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Interface Reports Fourth Quarter And Full Year 2009 Results
2.24.10 | Atlanta, GA | Interface, Inc. (Nasdaq:
IFSIA), a worldwide floorcoverings company and global leader in
sustainability, today announced results for the fourth quarter and full
fiscal year ended January 3, 2010.
Sales for the fourth quarter of 2009 were $230.9 million, compared with sales of $247.2 million in the fourth quarter of 2008, a decline of 6.6%. On a sequential basis, sales increased 5.7% over the third quarter of 2009. Operating income for the 2009 fourth quarter was $20.1 million, or 8.7% of sales, compared with an operating loss of $53.8 million in the fourth quarter of the prior year. (When adjusted to exclude goodwill impairment and restructuring charges totaling $72.2 million, operating income in the fourth quarter of 2008 was $18.4 million, or 7.4% of sales.) Operating income improved 6.4% sequentially over operating income of $18.9 million, or 8.7% of sales, in the third quarter of 2009.
Income from continuing operations for the 2009 fourth quarter was $6.6 million, or $0.10 per diluted share, compared with a loss from continuing operations in the year earlier quarter of $78.9 million, or $1.29 per share. (On an adjusted basis, income from continuing operations in the year earlier quarter was $3.6 million, or $0.05 per share.) Net income attributable to Interface, Inc. for the 2009 fourth quarter was $5.9 million, or $0.09 per diluted share, compared with a net loss attributable to Interface, Inc. in the year-ago period of $79.3 million, or $1.29 per share. (On an adjusted basis, net income attributable to Interface, Inc. in the year-ago period was $3.2 million, or $0.05 per share.)
Please see the tables below for a reconciliation of GAAP to nonGAAP measures. [Complete tables available at http://www.interfaceglobal.com/Investor-Relations/Press-Releases.aspx ]
"We made good strides in the fourth quarter, with year-over-year improvements in operating income and orders, and sequential sales improvements in most market segments," said Daniel T. Hendrix, President and Chief Executive Officer. "As in recent quarters, our business was buoyed by non-office segments and emerging markets such as India and the Middle East. Asia-Pacific is our first geographic area to turn positive on a year-over-year basis, as sales in the region increased more than 8% over the fourth quarter of the prior year. This was partially driven by China, where the pipeline of orders continued to strengthen, and Australia made good progress as well. While the corporate office segment did improve over the third quarter, it's still sluggish, particularly in the U.S. and in Europe. Although the overall sales environment continued to be challenging in many of our end markets, we remained focused on investing in our long term strategic initiatives to diversify our end markets and reduce our exposure to cycles in the corporate office segment."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "As a result of the actions we took early in the down cycle to scale our business to lower demand levels, we steadily improved operational efficiency throughout the year, culminating in operating margin expansion of 130 basis points despite a year-over-year decline in sales for the fourth quarter of 2009. Going forward, we will continue to balance disciplined cost management with selective SG&A reinvestment to support our long term growth plans. We believe we began 2010 well positioned to further realize the leverage in our operating model once demand returns to our end markets."
For the full year 2009, sales were $859.9 million, compared with $1.1 billion in 2008, a decrease of 20.6%. Operating income for the full year 2009 was $63.0 million, compared with operating income of $41.7 million in 2008. Income from continuing operations in 2009 was $12.7 million, or $0.19 per diluted share, compared with a loss from continuing operations of $34.5 million, or $0.58 per share, in the same period a year ago. Net income attributable to Interface, Inc. was $10.9 million, or $0.17 per diluted share, in 2009, compared with a net loss attributable to Interface, Inc. of $40.9 million, or $0.67 per share, in 2008.
The Company's 2009 results included the following items as previously announced: income of $5.9 million from patent litigation settlements; pre-tax restructuring charges of $7.6 million relating to the Company's cost reduction initiatives; and other expenses of $6.1 million associated with the completion of the previously-announced tender offer for our 10.375% Senior Notes. Excluding these items, full year 2009 operating income was $64.7 million, or 7.5% of sales, income from continuing operations was $18.2 million, or $0.28 per diluted share, and net income attributable to Interface, Inc. was $16.4 million, or $0.26 per diluted share. Excluding the items in the fourth quarter of 2008 mentioned previously, full year 2008 operating income was $113.8 million, or 10.5% of sales, income from continuing operations was $48.0 million, or $0.76 per share, and net income attributable to Interface, Inc. was $41.6 million, or $0.68 per share.
Mr. Hendrix concluded, "While we don't expect much of a rebound in the mature corporate office markets this year, we're optimistic about our prospects for a number of reasons. First, the market's secular shift to carpet tile is continuing, and as the category leader we're in the best position to take advantage of this trend. In addition, our success in penetrating non-office segments such as government, education, retail and healthcare has made us much less dependent on the corporate office market, and we plan to continue investing and pursuing new business in these non-office segments. We're also positioned well to grow our business in emerging markets such as China, India, the Middle East and South America. In that regard, our new carpet tile manufacturing plant in China is expected to be completed late this year, and we will continue to invest where we see these types of growth opportunities. Further, as a result of the steps we took early in this downturn to right-size our business to current market conditions, we are poised for profit margin expansion when top line growth returns."
