Atlanta, GA, October 27--Interface, Inc. announced results for the third quarter and also announced its intent, in line with its strategy to concentrate on its core capabilities, to exit its owned Re:Source dealer businesses.
The owned Re:Source dealers are part of a broader network comprised of owned and aligned dealers that sell and install floorcovering products. The discussion of results in this release, except for net loss, excludes the company's owned Re:Source dealer businesses.
Third quarter 2004 results include an 11.7% increase in sales to $222.8 million, from $199.5 million in the year ago period. Operating income was $15.9 million in the third quarter 2004, a 43.2% increase over operating income of $11.1 million in the third quarter 2003. Income from continuing operations was $2.4 million, or $0.05 per share, in the third quarter 2004, compared with income from continuing operations of $146,000, or $0.00 per share, in the third quarter 2003.
As required by accounting standards, the company reported the results of operations for its owned Re:Source dealer businesses as "discontinued operations." Included in those results is an operating loss of $4.1 million as well as write-downs for the impairment of assets and goodwill of $17.5 million and $29.0 million, respectively. As a result, the company's net loss for the third quarter 2004 was $47.8 million, or $0.92 per fully diluted share, compared with a net loss in the third quarter 2003 of $13.4 million, or $0.26 per fully diluted share.
"Through the continued strength of our worldwide modular business during the third quarter, we were able to attain sequential and year-over-year growth in both sales and operating income, as well as continue to gain market share," said Daniel T. Hendrix, president and chief executive officer. "While the corporate office market has been gradually improving, we are pleased to have achieved these results despite the lack of a sizeable recovery in this market. Order activity remained strong during the quarter, reflecting the increasing momentum we are seeing in our business segment initiatives, and that order trend has continued up through the present. For the third quarter, orders were up 18% to $239 million, compared with the third quarter of last year."
Mr. Hendrix continued, "Interface continues to lead and shape the growth of the modular carpet market. Our segmentation strategy has more than doubled our opportunity in the commercial carpet market, and has enabled us to deliver worldwide modular sales growth and broadloom sales growth of 13% and 12%, respectively, year-over-year. The education, retail, government and residential market segments produced particularly encouraging results during the third quarter. In addition, our fabrics business experienced a 5% increase in sales, year-over-year, primarily driven by an increase in its contract market sales. We are pleased with our success in further penetrating these markets and capitalizing on the sales opportunities they present."
For the first nine months of 2004, sales were $649.1 million, compared with $570.3 million for the same period a year ago, an increase of 13.8%. Operating income for the 2004 nine-month period increased to $45.4 million, from $19.4 million in the comparable 2003 nine-month period (after a pre-tax restructuring charge of $4.6 million, or $0.09 per share after-tax, in that 2003 period). Income from continuing operations during the first nine months of 2004 was $4.6 million, versus a loss from continuing operations of $8.6 million, after the restructuring charge, in the first nine months of 2003.
Including the results of the discontinued operations of the owned Re:Source dealer businesses, the company reported a net loss of $51.0 million, or $0.98 per fully diluted share, for the first nine months of 2004. This compares with net loss of $29.2 million, or $0.58 per fully diluted share, for the first nine months of 2003, after the restructuring charge.
