- Fourth Quarter Sales Increase 13.2% Year-Over-Year -
- Record Net Income of $20.3 Million, or $0.33 Per Diluted Share,
in Fourth Quarter -
- Record Operating Margin of 13.4% in Fourth Quarter -
ATLANTA, Feb. 20 /PRNewswire-FirstCall/ -- Interface, Inc.
(Nasdaq: IFSIA), a worldwide floorcoverings company, today announced results
for the fourth quarter and full year ended December 30, 2007.
Sales for the fourth quarter of 2007 increased 13.2% to $293.3 million
from sales of $259.1 million in the year ago period. As previously announced,
the Company sold its fabrics division in July 2007, and therefore the
financial statements for the fourth quarter of 2007, and all other periods
presented, now reflect the fabrics division as discontinued operations.
Operating income for the fourth quarter of 2007 increased 31.9% to a
record $39.4 million, or 13.4% of sales, compared with operating income of
$29.9 million, or 11.5% of sales, in the fourth quarter of last year. Income
from continuing operations was a record $20.3 million in the 2007 fourth
quarter, an increase of 63.1% compared with income from continuing operations
of $12.4 million in the fourth quarter of 2006. Net income for the 2007
fourth quarter was $20.3 million, or $0.33 per diluted share, compared with
net income of $12.1 million, or $0.21 per diluted share, in the 2006 fourth
quarter.
"The 2007 fourth quarter was the best performing quarter in Interface's
history and concluded our best performing year ever in terms of continuing
operations," said Daniel T. Hendrix, President and Chief Executive Officer.
"Our results continue to be driven by the strength of demand for modular
carpet both domestically and internationally, as well as the continued
expansion of our presence in non-office markets as a result of our market
segmentation strategy. These factors led to our fourth quarter overall
revenue growth, and coupled with good manufacturing discipline resulted in our
record operating profit margin. Order activity during the quarter remained
robust, growing 17% over year ago levels."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer,
commented, "Our InterfaceFLOR modular carpet business, which now comprises
more than 85% of our revenues, finished the year with an outstanding quarter,
with sales increasing 18% over year-ago levels. As a result of this sales
growth and with the operating leverage in our business model, operating income
in this division increased 35% compared with the fourth quarter last year, as
operating margins expanded significantly during the period. While overall
performance at Bentley Prince Street was below our expectations, the modular
component of this business continued its solid growth."
Sales for full year 2007 were $1.1 billion, compared with $914.7 million
for 2006, an increase of 18.2%. Operating income in 2007 increased 29.9% to a
record amount of $129.4 million, or 12.0% of sales, versus operating income of
$99.6 million, or 10.9% of sales, during 2006. Income from continuing
operations reached an all-time high of $57.8 million, or $0.94 per diluted
share, during the full year 2007 period, compared with income from continuing
operations of $35.8 million, or $0.64 per diluted share, in the 2006 period.
As previously reported, the Company also repurchased and redeemed in 2007 all
of its outstanding 7.3% Senior Notes, totaling $101 million, which further
strengthened its capital structure. The results for the full year 2007
included expenses on an after-tax basis of $1.0 million, or $0.02 per diluted
share, for premiums paid in connection with the redemption of these Senior
Notes, versus $0.7 million, or $0.01 per diluted share, on an after-tax basis
for premiums paid on repurchases of those notes in the prior year. Including
results of discontinued operations, the Company recorded a net loss for the
full year 2007 of $10.8 million, or $0.18 per diluted share, compared with net
income of $10.0 million, or $0.18 per diluted share, for 2006.
Mr. Hendrix concluded, "2007 was an excellent year for Interface in which
we continued to leverage our position as a market leader to generate record
results. Looking ahead, we see opportunity for continued strong financial
performance, and order growth has been solid through the first six weeks of
2008. Over the past few years, we have undertaken a number of initiatives to
focus on our core business, expand into new market segments and geographic
areas, and take advantage of the ongoing secular shift to carpet tile we see
in the marketplace. Our efforts have significantly reduced our exposure to
the U.S. corporate office market, which now comprises only about 24% of our
business. In short, we believe we are in an excellent position to continue to
grow and take market share in the current environment and look forward to
continued success in 2008."
