Building and infrastructure development signal prosperity in society, making construction a key to the health of an economy. Whether it is a home improvement, “do it yourself” project, or a massive skyscraper in a downtown metropolis, construction is the most notable sign that communities and markets are thriving. In the last seven years, the United States has seen building permits soar from around 600,000 in 2011 to latest reading of 1.24 million in October 2018. This growth in building permits comes as various sized construction projects are underway across the country.
The Construction Industry is Thriving in the United States
It is no coincidence that the United States gross domestic product (GDP) and construction rates have seen mostly positive growth since 2011. United States’ GDP from construction has seen a massive rebound since 2011. In 2011, U.S. GDP from construction stood around $540 billion. During the second quarter of 2018, construction GDP grew to $641 billion. This comes as large and small construction projects sprout up throughout the country over the past seven years.
Private Construction Projects Increased to Nearly $900 Billion in 2016
The popularity of home improvement channels like HGTV has propelled Americans to focus on building their dream home or in some cases making their current home a dream. The private construction industry can thank these channels and social media platforms like Pinterest for making some of the significant growth it experienced during the five-year span from 2011-2016. The total value of new private construction in the United States increased from nearly $502 billion in 2011 to almost $900 billion in 2016.
New construction has seen a steady increase in value since 2011 as well. Last year, new construction put in place in the United States was valued at around $1.23 trillion which is up from around $788 billion in 2011. Industry growth is expected to continue through 2022 with revenues estimated to reach $1.5 trillion.
When the Construction Industry Booms so Does Everything Else
When construction is booming, the industry has greater demand for jobs to staff open positions. The number of construction workers has jumped substantially in the last seven years. According to the United States Bureau of Labor and Statistics, the number of construction workers in August 2011 was over 5.5 million and in August 2018 the number increased to nearly 7.3 million.
The Building Material Industry is Key to the Success of the Construction Industry
While humans are a critical factor to construction, so are the building materials. In addition to the employment opportunities directly connected to construction, building materials like cement, sand, gravel, clay, windows, and siding are equally as important. Simply put, without building materials, there is no way to build.
Since building materials are so critical to the construction process, the building material industry is thriving just like the construction industry. Between 2010 and 2016 the number of per capita sales in building materials stores across the United States increased from $842 to $1,080.
Innovest Global Gets into the Building Materials Industry with the Acquisition of Authority National Supply
Innovest Global Inc. (OTC Markets:IVST) a company with operations in commercial & industrial services and biotechnology & health services, recently announced that they are officially getting into the building materials industry with the acquisition of Authority National Supply (ANS).
ANS, an Ohio based company, has had a successful track record in building supply sourcing. The company generated $24.5 million in revenue in 2017. Tony Crookston, ANS Chief Executive Officer believes that the new acquisition positions the company to continue to grow.
In the statement released by the Innovest Crookston explained, “we have twenty member-owners which are also owners of building materials businesses across the country. Let that sink in for how quickly I believe we can grow this division. Innovest just got started. We evaluated Innovest’s modest revenue and current valuation, compared to how much we believe that value will increase over time with us on the team. It was a no-brainer for our owners to take a stock deal, and lock arms with Innovest to make that growth a reality. Damon Mintz worked extensively with our owners to make this transaction a reality, and I am ecstatic to work with him and the Innovest team led by their CEO Dan Martin, to make this new Innovest division a dominant player in the building materials industry.”
Innovest Shares Rally with ANS Announcement
Innovest acquisition of ANS has already been beneficial as it increases the company’s annual revenue by over 500% and the shares have experienced a rally since the acquisition was announced. On October 22, 2018, the day the acquisition was announced the shares were trading at $0.26. The momentum from the announcement continued. Over the last week, the shares have almost doubled with trading north of $0.50 at times. The acquisition of ANS officially closed on November 5, 2018.
ANS Building Materials Sourcing Helps Independent Distributors Get in the Game
The energy behind the purchase steams from the relationship ANS has made to its shareholders. The company was created in 2012 to help alleviate some of the issues that independent building supply distributors have when it comes to purchasing and negotiating contracts. ANS is responsible for purchasing a variety of exterior building products including roofing, siding, windows, and tools from supply vendors on behalf of their shareholders.
Their one-step distribution model helps eliminate the costs of dealing with a middleman which in turn increases the bottom line for their shareholders. ANS’s commitment to their shareholders extends beyond building supplies. The company also works to collectively negotiate health care benefits. From a holistic perspective, the design of the ANS is committed to the company’s mission which is to keep independent distributors viable and profitable.
Could ANS’s Sourcing Model Impact Other Industries?
ANS’s model gives Innovest an opportunity to start strong in sourcing building materials. With the strength and success that ANS has had in the building materials industry, this acquisition also gives Innovest an opportunity to use this sourcing model in other aspects of the company’s business and apply it to other industries Innovest serves.
With the construction industry showing no signs of slowing down, areas like building materials are set to experience continued growth. ANS’s business model provides Innovest with a unique sourcing ability for raw materials and bringing a vertically-integrated business under its holding company model. Innovest’s move to purchase ANS was a big step that allows the company to diversify into the building materials industry and prepare for continued demand for infrastructure improvements across the country. Additionally by applying synergies with other business models within the Innovest family, the ANS acquisition could continue to pay “dividends” for the Innovest Global in my opinion.
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