Anchor Peabody attended the International Roof Expo in Las Vegas last month. The show was well attended an chock full of educational events, seminars, networking opportunities and exhibitors. Below is a brief list of our key takeaways for industry participants:
- Calendar Year 2025 Characterized by Unevenness – A lack of storms and some state-level legislation (e.g., prohibition on contractors absorbing deductibles) hurt the insurance industry last year. At the same time, certain sectors (namely data centers) kept up a pace of record demand, and some commercial contractors had record years. Self-pay residential business was largely down as low consumer confidence and expensive financing kept many homeowners from investing in renovation projects, and the industry hit the full brunt of course correction after a post-COVID boom. This past year was largely a problem-solving year for owners and executives.
- Industry Leaders Remain Bullish on 2026 – an NRCA poll found that most (75%+) respondents are predicting and up year, with only 4% projecting 2026 to underperform relative to last year. As we exit the post-COVID correction and interest rates continue to trend down, most executives expect a rebound in the residential business. Commercial contractors exposed to technology facilities have strong backlogs and the geographic reach of these projects is expanding to include the Carribean and Central/South America, where some domestic contractors can particpate. While some projects outside of data centers have been delayed due to funding or labor issues, the expectation is that 2026 will capture some of these delays and be a growth year across end-markets.
- Product Priority Shifts – Many contractors have seen an uptick in the coatings business, as they are easy to apply and serve a real need in many projects. We have also seen metal as a share of the market coming up due its durability and applications across industries, despite a higher price point.
- Top Challenges Differ from Prior Years – Challenges remain in the industry, with 50% of poll respondents citing the economy and inflation as a concern, making it the number 1 challenge; this item was not even a top 5 concern from poll respondents last year. Other key challenges include a lack of skilled and legally compliant workers (36%) and government/policy issues (29%). Panel members recommended owners and operators shift to a more personal, face-to-face driven recruiting model in this tight market, with less of a focus on passive online recruiting.
- Technology Adoption and Deployment Remains Paramount – Many companies, especially in the residential market, are embracing technology and AI to go to market quicker, close faster, decrease administrative costs, and lower cost of customer acquisition. It is easy to look at the landscape of AI and be overwhelmed or even dismissive of its grandiose promises, but there are real value-enhancing use cases for contractors. Purpose-built programs that recognize patterns can assist contractors in marketing, estimating, scheduling and routing. What’s more, consumers are more familiar with AI than they ever have been, and contractors should anticipate consumers to ask questions driven by AI usage.
In total, the industry is preparing for a recovery year, though the magnitude is highly uncertain. Owners and operators should be active rather than reactive in a rapidly changing market, evaluating and re-evaluating their strategic plans, use of technology, end-markets and product offerings/capabilities constantly. The M&A market for roofing contractors remains active, and while valuations and profitability levels are below their 2021-2023 peak, roll-ups and private equity firms continue to seek out high quality businesses and will pay fair prices.
Anchor Peabody is a boutique investment bank serving the building products and services community, with a dedicated Roofing & Exterior Contractor practice. Should you ever wish to have a confidential conversation on the state of the market and opportunities/options for your business, please reach out to me, Aaron Toomey at [email protected] or at 917.520.2256