- EPS From Continuing Operations Increase 47%
- Sales From Continuing Operations Increase 18.7%
- Orders From Continuing Operations Increase 27.5%
ATLANTA, July 25 /PRNewswire-FirstCall/ -- Interface, Inc.
(Nasdaq: IFSIA), a worldwide floorcoverings company, today announced results
for the second quarter ended July 1, 2007.
Sales from continuing operations for the second quarter of 2007 increased
18.7% to $265.0 million from sales of $223.2 million in the year ago period.
As previously announced, the Company sold its fabrics division to an affiliate
of Sun Capital Partners, and therefore the financial statements for the second
quarter of 2007 and all other periods presented now reflect the fabrics
division as discontinued operations. The fabrics discontinued operations also
include the results of the Company's former European fabrics business, which
was sold in the second quarter of 2006.
Operating income for the second quarter of 2007 increased 28.2% to $30.9
million, or 11.7% of sales, from $24.1 million, or 10.8% of sales, in the
second quarter of last year. Income from continuing operations was $13.3
million, or $0.22 per diluted share, in the 2007 second quarter, compared with
income from continuing operations of $8.5 million, or $0.15 per diluted share,
in the second quarter of 2006. Including results of discontinued operations,
net income was $1.0 million, or $0.02 per diluted share, in the 2007 second
quarter, versus net income of $5.9 million, or $0.11 per diluted share, in the
2006 second quarter.
"The second quarter of 2007 was an exceptional quarter for Interface, as
we reported strong performance across all of our businesses and continued to
increase market share," said Daniel T. Hendrix, President and Chief Executive
Officer. "We established record revenues in our modular carpet business in
each of our key geographic regions -- Americas, Europe and Asia-Pacific. This
growth was driven primarily by the rebounding corporate office market, while
our market segmentation strategy contributed greatly as well. Perhaps the
brightest spot, though, is that orders received in our continuing operations
during the quarter were up 28% to $304 million, their highest level ever."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer,
commented, "Our worldwide modular carpet business exhibited an outstanding
quarter, with sales increasing 21% and orders increasing 30% compared with the
second quarter last year. The Americas modular business continued its very
strong performance as orders grew 33% to mark the fifth straight record
quarter for this region. The record sales in our modular business drove
improved profitability, which increased 34% from the same period last year. In
our Bentley Prince Street business, we continued to see improvement, with
revenue growth of 17% and increased profitability. During the quarter, we had
a $24.3 million net increase in cash, while the July sale of our fabrics
division has further contributed to strengthening our balance sheet and
reducing debt."
For the first six months of 2007, sales from continuing operations were
$508.5 million, compared with $421.3 million for the same period a year ago,
an increase of 20.7%. Operating income for the 2007 six-month period was $55.2
million (including a loss of $1.9 million, or $0.03 per diluted share, on the
disposal of assets in its specialty products business), versus operating
income of $44.2 million for the comparable 2006 six-month period. Income from
continuing operations was $22.4 million, or $0.36 per diluted share, in the
2007 six-month period, compared with income from continuing operations of
$13.9 million, or $0.25 per diluted share, in the same period a year ago.
Including results of discontinued operations, net loss for the first six
months of 2007 was $39.6 million, or $0.64 per diluted share, compared with a
net loss of $11.2 million, or $0.21 per diluted share, for the 2006 first
half.
Mr. Hendrix concluded, "With the sale of our fabrics business, we are now
completely focused on our core floorcovering businesses. As demonstrated by
the record results for modular carpet during the second quarter, we are
benefiting from a secular shift toward modular applications and our
segmentation strategy is driving growth in non-office commercial segments.
With modular orders increasing 30% during the quarter, we are growing faster
than the overall market and building market share. While we do not know how
long we will sustain this rate of growth, we are very optimistic about the
strength of our markets and are confident that we have the right strategy in
place to continue to capitalize on our market opportunities and gain market
share. Business has remained robust during the first three weeks of the third
quarter, and we are very excited for the prospects of the Company as we move
into the second half of the year."
