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The Effects of the Economy on Ceramic Tile Distribution November 10, 2011

Explore the impact of the recession on ceramic tile distribution and market trends. Insights on housing starts, consumption, and manufacturing in the U.S. Detailed data analysis and industry overview.

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The Effects of the Economy on Ceramic Tile Distribution November 10, 2011

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  1. The Effects of the Economy on Ceramic Tile DistributionNovember 10, 2011 Presented By: Donato Grosser D. Grosser & Associates, ltd 11 BroadwayNew York, NY 10004Phone: (212) 661-0422 0

  2. Introduction • The recession has strongly affected the ceramic tile market • We will examine what happened to the system of distribution of ceramic tile 1 D. GROSSER & ASSOCIATES, LTD.

  3. The Recession • The recession has been deeper than what the government originally suggested 9.1% 2 D. GROSSER & ASSOCIATES, LTD.

  4. Housing Starts • Housing Starts have been flat for almost three years 3 D. GROSSER & ASSOCIATES, LTD.

  5. Housing Starts (Jan 2006-Sep 2011) Thousand of units 658K 425K 233K Source: U.S. Dept. of Commerce data 4 D. GROSSER & ASSOCIATES, LTD.

  6. Ceramic Tile Consumption by Sector Source: D.Grosser & Associates, Ltd. 5 D. GROSSER & ASSOCIATES, LTD.

  7. 30 Year Fixed Mortgage Rates • The fact that mortgage rates are lower than ever has not helped Effective Mortgage Rate Percentage 10 Year Treasury Yield Source: Freddie Mac and U.S. Department of the Treasury 6 D. GROSSER & ASSOCIATES, LTD.

  8. Some Good News • Housing Starts jumped 17.1 percent in September from the prior month to a 658,000 annual rate, the most since April 2010 • Multifamily Housing Starts jumped 51.3 percent in September to an annual rate of 233,000; the most since October 2008 7 D. GROSSER & ASSOCIATES, LTD.

  9. Housing Starts (Sep 2010-Sep 2011) 658K 597K Thousand of units 425K 233K 150K Source: U.S. Dept. of Commerce data 8 D. GROSSER & ASSOCIATES, LTD.

  10. Single Family • Existing Single Family home sales are well below 5 million units 9 D. GROSSER & ASSOCIATES, LTD.

  11. Single Family: Existing Sales vs Newly Built Existing Single Family Sales 4.33M Million of units Newly Built Single Family Sales 313K Source: U.S. Dept. of Commerce data 10 D. GROSSER & ASSOCIATES, LTD.

  12. Remodeling (Quarterly Data) • Remodeling activity until now has been up Billion Dollars Source: Joint Center for Housing Studies of Harvard University 11 D. GROSSER & ASSOCIATES, LTD.

  13. Ceramic Tile Consumption • Ceramic tile shipments by U.S. manufactures are flat • Imports are flat • Ceramic tile consumption is flat 12 D. GROSSER & ASSOCIATES, LTD.

  14. Ceramic Tile Consumption 1993–2010 Million Sq. Ft. Source: U.S. Dept. of Commerce data 13 D. GROSSER & ASSOCIATES, LTD.

  15. U.S. Ceramic Tile Shipments Million Sq. Ft. Source: D.Grosser & Associates, Ltd. 14 D. GROSSER & ASSOCIATES, LTD.

  16. U.S. Ceramic Tile Imports Million Sq. Ft. Source: D.Grosser & Associates, Ltd. 15 D. GROSSER & ASSOCIATES, LTD.

  17. U.S. Tile Manufactures • U.S. manufacturers benefited from the weak dollar 16 D. GROSSER & ASSOCIATES, LTD.

  18. Eur-Usd (Jan 2002-Aug 2011) 17 D. GROSSER & ASSOCIATES, LTD.

  19. Landed Price of Italian Ceramic Tiles $ per Sq. Ft. Source: D.Grosser & Associates, Ltd. 18 D. GROSSER & ASSOCIATES, LTD.

  20. U.S. Ceramic Tile Manufactures • Market share of U.S. tile manufacturers in 2010 was 30% • In 2006 was 17.6% 19 D. GROSSER & ASSOCIATES, LTD.

  21. U.S. Tile Manufactures 20 • There are six Italian tile manufacturing facilities in the U.S., their total shipments are 310 million sq. ft. (about 50% of total) D. GROSSER & ASSOCIATES, LTD.

  22. Contractors, Dealers and Distributors The recession affected Contractors & Dealers Distributors 21 D. GROSSER & ASSOCIATES, LTD.

  23. Ceramic Tile Contractors and Dealers in the U.S. Number in 2008 Number in 2010 - 22.6% Source: D.Grosser & Associates, Ltd. 22 D. GROSSER & ASSOCIATES, LTD.

  24. Ceramic Tile Distributors in the U.S. Number in 2008 1,713 Number in 2010 -19.3% Source: D.Grosser & Associates, Ltd. 23 D. GROSSER & ASSOCIATES, LTD.

  25. Let’s Look at some Selected States 24 D. GROSSER & ASSOCIATES, LTD.

  26. Tile Contractors and Dealers in 2008 and 2010 Source: D.Grosser & Associates, Ltd. 25 D. GROSSER & ASSOCIATES, LTD.

  27. Ceramic Tile Distributors in the U.S. 2008 and 2010 Source: D.Grosser & Associates, Ltd. 26 D. GROSSER & ASSOCIATES, LTD.

  28. Home Centers in the U.S. Source: D.Grosser & Associates, Ltd. 27 D. GROSSER & ASSOCIATES, LTD.

  29. Home Centers, Retailers and Distributors Source: D.Grosser & Associates, Ltd. 28 D. GROSSER & ASSOCIATES, LTD.

  30. Carpet & Rug Retailers and Distributors Source: D.Grosser & Associates, Ltd. 29 D. GROSSER & ASSOCIATES, LTD.

  31. Change in U.S. Tile Distribution • U.S. manufacturers gained market share • Home Centers gained market share • Tile retailers and distributors lost market share 30 D. GROSSER & ASSOCIATES, LTD.

  32. Ceramic Tiles Distribution in 2010 31 Source: D.Grosser & Associates, Ltd. 31 D. GROSSER & ASSOCIATES, LTD.

  33. 11 Broadway New York, NY 10004 (212)661-0435 d@grosserconsulting.com D. GROSSER & ASSOCIATES, LTD.

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