Rise in Stock

With its four most recent acquisitions, Raleigh, N.C.-based Stock Building Supply continued its march into some of the strongest housing markets in the United States. Over the past seven months, the company, which had annual sales of $4.1 billion ending in July last year, bought out Chicago-based Seigle’s; Universal Supply Co. in Hammonton, N.J.; Home Lumber Company in San Bernardino, Calif.; and K&A Lumber Company in Homestead, Fla., a supplier of framing lumber and rebar. The quartet of purchases added to Stock’s coffer almost 2,000 employees and combined revenues of more than $527 million. It’s all part of the supplier’s strategy to align its distribution channels with production builders as they continue to gobble up market share.

Today, custom home builders represent about 70 percent of Stock Building Supply’s customer base. But within the next decade, CEO Fenton Hord forecasts that the ratio of custom to production builders it serves will be 50-50, with commercial and remodeling representing 15 percent. And although it operates in 283 locations in 33 states and counting, the building material supplier isn’t relying on geographic spread alone to capture home building’s heavyweights. In order to meet the varying production and efficiency requirements of this diverse group, it is reorganizing to offer whole-house purchasing options, panelized components, and turnkey services in locations where they’re demanded. “In some markets we’ve exclusively set up our management to do nothing but big builder business,” Hord says. “Because of their scale and size, their demands are a little more intense than custom builders. It’s important to have the right product and 100 percent delivery on time, every time.

Stock is acquiring businesses with an eye toward its own diversity and adaptability. Seigle’s, for example, has 11 locations through which it sells building materials and value-added products such as wall panels, millwork, windows, and cabinetry, many of which are installed. The Seigle’s purchase also included Michael Nicholas Carpentry LLC, a turnkey provider of framing services to production builders. “Seigle’s product mix is highly attractive and reflects where we are moving to position Stock as a whole,” Hord says. He adds that Stock plans to grow its capacity to offer such items as plumbing, electrical appliances, and kitchen cabinets in conjunction with its sister company, Ferguson Enterprises. The partners currently have four builder showrooms up and running in Atlanta; Raleigh, N.C.; Washington, D.C.; and Santa Barbara, Calif.

“We’ve never been one to buy anything but good companies, so generally we’re happy to keep their entire management group,” Hord says. “What we bring to the party is the capital and the marketing strategy to grow the business beyond where we find it when we buy it. All three of these companies were high performers when we got there, and we want to enhance that going forward.”

Stock Building Supply is a subsidiary of Wolseley plc of Theale, England, which had worldwide sales in fiscal year 2005 of more than $20 billion. Wolseley is traded on the New York Stock Exchange as WOS.