Interface, Inc. (Nasdaq: IFSIA), a worldwide floorcoverings and fabrics company, announced profitable results for Q4 and 2005.
Sales in the 2005 fourth quarter rose 12.0% to $260.6 million from $232.6 million in the year ago period. Operating income in the 2005 fourth quarter was $23.1 million, compared with operating income of $15.3 million in the fourth quarter 2004, an increase of 51.0%. As a percentage of sales, operating income improved to 8.9% in the fourth quarter of 2005 versus 6.6% in the fourth quarter of last year.
“The year 2005 was very gratifying, as we built upon the momentum generated during our turnaround in 2004,” said Daniel Hendrix, CEO. “We continued to expand our leadership position in the worldwide modular market, outpacing the growth in the overall industry. While we garnered the benefit of some resurgence in our core corporate office market, we also took steps to significantly diversify our revenue base through our segmentation strategy. This was true not only in modular but also in our fabrics and broadloom businesses, each of which delivered solid improvements in both sales and profitability during the year. Importantly, we also were able to largely offset rising raw material costs through enhanced manufacturing efficiencies, diligent cost management and successfully passing through price increases, which led to higher operating margins.”
Mr. Hendrix added, “Modular carpet is increasingly becoming the floorcovering of choice across most commercial market segments, and that is reflected by the 13% increase year-over-year in worldwide sales we achieved in the fourth quarter. This growth was particularly strong in the U.S. and Asia-Pacific regions, where strong order flows produced record fourth quarter results — for the second year in a row. Furthermore, our Europe modular business had its best quarter in the last five years. The growing strength of the corporate office market also led to an 11% increase year-over-year in fabrics sales in the fourth quarter. We are pleased with the progress made in this business during the year, as we were successful in our efforts to reduce costs, penetrate the automotive market, and significantly improve profitability over prior year levels. In addition, our Bentley Prince Street broadloom business posted its best quarter in five years, with sales in the fourth quarter increasing 15% year-over-year, while our cost control efforts within this division led to substantial profitability growth.”
Patrick C. Lynch, Vice President and Chief Financial Officer, commented, “Financially, this was an important year for Interface, as our results affirm the strategic actions we have taken within the business. Based on the leverage in our operating model, we were able to capitalize on the growth opportunities presented in our markets, while containing costs and decreasing selling, general and administrative expenses as a percentage of overall sales. At the same time, we maintained our focus on cash flow, generating a $29.1 million net increase in cash for the year.”
For the full year 2005, sales increased 11.8% to $985.8 million, compared with $881.7 million in 2004. Operating income rose 35.0% to $82.0 million, or 8.3% of sales, from $60.7 million, or 6.9% of sales, last year. Income from continuing operations was $18.0 million, or $0.34 per diluted share, for 2005, versus income from continuing operations of $6.4 million, or $0.12 per diluted share, a year ago.
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, InterfaceFLOR, Heuga, Bentley and Prince Street brands, and, through its Bentley 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, Chatham and Camborne brands, and provides specialized fabric services through its TekSolutions business.
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