Service star: even after six years of explosive growth that established Bradco Supply as a nationwide leader in categories including roofing and siding, the company maintains the feel of a small family business and remains focused on building re

Service star: even after six years of explosive growth that established Bradco Supply as a nationwide leader in categories including roofing and siding, the company maintains the feel of a small family business and remains focused on building relationships with customers and staff

Pat Curry

Money was tight when Rob Kornahrens started Advanced Roofing in 1983. He had already borrowed $15,000 from his father and few other avenues were open for the Fort Lauderdale, Fla., entrepreneur. So he turned to Avenel, N.J.-based Bradco Supply Corp., a major supplier whose West Palm Beach branch he had worked with at his former employer. “They extended me a line of credit,” says Kornahrens, whose company is now a major South Florida commercial roofer and expects to do more than $30 million in sales in 2004. “I’ve never forgotten that.” It’s one of the reasons that, more than 20 years later, Bradco is still his primary supplier.

Family owned and operated since the day CEO Barry Segal opened the doors in 1966, Bradco Supply has retained that feeling of a small family business, despite six years of explosive growth that now have it poised to establish a nationwide presence as a specialty distributor in categories including roofing and siding. Through 109 locations in 26 states, Bradco serves commercial roofers, replacement roofing contractors, and new-home builders with an extensive line of roofing products, tools, supplies, and accessories; one of the nation’s largest tapered insulation departments; and an expanding group of supplemental product lines, including siding, windows, doors, decking, millwork, cabinetry, and countertops.

While some building materials suppliers have adapted their business models to compete with big-box retailers, Bradco has shifted its focus to grow the company with a pro-oriented specialty distribution business model. Ten years ago, commercial roofing was its bread and butter, but over time, a dragging economy led to a drop-off in commercial construction. Plus, Bradco already had significant share of the market in commercial roofing supply where they operated; there was little room to grow. Barry Segal’s son and company president Brad Segal studied sales at the company’s roughly four dozen branches and saw that the locations that focused on residential construction had the highest numbers.

The residential market offered growth opportunities for several reasons. First and most simply, there are more houses going up than commercial units; home building accounts for about two-thirds of the nation’s construction, according to NAHB. Second, the supplier market on the residential side is more fragmented than in the commercial segment, so there’s plenty of room for growth. Focusing on the segment involved opening branches in high-growth housing markets and offering a wide variety of shingles and metal roofing, as well as siding and windows.

While embarked on an aggressive campaign to add at least eight new branches a year–and to Leverage that exponential growth to reach $2 billion in sales within seven years–Bradco still is committed to remembering where it came from and remaining true to the company’s core values. At the same time, the company is constantly looking ahead, seeking new markets and product lines and making strategic investments in operations and technology.

Core Values

Even with almost 2,000 employees, Bradco Supply has not lost touch with its roots. When customers Like Kornahrens refer to the company, it’s not usually with descriptions like: “They’re a billion-dollar company,” or “They’re a force in the roofing supply industry,” although Bradco Supply is both of those. Most who have contact with Bradco will tell you that it’s a company where “they put people first,” and employees, suppliers, and customers routinely call Barry and Brad Segal by their first names.

“Barry makes you want to do things better,” says Joe Revello, the company’s inventory manager. Diagnosed with multiple sclerosis in 1997, Revello says he couldn’t work for six months. “If I didn’t work here, I’d probably be out of a job,” he says. “They set me up to work at home and changed my hours. Being given that opportunity was great. It was very uplifting to have that. It made me want to try harder.”

The service from energized staff like Revello is what keeps Brad Beldon coming back to Bradco. The president and CEO of San Antonio-based Beldon Roofing Co., Beldon says Bradco has exceeded his expectations “since the day they moved here” in 1998. “Bradco does what they say they’re going to do,” says Beldon, whose roofing and gutter business does about $50 million a year in sales. “They’re a customer service-oriented business. They go out of their way to make sure you’re satisfied…. From the top down, everybody in the organization is first-rate. If you have a problem with anything, you can call a number of people to get it resolved. They don’t pass the buck.”

Bradco doesn’t always have the lowest prices, Beldon says, but he still gives about half his business to the company. “You can always find anything for a cheaper price, but you have to develop a comfort level with the people you do business with,” he says. “They’re able to attach value to a commodity product, which is hard to do.”

“This is a very simple business, and there are only three separators–price, service, and relationship with the customer,” Brad Segal explains, adding that if one aspect of that business model triumvirate rises above others, it would be service. “We’re never satisfied with our service,” he says.

The company’s commitment to service has helped it keep long-term commercial customers such as Advanced Roofing, even as it seeks to expand markets and product lines. “They’re not just order takers,” Kornahrens says. “We can say, ‘Hey, we’ve got this project, what do you think is a good manufacturer to go to?’ Their knowledge of products and systems is excellent.”

