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Behind BMC’s run of acquisitions

A strategic key: growing and strengthening value-added offerings.

BY HBSDEALER Staff

When BMC Stock Holdings acquired Heritage One Door & Carpentry in September, President and CEO David Flitman provided some color: “Growing and strengthening our value-added offerings is a key part of our strategy.”

Heritage One is a supplier of pre-hung doors, millwork, hardware and finish carpentry services in Sacramento, Calif. It serves single-family and multi-family builders and contractors and was formed in 2012 from the combination of Gardemeyer Finish Carpentry and Sacramento A-1 Door.

The deal significantly increased the size and capabilities of BMC’s millwork, doors and windows business in Sacramento, and the surrounding markets. It also marked the company’s fourth completed acquisition in 2019.

Other recent acquisitions:

• In August, BMC acquired Kingston Lumber in Kingston, Wash.
• In February, BMC acquired Locust Lumber, in Charlotte, N.C.
• In January, BMC acquired Barefoot & Co., also in Charlotte, N.C.

Net sales for Heritage One for the 12 months ended June 30, were approximately $65 million. All four acquired companies have combined annual sales of nearly $200 million. (Financial terms of the deals were not released.)

Based in Raleigh, N.C., BMC had sales of nearly $3.7 billion in 2018. The company serves 45 metropolitan areas across 19 states, principally in the South and West regions.

“Enhancing our local scale, product offerings and value-added capabilities through tuck-in acquisitions is an important pillar of our strategy, and our pipeline of potential opportunities remains strong,” Flitman said, at the time of the company’s latest acquisition.

Growth through acquisition is just one part of the company’s strategy. Flitman shared with HBSDealer his thoughts on how BMC will maintain its edge by pointing to its four major initiatives: value (investing in innovation); excellence (driving efficiencies and enabling customer service), culture (including training and incentives), and growth (as shown above.)

HBSDealer asked Flitman for his thought’s on the next big thing pro dealers are going to have to be good at. In an e-mail interview, he answered:

“For BMC, its implementing technology solutions throughout the entire lifecycle of our customers’ projects — from initial quote and order entry, to delivery, final billing and post purchase service,” he said. “Leveraging technology ensures we operate efficiently internally, so we can deliver the products and service our customers need, exactly when they need them.”

Dave Flitman, president and CEO of BMC

Flitman offered the following example of technology helping the customer:

“When our customers log into their MyBMC Logistics Manager accounts, the online Order Tracker tool gives real-time order status and delivery tracking 24/7 from any device. Customers are coming to expect complete insight into their account and order activity, like they are accustomed to when making purchases in other aspects of their lives. We’re continuing to explore ways to enhance transparency and offer our customers immediate access to information. Our goal is to help them save time, money and frustration.”

As consumers are changing so are the company’s builder customers. At the same time, labor cost and availability are affecting housing affordability.

“Builders are shifting toward constructing homes with smaller square footages, while utilizing consolidated portfolios of repeatable open-concept floor plans,” Flitman said. “They are also becoming more receptive to exploring innovative construction methods to amplify these strategies.”

That bodes well for growth of the company’s Ready-Frame, pre-cut, smart-bundled framing solution, he said. In addition to quicker build cycles and smaller framing crews, the Ready-Frame system also brings to the table accuracy, and tightly framed walls that lead to improved insulation performance, he said. That’s “a major selling point to the current generation of new homebuyers.”

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