Atlanta, GA, February 24--Interface, Inc. in the fourth quarter reported sales increased 14.6% to $232.6 million, from $202.9 million in the year ago period.
The company reported a net loss for the fourth quarter 2004 was $4.4 million, or $0.08 per share, compared with a net loss in the fourth quarter 2003 of $4.1 million, or $0.08 per share.
Operating income was $15.3 million in the fourth quarter 2004, a 29.3% increase over operating income of $11.8 million in the fourth quarter 2003.
As previously announced, the company is exiting the owned dealer business. Those operations yielded a fourth quarter 2004 after-tax operating loss of $2.7 million.
"In 2004, we benefited from record sales in our U.S. modular business, improving trends in the corporate office market, an up-tick in our broadloom business, as well as our market segmentation strategy and cost reduction initiatives," said Daniel T. Hendrix, president and chief executive officer.
"Consequently, we were able to attain year-over-year growth in both sales and operating income in every quarter in 2004. Order activity remained robust throughout the year, with fourth quarter orders up almost 21% to $247.7 million, compared with the fourth quarter of last year. We expect this momentum to continue in 2005."
Hendrix continued, "Our worldwide modular business continued to gain market share, as Interface leads and shapes the expansion of this growth market. Sales in our worldwide modular business grew 21% for the fourth quarter 2004 because of the improving corporate office market and the success of our penetration into the non-corporate office markets.
"The increasing diversity in our end-markets also enabled us to deliver broadloom sales growth of 2% in the fourth quarter 2004, while cost-cutting initiatives and improvements in manufacturing efficiencies further contributed to broadloom operating profitability.
"While sales in our fabrics business for the fourth quarter 2004 were up only slightly, the business experienced a $10 million turnaround in operating profitability over the course of the year. We expect this business to become profitable again in the first quarter of 2005, underscoring the streamlining we have worked so hard to achieve over the past several quarters."
For the full year 2004, sales were $881.7 million, compared with $766.5 million for the same period a year ago, an increase of 15.0%.
Patrick C. Lynch, vice president and chief financial officer of Interface, commented, "Fiscal 2004 was an important year for Interface, as our results reflect the growth we have been experiencing and the operational strategies we have been executing. This was perhaps best evidenced by our growth in operating income, which nearly doubled as compared with 2003. During the fourth quarter of 2004, we felt the impact of higher raw material prices, and also incurred higher professional fees related to Sarbanes-Oxley compliance. Despite these factors, we still were able to improve our fourth quarter operating margin year-over-year."
Hendrix concluded, "We enter 2005 with a positive outlook. Interface continues to lead the growing modular market, while our market segmentation efforts and ongoing cost management program have led to higher sales levels and significant improvements in profitability.
"Based on the present trends, we expect continued sales growth and margin expansion in 2005. While increasing raw material costs will remain a challenge, we believe that the cost reduction actions we have taken position us well for further progress.
"Our focus moving into 2005 will include process improvements and continued cost management, to enhance margins in our broadloom business and enable our fabrics business to sustain profitability. Overall, we remain confident in Interface's growth prospects, given the fundamentals and momentum in all of our markets and the leverage that now exists in our operating model."
