TAMKO Building Products LLC

Overview Key strengths Key risks U.S. roofing manufacturer derives over three-quarters of sales from nondiscretionary repair and replacement. Narrow product focus on roofing shingles within the U.S. market alone, compared with larger, more diverse roofing producers. Adjusted net leverage well below 4x-5x, which supports our rating. U.S. southeast-focused footprint exposes it more to storm-based demand and related revenue volatility compared with direct peers. Ample liquidity with no debt maturities until 2026. Prone to input cost volatility, particularly from energy- and crude oil-related inputs like asphalt. Aggressive dividend policy, with payouts amounting to almost all of its free cash flow. We expect the company?s revenue to be about $1 billion in 2023, down 10%-12% versus the prior year, due to a

...We expect TAMKO Building Products LLC's volumes and revenue will decline over the next year due to weaker demand conditions from slowed residential construction activities. We expect the company's revenue to be about $1 billion in 2023, down 10%-12% versus the prior year, due to a slowdown in residential construction activities including repair and remodeling spending. Still, the company derives about 75% of its revenues from nondiscretionary roof replacement. We believe this makes the company less prone to extreme cyclicality from business and economic cycles when compared with peers in other building materials categories. That said, during periods of economic stress, customers could delay or defer full roof replacements for repairs instead, which could weaken demand. We expect TAMKO's profitability will modestly decline such that S&P Global Ratings-adjusted EBITDA margins return toward historical level of 15%-18%. We expect slower demand and less favorable price realizations (compared...

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