LUMBERYARDS

84 Lumber owners give rosy forecast

BY Brae Canlen

Pro dealer 84 Lumber opened a new store on Oct. 26 in Bridgeville, Pa., outside of Pittsburgh, marking the first new unit for the pro dealer in six years. The two-story store will be located on a seven-acre property that includes a kitchen and bath design showroom, a lumber warehouse, railroad spur and truss plant.

Company owner and president Maggie Hardy Magerko told the Pittsburgh Tribune Review that the company, which ranked No. 6 on the HCN Pro Dealer 2012 Scoreboard, will turn a profit this year for the first time since the housing downturn.

“We definitely hit rock bottom,” Hardy Magerko said in the interview. Sales at the new location, which will replace an older store located nearby, are projected to reach $25 million next year, she said.

Company founder and patriarch Joe Hardy, also interviewed by the Tribune Review, predicted that new-home construction “will start coming back in another year or so. The inventory is disappearing,” Hardy said, adding housing starts could return to the 1.5 million-a-year level nationwide in a couple years.

The company’s new store count is 251 locations, down from more than 500 units at its peak. 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

POLLS

How much credit should be given to the co-op business model for the success of the independent hardware and building supply dealer over the last half century?
LUMBERYARDS

Zelman brings up the house at PDIS

BY Brae Canlen

Savannah, Ga. — An optimistic outlook from a normally conservative housing analyst closed the final day of the ProDealer Industry Summit (PDIS) today, sending many attendees home with renewed optimism, a new take on demographics and the green light — in theory at least — to ask builders for price increases next year.   

Headliner Ivy Zelman of Zelman & Associates, who predicted the length and the depth of the housing slump early on, told a full audience that the acceleration of household formation, combined with a dwindling number of available rental units, has created a housing shortage that needs to be addressed immediately.

“We, as a country right now, do not have very many opportunities for shelter,” Zelman said. Renters who can’t find apartments are turning, instead, to renting single-family homes. When these come off the housing market, the available inventory drops even lower, she said. And demographics are also adding new buyers to the market as adult children finally decamp from their parents’ homes.

“It’s tough to date when you’re in your 30s and living in your mom and dad’s house,” Zelman observed. And, unlike young adults in many European counties, “people are still falling in love and getting married and having babies,” she added.

Zelman & Associates’ official forecast for 2013 is 980,000 housing starts and 1.22 million in 2014.

These factors are already leading to the sustained rise in home prices, which is at 9% year to date. “We believe we are in the beginning of a pretty strong long-term pricing cycle,” Zelman said.

Zelman & Associates also studies the home improvement industry, where it is tracking an upward trend. “The home improvement value is more dependent on the people who don’t move," Zelman said. As families grow, homes must be renovated to accommodate them. “The power of the female buyer will reignite spending on our homes,” she said.

The hottest potato in Zelman’s presentation dealt with commodity inflation and builders turning down requests for price increases; the housing analyst said a 0.5% price rise in a home’s prices can offset a 1.0% increase in labor and materials. In other words, they can do it.

“[Builders] don’t need as much price appreciation to cover building materials,” she said. “If they’re pushing back on you, I think you should have that discussion again,” she said, adding: “Builders are going to have to pay up [if] they want to make Wall Street happy.”

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

POLLS

How much credit should be given to the co-op business model for the success of the independent hardware and building supply dealer over the last half century?
LUMBERYARDS

Owens Corning Q3 earnings decline

BY HBSDealer Staff

Owens Corning has reported consolidated net sales of $1.28 billion in the third quarter of 2012, down 11.7% from $1.45 billion during the same period last year. 

The company reported net earnings of $44 million, compared with net earnings of $124 million in the third quarter of 2011. 

"We are disappointed in our third-quarter financial results," said chairman and CEO Mike Thaman.  "Despite these results, we are proud that our Insulation business achieved profitability in the quarter for the first time in four years, in an improving U.S. construction market. Roofing and Composites are experiencing challenging market conditions in the second half.  We continue to focus on actions that will position these businesses for near-term improvement."

The company expects full-year adjusted earnings before interest and taxes (EBIT) in the range of $280 million to $310 million.  The company’s revised adjusted EBIT expectation for the year reflects near-term weakness in roofing demand, higher curtailment and start-up costs in composites, as well as softer growth in global industrial production. 

In the building materials segment, roofing weakness in the latter part of the third quarter is not expected to improve for the rest of the year.  “However, the company expects the factors that have driven margins in recent years will continue to deliver profitability in this business,” according to a company press release.

Owens Corning expects that insulation will improve financial performance for the remainder of the year and narrow losses in 2012 on improved U.S. housing starts and operating leverage in the business.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

POLLS

How much credit should be given to the co-op business model for the success of the independent hardware and building supply dealer over the last half century?