- Orders, Sales and Operating Income Improve Sequentially Over First Quarter
- Finishes Second Quarter with $90 Million in Cash
ATLANTA, July 29 /PRNewswire-FirstCall/ -- Interface, Inc. (Nasdaq:
IFSIA), a worldwide floorcoverings company and global leader in
sustainability, today announced results for the second quarter ended July 5,
2009.
Sales for the second quarter of 2009 were $211.3 million, compared with
sales of $295.0 million in the second quarter of 2008, a decline of 28.4%.
Approximately 6% of the sales decline was related to fluctuations in currency
exchange rates relative to the year ago period. Operating income for the 2009
second quarter was $20.9 million, or 9.9% of sales, compared with operating
income of $33.4 million, or 11.3% of sales, in the second quarter of last
year. The Company's operating income in the second quarter of 2009 included
the following items:
- Income of $5.9 million from patent litigation settlements; and
- A pre-tax restructuring charge of $1.9 million relating to the
Company's continued cost reduction initiatives in Europe and the
Americas.
Excluding the items detailed above, operating income in the 2009 second
quarter was $16.8 million, or 8.0% of sales.
In the second quarter of 2009, the Company recorded other expenses of $6.1
million, or the equivalent of $0.06 per diluted share, associated with the
completion of its previously-announced issuance of 11 3/8% Senior Secured
Notes due 2013. Excluding the items described above and the bond offering
expenses, net income attributable to Interface, Inc. for the 2009 second
quarter was $5.1 million, or $0.08 per diluted share, compared with net income
attributable to Interface, Inc. in the year-ago period of $15.9 million, or
$0.25 per diluted share. Including all items, the Company reported second
quarter 2009 net income attributable to Interface, Inc. of $3.7 million, or
$0.06 per diluted share.
"Interface has made substantial progress during the second quarter of
2009, with sequential quarterly improvements in orders, sales and operating
income in the face of a global marketplace that continues to be very
challenging," said Daniel T. Hendrix, President and Chief Executive Officer.
"The successful implementation of our restructuring initiatives and the
further development of our market diversification strategy have enabled us to
improve our cost structure and operational efficiency while maintaining our
competitive position in the marketplace. Even though our results compared
with a record second quarter last year reflect the continued pressure of
current economic conditions, the non-office segments faired reasonably well,
driven mostly by the education buying season. The corporate office segment,
however, continued to deteriorate, which particularly impacted our performance
in Europe and the emerging markets."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer,
commented, "Interface has taken a number of steps to significantly reduce its
cost structure in light of recent global economic pressures, and most of the
benefits of these actions flowed through our results for the 2009 second
quarter. We also took significant steps towards our goal of strengthening our
balance sheet during the period, successfully refinancing nearly all of our
near-term debt maturities and ensuring we have the capital necessary to
continue executing on our strategic initiatives. As a result of our focus on
enhancing liquidity, managing costs and generating free cash flow, we exited
the quarter with $90 million in cash."
For the first six months of 2009, sales were $410.6 million, compared with
$556.7 million for the same period a year ago, a decrease of 26.2%.
Approximately 8% of the sales decline was related to fluctuations in currency
exchange rates relative to the first six months of last year. Excluding the
2009 second quarter items described above, as well as a pre-tax restructuring
charge of $5.7 million in the first quarter of 2009 as previously announced,
operating income and income from continuing operations for the 2009 six-month
period were $25.6 million (or 6.2% of sales) and $5.9 million (or $0.09 per
diluted share), respectively. These figures compare with operating income and
income from continuing operations of $64.4 million (or 11.6% of sales) and
$30.6 million (or $0.47 per diluted share), respectively, in the first six
months of 2008. Including all items, operating income and income from
continuing operations for the 2009 six-month period were $23.9 million (or
5.8% of sales) and $0.4 million (or $0.00 per diluted share), respectively.
Net loss attributable to Interface, Inc. in the first six months of 2009 was
$0.5 million, or $0.01 per diluted share, compared with net income
attributable to Interface, Inc. in the year-ago period of $30.0 million, or
$0.47 per diluted share.
Mr. Hendrix concluded, "Our market diversification strategy and the
operational initiatives that we implemented during the first half of the year
have enabled us to deliver solid second quarter results. The secular shift
toward carpet tile is continuing, even through the severe downturn in the
global office market. We believe that by taking the appropriate actions to
streamline our operations at the right time, we have protected the
profitability of our business. Although we saw a recovery in orders during
the quarter and are encouraged by sequential monthly sales trends, we remain
cautious about the operating environment through the second half of the year,
with market conditions in Europe and many emerging markets showing continued
signs of weakness. Despite this, we are pleased with our ability to execute
on our initiatives to realize operating efficiencies across the business, and
we plan to continue to focus on managing our costs and generating strong cash
flow, while at the same time enhancing our position in the marketplace through
further investments in market diversification."
