The U.S. market has an insatiable appetite for home remodeling and new builds, and that means big business for flooring manufacturers. Riding this wave, Paceline Equity Partners, LLC, a Dallas-based private equity manager, announced on February 2, 2022, that it acquired AHF Products, a leading North American hard surface flooring manufacturer. Floor Trends sat down with AHF Products President and CEO Brian Carson at The International Surface Event in Las Vegas where he shared his view of where this robust market is headed in 2022.
FT: What’s your outlook for 2022?
Carson: The industry is in a wonderful place. It’s always easier when you have the consumer rooting for you, and as you look at the residential sector, the next four or five years are going be really good for the market. There is a such a shortage of housing stock that the remodel strength that we saw last year is going to continue. There are way too many people looking for single-family homes, and with the household formations and millennials, there are not enough homes—they can’t build new ones fast enough.
With rising home equity, people are going have more equity in their homes to spend. Rising house prices creates a wonderful backdrop for renovation. If you think about our business, we're in wood, we're in laminate, we’re in commercial. Our roots are in hardwood. The power rally for hardwood is single-family remodel. The other power rally is single-family builder. Both those markets are going be the strongest parts of the market, and whether you're a retailer or you're a distributor, it’s going to be a good four or five years, although there will be a lot of challenges.
FT: What are those challenges?
Carson: The freight, the inflation is going to be with us for a while. That's another reason why the houses can't get built fast. And the supply chain disruptions are going to remain. I think it's probably going be 2023 before we see meaningful improvements in the supply chains out of Asia, particularly China.
We’ve got seven plants in the United States, which is a good place to be right now. We’ve got a plant in Cambodia, so we don't have all the tariff issues, and our vinyl and laminate is non-China, with a lot of it coming out of America.
FT: Where is your growth coming from?
Carson: Less than 5% of my business is dependent on China and a 100% of my growth is outside of China, with a lot of it coming right out of America. Everybody's looking to make moves to get suppliers closer to home and from less disrupted parts of the world, and I think that's a good strategy.
We’re expanding operations. Labor is a challenge in America. Labor is not a challenge in Cambodia. We’re investing in automation and plants, in material handling in the plants to reduce the dependency of on labor.
FT: What is the Paceline acquisition going to do for AHF?
Carson: The Paceline acquisition has given us great access to capital to invest behind additional ideas. We have to grow the business, so we've got a lot of financial flexibility to invest behind good ideas. They saw the trajectory, they saw our ability to grow, our marketing abilities to grow the customer base and grow that profits at the same time. And AIP, our former owners, were the best thing that ever happened to this business—they really accomplished their goals and more than accomplished what they set out to do with the business.