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State of the Market

The residential fenestration M&A market continues to benefit from continued economic growth and buoyant capital markets

Secular growth and an abundance of liquidity are driving a hot M&A market in residential building products, and the fenestration market is benefiting from this momentum. Strategic and financial buyers are battling for the most sought-after assets, and sellers are enjoying the rewards of more aggressive valuations and financing terms.

Consumers are continuing to invest in housing, with positive de-urbanization trends, repair and remodeling growth, and favorable shifts in demographics cited among the drivers of what industry analysts call a “runway for a multi-year housing cycle upswing.” We are seeing strong demand for all building products for both the new construction and repair and remodeling (R&R) markets. Many of our clients are sold out deep into 2022. 

Fundamentals support positive trends  

In November 2021, U.S. housing starts reached 1.679 million (preliminary), an increase of 11.8 percent from 1.502 million in October and 8.3 percent above the November 2020 rate of 1.551 million. The National Association of Home Builders is forecasting total housing starts to increase 2.5 percent in 2022 to a seasonally adjusted rate (SAAR) of 1.605 million units in 2022, up from a projected SAAR of 1.566 million units in 2021. 

The Harvard Joint Center for Housing Studies forecasts 9 percent growth in R&R spending in Q4 2021 and projects the pace to maintain into 2022, with annual spending reaching $400 billion by Q3 2022. “Residential remodeling continues to benefit from a strong housing market with elevated home construction and sales activity and immense house price appreciation in markets across the country,” observes Abbe Will, JCHS senior research associate. “The rapid expansion of owners’ equity is likely to fuel demand for more and larger remodeling projects into next year.” 

Home prices continue to rise. The S&P CoreLogic Case-Shiller National Home Price NSA Index rose 19.1 percent in October from a year ago. Builder confidence remains strong, increasing for the fourth consecutive month in December. 

The fenestration market is benefiting from market strength:

  • Cornerstone Building Brands (CNR) reported 20 percent pro forma net sales growth in Q3 2021, marking the third consecutive quarter of year-over-year double-digit net sales growth. 
  • PGT Innovations (PGTI) reported a 26 percent increase in net sales and total organic growth of 14 percent in Q3 2021, citing strong growth in the Western region and Florida. Organic R&R sales grew 8 percent during the quarter, and organic new construction sales grew 22 percent. Backlog is up 74 percent year-over-year. CEO Jeffrey Jackson says: “I'm feeling very good as we look into 2022 because I think we'll continue to see double-digit growth.”
  • Jeld-Wen achieved its fifth consecutive quarter of core revenue growth in Q3 2021. CEO Gary Michel reported accelerating customer demand, citing strong order and backlog growth that was broad-based across its segments. 

“Demand for our products in the quarter was and remains robust, and we expect growth to persist as consumers continue to invest in housing,” said Fortune Brands CEO Nicholas Fink, in the company’s Q3 2021 earnings call. Sales in the quarter were $1.99 billion, a 20 percent increase, and organic sales were up 14 percent.

Inflation is resulting in higher prices

Headwinds of rising labor and input costs remain drags on profitability. Some manufacturing companies have been more successful than others passing along cost increases, but most are realizing a portion of the increase resulting in lower margin. 

PGTI announced a 3 percent surcharge in its Florida operations that took effect at the beginning of November 2021, said Jackson in the company’s Q3 2021 earnings call. He also highlighted cost increases in aluminum, glass, hardware, vinyl and supplier-based surcharges, citing a 16 percent increase in aluminum spot prices during the third quarter alone. Approximately 60 percent of the company’s sales are aluminum products. 
Cornerstone Building Brands raised prices across its portfolio, said CFO Jeffrey Lee, also citing cost increases for commodities such as PVC resin, steel and aluminum stemming from supply shortages. 

Building materials prices have seen increases of more than three times the level of one year ago, reports the NAHB. Through the 11 months ended November 2021, prices have increased 14.1 percent, which compares to only 3.9 percent for the same period in 2020 and an average year-to-date increase of 1.5 percent between 2015 and 2020.  

Cash is king

Cash-rich strategic buyers are seeking acquisitions to boost topline growth through product line, geographic and channel expansion. Strategics are showing selectivity; however, when a high-quality deal comes to market, they are moving faster and are aggressive on valuation and deal terms. 

PGTI spent close to $250 million on three acquisitions in 2021, including Anlin Windows & Doors in October, paying $126 million and 8.5x EBITDA (pre-synergies), a transaction that the company expects to be accretive. Consideration consisted of $113.5 million in cash and $12.6 million in earnouts linked to 2022 and 2023 performance targets. PGTI expects the acquisition to expand its market presence in the high-growth West Coast region. Anlin achieved sales growth of more than 30 percent in the trailing 12-month period ended Q3 2021 compared to Q3 2020, according to Jackson in the company’s Q3 2021 earnings call, illustrating that buyers are paying strong multiples for growth. 

In February, PGTI acquired a majority stake (75 percent interest) in Eco Window Systems for $108 million, comprised of $100 million in cash and $8 million in stock. The business generated revenues of $73 million with upper teens EBITDA margin. With the acquisition, PGTI expects to expand its market position in the Florida commercial market, where it anticipates long-term growth.

One of Cornerstone Building Brands’ strategic priorities is to pursue “…inorganic investments to accelerate innovation and growth.” The company completed two acquisitions in the fenestration market in 2021, including in October, Cascade Windows for $245 million in cash (1.53x Revenue) and Prime Window Systems in May for $95 million (1.57x Revenue), both furthering its market position in vinyl windows in the Western U.S.

In October, Westlake Chemical (WLK) completed the acquisition of Boral’s North American building products business. In the company’s Q3 2021 earnings call, Albert Yuan Chao said the deal will “transform” its existing building products business, adding vinyl windows as a new strategic product platform, in addition to other specialty building product sectors including siding, trim and shutters, roofing and decorative stone. WLK flexed its balance sheet muscle to fund the $2.15 billion all-cash transaction, using $1 billion of cash on hand and a debt issuance, valuing the business at an estimated ~10x F1H21 EBITDA annualized, pre-synergies. The deal will increase WLK’s building products exposure from 28 percent to 37 percent of total company revenues. In terms of geographic expansion, BNA will expand its presence in the South and West, complementing its existing Midwest and Northeast operations. Approximately 50 percent of WLK’s building products business is oriented to the repair and remodeling markets, Chao said. 


Barring any unforeseen geopolitical events, we expect the M&A market to remain active into 2022, sustained by continued economic growth and buoyant capital markets. Inflationary conditions and rising interest rates could have a dampening effect on expected growth. Valuation multiples should stay strong, but any material upside is unlikely given current pricing levels.


Andrew K. Petryk

Andrew K. Petryk

Andrew K. Petryk is a managing director and leads the Industrials practice at Brown Gibbons Lang & Company, an independent investment bank serving the middle market. BGL publishes the Building Products Insider, a nationally recognized research publication which discusses critical industry trends and perspectives from leading executives. Contact Petryk at 216/920-6613 or Opinions expressed are the author's own and do not necessarily reflect the position of the National Glass Association or Window + Door.