Kodiak Building Partners

Kodiak Building Partners CEO and co-founder Steve Swinney admits that Kodiak’s founders chose a risky time to leave their positions at a leading building materials company to invest in a construction recovery. It was 2010, and the construction industry was only beginning to rebound from the recession that rocked the market just a few years earlier. Swinney and his partners were not deterred. “We felt as though there was an opportunity for investment,” he says.

The team believed that the industry could only improve, and the time was right to launch a business. “The market hadn’t really turned around, but it had bottomed out,” Swinney explains. 

“We did a lot of market research, and we felt a recovery was coming. It was very much a risk.”

‘Tough Times’

Kodiak started small by acquiring Barton Supply, a building supply company with a strong management team that was feeling the effects of the downturn. Kodiak along with Barton management spent nearly one year turning the company around, he recalls. The supplier required process changes, as well as improved vendor and investor relations, and the goal was to bring an end to the panic mode, he says. “It was all about getting through that first winter,” Swinney recalls. “Those were definitely tough times. It took about nine months to see the market begin to recover.”

As the recovery continued in 2012, so too did Kodiak’s acquisitions. The Littleton, Colo.-based company grew and created a platform of diverse and profitable investments across the building materials distribution spectrum, Swinney says. 

Specifically, Kodiak has four platforms within the building materials market. The company provides a variety of construction supplies, such as structural and reinforcing steel products; lumber; gypsum; and specialty materials including windows, cabinets, counter tops and appliances. “The platforms are tied to each stage of a construction project,” Swinney says.

Construction supplies make up about 40 percent of Kodiak’s sales while its 12 lumberyards represent about 25 percent of business. Gypsum and specialty materials make up the remainder of sales. The distinct business platforms were designed to help Kodiak withstand the cyclical nature of the construction industry and downturns in specific market segments, Swinney says. 

Kodiak’s vision is to build an organization with a diverse customer mix including new residential, repair and remodel, and commercial materials distribution, Swinney adds. “We want to build a company that withstands the test of time,” he says. “We’ve got a diversified business.” For example, the company is realizing an increase in business with multifamily residential developers as that market grows.

Kodiak works with both residential and commercial builders, as well as companies that perform infrastructure work. Single-family projects represent about 35 percent of the company’s sales while multifamily jobs account for about 20 percent, Swinney says. Commercial and infrastructure projects comprise the remainder of sales. 

The majority of Kodiak’s 32 locations are based in Texas and Colorado, but the company also operates a concrete supplier in Michigan, as well as a lumber and building supplies business in Boston, and a drywall business in Newark, Del.

Prime Locations

The bulk of the company’s businesses are located in Texas and Colorado because both states have experienced surges in construction over the past few years. “The markets we’re in have a lot of things going for them,” Swinney says. Kodiak chose the Texas and Colorado markets based on demographic trends. “People are coming to these places,” Swinney adds.

Additional acquisitions could lead to growth anywhere in the country, Swinney says. “We’ve looked at 250 acquisition opportunities over the past five years,” he says. “We’ve looked at opportunities in every region of the country.” 

The company does significant due diligence before adding a company to the Kodiak family. “We’re looking for companies that have strong management teams and are leaders in their market,” Swinney explains. Perhaps just as important is the desire for “someone who is willing to partner with us,” he says. “Partnership is key in an acquisition.”

Kodiak leverages the knowledge and reputation of the companies it acquires. The company believes that the diversity of building codes and construction practices throughout the country means construction has to be a local business. Decisions are made in individual markets where Kodiak’s employees can tailor the assortment of goods and services to the needs of their local customers. Additionally, Kodiak retains the names of the businesses it acquires for the trust and recognition that they have earned in the marketplace, Swinney says.

Swinney says he’s impressed with the company’s growth since 2010. “We’re really gratified and pleased with where we’ve gotten in the first five years,” he says. “This is a competitive space.” But he’s most proud of the people who make up the company. “We have a great team,” he says. “We’re just really proud of the people we get to work with every day.”

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