Flooring News and Information

Dallas, TX, Oct. 17— Dal-Tile International had record sales and profits for the third quarter of 2001. Sales increased $21.1 million, or 8.5%, to $269 million compared to $247.9 million in the third quarter last year. On a pro forma, fully taxed basis, net income for the quarter increased $2.4 million, or 13.3%, over the same period last year to $20.5 million, or $0.35 per share.

Net sales increased across all business units, supported by the launch of new products and growth of the natural stone business. Versus last year, company operated sales centers increased 9.7%, while distributors and home centers grew 8.4% and 1.9%, respectively. Operating margin was flat versus prior year. Gross margins declined by approximately 1% due to product mix, declining prices for floor tile and reduced production to balance inventories. The decline in gross margin was offset by reductions in selling, general and administrative expense and transportation cost. Profit margin before tax increased 50 basis points to 12.4%, due primarily to lower interest expense. Free cash flow was $33.6 million versus $31 million in the prior year, and debt was $261.7 million, which was $92.1 million lower than third quarter prior year.

"During the third quarter, the company realized two important milestones," said Jacques Sardas, chairman, president and CEO. "Sales increased to over $1 billion on a trailing twelve month basis and the ratio of debt to capital fell below 50%. Over the last four years, we’ve reduced our debt by almost $300 million. I am proud of our 8,000 employees, who in the aftermath of the tragic events of September 11 have dedicated themselves to continuing our progress in the face of a declining economy. We intend to focus our energies on growing our business and reducing our costs, paying particular attention to increasing cash flow and reducing debt."

Based on information available at this time, the company's fourth quarter earnings should be in line with consensus estimates of $0.30 per share. However, these estimates could be revised later in the quarter when the company has a better reading on the economy.