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The LBM JOURNAL 100

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In a year unlike any other, the power of people, the strength of relationships, and the resilience to serve customers no matter the circumstances defined the LBM industry.

While a typical year starts on January 1, for many in the LBM industry the “past year” may feel more like March 2020 through March 2021. When the pandemic reached U.S. shores in full force last year, the first two months faded into the background and the rest of 2020 became a year unlike anything ever experienced in building materials sales and distribution. As a result, the inaugural LBM JOURNAL 100—a ranking of the nation’s top pro dealers and lumberyards by 2020 sales—reflects much more than a typical calendar year of doing business.

And what a year it has been—one of challenges and frustrations, but, as it turned out, also one of many opportunities for the construction industry.

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We all know the story by now: The pandemic’s impact on our industry started with much uncertainty and fear beyond just the health concerns. Some yards were required to temporarily close, others laid off workers. But nearly as quickly, unexpected business growth followed, fueled by the residential construction industry as DIYers took advantage of stay-at-home time to make improvements, buyers sought out new houses with more space, and newly minted telecommuters took advantage of the opportunity to relocate.

LBM dealers pivoted swiftly, enacting safety protocols, allowing office staff to work from home, conducting customer meetings via video chat, and adding online ordering and curbside pick-up to meet demand while keeping employees and customers safe. Over time, the pandemic’s business anxieties shifted to supply shortages and price hikes. To be sure, it was a preferable alternative to the shut-downs and closures, but stressful nonetheless.

The LBM JOURNAL 100 reflects these challenges and opportunities, both in the raw survey data and in the commentary we received from participants. Most yards experienced growth in 2020, some tremendously so. And throughout it all was a familiar refrain, stronger than ever before, that what truly makes pro dealers successful are the people within.

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Record-breaking growth

The unexpected surge in home improvement activity and continued steady growth in new home construction translated into positive numbers for nearly the entire LBM JOURNAL 100.

Only eight companies on the list experienced negative growth in 2020. Even more telling is that nearly two-thirds of dealers on the list experienced percentage growth in the double digits, and 23 of those companies had growth of 30% or more. For some, the gains were milestones. For example, 84 Lumber exceeded $4 billion in sales for the first time in company history, Lang Building Supply reported record-breaking net profit, and T.H. Rogers Lumber had the best year of sales in its 120-year history.

“We recorded the largest yearly gross sales in the company’s history,” reported Devin Grieve, manager of Lakeside Lumber in Tualatin, Ore. “We accomplished this during a pandemic and operating with limited staff due to state guidelines.” “Due to COVID-19, we were closed for six weeks, but still exceeded the prior year revenues; additionally margin was up close to 1.5% points,” said Rich Lender, president and CEO of Your Building Centers in Altoona, Pa.

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Acquisitions drove some of the overall growth, but by no means all. Nineteen LBM JOURNAL 100 companies reported they grew through acquisition in 2020.

Among the biggest acquisition stories on this year’s list was in the No. 1 spot, Dallas-based Builders FirstSource, which expanded from 400 yards to 550 yards via a merger with BMC.

“The merger of Builders FirstSource and BMC Stock Holdings, Inc. allows us to expand our footprint and enhance our local relationships in many of the nation’s largest and fastest-growing markets,” says Dave Flitman, president and CEO. “We are well-positioned for long-term growth, underpinned by a resilient and expanding housing environment, as well as a significant capital base for M&A.”

Among some of the other large players, Kodiak Building Partners, headquartered in Highlands Ranch, Colo., brought in seven new locations through the acquisition of three companies in 2020, all of which continue to operate under their original brand names.

“We’re a family of great local businesses that have been built up over the years and generations,” says Founder and CEO Steve Swinney. “Even though we’re a consolidator, we’re really meant to be a facilitator rather than fold them into Kodiak.

“If you look at all the brands, there’s some that are over 100 years old,” Swinney continues. “I look at part of our role as being a steward of the legacy that these founder families have created over the years. [When we acquire them,] I hope that we continue their story instead of the acquisition being the end of their story.”

Buffalo Grove, Ill.-based US LBM added 25 locations in 2020—six green- field locations and the rest via seven acquisitions including Zeeland Lumber & Supply, Ridgefield Supply Company, and Gilcrest/Jewett.

“We are always looking to grow in our existing markets and partner with the best companies in new markets,” says L.T. Gibson, president and CEO of US LBM. “Key for us is that any partnership must be mutually beneficial.

Even if we partner with a market leader, we want to be able to provide a potential new partner the tools and resources to grow, which could be via our wider access of suppliers, product lines, or technology.”

