Farnham, Quebec, Mar. 13--During the fiscal year ended December 31, Domco Tarkett Inc. recorded net earnings of $16.0 million or $0.63 per share, up from $8.2 million or $0.32 for the previous year, an increase of 95.5%.
Net earnings grew by 23.1% over the net earnings of $13.0 million or $0.51 per share for the previous year, adjusted according to the new CICA accounting standard regarding goodwill impairment.
"This result reflects the continuous reduction in net debt combined with the decline in interest rates; the net interest on this debt was in fact cut by $2.8 million last year. In addition, operating costs were lowered by about $3 million. We also had to assume non-recurring restructuring costs of $3.6 million during the fiscal year. Without these costs, earnings before interest, income taxes, depreciation and amortization (EBITDA) would reach $53.3 million rather than $49.7 million, compared with $49.1 million in 2001," indicated Ulf Mattsson, president and CEO.
The corporation achieved sales of $667.2 million, up from $649.6 million a year ago, an increase of about 3%. Sales of resilient flooring totaled $464.3 million, holding fairly steady compared with 2001. The hardwood division's sales grew by 10.5% to reach $202.9 million, or 30.4% of Domco Tarkett's revenues. As in 2001, the corporation realized 84.7% of its sales in the U.S. and the balance mainly in Canada.
"The fact that our profitability in the commercial and residential resilient sector was strengthened in the second half of 2002 is one of last year's highlights and a first positive effect of the reorganization implemented mostly in 2002. This sector efficiently streamlined its operations and successfully launched several innovative products while expanding its distribution network. We are confident it will stay on track in 2003," added Mattsson.
Although the fourth quarter is generally the fiscal year's weakest period at Domco Tarkett, the last quarter of 2002 showed a distinct improvement in net earnings. Whereas the corporation incurred a net loss of $1.4 million (adjusted) in the fourth quarter of 2001, it posted a net profit of $803,000 in the equivalent quarter of 2002. Sales rose to $149.2 million, up 7.2% over the corresponding period a year ago.
During the fiscal year, the corporation lightened its balance sheet considerably, reducing its long term debt (including the current portion) by almost half to $78.6 million as at December 31, down from $142.3 million a year earlier. Domco Tarkett had total net debt of $63.5 million at the close of the year, compared with $85.8 million as at December 31. It should be noted that the corporation has repaid a total of $101.6 million in long term debt over the past two years.
Shareholders' equity amounted to $257.9 million, down from $319.1 million as of December 31, 2001. This decrease of $61.2 million was due mainly to the adoption of the new accounting standard regarding goodwill impairment.
As at December 31, 2002, the total net debt to shareholders' equity ratio stood at 0.25:1, compared with 0.27:1 a year earlier.
"In 2003, we are further strengthening the measures focused on improving profits in our three divisions, where the sales and marketing teams are stepping up their efforts to increase sales and take advantage of the potential of their respective markets. We now benefit from a decentralized structure with strong leadership of each division, and we are making good progress implementing an entrepreneurial culture. We have also enhanced our innovativeness corporation-wide. We hope that American consumer confidence will not be seriously affected by international events, which are currently having a downward impact on consumption indexes," concluded Mattsson.
