Luck Stone reflects on latest acquisition, broader M&A market

Luck Stone acquired North Carolina-based Ararat Rock Products last month, expanding in the Southeast with two additional quarry locations. Key details about the acquisition are available here. In addition, Luck Stone chief growth officer John Pullen paid P&Q an exclusive visit to discuss the broader merger and acquisition market and the company’s approach to it.

Industry M&A activity has been hot in 2021, with Luck Stone’s acquisition of Ararat Rock Products representing one of the latest deals to go down. As you examine the M&A marketplace, what dynamics are currently at play that are favorable for buyers and sellers and ultimately allow for deals such as Luck Stone-Ararat to come together?

The construction market is very favorable now in terms of project activity and volumes. That certainly creates a better market for sellers. And more sellers in the market, in turn, creates opportunities for buyers.

Some of the factors underpinning the current dynamic landscape are strong economic growth, cheaper debt and a lot of private equity interest in the market. Corporations, in general, have more cash on their balance sheets. All of these economic markers are favorable to an active M&A marketplace.

What ultimately allowed Luck Stone and Ararat to come together was a relationship and connection between two family-held companies with similar core values and a focus on people.

How would you compare the M&A market seen in 2020 versus what’s unfolded this year?

The broad M&A market has been very active – even through 2020, a year unlike any other. The construction industry had to figure out the impacts of COVID and how to navigate through an uncertain future. Now that there’s been more clarity in 2021, we’re seeing some real strength in the construction sectors of the economy. This is creating a more favorable environment for buyers and sellers.

Although Luck Stone had a footprint in North Carolina ahead of the Ararat acquisition, it seems Luck Stone has room to grow in the state. As you look at North Carolina and the aggregate producer ‘players’ there, what opportunities does the state and markets within it present? Is North Carolina a more challenging or competitive market because of the producers already there having big footprints?

It’s no secret that North Carolina is one of the fastest-growing states in the U.S., which makes it very attractive from a growth standpoint. There’s obviously a substantial number of large multinational/national players who have a firm presence in North Carolina.

As a privately-held company with a long history of making a positive impact on the lives of people and the welfare of communities we serve, it is our intent to continue this important work in North Carolina, while ensuring that our customers experience Luck Stone’s value proposition – lasting partnership, service and simplicity.

When it comes to M&A, what characteristics separate Luck Stone from the multinational and national producers?

In addition to being family-owned and operated for nearly 100 years, we have a recognized reputation of being a values-driven company with an exceptionally engaged workforce. All across the company, our talented teams of associates are enacting our mission – inside and outside of our organization. I believe that our caring, people-focused approach to business and our longstanding culture of innovation, leadership development and connection with our customers and communities differentiates us, enabling this exciting growth momentum.

Is additional 2021-2022 growth ahead for Luck Stone in the Southeast via M&A? In other U.S. markets?

The Southeast continues to provide opportunities to grow and broaden the reach of our mission and values culture. As you may recall, in 2018 we acquired Stephens Industries in Atlanta, Georgia and Willow Oak in Kershaw, South Carolina. This acquisition of Ararat Rock Products adds to that growth momentum in the Southeast.

How about growth by greenfield? These are obviously expensive and time-consuming projects, but is Luck Stone currently looking down this path for growth, as well?

We feel both greenfield and acquisition are viable paths for growth at Luck Stone. Greenfields can be more challenging, but our desire to collaborate and grow alongside new communities motivates us and it’s a path we feel can be successful for both Luck Stone and the great communities we hope to join.

A bit of a curveball here, but what are your expectations at this stage for a federal infrastructure bill considering how the House would not even vote on a bill as expected at the end of September?

It’s really hard to say right now. Like others in the aggregates industry, we certainly are very supportive of the infrastructure bill. However, it looks like some compromises and/or concessions will need to be made regarding the infrastructure bill and the cost of the reconciliation bill in order for both bills to gain broader support.

Anything you’d like to add, John?

This is an incredibly meaningful time for our organization. As we grow, there’s a lot of excitement, energy and opportunity for our associates as well as those we serve. Our continued growth will support and sustain our multigenerational, people-focused strategy and ensure our ability to continue broadening its reach and impact.