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TRANSCRIPT
Hello there. I’m Sydney Hoffman, sitting in for K. Schipper this week with the latest in hard surfaces industry news from Radio Stone Update.
0:32
At least one of the many legal challenges on quartz-surface tariffs ended last week … and, as a result, the high duties on Chinese-made material will remain in place.
A group of U.S. importers, including Arizona Tile and M S International, ended its fight to review the U.S. International Trade Commission’s imposition of the 300%-plus tariffs in 2019. The importers sought to have U.S. fabricators recognized as material manufacturers. This would mean that Cambria Company LLC, the Minnesota-based producer of quartz surfaces, would likely not be able to claim that a majority of U.S. manufacturers were being harmed by China’s subsidized and below-market-cost imports.
The U.S. Court of International Trade ruled in 2021 that the scope of manufacturers in the tariff action didn’t include fabricators. Importers moved with a challenge to the U.S. Court of Appeals to the Federal Circuit, but everyone involved with the action agreed on May 15 to dismiss the complaint.
Meanwhile, legal arguments on the review of tariffs on quartz surfaces from India will likely continue into next year. Ironically, all the parties involved in various lawsuits want the same action, but with different results.
At least four different actions are asking the Court of International Trade to send the review back to the U.S. Commerce Department’s International Trade Administration, or ITA. The federal agency, in its initial decision on the review last June, placed a tariff of 323 % on products from the Antique Group, one of India’s largest exporters. Nearly every other Indian producer and exporter faced a 161.5% tariff as part of a procedural averaging.
The ITA pulled back from that earlier this year by reaffirming the high tariff on the Antique Group but placing a previous levy of 3.19% on all other India quartz surfaces except for Pokarna, where the ITA determined the company shouldn’t face the tariff at all.
The Antique Group is asking for the review to go back to the ITA, claiming the agency didn’t treat them fairly in the review process. Other producers and importers/exporters want the ITA to adjust tariffs to an even lower rate using a formula that’s standard in determining overall levies. And Cambria is asking for the whole process to go back to the ITA to basically bring back the higher June 2022 tariffs.
The current schedule before the federal court doesn’t call for oral arguments on the case until December, pushing any adjudicated decision into 2024
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3:19
More change is in the offing for Caesarstone Ltd. Less than two months after announcing the return of former company CEO Yos Shiran, Caesarstone announced last week that it will close its original quartz-surface factory location as part of a major revamp of the surfacing industry leader.
The announcement came after Shiran reported a net revenue loss of $3.8 million in this year’s first quarter. In his statement he said it was clear Caesarstone has been lagging behind in its ability to generate profit and increase value for its shareholders. He added, “We believe that swift actions, taken as part of a comprehensive restructuring plan, will allow us to leverage our strong brand and best-in-class products to address these issues.”
The company reported worldwide revenue of $150.6 million in the first quarter of this year, trailing first quarter 2022 numbers by 8.9 percent when adjusted for currency fluctuations. While Caesarstone reported first quarter revenue increases in Europe and Australia, the first three months of this year showed U.S. revenues dropped by 10.8 percent, to $76 million, while Canada’s $18. 4 million reflected a drop of 17.6 percent. The United States accounts for half of Caesarstone’s worldwide totals.
Shiran noted in the statement that the company is already taking steps to increase cash flow and will maintain a close eye on financials for the rest of this year. One major step is closing the Sdot-Yam production facility – Caesarstone’s oldest – and its two production lines for quartz surfaces.
The company cited several factors in closing the facility, including future expenses related to meeting new environmental-emissions standards in Israel. The closing will layoff 150 employees and include cash costs of $4 million to $8 million in the next 12 months. Caesarstone will also need to deal with leases at the site that run through 2032.
Shiran called the move, “difficult yet necessary,” and said the company will continue to operate its four production lines at its plant near Karmiel, Israel, and the two lines at its Richmond Hills, Ga., location.
In a conference call with Wall Street analysts, Shiran said that Caesarstone is taking a close look at operations throughout the company to improve cash flow and performance, as well as reduce its product inventories, which reached $238.2 million at the end of last year. During the first quarter the company reduced that by 11.4 percent, to $211.1 million.
Early this year, Caesarstone declined to put a target number on revenues or margins, only offering an outlook that it anticipates revenues for 2023 will be within the range of 2022 revenues. Last year’s worldwide revenues totaled $690.8 million.
Shiran concluded by saying that he’s confident the company can rise to its potential, and it expects to deliver improved results in the years to come. Caesarstone Ltd. stock trades on the NASDAQ under the symbol CSTE.
7:27
Doug Heerdegen has been named the first president of Cutting Edge Countertops. The Perrysburg, Ohio-based company has been led by its co-founders, Brian Burns, Brad Burns, and Jeff Erickson, who will transition into strategic roles while remaining actively involved in the company’s operations.
Heerdegen, who most-recently worked for Palfinger USA, will provide leadership and strategic vision to the company, as well as its day-to-day operations. In making the announcement, Brian Burns said the founders believe they have built an organization with the ability to do more. He added, “Doug is a driven leader where building a great culture is the top priority to align teams under a shared vision, expectations, and goals to maximize impact.”
