THE REROOFING INDUSTRY finished 2023 in an optimistic mood, according to findings from the Market Index Survey for Reroofing conducted in January 2024. Across the industry as a whole and in each of its three market segments, the survey suggested that the fourth quarter of 2023 was characterized by business expansion. ABOUT THE SURVEY The quarterly Market Index Survey for Reroofing has been collecting industry data since the fourth quarter of 2020. Survey participants are contractors and consultants (72% and 28% of all respondents, respectively, in the January survey). They represent every region in the United States and Canada and work for firms with annual gross revenues ranging from less than US$1 million to more than US$100 million. Participants self-identify the market segment they work in. In the January survey, 17% of respondents said their business is in the primarily steep-slope segment; the rest were closely divided between the primarily low-slope (41%) and blended (42%) segments. The most recent survey was sponsored by IIBEC, the Asphalt Roofing Manufacturing Association, Canadian Roofing Contractors Association, Chemical Fabrics and Film Association, EPDM Roofing Association, Metal Construction Association, Metal Roofing Alliance, National Roofing Contractors Association, National Women in Roofing, Polyisocyanurate Insulation Manufacturers Association, Roof Coatings Manufacturers Association, and Single Ply Roofing Industry. MEASURING THE MOOD OF THE MARKET Since its inception, the Market Index Survey for Reroofing has included two questions about business volume. The first of these questions asks the survey participants to compare the volume of customer inquiries received by their firm in the most recent quarter and in the same quarter of the previous year. The second question asks participants to provide a similar quarter-to-quarter comparison of the volume of their firm’s business contracts. In the January survey, these questions compared the fourth quarters of 2023 and 2022. Quarterly reroofing survey report 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Primarily steep slope Primarily low slope Blend between low slope and steep slope Total 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Primarily steep slope Primarily low slope Blend between low slope and steep slope Total Market Index Survey for Reroofing Indicates a Positive End to 2023 Figure 1. Customer inquiry indexes by market segment since the fourth quarter of 2020. The index is equal to the percentage of respondents indicating that the volume of customer inquiries has increased when compared to the same quarter of the previous year, plus one-half of the percentage of respondents reporting no change. The total is multiplied by 100 to create the index. A score of 50 or higher suggests expansion or optimism, while a value below 50 signals contraction or pessimism. Figure 2. Project contract indexes by market segment since the fourth quarter of 2020. The index is equal to the percentage of respondents indicating that the volume of project contracts has increased when compared to the same quarter of the previous year, plus one-half of the percentage of respondents reporting no change. The total is multiplied by 100 to create the index. A score of 50 or higher suggests expansion or optimism, while a value below 50 signals contraction or pessimism. 32 • IIBEC Interface March 2024 13% 11% 11% 37% 40% 32% 30% 25% 31% 19% 18% 18% 1% 6% 7% Q4 2023 (v. Q4 2022) Q3 2023 (v. Q3 2022) Q2 2023 (v. Q2 2022) Increased >25% Increased 5%-25% About the same Decreased 5%-25% Decreased >25% Nearly half (47%) of respondents said that the volume of customer inquiries in Q4 2023 was about the same as in Q4 2022, and more than one-third (37%) indicated that the volume had increased in Q4 2023. The remaining 16% said that they had fielded fewer inquiries in Q4 2023 than in Q4 2022. The question about business contracts yielded similar results: 41% of respondents said the volume of contracts was about the same in Q4 2022 and Q4 2023, 42% said that the volume was greater in Q4 2023, and the rest (17%) said the volume was lower in Q4 2023. For each quarterly survey, analysts index the responses to these two questions to determine whether the reroofing industry is in a period of growth (optimism) or contraction (pessimism). Each index is equal to the percentage of respondents indicating that the volume has increased when compared to the same quarter of the previous year, plus one-half of the percentage reporting no change. The total is multiplied by 100 to create the index. A score of 50 or higher suggests expansion or optimism, while a value below 50 indicates contraction or pessimism. For the fourth quarter of 2023, the indexes were over 50 for the industry as a whole and for each of the three segments. Remarkably, for the industry as a whole, the indexes have suggested market optimism since the first survey in Q4 2020. Refer to Fig. 1 and 2 for comparisons of the quarterly indexes from the Q4 2020 to Q4 2023. LITTLE MOVEMENT IN THE PROJECT BACKLOG AND VOLUME OF MATERIALS INSTALLED TRENDS In addition to the indexed questions, the survey also asks participants two other questions. First, all participants are asked to estimate their project backlogs at the time of the survey. Second, contractors are asked how the volume of materials installed in the most recent quarter compares with the volume from the same quarter of the previous year. The second question was introduced in the Q2 2023 survey. As shown in Fig. 3 and 4, the distribution of responses to these questions in the January 2024 survey closely resembles the trends seen in other recent surveys. 17% 18% 19% 18% 19% 17% 21% 22% 15% 14% 19% 18% 20% 37% 35% 34% 38% 40% 30% 27% 31% 34% 41% 37% 38% 45% 27% 25% 20% 23% 25% 28% 20% 19% 22% 25% 20% 24% 23% 9% 12% 14% 11% 9% 13% 18% 14% 10% 11% 14% 13% 7% 11% 10% 12% 10% 6% 11% 14% 13% 19% 8% 9% 7% 5% Jan. 2024 Oct. 2023 July 2023 Apr. 2023 Jan. 2023 Oct. 2022 July 2022 Apr. 2022 Jan. 2022 Oct. 2021 July 2021 Apr. 2021 Jan. 2021 No backlog 1-2 months 3-4 months 5-6 months >6 months Figure 3. Project backlog trends by survey month. Note: Due to rounding of percentages, totals may not equal 100%. Figure 4. Trended comparison of the volume of materials installed versus the same quarter of the previous year. Note: Only contractors may answer this question. JOIN THE PARTICIPANT POOL! IIBEC encourages its members to participate in future Market Index Surveys for Reroofing. By participating, you can help ensure that the data are robust and fully reflect industry trends. Check IIBEC’s weekly newsletter for announcements about survey participation and results. March 2024 IIBEC Interface • 33
