Atlanta, Georgia, April 24--Interface, Inc., a worldwide commercial interiors products and services company, today announced results for the first quarter ended March 30, 2003.
Sales in the first quarter 2003 were $210.2 million, compared with $226.7 million in the first quarter 2002. The firm recorded a pre-tax restructuring charge of $2.1 million during the first quarter 2003 in connection with its previously announced restructuring initiative designed to rationalize manufacturing operations in its fabrics division and further reduce worldwide workforce. Operating loss was $3.4 million in the first quarter 2003, versus operating income of $10.6 million in the first quarter 2002. Loss from continuing operations was $9.0 million, or $0.18 per share, in the first quarter 2003, compared with break-even results from continuing operations in the first quarter 2002. Net loss for the first quarter 2003 was $10.4 million, or $0.21 per share, compared with a first quarter 2002 net loss of $0.1 million, or $0.00 per share.
"Our decline in sales in the first quarter was in line with industry performance, reflecting the effects of a prolonged economic downturn, exacerbated by market uncertainty in the face of the war in Iraq," said Daniel T. Hendrix, president and CEO. "We also experienced delays in implementing cost reductions in the fabrics business, which are now back on track. Our management team is focused on the fundamentals, and that has kept us in a market leadership position. We are implementing strategies that strengthen our position in our core office market as well as improve our ability to meet the needs of a growing universe of customers. First, we've launched an exceptional marketing campaign branded i2, our initiative to drive the modular concept within the total commercial market—including hospitality, retail, education, healthcare and government. This segmentation initiative is paying immediate dividends, particularly in the education sector, which should generate significant sales in the second quarter as we enter the schools' buying season."
"Secondly, our launch of InterfaceFLOR in the residential market during the first quarter has generated exciting early success. This penetration of the residential market represents a new and significant upside in our long-term prospects for growth," Hendrix said.
Hendrix also noted the successful market segmentation efforts underway in the firm's broadloom business, which is operating at a lower break-even point as a result of cost-cutting initiatives that will be realized in the second quarter. Other highlights included continued improved business, year over year, in both Europe and Asia-Pacific.
He concluded, "We are beginning to sense an improvement in the tone of the business, evidenced by orders of $230 million received during the first quarter. We believe the uncertainty associated with the war caused many customers to delay their projects, which contributed to a $14 million increase in our backlog going into the second quarter as compared with year end 2002. Considering our increased backlog, our market segmentation headway and our continued aggressive efforts to reduce costs and improve liquidity, we believe we are better positioned for the remainder of the year. Consequently, we are targeting improvements in revenues, operating income and bottom line results in the second quarter 2003. We also anticipate generating free cash flow of $25 million in the second quarter. This free cash flow is derived by an expected $30 million of cash provided by operating activities, which includes a tax refund, less an expected $5 million of cash used in investing activities - both as determined in accordance with GAAP."
Interface will host a conference call tomorrow, April 24, 2003, at 9:00 a.m. Eastern Time, to discuss its first quarter 2003 results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the conference call live over the Internet at www.firstcallevents.com/service/ajwz380050401gf12.html or through the Company's website at www.interfaceinc.com/results/investor/news.php. The archived version of the conference call will be available at these sites beginning approximately one hour after the call ends through Friday, May 23, 2003 at 11:59 p.m. Eastern Time.