Changing With the Times

With Bradco’s increased presence in the residential market came an opportunity to expand their product line into areas such as windows, doors, vinyl siding, decking, and kitchen and bath cabinets and countertops. That helped even out the cashflow roller coaster that comes with the seasonal fluctuations of roofing–winter is virtually dead in the northern markets and rainy seasons slow down work as well. Today, Bradco’s second-largest and fastest-growing product line is vinyl siding, with sales jumping between 10 and 20 percent per year ahead of the company’s overall sales growth.

Following vinyl siding and windows, kitchens may bring Bradco its next big new product segment windfall. After buying a millwork company 20 years ago in Toms River, N.J., with several locations positioned within five miles of a Bradco branch, a huge growth potential became apparent because there was virtually no overlap between Bradco’s roofers and the millwork company’s remodeling contractors. That led to Bradco opening kitchen showrooms in four branches. Sales volume is much lower in a kitchen branch than the average Bradco branch, but the profit margins are higher, Segal says, and by doing so they position the company to be a more valuable supplier to the customers in those areas.

The kitchen business is evenly divided between homeowners, remodeling contractors, and new-home builders, says division general manager Larry Gelber. The trick has been getting contractors to think of Bradco for their cabinet needs, and Bradco’s strategy has thus far been to emphasize both their facility investments and the professionalism of company salespeople. “Once they see we’ve invested in a beautiful showroom and trained staff, they’re happy to do business with us,” Gelber says.

Beating the Odds

While Bradco faces many of the same issues as any other building materials supplier, its specialization in roofing materials adds a layer of complexity to everything from choosing new markets to ordering inventory. “It’s kind of amazing how the weather affects this industry,” says national purchasing director Steve Kubicka. “Hail storms, harsh winters, hurricanes–they all affect us.” Roofs take the biggest pounding in severe weather, and roofing contractor customers often chase the business that follows hailstorms.

“Then you get into other scenarios,” Kubicka says. “Last year, they had an oil crisis in Venezuela. All the asphalt vendors were pulling crude out of Venezuela, so everybody scrambled the first quarter. That triggered price increases this year. Then we had problems with plywood. This year, you’re having a major problem with steel. Nail prices are increasing; the metal in roofing is increasing.”

But Bradco always seems to find a way to beat the odds, and at least twice in the company’s recent history the Segals have turned difficult times into opportunity. The first was in 1990. With $50 million in outstanding debt, Bradco was notified by its bank that its loan was being called and they had 90 days to find new financing.

The situation was ultimately resolved, but it led Bradco to re-examine its entire business model. Until then, they were a big company run like a small family business, Brad Segal says. “The credit crunch forced us to become more focused on operating for short-term profit and not just long-term building sales,” he says. “It forced us to do better business plans, identify our problems, take corrective action, and hold people accountable for reaching those business plans within the branches and divisions.”

The next crossroads arrived in 1997. One of Bradco’s competitors, Allied Building Products Corp., had been bought by Irish manufacturer CRH, providing Allied with monetary and capital resources Bradco couldn’t access, according to Segal. Cameron Ashley Building Products, another competitor, had gone public “and was buying everything in sight,” Barry Segal says.

Concerned that the company lacked the necessary resources to compete, Segal put the word out to the investment banking community that Bradco was interested in selling to Cameron Ashley. “We saw a very good fit, and thought it made sense for both companies,” he says. Cameron Ashley apparently thought so as well, and made an offer. But within a month, Bradco nixed the deal when it learned that it would include consolidating operations and letting some employees go, Segal says.

With that door shut, Bradco launched an expansion spree of its own, opening several brandies and buying companies with good reputations and customer bases in which the owners want to stay involved and keep their staff together. “Once we didn’t sell, we felt we had to become more of a national company, make our people feel good about where we were heading, and grow the company more quickly than we’d been trying to,” Segal says.

By 2004, Bradco’s number of branches had more than doubled, from 52 locations and $476 million in sales at the end of 1997 to 109 locations and $995 million in sales in 2003.

The Road to New Markets

Concerned about maintaining adequate control over operations as the company grew, the Segals concentrated their purchases no farther west than Texas until October 2003, when they opened their first branch in Arizona to begin capturing lucrative residential markets in Phoenix. Bradco now is looking for opportunities to expand in Arizona and California to give the company coast-to-coast operations. The Segals estimate they’ll open eight to 12 new branches a year for the foreseeable future.

Deciding where to locate new branches is a combination of strategy and serendipity. For new markets, the company looks closely at housing starts, population figures, and the number of competitors in the market, focusing particularly on the top 50 housing markets where national production builders have divisions. Active housing markets mean not only steady work in residential construction, but also in schools, shopping centers, and offices to serve the families living there. Once a branch is established and performing well, they look for other nearby spots so the stores can support each other. “It doesn’t work well to have an island,” Segal explains.

Just as often, though, a new branch is a result of an opportunity that’s too good to pass up. That was the case with the Phoenix branch, Segal says. The manager came to them from a competitor, and had extensive contacts with roofing contractors in the region. Plus, Phoenix is the second-largest housing market in the country with more than 46,000 housing permits pulled in 2003, according to BUILDER magazine, a sister publication of PROSALES.

