- First Quarter Sales Up 11.8% Year-Over-Year -
- First Quarter Operating Income Up 25.4% Year-Over-Year -
- Income from Continuing Operations of $2.9 million, or $0.06 per share -
ATLANTA, April 27 /PRNewswire-FirstCall/ -- Interface, Inc.
(Nasdaq: IFSIA), a worldwide floorcoverings and fabrics company, today
announced results for the first quarter ended April 3, 2005.
First quarter 2005 results included an 11.8% increase in sales to $234.7
million, from $210.0 million in the year ago period. The first quarter of
2005 contained 13 weeks, compared to 14 weeks last year. Operating income was
$17.2 million in the 2005 first quarter, a 25.4% increase over operating
income of $13.7 million in the first quarter 2004. As a percentage of sales,
operating income improved to 7.3% in the first quarter of 2005 versus 6.5% of
sales in the year ago period. Income from continuing operations for the 2005
first quarter was $2.9 million, or $0.06 per share, compared with a loss from
continuing operations of $286,000, or $0.01 per share, in the first quarter of
last year.
As previously announced, the Company is exiting its owned floorcovering
dealer business. Consequently, it is reporting the results of operations for
its owned Re:Source dealer businesses (as well as a small Australian dealer
business and a small residential fabrics business) as "discontinued
operations," in accordance with accounting standards. These operations
yielded a first quarter 2005 after-tax operating loss of $4.8 million. As a
result, the Company's net loss for the first quarter of 2005 was $2.2 million,
or $0.04 per share, compared with a net loss in the first quarter of 2004 of
$3.0 million, or $0.06 per share. (In the first quarter of 2004, the Company
expensed the equivalent of $0.01 per share of costs associated with a bond
issuance.)
"We are pleased with our results for the 2005 first quarter, which
represent considerable growth during what is typically a seasonally slower
period for our business," said Daniel T. Hendrix, President and Chief
Executive Officer. "We saw a continuation of the trends we experienced in
2004, reflecting the positive developments we are seeing in our industry.
Strong growth in our modular business drove improving performance for our
Company, and we continued to benefit from the ongoing improvements in the
corporate office and retail space markets. Overall, sales increased and
operating margins continued to expand, and we were encouraged to see the level
of order activity remain high during the first quarter. Orders were up 9.1%
to $261 million, compared with the first quarter of last year."
Mr. Hendrix continued, "During the first quarter, we once again gained
market share in our worldwide modular business as we continue to outpace the
industry and lead the growth of this market. The ongoing improvement in the
corporate office market, coupled with our penetration into other markets, led
to a 15.3% increase in worldwide modular sales for the quarter. This growth
was primarily driven by the U.S. and Asia-Pacific regions, where strong order
flows produced record results. As we predicted, our fabrics business returned
to profitability in the first quarter, due to a modest improvement in sales -
despite having one less week in the first quarter compared with last year -
and the benefits of our past restructuring initiatives. We expect to see
further profitability improvements in this business during the course of the
year. Our Bentley Prince Street broadloom business posted its third straight
quarter of profitability, and we remain confident that our cost-control
initiatives and increased manufacturing efficiencies, coupled with an
improving market, have this business on track in 2005."
Patrick C. Lynch, Vice President and Chief Financial Officer of Interface,
commented, "Selling, general and administrative expenses improved to 23.0% of
sales, versus 24.3% of sales a year ago, reflecting our focus on cost
containment, even as we increase our investments in targeted sales and
marketing initiatives. We continue to move forward with the divestiture of
our dealer business and we are pleased with our progress to date. To date, we
have sold or initiated closure of 13 of our 15 dealer locations, and we are on
target to achieve our previously stated goal of substantially completing our
exit of these activities by the end of the second quarter of 2005."
Mr. Hendrix concluded, "Overall, we are encouraged by our results for the
first quarter and are optimistic, based on current market trends, that the
momentum we have generated will continue throughout the remainder of the year.
Our focus will remain on leading and shaping the growth of the worldwide
modular carpet market across all segments. We also will seek to drive sales
in our fabrics and broadloom businesses through segmentation efforts and
improving market conditions, while at the same time continuing our process
improvements and cost controls. Although raw material pricing remains a
challenge, we believe that with the proper execution of our business strategy,
we can continue to generate top line growth while improving profitability in
all areas of our business."
The Company will host a conference call tomorrow, April 28, 2005, at
9:00 a.m. Eastern Time, to discuss its first quarter 2005 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=1049607 or through the Company's website at
http://www.interfaceinc.com/results/investor/. The archived version of the
conference call will be available at these sites beginning approximately one
hour after the call ends through April 28, 2006 at 11:59 p.m. Eastern Time.
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,
Prince Street and FLOR 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. 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 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 "Safe Harbor Compliance Statement for Forward-Looking
Statements" included in Item 1 of the Company's Annual Report on Form 10-K for
the fiscal year ended January 2, 2005, 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 construction and renovation 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," "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 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.