The Company will host a conference call tomorrow, July 30, 2009, at 9:00
a.m. Eastern Time, to discuss its second quarter 2009 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
=2332780 or through the Company's website at
http://www.interfaceglobal.com/Investor-Relations.aspx. The archived version
of the webcast will be available at these sites for one year beginning
approximately one 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 forwardlooking 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
28, 2008, which discussion is incorporated herein by this reference,
including, but not limited to, the discussion of specific risks and
uncertainties under the headings "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," "The recent
worldwide financial and credit crisis could have a material adverse effect on
our business, financial condition and results of operations," "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," "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 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 Six Months Ended
(In thousands, -------------------- --------------------
except per 07/05/09 06/29/08 07/05/09 06/29/08
share data)
-------------------- -------- -------- -------- --------
Net Sales $211,297 $295,005 $410,605 $556,741
Cost of Sales 142,191 189,712 278,330 357,182
------- ------- ------- -------
Gross Profit 69,106 105,293 132,275 199,559
Selling, General
& Administrative
Expenses 52,263 71,857 106,634 135,152
Income from
Litigation
Settlements (5,926) -- (5,926) --
Restructuring Charge 1,903 -- 7,627 --
----- ---- ----- ----
Operating Income 20,866 33,436 23,940 64,407
Interest Expense 7,726 8,108 15,399 15,936
Bond Offering Expenses 6,096 -- 6,096 --
Other Expense
(Income), Net 650 (168) (100) 20
--- ----- ----- --
Income Before Taxes 6,394 25,496 2,545 48,451
Income Tax Expense 2,595 9,204 2,119 17,862
----- ----- ----- ------
Income from Continuing
Operations 3,799 16,292 426 30,589
Discontinued Operations,
Net of Tax -- -- 650 --
--- --- --- ---
Net Income (Loss) 3,799 16,292 (224) 30,589
Net Income
Attributable to
Noncontrolling
Interest in
Subsidiary (133) (416) (262) (591)
----- ----- ----- -----
Net Income (Loss)
Attributable to
Interface, Inc. $3,666 $15,876 $(486) $29,998
======== ======== ======== ========
Earnings (Loss)
Per Share
Attributable to
Interface, Inc.
- Basic
Continuing
Operations $0.06 $0.25 $0.00 $0.48
Discontinued
Operations -- -- (0.01) --
---- ---- ---- ----
Earnings (Loss)
Per Share
Attributable to
Interface, Inc.
- Basic $0.06 $0.25 $(0.01) $0.48
======= ======= ========= =======
Earnings (Loss)
Per Share
Attributable to
Interface, Inc.
- Diluted
Continuing
Operations $0.06 $0.25 $0.00 $0.47
Discontinued
Operations -- -- (0.01) --
---- ---- ---- ----
Earnings (Loss)
Per Share
Attributable to
Interface, Inc.
- Diluted $0.06 $0.25 $(0.01) $0.47
======= ======= ========= =======
Common Shares
Outstanding -
Basic 63,201 62,999 63,199 62,900
Common Shares
Outstanding -
Diluted 63,299 63,343 63,224 63,259
Orders from
Continuing
Operations 222,300 311,400 436,500 593,800
Continuing
Operations
Backlog (as of
07/05/09 and
06/29/08,
respectively) 115,100 154,400
* Prior year periods have been adjusted for the adoption of SFAS
No. 160, "Noncontrolling Interests in Consolidated Financial
Statements - an amendment to ARB No. 51" and FSP EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities."
