The Top 200, signs of progress

The 2012 Home Channel News Pro Dealer Industry Scoreboard reveals that the nation’s top 200 leading lumberyards and building material dealers are collectively moving forward.

There’s no doubt that pockets of pain remain in the lumber and building material retail and distribution industry, as housing construction advances ever so slowly from the record lows of 2011. But each day the positive news seems to take a step or two ahead of the negative news.

Here’s the good news from an analysis of the Scoreboard.

• The 200 companies showed a combined estimated sales increase of 6.4%, up from $31.56 billion to $33.58 billion.

• Collectively, companies are generating more sales per unit, up from an average of $5.05 million in 2010 to $5.23 million in 2011.

• Despite a year of record-low single-family housing starts, data from companies that shared data (as opposed to HCN estimated) reveal that 80% of the Top 200 showed sales growth ranging from 0.8% (San Marcos, Texas-based McCoy’s Building Supply at No. 12) to 64% (Green Bay, Wis.-based US LBM Holdings at No. 13).

The bad news for companies is that the long-awaited economic and housing market recoveries are moving at frustratingly slow paces.

The 2012 Pro Dealer Industry Scoreboard ranks lumberyards and building material dealers by sales in the most recently completed fiscal year. Research has been ongoing since February, with email surveys and telephone follow-up generating the majority of the data. There are only three publicly held companies on the 200.

One of those public companies is Builders FirstSource, ranked No. 7, a company whose quarterly reports are seen as a kind of bellwether for the building supply industry. The Dallas-based southeastern pro dealer in 2011 saw sales gains of 11.2%. And it finished the year with an even stronger top line — up 31.0% in the fourth quarter. However, profits remain elusive, as the company posted a $65 million net loss in 2011.

Looking beyond the top 200, the U.S. Census Bureau’s sales estimates for all companies classified as “building material and supplies dealers” (NAICS 4441) showed a sales increase in 2011 — the first year-over-year increase since 2006.

“Optimism is returning to contractors for the first time since the recession,” said Rob Rourke, L.E.K. Consulting’s VP growth strategy.

Acquisition-minded LBM and specialty distribution companies US LBM Holdings and SRS Acquisition appear in the fastest-growing chart, along with National Lumber, which shares some of its remodeling thoughts in a special report beginning on page 20.

There are many interpretations of the metrics. Chief among them is that the dealers that have survived the drastic building downturn have emerged with battle-tested business models and loyal customers. If they can get a little from the macro-economy, the theory goes, then they are poised to make a deep run into positive numbers.