July 31, 2014

Mohawk announces purchase of Marazzi Group: Marazzi and Daltile brands to maintain separate identities in the U.S.


Mohawk Industries, Inc. (NYSE: MHK) today announced that the company has entered into a definitive agreement to acquire the Marazzi Group, which will make Mohawk — the parent of Dal-Tile Corporation — the worldwide leader in ceramic tile.
The Marazzi Group is a leading manufacturer and marketer of ceramic tile in all its major geographies, including Russia, the United States, Italy, France and Spain. Marazzi’s 2011 revenues were about €833 million, or $1.16 billion, with EBITDA of approximately 15.5% under historical IFRS accounting. Marazzi is held by the Marazzi family and two private equity funds—Permira and Private Equity Partners.
Mohawk is acquiring Marazzi for €1.17 billion, or approximately $1.5 billion, with a combination of cash and equity. Marazzi’s estimated 2012 EBITDA of €145 million represents a purchase multiple of about eight times. The transaction is expected to be completed during the first quarter of 2013 pending customary closing conditions and regulatory approvals. Mohawk anticipates that the transaction will be accretive in 2013.
Ceramic tile remains the world’s most widely utilized flooring product with an estimated worldwide consumption of more than 110 billion square feet and annual growth of 5 to 6%. Marazzi distributes ceramic tile in more than 100 countries through a strong international sales force, which will increase Mohawk’s worldwide growth.
Founded and managed by Filippo Marazzi, Sr. and his family, the Marazzi Group has become a global leader in ceramic tile with worldwide brand recognition. Marazzi’s product line features glazed ceramic, glazed porcelain, technical tile and color body porcelain. Marazzi introduced the single fire process that revolutionized the industry, making ceramic more accessible to a wider market.  Technological innovations continue today with new introductions such as crystalized porcelain and single-fired thin tiles. Marazzi operates manufacturing facilities in Russia, the United States and Western Europe and employs around 6,300 people.
Jeff Lorberbaum, Mohawk’s chairman and chief executive officer, stated, “This acquisition represents the next step in the expansion of Mohawk’s global business and will make Mohawk a stronger company.  We found Marazzi attractive because of its solid management team and leadership positions in the U.S., Russia and Europe. Marazzi’s differentiated products, leading-edge design, efficient manufacturing and exemplary service have created one of the most valued brands in the industry. We have many opportunities to improve results by leveraging best practices, operational expertise, product innovation and manufacturing assets.”

U.S. plans
In the U.S., Marazzi’s products are sold through independent distributors, home centers and a few company service centers. Mohawk expected to leverage the combined manufacturing expertise, design capabilities and distribution systems to enhance its ceramic business.  Marazzi and the Daltile brand will maintain separate identities in the market, with the expectation that streamlining manufacturing, technical and marketing capabilities will strengthen both brands. The total residential and commercial offerings complement each other and can satisfy every requirement in the market. Additional products from facilities in Mexico, China and Europe will help the company compete directly with the large quantity of imported ceramic tile.

In a letter to its customers, Daltile vice president John Cousins said, “While we are still in the process of closing the transaction, which is expected to occur in the first quarter of 2013, we want to share with you some key points as we move forward:

  • We are committed to preserving the unique strengths that made Dal-Tile’s and Marazzi’s   businesses successful over the years. The brands will maintain separate identities in the market and they will continue to serve each channel as they do today. To a large extent, you will continue to do business with us in the same way that you have done in the past.
  • The combination of these two companies will leverage complimentary product, manufacturing, technical and marketing capabilities that will be focused on helping you profitably grow your business.
  • Through access to the global capabilities of each organization, we will be able to bring new, innovative products and services to market more quickly.
  • We are also committed to maintaining the high level of sales and customer service support that you have come to expect from our organizations.

I hope you share in our excitement as Marazzi joins with us, and together, we become North America’s premier manufacturer and marketer of tile and stone products.”

