Specialist
Executive at an Austin-based windows and siding company
Agenda
- Pandemic impact on US supply and demand across exterior homebuilding materials, highlighting windows, sidings and roofing
- Lead times and expectations for normalisation
- Key suppliers’ differentiators and competitive strengths
- Category-wide pricing increases and H2 2022-23 supply-demand outlook
Questions
1.
What is your outlook for residential new construction starts in the US?
2.
Could you outline the operating environment over the last few years for windows? We’ve heard a lot about windows delaying housing completions. What were the pandemic’s impacts on windows?
3.
What are the key drivers of the window shortage or frenzy you just mentioned?
4.
You mentioned window market was frenzied for quite a while, and then a few weeks ago, you noticed demand started to drop. Do you have any idea what’s driving that demand drop? Is it just, as you said, a lot of pent-up demand now finally cooling off or a function of rising rates?
5.
What demand trends have you seen in windows? Has there been any notable change in customer behaviour for the types of windows demanded?
6.
What are the lead times for the various types of windows? How do those compare to historical norms and what did they look like at the peak levels you saw over the last two years?
7.
What drives the difference in lead times between remodel and new construction?
8.
You mentioned the difference in window lead times between the manufacturers, a lot of which I assume is driven by the supplier’s purchasing power. Have you seen any particular supplier that’s better managed the issues you’ve outlined for us?
9.
What else could have driven the rapid change in lead times? You mentioned thinking it was a bit artificial.
10.
Could you outline the competitive landscape for window manufacturers and what differentiates them? You mentioned you work with five or six.
11.
Across some of the window components – whether it’s PVC, wood, aluminium or composite fibreglass – do any remain in short supply?
12.
What do you expect lead times will look like? You mentioned the historical lead times at peak. Do you expect the continued decline back to normal levels, and what would you consider normal levels to be?
13.
How have the domestic manufacturers responded to the shortage you saw over a year ago? Did you see large increases in capacity or projections for increases? I believe you mentioned you didn’t see much capacity added.
14.
Why didn’t manufacturers add the capacity to meet the demand? Are they generally conservative with capacity adds?
15.
What do inventory levels look like today and how do they compare to what you’ve seen historically and at the window shortage’s peak?
16.
I believe you said demand is down 5-10% from what you normally see during spring in a peak season. Could you expand on the demand environment for the past two years and compare it to historical norms?
17.
What are your demand expectations as we exit the pandemic and return to some sort of normalcy? Do you expect demand to continue declining as you’ve seen in recent months or might it start to flatten?
18.
What do industry outsiders or investors often misunderstand about the window issues you’ve illustrated?
19.
How do you expect the slowdown and what you’re seeing for exterior materials – such as windows, siding and roofing – to flow through into residential homebuilding over the next 12-24 months?
20.
Given that a lot of the demand for windows is already booked in homebuilders’ backlogs, what is the risk that demand isn’t fully realised? Do you have any view on the potential for cancellations to increase materially? Alternatively, do you expect cancellations for homebuilding to stay in line with what they’ve been recently, which is historically lower?
21.
Are there any other demand drivers for windows? Are builders putting more windows into homes than they have historically?
22.
What are you seeing on the supply side for exterior materials such as on roofing and siding? Are there any noticeable lead time increases or any specific products that are harder to come by?
23.
You mentioned lead times are still quite elevated on siding, but that they’ve reduced for windows, so what’s driving that difference? Why are siding suppliers or manufacturers having more trouble?
24.
Could you discuss the lead times in siding? What did historical lead times look like and what did you see at the peak, or are we in the peak?
25.
Are you seeing any shifts in siding material trends for fibre cement vs vinyl? Is any material taking share of the overall siding market?
26.
Is anything else driving the demand shift into fibre cement, besides builders saving money or the overall code and regulatory shift?
27.
What roofing trends have you seen over the last two years, including the pandemic impacts?
28.
You mentioned the price increases across the board for each product category. How sticky do you think all these price increases will be as demand normalises? What are your pricing expectations? Might we start to see declines or will these stay flat?
29.
How have customers responded to the manufacturers? Have smaller players started to fall off because they can’t take the price increases? How have customers responded to the 7-8 price increases we’ve seen over the last two years?
30.
Do you think we’re nearing the top of these price increases, so there’s not much more price for manufacturers to push? I know you mentioned that if you were to see more increases, you might consider switching.
31.
You mentioned some of the regulatory trends that led to the fibre cement shift, but are there any other regulatory trends, either nationwide or in Texas specifically that lend themselves to a particular type of siding or window? Could any regulatory trends serve as a tailwind for any particular product?
32.
Are there any up-and-coming materials, perhaps an even more energy-efficient window, that we should monitor in windows or siding?
33.
What are your expectations for the window and siding industry for the next 12-24 months?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary 48 hour week trial
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited