US Homebuilding Exterior Materials – Industry Update – Roofing, Siding & Windows

What’s your view on the current operating environment when it comes to building materials? What are normal lead times and how are things shaping up across roofing, siding and windows? What 2-3 trends would you highlight today?

What are you seeing in terms of inventory across the board? Are you starting to see inventories build above healthy levels across any materials? If so, what’s driving the build? Is it a function of the housing forecast or just a drop-off from the elevated demand?

You talked about 6-12 months, but if you think a bit further out, do you have any expectations for a big distributor de-stocking across exterior products over the next 12-24 months?

What would trigger a large de-stocking? What would it take to get there, and is there a certain metric you’d be looking at?

Have the elevated prices and lead times for standard building materials over the last two years increased the appetite for premium substitution? Was the tightening price spread a catalyst for people to look away from asphalt roofs, for example? More generally, did customers start to evaluate new materials over the past two years?

Can you discuss the material shifts you are seeing within siding and cladding from vinyl, fibre cement, engineered wood, etc? Which siding materials are gaining and losing market share?

Is the vinyl market still growing as the entire exterior cladding market grows, or is it growing but becoming a smaller piece of the overall pie for exterior cladding?

When you look across the siding competitive landscape, are any manufacturers performing particularly well in terms of product quality and availability?

Have there been any interesting material shifts in roofing and windows? What new materials are gaining or losing market share for each of those?

When you look across today’s competitive landscape, which windows, siding or roofing manufacturers are taking or losing market share? What’s driving each side?

You highlighted the potential for consolidation, specifically with retrofit windows. Where else would you expect to see consolidation across building materials?

How should we think through when manufacturers will stop being able to capture the pricing? You alluded to the historic pricing increases we’ve seen over the last two years, but presumably that narrative would change given easing supply chain constraints and waning demand. When might that happen and where would it become more difficult for manufacturers to pass costs on?

When you look up and down today’s homebuilding value chain, whose margins are most at risk and why? We’re seeing housing starts fall, retrofit demand potentially slow and we saw a lot of pricing get passed through these last two years.

We’ve mentioned everything slowing down, but given the narrative that the US is structurally short of houses, there’s also a constrained supply chain and the infrastructure investment, is there enough structural demand in place to create a floor for building materials?

How should we think about the more recent shift towards the build-for-rent market? Nearly every builder is talking about increasing their footprint within build-for-rent. What impact could it have on the future building materials market? Do you have any apples-to-apples comparison from build-to-rent for single family in terms of the most significant differences in the amount or types of materials required?

How does working with investors differ from working with builders when it comes to build-for-rent? Do investor groups have a different buying process, or need different amounts or types of materials? You mentioned buying cheaper materials. What differences are noteworthy when selling to investors, given they’ve been the big buyers of build-for-rent?

If players start to trade down and buy cheaper materials, what would that look like? What is your outlook for the next 1-5 years?

Are there any new and emerging trends across any of the building materials, such as shorter replacement cycles? What could serve as another offset during periods of prolonged softness? How should we differentiate the potential of that effect across siding, windows and roofing?