CONTACT: | Daniel T. Hendrix |
President and Chief Executive Officer | |
Patrick C. Lynch | |
Senior Vice President and Chief Financial Officer | |
(770) 437-6800 | |
FD | |
Eric Boyriven, Jessica Greenberger | |
(212) 850-5600 |
FOR IMMEDIATE RELEASE
INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
-- $0.10 Earnings Per Share from Continuing Operations in Fourth Quarter - --
ATLANTA, Georgia, February 23, 2010 – 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 non-GAAP measures.
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“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.
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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
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.
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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
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 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.
- TABLES FOLLOW -
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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Consolidated Condensed Statements of Operations | Three Months Ended | Twelve Months Ended | ||||||||||||||
(In thousands, except per 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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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Consolidated Condensed Balance Sheets | ||||||||
(In thousands) | 01/03/10 | 12/28/08* | ||||||
Assets | ||||||||
Cash | $ | 115,363 | $ | 71,757 | ||||
Accounts Receivable | 129,833 | 144,783 | ||||||
Inventory | 112,249 | 128,923 | ||||||
Other Current Assets | 29,028 | 27,342 | ||||||
Assets of Businesses Held for Sale | 1,500 | 3,150 | ||||||
Total Current Assets | 387,973 | 375,955 | ||||||
Property, Plant & Equipment | 162,269 | 160,717 | ||||||
Other Assets | 176,997 | 169,363 | ||||||
Total Assets | $ | 727,239 | $ | 706,035 | ||||
Liabilities | ||||||||
Accounts Payable | $ | 35,614 | $ | 52,040 | ||||
Accrued Liabilities | 101,143 | 102,592 | ||||||
Current Portion of Long-Term Debt | 14,586 | -- | ||||||
Total Current Liabilities | 151,343 | 154,632 | ||||||
Senior and Senior Subordinated Notes | 280,184 | 287,588 | ||||||
Other Long-Term Liabilities | 49,531 | 46,378 | ||||||
Total Liabilities | 481,058 | 488,598 | ||||||
Shareholders’ Equity | 246,181 | 217,437 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 727,239 | $ | 706,035 |
Consolidated Condensed Statements of Cash Flows | Twelve Months Ended | |||||||||||||||
(In millions) | 01/03/10 | 12/28/08* | ||||||||||||||
Net Income (Loss) | $ | 11.8 | $ | (39.7 | ) | |||||||||||
Adjustments for Discontinued Operations | 0.9 | 5.2 | ||||||||||||||
Net Income (Loss) from Continuing Operations | $ | 12.7 | $ | (34.5 | ) | |||||||||||
Depreciation and Amortization | 25.2 | 23.7 | ||||||||||||||
Impairment of Goodwill | -- | 61.2 | ||||||||||||||
Deferred Income Taxes and Other Items | 1.8 | 17.6 | ||||||||||||||
Change in Working Capital | ||||||||||||||||
Accounts Receivable | 21.0 | 11.9 | ||||||||||||||
Inventories | 20.8 | (11.4 | ) | |||||||||||||
Prepaids | 0.1 | 5.1 | ||||||||||||||
Accounts Payable and Accrued Expenses | (27.1 | ) | (18.5 | ) | ||||||||||||
Cash Provided from Operating Activities | 54.5 | 55.1 | ||||||||||||||
Cash Used in Investing Activities | (7.4 | ) | (33.5 | ) | ||||||||||||
Cash Used in Financing Activities | (5.3 | ) | (28.5 | ) | ||||||||||||
Effect of Exchange Rate Changes on Cash | 1.8 | (3.7 | ) | |||||||||||||
Net Increase (Decrease) in Cash | $ | 43.6 | $ | (10.6 | ) |
________________
* 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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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Consolidated Condensed Segment Reporting
(In millions)
Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
01/03/10 | 12/28/08 | % Change | 01/03/10 | 12/28/08 | % Change | |||||||||||||||||||
Net Sales | ||||||||||||||||||||||||
Modular Carpet | $ | 208.1 | $ | 218.5 | (4.8 | %) | $ | 765.3 | $ | 946.8 | (19.2 | %) | ||||||||||||
Bentley Prince Street | 22.8 | 28.7 | (20.6 | %) | 94.6 | 135.5 | (30.2 | %) | ||||||||||||||||
Total | $ | 230.9 | $ | 247.2 | (6.6 | %) | $ | 859.9 | $ | 1,082.3 | (20.6 | %) | ||||||||||||
Operating Income (Loss) | ||||||||||||||||||||||||
Modular Carpet | $ | 23.7 | $ | 12.8 | 85.2 | % | $ | 68.1 | $ | 109.3 | (37.7 | %) | ||||||||||||
Bentley Prince Street | (1.7 | ) | (63.9 | ) | 97.3 | % | (7.7 | ) | (61.4 | ) | 87.5 | % | ||||||||||||
Corporate Income, Expenses and Eliminations | (1.9 | ) | (2.7 | ) | 29.6 | % | 2.6 | (6.2 | ) | 141.9 | % | |||||||||||||
Total | $ | 20.1 | $ | (53.8 | ) | 137.4 | % | $ | 63.0 | $ | 41.7 | 51.1 | % |
Reconciliation of Non-GAAP Performance Measures to GAAP Performance Measures
(In millions, except per share amounts)
