Interceramic First Quarter 2004 Results CHIHUAHUA, Mexico, April 21 /PRNewswire-FirstCall/ -- The first quarter of 2004 may well prove to be a turning point for Interceramic. While the overall financial results for the period were not particularly outstanding, we ended the quarter with a very strong March and April appears to be shaping up very well. Additionally, other important developments during the month bode extremely well for the future of the Company. At the end of the first quarter, we concluded an equity offering in the United States and Mexico, selling all offered securities and netting the Company US $43.7 million in proceeds. Simultaneously with the completion of this offering, we acquired for US $15.8 million two of our biggest franchisees in Mexico, with operations in the key Mexican markets of Chihuahua and Monterrey. Combined, over the last 12 month period these two franchises have generated earnings before interest, taxes, depreciation and amortization or "EBITDA" of approximately US $3.0 million. With every passing quarter in Mexico we have learned that not only do our subsidiary franchises sell more product than most of our independent distribution, but also provide us with significantly higher margins. We expect to reap substantial benefits by the addition of these two very important markets to our subsidiary network. The remaining proceeds from the offering give Interceramic the funds necessary to undertake our long-planned capacity expansion. With the funds now in hand, we will break ground on the new state of the art manufacturing facility-to be located at our home-base in Chihuahua, Mexico-by next month. The project should be completed and operational about this time next year. The cost of the new plant is projected to be around US $25.0 million and will increase our overall production capacity by nearly 25 percent. The new plant brings added flexibility, lower costs and higher productivity and will be dedicated to the manufacture of our innovative, high-design, high-margin products, allowing us to produce more of our best selling products and freeing up some capacity at our other plants for production of some of the offerings that we have been importing from other manufacturers over the past couple of years. Sales in the first quarter of 2004 at US $76.6 million grew by 3.24 percent over sales of US $74.2 million in the first quarter of 2003. Sales for the quarter broke down to US $42.0 million in Mexico-virtually identical to the same period last year-and US $34.6 million in the International markets, a 7.54 percent increase over the first quarter of 2003. In both markets we sold about five percent more product than we did during the first quarter of 2003. Higher cost of sales and operating costs attributable primarily to our investment in selling infrastructure and higher natural gas prices impacted operating income, and at US $4.3 million it was 32.29 percent behind operating income of US $6.4 million in the same period of 2003. Our EBITDA for the period did not lag quite so much, at US $8.6 million compared to US $10.1 million in the first quarter of 2003, a decrease of 15.23 percent. However, for the month of March we posted EBITDA of US $4.5 million compared to US $4.4 million in March of last year. This is the best EBITDA achieved by the Company in two years and is particularly encouraging because we decided against holding our traditional "annual sale" this year, the benefit of which boosted our income last March. Customer anticipation of this annual promotion has had a negative effect on February and April sales in previous years, but our cancellation of the sale this year seems to have strengthened sales in February and April has started well too, a very positive development. We also ended the period with a debt service coverage ratio of 5.4 and a debt to EBITDA ratio of 2.9. We at Interceramic have overcome a number of obstacles and invested heavily in pushing through major changes throughout our organization over the past couple of years. We believe that these efforts are now starting to pay off. The success of our recent stock offering, the coming to fruition of our expansion plans and the definite spark in our operations and sales we have perceived in the last couple of months are extremely encouraging. We look forward to the coming months with both confidence and optimism. Oscar E. Almeida Chairman of the Board Victor D. Almeida Chief Executive Officer This document contains forward-looking statements within the meaning of the United States Securities Exchange Act of 1934 which reflect the Company's views about future events and financial performance. Actual events and results could differ materially from those stated herein and, accordingly, undue reliance should not be placed upon them. The forward-looking statements speak only of their dates and the Company undertakes no obligation to update or revise any of them. DATASOURCE: Interceramic CONTACT: Luis Fernando Cano Barraza, Investor Relations of Interceramic +52-614-429-1264, Web site: http://www.interceramic.com/

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