The Company will host a conference call today, February 23, 2010, at 4:30 p.m. Eastern Time, to discuss its fourth quarter and full year 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=2733692 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.
INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Consolidated Condensed Statements
of Operations
(In thousands, except per Three Months Ended Twelve Months Ended
share data) 01/03/10 12/28/08* 01/03/10 12/28/08*
Net Sales $230,919 $247,180 $859,888 $1,082,344
Cost of Sales 152,589 169,611 576,871 710,299
Gross Profit 78,330 77,569 283,017 372,045
Selling, General &
Administrative Expenses 58,200 59,151 218,322 258,198
Impairment of Goodwill -- 61,213 -- 61,213
Restructuring Charges -- 10,975 7,627 10,975
Income from Litigation
Settlements -- -- (5,926) --
Operating Income (Loss) 20,130 (53,770) 62,994 41,659
Interest Expense 9,361 7,371 34,297 31,480
Bond Retirement Expenses -- -- 6,096 --
Other Expense, Net 520 1,088 576 1,652
Income (Loss) Before Taxes 10,249 (62,229) 22,025 8,527
Income Tax Expense 3,691 16,717 9,352 43,040
Income (Loss) from Continuing
Operations 6,558 (78,946) 12,673 (34,513)
Discontinued Operations,
Net of Tax (259) -- (909) (5,154)
Net Income (Loss) $6,299 $(78,946) $11,764 $(39,667)
Net Income Attributable to
Non-Controlling Interest in
Subsidiary (351) (355) (846) (1,206)
Net Income (Loss) Attributable
to Interface, Inc. $5,948 $(79,301) $10,918 $(40,873)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Basic
Continuing Operations $0.10 $(1.29) $0.19 $(0.58)
Discontinued Operations (0.01) -- (0.01) (0.08)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Basic $0.09 $(1.29) $0.17 $(0.67)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Diluted
Continuing Operations $0.10 $(1.29) $0.19 $(0.58)
Discontinued Operations (0.01) -- (0.01) (0.08)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Diluted $0.09 $(1.29) $0.17 $(0.67)
Common Shares Outstanding -
Basic 63,265 61,603 63,213 61,439
Common Shares Outstanding -
Diluted 63,752 61,603 63,308 61,439
Orders from Continuing
Operations 227,300 222,860 885,300 1,083,900
Backlog (as of 01/03/10 and
12/28/08, respectively) 108,200 97,200
* Prior year periods have been adjusted for the adoption of accounting
standards relating to the determination of shares used in earnings per
share calculations and related to the presentation of non-controlling
interests in financial statements.
Sales for the fourth quarter of 2009 were $230.9 million, compared with sales of $247.2 million in the fourth quarter of 2008, a decline of 6.6%. On a sequential basis, sales increased 5.7% over the third quarter of 2009. Operating income for the 2009 fourth quarter was $20.1 million, or 8.7% of sales, compared with an operating loss of $53.8 million in the fourth quarter of the prior year. (When adjusted to exclude goodwill impairment and restructuring charges totaling $72.2 million, operating income in the fourth quarter of 2008 was $18.4 million, or 7.4% of sales.) Operating income improved 6.4% sequentially over operating income of $18.9 million, or 8.7% of sales, in the third quarter of 2009.
Income from continuing operations for the 2009 fourth quarter was $6.6 million, or $0.10 per diluted share, compared with a loss from continuing operations in the year earlier quarter of $78.9 million, or $1.29 per share. (On an adjusted basis, income from continuing operations in the year earlier quarter was $3.6 million, or $0.05 per share.) Net income attributable to Interface, Inc. for the 2009 fourth quarter was $5.9 million, or $0.09 per diluted share, compared with a net loss attributable to Interface, Inc. in the year-ago period of $79.3 million, or $1.29 per share. (On an adjusted basis, net income attributable to Interface, Inc. in the year-ago period was $3.2 million, or $0.05 per share.)
Please see the tables below for a reconciliation of GAAP to nonGAAP measures. [Complete tables available at http://www.interfaceglobal.com/Investor-Relations/Press-Releases.aspx ]
"We made good strides in the fourth quarter, with year-over-year improvements in operating income and orders, and sequential sales improvements in most market segments," said Daniel T. Hendrix, President and Chief Executive Officer. "As in recent quarters, our business was buoyed by non-office segments and emerging markets such as India and the Middle East. Asia-Pacific is our first geographic area to turn positive on a year-over-year basis, as sales in the region increased more than 8% over the fourth quarter of the prior year. This was partially driven by China, where the pipeline of orders continued to strengthen, and Australia made good progress as well. While the corporate office segment did improve over the third quarter, it's still sluggish, particularly in the U.S. and in Europe. Although the overall sales environment continued to be challenging in many of our end markets, we remained focused on investing in our long term strategic initiatives to diversify our end markets and reduce our exposure to cycles in the corporate office segment."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "As a result of the actions we took early in the down cycle to scale our business to lower demand levels, we steadily improved operational efficiency throughout the year, culminating in operating margin expansion of 130 basis points despite a year-over-year decline in sales for the fourth quarter of 2009. Going forward, we will continue to balance disciplined cost management with selective SG&A reinvestment to support our long term growth plans. We believe we began 2010 well positioned to further realize the leverage in our operating model once demand returns to our end markets."
