Paint company Benajmin Moore, acquired by Berkshire Hathaway in 2000, remains well positioned long-term because of the continued improvement in the housing market, according to CEO Mike Searles.
Searles joined Benjamin Moore at a tumultuous time. Former CEO Denis Abrams neared a deal to sell paint to Lowe's (LOW), which represented a breach of Buffett's promise that he would stick with the dealer system and not sell into big chains. After Abrams was pushed out, his replacement Robert Merritt was pushed out after only 15 months after a number of clashes.
"There was a period of time where the dealers didn't trust us because there was talk of us going into the big boxes. For the independent dealer, that would have been a broken promise by Warren Buffett," Searles said, adding that the promise was never broken. "Warren is very particular about promises he makes...All we have done is listen more closely to our customers. We have the best products in the world."
Searles added that being part of the Berkshire family is a blessing.
"Working for Berkshire and working for Warren is difficult to describe. I've worked in public companies all my life. Working for Warren, working for Berkshire is so unique in that it's hands off. You're constantly focused on the future. The business decidisons are not made because of a day or a month or a quater. They're about the long-term sustainability of the company,"he said.
Searles, who was formerly the CEO of Wilson's Leather, said he got the call to join the company on his son's wedding day.
"Shifting from apparel to paint was a big change, but the basic elements about how you develop customer relations and strategies are the same," he said, adding that he had a great team that has taught him the paint business.
When he met Buffett, he told him that he had kept a framed version of one of his quotes in all of his offices over the years: “I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.” When Buffett later asked him if he had put it up in his Benjamin Moore office, he said he hadn't because "I don't want to be the idiot," he said, laughing
As for the future of Benjamin Moore? Searles said he's bullish on growth because of the continuing improvement in the housing market, where March existing home sales were up 5.5%
"Existing home sales is really the best indicator for our business," he said. "People repaint the home when they move into a house."
He added that the wave of millennials to buy homes would also boost sales. "There's 92 million millennials, many of whom are still renting, and as that market matures and those people move into homes, over the next 10 years, we're going to have a huge increase in home ownership."
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