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Acquisitions Clayton Homes

Clayton Homes Acquires Ninth Site Builder

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Berkshire Hathaway’s Clayton Homes, the leading builder of manufactured homes, is quickly becoming a big player in the site built home business. Clayton has acquired Highland Homes, a Florida home builder that is the ninth home builder acquired by Clayton in just three years.

In its 23rd year, Highland, which is based in Lakeland, Florida, is headed by the father and son team, Bob and Joel Adams. Both will be staying on to run the company under Clayton.

The builder will join Clayton Properties Group, a division of Clayton Home Building Group that is based in Maryville, Tennessee.

Highland’s focus is on the low and midprice market, which fits with Clayton’s market approach for its site built homes.

“We are thrilled to join Clayton Properties Group’s family of builders,” said Joel Adams, Highland Homes’ executive vice president, in the statement. “The partnership with Clayton opens up tremendous opportunity for our team members to continue our focus on building high-quality, affordable homes in Central Florida with a strong emphasis on customer experience and market growth.”

Ranked 75th on the 2018 Builder Magazine’s Builder 100 list, Highland built 800 homes in 2018, and is aiming to construct 980 in 2019.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Insurance

Berkshire Launches New Comprehensive Small Business Insurance Brand, “THREE”

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Why is small business insurance so complicated? It’s a question that Berkshire Hathaway’s out to answer.

Boasting a simple, plain English approach, Berkshire Hathaway’s new insurance Brand, THREE, is looking to make small business insurance a more straight forward and lower-priced product.

Traditionally, small businesses seek separate coverage for business property, professional liability, worker’s compensation insurance, commercial vehicles, cyber coverage, and directors and officers coverage, but THREE is looking to modernize coverage by offering comprehensive insurance that covers all of these areas.

THREE is a brand of Berkshire Hathaway Direct Insurance Company, and a company representative says it will save customers roughly 20% over the cost of these insurances purchased separately.

With an inclusive policy, the company notes that customers will be less likely to find that they have gaps in coverage despite owning multiple policies.

“Most policies take pages and pages of legalese to tell you what’s not covered,” a THREE representative noted. “Our three-page, plain-English policy eliminates all that by making it comprehensive.”

For now, THREE is available in Connecticut, Illinois, Nebraska and Texas, with the plan to be available in most states by 2020.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Brooks

Brooks Running Company Opens New Distribution Center

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Brooks Running Company has opened a new, world-class distribution center that allows it to deliver product to runners and retailers faster than ever before.

Based in Whitestown, Ind., the facility serves as the Brooks North American distribution center and will employ more than 130 people by 2023.

“Opening our new distribution center is an exciting and crucial step on our journey to become the No. 1 choice for all who run,” said Jim Weber, CEO, Brooks Running Company. “We don’t want anything to get in the way of a great run, and that includes excessive wait times for new gear. Our team has thoughtfully created a center that streamlines this part of our supply chain, benefitting our retail partners, runners and the environment.”

With almost 60 percent of the U.S. population living east of the Mississippi River, the new distribution center allows Brooks to get product to more runners and retailers in less time. Additionally, the majority of orders placed on BrooksRunning.com are shipped east of the North Dakota-Texas line. By moving the Brooks distribution center to the Midwest, most orders will now arrive to runners within three days via ground shipping. Energy efficiencies in the building’s design and the proximity to more runners will result in an approximate 50 percent reduction in carbon emissions when compared to operating out of the previous distribution center in Sumner, Wash.

The new distribution center spans more than 400,000 square feet with expansion capability to facilitate future growth of the brand. It features state-of-the-art systems and automation to improve order accuracy and more efficiently flow inventory in and out of the center and better meet demand. Brooks’ new distribution center is fully operating now and servicing customers across the continent.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Clayton Homes Special Report

Special Report: Kevin Clayton Transforms Clayton Homes

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“Would you believe where we are after just three years,” Kevin Clayton, president and CEO of Clayton Homes, says about the company’s move into the site builder business.

It’s a business that Clayton is growing rapidly, and he just acquired Highland Homes in early May, a Florida home builder that is the ninth home builder acquired by Clayton in just three years.

It’s all part of an increasing emphasis on site built homes for the low and midprice market, notes Kevin Clayton.

“It’s a market that has an average price point of $318,000, Clayton says, “which is well under the national average of over $400,000.”

