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Masco posts first-quarter growth

BY Ken Clark

Taylor, Mich.-based Masco Corp. reported first-quarter net sales of $1.88 billion, up 3.9% from the same quarter last year.

Net income for the giant manufacturer of home improvement and building products was $47 million, up from $33 million in the prior-year quarter. 

"We continued to benefit from strong growth in North American new home construction," said Masco president and CEO Tim Wadhams. "Despite a harsher winter this year in regions of North America and Europe, we improved our performance in the first quarter compared with 2012."

Wadhams pointed to successful new products and programs while describing the cabinet segment as "heading in the right direction." 

Reducing costs also played a role in the company’s strong performance, he said.

"We continue to believe that new home construction will show strong growth in 2013, and repair and remodel activity will grow modestly, with big ticket items continuing to lag. While the continued weakness in the Eurozone remains a concern, we believe our ability to leverage the growth in new home construction, along with the actions we have taken over the past several years, including investing in our brands, reducing our cost structure and paying down debt, will continue to strengthen our business for the future," said Wadhams.

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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

 

A price index of lumber and panels used in actual construction for April 26, 2013

*Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.

Lumber: SPF lumber prices continued to drop, in many instances by double digits, as producers across Canada tried to find price levels that would draw more interest from buyers. Producers reported improved demand at the lower price levels. Southern Pine lumber producers sold prompt shipping volumes in some instances at discounts of $30 to $40 in an effort to control growing floor stocks of particular items. Where selling floor stocks was not as pressing, mills discounted less, willing to stack more lumber until prices rebound. Coastal species lumber mills became more aggressive in their approach, forcing market prices down in bigger chunks. The need to sell production varied, generating a broad range of mill quotes and selling levels. Price concessions and prompt shipments were the keys to successful sales for Inland species lumber. Even so, sales volumes remained light, as buyers remained on the sidelines. Light sales of Radiata Pine Mldg&Btr continued, as asking prices put it out of buyers’ reach in many cases. Sales of Ponderosa Pine Moulding and Shop lumber remained active, in spite of little participation from window plants. Limited supplies of Shop grades added to the market’s strength. Sales activity for Ponderosa Pine boards was quiet. Buyers remained on the sidelines, especially when it came to #2. Eastern White Pine producers reported steady demand and sales for Industrial. Select sales remained slow. Activity for ESLP was quiet as buyers remained on the sidelines. Western Red Cedar producers continued to sell moderate volumes at a steady pace, leaving prices very firm or edging higher. Producers catering to home center outlets generally reported better sales to those stores than to wholesalers and retailers.

Panels: OSB prices often changed several times in a day, as both producers and buyers searched for a trading level. The late arrival of spring was blamed for the market weakness, along with limited available credit and increased production. Slow trading left the Southern Pine plywood market quieter than it has been in weeks. Mill order files extending out into the middle of May allowed producers to hold prices while wholesalers discounted. Western Fir plywood mills aggressively lowered prices and accepted counters to move order files beyond a certain point. Buyers willing to purchase significant volumes took advantage of CDX items at levels discounted $30 to $40. After a quiet start, Canadian plywood buyers came to producers with offers that fit mills’ needs. The sales allowed producers to extend their order files into the middle of May and hold a better line on discounts. Western particleboard producers continued to experience varying degrees of improvement in their market. MDF sales in both the East and West remained strong.

For more on RISI, click here.

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Handy faces future as private distributor

BY Ken Clark

Back in March, Handy Hardware was a member-owned co-op intent on staying that way, even as it struggled through a reorganization under bankruptcy protection. 

But with a stroke of a pen, that all changed when it was announced last week that Greenwich, Conn.-based private equity firm Littlejohn Management Holdings would acquire Handy and run it as an independent distributor. 

Despite the loss of the co-op structure, it was the best result the members could have hoped for, according to Handy management.

“They wanted to see Handy remain independent,” said Morrie Aaron, president of MCA Financial Group, Handy’s financial advisory firm. “And it has. It’s still there to provide a consistent transparent, no-frills low-price model around which they can build their business.” 

According to Handy, if the deal is approved by the court, then Handy would emerge from bankruptcy this summer as a subsidiary of a Littlejohn portfolio company, while maintaining its Handy Hardware brand. 

The deal, which has the support of Handy’s board of directors, its member advisory committee and member equity committee, is expected to gain court approval in July 2013, Handy said.

According to Aaron, and subject to bankruptcy court approval, the deal includes Littlejohn refinancing or paying on the effective date: the $15 million in Debtor in Possession funds currently outstanding; roughly $8 million  pre-petition unsecured creditor claims; and the assumption of post-petition accounts payable, and investment of working capital. 

For that, Littlejohn takes Handy’s inventory, accounts receivable, brand and miscellaneous assets.

Mickey Schulte, VP marketing and purchasing, said the deal achieves the goal of exiting bankruptcy as an independent distribution company offering low prices and good service. “Our members will now become customers,” he said. “But that doesn’t change anything, they are still family to us.”

Handy described Littlejohn as a company with “substantial holdings in the wholesale distribution business and the hardware industry.” Its portfolio includes hardware products distributor Howard Berger Co. and Installed Building Products.

Aaron said that Howard Berger and Handy are expected to be sister companies, operating independently of each other. 

In a note to members alerting them of the agreement, Handy’s board of directors explained: "Current Handy member dealers will not have to contribute additional equity as part of the plan, and Littlejohn will also eliminate the 2% warehouse service fee upon closing."

Handy management intends to explain the changes to current Handy dealers at a series of town hall meetings in the coming weeks.

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