The Home Depot Buys SRS Distribution, Expanding Its Pro Reach

Calling it "one of the absolute finest assets that we've seen" in decades,

The Home Depot announced March 28 it will acquire SRS Distribution, one of America's biggest specialty dealers, for $18.25 billion--roughly 16 times last year's EBITDA.

The purchase brings The Home Depot a $9.8 billion company that gets roughly two-thirds of its revenue from roofing, siding and other exterior products, about one-sixth from its landscape division and one-sixth from its pool supply unit. SRS has roughly 760 branches in 47 states. For 2023, it posted $1.1 billion in EBITDA (earnings before interest, taxes, depreciation, and amortization) but only $75 million in net earnings. TD Cowen Equity Research estimates SRS' EBIT (earnings before interest and taxes) margin at 5.3% in 2023. THD's is 14.2%.

Given that it will take many months to finalize the deal, and given SRS' growth expectations for this year, analysts expect the deal will be worth at closing a multiple of 13 to 15 times EBITDA.

SRS will remain a separate operation and its 10,800 employees will continue to be led by Dan Tinker, one of the company's founders.

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