Interface 4Q Earnings Up
Analysts had forecast earnings per share of $0.20 in the quarter.
Sales in the quarter increased 20.4% to $295.9 million from sales of $245.7 million in the year ago period, after exclusion of revenues from the company's European fabrics business that were present in the fourth quarter of 2005. Including the European fabrics business, sales increased 13.5% from $260.6 million reported in the fourth quarter of 2005.
For the full year 2006, the company reported net income of $10.0 million, or $0.18 per diluted share, versus net income of $1.2 million, or $0.02 per diluted share, in 2005.
Analysts had forecast earnings per share of $0.62 for the year.
Sales for full year 2006 were $1.1 billion compared with sales of $922.8 million a year ago, an increase of 14.7%, excluding results from the company's European fabrics business in both periods. Including the European fabrics business, full year 2006 sales of $1.1 billion represent an increase of 9.1% over sales of $985.8 million in 2005.
"We are pleased to report one of the best fourth quarters in our history, finishing a year of continuously improving performance," said Daniel T. Hendrix, president and chief executive officer. "These results are a testament to the dedication and hard work of our employees worldwide."
Hendrix continued, "Our modular carpet business continued to lead our strong performance and achieved a 27% increase in sales compared with the year ago period. Sales were strong across all key regions with the positive trends in Europe providing the most significant driver of growth geographically. In addition, operating income from the modular carpet business increased 39%, primarily due to higher sales volume. Sales in our Bentley Prince Street business improved 7% during the quarter. We are pleased with its progress to date and expect improvement throughout 2007. Our fabrics business generated a modest operating loss, but it improved on a sequential basis and we continue to take actions to increase its manufacturing efficiencies."
Patrick C. Lynch, vice president and chief financial officer, commented, "As a result of the improved sales and actions taken to increase efficiencies in our business, we increased our fourth quarter operating profit margin by 110 basis points compared with the same period last year, enabling us to report a 28.1% increase in operating income. One particular highlight in the quarter is that our modular carpet segment reached a 13.6% operating profit margin. We also took steps to strengthen our balance sheet during the fourth quarter, raising $79 million from our equity offering that will primarily be used to reduce our outstanding debt, and generating $30 million in net cash flow from operating and investing activities. Supported by the execution of our market segmentation strategy and the ongoing recovery in the office market, orders during the fourth quarter increased by 11% compared with a strong order period last year. We concluded the year with a stronger financial platform from which to grow our business in 2007."
Hendrix concluded, "Over the past three years, we have made tremendous progress in expanding and further penetrating our end markets, strengthening our balance sheet, and focusing on our core businesses. Modular carpet continues to take market share from other floorcoverings, and Interface is best positioned to capitalize on this secular market shift. Looking forward, we remain very optimistic about the ongoing recovery we see in the office market, especially in the U.S. and Europe, and we expect our segmentation strategy to continue driving demand for our products in other market segments.