Architectural glass and aluminum manufacturer Tecnoglass (NYSE:TGLS) this morning announced its entry into the vinyl window market, a move that the multinational manufacturer says will more than double the company’s addressable market and is expected to further solidify its position as an industry leader in architectural windows and glass solutions.
The decision to enter the vinyl window market is directly aligned with Tecnoglass’ ongoing diversification strategy to expand its footprint and leverage its competitive advantages. The company has signed a long-term supply agreement to procure vinyl frame profiles from a premier global supply chain partner, and in line with its vertically integrated platform, Tecnoglass will reshape the profiles to custom made specifications and will use its internally produced glass plus its newly installed vinyl assembling lines to manufacture and distribute cutting-edge vinyl windows for new and existing customers.
The new vinyl product line will be marketed under the company’s ES Windows Legacy Brand
Given its comprehensive vertically integrated manufacturing platform and its growing network of dealers and distributors, many of which already sell vinyl products, Tecnoglass says it expects to start production and deliveries in November of this year, more than doubling its addressable market while increasingly diversifying its revenue base going forward.
The expansion into vinyl windows offers a range of benefits to Tecnoglass and its customers:
- Enhanced Product Portfolio:Tecnoglass’ entry into the vinyl window market expands its product portfolio, offering customers a wider selection of solutions to meet their project needs. The company’s current distribution base provides an immediate synergy given the significant number of current dealers and distributors that already sell both aluminum and vinyl windows.
- Expanded Addressable Market:Based on sources like IBISWorld, Fenestration & Glazing Industry Alliance (FGIA), and Arizton Advisory & Intelligence, vinyl windows are estimated to represent approximately 60% of the $26 billion architectural window market, with aluminum windows comprising the majority of the remainder. In line with the company´s ongoing geographical expansion, vinyl products provide another entry point given its versatility and adaptability for different regions and conditions.
- Energy Efficiency:Vinyl windows are known for their efficient thermal performance, which aligns well with ongoing sustainability trends and increased demand for energy efficient products.
- Reliability and Durability:Leveraging its manufacturing expertise, Tecnoglass will look to produce its vinyl products with the same level of durability and longevity that customers have come to expect from the Company’s existing product portfolio.
Tecnoglass’ vinyl window lines will ship this November, and there is already an order backlog for both residential and commercial sectors.
“Our planned introduction of vinyl windows is a significant milestone that more than doubles our addressable market and reflects our dedication to providing comprehensive architectural window solutions to our customers. We are excited to partner with a leading vinyl profile manufacturer while leveraging our existing experience and capabilities to deliver innovative, reliable, and visually appealing vinyl windows catering to the residential and commercial end markets,” said José Manuel Daes, Chief Executive Officer of Tecnoglass.
Santiago Giraldo, the company’s Chief Financial Officer, added, “The vinyl window market provides a great opportunity to further expand our revenue base. We expect this new initiative to deliver an attractive margin on our highly efficient, vertically-integrated platform, driving accretive benefits to our results. As with previous investments, we expect a very high return on invested capital and a short payback period, backed by a strong order book to begin deliveries by year end and our active marketing of these products to our existing dealer base and new potential clients. We have already deployed the $25 million budgeted to support our vinyl market entry, which in addition to the vinyl lines, include the investments already completed during 2023 on a new state of the art fully automated insulated glass line, plus capital expenditures in land and warehousing space. These investments should allow us to scale up our vinyl window opportunity to approximately $300 million in annual revenues over time.”