Interceramic posts 2003 year end results
Interceramic's gross margin for 2003 of 34.7 percent was 2.3 points lower than gross margin of 37 percent in 2002.
Sales in Mexico grew by 1.56 percent over sales in 2002, hitting U.S. $171.8 million. Another plus was the growth in unit sales of 17.54 percent in 2003 over 2002, indicating greater market penetration in the Mexican ceramic tile market.
In international markets, primarily the United States, sales grew to $134.6 million in 2003 from $130.9 million in 2002, a 2.88 percent increase. At the same time, volume of product sold decreased by 7.7 percent.
As was the case during 2002, costs attributed to improving sales infrastructure led to a decline in operating income. At $20.5 million, operating income in 2003 was 28.08 percent lower than operating income of $28.5 million in 2002. Lower operating income suppressed earnings before interest, taxes, depreciation and amortization ("EBITDA"), which at $36.2 million for the year represented a 16.14 percent drop over EBITDA of $43.2 million in 2002. Lower interest rates improved the company's debt service coverage ratio, which at the end of the last quarter of 2003 stood at 5.7 times compared to 4.4 times at the end of last year.
At the end of 2003, Interceramic had 19 company-owned stores in the United States that provided sales growth during 2003 of about 9 percent over last year. The company also introduced more than 40 new product lines -- compared to an average of 10 annually in prior years -- most of which were made available in Mexico and in the United States.
In Mexico grew sales markedly, selling 20.89 percent more product than during 2002. At the end of 2003 Interceramic reached an agreement with an affiliate to purchase its franchise distributors in key Mexican markets including Monterrey and the State of Chihuahua.