- Second Quarter Sales Up 9% Year-Over-Year to $254 million -
- Second Quarter Orders Up 13% Year-Over-Year to $258 million -
ATLANTA, July 28 /PRNewswire-FirstCall/ -- Interface, Inc. (Nasdaq: IFSIA), a worldwide interiors products and services company, today
announced results for the second quarter ended July 4, 2004.
Sales in the second quarter 2004 rose 9% to $254.1 million, from $234.0 million in the second quarter 2003. Operating income was $11.8 million in the second quarter 2004, a significant increase over operating income of $3.7 million in the second quarter 2003. The Company reported a net loss for the second quarter 2004 of $0.2 million, or $0.00 per share, compared with a net loss in the second quarter 2003 of $5.4 million, or $0.11 per share. The Company's results for the second quarter 2003, as announced at that time,
included a pre-tax restructuring charge of $2.5 million, or $0.03 per share,
in connection with the completion of the Company's initiative to rationalize
manufacturing operations in its fabrics division and reduce its workforce
worldwide.
"We are pleased with our results for the second quarter as we once again achieved sequential and year-over-year improvements in sales and operating income," said Daniel T. Hendrix, President and Chief Executive Officer. "Our growth in the second quarter is primarily a result of record sales in our U.S.
modular business and the ongoing recovery in the corporate office market. We
were also encouraged to see the level of order activity remain high during the
second quarter. Orders were up 13% to $258 million, compared with the second
quarter of last year."
Mr. Hendrix continued, "Sales in our worldwide modular business continued to be robust across all areas, increasing 13% year-over-year. We experienced particularly strong growth in the education, retail and government markets, where we believe we're gaining market share. Our fabrics business continued to benefit from the restructuring initiatives and the market segmentation strategy we have been implementing over the past several quarters. Revenues from this portion of our business increased 6% year-over-year, and operating income improved to $1.4 million for the second quarter of 2004, from an operating loss of $2.5 million a year ago. While sales in our Bentley Prince Street broadloom business were essentially flat year-over-year, we believe we're gaining share in non-corporate office markets; and we remain confident that our strategic initiatives will produce a positive long-term effect on
this business."
For the first six months of 2004, sales were $503.4 million, compared with $444.2 million for the same period a year ago, an increase of 13%. Operating income for the 2004 six-month period increased significantly to $21.3 million, versus operating income of $0.3 million for the comparable 2003 six-month period (which included total restructuring charges of $4.6 million). For the first half of 2004, the Company reported a net loss of $3.2 million, or $0.06 per share (which includes the equivalent of $0.02 per share of costs associated with its previously announced bond issuance in the first quarter of 2004). This compares with net loss of $15.8 million, or $0.31 per share, for the first six months of 2003.
Mr. Hendrix concluded, "This was an important quarter for Interface, as our focus on cost control led to significant improvements in operating income and allowed us to essentially reach the breakeven level. Overall, we are encouraged by these results and believe the positive momentum will continue through the remainder of the year. Our focus going forward will be to continue our efforts on market segmentation and cost control initiatives. Doing so will help drive revenue growth, enhance our market presence and contribute to continued profitability improvements. We remain confident about Interface's growth prospects and believe the Company is well positioned to capitalize on the progressing recovery in the overall industry."
Interface, Inc. is a recognized leader in the worldwide interiors market, offering floorcoverings and fabrics. The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value. The Company is the world's largest manufacturer of modular carpet under the Interface, Heuga, Bentley and Prince Street brands, and, through its Bentley Mills and Prince Street brands, enjoys a leading position in the high quality, designer-oriented segment of the broadloom carpet market. The Company is a leading producer of interior fabrics and upholstery products, which it markets under the Guilford of Maine, Toltec, Intek, Chatham and Camborne brands. The Company provides specialized carpet replacement, installation, maintenance and reclamation services through its Re:Source Americas service network. In addition, the Company provides specialized fabric services through its TekSolutions business and produces InterCell brand raised/access flooring systems.
Safe Harbor Statement under the Private Securities Litigation Reform Actof 1995: Except for historical information contained herein, the other matters set forth in this news release are forward-looking statements. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading "Safe Harbor Compliance Statement for Forward-Looking Statements" in Item 1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2003, which discussion is incorporated herein by this reference, including, but not limited to, the discussion of specific risks and uncertainties under the headings "We compete with a large number of manufacturers in the highly competitive commercial floorcovering products market, and some of these competitors have greater financial resources than we do," "Sales of our principal products have been and may continue to be affected by cycles in the construction and renovation of commercial and institutional buildings," "Our continued success depends significantly upon the efforts, abilities and continued service of our senior management executives and our design consultants," "Our substantial international operations are subject to various political, economic and other
uncertainties," "Our Chairman, together with other insiders, currently has
sufficient voting power to elect a majority of our Board of Directors," "Large
increases in the cost of petroleum-based raw materials, which we are unable to
pass through to our customers, could adversely affect us," "Unanticipated
termination or interruption of any of our arrangements with our primary third-
party suppliers of synthetic fiber could have a material adverse effect on
us," "We have a significant amount of indebtedness which could have important
negative consequences to us," and "Our Rights Agreement could discourage
tender offers or other transactions that could result in shareholders
receiving a premium over the market price for our stock." Any forward-looking
statements are made pursuant to the Private Securities Litigation Reform Act
of 1995 and, as such, speak only as of the date made. The Company assumes no responsibility to update or revise forward-looking statements made in this
press release and cautions readers not to place undue reliance on any such
forward-looking statements.
