Heading across the Pond to profile a UK-based building materials distributor with a unique business model and expanding network of efficiently-run depots.
This is a great write-up.
The annual report is indeed wonderful and should be a model for many companies.
This is neither an “owner-operator" model neither a family-owned company but they managed to create and maintain a great culture.
The name was mentioned by Meryl Witmer in a Barron's Roundtable in 2017.
Great piece Todd. Especially loved the flywheel diagram... you explain the virtuous circle in the biz extremely clearly.
Nice write up. I've liked Howdens for a while, but it does look fully priced.
I like companies with a strong corporate culture, decentralised management and employee participation
Do you know any others that tick those boxes?
Interesting write up, but not sure about the low level of insider ownership
Hi Todd, This is a higher quality business than people appreciate and I agree that the reporting/management communication is excellent. Worth noting that Matthew Ingle has family pedigree in the joinery/timber trade- while it's not a family owned business there are cultural similarities. His book, Kitchens, or Sink, is worth reading.
FWIW, I don't see them attempting a US expansion. Management are a conservative bunch and they see the French expansion as a learning exercise. If it really gains traction there, that would keep them busy for 10+ years anyway.
Finally, it's worth noting that the depots take about 7 years to reach maturity. If they were to stop expanding the network and allow the existing depots to mature operating margins would easily trend towards the high teens.
I'm quite bullish on this business- there's a nice balance here between growth, dividends and buybacks and management and strategy are both proven. My best bet is that UK consumer confidence improves over the next couple of years, but regardless this is a business with a proven ability to weather a cycle and the balance sheet is very strong.
Enjoyed the post and welcome to the Newsletter publishing world, Todd!
I am based in the U.K., maybe a bit spoiled by cheap stocks here, so am tilted more towards value over quality. Not an owner at the moment, but keeping it on my watchlist.
Great writeup! Well done. I have reviewed this business before and I really like how you broke it down and structured the flow 🙌. I am waiting for a while now for this stock to drop, but it's holding up pretty well, unfortunately !
This was a great read! You got straight to the core of this business and hit a ton of relevant points in a nice concise post!
You might be interested in Ferguson, although it’s certainly not being flown over.
I have had this stock for long time as I have been an indirect customer of theirs in the UK. I learned a lot from this excellent write -up .
Loved your bottom line "It’s important to build a roster of great companies in your mind, regardless of valuation. For one, you never know when you might get an opportunity to pounce on short-term weakness"
Great reading, thanks and good luck on the premium service!