Builders FirstSource to Buy Cornerstone Building Alliance for $400 million

Cornerstone Alliance is the largest independently operated supplier of building materials in Arizona.
Builders FirstSource 1Q 2022 earnings

Builders FirstSource Inc. (Nasdaq: BLDR), Dallas, announced Monday that it has agreed to buy Cornerstone Building Alliance SW LLC for approximately $400 million, subject to adjustments.

More than 300 Cornerstone Alliance employees will be joining Builders FirstSource, the company said in in its press release, including True Carr, managing partner of Alliance.

Alliance is the largest independently operated supplier of building materials in Arizona, primarily serving the greater Phoenix, Tucson, and Prescott Valley metropolitan areas. Cornerstone reported approximately $330 million in sales as of April 2021.

The deal is expected to be accretive to Builders FirstSource’s adjusted earnings per share in 2021 and will be funded through a combination of existing cash and credit facilities. It’s slated to close around the end of the second quarter of 2021, subject to customary closing conditions and approvals.

Builders FirstSource distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other building products. The lumber and building materials (LBM) sector has continued its hot streak from last year when the pandemic led to a marked increase in residential construction projects and new home builds. According to the most recent quarterly MDM-Baird Distribution Survey, LBM was up 9.9% in the first quarter.

Earlier this month, Builders FirstSource announced it has acquired Michigan-based distributor John’s Lumber.

“This acquisition is aligned with our strategy of investing organically and through M&A, to shift our portfolio toward high-value and faster-growth categories,” said Dave Flitman, President and CEO of Builders FirstSource. “Alliance’s service area represents the third largest single-family market and includes the fastest growing county, Maricopa, in the country. Alliance’s geographic footprint represents an excellent strategic fit, with a limited overlap of our existing geographic coverage that enables us to expand our product lines across various end markets. Building upon the success of the BMC merger, we will be opportunistic in pursuing value-enhancing investments, such as Alliance, that align with our culture, value-added product focus, and high return thresholds.

“True Carr has built a fantastic company with a very strong leadership team and a culture of growth and outstanding customer service that aligns well with the Builders FirstSource culture.”

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