CONTACT: Daniel T. Hendrix
President and Chief Executive Officer
Patrick C. Lynch
Chief Financial Officer
(770)437-6800
Financial Dynamics:
Christine Mohrmann, Jim Olecki
(212)850-5600
Consolidated Condensed Statements of Operations
Three Months Ended
(In thousands, except per share data) 04/03/05 04/04/04
Net Sales $234,715 $210,033
Cost of Sales 163,576 145,212
Gross Profit 71,139 64,821
Selling, General & Administrative Expense 53,969 51,132
Operating Income 17,170 13,689
Interest Expense 11,578 11,805
Bond Offering Cost -- 1,869
Other Expense (Income), Net 600 790
Income (Loss) Before Taxes 4,992 (775)
Income Tax Expense (Benefit) 2,069 (489)
Income (Loss) from Continuing Operations 2,923 (286)
Discontinued Operations, Net of Tax (4,762) (2,743)
Loss on Disposal, Net of Tax (337) --
Net Loss $(2,176) $(3,029)
Earnings (Loss) Per Share - Basic:
Continuing Operations $0.06 $(0.01)
Discontinued Operations (0.09) (0.05)
Loss on Disposal (0.01) --
Earnings (Loss) Per Share - Basic $(0.04) $(0.06)
Earnings (Loss) Per Share - Diluted:
Continuing Operations $0.06 $(0.01)
Discontinued Operations (0.09) (0.05)
Loss on Disposal (0.01) --
Earnings (Loss) Per Share - Diluted $(0.04) $(0.06)
Common Shares Outstanding - Basic 51,326 50,372
Common Shares Outstanding - Diluted 53,079 50,372
Orders from Continuing Operations 260,586 238,845
Continuing Operations Backlog (as of 04/03/05
and 01/02/05, respectively) 104,079 91,700
Consolidated Condensed Balance Sheets
(In thousands) 04/03/05 01/02/05
Assets
Cash $23,252 $22,164
Accounts Receivable 142,519 142,228
Inventory 152,515 137,618
Other Current Assets 25,232 22,756
Assets of Businesses Held for Sale 25,911 42,788
Total Current Assets 369,429 367,554
Property, Plant & Equipment 191,818 194,702
Other Assets 309,519 307,542
Total Assets $870,766 $869,798
Liabilities
Accounts Payable $63,185 $46,466
Accrued Liabilities 67,760 86,856
Liabilities of Businesses Held for Sale 3,480 5,390
Long-Term Debt 16,807 --
Senior and Senior Subordinated Notes 460,000 460,000
Other Long-Term Liabilities 75,799 76,908
Total Liabilities 687,031 675,620
Shareholders' Equity 183,735 194,178
Total Liabilities and Shareholders' Equity $870,766 $869,798
Consolidated Condensed Statements of Cash Flows Three Months Ended
(In millions) 04/03/05 04/04/04
Net (Loss) $(2.2) $(3.0)
Adjustments for Discontinued Operations 5.1 2.7
Net Income (Loss) from Continuing Operations $2.9 $(0.3)
Depreciation and Amortization 8.1 9.3
Deferred Income Taxes and Other Non-Cash Items (5.7) 0.0
Change in Working Capital
Accounts Receivable (1.0) 5.2
Inventories (16.2) (13.2)
Prepaids (5.7) (4.5)
Accounts Payable and Accrued Expenses 0.0 0.5
Cash Used in Continuing Operations (17.6) (3.0)
Cash Provided from (Used in) Operating 6.2 (2.8)
Activities of Discontinued Operations
Cash Used in Operating Activities (11.4) (5.8)
Cash Used in Investing Activities (4.0) (6.4)
Cash Provided From Financing Activities 17.0 26.5
Effect of Exchange Rate Changes on Cash (0.5) (0.1)
Net Increase in Cash $1.1 $14.2
Consolidated Condensed Segment Reporting Three Months Ended
(in millions) 04/03/05 04/04/04 % Change
Net Sales
Modular Carpet $153.5 $133.1 15.3%
Broadloom 28.0 27.0 3.7%
Fabrics Group 48.5 46.8 3.6%
Specialty Products 4.7 3.1 51.6%
Total $234.7 $210.0 11.8%
Operating Income (Loss)
Modular Carpet $16.5 $13.1
Broadloom 0.5 (0.3)
Fabrics Group 1.0 1.4
Specialty Products 0.2 0.1
Corporate Expenses and Eliminations (1.0) (0.6)
Total $17.2 $13.7
SOURCE Interface, Inc.
CONTACT:
Daniel T. Hendrix
President and Chief Executive Officer
or
Patrick C. Lynch
Chief Financial Officer
+1-770-437-6800
or
Christine
Mohrmann
or Jim Olecki
both of Financial Dynamics
+1-212-850-5600
Web site: http://www.interfaceinc.com
(IFSIA)