In Sophic Capital’s Renoworks Software Inc. (RW) – Visualizing the Growth in a Successful Business report, Doug Vickerson, the CEO of Renoworks Software, told us how Renoworks:

  • Gives homeowners more control of the home renovation value chain, thereby removing stresses and costs;
  • Has licensed its solution to several of the construction industry’s largest building product manufacturers and distributors;
  • How Renoworks technology works by leveraging manufacturer product libraries and aerial imagery.

Renoworks, [TSXV:RW, OTC:ROWKF], a business-to-business software firm that develops digital visualization solutions for the home renovation and new home construction industry, is set to continue disrupting the hot, North American home renovation industry. In this report, we look at the North American home renovation industry and delve into who Renoworks customers are [Hint: some of North America’s largest construction material manufacturers, distributors, and retailers].

Q: Doug, during our previous conversation, you described in great detail the Renoworks platform and its value propositions. I wanted to delve deeper into your target market and some broader industry considerations. Geographically, where does most of Renoworks’ business come from?

A:About  90% of our business comes from the U.S. with the other 10% coming from Canada and other countries.

Sophic Capital - Logo - Colour

Q: Is demand for your solution driven by broader market trends? For example, would a hot residential remodeling and construction market result in increased demand for your solutions?

A: Yes. When the residential and new-build markets heat up, so does the demand for home visualization and design solutions. More people start trying to figure out what their new project will look like when it’s done, and the usage on our clients’ visualizers increases. These market factors also result in more homeowner and dealer demand for visualization solutions from manufacturers, distributors, and retailers. When manufacturers start receiving an influx of homeowner and dealer inquires about what X or Y color will look like on their home, that’s usually when they reach out to Renoworks to develop a branded visualization platform.

Q: To put some context around the market opportunity, how did U.S. residential housing construction fare during the COVID pandemic, and how is it performing today?

A: Residential housing held strongly during the pandemic and continues to do so during 2021. In the U.S., housing starts surged 22.6% in July 2020, following the initial disruptions the pandemic caused the construction industry. Since then, housing permits, starts, and completions have all continued to grow. For March 2021 (the most recent data from the U.S. Department of Commerce), U.S. permits for privately-owned houses grew 30.2% year-over-year; housing starts rose 37.0% annually; and housing completions were up 23.4% since March 2020. U.S. residential housing construction has done fantastically.

Sophic Capital - Logo - Colour

Q: Has the strength of U.S. residential housing construction carried over to the home renovation market?

A: Absolutely. When restrictions forced people into their homes, families realized that they needed home offices since offices were closed; decks to relax, because they couldn’t go out for walks, playgrounds for their kids since parks were closed; new kitchens, since restaurants were closed. In addition, landlords needed to maintain their properties, and many landlords chose to make property improvements in order to stem the urban exodus to rural areas.  That said, we find that homeowners typically spend almost 3x more on home renovations than landlords do on their rental properties.

Q: How big could the U.S. home renovation market become in 2021?

A: The Joint Center for Housing Studies of Harvard University estimates that the total U.S. home renovation market could be worth US$419 billion in 2020. They forecast that the market could grow to US$433 billion in 2021 (Exhibit 1).

Exhibit 1: Americans Continued to Spend on Home Renovations through the 2020 COVID-19 Pandemic
Sophic Capital - Logo - Colour

Source: Home Improvement Research Institute and IHS Markit U.S. Size of Market Report

Q: Renoworks is primarily targeting the American and Canadian markets; did Canada’s home construction and renovation dynamics mirror those of the United States?

A: Canadian activity was robust as well, following the onset of the COVID pandemic. Month-over-month, July 2020 housing starts rose 16% to 246,000 versus June 2020. Canadian housing starts rose 21.6% month-over-month in March 2021 to 335,000. The Canadian home renovation market was worth over $80.1 billion in 2019 but expected to decline 5.2% in 2020 due to the pandemic. However, Canadians are expected to accelerate home renovation spending in 2021.

Q: Why do you think Canadian home renovation spending will accelerate this year?

A: There are several reasons: i) lower renovation spend in 2020 has created pent-up demand; ii) Canadians are returning to work and many will actually have more savings from not going on vacations in the past year, so they will have more disposable income; iii) many homes need renovations, due to our harsh winters; iv) work-from-home will be at least semi-permanent for many or at least a more prevalent option (i.e. work from home a certain number of days a week), so people are planning to upgrade their backyards to relax and let the kids and dogs play. Even if the Canadian market falls short, it and the rest of the world are about 10% of our overall business.

Q: Did the 2020 pandemic accelerate the adoption of technology in your end markets?

A: In 2020, and into 2021 construction and remodeling projects boomed in the U.S., where 90% of our revenues come from. At the onset of the pandemic, everything was shut down and people could not go to their home centers. They had to go online to purchase project materials. Our partners that were already using our technology saw increased business. Even as the economy and restrictions eased, our numbers showed a significant increase in homeowners visiting our platform via our client’s visualizer platforms. Enterprises who did not adopt our technology, but were looking at it, now have an added interest in our technology driven by evolving consumer behaviour. Additionally, many of their competitors already have and are gaining market share during the current construction and renovation boom. Overall, 2020 was a good year for Renoworks.

Q: Who are some of Renoworks’ customers?

