Windows & Doors

# Executive Summary * The Windows & Doors industry is currently under significant pressure from high interest rates and a broad housing market slowdown, which is dampening demand for both new construction and discretionary remodeling projects. * Volatile commodity prices and tariffs are compressing manufacturer margins, creating a competitive advantage for companies with resilient, localized supply chains and strong pricing power. * Technological innovation, particularly in smart home features and access control systems, is the primary driver of differentiation and a key source of future growth for industry leaders. * Financial performance is bifurcating, with vertically integrated and tech-focused players outperforming peers who are more exposed to cyclical volume declines. * The competitive landscape is being reshaped by significant M&A, as large players consolidate to gain scale and broaden their product portfolios. * A long-term tailwind exists from the aging housing stock, which supports a stable, high-margin repair and remodel (R&R) market, partially offsetting new construction weakness. ## Key Trends & Outlook The most critical factor impacting the Windows & Doors industry is the macroeconomic headwind from elevated interest rates and the resulting housing market slowdown. This slowdown is directly suppressing demand, leading to significant volume declines and an unprecedented negative mix shift to lower-priced products, as seen in JELD-WEN's 19.1% revenue drop in Q1 2025. The mechanism is twofold: higher borrowing costs reduce housing affordability for consumers and delay new construction projects for builders, with some customers seeing project churn rates extend from approximately 300 days pre-pandemic to around 500 days currently for Janus International. This environment is creating a clear divergence between companies heavily exposed to cyclical demand and those with more resilient business models. While the pressure is expected to persist in the near term, some market participants note early signs of stabilization, suggesting a potential rebound in 1-3 years. Concurrent with demand pressures, manufacturers face significant margin compression from volatile raw material costs and tariffs. This directly impacts profitability, with companies like Apogee Enterprises expecting a $0.35 to $0.45 unfavorable EPS impact from tariffs alone in fiscal 2026. This challenge highlights the strategic importance of supply chain management, where companies like Fortune Brands Innovations have gained a competitive edge by significantly reducing their reliance on China by over 60% in favor of a predominantly North American-focused supply chain. The most significant opportunity for differentiation and value creation lies in technological advancement. Leaders are embedding smart features and digital tools into their products, creating new revenue streams, as exemplified by Fortune Brands Innovations' digital portfolio, which is on track to reach $300 million in annualized sales by year-end 2025 and $1 billion by 2030. Janus International's Nokē Smart Entry System, with 409,000 units installed by Q2 2025, representing a 26.6% year-over-year increase, further demonstrates this trend. The primary risk is continued macroeconomic pressure on the housing market, which could prolong volume declines and further erode profitability for players unable to offset headwinds through innovation or market share gains. However, the residential repair and remodel (R&R) market provides a crucial mitigating factor, with an aging housing stock creating a long-term tailwind for R&R activity, particularly for companies like Janus International, which is capitalizing on over 60% of U.S. self-storage facilities being over two decades old. ## Competitive Landscape The Windows & Doors market is characterized by a mix of large, diversified players and specialized leaders, with recent M&A activity, such as Owens Corning's acquisition of Masonite, driving further consolidation. Some firms gain a significant competitive edge through vertical integration, which provides robust cost control and speed to market. Tecnoglass, for instance, leverages its low-cost manufacturing footprint in Barranquilla, Colombia, combined with integrated U.S. distribution, to achieve industry-leading gross margins of 43.9% in Q1 2025 and offer faster lead times of 5-6 weeks for its residential dealer network. This integrated approach allows for efficient production of high-specification products, such as hurricane-resistant glass. In contrast, other players dominate specific niches by embedding proprietary technology into their solutions and offering a full-service approach. Janus International Group exemplifies this by specializing in turn-key solutions for the self-storage sector. The company not only provides roll-up and swing doors but also offers the Nokē Smart Entry System, a technology solution that enables virtual facility management and commands a premium, allowing it to gain market share from smaller, less capitalized competitors. Finally, large, diversified firms compete by building a broad portfolio of trusted brands and growing through strategic acquisitions. Owens Corning's acquisition of Masonite significantly expanded its presence in branded residential building products by adding a leading doors business. Similarly, Fortune Brands Innovations leverages a portfolio of iconic brands like Therma-Tru doors and Yale smart locks, alongside strategic acquisitions and a focus on digital solutions, to maintain market leadership across various product categories. ## Financial Performance Revenue performance across the Windows & Doors industry is sharply bifurcating based on business model resilience and market focus. This stark divergence is a direct consequence of the housing market slowdown. Companies with differentiated products and exposure to less cyclical segments are gaining market share, while those more reliant on traditional new construction are experiencing significant volume declines. Tecnoglass's 15.4% year-over-year revenue growth in Q1 2025, driven by organic expansion and market share gains, exemplifies the success of a vertically integrated model in capturing share. In contrast, JELD-WEN's 19.1% year-over-year revenue decline in Q1 2025 proves the acute pressure on less-differentiated players facing intensified volume declines and an unprecedented negative mix shift. {{chart_0}} Profitability also shows a clear divergence in margin resilience. Gross margins vary significantly, with some companies achieving over 40%, while others fall below 15%; similarly, EBITDA margins range from over 30% to low single digits. The primary drivers of profitability are cost structure and pricing power. Vertically integrated players are better insulated from commodity price volatility, while companies with strong brands or proprietary technology can command premium pricing, protecting margins even as volumes fall. Tecnoglass's robust 43.9% gross margin in Q1 2025 highlights the benefit of its cost-advantaged vertical integration and pricing power. In contrast, JELD-WEN's adjusted EBITDA margin fell to just 5.5% in Q3 2025, demonstrating the severe impact of volume deleverage and cost pressures. {{chart_1}} Capital allocation strategies reflect a balanced approach of returning capital to shareholders while pursuing strategic M&A and investing in technology. Amidst market uncertainty, financially healthy companies are signaling confidence through share buybacks and dividends. Installed Building Products exemplifies shareholder returns with its new $500 million stock repurchase program authorized in February 2025 and consistent dividend increases, including a 6% increase in its quarterly cash dividend in Q3 2025. Simultaneously, the industry is using this period to consolidate and invest in future growth drivers, with Owens Corning's acquisition of Masonite representing the industry's focus on transformative M&A to expand its presence in branded residential building products. The balance sheet health across the industry is generally robust for market leaders but stressed for those underperforming. Strong operational cash flow allows leaders to deleverage and build robust liquidity, providing flexibility for investment and capital returns. Conversely, poor profitability is straining balance sheets and increasing leverage for laggards. Tecnoglass's achievement of a record net cash position of $157.3 million in Q1 2025 and a net leverage ratio near zero serves as the benchmark for financial strength in the sector, with total liquidity climbing to $550 million in Q3 2025. This contrasts sharply with JELD-WEN, whose net debt leverage ratio increased to 4.6x in Q1 2025, exceeding its target range. {{chart_2}}