Clayton Homes, which runs its site builders under its Clayton Properties Group, a division of Clayton Home Building Group that is based in Maryville, Tennessee, is already ranked 18th on Builder Magazine’s Builder 100 list and rising fast.

Clayton Homes has been named “Builder of the year” for 2019. It’s an award that really pleases Kevin Clayton.

“To think we weren’t even in that business three years ago,” Clayton says proudly.

Clayton is looking to acquire more site builders, but notes they must meet four criteria.

“First, the owner must be willing to stay around and work,” Clayton says. “Second, they must have survived the last recession; third, they must focus on building low and midprice houses, and fourth, but not least, they must be customer focused and really care about the customer experience.”

Clayton Homes was founded in 1956, by Kevin Clayton’s father Jim Clayton, and Kevin Clayton has led the company since 1999, when he took over from his father.

Acquired by Berkshire Hathaway in 2003 for $1.7 billion, Clayton Homes has grown into a diverse builder offering traditional site built homes, modular homes, manufactured homes, tiny homes, college dormitories, military barracks and apartments.

Improvement in Manufactured Homes

Kevin Clayton is also positive about his manufactured homes business, which he emphasis use the same 30-year shingles as a traditional site built home.

“We don’t have metal roofs anymore,” Clayton says. “Our manufactured homes have a lifespan that’s the same as a site built home.”

Clayton is also building a new type of manufactured homes, for now dubbed New Class Homes, which meet Fannie Mae and Freddie Mac standards. By qualifying, borrowers have lower down payment requirements and lender fees. The homes qualify for a MH Advantage loan, and must be “designed to meet specific construction, architectural design and energy efficiency standards,” according to Fannie Mae.

The move dramatically reduces the amount of down payment borrowers have to come up with. MH Advantage loans require a 3 % down payment, down from 5% previously. In addition, Fannie Mae does not charge its 50-basis-point loan-level price adjustment for manufactured housing loans.

“New Class Homes represent only a couple of percent of our revenues right now,” Kevin Clayton says, but he sees lots of rooms for growth.

The overall manufactured home business is strong.

“The manufactured home business is up 6-7 percent this year,” Clayton says.

Clayton emphasized the environmental advantages manufactured homes, which produce far less waste than traditional site built homes.

“All our 42 facilities are ISO 14001 certified, which is all about environmental standards,” Clayton says.

ISO 14001 is the international standard that specifies requirements for an effective environmental management system.

Clayton has moved much of its supply chain in-house, building more of its own components.

“We build our own windows,” Clayton notes.

Why Consumers Buy Manufactured Homes

It’s a type of housing that opens home ownership to a broad range of consumers that are locked out of housing market as traditional home prices have skyrocketed.

“Fifty percent of people we help with a home would not qualify for Fannie Mae or Freddie Mac mortgages,” Clayton says.

A big part of that access to homes is the greatly lower price point. A manufactured home can be purchased for $69,000 and has an average cost of only $116,000 with land.

“In rural America there’s not a lot of apartment options,” Kevin Clayton notes. “Many of our customers have been living with family, and are looking for an affordable way to live on their own.”

Clayton especially notes the popularity of manufactured homes for five-acre ranches.

“Where there’s land, we shine!”

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Energy

NV Energy CEO Lauds New Nevada Bill Increasing Renewable Portfolio Standard to 50 Percent

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NV Energy officials were on hand last week as the Governor of Nevada signed into law Senate Bill 358, which increases Nevada’s renewable portfolio standard to 50 percent by 2030.

“NV Energy has been vocal about our aspirational goal of providing our customers with 100 percent renewable energy, and this is an important next step in accomplishing that,” said Doug Cannon, NV Energy president and CEO. “We announced our support of the renewable standard increase in 2018 and are honored to have worked closely with Governor Sisolak, Senator Chris Brooks, who was instrumental in leading this effort; and other stakeholders to accomplish this so early in the legislative session.”

The company’s 2018 announcement that it planned to add six more large-scale solar projects, three of which will include battery storage for the first time, reinforced its commitment to add more low-cost solar to its energy mix.

NV Energy also recently submitted its annually-required renewable portfolio standard (RPS) compliance filing to the Public Utilities Commission of Nevada, which stated that the company had exceeded the current RPS requirement for the ninth-straight year. Instead of the 20 percent required today, 24 percent of the energy the company provides is generated from renewable resources.

