Louisiana-Pacific: Distributor Relationships & Market Footprint

This is a snippet of the transcript, sign up to read more.

Yes. Like when LP wants to go into a market and there are different distributors they can select from, what are the factors they might consider in choosing one distributor versus another?

Typically, what you're not going to find is a big-name two-step distributor that has access to both products. The distributors would love it because that's exactly what they want. They want to have the two big brands in the siding category, but the manufacturers won't allow that. If you're the James Hardie guy, you're with James Hardie. If you're with LP, you're with LP. That's the first domino that falls there.

This is a snippet of the transcript, sign up to read more.

Yes. Like when LP wants to go into a market and there are different distributors they can select from, what are the factors they might consider in choosing one distributor versus another?

If a change is necessary, manufacturers need to see who is left. Often, they could call someone selling James Hardie, but that distributor would have to drop the Hardie line to take on their product, which rarely happens. There was a battle a couple of years ago in Texas with Boise Cascade, which was selling James Hardie and wanted to move to LP. I believe Hardie pulled the line from them.

This is a snippet of the transcript, sign up to read more.

So, is it fair to say that Builders FirstSource sources the vast majority of their inventory direct instead of through second-step distributors?

The third reason, and I think this is probably one of the biggest reasons, and what really keeps the two-stepper engaged with the big one-stepper, is all of these manufacturers. Now, James Hardie, LP, have come out with a color product, a pre-finished product. The big one-steppers find it hard to have a broad offering. They don't want to stock 15 colors. So, they will use the two-stepper for that. And I will tell you, that is a growing product because pre-finished is going to be the future.

This is a snippet of the transcript, sign up to read more.