with Project Mountain Truss · Project Mountain Truss
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
Geographic proximity is a real moat in truss manufacturing because bulky products are usually sourced close to the job site.
Engineered truss businesses can look like manufacturing, but they also depend on design, estimating, and assembly know-how that makes them harder to run than a simple distribution business.
High EBITDA margins do not eliminate cyclicality; housing starts and building permits can still drive a sharp downturn.
A listing that mixes annualized EBITDA with partial-year revenue can make a healthy business look like it is deteriorating.
Seller financing is especially attractive when the business is cyclical because it lets repayments flex more with revenue.
Customer stickiness can be strong when builders and supply houses repeatedly use the same truss vendor, but that stickiness does not protect against a construction slowdown.
The Southeast timber ecosystem supports this type of business because wood input supply and construction demand are both concentrated there.
The panel uses this phrase to describe how lender sentiment swings with the macro environment: when credit is worried, even solid businesses can face tougher underwriting and more conservative leverage assumptions.
When to use: Use it when evaluating how bank appetite will affect acquisition leverage in cyclical industries.
The listing showed about $11 million in 2022 revenue and $5.1 million in 2022 EBITDA.
The hosts read the broker teaser for Project Mountain Truss.
The teaser showed 2023 year-to-date revenue of $8.6 million and 2023 year-to-date EBITDA of $4.3 million.
Bill criticized the presentation for mixing annualized and partial-year numbers.
The company’s customer mix was 61% building supply companies, 26% contractors, and 12% individuals.
The hosts used the mix to assess concentration and cyclicality.
The backlog was described as three to four weeks out.
The hosts debated whether that backlog level is good or bad for this industry.
The business has been family owned and operated since 1990 and the owner has been absentee since 2013.
The broker teaser was used to suggest operator continuity and transition readiness.
Normalize teaser numbers before comparing them to prior years because mixed annualized and year-to-date figures can hide the true trend.
Why: Buyers may incorrectly read a healthy business as declining if the chart is not apples-to-apples.
Underwrite leverage to the low point in the construction cycle rather than the current peak.
Why: The end market is cyclical and debt still has to be serviced when housing activity falls.
Prefer seller financing or other flexible capital structures for cyclical manufacturing deals.
Why: Repayment terms that can scale with revenue reduce the risk of a forced default in a downturn.
Stress-test the business for a housing slowdown before paying for strong current margins.
Why: Customer demand is linked to construction activity even when the business itself looks operationally excellent.
One host relayed that a friend sold a truss-related business to Builders FirstSource years ago and later said he wished he had stayed in the industry. The anecdote was used to support the view that these businesses can be durable and strategically valuable over time.
Lesson: Strategic buyers may pay very well for vertically useful building-products businesses.
Bill described needing a custom engineered truss for a porch opening that would have violated normal span limits. The specialized truss cost about $8,000, far more than a standard lumber solution, which illustrated why engineered products can carry attractive margins.
Lesson: Custom structural components can command premium pricing because they solve code and design constraints standard lumber cannot.