Lorberbaum added, “The combination of Mohawk and Marazzi creates opportunities to expand U.S. distribution through service centers and other channels, source ceramic from our worldwide assets, utilize our relationships to expand all product categories and deploy leading innovation and design trends to all of our ceramic businesses around the globe. Mohawk and Marazzi’s strong management and solid financial position combined with process and material knowledge, distribution expertise, and synergies with other products will deliver additional value to our shareholders.”

European dominance

Marazzi has the number one position in the Russian ceramic market (similar in size to the United States), where it operates two manufacturing sites and 21 regional distribution centers as well as owning and franchising more than 300 retail stores that carry only Marazzi products. About 50% of the Marazzi Russian business is sold directly to end users. Retail advertising done by the stores has created a strong consumer brand. The company expects increase its geographic reach by expanding company owned and franchised stores, other distribution channels.
Presently European flooring is at a low point where Marazzi has leading positions in Italy, France and Spain.  Marazzi has rationalized its capacity to align with the market and is implementing new strategies to enhance its sales in the region and adjacent countries. Improvements have been made that enhanced the manufacturing efficiency, quality and sales effectiveness. Additional investments are planned to further reduce manufacturing cost, increase sales and expand the company’s design capabilities.

 

The Italian Connection

Cersaie generates new products; NTCA Five Star Contractors review the show

By Lesley Goddin

The 30th edition of the annual Cersaie show attracted a record number of international visitors to Bologna in late September. Some of those international attendees were four NTCA Five Star Contractors who traveled to Bologna to tour the Laminam plant and powwow with Crossville and Laminam personnel. These contractors gave jobsite perspectives on installation methods and approaches to the new Laminam by Crossville reduced-thickness/thin tile Crossville is importing exclusively into the U.S. (see related story in the January 2013 issue).

One couldn’t be in Bologna and miss the show, so our four contractors – Dan Welch, Welch Tile, James Woelfel, Artcraft Granite Marble & Tile Co., and Martin Howard and Chris Walker, with David Allen Company (DAC) –toured Cersaie, as well.

Contractors were thrilled with the opportunity to experience the international show, and to visit factories that produce innovative tile technology.

“I love going to Cersaie because I love Italian food, wine, cheese, cars, the countryside and history!” said DAC’s Martin Howard. “Oh yes, and then there are the beautiful tile, colors and design options that can turn one’s mind loose with creativity.

“Cersaie is definitely a buyers show, but the networking and contacts one can make are very beneficial,” Howard added. “It is possible to get an advance look at the next big look that’s coming or research new technologies like thin tile or ventilated façade systems.”

Another benefit of the show was the ability to compare construction similarities and differences as they relate to tile installation. DAC’s Chris Walker appreciated “the opportunity to view the work in progress modules being performed by skilled tile setters, which reinforced the difference between the U.S. methods and the European methods, since almost all substrates in Europe are mudbed.”

Dan Welch, a first-time visitor to Cersaie, was intrigued with lighted pre-manufactured expansion joints, as was James Woelfel, another first-timer, who said, “This could help in the U.S., as they add an architectural ingredient to necessary movement joints.” Of the show itself, Woelfel remarked, “I was very excited to go to Cersaie for the first time. The tile booths were more lavish than Coverings, as the show is much bigger.”

 

Trends

Seen on the Cersiae showroom floor were these major design trends, coming soon to a showroom near you:

