LUMBERYARDS

ProBuild Alum: Where are they now?

BY Brae Canlen

Robert Marchbank, the newly appointed CEO of ProBuild, is a seasoned executive who spent 19 years moving up the ranks at Ferguson Enterprises, where he eventually became CEO for the entire European operation. He takes on the top job at the largest LBM chain during the LBM’s worst downturn — in many ways, not an enviable position.

And to top things off, ProBuild is owned by a privately held company, Fidelity Capital, that has grown impatient with the continued loss of profits at the Denver-based chain. ProBuild was formed by bringing together some of the most successful companies in the business — Lanoga, Strober, Hope Lumber, United Building Supply — and the men who helped build them.

But Marchbank presides over a different group of executives now. With the exception of Ed Waite, executive VP local operations (but for many years, the president of Spenard Builders Supply in Alaska), no one on the 10-person executive team worked for one of ProBuild’s legacy companies.

So where did they all go?

Home Channel News tracked down a number of ProBuild’s former executives, many of whom have either started new businesses, or retired, or are waiting for their non-compete agreements to expire so they can start or join other LBM companies. Some individuals left the company on their own terms; others were forced out. In the end, it doesn’t really matter. The important thing is that most stayed within the industry, because as the saying goes, once you get sawdust in your veins …

• Paul Hylbert, CEO, Kodiak Building Partners
Paul Hylbert left the chief executive’s job at ProBuild in April 2011. Three months later, he announced he was joining a partnership called Boreas Advisors (comprised of former finance guys from ProBuild) “to look for opportunities in the housing and building products industry.” Although they started in the steel fabrication business, Hylbert and his investment crew — now called Kodiak Building Partners — are searching out building products companies that serve new residential, repair and remodeling, and commercial construction markets. 

• Bill Myrick
The July 2011 announcement that Bill Myrick was leaving ProBuild, after only 10 months as CEO, was the beginning of a three-month purge of high-level executives that included Jim Cavanaugh, executive VP operations, and Joe Todd, executive VP specialty distribution and pricing. Myrick, the former chief operating officer of 84 Lumber, has spent his entire career in the LBM business. He has no intention of leaving it, he said. “My non-compete expires in July, and I’ve been talking to some companies, as well as some private equity firms that are interested in getting into this space,” Myrick told Home Channel News. In the meantime, the 50-year-old has been traveling and visiting with his first two grandchildren, both born in the last year.  

 • Joe Todd, principal, Rosen Materials
Joe Todd had numerous titles at ProBuild — president of marketing development, head of national accounts, northeastern regional president — before he left in October 2011 as executive VP specialty distribution and pricing. That same month, he joined up with Drew Rosen of Rosen Materials, who had bought back some of his family’s drywall and steel framing yards from ProBuild and was expanding the chain. “We’ve done it mostly through greenfields and small acquisitions,” Todd told HCN, explaining the company’s 10 locations; Florida has eight outlets, and Chicago and Las Vegas each have one unit. Next on the horizon: “Colorado,” Todd said.

• Ben Phillips, president, Phillips Group
Phillips held several positions at ProBuild — executive VP as well as chairman — until Fidelity made him the chief operating officer of U.S. operations for its Devonshire Group, putting ProBuild under his domain. Phillips left Fidelity in May 2010. He now does operational and leadership management consulting under his own firm, the Phillips Group. “I also work for private equity groups that are doing acquisitions,” he told HCN. 

• George Finkenstaedt, principal, M & A Advisors
Finkenstaedt was a senior VP corporate development when he left ProBuild in 2008. Like his business partner, former executive VP and acting ProBuild CFO Bill Brakken, Finkenstaedt didn’t want to make a permanent move to ProBuild headquarters in Denver. So the two men have been putting together M&A deals ever since. They worked on the Harbert Lumber acquisition, a four-unit chain in Denver purchased by ProBuild, and the Edward Hines Lumber Co. merger with US LBM Holdings and BlackEagle Partners. “We’ve got two deals [pending] right now,” Finkenstaedt told HCN. “There are a lot more [investors] interested in the LBM sector than last year.”

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D.C. Hotline: NLBMDA releases policy agenda

BY HBSDEALER Staff

The National Lumber and Building Material Dealers Association 2011 National Policy Agenda hasn’t changed a lot since 2011. But there have been some twists.

For instance, the document’s Housing & Economic Policy sections declare an unchanged commitment to “support America’s housing recovery and restore housing as the cornerstone of our national economy.” New bullet points embrace support for the mortgage interest deduction and a belief that “any strategy to jump-start the economy must have a robust small business component that allows entrepreneurs to access capital and credit and retain existing cash flow from operations in order to grow and expand their enterprises.”

Other new principles emphasized this year are support for extending the current capital gains tax rate, reforming debit and credit card interchange swipe fees (representing “billions of dollars in unreasonable costs”), and guaranteeing an employer’s ability to participate in a fair union election.

NLMBDA chair and Zarsky Lumber executive VP Cally Coleman Fromme, wrote: “We look forward to working with Congress to review and roll back regulatory red tape.”

The association intends to press these principals during the NLBMDA Legislative Conference March 5 to 7 in Washington, D.C. For more information, visit dealer.org.

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Joint Center points to housing opportunities

BY Ken Clark

Orlando, Fla. — The bar charts and graphs told a complicated construction story that was interpreted with a certain degree of optimism by a Harvard economist.

Joint Center for Housing Studies of Harvard University economist Kermit Baker gave his presentation during the Presidents Council advisory board meeting held Wednesday here at the Orange County Convention Center.

There are many opinions about the health of the remodeling market, he said, pointing to a wide range of statistics. According to Baker, home improvement spending (rental and owner improvements as well as maintenance and repair) was a $280 billion market last year, reflecting very little growth over the last two years.

One positive factor is the old and under-invested rental stock in America today. "I think we’ll see a lot of growth there in the coming years," Baker said. 

Three strong opportunities for housing include sustainable (green) remodeling, rehabilitating distressed properties, and serving an aging population. Historically, the industry hasn’t done very well in these areas, Baker said.

When asked about housing starts forecasts for 2012 that call for 700,000 total starts in 2012 reflecting a 17% gain, Baker said it could happen.

"I think there’s a lot of strength in the multi-family market; I don’t think we’re seeing a lot of strength yet in the single-family side," he said. "We are beginning to see some pent-up demand that’s going to break loose at some point."

He referred to a colleague Chip Case, (the "Case" from the S&P Case-Shiller Home Price Index) who remarked: " ‘At some point in the housing cycle, there’s a whistle that only home buyers and dogs can hear,’ ” he said. "I don’t know when we’re going to hear that whistle. But some point in time we’re going to see a pretty strong uptick in activity." 

When prices and mortgage rates start inching up and consumers feel that they might miss out on a deal, that’s when he expects the growth story to begin in force. 

Baker is co-author of "Bigger Isn’t Necessarily Better," about efficiencies and best practices in the housing construction industry. Profits rise, but not necessarily efficiencies, he said.

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