Earlier this month Latium USA—corporate parent of the Four Seasons Sunrooms franchise—announced its acquisition of Metals USA Building Products, a manufacturer and distributor of aluminum products, from $8 billion steel giant Reliance Steel & Aluminum Co.
The acquisition adds a third component to Latium USA’s holdings, which—besides Four Seasons, with 300-plus franchisees—also operates Four Seasons Home Products, a retail group consisting of 12 stores offering home renovation services, including sunrooms and kitchen remodeling.
Vertically Integrated Remodeling Giant
Shaun Kennedy, the president of FourSeasons Sunrooms who—with his brother, Brian—is co-owner of Latium USA, says that the acquisition is one more step in achieving their goal of building a $500 million remodeling group that will include manufacturing businesses that can be integrated into the company.
Where that integration may occur is in the patio covers and carports product categories—specialties of Metals USA that are particularly popular in the southern and western markets the company serves. Those products are considered the low-end of the broader sunroom market, retailing for less than $5,000.
Kennedy says that Latium USA will change the name of Metals USA to Metals Building Products. He told REMODELING that he plans to operate the company separately from both the Four Seasons Sunrooms franchise group headed by Pat Marron and Four Seasons Retail, led by Peter Allen.
Positioning for Future Growth
How, exactly, the acquisition might fit into that larger goal of a vertically integrated remodeling group has metals industry veterans such as Bud White, president of White Aluminum, in Florida, and the original owner of Metals USA, scratching their heads, since Metals USA Building Products is a manufacturer of metal products that distributes through other entities such as Town & Country Industries and does not actually install the products it makes. “It seems odd,” Dorman said. “Maybe the price was right.” But then, Four Seasons Sunrooms, founded in 1975, is one of the rare operations in the home improvement industry with experience in not only manufacturing—it produces all the components for its sunrooms in its Long Island plant—but in retail and installation as well.
The recession that set most remodeling companies’ sales back did disproportionate damage to the sunroom industry where Four Seasons is the largest player. Industry sales, reported to be somewhere between $2.5 billion and $3 billion before the fall 2008 stock market and banking crash, declined by as much as two-thirds during the years that followed. According to Craig Addington, executive director of the National Sunroom Association, in Cleveland, the industry has seen new growth during the last 18 months as consumer credit has become more readily available.
Still, sunroom sales are far from what they were before the recession. Many large retail sunroom companies, such as Paradise Sunrooms, in Chicago, or Melani Brothers, in Virginia, have gone out of business. Others have stepped back, emphasizing windows or other products to make up for lost volume due to the shriveling sunroom market. Recently a handful of home improvement companies such as Hulco, in Chattanooga, Tenn., and Majors Home Improvement, in Pensacola, Fla., have been aggressively pursuing sunroom sales, citing a vacuum among sellers of the product.
For the owners of Four Seasons Sunrooms, a central focus has been building the company’s retail arm. Peter Allen, who heads that division, says that the 12 company-owned stores will generate $25 million in sales this year.
Kennedy says that he expects Metals Building Products—currently doing about $50 million in sales—to expand to $100 million as it offers more services and opens additional locations.
That has left many in the industry to wonder how or why investing in additional production capacity makes sense at this point for Four Seasons. The legal firm of D.S. Berenson, a construction attorney who frequently contributes to REMODELING, assisted Latium USA in its acquisition search. Berenson calls the Four Seasons trade name “underutilized” and says, “The time for seeking strategic acquisitions is when everyone is suffering.” In fact, Kennedy adds, there will be other acquisitions going forward, though what he might have in mind next he doesn’t say. —Jim Cory is a writer based in Philadelphia and is a contributing editor to REMODELING.