BMC Enterprises making moves in the Midwest

BMC Enterprises, a vertically integrated construction materials producer with more than 70 operations in Missouri, Illinois and Arkansas, recently completed three acquisitions that expand its core business areas: aggregates, ready-mixed concrete and concrete products. Nathan McKean, CEO of BMC Enterprises, visited with P&Q this summer not only to discuss the acquisitions of Eureka Materials, Blue Grass Ready Mix and Raineri Building Materials, but to share broader insights on industry M&A and more.

P&Q: Tell us about BMC’s three recent deals. What drove them forward, and how do they help shape the company going forward?

MCKEAN: We’ve been really focused on trying to build more geographic diversity. The business I took over 20 years ago was purely a small union shop ready-mix operation in St. Louis. I realized I wanted to take the business in a different direction, so most of our M&A activity has been focused on vertical integration [with] a heavy focus on aggregates, [but also] geographic diversification [and] getting into more markets – not wanting to be incumbent to any one general economic market. We realized that we needed to get outside of St. Louis.

Most of [our] focus has had been on geographic diversification, but we had an opportunity with Eureka Materials to come back into St. Louis metro and get an [aggregates] deal. You’re just not going to get a permit to do an aggregate mining operation in St. Louis County in the metro area anymore. That’s not going to happen, so being able to get our hands on 35 years’ worth of sand and gravel reserves was key.

Also, [we’re] kind of experiencing some softening in the general market right now. So, coming back into St. Louis [and] acquiring a Raineri operation was more of a macro-consolidating play – eliminating a competitor [and] expanding our market share. But there also were a number of different synergies with the Raineri deal that made a lot of sense for us to come back into St. Louis and do a deal.

P&Q: You just touched on a couple of key pathways to growth. Greenfields are much more challenging here in 2023, and then there’s the M&A route. As you think about growth and the avenues to best pursue it, what is the overall approach BMC takes?

MCKEAN: I’m not a big fan of greenfield. The vast majority of our growth has been through acquisition activity. That’s part of the deal being in the Midwest, when you come from sleepier low-single-digit organic growth rates. For us to continually perform at 15 to 30 percent compounded annual growth rates, we’re only achieving that through the inorganic acquisition strategy. That’s really where we focus, and it’s worked really well.

We’ll greenfield on the rare occasion when we need to fill a gap. But greenfields are really the last thing that we’re interested in. We’re more or less trying to get more capacity taken offline, consolidating markets and bolting on new geography.

We definitely prefer the acquisition strategy versus a greenfield strategy to achieve higher growth rates.

P&Q: As you think about your company as a whole, how do aggregates fit into it?

MCKEAN: It’s the clear No. 1. It’s our focus. [Aggregates] is first in any market. We’ll do pure ready-mix deals and pure aggs deals, but it’s aggs first.

With the challenge to greenfield an aggregate operation in this day and age – especially with the regulatory environment that we’re dealing with, some of the whipsawing between the administrations and the challenges that come from that – a pure aggs play is going to be priority [No.] 1 in our acquisition strategy.

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