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K. SCHIPPER: Hi, I’m K. Schipper with a new edition of Radio Stone Update.
00:09
Mosaic Companies announces the acquisition of stone distributors Walker Zanger and Opustone. Terms of the recently completed deals weren’t disclosed.
Mosaic is a partnership between Albert Claramonte, the founder of Surfaces Southeast and the Baupost Group, a Boston-based investment manager with experience partnering with family and founder-owned businesses. The Miami-based Mosaic also includes Surfaces Southeast, a manufacturer and distributor of specialty wall and mosaic coverings in the home center and specialty retail market.
Glen Morrison, CEO of Mosaic, says the two acquisitions bring together industry expertise and leading luxury brands to support Mosaic’s strategy of growth and diversification across product categories. Those categories include specialty and mosaic tiles, floor tiles, and slabs. It also unites key channels including retailers, distribution and luxury showrooms.
Says Morrison, “We are creating a business focused on unparalleled customer experiences and market-leading design with omni-channel reach.” He expects Mosaic to become a powerhouse in the luxury surfaces industry.
Walker Zanger is one of the best-recognized stone brands in the country, with more than 65 years of experience offering a broad range of products through curated showrooms, slab galleries and authorized dealers to residential and commercial markets nationwide. Company founder and industry pioneer Leon Zanger passed away in mid-January from Covid-19 at the age of 93.
Jeff Lupica, Walker Zanger acting general manager, says the acquisition gives that company the opportunity to build on its history as an innovative leader in natural stone slabs and tile.
Opustone was founded in 2001 and is a distributor of decorative and ornamental stone in the south Florida region with showrooms in Miami, West Palm Beach and Fort Lauderdale. Opustone President Eric Schigiel says by joining the Mosaic Companies, Opustone is becoming part of a vibrant, growing business that shares a similar vision and set of values. He expects the pairing to accelerate growth and expand the company’s reach nationwide.
Schigiel will remain in his role with Opustone, as well as serve as a strategic advisor to Walker Zanger’s slab division. Lupica will continue to serve as acting general manager of Walker Zanger, supported by the existing Walker Zanger team.
2:44
While Mosaic Companies has added to its stable of businesses, Select Interiors Concepts Inc., or SIC, sold off one side of its operation at the end of June. Its Residential Design Services, or RDS segment, was sold to a subsidiary of the Blackstone investment firm for $215 million.
SIC retains its Architectural Surfaces Group. Known as ASG, it includes more than 20 stone distribution and fabrication facilities across the United States. The deal is expected to close this summer. SIC will use the proceeds to repay its outstanding indebtedness and capital-lease obligations.
SIC’s CEO, Bill Varner, says, “When I joined SIC last June, I promised that my highest priority would be to focus on building shareholder value, and this transaction is a significant accomplishment towards that objective.” He adds that the move leaves the company with a clean balance-sheet to focus on further building shareholder value with the its fast-growing ASG segment.
The sale ends a seven-year effort that eventually merged RDS, an interior-design service deeply rooted in California, with the assets of fabrication-based ASG. Both companies operated under Dallas-based private equity firm Trive Capital after it financed the buyouts of RDS in 2014 and ASG in 2015
SIC brought the two operations together in November 2017 in a publicly traded company, and initially reported steady financial growth, although a large part of that came from acquiring more companies. The company reported a positive net profit for the only time in 2019. Issues raised by a major stockholder caused the company to lose almost 25 percent of its value at the start of 2020, and with the start of the pandemic, the share price fell to a low of $1.67 in April of last year. In June, 2020, Tyrone Johnson, SIC’s founding CEO, resigned and was replaced by Varner, the former CEO of United Subcontractors Inc.
As part of the move, Architectural Surfaces Group is also rebranding its regional brands AG&M, Pental Surfaces and Modul Marble under one name, Architectural Surfaces. The new name is seen as a way to leverage the company’s national presence while providing brand clarity. The new SIC will operate in 21 locations in Arizona, California, Colorado, Iowa, Maryland, Massachusetts, Missouri, North Carolina, Oklahoma, Tennessee, and Texas. The company has already announced it plans to expand into Florida in the second half of this year. SIC trades on the NASDAQ under the ticker symbol SIC.
5:37
EMERSON SCHWARTZKOPF: This is Emerson Schwartzkopf. U.S. hard-surface imports reached a new height in May with 438.3 million dollars in value for natural stone, quartz slabs and porcelain. That’s 8.2 percent better than April, and nearly 88 percent up from May 2020 during the absolute depths of the coronavirus slowdown.