Consolidated Condensed Balance Sheets*
(In thousands) 07/05/09 12/28/08
------------- -------------
Assets
Cash $89,867 $71,757
Accounts Receivable 122,758 144,783
Inventory 122,854 128,923
Other Current Assets 29,400 27,342
Assets of Businesses Held for Sale 2,150 3,150
----- -----
Total Current Assets 367,029 375,955
Property, Plant & Equipment 164,097 160,717
Other Assets 174,339 169,363
------- -------
Total Assets $705,465 $706,035
======== ========
Liabilities
Accounts Payable $38,263 $52,040
Accrued Liabilities 92,971 102,592
Current Portion of Long-Term Debt 14,586 --
------ -------
Total Current Liabilities 145,820 154,632
Senior Secured and Senior Subordinated Notes 279,556 287,588
Other Long-Term Liabilities 49,608 46,378
------ ------
Total Liabilities 474,984 488,598
Shareholders' Equity 230,481 217,437
------- -------
Total Liabilities and Shareholders'
Equity $705,465 $706,035
======== ========
Consolidated Condensed Statements of Cash Flows*
Three Months Ended Six Months Ended
------------------------ ---------------------------
(In millions) 07/05/09 06/29/08 07/05/09 06/29/08
----------- ----------- -------------- ----------
Net Income (Loss) $3.8 $16.3 $(0.2) $30.6
Adjustments for
Discontinued
Operations -- -- 0.7 --
---- ---- ---- ----
Net Income from
Continuing
Operations $3.8 $16.3 $0.5 $30.6
Depreciation
and Amortization 5.8 5.5 12.0 12.0
Deferred Income
Taxes and Other
Non-Cash Items 5.5 1.3 0.9 2.5
Change in Working
Capital
Accounts
Receivable (2.2) (14.1) 27.9 7.1
Inventories 6.6 (2.3) 8.9 (23.3)
Prepaids 8.2 (2.0) 3.9 (3.7)
Accounts
Payable and
Accrued
Expenses 1.0 29.3 (26.7) (4.0)
---- ---- ---- ----
Cash Provided
from Continuing
Operations 28.7 34.0 27.4 21.2
Cash Provided
from (Used in)
Operating
Activities of
Discontinued
Operations -- -- -- --
---- ---- ---- ----
Cash Provided
from Operating
Activities 28.7 34.0 27.4 21.2
Cash Provided
from (Used in)
Investing
Activities (1.1) (8.3) (5.8) (18.5)
Cash Provided
from (Used in)
Financing
Activities 6.0 (1.7) (4.4) (2.8)
Effect of
Exchange Rate
Changes on
Cash 1.4 0.4 1.0 1.4
---- ---- ---- ----
Net Increase
(Decrease) in Cash $35.0 $24.4 $18.2 $1.3
===== ===== ====== =====
* Prior year periods have been adjusted for the adoption of SFAS
No. 160, "Noncontrolling Interests in Consolidated Financial
Statements - an amendment to ARB No. 51" and FSP EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment
Transactions Are Participating Securities."
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended Six Months Ended
------------------ -----------------
07/05/09 06/29/08 % Change 07/05/09 06/29/08 % Change
-------- -------- -------- -------- -------- --------
Net Sales
Modular Carpet $186.6 $259.3 (28.0)% $363.0 $485.4 (25.2)%
Bentley Prince
Street 24.7 35.7 (30.8)% 47.6 71.3 (33.2)%
------ ------ ------ ------ ------ ------
Total $211.3 $295.0 (28.4)% $410.6 $556.7 (26.2)%
====== ====== ====== ====== ====== ======
Operating Income (Loss)
Modular Carpet $17.5 $35.3 (50.4)% $24.2 $66.2 (63.4)%
Bentley Prince
Street (2.0) 0.2 * (5.0) 1.8 *
Corporate Expenses,
Income and
Eliminations 5.4 (2.1) * 4.7 (3.6) *
----- ----- ------ ----- ----- ------
Total $20.9 $33.4 (37.4)% $23.9 $64.4 (62.9)%
===== ===== ====== ===== ===== ======
* Not meaningful
Reconciliation of Non-GAAP Performance Measures to
GAAP Performance Measures
(In millions except per share amounts)
Three Months Six Months
Ended Ended
07/05/09 07/05/09
Operating Income, Excluding
Restructuring Charge and Income
from Litigation Settlements $16.8 $25.6
Restructuring Charge (1.9) (7.6)
Income from Litigation Settlements 5.9 5.9
--- ---
Operating Income, As Reported $20.9 $23.9
===== =====
Three Months Six Months
Ended Ended
07/05/09 07/05/09
Income from Continuing Operations,
Excluding Restructuring Charge,
Income from Litigation Settlements
and Bond Offering Expenses $5.2 $5.9
Restructuring Charge (1.3) (5.4)
Income from Litigation Settlements 3.6 3.6
Bond Offering Expenses (3.7) (3.7)
----- -----
Income from Continuing Operations,
As Reported $3.8 $0.4
==== ====
Three Months Six Months
Ended Ended
07/05/09 07/05/09
Net Income Attributable to
Interface, Inc., Excluding
Restructuring Charge, Income from
Litigation Settlements and Bond
Offering Expenses $5.1 $5.0
Restructuring Charge (1.3) (5.4)
Income from Litigation Settlements 3.6 3.6
Bond Offering Expenses (3.7) (3.7)
----- -----
Net Income Attributable to
Interface, Inc., As reported $3.7 $(0.5)
==== =====
Three Months Six Months
Ended Ended
07/05/09 07/05/09
Diluted Earnings Per Share from
Continuing Operations, Excluding
Restructuring Charge, Income
from Litigation Settlements and
Bond Offering Expenses $0.08 $0.09
Restructuring Charge (0.02) (0.09)
Income from Litigation
Settlements 0.06 0.06
Bond Offering Expenses (0.06) (0.06)
------ ------
Diluted Earnings Per Share from
Continuing Operations, As
Reported $0.06 $0.00
===== =====
SOURCE: Interface, Inc.
- 07/29/2009
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;
or FD, Eric Boyriven, or Jessica Greenberger, +1-212-850-5600,
both for Interface, Inc.
Web Site: http://www.interfaceinc.com
(IFSIA)