Big changes and cuts announced at ProBuild Holdings
ProBuild Holdings, the nation’s largest pro dealer, has announced a restructuring that will eliminate several high level management positions, lay off a number of people, and institute a hiring freeze at its Denver headquarters.
In an internal memo obtained by Home Channel News, ProBuild’s CEO Rob Marchbank outlined the new leadership and reporting structure of the Denver-based company. The executive VP operations layer of management will be eliminated, and all senior VPs of operations will report directly to Marchbank.
Frank Garcia is leaving the company. Garcia was president of ProBuild’s South Central region before being named head of the metropolitan group.
The corporate development function will be eliminated, and as a result, Michael Mahre, senior VP corporate development, is leaving the company. The real estate function will report to Mark Butterman and construction services will report into manufacturing, which is headed by senior VP Lonnie Bernardoni.
Bryan Reckrodt, a senior VP, is also leaving ProBuild.
Ed Waite, former president of Spenard Builders Supply and later the company’s Northwest region, is moving back to Alaska to assume the role of senior VP operations there. Waite also served as executive VP local operations.
All the company’s senior VPs will join the Executive Leadership team, according to the memo, to allow better insight into market issues and closer connection with customers. “Working with the SVPs, we will develop a plan for that organization in the coming weeks,” Marchbank said in his memo.
A spokesperson for ProBuild said the company would have no comment on the memo.
ProBuild also has a number of changes in store for what it calls its “support structure.” This restructuring follows nine months of strategic analysis by Rick Goulding, managing director at Devonshire Investors, who returns to Devonshire’s Boston headquarters in early May.
Pricing: Now led by David Koth, pricing is getting another overseer — Don Riley, executive VP of supply chain and development. Koth, who now reports to Riley, will focus on “developing processes and tools to help the locations better manage and analyze their product pricing,” according to the memo.
National accounts and sales force effectiveness: Wendy Minichiello will lead this function and report directly to the CEO’s office.
Marketing: ProBuild is eliminating the position of VP marketing. Instead, marketing now reports to Paul Dodge, senior VP supply chain.
Transformation Management Office (TMO): ProBuild wants a more focused and tactical project management team. Mark Garboski, currently VP of TMO, will stay with ProBuild for several weeks to ensure a smooth transition of TMO resources and project accountabilities, and then he will leave the organization. The team will report to Don Riley.
Human resources: Felicity O’Herron, senior VP human resources, is leaving ProBuild for personal reasons. Paul White of Devonshire Investors is serving on an interim basis while the company searches for a replacement.
ProBuild has found it necessary to prioritize and reduce the number of business initiatives for 2012, according to the memo.
“I realize there have been a number of changes in leadership and direction over the past 24 months,” wrote Marchbank, who took over as CEO in January 2012. “We need to focus on developing the tools and capabilities that will differentiate our company in the future. I am committed to opening and maintaining a dialogue with you as we move forward, and I encourage you to ask questions and provide your feedback.”
ProBuild is the nation’s largest network of lumberyards and component plants, ranking No. 1 on the HCN Pro Dealer Scoreboard. It operates more than 430 LBM outlets that serve 45 U.S. states, and is owned by Fidelity Capital, a private equity firm based in Boston. Devonshire Investors is one of Fidelity’s portfolios.
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1.6 million housing units in ‘shadow’ inventory
CoreLogic, a provider of analytical information about the housing market, reported that the current residential shadow inventory as of January 2012 was 1.6 million units, approximately the same level reported in October 2011. CoreLogic estimates shadow inventory by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent, in foreclosure and real estate owned (REO) by lenders.
On a year-over-year basis, shadow inventory was down from January 2011, when it stood at 1.8 million units. Currently, the flow of new seriously delinquent (90 days or more) loans into the shadow inventory has been offset by the roughly equal flow of distressed sales (short and real estate owned).
"Almost half of the shadow inventory is not yet in the foreclosure process," said Mark Fleming, chief economist for CoreLogic. "Shadow inventory also remains concentrated in states impacted by sharp price declines and states with long foreclosure timelines."
Anand Nallathambi, president and CEO for CoreLogic, added: "The shadow inventory remains persistent even though many other metrics of the housing market show signs of improvements. In some hard-hit markets, the demand for REO and distressed property is now outstripping supply. As we move into what is traditionally the peak selling season for real estate, servicers will certainly be watching closely to see if now is the time to move more inventory out of the shadows.”
Some data highlights from the report include:
• The shadow inventory is approximately half the size of all visible inventory listings. For every two homes available for sale, there is one home in the "shadows."
• The total percent of borrowers who were ever 60+ days delinquent (irrespective of delinquency status today) increased to 15.5% in January 2012, up from 14.3% a year ago.
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The highest concentration of shadow inventory is for loans with loan balances between $100,000 and $125,000. More importantly, while the overall supply of homes in the shadow inventory is declining versus a year ago, the declines are being driven by higher balance loans. For loans with balances of $75,000 or less, however, the shadow is still growing and is up 3% from a year ago.
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Despite pent-up demand, existing-home sales slip
Existing-home sales data released Wednesday by the National Association of Realtors (NAR) declined slightly compared with the previous month but showed gains compared with a year ago.
February existing-home sales came in at a rate of 4.59 million, down 0.9% from 4.63 million in January. Compared with a year ago, completed transactions are 8.8% higher than February 2011.
Sales were up in the Midwest and South, offset by declines in the Northeast and West.
“The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” said Lawrence Yun, NAR chief economist. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.”
The national median existing-home price for all housing types was $156,600 in February, up 0.3% from February 2011. Distressed homes — foreclosures and short sales sold at deep discounts — accounted for 34% of February sales (20% were foreclosures and 14% were short sales), down from 35% in January and 39% in February 2011.
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