It wasn’t just the top 10 dealers expanding via acquisition; companies of all sizes made moves. For example, Campbellsport, Wis.-based Drexel Building Supply added Blenker Building Systems, an off-site manufacturer of wall, floor, and roof panels with nearly 90 team members, expanding on the LBM dealer’s existing portfolio of roof trusses.

Though the transaction began in December 2019, it closed in May 2020, well into the pandemic. Having similar cultures—and lots of communication—was critical to easing the transition during a time when Drexel leadership couldn’t travel to the new location.

Massa Home Center grew from one location in Hamilton, Mont., to three with the purchase of Lemhi Lumber Company and Allied Builders Supply, both in Idaho. “Through acquisition of our Idaho stores, we see a huge opportunity to grow our market share in Custer and Lemhi counties,” says co-owner Deana Wolfe. “We would also like to grow our Montana sales by looking to areas we are not currently serving.”

Wolfe says the pandemic didn’t impact their area much, which is seeing an influx of people relocating from both the West and East coasts.

“I’d always pumped the brakes [on adding new stores] because I didn’t know how to run a business without being there every day,” says Wolfe. “But the two stores presented a really good opportunity. We see a ton of potential in Idaho at those locations. The stores really lent themselves to growth.”

And the acquisitions don’t appear to be slowing. Of the nearly 49% of companies with plans to expand in the next one to two years, 70% of those say the growth will include acquiring other companies.

“Our philosophy isn’t changing,” says US LBM’s Gibson, “there may be more opportunities because of the general condition of the market and the country, but we’re still looking to partner with the best companies in their markets with strong teams in place.”

Ongoing challenges

When asked about their biggest challenges, it’s not surprising that dealers say finding and keeping good employees is near the top of the list. Dealers continue to face deficits as more workers retire while fewer young people express interest in joining the industry.

More than three-quarters of the LBM JOURNAL 100 reported challenges with recruiting, hiring, and retaining employees, with drivers and yard workers noted as the hardest-to-fill roles (85% and 69%, respectively), followed by outside and inside sales positions.

LBM 100 chart 3

Massa Home Center’s other co-owner, Jeff Wolfe, says that in Montana and Idaho, the area’s growth may actually compound the labor problem, as many of the people moving there are retirees, not construction or LBM specialists. “Every business here is hiring,” he says. “The competition for employees has gotten more intense.”

Another thing that hasn’t changed is the value the LBM industry puts on its people—a quality that has only grown stronger amid the trials of the past year.

“We have the best people in the industry, bar none,” said Mark Ely, director of marketing for Kent, Ohio-based Carter-Jones Lumber Companies. “For the last decade-plus, we have focused on not only hiring A-players, but A-players who are good people. We see the effects of that inside our company, and we know it carries through as they take care of our customers. With everything that went on in 2020, our people and our culture were put to the test. We saw that because we had good people, no challenge was too big for us.”

Hunter Lansing, president and CEO of Richmond, Va.-based Lansing Building Products, places importance here, as well: “There’s an emphasis on our people—recruiting, hiring, training, recognizing, and developing our associates.”

Many companies are recognizing the need to do more to not only recruit but also retain talented team members. In fact, 33 companies indicated they have a mentoring program.

For instance, Wilson Lumber, headquartered in Huntsville, Ala., has instituted a program called “Wilson Lumber Grows,” in which managers mentor emerging leaders so that they can develop them into the next generation of managers.

“I am a firm believer that if you take care of your team, they’ll take care of clients and the community. We put tremendous emphasis on team and that they’re living our core values and our mission to supply happiness,” says Caitlin Stoll, happiness leader at Drexel. “We’ve built a culture of doing multiple things to make sure our team is engaged and fulfilled. And from there they are able to shine. And our customers feel it, our communities feel it. It creates a contagious environment for success.” Targeting the industry’s high turnover rate, Kodiak is implementing a talent development program over the next few years with a goal of holistically developing employees from entry level to senior leadership. “We really want to be a place where people can build careers,” Swinney says.

LBM 100 chart 4

And of course, contractors are feeling those same labor challenges, which many dealers have leveraged into opportunity via manufacturing and installed sales capabilities. “Material and labor shortages are allowing us to explore other options for builders who haven’t considered it before,” says Jason Blenker, off-site construction solutions leader at Drexel Building Supply and the co-owner of Blenker Building Systems when it was acquired by the dealer last year. “It’s given us an opportunity to grow our business and more importantly fill a need in the marketplace.”

Another common refrain from the LBM JOURNAL 100 are price and supply constraints as shortages from the pandemic collided with increased demand. This spring, the NAHB reported that the 180% rise in lumber prices alone in the last year has increased the price of an average new single-family home by more than $24,000.