Not all acquisition efforts hit the bull’s-eye. For example, Bradco’s efforts to purchase Vernon Hills, Ill.-based Wickes Lumber (which began in 2002 when Barry Segal identified the company’s stock as undervalued and began buying it) did not pan out. In April 2003, he made an offer for a complete purchase of the company, which was rejected. Nine months later, Wickes filed for Chapter 11 bankruptcy and the Segals say they are no longer interested in a deal.

Even without bringing Wickes into the fold, there is plenty on the plate to keep everyone at Bradco busy. “My goal for the branches is to be No. 1 or No. 2 in the market,” Barry Segal says. “We want to expand in markets where we are strong. At the same time, we want to build smaller markets to that same level.” Barry Segal says he sees Bradco maintaining its 12 to 13 percent annual growth through the next five years. They’ll do that, he says, by opening new branches and growing their sales volume with the addition of new products, particularly more high-end roofing materials.

Internal Strategies for External Growth

“While specializing in roofing means a smaller group of product lines to purchase from, Kubicka says it doesn’t reduce the number of SKUs because he’s buying deeper within each line. To help keep inventory mangeable, like many other specialty dealers, Bradco is looking to consolidate vendors and SKUs to improve pricing, purchasing power, and inventory turns, and to develop consistent sales and marketing support nationwide. But with constantly opening new branches, that’s a tough assignment. “We allow a lot of autonomy at the branches,” he says. “We don’t tell them what to buy. There’s enough pressure on them starting up to find the sales. It’s easier to … sell someone what they need than to convince them to buy something else. We let the sales lead the product and then re-evaluate later on.”

Company-wide, Bradco also is focusing on exterior packages that include decking and vinyl railing, which Brad Segal says offer a “huge opportunity” for growth compared to roofing and siding. “We’re expanding with contractors who do all three of those.”

To help the company manage and maintain its current level of growth, Bradco also has invested more than $10 million in a new nationwide computer network that provides e-commerce functions for customers and vendors. All the company’s executives, managers, and sales staff have remote access to the system.

Additionally, Bradco is adding key executive staff–including HR and marketing directors–to mange the need for more personnel and expanded marketing efforts. “I can open branches and buy trucks,” Brad Segal says. “The biggest challenge to growth is people.” Bradco’s goal is to never become too institutionalized to lose its ability to respond quickly to opportunities in the marketplace–and to inspire its employees to excel. “I want people to do well,” Barry Segal says. “We have long-term people who have been here from day one. People can make a career here. It’s a good place to work.”

That’s one thing that won’t change as the company grows. Bradco may continue to branch into new product lines, but their customers will still reel like they can call headquarters, ask for Barry or Brad, and be connected. “The big difference at this company is how we treat people,” Barry Segal says. “They feel a part of something.”

Vital Statistics * Company: Bradco Supply Corp. * Year founded: 1966 * Headquarters: Avenel, N.J. * Number of locations: 109 * Number of employees: 1,995 * 2003 gross sales: $995 million * Pro sales percentage: 97 percent

Road Warriors

With more than 100 locations spanning markets in 26 states, Bradco Supply relies on technology and consistent fleet maintenance to keep deliveries on the road.

As Bradco Supply continues to grow from a regional player into a national specialty distribution company, literally thousands of deliveries are departing each day via Bradco’s fleet of about 750 power units (primarily trucks and cranes), around 250 trailers, about 450 warehouse forklifts, and approximately 250 truck-mounted forklifts, says fleet manager Kevin Tremmel. In the past three years, Bradco has invested in processes and technology to keep an increasing amount of vehicles–and their drivers–operating at maximum performance.

Each vehicle is on a preventive maintenance schedule, outsourced to garages that run second and third shifts to minimize downtime. To monitor the fleet’s life cycle and maintenance needs, Tremmel is piloting a secure, Internet-based management system. Two years in development, the system catalogs each vehicle’s specs and maintenance intervals, with alerts to schedule service. Tremmel is notified if a scheduled maintenance is missed. The system eliminates duplicate or incorrect maintenance, he says, and dramatically reduces paperwork.

Removing the administrative burden to scheduled maintenance has freed Bradco up to develop additional fleet-friendly services. For example, a monthly “air up” program ensures proper tire inflation, extending tire life. Tremmel also is rolling out a GPS system for the drivers. Dispatchers can see each driver’s location, give them turn-by-turn directions if they’re lost, or tell customers estimated delivery times. The system also measures speed and excessive downtimes.

“Things are going to break on trucks. It comes down to having newer equipment, having it well maintained, meeting the original manufacturer guidelines, and having a vendor network to support us,” he says. “That gives us the ability to have trucks ready when they’re needed.”–P.C.

COPYRIGHT 2004 Hanley-Wood, Inc.

COPYRIGHT 2004 Gale Group