Tarkett (XPAR:TKTT), which is owned and controlled by the Deconinck family, is a global flooring company based in France. It designs, manufactures and distributes carpet and vinyl for commercial and residential use. While its business is somewhat economically cyclical, 80% of Tarkett’s end demand is driven by renovation and just 20% by new construction. In our view, Tarkett has a good, cash generative business that has consistently earned 20% returns on tangible invested capital. At purchase, it was trading at roughly 8 times normalized EBITA (earnings before interest taxes and amortization) and had approximately a 9% owner’s earnings yield (net operating profit after tax). In addition, it has paid a dividend yield of approximately 2.3%, and the founding family recently purchased a small amount of company shares at higher prices.
From Tweedy Browne (Trades, Portfolio)'s second quarter 2018 shareholder letter.