  • Mix and match: patchwork tiles and varying color, size and material in one collection.
  • Antibacterial/self-cleaning and eco-friendly
  • Encaustic and majolica looks: bold solid colors and large sizes, patchwork effects and vintage encaustic looks, now created by high-tech printing
  • Planks: wood and cement looks dominate in this trend
  • Ceramic fabric and textile-derived aesthetics: plaid, silk, lace, tweed, damask and more can all be evoked by today’s tiles.
  • Installation made easy: new installation systems included clip systems for 2 cm thick porcelain tiles, quick-laying floors and monolithic porcelain slabs,  thick 20mm tiles which offer an incredibly high breakage load (up to 2,000 pounds) and can be dry-laid on grass, gravel, dirt, and cement without grout or adhesives.
  • Size matters: reduced-thickness/thin tiles and giant slabs are proliferating at an accelerated rate as acceptance of this new technology grows.
  • Digital printing: ink-jet technology continues to expand the possibilities for surface decoration.
  • Celebrity designers: artists, graphic designers and material architects are working with tile’s graphic potential and synergy with fixtures and accessories.

The next Cersaie show in Bologna will be September 24-28, 2013. Visit www.cersaie.it/eng/ for more information about the show.

65th Anniversary marks historic year for NTCA

By Bart BettigaNTCA_logo_100pixels

2012 will be remembered by NTCA leaders as one of our most effective years in the history of the association. Established in 1947, the NTCA now is approaching 850 members dedicated to the professional installation of ceramic tile.  These are the largest membership figures in NTCA history!

While it is gratifying to see our membership growing, even more significant is the increase in support of our efforts by so many individuals. This is what is making a difference in our success. A great example of this took place at Coverings in 2012, where many NTCA members supported the staff by volunteering to work in our booth. The result was the most new members to ever sign up at Coverings or at any trade show exhibit in which NTCA has been involved.

The same can be said about the NTCA Workshop/Symposium program. Trainers Gerald Sloan and Michael Whistler performed in front of more than 3,000 industry professionals and signed up over 100 members in 2012. They could not have done this without volunteer help by members all over the country. On behalf of our staff and board of directors, we thank every one of you who attended and supported our training efforts.

2012: qualified labor language accepted in Handbook

Perhaps the most important achievement occurred in 2012: one I believe to be one of the most significant initiatives in the history of the NTCA. I am referring to the inclusion of language stating the importance of recommending or specifying qualified tile installers in the 2012 Tile Council of North America Handbook for Ceramic, Glass and Stone Tile Installation. This effort was a joint initiative by the NTCA and the Tile Contractors’ Association of America, and was supported by the voting members of the Handbook Committee. In a short period of time, we are seeing architects and design professionals already including this language in the quality assurance sections of their specifications.

Advanced skills certification to come in 2013

As we transition from 2012 into 2013, we are excited to announce one of our most ambitious efforts to date related to the certification of qualified tile installers in the United States. On October 27th, at Total Solutions Plus in Palm Springs, California, the framework of an agreement to mutually develop and implement an advanced certification of task-specific skills was formed with the tile installation trade associations, in conjunction with several tile and installation material manufacturer representatives. We hope to further explain this effort at Surfaces in 2013, with the first installers actually being certified at Coverings in Atlanta, taking place April 29th-May 2nd. You will be hearing much more about this in the future; but for now I can tell you this is significant because consumers, project owners, builders, architects, dealers, etc. will be able to look confidently at a certification that is supported by the entire tile industry.

Leadership and support add to NTCA success

Incoming president Dan Welch of Welch Tile & Marble in Kent City, Mich., near Grand Rapids.

Incoming president Dan Welch of Welch Tile & Marble in Kent City, Mich., near Grand Rapids.

The NTCA continues to expand in membership and influence. We are taking an aggressive approach to establish our strategic initiatives. I would like to personally thank our president these past two years, Nyle Wadford of Neuse Tile Service in Youngsville, N.C., and welcome in our new president, Dan Welch, of Welch Tile & Marble near Grand Rapids, Mich. Both Nyle and Dan have been very involved in the growth and development of the association, and will continue to do so. I would also like to thank the entire staff of the NTCA, and the board of directors, committee members, state directors, and all the NTCA members who continue to support our efforts. The NTCA strives to be the Voice of the Tile Contractor, and I am proud to be a part of this mission.