The Company will host a conference call tomorrow, July 26, 2007, at 9:00
a.m. Eastern Time, to discuss its second quarter 2007 results. The conference
call will be simultaneously broadcast live over the Internet. Listeners may
access the conference call live over the Internet at
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
eventDetails&c=112931&eventID=1601592 or through the Company's website at
http://www.interfaceinc.com/results/investor/. The archived version of the
webcast will be available at these sites for one year beginning approximately
1 hour after the call ends.
Interface, Inc. is the world's largest manufacturer of modular carpet,
which it markets under the InterfaceFLOR, FLOR, Heuga and Bentley Prince
Street brands, and, through its Bentley Prince Street brand, enjoys a leading
position in the designer quality segment of the broadloom carpet market. 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.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 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 "Risk Factors" included in Item 1A of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, 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 adverse
economic cycles in the renovation and construction of commercial and
institutional buildings," "Our success depends significantly upon the efforts,
abilities and continued service of our senior management executives and our
principal design consultant, and our loss of any of them could affect us
adversely," "Our substantial international operations are subject to various
political, economic and other uncertainties that could adversely affect our
business results, including by restrictive taxation or other government
regulation and by foreign currency fluctuations," "Large increases in the cost
of petroleum-based raw materials could adversely affect us if we are unable to
pass these cost increases through to our customers," "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," "The market price of our common stock has been
volatile and the value of your investment may decline," "Our earnings in a
future period could be adversely affected by non-cash adjustments to goodwill,
if a future test of goodwill assets indicates a material impairment of those
assets," "Our Chairman, together with other insiders, currently has sufficient
voting power to elect a majority of our Board of Directors," and "Our Rights
Agreement could discourage tender offers or other transactions for our stock
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 Condensed Statements of Operations
(In thousands, except Three Months Ended Six Months Ended
per share data) 07/01/07 07/02/06 07/01/07 07/02/06
Net Sales $264,962 $223,184 $508,454 $421,318
Cost of Sales 172,737 147,476 333,001 277,686
Gross Profit 92,225 75,708 175,453 143,632
Selling, General
& Administrative
Expenses 61,332 51,617 118,379 99,455
Loss on Disposal --
Specialty Products -- -- 1,873 --
Operating Income 30,893 24,091 55,201 44,177
Interest Expense 9,161 10,936 18,281 22,168
Other Expense, Net 612 445 1,035 718
Income Before Taxes 21,120 12,710 35,885 21,291
Income Tax Expense 7,797 4,234 13,493 7,386
Income from
Continuing
Operations 13,323 8,476 22,392 13,905
Discontinued
Operations, Net of
Tax (12,325) (868) (62,010) (23,385)
Loss on Disposal --
Discontinued
Operations, Net of
Tax -- (1,723) -- (1,723)
Net Income (Loss) $998 $5,885 $(39,618) $(11,203)
Earnings (Loss) Per
Share - Basic
Continuing
Operations $0.22 $0.16 $0.37 $0.26
Discontinued
Operations (0.20) (0.02) (1.03) (0.44)
Loss on Disposal -- (0.03) -- (0.03)
Earnings (Loss) Per
Share -- Basic $0.02 $0.11 $(0.66) $(0.21)
Earnings (Loss) Per
Share -- Diluted
Continuing
Operations $0.22 $0.15 $0.36 $0.25
Discontinued
Operations (0.20) (0.01) (1.00) (0.43)
Loss on Disposal -- (0.03) -- (0.03)
Earnings (Loss) Per
Share -- Diluted $0.02 $0.11 $(0.64) $(0.21)
Common Shares
Outstanding -- Basic 60,322 53,375 60,210 52,995
Common Shares
Outstanding --
Diluted 61,571 54,996 61,435 54,548
Orders from Continuing
Operations* 303,800 238,200 558,600 441,400
Continuing Operations
Backlog (as of
07/01/07 and 07/02/06,
respectively)* 148,235 111,200
* Orders from Continuing Operations and Continuing Operations Backlog
exclude all activity related to the Fabrics Group business segment,
which was sold in the third quarter of 2007.