Nevada is a leader in renewable energy, ranking fourth in solar and second in geothermal.

NV Energy has fostered renewable development since before a renewable standard was put into place, having signed its first geothermal contract in 1986. Thanks to expanding renewable energy serving its customers and the retirement of coal-fueled generation in Nevada, Nevada experienced an 85 percent reduction in coal-fueled carbon emissions from 2005 to 2015.

During that same period, Nevada reduced carbon emissions from the electric industry by 44 percent.

“Our company has made great strides over the last decade to increase our use of clean energy resources and reduce our carbon footprint, all while keeping costs low for our customers. Today signifies another step in building Nevada’s a clean energy economy and we’re proud to be one of the leaders in that effort,” added Cannon.

© 2019 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Johns Manville

Johns Manville Names John Vasuta President of Engineered Products business

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Berkshire Hathaway’s Johns Manville, a leading manufacturer and marketer of premium-quality building and specialty products has announced John Vasuta is the new President of the company’s Engineered Products business.

“John is an accomplished leader and a welcome addition to JM’s leadership team,” said Mary Rhinehart, JM’s President and CEO. “He brings to JM a proven track record of successfully growing businesses and global commercial leadership.”

Vasuta will lead a global business that manufactures premium-quality glass fiber nonwovens, polyester spunbonds and glass fibers for the building and construction industry, as well as for automotive, industrial and residential applications.

JM products cover an extensive range of applications such as waterproofing membranes, flooring, building and technical insulation, air and liquid filtration, energy storage, composites and gypsum boards. The business operates manufacturing plants in the United States, Germany, Slovakia and China.

“Johns Manville is built on a rich history and has a well-earned reputation as a global market leader,” Vasuta said. “I am excited to join the company and to lead the Engineered Products business.”

Vasuta most recently worked at Bridgestone Corp. as President and Managing Director, Firestone Building Products International as well as Global Senior Vice President, Firestone Building Products. He joined Bridgestone as Deputy General Counsel and later held a variety of executive-level jobs, including President of Bridgestone’s 250 commercial store division and VP of International Sales and Operations for building products.

Vasuta earned a bachelor’s degree in engineering, an MBA and a Juris Doctorate, all from the University of Akron, and he worked earlier in his career in private law practices and the semi-conductor industry.

© 2019 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Lubrizol

Lubrizol to Build Plant in Chiba, Japan

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The Lubrizol Corporation will build a new plant within the Ichihara Works (Ichihara City, Chiba, Japan) to manufacture LUCANT(TM) hydrocarbon-based synthetic fluid.

LUCANT is a high performance, hydrocarbon-based, specialty synthetic fluid used primarily as a viscosity modifier. It is used in the most demanding applications including automotive driveline, industrial lubricants and greases, and is the approved choice for leading OEMs and global oil marketers. Mitsui Chemicals was the first manufacturer to offer this unique synthetic fluid which boasts industry leading efficiency and durability.

“This investment in additional LUCANT capacity will allow the Lubrizol Additives business to further optimize its strategic relationship with Mitsui Chemicals to meet the evolving and demanding needs of lubricant market, while ensuring we remain a trusted, reliable and secure supply partner,” said Barrie Masters, global business director for the viscosity modifier business at Lubrizol.

Commercial operation at the new plant is planned for 2021 and Mitsui Chemicals, Inc. and The Lubrizol Corporation are excited to further invest in their partnership.

In 2014, Lubrizol entered into an exclusory agreement with Mitsui Chemicals, Inc. to become the exclusive worldwide seller and marketer of the LUCANT polymer products in the lubricant industry.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Energy

Rocky Mountain Power Considers Early Coal Plant Closures

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Berkshire Hathaway’s PacifiCorp is looking at early closures of some of its coal-fired generating stations.

The potential PacifiCorp coal unit closures are operated by its Rocky Mountain Power subsidiary in Wyoming, Utah and Idaho.

Most of PacifiCorp’s coal units will reach the end of their depreciable lives at different points over the next 20 years.

While no resource decision will be made ahead of completion of the 2019 IRP, a PacifiCorp study identified potential benefits for customers through early retirement of some coal units.

“We continuously examine the costs and benefits of how the company generates electricity to ensure we are making the best decisions for customers,” said Rick Link, PacifiCorp vice president of resource planning and acquisitions. “The study reflects the ongoing changing economics for coal driven by market forces.”

