Tile and Terrazzo Contractors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 10,000 tile and terrazzo contractors in the US set and install ceramic tile, stone, and mosaics and/or mix marble particles and cement to produce terrazzo at the job site. Because the terrazzo market is a small part of the category, terrazzo contractors often install stone or tile, while few tile contractors also install terrazzo.
Dependence On General Contractors
Tile and terrazzo contractors generally work as part of a team of subcontractors managed by general contractors, which act as a gateway to construction jobs.
Competition From Alternative Materials
In the construction market, tile and terrazzo compete with other types of material, particularly in the flooring sector.
Industry size & Structure
The average tile and terrazzo contractor operates out of a single location, employs about 5-6 workers, and generates about $922,000 annually.
- The tile and terrazzo contracting industry consists of about 10,000 establishments that employ about 55,900 workers and generate about $9 billion annually.
- Most firms are small, independent operators that work within a limited geographical market. Even the largest companies are regional.
- Tile outsells terrazzo by a wide margin; square footage of ceramic floor and wall tile totals about 3.2 billion per year, while square footage of terrazzo totals about 341 million.
Industry Forecast
Tile and Terrazzo Contractors Industry Growth
Recent Developments
Mar 16, 2023 - Remodelers’ Profits Trend Downward
- Residential remodelers’ average gross and net profit margins declined in 2021, according to the 2023 edition of the Remodelers’ Cost of Doing Business Study released in March by the National Association of Home Builders (NAHB). Remodelers’ average gross profit margin grew steadily from 26.8% in 2011 to 30.1% in 2018, but in 2021 fell to 24.9%. The drop in gross margins was primarily due to higher trade contractor and homebuilding costs. However, remodelers’ average net margins were more resilient, dropping to 4.7% in 2021 from 5.2% in 2018. Steadily falling operating expenses between 2018 and 2021 held back a steeper decline in average net margins. The study also showed that residential remodeler participation in the single-family homebuilding market is rising. In 2018, 6% of total remodeler revenue came from single-family construction; in 2021, the share rose to 11%.
- Mortgage rates dipped slightly after the collapse of Silicon Valley Bank, but housing industry watchers are uncertain if lower rates will persist long enough to provide much relief from the affordability issues that have slowed the US housing market, according to Yahoo Finance. Some financial market watchers note that the banking sector's jitters could slow the Federal Reserve’s strategy of taming inflation with rate hikes. Redfin chief economist Daryl Fairweather told Yahoo Finance, “There's still a lot of uncertainty but in the near term, I do expect mortgage rates to drop. And I expect buyers to take advantage of those mortgage rates because we've seen buyers be incredibly sensitive to those interest rates.” However, some industry insiders suggest that rates would need to drop and stay low for a sustained period to lure more buyers into the market.
- Sales of existing US homes fell 0.7% in January from December and were down 36.9% year over year, according to the National Association of Realtors (NAR). January marked the twelfth consecutive monthly drop as rising interest rates slow home sales. NAR chief economist Lawrence Yun said, “Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.” Yun added, “Inventory remains low, but buyers are beginning to have better negotiating power. Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.” Existing home sales are a key demand driver for tile and terrazzo work. Sellers often make repairs before putting a home on the market, and buyers typically renovate before moving in.
- Multifamily developer confidence improved in the fourth quarter of 2022 but remained in negative territory, according to February’s Multifamily Market Survey (MMS) report by the National Association of Home Builders (NAHB). The Multifamily Production Index (MPI) rose two percentage points in Q4 to 34 compared to the third quarter of 2022. The Multifamily Occupancy Index increased by four points to 49 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. While multifamily housing demand is robust, supply is catching up with demand in some markets. The NAHB expects multifamily production will slow significantly over the next two years after rapid growth in 2022. Developers face several challenges, including high regulatory costs, difficulty securing new project financing, and high interest rates.
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