Consolidated Condensed Balance Sheets
(In thousands) 07/01/07 12/31/06
Assets
Cash $89,346 $109,157
Accounts Receivable 152,034 143,025
Inventory 128,446 112,293
Other Current Assets 28,009 28,634
Assets of Businesses Held for Sale 92,194 158,322
Total Current Assets 490,029 551,431
Property, Plant & Equipment 146,608 134,631
Other Assets 262,466 242,278
Total Assets $899,103 $928,340
Liabilities
Accounts Payable $55,310 $49,542
Accrued Liabilities 102,488 98,702
Current Portion of Long-Term Debt 79,235 --
Liabilities of Businesses Held for Sale 22,506 22,934
Total Current Liabilities 259,539 171,178
Long-Term Debt 8,765 --
Senior and Senior Subordinated Notes 310,000 411,365
Other Long-Term Liabilities 79,900 71,403
Total Liabilities 658,204 653,946
Shareholders' Equity 240,899 274,394
Total Liabilities and Shareholders' Equity $899,103 $928,340
Consolidated Condensed Statements of Cash Flows
Three Months Ended Six Months Ended
(In millions) 07/01/07 07/02/06 07/01/07 07/02/06
Net Income (Loss) $1.0 $ 5.9 $(39.6) $(11.2)
Adjustments for
Discontinued
Operations 12.3 2.6 62.0 25.1
Net Income (Loss) from
Continuing Operations $13.3 $8.5 $22.4 $13.9
Depreciation and
Amortization 5.6 5.3 12.0 10.8
Deferred Income Taxes and
Other Non-Cash Items 0.0 (5.0) 0.0 (5.7)
Change in Working Capital
Accounts Receivable (8.7) (4.7) (8.0) (8.9)
Inventories (1.3) (1.5) (16.1) (18.4)
Prepaids 1.6 (0.5) 1.7 (3.1)
Accounts Payable and
Accrued Expenses 25.5 23.6 8.3 5.0
Cash Provided from
(Used in)
Continuing Operations 36.0 25.7 20.3 (6.4)
Cash Provided from
(Used in) Operating
Activities of
Discontinued
Operations (1.7) (1.7) 3.2 (0.5)
Cash Provided from
(Used in) Operating
Activities 34.3 24.0 23.5 (6.9)
Cash Provided from
(Used in) Investing
Activities (12.9) 19.9 (31.1) 8.8
Cash Provided from
(Used in) Financing
Activities 2.2 (35.9) (13.3) (24.2)
Effect of Exchange Rate
Changes on Cash 0.7 0.8 1.1 1.2
Net (Decrease) Increase
in Cash $24.3 $ 8.8 $(19.8) $(21.1)
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended Six Months Ended
07/01/07 07/02/06 % Change 07/01/07 07/02/06 % Change
Net Sales
Modular Carpet $225.5 $186.5 20.9% $430.8 $352.4 22.2%
Bentley Prince
Street 39.5 33.9 16.5% 75.5 63.0 19.8%
Specialty
Products -- 2.8 * 2.2 5.9 (62.7%)
Total $265.0 $223.2 18.7% $508.5 $421.3 20.7%
Operating Income
(Loss)
Modular Carpet $31.6 $23.6 33.9% $58.4 $44.3 31.8%
Bentley Prince
Street 2.0 1.7 17.6% 3.0 2.2 36.4%
Specialty
Products -- 0.0 * (1.8) 0.0 *
Corporate
Expenses and
Eliminations (2.7) (1.2) (125.0%) (4.4) (2.3) (91.3%)
Total $30.9 $24.1 28.2% $55.2 $44.2 24.9%
* Not meaningful
SOURCE Interface, Inc.
CONTACT:
Daniel T. Hendrix,
President and Chief Executive Officer,
or
Patrick C. Lynch,
Senior Vice President and Chief Financial Officer,
both of
Interface, Inc., +1-770-437-6800;
Christine Mohrmann, Bob Joyce, both of FD
for Interface, Inc.,
+1-212-850-5600
Web site: http://www.interfaceinc.com