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Foundation Building Buys Marriott, Boosts Milwaukee Presence

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Foundation Building Materials, Inc. (FBM - Free Report) has acquired an independent distributor of drywall and accessories, steel framing, insulation, tools, and fasteners — Marriott Drywall Materials, Inc. ("Marriott"). With this addition, Foundation Building expanded residential and commercial market presence in the Milwaukee metropolitan area.

Owing to the Marriott acquisition, the company expects to generate $2-$3 million net sales in the remainder of 2020, consistent with its prior-year performance. Notably, the acquisition is expected to be accretive to Foundation Building’s results immediately, backed by increased scale and cost synergies.

Acquisitions to Boost Market Reach

Acquisitions have been a preferred mode of solidifying its presence, scale and market reach for Foundation Building. Also, it provides cost-saving opportunities to this specialty distributor of wallboard, suspended ceilings systems, metal framing and complementary products company.

Since 2013, Foundation Building has completed more than 35 acquisitions, and has more than 170 branches and 30,000 SKUs. In February, it acquired two specialty building product branches of Insulation Distributors, Inc. in Baltimore and Washington, DC for $8.6 million. The acquisition contributed $5 million to net sales in the second quarter and $8.9 million in the first six months of 2020.

Again in December 2019, the company completed the buyout of Associated Drywall Suppliers, Inc. — an independent distributor of drywall, metal framing and suspended ceiling systems serving the greater Louisville, Kentucky market.

During the first six months of 2020, acquired and combined branches net sales grew 32.4%, while net sales from the base business declined 7.7% from the year-ago period. The company has a solid pipeline of acquisitions, which will enhance its presence in North America.

Shares of the company have outperformed the Zacks Building Products - Miscellaneous industry in a month’s time. The stock grew 11.6% in the past month compared with the industry’s 5.3% rally. It believes that its national footprint, market leadership, entrepreneurial culture and ability to retain key leadership through the acquisition strategy bode well.

Foundation Building — which shares space with Installed Building Products, Inc. (IBP - Free Report) , Armstrong World Industries, Inc. (AWI - Free Report) and Gibraltar Industries, Inc. (ROCK - Free Report) in the same industry — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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