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Nebraska’s Builder in Chief: Myron Andersen

BY HBSDEALER Staff

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Myron Andersen established Builders lumberyard as a 27-year-old with three other employees and first-year sales of $150,000. That was more than 35 years ago. A lot has happened over the years, including recognition as the 2013 Tools of the Trade honoree — an award for a hardware and home improvement store that champions innovation and best practices across its operation to generate results and connect with customers.

Kearney, Neb.-based Builders, a Do it Best member, operates in the parallel universes of LBM and DIY, with a showroom and a truss plant thrown into the mix. It’s a business model that’s evolved over time. “We’re an opportunistic type of company,” Andersen said. “We are always looking at our market for areas where we can succeed.” He spoke to HCN from his office in Kearney.

 

HCN: How did it all begin?

Andersen: “Back in 1977, we didn’t have a lot of money and we didn’t have a lot of inventory. We had a World War II Army surplus forklift and a 1950 Chevy Farm truck with a hoist on it. We never shut the truck off because we were afraid it wouldn’t come back on again.”

 

HCN: How did you expand into DIY and home improvement?

Andersen: About 1982, Home Depot was just getting started down in Atlanta, and they were one of the real success stories in the industry. So we said: “You know, we could do something like that, only on a smaller scale, and do it right here in Central Nebraska.” So we built a 60,000-sq.-ft. warehouse store. The original design was about 75% retail and 25% pro.

 

HCN: Was it hard venturing into the retail side?

Andersen: We opened in 1985 right in the middle of the farm crisis and damn near went broke. But we struggled through it and continued to grow. And it’s been steady growth ever since. We had $72 million in sales this year.

 

HCN: What got you through the tough times?

Andersen: We probably succeeded despite ourselves. We weren’t sure that we were going to make it through the 1980s. It was a real team effort. We had employees say “I’ll hold my check.“ We had vendors who gave us extended dating. We had a bank that bent over backward to work with us. Mostly it was people internally who stepped up to the plate and worked hard for us to survive.

 

HCN: What’s your focus today?

Andersen: Our customers want a lot of things, but mostly they want their orders on time, in full, delivered to the job site. And a lot of other stuff comes after that. Many of our customers don’t know who I am, and don’t know who [general manager] Chris [Borrego] is, but they know the truck driver. And he’s the best representative we have for our company.

 

HCN: A lot of independents focus on one or the other — pro or homeowner. How do you do both?

Andersen: The diversification makes us a better company. I also think it’s a blessing and a curse, because we are a slave to many different masters. I’d like to tell you we do it well all the time, but we don’t. Our customers are constantly evolving, so the services we provide are constantly changing. He’s a totally different breed than 10 years ago, and he’ll be totally different five years from now. And if you think the industry has changed a lot in the last five years, you haven’t seen anything yet.

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Harley-Davidson rides into home improvement

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Craftsman and Harley-Davidson have teamed to produce co-branded, special-edition tool storage products available now in Sears stores and online.

As part of the partnership, Craftsman

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For Handy Hardware, a sale and a sea change

BY HBSDEALER Staff

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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 in April when it was announced 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.

“[Members] 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, the deal includes Littlejohn payments of $15 million in Debtor in Possession funds, and roughly another $15 million in claims and payment to unsecured creditors, working capital and other costs. 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.”

The 1,300-member regional co-op filed for Chapter 11 bankruptcy in January.

A major cause of the bankruptcy was an ill-fated attempt to expand into the Southeast, an effort that began to take shape in 2008 as the housing and home improvement markets and the general economy hit hard times.

A groundbreaking of a new, $20 million state-of-the-art distribution center took place in 2009, an investment the co-op described at the time as a growth vehicle. But Handy incurred more than $30 million of debt in connection with the building and operation of the facility, due to operational challenges and the economic environment at the time of opening. It closed Dec. 31, 2013.

For members, the damage meant that what was once $27 million in member equity in Class A and Class B shares was wiped out, according to Handy management.

Under Littlejohn, the Handy story will continue, albeit under a completely different structure. 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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