Consolidated Statements of Income
(in thousands, except per Three Months Ended Six Months Ended
share data) 07/04/04 06/29/03 07/04/04 06/29/03
Net Sales $254,137 $233,964 $503,381 $444,174
Cost of Sales 180,466 169,093 357,434 323,604
Gross Profit 73,671 64,871 145,947 120,570
Selling, General &
Administrative Expenses 61,835 58,670 124,598 115,710
Restructuring Charge -- 2,469 -- 4,555
Operating Income 11,836 3,732 21,349 305
Interest Expense 11,552 10,213 23,357 20,393
Bond Offering Cost -- -- 1,869 --
Other Expense, Net 523 344 1,307 437
Loss Before Taxes on Income (239) (6,825) (5,184) (20,525)
Income Tax Benefit (80) (2,885) (1,996) (7,543)
Loss from Continuing Operations (159) (3,940) (3,188) (12,982)
Discontinued Operations, Net of Tax -- (1,472) -- (2,784)
Net Loss $(159) $(5,412) $(3,188) $(15,766)
Basic and Diluted Loss per Share
Continuing Operations $(0.00) $(0.08) $(0.06) $(0.26)
Discontinued Operations -- (0.03) -- (0.05)
Basic and Diluted Loss per Share $(0.00) $(0.11) $(0.06) $(0.31)
Common Shares Outstanding,
Basic and Diluted 50,581 50,275 50,474 50,274
Orders $258,300 $229,800 $570,900 $492,600
Backlog (as of 7/4/04
and 6/29/03, respectively) $128,600 $126,000
Consolidated Condensed Balance Sheets
(In thousands) 07/04/04 12/28/03
Assets
Cash $14,804 $16,633
Accounts Receivable 176,217 174,366
Inventory 159,267 143,885
Other Current Assets 27,739 24,062
Total Current Assets 378,027 358,946
Property, Plant & Equipment 205,224 211,457
Goodwill 223,074 224,129
Other Assets 106,611 99,742
Total Assets $912,936 $894,274
Liabilities
Accounts Payable $58,633 $62,352
Accrued Liabilities 69,746 76,014
Total Current Liabilities 128,379 138,366
Long-Term Debt 16,645 --
Senior and Senior Subordinated Notes 460,000 445,000
Deferred Income Tax 32,203 36,462
Other Long-Term Liabilities 59,823 55,713
Total Liabilities 697,050 675,541
Shareholders' Equity 215,886 218,733
Total Liabilities and Shareholders' Equity $912,936 $894,274
Consolidated Condensed
Statements of Cash Flows Three Months Ended Six Months Ended
(in millions) 07/04/04 06/29/03 07/04/04 06/29/03
Net (Loss) $(0.2) $(5.4) $(3.2) $(15.8)
Depreciation, Amortization 9.0 9.0 18.8 18.4
Deferreds and other
Non-Cash Items (4.5) 3.1 (4.5) 3.1
Change in Working Capital
Accounts Receivable (5.9) (36.0) (2.3) (29.2)
Inventories 0.6 (4.9) (15.6) (13.5)
Prepaids 1.1 1.9 (3.6) (2.5)
Accounts Payable and
Accrued Expenses (2.3) 6.4 (10.9) 6.9
Cash Provided from (Used in)
Continuing Operations (2.2) (25.9) (21.3) (32.6)
Cash Provided from (Used in)
Operating Activities of
Discontinued Operations 0.0 6.7 0.0 6.7
Cash Provided from (Used in)
Operating Activities (2.2) (19.2) (21.3) (25.9)
Cash Provided from (Used in)
Investing Activities (3.1) 4.0 (9.4) (3.0)
Cash Provided from
Financing Activities 2.3 16.3 28.8 18.7
Effect of Exchange
Rate Changes on Cash 0.2 0.2 0.1 0.3
Net Increase (Decrease)
in Cash $(2.8) $1.3 $(1.8) $(9.9)
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended Six Months Ended
07/04/04 06/29/03 % Change 07/04/04 06/29/03 % Change
Net Sales
Modular Carpet $134.1 $118.8 12.9% $265.2 $224.5 18.1%
Broadloom 29.2 29.3 -0.3% 56.3 51.1 10.2%
Distribution Channel 38.9 38.0 2.4% 77.0 70.4 9.4%
Fabrics Group 48.9 46.1 6.1% 98.9 93.0 6.3%
Specialty Products 3.0 1.8 66.7% 6.0 5.2 15.4%
Total $254.1 $234.0 8.6% $503.4 $444.2 13.3%
Operating Income (Loss)
Modular Carpet $13.3 $9.3 $26.0 $18.0
Broadloom (0.6) (0.4) (0.9) (3.5)
Distribution Channel (2.4) (1.1) (5.6) (4.8)
Fabrics Group 1.4 (2.5) 2.3 (7.9)
Specialty Products (0.1) (0.1) 0.0 0.2
Corporate Expenses,
Net 0.2 (1.5) (0.5) (1.7)
Total $11.8 $3.7 $21.3 $0.3