For the full year 2009, sales were $859.9 million, compared with $1.1 billion in 2008, a decrease of 20.6%. Operating income for the full year 2009 was $63.0 million, compared with operating income of $41.7 million in 2008. Income from continuing operations in 2009 was $12.7 million, or $0.19 per diluted share, compared with a loss from continuing operations of $34.5 million, or $0.58 per share, in the same period a year ago. Net income attributable to Interface, Inc. was $10.9 million, or $0.17 per diluted share, in 2009, compared with a net loss attributable to Interface, Inc. of $40.9 million, or $0.67 per share, in 2008.
The Company's 2009 results included the following items as previously announced: income of $5.9 million from patent litigation settlements; pre-tax restructuring charges of $7.6 million relating to the Company's cost reduction initiatives; and other expenses of $6.1 million associated with the completion of the previously-announced tender offer for our 10.375% Senior Notes. Excluding these items, full year 2009 operating income was $64.7 million, or 7.5% of sales, income from continuing operations was $18.2 million, or $0.28 per diluted share, and net income attributable to Interface, Inc. was $16.4 million, or $0.26 per diluted share. Excluding the items in the fourth quarter of 2008 mentioned previously, full year 2008 operating income was $113.8 million, or 10.5% of sales, income from continuing operations was $48.0 million, or $0.76 per share, and net income attributable to Interface, Inc. was $41.6 million, or $0.68 per share.
Mr. Hendrix concluded, "While we don't expect much of a rebound in the mature corporate office markets this year, we're optimistic about our prospects for a number of reasons. First, the market's secular shift to carpet tile is continuing, and as the category leader we're in the best position to take advantage of this trend. In addition, our success in penetrating non-office segments such as government, education, retail and healthcare has made us much less dependent on the corporate office market, and we plan to continue investing and pursuing new business in these non-office segments. We're also positioned well to grow our business in emerging markets such as China, India, the Middle East and South America. In that regard, our new carpet tile manufacturing plant in China is expected to be completed late this year, and we will continue to invest where we see these types of growth opportunities. Further, as a result of the steps we took early in this downturn to right-size our business to current market conditions, we are poised for profit margin expansion when top line growth returns."
The Company will host a conference call today, February 23, 2010, at 4:30 p.m. Eastern Time, to discuss its fourth quarter and full year 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=2733692 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.
INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Consolidated Condensed Statements
of Operations
(In thousands, except per Three Months Ended Twelve Months Ended
share data) 01/03/10 12/28/08* 01/03/10 12/28/08*
Net Sales $230,919 $247,180 $859,888 $1,082,344
Cost of Sales 152,589 169,611 576,871 710,299
Gross Profit 78,330 77,569 283,017 372,045
Selling, General &
Administrative Expenses 58,200 59,151 218,322 258,198
Impairment of Goodwill -- 61,213 -- 61,213
Restructuring Charges -- 10,975 7,627 10,975
Income from Litigation
Settlements -- -- (5,926) --
Operating Income (Loss) 20,130 (53,770) 62,994 41,659
Interest Expense 9,361 7,371 34,297 31,480
Bond Retirement Expenses -- -- 6,096 --
Other Expense, Net 520 1,088 576 1,652
Income (Loss) Before Taxes 10,249 (62,229) 22,025 8,527
Income Tax Expense 3,691 16,717 9,352 43,040
Income (Loss) from Continuing
Operations 6,558 (78,946) 12,673 (34,513)
Discontinued Operations,
Net of Tax (259) -- (909) (5,154)
Net Income (Loss) $6,299 $(78,946) $11,764 $(39,667)
Net Income Attributable to
Non-Controlling Interest in
Subsidiary (351) (355) (846) (1,206)
Net Income (Loss) Attributable
to Interface, Inc. $5,948 $(79,301) $10,918 $(40,873)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Basic
Continuing Operations $0.10 $(1.29) $0.19 $(0.58)
Discontinued Operations (0.01) -- (0.01) (0.08)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Basic $0.09 $(1.29) $0.17 $(0.67)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Diluted
Continuing Operations $0.10 $(1.29) $0.19 $(0.58)
Discontinued Operations (0.01) -- (0.01) (0.08)
Earnings (Loss) Per Share
Attributable to
Interface, Inc. - Diluted $0.09 $(1.29) $0.17 $(0.67)
Common Shares Outstanding -
Basic 63,265 61,603 63,213 61,439
Common Shares Outstanding -
Diluted 63,752 61,603 63,308 61,439
Orders from Continuing
Operations 227,300 222,860 885,300 1,083,900
Backlog (as of 01/03/10 and
12/28/08, respectively) 108,200 97,200
* Prior year periods have been adjusted for the adoption of accounting
standards relating to the determination of shares used in earnings per
share calculations and related to the presentation of non-controlling
interests in financial statements.
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