Lumberyard / building supplies company diligence

we looked at a few. Most cannot tell you how their growth in 2021 and the first half of 2022 split out between pricing and volume. We all know it's 150% price increases and 25% volume decreases, but no one is willing to admit that, and they want to get paid as if 2021 is the new normal. Remember too that there will be a housing downturn at some point, and make sure you are comfortable with debt service if prices drop 20% from historical norms and volumes are flat or down slightly.

It's a commodity business, and no matter how much they try to convince you that they are unique and value-added, they almost certainly are not.

Also look closely at capex -- any increase in capacity will probably have to come from new equipment or running existing equipment for more hours per day (which = more maintenance cost and more frequent replacement).

It’s also helpful to turn the year to year financials into percentages. Compare the percentages. Revenue to cost of goods as a percentage, you get a better picture of the business and operating costs.