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June 2024 #16299 Page #72
CS150 Reveals Biggest Revenue Drops at Dealers Since the Great Recession
Craig Webb President, Webb Analytics
Y
ou have to go back to the Great Recession 15 years ago to find as many LBM dealers reporting sales declines as we had in 2023. But the reasons are far different,and so are the consequences.
Three-quarters of the companies constituting the 2024 Construction Supply 150 reported revenue drops last year. The entire CS150’s U.S. operations sold $382.03 billion worth of goods. That’s 5.7% less than the year before. Reports haven’t been this bad since 2007 to 2009, when 84% to 93% of the companies in the ProSales 100 said sales had fallen year over year. However, it’s wrong to read these numbers as reason for panic. The Great Recession was a deadly cocktail of toxic mortgages and homebuilding mania that ultimately led housing starts to plunge 75%. The drop in 2023 was more like a steep roller-coaster dip that came after a climb to unsustainable heights. And while 2023’s ride has been sobering, dealers have emerged safe—and optimistic for the future. On average, CS150 members predicted sales would rise 4.4% this year. How did we get on this roller coaster? In a word: Lumber.
In 2021, unprecedented rises in lumber prices caused the members of that year’s Construction Supply 150 to report a 19.2% gain in revenue. The next year, even with prices by year-end down more than 60% from where they were at the start, the CS150 membership posted a gain of 9.5%. (Every year, the CS150 membership changes a bit, so you can only compare each group’s numbers with what they did the previous year.) In 2023, the average price for framing lumber fell roughly 48%. Dealers that rely heavily on the product—both as a commodity and as part of the cost of truss and panel manufacturing—got mauled. For instance, at Builders FirstSource, revenues from sales of lumber and sheet goods dropped nearly in half, accounting for close to 70% of the company’s revenue decline in 2023. Even big boxes suffered: The decline in lumber sales amounted to 36% of The Home Depot’s total sales drop, while at Lowe’s it can be said that lumber’s drop produced 25% of its overall decrease. The Lumber Effect can be seen when you break down the CS150 membership by type of company. Sales at lumberyards with manufacturing operations went down 22.7%, while at lumberyards without manufacturing the drop was 12.8%. Hardware stores and home centers are much less dependent on lumber (aside from The Home Depot and Lowe’s), but they still reported 4.3% less revenue. Only specialty dealers—companies that primarily sell products like roofing and siding, with very little lumber—saw a sales increase. They rose 5.1%. Continued next page
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