Last year was a year of change for HD Supply as it was peeled off from Home Depot and sold to a threesome of private equity firms. This year will be one of growth, said CEO Joe DeAngelo during a meeting with Big Builder at the International Builders' Show in Orlando.
"We spent 2007 doing a lot of things," said DeAngelo. In 2008 "We will be turning on our acquisition engine. Now is a good time to do deals."
One of its main initiatives in the residential building area is growing its Creative Touch Interiors (CTI) division as builders look to outsource more of their design function in the marketplace. CTI offers turnkey supply and installation of interior finish options, including flooring, cabinets, countertops, and window coverings, as well as design center and interior care services.
Currently CTI operates in 65 metro areas in 17 states. DeAngelo said the company expects to grow it by eight more markets this year. He said he expects most of that growth to be organic rather than through acquisition.
While the company was part of Home Depot, a great deal was invested in linking CTI digitally, including sophisticated design software that allows the company to take builders' plans, convert them to digital plans and then design, spec., and order kitchen countertops, for instance.
The platform is in place for CTI to provide builders of any size in any geography, with any range of services, from design centers, to installation. The company will help builders create a "menu" of offerings that it can buy in scale at reduced prices.
The sale of HD supply was closed last August. Bain Capital, The Carlyle Group, and Clayton, Dubilier & Rice Inc. paid $8.5 billion for the wholesale distributor of construction and maintenance-related products, less than the original $10.3 billion price originally agreed to. The soft housing market became weaker before the sale was closed, requiring the price to fall and Home Depot to retain a percentage of ownership.
That lower price ended up being fortuitous, said DeAngelo, because it resulted in lower debt "with more head room" and little in the way of covenant requirements.
Home Depot's ownership in the company is passive, he said. "It will turn out to be a very good investment for them."