Do it Best IT exec to retire
Do it Best Corp. VP of Information Technology Mike Altendorf will retire effective Aug. 10, capping a 30-year career in home improvement. Altendorf joined Do it Best Corp. in 2009 as director of IT business planning and architecture and was appointed VP of IT seven months later.
Altendorf’s contributions to the co-op also include establishing a business intelligence platform, many new operational systems, and numerous upgrades to both software and hardware systems. Altendorf is especially proud of his team and enjoyed contributing to their growth. One example was the creation of Techapalooza, the co-op’s annual in-house, week-long technology conference that draws respected industry leaders and speakers from across the country.
The co-op expects to name Altendorf’s successor later this spring, and is conducting a search, both internally and externally.
Prior to joining Fort Wayne, Ind.-based Do it Best Corp., Altendorf served for more than 20 years at Ace Hardware, including five years as its vice president of IT. His first job as a high school student was at a lumberyard and hardware store in his native Chicago, where he worked for 10 years.
“I am so honored to have been able to help lead and grow our IT team at Do it Best Corp. over the last decade,” Altendorf said. “And I’m privileged to have spent so much of my career in the home improvement industry. From my very first experience in this industry as a teenager, I’ve learned how rewarding it is to help independently owned businesses grow and thrive. The industry includes so many wonderful family businesses and great people.”
In addition to his extensive professional experience, Altendorf has been an active as a volunteer and educator in the communities he’s called home. He served on the faculty at Northern Illinois University prior to relocating to Fort Wayne, where he continues to serve on a professional advisory board for the department of computer science at Purdue University Fort Wayne and the industry advisory board for computer science at the University of Saint Francis; he is also a member of the board of advisors for Carmel, IN-based Eleven Fifty Academy, a nonprofit organization focused on computer-programming training. He recently completed his term as board chair with the Northeast Indiana Innovation Center. He also serves on the Parkview Health System Foundation board and has volunteered with Big Brothers Big Sisters of Northeast Indiana for several years.
“Mike has been the driving force behind a period of tremendous growth with our IT team – an era that has had a profoundly positive impact on our members,” explained Do it Best Corp. President and CEO Dan Starr. “On behalf of our members and fellow team members, we are incredibly grateful to Mike for his years of service and commitment to making this co-op and his community a better place.”
Taking stock of BlueLinx
BlueLinx, the Atlanta-based building products distributor, is acquiring wholesale distributor Cedar Creek in a $413 million deal. The combined companies will offer more than 50,000 branded and private label SKUs, as well as a distribution footprint of 70 national locations servicing 40 states.
To say Wall Street liked the deal is an understatement. The stock price, which had been dramatically outperforming the industry for the past year, skyrocketed nearly 80% on the day of the announcement — as well as another 20% on the day after.
Matt Zielenski, an industry analyst with the Cleveland-based Freedonia Group research firm, explained why he likes the deal and its timing.
“This transaction greatly expands BlueLinx’s physical presence in the building materials distribution market and makes BlueLinx a more formidable competitor nationwide,” Zielenski said, noting that construction activity in the United States has demonstrated steady growth.
The acquisition positions BlueLinx in the right spot for capitalizing on an increased demand for building materials, according to Zielenski.
“Housing starts are expected to rise during the remainder of 2018, especially now that the weather will be more favorable in the United States,” Zielenski said. “Additionally, as rebuilding activity continues in Florida and Texas in the aftermath of hurricanes Harvey and Irma and more consumers show an interest in home improvement projects, contractors will be purchasing more plywood, framing lumber, insulation, siding and other building materials. The combined operations of BlueLinx and Cedar Creek can supply builders and contractors with most, if not all, of these products.”
Seeing double: Acquisition doubles footprint
It was announced March 12 that BlueLinx would acquire Cedar Creek, the Oklahoma City-based wholesale lumber and building materials distributor, from the portfolio company of Charlesbank Capital Partners. In the $413 million deal, BlueLinx is paying about $345 million in cash and approximately $68 million in the agreed value of capital leases for Cedar Creek. BlueLinx said the transaction has been unanimously approved by its board of directors and is expected to close by May.
