Quanex acquires Woodcraft Industries
Quanex Building Products has agreed to acquire Woodcraft Industries, a supplier of doors and components to leading original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry, for a pricetag of $248.5 million.
"Quanex's growth strategy is based, in part, on highly-complementary acquisitions that contribute proven technologies, products and enhanced scale," said Quanex chairman, president and CEO Bill Griffiths. "Woodcraft is an ideal strategic and financial fit in this regard. It is, first and foremost, a well-run company that adds $3 billion to our addressable market. Woodcraft's breadth of products and stellar customer relationships are unmatched in the industry and also represent uniquely positive and durable attributes. Woodcraft's business model is also very similar to our operations in that they serve large OEM customers. Finally, we expect the acquisition will deliver clear financial benefits to Quanex shareholders as we continue to prudently build the company for sustained profitability."
Woodcraft has been providing hardwood and engineered wood doors and components to kitchen and bath cabinet manufacturers in North America for more than 70 years.
It maintains 13 production facilities and four distribution locations throughout the U.S., Canada and Mexico.
Woodcraft will maintain its current management structure, led by president Dale Herbst, from its St. Cloud, Minnesota headquarters as a wholly-owned subsidiary of Quanex.
"Upon closing, the transaction will represent the best of both worlds: a continuation of Woodcraft's craftsmanship and unrelenting customer focus combined with access to Quanex's resources in pursuit of new opportunities in the growing cabinet industry," said Herbst. "More generally, it was important that we align with an organization that shares our values and that is committed to expanded opportunities for our employees and service excellence for our customers. Quanex is an ideal partner for us moving forward, and we look forward to a bright future together."
Woodcraft is expected to add $240 million in revenues at 13% EBITDA margins to Quanex's portfolio.
The all-cash transaction is expected to close in the fourth quarter of this year.
Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Aug. 28, 2015
*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: Negative global economic news and the reaction to it by stock markets sent some SPF lumber buyers into hiding early in the week. Most futures contracts also declined early, further eroding confidence in the cash market. Southern Pine producers often lowered prices considerably to sell surpluses to customers. Several producers reported a “quiet” sales week overall, which contributed to buildups and forced them to manage those inventories. Serious efforts to cut back production failed to materialize. Coastal species mills continued to lower prices both moderately and significantly to sell volumes. Much of the deeper discounting occurred in low grades, where buildups persisted. Inland lumber saw further price declines this week, equating to an average of about $10 per item. Most stud prices remained weak. Mills often exhibited the greatest urgency to sell carload volumes in the SPF market. An increase in supplies of Radiata Pine from Chile has put additional pressure on the market. Spotty carloads offered quietly by mills appeared at prices well below published levels. Ponderosa Pine and Radiata Pine prices from #2 Shop on down made adjustments in recent weeks, some of which were significant. Mills are processing Ponderosa Pine logs that create tight markets for both #2 Common and Selects. The higher quality material simply cannot be produced from the majority of logs being brought to mills. ESLP boards are sustaining slightly better market strength than Ponderosa. Inland Cedar remains very solid and is the only real gainer among western species this year. Eastern White Pine is not robust, but prices of most grades have been relatively stable. Western Red Cedar producers exhibited little concern over the slower August pace, noting that historically the rate of sales in August can be dull.
Panels: OSB activity was mixed this week, while some markets went into a digestive mode. The exception was Western Canada, where mills and distributors reported strident price gains and decent sales. Order files vary broadly by producer, but generally fall into mid-September. Southern Pine plywood mills experienced enough demand to keep raising rated sheathing prices, particularly thick panels. Order files often remained in the weeks of September 7 and 14, with a few extending into the latter half of that month. Western Fir plywood producers sold decent volumes and bumped quotes higher as a result. Buyers reported some mills easing off their higher quotes toward the end of the week to sell quicker shipping items into a two-tiered market. August was a solid month for sales, better than expected according to a number of sources in MDF and particleboard markets. Mill order files remained at arm’s length, sometimes longer. Canadian plywood markets slogged through another slow week of tepid sales and prices sideways from last Friday’s Crow’s net level. Producers said they are listening to counters on volume, but no one is looking for a position.
For more on RISI, click here.
From ProBuild to PRO Group
The Denver-based PRO Group hired Jeff Styerwalt as merchandise manager. Styerwalt’s responsibilities include Housewares, Lawn and Garden, Paint and Sundries, and Commodities.
He will begin to travel to a few distributor and industry events in the coming weeks and will be at the annual Executive Planning Conference Nov. 17-19 at the Marriott Marco Island, Florida.
"I am very excited to join the PRO team,” said Styerwalt. “My career has been focused on helping independents succeed by partnering with manufacturers to provide value added products and programs. I am looking forward to continuing to fight for the success of independent retailers and wholesalers."
According to Brendan Sullivan, PRO group director of merchandising, Styerwalt’s experience in purchasing, marketing and sales to independent retail lumberyards will be “a great addition” to PRO Group.
Styerwalt was a senior buyer at ProBuild, purchasing building material products for 110 lumberyards. He has an extensive career working with and supporting independent lumber retailers throughout the United States, including Temple-Inland, Boise Cascade and MacMillan Bloedel. Styerwalt is originally from Peoria, Illinois.