Building a one-stop shop

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This article was published 17/03/2023 (1058 days ago), so information in it may no longer be current.

Exchange Income Corp. has made a $95-million investment in the highrise window business with the acquisition of BVGlazing based just north of Toronto.

While Winnipeg-based EIC typically buys stand-alone operations, this one is different in that it complements another company EIC owns in the same sector, Quest Window Systems.

The company also takes a hands-off approach to operations, letting existing management run the companies, but this time it is deploying head-office staff to work with both BVGlazing and Quest to see how they can best complement each other.

“We would have bought BVGlazing on a stand-alone basis even if we did not own Quest,” said EIC chief executive Mike Pyle. “We like the company, it has a great management team and we bought it at the right price. And in this case in addition to that we are adding different product offering to each of the different companies by having both.”

BVGlazing makes both window walls (built from the inside during high-rise construction) and curtain wall (hauled up by cranes and attached from the outside). Quest only makes window walls. In addition, BVGlazing makes railings for balconies, something Quest does not and Quest owns installation companies in the U.S. which BVGlazing does not have.

The deal requires Competition Bureau approval and is expected to close in the second quarter.

Pyle says there are many operational synergies between the two companies but he was adamant to note that is not “code” for laying people off.

“That is absolutely, unequivocally not the case. We need every employee we’ve got,” said Pyle.

Another element that makes this deal a little different is that EIC is sending its chief operating officer, Darwin Sparrow, to Toronto for a year or two to figure out the best ways the two companies can work together.

“We are doing this to increase capacity,” Sparrow said. “The need for residential condos or apartment buildings in North America will continue to grow. There will be ebbs and flows with the economy, but overall there will be huge demand.”

EIC has targeted this sector and it believes that having more options available to builders from one group will increase its market share.

“The builders want to go to a one-stop shop,” Sparrow said. “If Quest wins the contract for the window wall but another part of the building needs a curtain wall it will have to farm that out as well as the balcony railings. They have to rely on another supplier and if there is a screw-up Quest will wear that. Now it is all in the same family.”

Pyle said, “Having them both in the same family fuels our ability to gain market share.”

There is minimal customer overlap between the two companies and they have differing geographic focus. And there is substantial demand and growth into the future.

The two companies right now have a combined backlog of $1 billion with additional $2.5 billion in opportunities in their combined pipelines.

While EIC does not disclose the financial performance of the individual companies it owns, Sparrow said BVGlazing and Quest are of comparable size. BVGlazing has about 800 employees.

EIC finished 2022 with gross revenues of $2 billion up 46 per cent from the previous year.

While there were a handful of acquisitions last year — including the $325 million purchase of Northern Mat & Bridge, its largest acquisition yet — the company also recorded a 60 per cent increase in net earnings to $109.7 million.

martin.cash@freeprss.mb.ca