“We’re navigating the supply chain issues, but it’s a lot of work for everyone,” says Kodiak’s Swinney. “Our team is making it look like it’s easy because they’re getting it done. But behind the scenes they’re working so hard, expanding inventory levels outside of normal routine to stay in stock. Another part of what we’ve tried to build here is to partner with vendors, etc. We’ve worked to communicate with vendor partners and customer partners. That’s how you navigate the pricing swings.”

LBM 100 online sales chart 2

The year’s ongoing impact

No one can deny the effect the pandemic has had on the industry over the past year. To re-open or stay open, many yards had to shift the way they do business to create safe distancing and protect both themselves and their customers.

Still, only 33% of the LBM JOURNAL 100 are offering online sales, and of those, 86% count less than 5% of sales from ecommerce. However, when comparing those companies from 2019 to 2020, 41% said online sales were significantly higher than the year before, and 34% said they were slightly higher. Three-quarters of the companies with online sales are delivering those goods by curbside pickup along with other means.

For Kodiak, having locations across 17 states, each with different sets of regulations, could have proven chaotic. “In the long run, it enhanced our model because we learned to keep those connections in different ways,” says Swinney. “We were comfortable getting on airplanes and visiting, and that all shut down. We’ve learned to use video conferencing. We invested in more technology to give us the tools to do that really well. I spent more time talking to company presidents this year than in the past because of this tool.”

Swinney adds that the decentralized approach also helped navigate all of the unknowns. “The fact that our people figured out how to do their jobs … and at a highly successful level is absolutely amazing to me,” he says. “And I know we’re not the only ones.”

Stoll saw similar success at Drexel. “We really became flexible,” she says. “We added an 11th core value: connection. Connection doesn’t have to mean you see people face to face, but we can do video chats, emails, phone calls.

We realized early in the year how important that was. I give kudos to the team. Everyone dug their heels in, made adjustments, and went with it.”

The LBM industry has always been big on relationships, and that core value was all the more important during the pandemic.

LBM100 chart 1

“The silver lining of the pandemic for us has definitely been relationships,” says Charlie Parks, co-owner and vice president of Dahlonega, Ga.-based Parks Lumber & Building Supply. “We have developed stronger relationships with our customers, suppliers, and even with other supply houses in the area that we have done some dealing back and forth with during the shortage. These relationships have proved extremely critical today in our line of work as everyone is having to go the extra mile. We very much look forward to building upon all of these bonds this year as we all continue to do our best to get the job done.”

“We were very proud of our employees who put forth an incredible effort to provide strong service levels to customers while keeping themselves, their colleagues, and our customers safe through an unprecedented environment plagued by the pandemic, natural disasters, and social injustice,” says Julian Francis, president and CEO of Beacon Building Products, based in Herndon, Va.

Beacon is one of a small number of companies indicating a developed plan in place to promote diversity and inclusion.

A statement from Francis reads, “Beacon is taking steps to expand our role as an employer that champions diversity, inclusion, and equality of opportunity. I believe that everyone at our company must have the opportunity to reach their full potential in order for the business to realize its full potential. We have established a framework that will guide us to listen, learn, and then act. We will use our talent system, learning platforms, and employee outreach to build more understanding. I have signed the CEO Action for Diversity and Inclusion pledge, along with over 1,000 CEOs to learn from one another and use our roles as business leaders to advance diversity and inclusion at our companies and in our communities. Our goal at Beacon is to cultivate an environment where all ideas are welcomed, all our people are empowered, and we reject discrimination on the basis of race, religion, gender, sexual orientation, and any form of illegal discrimination.”

Looking ahead

As the second quarter of 2021 is underway, the challenges of the pandemic continue, though they look different than they did a year ago. Will new home sales and remodeling remain strong? Will material supply catch up with demand before pricing spins further out of control? Can the industry attract more talent?

“I’m hopeful that we will see some of the supply chain issues resolve themselves by the end of the year,” says Gibson. “I do expect M&A to continue given all of the market factors, and I see new home construction continuing to grow as existing housing inventory levels remain low across much of the country.”

“We have to plan for both—that it’s the best year or that the housing market is going to unravel,” notes Blenker. “We’re open with the team in communicating that. We can control what we do day in and day out. We want to be the preferred supplier in the market in either case.”

Indeed, no matter what, the LBM industry will face it head on, just as it has through every peak and valley, challenge and opportunity, and market boom and bust of the past.

“I’m so proud not just of our team, but also of our industry,” Swinney says. “I feel like our industry was one of the examples of how to get through the pandemic. We couldn’t shut down—we couldn’t do our jobs from home. We figured out how to go to work safely. How to help customers.”

A big thank you to all of the companies who shared their data and made the first-ever LBM JOURNAL 100 a reality. We’re especially proud that the numbers all came directly from the companies themselves, with zero “guesstimates” from our team. These same high standards will guide future updates to this industry snapshot.

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