Select Interior Concepts Inc., Anaheim’s second most valuable publicly traded company, considers California too expensive.
The provider of interiors for new homes cited housing costs here as a reason it recently decided to move its headquarters from Anaheim to Atlanta.
“Atlanta’s relatively low cost of living, direct flight options, and highly skilled workforce, makes it an ideal headquarters location as we continue to grow the business,” Chief Executive Tyrone Johnson said in a Feb. 7 statement.
With a $255 million market cap, it is second in value among Anaheim public companies, only behind Willdan Group Inc. (Nasdaq: WLDN), which has a $391 million market cap. After Select Interior’s departure sometime this month, Willdan will be Anaheim’s only representative cracking the top 50 of the Business Journal’s list of most valuable public companies based in Orange County.
The move comes at a time of increasing investor interest.
Since Dec. 17, Select Interior’s shares (Nasdaq: SIC) have jumped 66% to almost $10.
Select Interior’s shares have been rising “on no apparent company-specific news,” B. Riley FBR’s Alex Rygiel, the only analyst who covers the firm, wrote in a news report last week.
On Feb. 11, about 1.75 million shares traded hands compared with the daily average of 23,400.
“The activity is notable and suggests to us that value investors are taking notice of SIC,” Rygiel said.
Interior Installer
Select Interior Concepts mostly targets new homes as an installer and distributor of flooring, countertops and windows. Its Architectural Surfaces Group segment distributes natural and engineered stone under proprietary brand names such as AG&M, Bedrock International and Cosmic.
The company was formed in 2014 and after a 2017 restructuring, Johnson became its chief executive. It went public last August at a $12 share price.
Also earlier this month, the company named J. David Smith as chairman, replacing Christopher Zugaro, who resigned to focus on other business interests.
Smith was most recently chairman at Siamons International Inc., a maker of specialty mold cleaners. Siamons, which has annual sales around $20 million, was acquired in December by the Rust-Oleum group of RPM International Inc. (NYSE: RPM).
Select Interior has grown sales through acquisitions in markets like Nevada and central Texas, completing at least four purchases last year with annualized sales of $57 million.
Its sales climbed to 41% to $357 million for the nine months ended September. During the same period, adjusted EBITDA profit rose 20% to $39.6 million.
It’s aiming for $500 million in sales this year, something that should be aided by its January pickup of T.A.C. Ceramic Tile Co. to gain entry into the Washington, D.C. area market. Select Interior paid $43 million in cash for T.A.C., which has annual sales around $70 million.
B. Riley FBR in late 2017 helped Select Interior raise $261 million in a private placement. Analyst Rygiel predicts a bright future with a $15 target price.
“SIC continues to be one of our favorite construction services companies,” said Rygiel, citing “meaningful upside to the equity value.”
Train to Georgia
Additional details on why the company picked Atlanta were unavailable as Johnson declined to comment for this article.
The company’s prospectus, which said most of its business is in California, warned last year that a slowdown in this state “could have a disproportionately negative effect on our business.”
New housing permits in California may decline 10% in 2019 to 110,000 units, according to a Chapman forecast made in December.
The company didn’t disclose what will happen with its 52,416-square-foot headquarters at 4900 E. Hunter Ave.
Johnson is knowledgeable about the Atlanta area, having previously worked as an executive at OmniMax International Inc., formerly Euramax International Inc., a metal roofing products manufacturing company based in Peachtree Corners, Ga.
The company’s new headquarters, which will be in Atlanta’s Galleria office complex, will serve as the primary location for the executive team and corporate staff.
