NLBMDA applauds restoration of higher FHA loan limits
The National Lumber and Building Material Dealers Association (NLBMDA) applauded Congress for reinstating the higher conforming loan limits for the Federal Housing Administration (FHA) through 2013, helping reduce uncertainty for an already fragile housing market.
By increasing the loan limits guaranteed by FHA to $729,750, Congress has taken a step to stabilize home values while enabling creditworthy consumers to get home loans with the best mortgage rates, lowest fees and better down payment requirements, the NLBMDA said.
"We thank the Republican and Democratic leadership in Congress for backing legislation that supports the recovering housing market, creates jobs, and allows access to affordable and reliable financing to responsible home buyers and owners," said Michael O’Brien, NLBMDA president and CEO.
Despite the action by Congress on FHA loans, the lower Fannie Mae and Freddie Mac conforming loan limits of $629,500, which went into effect Oct. 1, remain in place. The NLBMDA said it will continue its efforts in restoring the higher conforming loan limits for Fannie Mae and Freddie Mac.
Former Wolseley CEO to lead Morrison Supply
Morrison Supply Co., the fourth-largest distributor of plumbing and HVAC supplies in the United States, has sold a majority share to private equity firm Advent International.
Founded in 1917, Morrison is now the largest distributor of plumbing supplies in the southwestern United States. The company has 77 branches and showrooms, located in Texas, New Mexico, Oklahoma, Louisiana, Arkansas and Kansas. Morrison has several lines of business, including plumbing, heating, ventilation & air conditioning (HVAC), industrial pipes, valves & fittings, oil & gas and waterworks.
Morrison Supply intends to use the new funding to expand its presence in the plumbing and HVAC supply market, particularly in its current market. Chip Hornsby, the former CEO of Wolseley, will join the company as CEO and will lead Morrison in the next phase of its expansion.
Wolseley is the parent company of Ferguson Enterprises, one of the largest plumbing and HVAC supplier in the United States and a competitor of Morrison Supply.
“Morrison’s core strength is the quality of its people,” Hornsby said. “And we believe this transaction will be very positive for our employees, as the company’s expansion should lead to new and exciting opportunities for our people and their families. Equally, our vendor partners and customers stand to gain from our growth and financial strength.”
Scott Sangalli, Morrison’s former CEO and principal owner for the past 25 years, will continue as an investor in the company. Darrell Hawkins and Charlie Allen will continue in their roles as president and chief financial officer, respectively. Additionally, they will remain investors in the company and deeply committed to its ongoing success and expansion.
Advent operating partner Wes Clark will join the company as non-executive chairman. Clark is the former president and chief operating officer of W.W. Grainger, a leading $8 billion distributor of industrial maintenance and repair supplies. He also served as CEO of Morton Salt, the largest U.S. producer and distributor of sodium derivatives.
Advent has been an active investor in building products, distribution and construction supply for more than 20 years and has invested in more than 20 companies in these sectors. In its most recent transaction in the space, Advent acquired Bradco Supply in 2008 and subsequently merged it with ABC Supply in 2010 to create the largest U.S. distributor of roofing supplies and complementary exterior building materials. Since its founding in 1984, Advent has raised $26 billion in private equity capital and, through its buyout programs, has invested in more than 270 companies valued at more than $60 billion in 35 countries.
Beacon Roofing posts record sales for quarter, year
Beacon Roofing Supply, the Peabody, Mass., distributor of roofing and other housing exterior materials, posted net sales of $575.6 million for its fourth fiscal quarter, a 19.3% rise over sales of $482.6 million in the same quarter last year.
Existing market (organic) sales, which exclude branches acquired after the beginning of last year’s fourth quarter, increased 15.6%. In existing markets, residential and non-residential roofing product sales increased 25.7% and 10.8%, respectively, while complementary product sales declined only 1.0%. Fourth-quarter roofing sales this year were favorably impacted by higher average selling prices and by increased business in several markets that experienced significant spring hail storms.
Net income for the fourth quarter, which ended Sept. 30, was $31.3 million, which included a one-time income tax benefit of $5.1 million. This compares with $16.9 million in 2010, an improvement of 85.3%. This year’s fourth-quarter net income, even prior to the tax benefit, represented a record for any prior quarter, according to the company.
Year-end results showed a 12.9% increase in sales to a record $1.82 billion in 2011 from $1.61 billion in 2010. Existing market sales increased 9.3%. The annual existing market results exclude branches acquired during 2011 and 2010. In existing markets, residential and non-residential roofing product sales were up strongly at 8.8% and 12.8%, respectively, while complementary product sales increased 1.7%. Annual roofing sales this year were also impacted favorably by higher selling prices and repair work demand caused by spring hail storms.
Net income was $59.2 million compared with $34.5 million in 2010, an increase of 71.5%.
Paul Isabella, Beacon’s president and CEO, noted in a prepared statement that the company had set records for both its quarter and fiscal-year results. “Most of our regions achieved double-digit sales percentage increases in the fourth quarter and substantially exceeded our fourth-quarter and full-year sales and income expectations,” Isabella said. “Once again both our residential and non-residential product sales showed double-digit percentage increases for the quarter. Our complementary product sales were down only 1%. Our roofing businesses have benefited both from a pick-up in volume, including some storm business, and from industry-wide price increases mostly during the second half of the year. Our commercial business has remained consistently strong throughout this year. We were able to use our strong financial position to increase inventories ahead of some vendor price increases, which enabled us to achieve gross margins that were significantly above last year’s rates.
“We continued to exercise prudent expense controls to further improve our operating margin and our cash holdings have increased since last year even after this year’s third-quarter purchase of Enercon Products. We continue to aggressively seek quality companies that fit our target acquisition profile, such as Denver-based Fowler & Peth acquired in the first quarter of fiscal 2012. We believe there are many favorable long-term growth factors in our industry, so we expect to continue expanding our geographic reach in 2012."