Robert J. Pavuchak, Post-Gazette Maggie Hardy Magerko of 84 Lumber "You don't want to be No. 3." Click photo for larger image. Previous Coverage: Plug pulled on 84 Lumber Classic

The new year had just begun and 84 Lumber Co. and its president, Maggie Hardy Magerko, were riding high.

Sales at the Washington County-based company had reached nearly $4 billion, making 84 Lumber No. 1 among privately owned building materials suppliers serving pro contractors and No. 2 overall; 2006 looked like the year 84 Lumber would take the top spot.

Ms. Hardy Magerko was set to attend a gala reception at a builders' show in Orlando, Fla., where she would be honored by a hardware industry group for her community work.

Then, four days before the party, the news broke.

The No. 3 company -- Redmond, Wash.-based Lanoga Corp. -- was being sold. Like 84 Lumber, the business had been started by a family and stayed private as it grew. "I always admired Lanoga," said Ms. Hardy Magerko, who was shocked by the announcement.

For 84 Lumber, the sale challenged its industry standing. The Lanoga buyers planned to combine the operation with a smaller company, boosting a new Pro-Build Holdings organization into the top spot. 84 Lumber would slip to third behind Pro-Build and Stock Building Supply, a subsidiary of a United Kingdom company.

"In any industry, you don't want to be number three," said Ms. Hardy Magerko. "It's difficult to be profitable at number three."

For her personally, the news helped solidify concerns she'd had about keeping her business competitive and in the family.

Three months later, 84 Lumber officials would make a couple of startling announcements. The company unveiled an aggressive expansion plan to double sales in three years, add 125 stores and hire 1,000 sales reps. And it abruptly closed 67 stores, including several in the Pittsburgh area.

Even more shocking was the company's announcement a week later that it would no longer host a professional golf tournament as part of the PGA Tour, even though the 4-year-old event had just been granted a coveted mid-June date with high-profile coverage on CBS.

Ms. Hardy Magerko, who sat down for an interview in her Eighty-Four office this week, has heard the questions about what it all means and the potshots that a wealthy company is ruthlessly pinching pennies to drive corporate profits. Some people want to know if 84 Lumber in trouble.

The reality, she said, is the opposite. News of the Lanoga sale drove a range of decisions that she believes will make 84 Lumber even stronger -- and free of the burdens that may come from being a public company. Indeed, being public had been part of the company's agenda until the events of the new year unfolded, an agenda she never fully bought into.

More than a year ago, Ms. Hardy Magerko, determined not to burden her company with heavy debt loads, had decided with her management team that the private company would need to start selling stock on Wall Street. "I was convinced I was going to go public," she said.

But the decisive, independent daughter of Joe Hardy, an entrepreneur who turned a small Western Pennsylvania company into a major player in its industry, didn't want a boss. She didn't want to have to explain her decisions to close stores or to cancel a golf tournament to Wall Street. She gets enough debate from her own feisty management.

"I started getting anxiety attacks, literally," she said during the interview. Those anxiety attacks, and the Lanoga announcement, finally convinced her an initial public offering was out of the question.

84 Lumber needed another strategy and quickly. Within a couple of months, management developed its new plan, ending with April's major store expansion-and-closing announcement and the even more surprising cancellation as host of a PGA Tour event.

The latter was particularly noteworthy because only a few months earlier, the company got the news the PGA Tour had awarded its 4-year-old tournament the high-profile June date that founder Joe Hardy wanted.

But pretty soon, it became clear the higher costs of such things as moving from ESPN to CBS would bump the overall price tag up to the point where 84 Lumber expected to pay $100 million over the six-year contract.

That's money that could be used to build a lot of new stores plus help pay for acquisition of companies that can fill in services not offered by 84 Lumber now.

Ms. Hardy Magerko couldn't justify putting so much money and staff time into a golf tournament, especially since her customers are not the broad consumer audience that would be attracted to a CBS broadcast.

She broke the news to her father. "I didn't ask him. I basically told him," she said, knowing that he would hate losing the event. And he did, though she said he agreed with her assessment of the financial bottom line.

Ms. Hardy Magerko has mixed emotions about how things worked out with the PGA. She has offered to host the fall tournament another year if the organization can't find a replacement in time.

She believes the golf organization might have helped 84 Lumber more in making its numbers work. She said the PGA was unwilling to sign a deal shorter than six years or to allow the company to bring in a presenting sponsor to help share the expense, though she has heard it has been more accommodating for the group that stepped up to take the spot.

For now, 84 Lumber is prepared to put on its final PGA tournament in the fall and then move on. Ms. Hardy Magerko won't miss the constant meetings required to plan the annual golf event. That's time she can spend on the road meeting with her new store managers.

"It was an emotional decision," she said, admitting the past few months have taken a toll. But she is absolutely convinced she is doing the right thing for her company and its future.

"I'm looking for the long term here. I'm not looking six years down the road. I'm looking 20 years, 40 years," she said.

Ms. Hardy Magerko has been running the 50-year-old company founded by her gregarious father for several years. She led it deeper into the professional building supply market, moving away from the do-it-yourself business.

84 Lumber has been building bigger lumberyards in booming markets such as Florida and Arizona, and now claims a national presence that few in the industry can offer. Its growing chain of component plants are capable of assembling trusses to supply massive developments.

But mega developers want more. They want one-stop shops that can not only frame up houses but do the electrical and plumbing work, too. Just last week, Stock Building Supply acquired three electrical companies and a plumbing installer in Las Vegas. Two weeks ago, it bought a Indianapolis supplier of roof trusses, wall panels and flooring.

If 84 Lumber is to compete, it needs to offer more services and put its lumberyards in the midst of prime areas, not in slow growth markets such as Pittsburgh.

The analysis of return on assets over 521 stores turned up 67 that didn't make the cut. Money saved there would be needed to pay for other initiatives.

The average new store would cost $4.5 million for land and construction but each store is projected to produce between $10 million and $13 million in sales in the first year.

Those 1,000, new outside sales representatives are meant to get more orders from the huge builders that 84 Lumber has not done a lot of work for. Each should bring in an average of $1.5 million in sales annually.

If the company can keep the growth going, it can improve its market position and pay its bills, too. There's not a lot of room for maneuvering because so much is tied in up inventory and real estate. "A lot of people think we have a lot of cash lying around," said Ms. Hardy Magerko.

Meanwhile, the company hopes to break ground soon on a new headquarters complex that will be built on 80 acres near its existing facilities. Phase one will be a 78,000-square-foot structure.

A previous plan to enclose the original 84 Lumber store was abandoned. While there are always permitting issues, Ms. Hardy Magerko said the idea of closing that first store became too emotional. "I had customers calling me," relating stories of going there with their fathers.

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Correction/Clarification: (Published May 11, 2006) This May 10, 2006 story about 84 Lumber Co. originally reported that its annual revenues for last year was $3.46 billion. That was the figure for 2004. In 2005, the private company reported revenue of nearly $4 billion.