The HBSDealer-US LBM Q&A
After bursting onto the scene in 2010, US LBM quickly won honors as “one of the fastest-growing companies” in the building materials universe. More than five years later, it still holds that distinction.
The company has been in the headlines regularly in 2015 — mostly by making acquisitions of lumberyard companies, but also by being involved in a huge private equity deal. In late July, Kelso & Company entered an agreement to purchase a majority of the equity interests in Green Bay, Wisconsin-based US LBM Holdings. BlackEagle Partners LLC and certain members of US LBM will be investors alongside Kelso.
HBSDealer conducted the following email interview with US LBM CEO L.T. Gibson, who appeared on the cover of our Jan. 10, 2011, issue (above), along with the headline: “L.T. Gibson and US LBM Holdings are looking for growth.”
HBSDealer: In what ways will the recent deal change US LBM, make it stronger, or increase the speed with which it makes acquisitions?
Gibson: There are several reasons US LBM will be even stronger after partnering with Kelso. The more obvious, is from a balance-sheet perspective and access to new and cheaper sources of funds. The other is more similar to some of our acquisitions, where we strive to learn, get better and grow every day. Each new partner brings their own experiences and knowledge. Our team digests this input and implements the programs and ideas that help us get better, faster, more reliable, etc. I see a lot of opportunities to learn from the Kelso team as well as their other companies.
HBSDealer: What are your general thoughts on consolidations in the lumberyard industry?
Gibson: Getting bigger for the sake of getting bigger has never made sense to me. There has to be a compelling reason the two companies will benefit from being together versus apart. As long as that's the case, I think these consolidations have the opportunity to be successful.
HBSDealer: Will the industry be highly fragmented for a long, long time?
Gibson: I believe the pace of change in our industry will only increase. Those focused on the right things will succeed regardless of model or size.
HBSDealer: Should the independent lumberyard be concerned by major mergers in the LBM industry?
Gibson: There are advantages to both models, the independents versus national companies. As long as you understand your strengths and are the best in your local market, you have a future.
HBSDealer: There are a lot of companies on acquisition streaks in the LBM industry. How is US LBM going about it differently (and more successfully) than others?
Gibson: We are very disciplined in our approach. We want companies that are the best at what they do, companies that make us stronger and we can benefit each other. We love product and customer diversity, innovation, game changers, dreamers, teams that want to be the best at what they do. When we find the right partners, we have proven we can do some amazing things together because we ignore politics and the old top-down structure. We want to push the envelope to see how fast we can grow or how good we can get and how fast we can get there.
HBSDealer: To what degree would you agree that the key to growth is combining the best of the independent with the buying power of the national company?
Gibson: Our model is simply how to get the most out of each opportunity. Much is local and some is national. If you can remove the fears of trying to have a one-size-fits-all model and really focus on just getting better, it can be very powerful. That's what we are about. We take the best practices and share them across our group while keeping a local feel and leveraging the size and scale benefit. While it sounds simple, and can be, you have to create a culture where those ideas can thrive without changing the things that have made each of our group so successful over the years.
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