“I’m excited to lead the talented team at Cutting Edge Countertops,” said Heerdegen. He’s held several senior management positions, most recently as managing director for the Tiffin, Ohio-based Palfinger. A graduate of the University of Michigan, he’s also a Certified Public Accountant.
Cutting Edge Countertops currently operates six showrooms and four service centers in Ohio, Michigan, and Indiana, producing about 15,000 projects a year. It’s also accredited by the Natural Stone Institute.
8:47
Humans weren’t the only ones to benefit from last month’s Covering tradeshow in Orlando, Fla. Once again, members of the Tile Council of North America, Inc. – the TCNA – donated handcrafted tiled doghouses in what’s become an annual event at Coverings.
The TCNA donated 16 doghouses to Florida Little Dog Rescue, which will then include the structures in a fund-raising raffle. Forms used to make the doghouses were custom-manufactured and contributed by Wedi Corp.
TCNA Marketing Director Kathy Meyer says every year at Coverings, TCNA members give back to the local community through their time, talent and tile. This year’s donation supports the Florida Little Dog Rescue mission to help unwanted, abused and abandoned little dogs.
Laurie Johnson, Florida Little Dog Rescue director thanked the organization and said funds raised from raffling the doghouses will directly benefit medically needy pups as they arrive in rescue. Her organization rescues dogs from all over the state of Florida, but its focus is the Central Florida area.
TCNA is a trade association representing manufacturers of ceramic tile, tile installation materials, tile equipment, raw materials, and other tile-related products.
10:08
More than 500 architects and designers from the United States, as well as the United Arab Emirates, Bahamas, Italy, the United Kingdom and China got to know more about Brazilian natural stone in the last 18 months.
The acquaintance has come thanks to technical lectures held by a body of experts appointed by “It’s Natural – Brazilian Natural Stone,” a project to encourage exports of Brazilian ornamental stones promoted by the Brazilian Center for Ornamental Stones Exporters — Centrorochas — and the Brazilian Trade and Investment Promotion Agency– ApexBrasil.
The presentations took place in several cities in North America, Europe and Asia, including the cities of New York, Las Vegas, Tucson, Ariz., and San Diego. Other sessions took place in Nassau in the Bahamas; Dubai and Abu Dhabi in the UAE; Verona, Italy; and London. A virtual presentation was also given to Chinese specifiers.
Fabio Cruz, Centrorochas vice president, says the main reason for the sessions was to promote the potential of the stone sector to the international market, as well as that country’s environmental practices. For instance, more than 95 percent of all water used in the production process is totally recycled.
Still another purpose for the presentation was to present the variety and diversity of Brazilian stones, The country offers more than 1,200 varieties of natural stone and is the fourth largest world producer and fifth-largest exporter.
11:40
The Artisan Group network of stone fabricators, held its 10th annual tradeshow and meeting in Austin, Texas, last month. The event was hosted by Architectural Surfaces at its Austin showroom and warehouse.
The event brought together its more than 50 members to exchange best practices, followed by a tradeshow featuring 20 of the group’s vendor partners. Presentations were also given on Human Resources by Hunter Lott, and Jim Hieb of the Natural Stone Institute who spoke on that organization’s Silica Safety initiative. A new partnership program with Kohler was also announced.
Artisan Group Executive Director Jason Brown called the evolution of the group “truly astounding,” and said the group remains committed to delivering unparalleled value to its members and embracing every partnership within its network.
12:31
The National Tile Contractors Association – the NTCA – utilized last month’s Coverings show, to recognize three individuals for their roles in the industry.
The Tile Person of the Year award was given jointly to Joe and Wendi Kerber of Kerber Tile, Marble and Stone in Shakopee, Minn., while Real Bourdage, strategic marketing director for MAPEI Corp., has been honored with the 2023 Joe A. Tarver Award in recognition of his service to the tile and stone industry.
Joe Kerber has been a member of the NTCA Technical Committee and Methods and Standards Committee for many years, as well as serving two terms on the NTCA board of directors. He’s also currently an ambassador for the association, along with being a certified tile installer and evaluator for the Ceramic Tile Education Foundation. Wendi Kerber is a CPA who manages financial and tax planning for Kerber Tile. This is only the second time in the NTCA’s 76-year history that a couple shared the award.
Bourdage has been part of the tile industry since 1988. He worked with HB Fuller for 21 years, where his last role was president at TEC Specialty Products, an HB Fuller subsidiary. Bourdage was also vice president of international business development at Custom Building Products prior to joining MAPEI in 2010.
NTCA is a trade association representing contracting and installation companies and associate supporters of ceramic tile, natural stone, tile and stone installation materials and other tile/stone-related products.
Remember, the latest issue of Hard Surfaces Report is now available at www.hardsurfacesreport.com. Our online newsletter, Slab & Sheet, comes out on alternate Wednesdays. For a transcript of this broadcast, go to www.radiostoneupdate.com
For Radio Stone Update, I’m Sydney Hoffman.
