Hixson Lumber Sales

Hixson Lumber Sales has a mill on Arkansas 19 south of Magnolia. The location is part of a $375 deal that has sold Hixson to a Canadian company.

Hixson Lumber Sales, which includes the company’s mill on Arkansas 19 south of Magnolia, has been sold to Doman Building Materials Group Ltd. of Vancouver, British Columbia, Canada.

Doman said that it acquired all assets of Texas-based Hixson for approximately $375 million in cash, including inventory.

Hixson is being acquired on a cash-free and debt-free basis, and the transaction is being funded from the company’s existing cash on hand and revolving credit facilities.

Hixson is a wholesale and manufacturing company of lumber and treated lumber operating in the Central United States. Doman said in a statement that Its operations are highly complementary to the company’s existing U.S. West Coast operations without overlap.

Doman said the transaction will facilitate the company’s growth, will be immediately accretive and will expand the company’s product suite to include new offerings.

“We are very excited with the addition of Hixson to the Doman group of companies. The transaction is a great complement to our existing U.S. operations while further advancing our growth strategy and developing a leadership position in the central corridor of the U.S., in areas such as Texas that continue to have extremely strong growth activity,” said Amar Doman, Chairman and CEO.

“We continue our disciplined approach in tracking and executing on accretive growth opportunities, further strengthening our financial performance, and enhancing shareholder value based on a fundamentally sound and sustainable growth plan. With the transaction, our U.S. footprint now extends from the West Coast and Hawaii across the mainland and into several high growth states in the middle of the U.S., we proudly operate 32 treating plants across our system, and our product offerings importantly include Southern Yellow Pine building materials.”

Hixson was founded in 1959 and is headquartered in Dallas. It has about 1,100 employees. Hixson is a value-added wholesale and manufacturing company in the lumber and treated lumber space, operating from 19 locations located in eight U.S. states. Hixson operates 19 lumber treating plants, five specialty sawmills and its own trucking fleet, and services and delivers products in approximately 25 states primarily in the central United States.

In addition to its Magnolia mill, Hixson’s other Arkansas facilities are in Rison, Pine Bluff, Plumerville and Russellville.

Oher locations are in Caddo Mills, Carrolton, Gilmer and Willis, TX, Winnfield, LA, Hattiesburg, MS, and Hillsboro and Streator, IL.

With approximately 1,100 employees, Hixson serves national big box retailers, several national home builder distribution yards, large regional lumber yards, and multiple small independent lumber yards. Primary business lines include pressure treated lumber, wood fence manufacturing, and specialty items for new home and renovation markets.

CLICK HERE to see Hixson Lumber Sales’ website.

The transaction will combine Hixson’s operations with Doman's well-established and growing North American platform, which includes the California Cascade and Honsador groups of companies.

Doman says the deal immediately obtains a market leadership position in the region with a diversified and loyal customer base from its locations in Texas, Arkansas, Illinois, Indiana, Missouri, Mississippi, Louisiana and Tennessee.

Doman will also claim a position as one of the largest pressure-treated lumber producers in North America with approximately 2 billion board feet of annual capacity, adding to the company’s existing base of pressure-treated plants and distribution centers.

The acquisition of Hixson effectively triples Doman’s sales in the United States, and the purchase price is consistent with the company’s traditional targeted multiples range for acquisitions.

In assessing the financial merits of the transaction, Doman management felt it was prudent to assess the Hixson transaction with a long term perspective in mind, despite exceptionally strong performance and record results for both companies in 2020 that continued through the first quarter of 2021. Thus, management felt it was vitally important to view Hixson’s financial performance on the basis of an appropriate discount to recent outperformance across the industry, which has arisen from market supply and pricing dynamics in the North American building materials space.

“This led our team and our financial advisors to arrive at a more normalized picture of Hixson’s performance. On this normalized basis, the Transaction is expected to be accretive by over 55% on both earnings per share and free cash flow per share,” the Doman statement said.

Doman expects to realize synergies from integrating Hixson’s business with the company’s existing customer base and suite of products. Opportunities for additional operational and margin synergies are expected to be realized over time, including scale and purchasing benefits on pressure-treated inputs, and utilization of the company's established purchasing, sales and distribution channels and access to the company’s infrastructure and resources.

Doman’s statement called Hixson “an exceptionally-run, family-owned business that has a strong legacy in its key markets and strong relationships with its customer and suppliers. Hixson has a committed and strong management team that operates very efficiently on its platform across the central United States. Key management have 50+ years of combined industry experience and will remain in place, further adding to the company’s bench strength.”

The transaction was completed on June 4, 2021 and is not subject to any further regulatory or shareholder approvals or consents.

Doman is headquartered in Vancouver and trades on the Toronto Stock Exchange under the symbol DBM and is a leading North American distributor of building materials. It is Canada's only fully integrated national distributor in the building materials and related products sector.

Doman operates several distinct divisions: CanWel Building Materials with multiple treating plant, planing facilities and distribution centers coast-to coast in all major cities and strategic locations across Canada.

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