A: We are fortunate to have several of the industry’s largest brands as customers. Menards is a home improvement chain that’s been around since 1958. They have over 300 home improvement stores throughout the U.S. Midwest. CertainTeed has helped shape the building products industry for more than 110 years and is North America’s leading brand of exterior and interior building products, including roofing, siding, fence, decking, railing, trim, insulation, gypsum, and ceilings. CertainTeed and its affiliates have more than 6,300 employees and more than 60 manufacturing facilities throughout the United States and Canada. Alside serves the residential and commercial remodeling and new construction markets. It manufactures vinyl, aluminum and steel siding, soffit and accessories, vinyl windows, and vinyl patio doors. Alside has more than 3,000 employees in its 10 manufacturing facilities.

Sophic Capital - Logo - Colour

Search engine for Renoworks’ customers

Source: Renoworks Software website 

Want to see Renoworks’ home renovation solution?

Do you want to see Renoworks solution in action?  Or are you in the process of renovating the exterior of your home? Here are some Renoworks customer websites where you can demo the platform:

  1. https://homeplay.renoworks.com/
  2. https://jameshardiepros.renoworks.com/
  3. https://sherwin-williams.renoworks.com/
  4. https://homevisualizer.menards.com/?isInternal=false
  5. https://plygem.renoworks.com/

Coming Up…

In our next report, we’ll look at Renoworks’ recent financials, revenue model, and how it’s access to customer data could unlock future revenue streams.


The information and recommendations made available through our emails, newsletters, website and press releases (collectively referred to as the “Material”) by Sophic Capital Inc. (“Sophic” or “Company”) is for informational purposes only and shall not be used or construed as an offer to sell or be used as a solicitation of an offer to buy any services or securities. In accessing or consuming the Materials, you hereby acknowledge that any reliance upon any Materials shall be at your sole risk. In particular, none of the information provided in our monthly newsletter and emails or any other Material should be viewed as an invite, and/or induce or encourage any person to make any kind of investment decision. The recommendations and information provided in our Material are not tailored to the needs of particular persons and may not be appropriate for you depending on your financial position or investment goals or needs. You should apply your own judgment in making any use of the information provided in the Company’s Material, especially as the basis for any investment decisions. Securities or other investments referred to in the Materials may not be suitable for you and you should not make any kind of investment decision in relation to them without first obtaining independent investment advice from a qualified and registered investment advisor. You further agree that neither Sophic, its, directors, officers, shareholders, employees, affiliates consultants, and/or clients will be liable for any losses or liabilities that may be occasioned as a result of the information provided in any of the Material. By accessing Sophic’s website and signing up to receive the Company’s monthly newsletter or any other Material, you accept and agree to be bound by and comply with the terms and conditions set out herein. If you do not accept and agree to the terms, you should not use the Company’s website or accept the terms and conditions associated to the newsletter signup. Sophic is not registered as an adviser or dealer under the securities legislation of any jurisdiction of Canada or elsewhere and provides Material on behalf of its clients pursuant to an exemption from the registration requirements that is available in respect of generic advice. In no event will Sophic be responsible or liable to you or any other party for any damages of any kind arising out of or relating to the use of, misuse of and/or inability to use the Company’s website or Material. The information is directed only at persons resident in Canada. The Company’s Material or the information provided in the Material shall not in any form constitute as an offer or solicitation to anyone in the United States of America or any jurisdiction where such offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation. If you choose to access Sophic’s website and/or have signed up to receive the Company’s monthly newsletter or any other Material, you acknowledge that the information in the Material is intended for use by persons resident in Canada only. Sophic is not an investment advisor nor does it maintain any registrations as such, and Material provided by Sophic shall not be used to make investment decisions. Information provided in the Company’s Material is often opinionated and should be considered for information purposes only. No stock exchange or securities regulatory authority anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. Sophic and/or its principals and employees may have positions in the stocks mentioned in the Company’s Material and may trade in the stocks mentioned in the Material. Do not consider buying or selling any stock without conducting your own due diligence and/or without obtaining independent investment advice from a qualified and registered investment advisor. The Company has not independently verified any of the data from third party sources referred to in the Material, including information provided by Sophic clients that are the subject of the report, or ascertained the underlying assumptions relied upon by such sources. The Company does not assume any responsibility for the accuracy or completeness of this information or for any failure by any such other persons to disclose events which may have occurred or may affect the significance or accuracy of any such information.

The Material may contain forward looking information. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” “projects,” “plans,” and similar expressions, or statements that events, conditions or results “will,” “may,” “could,” or “should” occur or be achieved or their negatives or other comparable words and include, without limitation, statements regarding, projected revenue, income or earnings or other results of operations, strategy, plans, objectives, goals and targets, plans to increase market share or with respect to anticipated performance compared to competitors, product development and adoption by potential customers. These statements relate to future events and future performance. Forward-looking statements are based on opinions and assumptions as of the date made, and are subject to a variety of risks and other factors that could cause actual events/results to differ materially from these forward looking statements. There can be no assurance that such expectations will prove to be correct; these statements are no guarantee of future performance and involve known and unknown risks, uncertainties and other factors. Sophic provides no assurance as to future results, performance, or achievements and no representations are made that actual results achieved will be as indicated in the forward looking information. Nothing herein can be assumed or predicted, and you are strongly encouraged to learn more and seek independent advice before relying on any information presented.