Midwest: Roofs hold up
Homeowners are pulling back from discretionary remodeling projects, and retailers are feeling the pinch in the kitchen and bath departments. But most people won’t put off replacing their roofs. A 2006 survey of U.S. households by the Home Improvement Research Institute found purchasing declines in 10 out of 14 building material categories. But spending on roofing products remained unchanged.
Roofing trends tend to be regional, in keeping with the dominant architectural style. But in general, homeowners are gravitating toward dimensional shingles, which have replaced strip shingles as the preferred roofing choice. Nowhere is this more true than in the Midwest, where homeowners like the value (30- or 40-year warranties) and adaptability to different house styles.
“It’s a thicker, heavier look [that creates] a shadow line,” explained Joe Corah, Do it Best’s division manager for roofing, insulation and gypsum. Dimensional shingles are also popular with members of the Fort Wayne, Ind.-based co-op because of fewer callbacks, according to Corah.
“Because they’re heavier, they’re not going to blow off or curl on the edges,” he said.
A number of manufacturers make dimensional shingles, including Owens Corning, GAF-Elk and CertainTeed. They can imitate different looks and have fancy names like CertainTeed’s “Hallmark Shangle,” an asphalt and fiberglass shingle that looks like wood shake. Although it carries a 40-year guarantee, CertainTeed markets the product’s aesthetics.
“Most of the manufacturers are [no longer] leading with the warranty,” said Joe Ravana, vp-purchasing for Allied Building Products, one of the largest roofing distributors in the country. “People buy what they like.”
When it comes to higher-end products, people are starting to like metal roofing. Although traditionally a product for the commercial market, the East Rutherford, N.J., firm has been selling it for residential applications, Ravana said.
Do it Best is seeing a similar trend. “Our sales of metal roofing are really picking up,” Corah said. “I think you’re going to see a lot more of that, especially in resort areas.”
Tamko Building Products in Joplin, Mo., makes a line of steel shingles that resemble wood shake, slate and tile. Called MetalWorks, the products can install directly over asphalt shingles and carry a 50-year warranty.
“We’ve seen a big jump in metal sales in mountain and resort communities,” said Tamko spokesman Gary McElyea. People like the fire and hail resistant attributes of metal roofing but don’t want the “standing seam” look of commercial products. “You don’t want your house to look like a shopping mall,” McElyea said.
Another high-end product popular in resort areas are synthetic shingles, which also carry a 50-year warranty. Ray Rosewall, president and CEO of DaVinci Roofscapes, points out the challenges of reroofing a second home in an inaccessible mountainous or lake area. Labor can be in short supply, and weather may only permit a short window of opportunity for construction activity. Homeowners don’t want to spend their vacation time overseeing a roof replacement, so they’ll pay more for a product that will last a lifetime.
“That way, they don’t have to worry about maintenance and problems,” Rosewall added.
Dan Fesler, CEO of Lampert Yards, has another explanation: roof cachet.
The St. Paul, Minn.-based pro dealer operates locations in resort communities throughout Minnesota and Wisconsin, in towns like Lake Elmo, Moose Lake, St. Croix Falls, Sister Bay and Washington Island.
Through its installation division, Lampert Exteriors, the company installs roofs on vacation homes throughout the Great Lakes region.
“If people are building a million dollar home,” Fesler said, “they don’t want an ordinary looking shingle.”
Lumber Liquidators closes IPO
Toano, Va.-based specialty hardwood flooring retailer Lumber Liquidators has closed its initial public offering.
The company offered 10 million shares of common stock at a price of $11 per share, including 3.8 million shares offered by the company and 6.2 million shares offered by selling stockholders.
The company intends to use the net proceeds of approximately $36.4 million from the offering to repay outstanding debt and support the growth of the business, which includes plans for 25 stores in 2007, followed by 30 to 40 new stores per year until 2011.
Goldman Sachs and Merrill Lynch acted as joint book-running managers with Lehman Brothers, Banc of America Securities and Piper Jaffray serving as co-managers for the offering.
Lumber Liquidators has seen same-store sales growth of 8.5 percent to 9 percent each quarter this year. According to the company’s S-1 filing with the Securities and Exchange Commission, in 2006 Lumber Liquidators had sales of $332 million, up 35 percent from sales of $245 million in 2005.
The retailer currently operates 111 small-format stores in the United States. The company is traded on the New York Stock Exchange under the symbol “LL.”
NKT Holdings withdraws initial public offering
Providence, R.I.-based HVAC company NTK Holdings has canceled its initial public offering according to a Securities and Exchange Commission filing this week.
The company said that the application was withdrawn “due to the unsettled market conditions.” The company had planned to use the IPO proceeds to repay debt.
The announcement was part of Nortek’s third-quarter earnings statement. Nortek, which reported a 4 percent increase in sales, is a subsidiary of NKT.
The company reported net earnings of $37.6 million for the period ended Sept. 29, down 44.9 percent from last year’s earnings of $67.7 million in the same period last year. Nortek also reported net sales of $602 million, up 4 percent from $579 million last year.
NTK Holdings manufactures air conditioning, heating ventilation and home environmental control technology products.