TRG | The Bottom Line – 12/9

The London holiday spirit is definitely back, and based on a variety of meetings with institutional investors, private equity and companies last week in London, investors are focused on opportunities into 2023 despite the turmoil of 2022. Of course Wall Street skeptics could say this is the case each December, all hopeful looking into the next year. That said, we are finding that both public and private equity investors are doubling down efforts to identify oversold opportunities. Based on TRG’s Consulting & Advisory work, we would note that companies are also on the same page, quietly prepping for what could be a busy 12-18 months hunting for opportunities. Against that backdrop, this week TRG’s Policy note, “The Shazam of the Whole Thing,” TxDOT Construction Set to Explode! , highlighted a significant inflection point in construction-related expenditures in FY’23 and FY’24. In the private sector, companies are also looking forward vs. sitting still. The door industry is seeing skins capacity added for the first time in many years, as TRG wrote about Steves & Sons intention to build a $100MM skins plant. The key question this sparks is: Will this incremental skins capacity from a new player shift the balance of power away from the sizable vertically-integrated players (JELD and DOOR) or is this more of a factor of Steves seeking to take control of its own destiny.