How the $147 Billion Lumber Distribution Industry is Changing

October 20th, 2015 by Casey Flores

Within three years, the lumber and building materials (LBM) distribution channel will see a major increase in revenue.

That’s according to a new report by Principia, a research and consulting partner focused on the building materials and construction industry.

The report says the industry will see an increase from $147 billion in 2014 to $173 billion by 2017, which represents a net $26 billion increase. The total gross margin pool is projected to grow from $34 billion to over $40 billion over the same time period, a $6 billion increase and an average annual growth rate of 5 percent.

“Overall, 2014 was a noteworthy year for consolidation as large companies just keep getting bigger,” a company press release reads. “Acquisitions and mergers that took place in 2014 occurred mostly to the east of the Mississippi River. There are no signs showing that this trend will slow, as the market is ripe for mergers and acquisitions.”

Principia is predicting that after years of good performance since the economic downturn, low-interest rates and banks being willing to lend, the environment is receptive for both buyers and sellers. Overall, there have been more than 50 major acquisitions in the industry in 2014-2015 with some of the largest recent ones as follows:

  • ABC Supply acquired Norandex in the fall of 2015;
  • Builders FirstSource acquired ProBuild;
  • Building Materials Holding Company (BMC) and Stock Building Supply merged to create third largest pro dealer; and
  • US LBM made 11 acquisitions in 2014 and has grown significantly since 2009.

More information from the report is available here.

Tags: , ,

Leave Comment