Courtsey US LBM

The landscape of US LBM is rapidly changing. Since December 2020, the Buffalo Grove, Illinois–based specialty building products distributor has completed more than 20 acquisitions, bringing the company to approximately 460 locations across the United States.

During the same period, the company has identified customer pain points—long cycle times and high labor costs—and pivoted to provide prefabricated solutions, adding more than a dozen components manufacturing facilities to its portfolio.

BUILDER spoke with US LBM president and CEO L.T. Gibson to learn more about the company’s approach and plans for components manufacturing, its growth strategy, and its short-term outlook for the construction industry.

BUILDER: The company has added more than a dozen components manufacturing facilities to its portfolio over the past year. What was the catalyst for investment and expansion in this category?

Gibson: We’re focused on continuous improvement as an organization, and we apply those principles to how we engage with our builders, who are looking to us for solutions to reduce cycle time, better manage their costs, and address labor challenges, all of which are addressed by prefabricated structural components.

As evidenced by our recent acquisitions and greenfield expansions, we see a lot of interest in components in the Sun Belt states, and we were already strongly positioned with components in the upper Midwest and in key markets in the Northeast. There are still some pockets of the country where stick framing remains prevalent, but, with the continued labor challenges all over the country, we’ve seen greater interest in components now than ever before.

Our mix of growth in this category, both via acquisition and greenfields, is driven by our locally focused strategy. Our model and the reach of our local divisions and teams allow us to evaluate what the conditions are on the ground in our markets to determine if it makes sense for us to invest in a greenfield or if there is a local leader in component manufacturing that would be a strong partner for us.

Florida is a great example of this approach in action; we have Raymond Building Supply with truss capacity in the Fort Myers area, and we saw an opportunity to expand in that category in other markets in the state. In Miami-Dade in the southeast, we were able to acquire a strong manufacturing operation in Deco Truss. We didn’t see any acquisition fits for us to get into components in the Tampa and Orlando markets, so we invested in a new greenfield truss location that can serve both markets.

BUILDER: US LBM recently divested its Feldman Lumber, Rosen Materials, and Wallboard Supply Co. operating divisions. What factors influenced the company’s decision, and how does this move align with future plans?

Gibson: We received several unsolicited inquiries regarding these divisions due to their performance and product mix, with heavy volumes of wallboard, acoustical ceilings, and steel framing, which align with the product focus of other industry distributors. The proceeds from the sale will only help to strengthen our already-strong financial position and allow us to continue to execute on our go forward strategies. Wallboard remains an important product in our portfolio mix and continues to be available at other US LBM divisions.

BUILDER: Since Bain Capital Private Equity acquired a majority stake in the company in 2020, US LBM has completed more than 20 acquisitions. Has the company’s growth strategy been informed by this transaction, and how is US LBM approaching future expansion?

Gibson: Our approach and strategy to acquisitions is the same as when US LBM was founded: partnerships with the best companies that are mutually beneficial. We want partnerships that expand our reach, either geographically or via a product or capability in an existing market, and also allow our new partners to grow and thrive through our support teams, strong supplier relationships, and wider network of divisions.

Bain has been a tremendously supportive partner to us over the past two-and-a-half-years, and that support has allowed us to partner with some larger companies, such as American Construction Source, Professional Builders Supply, and Foxworth-Galbraith. The larger acquisitions are obviously the ones that get a lot of notice, but we’ve made 20 other acquisitions over that time and those companies are incredibly important contributors to our long-term success.

BUILDER: How is US LBM responding to shifts in the market, and what is the company’s outlook for the construction sector?

Gibson: Our expectation is that construction levels will increase in the second half of the year, and, while we don’t anticipate a return to 2021 and 2022 levels this year, we’re very optimistic about the significant demand for new housing over the long term. It’s a challenging but also a very exciting time for us because we’ve created incredible opportunities for ourselves, and we’re working daily to ensure we’re ready to capture those opportunities when the market shifts upward again.

We want all of our stakeholders—our people, customers, suppliers, and communities—to emerge from this period stronger and well positioned to meet that increased demand. We’ve always been a company driven by continuous improvement. Right now we’re focused on investing in our people and operations and putting the technology, processes, and products in place to help everyone in our value chain become more efficient—from helping builders reduce cycle times and address their labor challenges to maximizing our footprint and logistics as well as training our people to be the workforce this industry needs for both today and tomorrow.