Stock Building Supply today named Jeffrey G. Rea, a former Johns Manville executive and most recently president of Tyco Electronics Specialty Products Group, as the new chief executive officer of America's fourth-biggest construction supply company.
Rea succeeds Joe Appelmann, who left Stock on Monday after guiding Stock successfully through a sale and Chapter 11 reorganization, but apparently failing to pull the company out of a sea of red ink.
Stock's announcement regarding Rea described him as the former president of Tyco Electronics Specialty Products Group, which was comprised of four separate global businesses. "While serving in this role, Rea implemented double-digit organic growth strategies, led a significant increase in strategic investments and organization capability while delivering strong operational performance," the announcement said. "Prior to joining Tyco Electronics, Rea was a senior executive at Johns Manville. During his tenure there, he rose from the position of vice president and general manager of the Building Insulation Business to senior vice president of Johns Manville Building Products Group, which included the building insulation, performance materials, and roofing systems businesses. Under Rea's leadership, the businesses implemented new brand and channel strategies, made numerous strategic investments and delivered industry-leading earnings growth."
Rea also worked for 15 years at General Electric, including "five years on GE's prestigious corporate audit staff," Stock's announcement said.
"Jeff is an outstanding executive who brings to Stock a wide array of senior executive-level experience, a strong cross functional skill set, and exceptional leadership," said Tim Meyer, chairman of the Stock board and managing director of the Gores Group, which bought 51% control of Stock last year from Britain's Wolseley Plc. "We are confident he will be an excellent CEO. His work building Johns Manville Building Products Group, combined with his other experience and abilities, make him an ideal candidate to lead Stock to the next level. We expect great things from him and Stock in the near future."
The announcement also quoted Rea as saying that Stock's leadership and The Gores Group "have done a great job of stabilizing and turning around the company since it was acquired 18 months ago. I look forward to working with all the Stock employees to deliver exceptional customer support and service while helping the company reach its full potential."
The change at the top of America's fourth-biggest LBM operation came about seven weeks after Wolseley, Stock's minority owner, reported that the investment vehicle that took control of Stock Building Supply in May 2009 incurred an after-tax loss of $45.5 million on revenue of $949.9 million in the fiscal year ended July 31. Wolseley also said then that it was writing off the carrying value of its investment--roughly $64.4 million--in Saturn Acquisition Holdings LLC because the firm continued to post losses in the past fiscal year and Wolseley wasn't sure whether Saturn would post dividends or other returns on investment in the future.
Departing Stock CEO Appelmann, a native of the Cincinnati area, spent more than 20 years at Stock, mainly in financial roles before moving into general management positions. He was senior vice president of operations in August 2007 when he succeeded Fenton Hord as CEO. During his 20-year tenure at Stock, Hord helped the company grow from seven yards in North Carolina with sales of $113 million to America's biggest LBM operation, with 310 locations in 34 states with $5.3 billion in sales. That growth was powered in part by Wolseley, which had purchased Stock and eagerly was acquiring lumberyards across the country.
But Appelmann's time at the helm also corresponded with America's worst housing recession in decades. Stock began bleeding red ink, and Wolseley began feeling pressure from shareholders to dump Stock. In spring 2009, Wolseley sold a 51% stake in the company to the Gores Group, an investment fund based in Los Angeles. At the same time, Stock filed for protection from creditors under Chapter 11 of the federal bankruptcy code and reorganized itself. Stock emerged July 1, 2009, from Chapter 11 with roughly half its previous number of locations and a focus on just 19 markets nationwide.
By the time it had finished reorganizing, Stock was reporting 2009 sales of $1.43 billion, nearly 54% less than in 2008 and far below its peak of $5.3 billion, according to the latest ProSales 100. It ranks fifth nationally on that lists, but a merger earlier this year between then-No. 2 ABC Supply and No. 4 Bradco Supply moved Stock back to fourth place.
"Joe had a tremendous career at Stock for over 22 years and held many key posts including vice president of finance, senior vice president of logistics, and chief operating officer," Meyer said in the e-mail to staff. "Joe became CEO in 2007 during the heart of the housing crisis and led the company exceptionally well through its sale to Gores and a rapid restructuring.
"No other organizational announcements are planned at this time," Meyer added. "The new CEO of Stock has been identified and will join us this week to begin his responsibilities. I look forward to making that announcement and introducing him to the organization. In the meantime, the most important priority is to focus on providing exceptional service to all of our customers."
The announcement also included a statement from Appelmann. "Stock is an exceptional place to work with a bright future," he said. "I would like to thank every associate for the courtesy and loyalty they extended to me during my tenure. My sincere hope is they will provide the same support to my successor."
In a September 2009 interview with ProSales at Stock's headquarters near Raleigh, N.C., Appelmann reflected on the challenges of leading a business during hard times.
"It just amazes me that people say, 'Gosh, I feel bad for you. You took the company over a hard time,'" he said then. "And I say, "This has always been my dream job. You don't really get to pick your spots if you're lucky enough to get the job you want. And I tell people, ‘You know, I don't lose a lot of sleep over when I got the company, because I know the commitment of the associates. I've got a wonderful management team, super smart. It's a good organization.’ As hard as all these decisions are--and some ended up on a personal, emotional level (regarding) some of the folks that have had to leave the business; that's the kind of thing you lose sleep over--I still like getting up in the morning. I still love the industry. The business is going to come back."
Craig Webb is editor of ProSales magazine.