The Home Depot Inc. announced it had agreed to acquire SRS Distribution for $18.25 billion on March 28.

In a call with investors, CEO Ted Decker and other Home Depot executives shared details about SRS’ finances and what they hope the distribution company will add.

Home Depot ranks No. 4 in the Top 1000, Digital Commerce 360’s database of the largest online retailers in North America. It’s also the top-ranking retailer in the Top 1000’s Hardware & Home Improvement category.

Why Home Depot is acquiring SRS

SRS Distribution is a residential specialty trade distribution company with professional roofers, landscapers and pool contractors as customers. In 2023, it recorded about $10 billion in revenue, and $1 billion in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

The distribution company has a “proven track record of exceptional profitable growth,” Decker told investors in the March 28 call. That growth is a “statement to its strong vision, leadership, culture and execution.”

SRS has several aspects that could be beneficial additions to Home Depot’s offerings:

• Strategic locations: more than 760 locations across 47 states
• Sales force: more than 2,500 sales professionals
• Delivery fleet: 4,000 flatbed, box and boom delivery vehicles
• Brands and assortment: brands that will expand Home Depot’s catalog
• Order and account management: a modern enterprise resource planning (ERP) system
• Ecommerce ecosystem: Digital sales targeted to each segment

Those aspects are complementary to Home Depot’s own Pro ecosystem, which currently accounts for about half of all sales, Decker said. The acquisition is both “complementary and additive” to Home Depot’s current offerings, he said.

SRS will expand Home Depot’s total addressable market by $50 billion, to about $1 trillion, Home Depot said.

“2023 was a year of moderation for Home Depot, and healthy same-store sales growth for SRS,” Home Depot chief financial officer Richard McPhail said. SRS has grown total revenue faster than comparable sales due to new locations, organic growth and acquisitions, he added.

Home Depot total sales declined 3% to $152.7 billion in the fiscal year ended Jan. 28. Comparable sales also declined 3.2%.

McPhail spoke highly of SRS, calling it “One of the most sophisticated acquisitions we’ve seen.” He noted that the deal is promising, because it’s “a growth company buying a growth company.”

Terms of the deal

Home Depot spent $18.25 billion to acquire SRS. The retailer will fund the acquisition with cash on hand, incremental commercial paper, and new unsecured notes, it said.

In addition, SRS senior leadership will stay on during the transition and continue to lead the business. That includes co-founder and CEO Dan Tinker.

Home Depot expects the deal to close by the end of 2024 following regulatory approvals. There are no plans to rebrand SRS locations, it said.

What Home Depot brings to SRS

Home Depot said it has three strategies to grow market share among both Pros and do-it-yourself (DIY) consumers:

• Delivering the best customer experience
• Developing differentiated capabilities
• Extending its low-cost provider position

Within those strategies, the retailer identified potential areas of growth, including expanding its Pro offerings. That’s where SRS becomes an asset to Home Depot, Decker said. 

Home Depot will bring SRS customers additional convenience on purchases like ladders, Decker said.

The retailer has already invested in growing its Pro offerings over the past year. To boost sales to its professional customers, Home Depot acquired Construction Resources in December. Construction Resources is a distributor of design-oriented surfaces, appliances and architectural specialty products.

The retailer also has plans to develop “new order-management capabilities to better manage complex Pro orders,” Decker said. By the end of 2024, it will offer new fulfillment options, localized product assortment and enhanced digital capabilities in 17 of its top Pro markets.

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