For purposes of the study, the company examined whether customers would benefit if units are retired as early as 2022 and replaced with other resources. The timing and sequencing of any actual coal unit closures will ultimately be determined by a range of factors that also include workforce and community transition considerations.

The units the study identifies as being less economic to operate beyond 2022 than alternatives and are candidates for early retirement are:

• Naughton Units 1 and 2 in Wyoming.
• Jim Bridger Units 1 and 2 in Wyoming.

PacifiCorp is a majority owner and the operator of these units.

The company anticipates issuing a preferred portfolio for input from regulators and stakeholders before submitting a final plan to state regulators in August.

© 2019 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Commentary

Commentary: Race Between Tesla and BYD Not Going Well for Tesla

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If there ever were two companies on a collision course for investors dollars it’s Tesla and China’s BYD (Build Your Dreams), a world leader and pioneer in battery and zero-emission vehicles.

Both companies have staked their claim as the leaders in the electrification of everything from cars to forklifts, and both companies have intrigued investors looking for explosive growth on the manufacturing side of investing.

Unfortunately, for Tesla, which lost $702 million in its first quarter and is already looking towards another capital raise in the $2.5 billion range to keep the battery-powered lights on, its overseas competitor is making money.

Lots of money.

BYD has announced that its first quarter profit skyrocketed 632 percent to 749.73 million yuan (US$111.4 million).

In the race to become number one in electric cars, BYD’s already firmly in the lead.

While US investors may pay more attention to Tesla’s US sale figures (increasingly nervously), BYD is number one in the biggest electric vehicle market in the world, China.

“New energy vehicles are expected to continue to sell well in the second quarter, and new energy vehicle sales and revenues continue to maintain strong growth,” noted BYD in its stock exchange filing.

BYD is looking even further down the road, and just signed an agreement with the city government of Changzhou city government for its fourth car factory, which will produce some 400,000 electric cars annually.

Not Just Cars, Buses

While you don’t see any BYD cars on US highways, you do see an increasing number of BYD pure electric buses. The company has made huge headway since it opened an assembly plant in Lancaster, California in 2013, and recently produced its 300th bus.

Worldwide, BYD dominates the market and has produced over 50,000 pure electric buses in just nine years.

As for the battle of the lithium-ion battery, Tesla’s Gigafactories are going head-to-head with BYD’s factories for the production crown, and for now BYD has the world’s largest.

Located in the western province of Qinghai, BYD’s 24GWh power battery factory is aiming to increase total production capacity to 60GWh by 2020. And it has the advantage that Qinghai province is a major source of lithium.

The Qinghai plant is BYD’s third battery factory in China after Shenzhen and Huizhou, and the company is constructing a fourth plant in Chongqing, which will have an annual capacity of 20 GWh.

“Electrification is a done deal as several countries have announced a deadline for the sale of internal combustion engine cars to end. Electric vehicles are on the cusp of another boom,” said BYD President and Chairman Wang Chuanfu, at the time of the Qinghai plant’s opening.

The question is whether BYD’s race with Tesla is a “done deal” as well.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2019 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway and BYD, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Pilot Flying J

Pilot Flying J Out to Hire 5,000 Workers

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Pilot Flying J, the largest travel center network in North America, has announced its first-ever National Hiring Day on May 2 – the largest in-person and virtual hiring event in the company’s history.

Gearing up for the influx of travelers this summer, the company aims to hire more than 5,000 new team members across its network of more than 750 travel centers in the U.S. and Canada. Pilot Flying J invites job seekers to experience and explore what it means to be part of the Pilot Flying J team with on-the-spot in-person and virtual interviews.

“Making the decision to start a career at Pilot Flying J provides the opportunity to work hard, have fun and live up to one’s full potential, while also advancing professionally,” said Paul Shore, chief people officer of Pilot Flying J. “Hiring 5,000 enthusiastic team members to join our company in a wide array of positions across North America is an exciting challenge, especially during a time of low unemployment. To help candidates get a feel for our values and culture, learn about the great benefits we offer and find the right job opportunity, we can’t rely on standard outreach. That’s why we’re inviting everyone to join us on National Hiring Day.”

Berkshire Hathaway and Pilot Flying J

In October 2017, Berkshire Hathaway made a $2.76 billion investment in Pilot Travel Centers. Under the terms of the agreement, Berkshire will become the majority owner in five years.

© 2019 David Mazor


Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.