Marble showed the biggest month-to-month growth at 21.4 percent, while the usually robust quartz sector increased by only 3.1 percent and porcelain all-but-stagnated with the slightest of gains at two tenths of one percent.
But, are all the gains in value fueled by inflation, with too many buyers chasing too few goods? Surprisingly, no. I figured out the per-unit value of all the hard-surface imports, and compared May’s data with January 2020, well before the pandemic affected the market.
Only two sectors showed an increase in per-unit value: granite and travertine. Quartz slabs per-unit value dropped 9.4 percent, while porcelain dipped 8.5 percent. The three remaining sectors – marble, other calcareous and other stone – all fell by more than 20 percent.
Keep your eye on all the import numbers with Hard Surface Report, our monthly magazine with the latest figures. Look for the next edition later this week.
7:07
K. SCHIPPER: Australia-based Boral Limited is also parting with assets, in this case its North American Building Products business including major brand names in manufactured and architectural stone. The buyer is Westlake Chemical Corp., and the $2.15 billion transaction is subject to adjustment and regulatory approval and is expected to be finalized by year’s end.
Boral will use the proceeds to reduce its net debt target and for shareholder distribution. Boral’s holdings in architectural stone include Eldorado Stone, Cultured Stone, Versetta Stone, Dutch Quality Stone, StoneCraft Industries and Kindred Stone. The latter is a new outdoor living brand. Boral’s other building products include siding, roofing, windows and masonry products under the Meridian Brick brand. A Bloomberg report cites the entire business generating $2 billion in revenue in fiscal 2020.
Houston-based Westlake operates a business portfolio mainly in petrochemicals and polymers along with PVC-based building components under the Royal Building Products, DaVinci and NAPCO brands.
8:16
BB Industries is honored as the Top Workplace for 2021 in its hometown of Knoxville, Tenn. The “Knoxville News Sentinel” selected the distributor based solely on employee feedback gathered through an anonymous third-party survey.
Rick Stimac, BB Industries president and CEO, says, “This award is such an honor because we pride ourselves on treating each other like family.” He adds that when he joined the company in 2017, he was impressed with the loyalty and longevity of the employees at BB Industries. Most have been with the company at least five years, with others serving 10 and even 20 years or longer. One employee who helped open the company in 1995 recently retired.
Eric Rubino, CEO of Energage LLC, the company that conducted the survey, explains that it looked at 15 culture drivers that are critical to the success of any organization, including alignment, execution and connection. He adds that when employees are given a voice, companies come together to navigate challenges and shape their paths going forward.
Stimac says he believes the award will help BB Industries gel even more as an organization and he’s confident that translates to its valued customers and vendor partners.
In other news around the industry…
9:40
Beaufort, S.C.-based StoneWorks announces the promotion of Shannon Balzegar to the position of sales manager. Balzegar, who has worked in the business for more than 23 years, is the daughter of founder John Balzegar III and one of the company’s owners. Most recently she took the lead in the design of StoneWorks’ new boutique showroom, a 6,500-square-foot design center in Bluffton, S.C. Stoneworks is a leading source of porcelain, quartz, granite, marble, and tile serving the South Carolina Lowcountry.
10:15
The steering committee for the North American Quarry Advocacy Group at the Natural Stone Institute is now up and operating. The nine-member group has identified several key areas of focus, with priority being given to two initial work groups. One addresses collaboration in benchmarking and exchanging data and solutions, and the other will collaborate in finding solutions for recruiting and retaining employees. The committee is chaired by Reid Kubesh of Coldspring. Natural Stone Institute members who would like to join the group should visit naturalstoneinstitute.org/naquarryadvocacy.
10:55
Park Industries will hold a free webinar on July 28 for fabricators focusing on the state of the market and what to expect in the years to come. The event will feature a guest speaker from the economic research and consulting firm ITR Economics and will share data-driven projections for this year, as well as 2022 and 2023 for the U.S. market, both nationally and regionally. Key topics include what’s next for the industry, how to prepare your company for the future, and opportunities to capture before your competitors do. Sponsors include Hexagon, ISFA, Laser Products, Moraware and ITR Economics. To register, go to parkindustries.com/trends.
You can keep up with all the trends in stone, quartz and porcelain imports with our own monthly magazine Hard Surfaces Report. And, for notes on this episode and a full transcript, go to radiostoneupdate.com.
I’m K. Schipper for Radio Stone Update and we’ll see you here again soon.