In addition to its combined footprint of 70 locations, the combined companies will also service nearly 15,000 national, regional and local dealers; specialty distributors; national home center chains; industrial customers; and manufactured housing customers. The combined revenue of both companies was $3.2 billion in 2017 — BlueLinx had sales of $1.82 billion through 39 locations, while Cedar Creek generated revenue of $1.42 billion through 31 locations.
“Cedar Creek’s commitment to organic growth and its customers as well as its track record of successful acquisitions make it an ideal partner for BlueLinx,” said Mitch Lewis, president and CEO of BlueLinx. “The combination will significantly enhance our product portfolio by providing greater breadth and depth of building products and services for our customers and suppliers across our markets.”
“This transaction will create a leading U.S. wholesale distributor of building and industrial products and significantly enhance the value that we can deliver to our customers, as well as our supplier partners and end-market consumers,” Lewis said.
Lewis will serve as CEO of the new company while Cedar Creek CEO Alex Averitt will become COO of the new BlueLinx. Averitt, who assumed the role of Cedar Creek CEO in 2017, has 20 years of experience in the sector.
BlueLinx demonstrated that it was in a strong position prior to the acquisition. On March 1, the company reported net sales of $433.6 million for the fourth quarter of 2017, up 2.8% from net sales of $421.7 million in the fourth quarter of 2016. BlueLinx reported a net income of $53.5 million for the quarter, up from $10.4 million in the fourth quarter a year ago. For the full year, BlueLinx posted a net income of $63 million (up 34%).
BlueLinx also recently paid off the remaining mortgage principal of approximately $98 million. The payment was funded through long-term sale leaseback transactions on four properties owned by the company, which provided $110 million in aggregate sale proceeds, the company said.
“These results, coupled with the four sale leaseback transactions we completed on Jan. 10, position us well to capitalize on our anticipated continued strength in the markets we serve,” Lewis said.
Despite the drop-off in sales for the year as a whole — sales fell 3.5% to $1.82 billion in 2017 from net sales of $1.88 billion in 2016 — Susan O’Farrell, BlueLinx senior VP and CFO, described 2017 as “exceptional for BlueLinx.”
“Our continued focus on deleveraging the business led to one of the best years in company history as we improved our financial results and significantly reduced our debt,” O’Farrell said.
For BXC, an attractive deal
In a presentation to analysts, BlueLinx pointed to a half-dozen reasons to be bullish on the Cedar Creek acquisition. These included:
- Creation of a company with greater breadth and depth of building products and services;
- Expansion of geographic reach and local market presence in the Northeast, Midwest and South;
- Strong customer diversification (no single customer represents more than 5% of combined sales);
- Timing is right to grow with the housing recovery;
- Cost savings anticipated of at least $50 million run-rate annually to be achieved within 18 months; and
- Improved financial flexibility to support growth.
MRS expands James Hardie offering
Northeastern wholesale building materials distributor Manufacturers Reserve Supply announced it is accepting orders for the full line of James Hardie products, including lap and panel siding, shingle, trim and soffit products, and backer board.
Irvington, N.J.-based MRS serves New Jersey, New York, Pennsylvania, Delaware and Connecticut. The company says its products are delivered in special packaging that facilitates their arrival in “pristine condition, ready for installation.”
“Our partnership with the leader in fiber cement siding allows us to maintain the high level of excellence our customers have come to expect,” said Tina Breen, general sales manager of MRS. “They know they’re getting extremely durable, authentically designed products delivered on time and in perfect condition.”
The James Hardie siding offering can be ordered primed or in 25 shades of James Hardie ColorPlus Technology colors. ColorPlus Technology applies consistent, multiple coats of finish under controlled factory conditions.
“We’ve always been committed to raising the bar for the building products industry, which is why we’re thrilled to strengthen our partnership with MRS,” said Andrew Bella, Northeast regional sales manager for James Hardie. “They help us set the standard even higher and make customers’ jobs easier by delivering premium products and allowing them to focus on the installation at hand.”
MRS is family-owned and -operated since 1931, specializing in distribution of roofing, siding, trim and decking materials.