Three Months Ended 12/28/08 | Twelve Months Ended 12/28/08 | |||||||
Operating Income, Excluding Impairment, Restructuring Charges | $ | 18.4 | $ | 113.8 | ||||
Impairment of Goodwill | (61.2 | ) | (61.2 | ) | ||||
Restructuring Charges | (11.0 | ) | (11.0 | ) | ||||
Operating Income (Loss), As Reported | $ | (53.8 | ) | $ | 41.7 | |||
Income from Continuing Operations, Excluding Impairment, Restructuring and Repatriation Charges | $ | 3.6 | $ | 48.0 | ||||
Impairment of Goodwill | (61.2 | ) | (61.2 | ) | ||||
Restructuring Charges (net of tax of $3.0 million) | (8.0 | ) | (8.0 | ) | ||||
Repatriation Charges | (13.3 | ) | (13.3 | ) | ||||
Loss from Continuing Operations, As Reported | $ | (78.9 | ) | $ | (34.5 | ) |
Net Income Attributable to Interface, Inc., Excluding Impairment, Restructuring and Repatriation Charges | $ | 3.2 | $ | 41.6 | ||||
Impairment of Goodwill | (61.2 | ) | (61.2 | ) | ||||
Restructuring Charges (net of tax of $3.0 million) | (8.0 | ) | (8.0 | ) | ||||
Repatriation Charges | (13.3 | ) | (13.3 | ) | ||||
Net Loss Attributable to Interface, Inc., As Reported | $ | (79.3 | ) | $ | (40.9 | ) |
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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Three Months Ended 12/28/08 | Twelve Months Ended 12/28/08 | |||||||
Earnings Per Share, Excluding Impairment, Restructuring and Repatriation Charges | $ | 0.05 | $ | 0.68 | ||||
Impairment of Goodwill | (0.99 | ) | (1.00 | ) | ||||
Restructuring Charges, After Tax | (0.13 | ) | (0.13 | ) | ||||
Repatriation Charges | (0.22 | ) | (0.22 | ) | ||||
Loss Per Share, As Reported | $ | (1.29 | ) | $ | (0.67 | ) |
Three Months Ended 12/28/08 | Twelve Months Ended 12/28/08 | |||||||
Earnings Per Share from Continuing Operations, Excluding Impairment, Restructuring and Repatriation Charges | $ | 0.05 | $ | 0.76 | ||||
Impairment of Goodwill | (0.99 | ) | (1.00 | ) | ||||
Restructuring Charges, After Tax | (0.13 | ) | (0.13 | ) | ||||
Repatriation Charges | (0.22 | ) | (0.22 | ) | ||||
Loss Per Share from Continuing Operations, As Reported | $ | (1.29 | ) | $ | (0.58 | ) |
Twelve Months Ended | ||||
01/03/10 | ||||
Operating Income, Excluding Restructuring Charge and Income from Litigation Settlements | $ | 64.7 | ||
Restructuring Charge | (7.6 | ) | ||
Income from Litigation Settlements | 5.9 | |||
Operating Income, As Reported | $ | 63.0 |
Twelve Months Ended | ||||
01/03/10 | ||||
Income from Continuing Operations, Excluding Restructuring Charge, Income from Litigation Settlements and Bond Retirement Expenses | $ | 18.2 | ||
Restructuring Charge (net of tax of $2.2 million) | (5.4 | ) | ||
Income from Litigation Settlements (net of tax of $2.3 million) | 3.6 | |||
Bond Retirement Expenses (net of tax of $2.4 million) | (3.7 | ) | ||
Income from Continuing Operations, As Reported | $ | 12.7 |
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INTERFACE REPORTS FOURTH QUARTER AND FULL YEAR 2009 RESULTS
Twelve Months Ended | ||||
01/03/10 | ||||
Diluted Earnings Per Share from Continuing Operations, Excluding Restructuring Charge, Income from Litigation Settlements and Bond Retirement Expenses | $ | 0.28 | ||
Restructuring Charge, After Tax | (0.09 | ) | ||
Income from Litigation Settlements, After Tax | 0.06 | |||
Bond Retirement Expenses, After Tax | (0.06 | ) | ||
Diluted Earnings Per Share from Continuing Operations, As Reported | $ | 0.19 |
Twelve Months Ended | ||||
01/03/10 | ||||
Net Income Attributable to Interface, Inc., Excluding Restructuring Charge, Income from Litigation Settlements and Bond Retirement Expenses | $ | 16.4 | ||
Restructuring Charge (net of tax of $2.2 million) | (5.4 | ) | ||
Income from Litigation Settlements (net of tax of $2.3 million) | 3.6 | |||
Bond Retirement Expenses (net of tax of $2.4 million) | (3.7 | ) | ||
Net Income Attributable to Interface, Inc., As Reported | $ | 10.9 |
Twelve Months Ended | ||||
01/03/10 | ||||
Diluted Earnings Per Share, Excluding Restructuring Charge, Income from Litigation Settlements and Bond Retirement Expenses | $ | 0.26 | ||
Restructuring Charge After Tax | (0.09 | ) | ||
Income from Litigation Settlements After Tax | 0.06 | |||
Bond Retirement Expenses After Tax | (0.06 | ) | ||
Diluted Earnings Per Share, As Reported | $ | 0.17 |
The Company believes that the above non-GAAP performance measures, which management uses in managing and evaluating the Company’s business, may provide users of the Company’s financial information with additional meaningful bases for comparing the Company’s current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, these non-GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under accounting principles generally accepted in the United States. Tax effects identified above (when applicable) are calculated using the statutory tax rate for the jurisdictions in which the charge or income occurred.
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