Dal-Tile said growth was achieved across all distribution channels. Compared to the prior year, sales through company-operated sales centers increased 8.0%, while sales to independent distributors and home centers increased 3.9% and 7.2%, respectively. Profit margin before tax increased 100 basis points to 10.9% due to improved productivity, reduced operating costs and lower interest expense. Free cash flow was $8.0 million versus $3.5 million in the prior year, and debt decreased $85.1 million to $319 million versus first quarter prior year.
"As we cross these turbulent economic times, we are focusing on two major goals," said Jacques Sardas, chairman, president and CEO. "We want to continue to reduce our debt and, at the same time, we want to invest in low cost, high quality manufacturing capabilities and exciting new products.”
Based on the information currently available to the company, Dal-Tile estimates that for its fiscal year ending December 28, 2001, sales will grow 6% to 8% and earnings per-share growth range between 8% to 10% vs. the prior year.
In other news, the company also annuounced that it intends to file a registration statement with the Securities and Exchange Commission for an underwritten offering of shares of its common stock. It is currently anticipated that approximately 14 million shares will be offered by certain selling stockholders and that the underwriters will be granted an over-allotment option.
The selling stockholders will be certain unit holders of DTI Investors LLC (an affiliate of AEA Investors Inc.), which currently holds approximately 28.6 million Dal-Tile shares. Following the offering, the remaining shares will be subject to lock-up arrangements that are expected to expire in the fourth quarter of 2001.
Dal-Tile will not receive any proceeds from the sale of the shares. The offering is expected to be completed in the second quarter of 2001. The timing of the filing of the registration statement and the commencement of the offering are dependent on market conditions and other factors and are subject to change, the company said.
"AEA has been a long time partner and investor in Dal-Tile and we have always valued and appreciated their support,” Sardas noted. “Their desire to obtain liquidity is understandable. Looking ahead, the offering will result in an increased stock float and a broader shareholder base, which we believe will benefit Dal-Tile."