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Business Observer Friday, Sep. 14, 2018 10 months ago

Contractors raise the roof on revenues, profits

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Roofers nationwide are keeping up with demand.

The labor shortage has done little to damage an upward growth pattern in the U.S. roofing industry — a sector in its fourth consecutive year of improved profitability and double-digit percentage increases in sales.

A big reason for the continued surge, reports financial information firm Sageworks, is keeping up with demand in new home construction and storm-related damage repair work. 

Sales among privately held roofing contractors have increased, on average, 14% in the 12 months ended May 1, Raleigh, N.C.-based Sageworks reports. That follows 15% sales growth in 2017 and a 13.5% increase in 2016. And it makes 2014’s 3.9% increase downright paltry. 

The average profit margin for roofing contractors, meanwhile, was 6% in the year ended May 1. That marks four straight years of margin increases, going back to 4.2% in 2014, the Sageworks survey found.

“Roofing contractors have experienced stronger sales growth in recent years, tracking pretty closely with sales increases among all types of construction firms in our database and outperforming private companies broadly when you look across all industries,” Sageworks analyst Libby Bierman says in a statement. “And like many subindustries in the construction sector, roofing contractors don’t typically have the fattest margins. However, roofers have been able to improve their profitability in recent years.”

While the growth is projected to continue, Sageworks, citing reports from the National Roofing Contractors Association and other outlets, points to somewhat obvious but significant challenges the industry faces. The labor shortage is one, as is rising material costs stemming from U.S. tariffs on steel and aluminum imports.

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