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LBM 100 SHOWS MORE BIG GAINS IN 2022
Since we first launched the LBM 100 in 2021, each year has ushered in new
record sales for LBM dealers participating in the list. Kicked off during one of
the most bizarre business climates in modern history, the list is compiled of
dealers who continued to succeed throughout the unprecedented challenges
of the COVID-19 pandemic, and into the highly volatile markets and supply
chain conundrums that followed.
Now in its third year, the LBM 100 continues to demonstrate the strength
of the lumber and building materials industry while fighting new challenges
such as sky rocketing interest rates, rising inflation and fuel costs, labor
shortages, and foreboding talk of a recession. If that list of challenges faced
any other industry, it is unlikely that we would see that 94 of this year’s top
100 dealers reporting increases in sales in 2022. Nearly all of those increases
were in the double digits, and some, including Howard Lumber and Hardware
in Statesboro, Ga. (No. 44) and Glecker and Sons in Jacksonville, Fla. (No 38),
A number of records were set in 2022, including those at Zuern Building Products (No. 54) in Slinger, Wisc., where President Tom Zuern reported, “Record sales, record profitability, continued improvement to journey value,” while the company sold $24 million more in delivered sales using 144 fewer deliveries. “Every product category was up at least 18%,” Zuern said. At Carter-Jones Lumber Co. (No. 5) in Kent, Ohio, Director of Marketing Mark Ely said, “We surpassed $3 billion in sales for the first time in our company’s history. We also made major gains with our national builder customer base and grew that portion of our business at a rate which far outpaced our overall growth.” Other 2022 records mentioned by LBM 100 dealers include the first $100 million sales year at Concord, Calif.-based Ashby Lumber (No. 73). At Frisco Wholesale Lumber (No. 71), in Frisco, Texas, the company surpassed $1 billion in sales over the company’s history.
Growth in 2022 and beyond
The year saw a number of mergers and acquisitions, as reflected in this year’s LBM 100. Some, such as Buffalo Grove, Ill.-based US LBM’s July acquisition of Foxworth-Galbraith Lumber Company, surprised even industry insiders. Foxworth-Galbraith ranked No. 11 on the 2022 LBM 100 list, citing sales of $926.5 million in 2021. While US LBM was in the news often in 2022 for acquisitions (the company gained 46 locations over the course of the year), the moves didn’t alter the heavy hitter’s firm hold on the No. 2 spot on the LBM 100. This year US LBM maintained that second spot and reported a 24.5% gain at over $11.4 billion in gross sales.
In comparison, the No. 1 spot on this year’s list, Texas-based Builders FirstSource, acquired six companies for a total of 24 locations in 2022 and held the top spot with a 19.5% increase in gross sales to $22.7 billion. Kodiak Building Partners, based in Highlands Ranch, Colo., and No. 4 on this year’s list, also acquired six companies last year. Also notable is up-and-coming TAL Holdings (No. 31), headquartered in Vancouver, Wash., which acquired four companies, adding a total of 14 locations. TAL reported 60.5% gross sales growth year-over-year.
Overall, nearly one quarter of the dealers on this year’s LBM 100 list indicated that they had gone through the acquisition process (on either the buy or sell side). And if that number seems high, consider that nearly half of the LBM 100 companies intend to grow this year or in 2024. While not all will be done through acquisition, 49% indicated that they plan to expand in the next 12-24 months. Just 19% said they did not have an expansion on the horizon during that time period, and another 26% indicated that they didn’t know.
In an industry that continues to grow despite its obstacles, this year’s LBM 100 is indeed building for the future. As a means of doing so, dealers continue to serve their strongest customers in the highest percentage, namely custom builders. Unchanged from last year, custom builders made up 41% of LBM 100 dealers’ customer base. Down slightly are the percentages of production homebuilders served at 21%, but up percentage point each are professional remodelers and consumer/DIYers.
Perhaps a holdover pandemic-era convenience, but also a sign of changing buying habits,
40% of LBM 100 dealers now offer online sales. That number is up 9.5% from 2022’s report of 30.5% of dealers who offered products for sale online. Indeed pandemic-related are “buy online pick up outside” type orders. Of those who sell products online, curbside orders made up 27.4% of the deals in 2022. Just more than 35% of online orders placed at LBM 100 dealers are picked up in store.
Opportunities abound in any industry, and the LBM dealers on this year’s top 100 list know where to focus next. Again in 2022, recruiting, hiring, and retaining talent were major challenges in the industry. Sixty-eight percent of LBM 100 dealers indicated that finding and keeping good team members is a challenge. While a concern industry-wide, it appears to be ebbing a bit, as 84% of last year’s LBM 100 indicated the same challenge. Some dealers, like Curtis Lumber (No. 23) based in Ballston Spa, N.Y., are solving their local labor woes.
“Curtis Lumber, in conjunction with the Saratoga Builders Association started a Workforce Development Coalition for the trades six years ago that is now showing significant growth,” said Doug Ford, VP of sales and purchasing at Curtis Lumber. “It is focused on driving awareness to students around the career paths into the trades through involvement with the high schools, colleges, and technical schools.”
As dealers such as Curtis Lumber have made strides in recruiting and retaining the next generation of LBM pros, driver positions in particular have proven hardest to fill. This year’s LBM 100 dealers indicated that of all the positions that are challenging to fill, drivers exceed any other role by nearly 20%. Following drivers, of which 60% of dealers indicated are the most difficult to fill, are yard workers at 42% and outside sales reps at 24%.
Some companies have felt a bit less weight on the hiring challenge as recession fears
caused larger companies to reduce staff. “The economic slowdown has offered our company some good, quality employees…those changing from employers that may be less stable than us,” said one Northeastern dealer.
While many in the industry will agree that the worst of the COVID-19 pandemic-era concerns are behind us, there continues to be a watchful eye on inflation indicators. Many dealers have indicated that 2023 will still be a year of growth, despite higher interest rates and lingering supply chain challenges.
“There will be fallout in the industry and cash is always king. We will be ready to take
advantage of business opportunities,” said one Texas dealer.