Ply Gem Industries recently announced its second price increase in six months for vinyl siding products with company officials pointing to higher PVC resin costs as a reason for the price hike of 6 to 8 percent.
The Cary, N.C.-based company initially raised prices for its Mastic and Variform brand siding by 6 to 8 percent in December. Major competitors followed with the same rates of increase implemented by Royal Building Products and CertainTeed. Will they do it again? That remains to be seen.
Resin prices were favorable in 2015 and 2016 but that's not the case so far this year, according to Ply Gem Chairman and CEO Gary Robinette. The company says it saw a year-over-year April cost increase of 18 to 20 percent for PVC.
"There's still commodity headwinds," Robinette said Monday during a quarterly conference call with investment bankers. "Very seldom — and it's only happened a couple times since I've been here — did we go out for two price increases in a short period of time. To cover that headwind, we had to go back out."
Robinette, who was named CEO in 2006, said he thinks PVC prices will flatten out soon but it will take Ply Gem 60 to 120 days "to get on the right side of it." The second price increase for siding goes into effect on June 3.
Back in September, Ply Gem also announced an increase of 6 to 8 percent for window prices for 2017, citing increased material costs for PVC, aluminum and glass. However, the company carries more siding inventory than windows so the higher resin costs won't "flow through" the siding, fence and stone segment until the second or third quarter, CFO Shawn Poe said.
"The vinyl siding industry is a very consolidated industry and has acted rationally for a number of years," Poe added. "I don't expect a dramatic break from that, but we just announced a second price increase so it's too early to tell. I'd say if that second price increase doesn't hold, it's probably because PVC doesn't go to the level that the PVC producers are trying to push it to or maybe it actually walks back a little bit sooner."
Overall, Ply Gem had a strong first quarter with net sales up 5.2 percent to $430 million and a gross profit of $89.5 million.
During the conference call, company officials also said they will combine their Ply Gem and Simonton window groups; manufactured stone is their fastest growing category of cladding; and the acquisition pipeline is shallow with no big deal in the works but a small bolt-on acquisition is possible.
