Bradco sells majority share to private equity firm
Bradco Supply, a family owned building materials distributor with locations in 30 states, has sold a majority interest to Advent International, a private equity firm. Terms of the deal were not disclosed.
Bradco ranks in 7th place on the 2008 Pro Dealer Top 350 Scoreboard, which will be published in the next issue of Home Channel News. The company’s sales last year were $1.70 billion.
Brad and Martin Segal, sons of company founder Barry Segal, will continue as president and vp, respectively. Ted Boylan, who succeeded Barry Segal as CEO last February, will stay in that position. The Segal family has retained a 10 percent share in the company, and Apollo Management, a private equity firm that invested in Bradco last year, holds a 5 percent stake.
“We really weren’t looking to sell the company, but [Advent] approached us and the timing was right. It made sense,” said Brad Segal in an interview with Home Channel News.
“We’re very strong financially, and we’re looking to get into new markets,” Segal continued, echoing the comments of the company’s new owners. In a prepared statement, the global buyout firm said it will “work with existing management and the Segal family to … grow through acquisitions of complementary businesses and regional expansion.”
“People are struggling, and there are opportunities out there for acquisitions,” Segal observed. But Bradco is primarily interested in specialty distributors. The company is exiting the lumber business and will focus instead on its core product categories: roofing (which accounts for 70 percent of its revenues); windows and doors, decking, and at some locations, kitchen cabinets and countertops.
Bradco began selling framing lumber in 2004, when Wickes Lumber was divided up in a Chapter 11 bankruptcy court. Bradco purchased 20 Wickes yards, primarily in the northeastern United States, for $65 million. But the Wickes units did not perform well for Bradco, Segal said, blaming “a combination of things.” The company has closed or sold a number of the yards, and fewer than 10 locations are currently up for sale. Three of the original 20 Wickes yards have been converted into Bradco outlets.
Bradco’s new owner, Advent International, has offices in 15 countries. Its other investments in the building products sector include a Bulgarian manufacturer of ceramic flooring and wall tiles; two Romanian companies that make paint, brick and day roofing tiles; a construction equipment rental firm in Spain; and Stone Products Corp., a U.S. maker of manufactured stone facings that was later acquired by Owens Corning and renamed Owens Corning Cultured Stone.
Advent’s initial investment in Bradco, and its financial backing for Bradco’s future growth, comes from a new $10.4 billion fund called Global Private Equity VI. According to the company’s Web site, GPE VI, as it’s called, is aimed at middle market buyouts (enterprise values of $300 million to $1.5 billion) where operational improvements, strategic repositioning and market expansion can drive growth.
PRO Group makes key promotions
Denver-based PRO Group has promoted Brendan Sullivan to director of merchandising, a new position, according to the company.
Sullivan is a 21-year industry veteran who has served in various merchandising and business development positions for Servistar/Coast To Coast and True Value prior to joining PRO Group in 2005.
“Brendan Sullivan’s experience and work style makes him ideally suited to a merchandising director role,” said Steve Synnott, president and CEO of PRO Group, in a statement. “Brendan has worked as a buyer and merchandise manager, and since he joined our company three years ago he has taken a leading role in providing progressive ideas and programs on the merchandising side.”
In addition, PRO Group managing director for the PRO Hardware and GardenMaster divisions, Shari Kalbach, has been named managing director for the company’s Farm Mart division, which supplies independent farm supply retailers.
Kalbach joined PRO Group in 1997 and is responsible for all of the Group’s distributor relationships.
“Shari Kalbach has a proven track record as a highly effective executive working with PRO Group distributor members,” Synnott said. “Adding Farm Mart to Shari Kalbach’s scope of work is a natural progression of her role. She excels working closely with our distributor members.”
Design Within Reach narrows losses
Design Within Reach, the San Francisco-based specialty home decor retailer with around 70 locations nationwide, saw net losses of $159 million, narrower than the $575 million in losses recorded in the same period last year.
Net sales for the second quarter decreased 3.7 percent to $47.3 million, compared with $49.1 million recorded in the year-ago period.
Still, the retailer saw an improvement in gross margin, a measurement of earnings that takes production and service costs into consideration — gross margin improved to 46.4 percent in the second quarter, compared with 44.3 percent in the same period last year.
In-store sales were $32.6 million, up 2.2 percent from last year. Sales from phone and the dwr.com Web site decreased 17.5 percent to $10.4 million.
DWR also said it predicted that “in light of the challenging economic environment, the company believes revenue will be flat year over year.”