The Company will host a conference call tomorrow, February 21, 2008, at
9:00 a.m. Eastern Time, to discuss its fourth quarter and full year 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=1766095 (if URL does not hyperlink please copy
and paste into browser) 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
Three Months Ended Twelve Months Ended
(In thousands, except per
share data) 12/30/07 12/31/06 12/30/07 12/31/06
Net Sales $293,348 $259,120 $1,081,273 $914,659
Cost of Sales 189,208 171,556 703,751 603,551
Gross Profit 104,140 87,564 377,522 311,108
Selling, General & Administrative
Expenses 64,700 57,655 246,258 211,487
Loss on Disposal - Specialty
Products -- -- 1,873 --
Operating Income 39,440 29,909 129,391 99,621
Interest Expense 7,186 9,532 34,110 42,204
Other Expense (Income), Net (465) (92) 1,851 998
Income Before Taxes 32,719 20,469 93,430 56,419
Income Tax Expense 12,469 8,057 35,582 20,612
Income from Continuing Operations 20,250 12,412 57,848 35,807
Discontinued Operations, Net of Tax -- (323) (68,660) (24,092)
Loss on Disposal - Discontinued
Operations, Net of Tax -- -- -- (1,723)
Net Income (Loss) $20,250 $12,089 $(10,812) $9,992
Earnings (Loss) Per Share - Basic
Continuing Operations $0.33 $0.22 $0.96 $0.66
Discontinued Operations -- (0.01) (1.14) (0.45)
Loss on Disposal -- -- -- (0.03)
Earnings (Loss) Per Share - Basic $0.33 $0.21 $(0.18) $0.18
Earnings (Loss) Per Share - Diluted
Continuing Operations $0.33 $0.21 $0.94 $0.64
Discontinued Operations -- -- (1.12) (0.43)
Loss on Disposal -- -- -- (0.03)
Earnings (Loss) Per Share - Diluted $0.33 $0.21 $(0.18) $0.18
Common Shares Outstanding - Basic 60,926 56,824 60,573 54,087
Common Shares Outstanding - Diluted 61,895 58,653 61,520 55,713
Orders from Continuing Operations* 284,057 242,647 1,112,693 929,411
Continuing Operations Backlog
(as of 12/30/07 and
12/31/06,respectively)* 123,771 105,244
* 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) 12/30/07 12/31/06
Assets
Cash $82,375 $109,157
Accounts Receivable 178,625 143,025
Inventory 125,789 112,293
Other Current Assets 24,848 28,634
Assets of Businesses Held for Sale 4,792 158,322
Total Current Assets 416,429 551,431
Property, Plant & Equipment 161,874 134,631
Other Assets 256,929 242,278
Total Assets $835,232 $928,340
Liabilities
Accounts Payable $57,243 $49,542
Accrued Liabilities 120,388 98,702
Liabilities of Businesses Held for Sale 220 22,934
Total Current Liabilities 177,851 171,178
Senior and Senior Subordinated Notes 310,000 411,365
Other Long-Term Liabilities 53,239 71,403
Total Liabilities 541,090 653,946
Shareholders' Equity 294,142 274,394
Total Liabilities and Shareholders' Equity $835,232 $928,340
Consolidated Condensed Statements of Cash Flows Twelve Months Ended
(In millions) 30-Dec-07 31-Dec-06
Net Income (Loss) $(10.8) $10.0
Adjustments for Discontinued Operations 68.6 25.8
Net Income from Continuing Operations $57.8 $35.8
Depreciation and Amortization 22.5 21.8
Deferred Income Taxes and
Other Non-Cash Items 6.9 (11.2)
Change in Working Capital
Accounts Receivable (32.1) (20.6)
Inventories (11.9) (19.6)
Prepaids 6.0 (5.3)
Accounts Payable and Accrued Expenses 19.3 26.3
Cash Provided from Continuing Operations 68.5 27.2
Cash Provided from (used in) Operating
Activities of Discontinued Operations (2.8) 5.9
Cash Provided from Operating Activities 65.7 33.1
Cash Provided from (Used in)
Investing Activities 6.2 (12.6)
Cash Provided from (Used in)
Financing Activities (101.7) 39.0
Effect of Exchange Rate Changes on Cash 3.0 2.4
Net Increase (Decrease) in Cash $(26.8) 61.9
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended Twelve Months Ended
12/30/07 12/31/06 %Change 12/30/07 12/31/06 %Change
Net Sales
Modular Carpet $257.0 $217.7 18.1% $930.7 $763.7 21.9%
Bentley Prince
Street 36.3 37.8 (4.0%) 148.4 137.9 7.6%
Specialty Products -- 3.6 * 2.2 13.1 (83.2%)
Total $293.3 $259.1 13.2% $1,081.3 $914.7 18.2%
Operating Income
(Loss)
Modular Carpet $40.1 $29.6 35.5% $133.7 $98.2 36.2%
Bentley Prince
Street 1.4 1.5 (6.7%) 5.6 5.9 (5.1%)
Specialty Products -- 0.3 * (1.8) 0.4 *
Corporate Expenses
and Eliminations (2.1) (1.5) (40.0%) (8.1) (4.9) (65.3%)
Total $39.4 $29.9 31.8% $129.4 $99.6 29.9%
* Not meaningful
SOURCE Interface, Inc. 02/20/2008
CONTACT: Daniel T. Hendrix, President and Chief Executive Officer,
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, both of
Interface, Inc., +1-770-437-6800; or Christine Mohrmann, Bob Joyce, both of FD
for Interface, Inc., +1-212-850-5600
Web site: http://www.interfaceinc.com
http://www.interfaceinc.com/results/investor
(IFSIA)
02/20/2008 16:02 EST http://www.prnewswire.com