(Nov. 13)

New York City -- Stock Building Supply CEO Joe Appelmann shared details about the frustrations, challenges and successes of his company's tumultuous year during the 2009 Building and Infrastructure Conference in New York City yesterday.

Point number one, he said, times changed dramatically from the company's 14-year run of 28% annual growth, and the mental difficulty of dealing with that change stood out as a major corporate challenge.

"The first thing we faced was reality, and it really was a mindset change," Appelmann said during the event's panel discussion, titled "Lessons Learned from the Trenches: Buying and Selling Building and Infrastructure Companies in Today's Environment."

Stock's case history was particularly compelling to the mergers and acquisitions professionals assembled for the conference.

On May 6, the Gores Group, a private equity firm based in California, purchased 51% ownership of Stock from Wolseley. At the time the deal was signed, Stock was losing a million dollars a day, Appelmann told the conference attendees. The Raleigh, N.C.-based pro dealer entered Chapter 11 in May and emerged in June.

At the time, Appelmann called the re-emergence "a great day for the company." But painful decisions have been part of the process, including closings consolidations and job cuts. On May 15 alone, Stock announced 2,000 job cuts across the country.

He added that since the deal, pay count was cut by half, and 143 locations were closed. But on the positive side, the company hasn't had to borrow $1 since the deal, and under Gores Group, EBITDA performance is improving each month.

About the partnership with Gores Group, he added: "We needed a partner who would rebuild the confidence in the associate base," said Appelmann. "To say that they want to be in this space."

The effort through 2009 was compounded by the inability to communicate with employees during the deal's quiet periods and private negotiations. "The toughest piece of all of this is building the faith and the hope in your associates that there's going to be a better, brighter future," Appelmann said. "When you've locked down the communication for a period of that scale, as soon as they came clean on what they were going to do with the business, we wasted no time over communicating to our associates."

There were plenty of challenges with customers too, during the pre-bankruptcy period. The customer relationships were difficult, and grew more difficult when the company left markets.

"The customer story was: ‘Hey, we're going to find an owner,’ " he said.

Of particular concern were the production builders.

"You can't have us start a subdivision and not be there to complete it," he said. "That's why for us when the announcement was made March 6, (the exit of the business) we had to quickly find a deal. Every day was another day that we would lose revenue or customer support. So getting something done quickly was really, really important."

Appelmann began his career with Stock in 1988 and served as senior VP operations for the company under previous CEO Fenton Hord.

When it emerged from bankruptcy protection, the company pointed to 19 markets where it felt it the strongest prospects for growth: Washington, D.C.; Paradise, Pa.; Richmond, Va.; Raleigh-Durham, Charlotte and Winston-Salem/Greensboro, N.C.; Greenville and Columbia, S.C.; Atlanta; Austin, Amarillo, Houston, Lubbock and San Antonio, Texas; Albuquerque, N.M.; Salt Lake City and Southern Utah; Spokane/Northern Idaho; and Los Angeles.  

The Building and Infrastructure Conference was sponsored by Lincoln International and L.E.K. Consulting.