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Aggressive Acquisition Strategy Grows Builders FirstSource, Inc.’s (BLDR) Topline, National Ranking

Shares of Dallas-based Builders FirstSource spiked to a new 52-week high in today’s morning trade following yesterday’s announcement that it will acquire privately held lumber supplier ProBuild for $1.63 billion in cash.

BLDR manufactures professional-grade building materials and products for U.S. homebuilders and remodelers. Through its 56 distribution centers and 56 manufacturing facilities across nine southeastern states, the building materials company produces a variety of products including decking, stairs, cabinets, shelving, siding and insulation, windows, interior and exterior doors, mirrors, lumber and more.

Based on 2013 sales figures, ProSales Magazine ranks BLDR as the nation’s third-largest building products provider. The company employs an aggressive acquisition strategy, and since its formation in the late 1990s has acquired more than 26 companies that contribute to the company’s growth.

Despite weaker-than-expected new home construction in 2014, BLDR increased its topline and expanded its product offering and customer base.

The acquisitions drove Q4 2014 revenues 7.5% higher to $397 million while fiscal full-year sales increased 7.7% to $1.6 billion. Excluding the impact of these acquisitions, Q4 revenues increased 3.0% while full-year sales increased 5.8%. Full-year sales volume grew 7.9% before a 2.1% negative impact of commodity price deflation on total sales.

In the second half of 2014 BLDR completed five acquisitions and opened a new distribution facility in Houston. The upcoming acquisition of ProBuild, a company with sales of $4.5 billion in 2014, is expected to close in the second half of 2015 and be immediately accretive to BLDR’s earnings.

BLDR CEO Floyd Sherman explained how the company plans to continue this momentum moving forward.

“Our outlook is for a steady recovery in the housing market due to factors such as continued job growth, favorable mortgage rates and lending guidelines that appear to be easing. As the economy expands and the housing market moves back towards a stronger level of activity, our focus will remain on profitably growing our revenues while continuing to look for ways to gain share, either organically or through acquisitions, and improve our operating margins,” Sherman stated in BLDR’s Q4/FY14 earnings release.

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