Outgoing NTCA president Nyle Wadford (l.) of Neuse Tile Service, Youngsville, N.C. with James Woelfel of Artcraft Granite Marble & Tile, Mesa, Arizona. In addition to chairing the NTCA Technical Committee, Woelfel is first vice president for NTCA.

Outgoing NTCA president Nyle Wadford (l.) of Neuse Tile Service, Youngsville, N.C. with James Woelfel of Artcraft Granite Marble & Tile, Mesa, Arizona. In addition to chairing the NTCA Technical Committee, Woelfel is first vice president for NTCA.

At Coverings this year, many NTCA members supported the staff by volunteering to work in our booth. The result was the most new members to ever sign up at Coverings or at any trade show exhibit in which NTCA has been involved.

At Coverings this year, many NTCA members supported the staff by volunteering to work in our booth. The result was the most new members to ever sign up at Coverings or at any trade show exhibit in which NTCA has been involved.

Independent Manufacturer Reps Wanted!

NAC Products, Inc., the innovator of ECB™, the first self-adhering crack isolation membrane on the market, is seeking a diligent, professional, manufacturer’s representatives to sell our quality line of underlayment systems for tile, stone & other hard floor surfaces. Qualified candidates must be motivated, have a thorough knowledge of the flooring industry, and solid relationships with distributors.

NAC manufactures sheet and liquid membranes and companion products for crack isolation, waterproofing, sound and moisture control.  Markets are available throughout the US and Canada. Email resume to [email protected]

Duradek Offers Discount on Deck Rebuilds After Sandy

While we at Duradek cannot begin to fully appreciate the destruction that eastern U.S. residents faced with Hurricane Sandy and the amount of work required to clean up the damage left behind, we certainly would like to assist in the rebuilding process and help those who dealt with property losses get back to their quality of life on the east coast.
Being in the decking business, we know that communities from coast to coast take great pride in their natural environments and outdoor living space. Sandy packed a far-reaching punch and hundreds of residents certainly lost their decks and balconies altogether, but even homes where the decks are still standing may have lost critical stability and made their decks unsafe for use.
Duradek Discount Offer for Hurricane Victims
Duradek, in conjunction with our local Distributor Specialty Building Systems, would like to assist these homeowners in our own small way by contributing 15% off of the cost of material for our Duradek vinyl membranes in waterproofing your new or reconstructed decks. This offer goes out to all residents in the affected regions in New Jersey, New York and Pennsylvania.
Working with Specialty Building Systems, our eastern American distributor in NY, NJ and PA, homeowners in these disaster regions may request 15% off the cost of vinyl when they choose a Duradek dealer for their deck rebuilding. Duradek and Specialty Building Systems will present this offer for one year to the anniversary of Hurricane Sandy, but we will require that some proof of hurricane damage be submitted for this special discount offer (photographs or a copy of an insurance claim would suffice).
It doesn’t matter if your previous deck was a Duradek deck, wood deck, a composite deck, a fiberglass deck, an EPDM roof deck or even a competitive vinyl deck…Duradek will help you waterproof your re-build!

Choosing a Duradek dealer for your deck waterproofing takes all of the guesswork out of choosing a contractor. All Duradek installers are trained and authorized, so you don’t have to worry about the skill or reliability of the people working on your home.

If your deck was affected by Sandy, you or your insurance or restoration company can contact Specialty Building Systems at 1-800-765-9865  or email [email protected] for peace of mind in your rebuilding.

Duradek Vinyl has roof grade waterproof protection

In addition to all other building code approvals, Duradek has been tested to show our Duradek Ultra Vinyl meets the requirements and received evaluation reports for both Wind Uplift and for Pull-Off Testing for Edge Flashing.

We know that this small gesture cannot make up for the losses and the trauma that Sandy delivered, but we sincerely hope that we can do our small part in helping you take back your quality of life and enjoy your outdoor living space.

Duradek Vinyl keeps your deck protected from water damage.