Atlanta, GA, Oct. 16--Interface expects to report lower revenue and a net loss for the third quarter ended September 29. Based on preliminary data, the company expects third quarter revenue of between $230 million and $235 million and a net loss of between $2.75 million and $3.25 million, or $(0.05) to $(0.06) per diluted share.
"We¹re disappointed that the continued weakness in the economy and a lack of improvement in industry conditions have resulted in lower than forecasted third quarter results,² said Interface president and CEO Daniel T. Hendrix. ³The commercial sector has yet to see the stabilization that was predicted for the second half of fiscal 2002, which in turn led to declining sales in certain business units, including broadloom, fabrics, raised flooring, and our Re:Source Americas service business. Profitability was negatively affected by the under-absorption of manufacturing costs, primarily due to lower sales volumes and significant reductions in inventories during the third quarter. Our raised flooring business, which is strongly tied to new construction, continued to suffer as commercial development activities remained sluggish.
"We continue to be encouraged by the growing positive momentum of our modular carpet business, which showed both sequential and year-over-year increases in billing and orders during the third quarter of 2002. Our strength in the carpet tile segment is evidenced by Interface recently being named the number one carpet manufacturer in the categories of service, quality, performance and overall business experience in a survey of top design firms conducted by Floor Focus magazine. We also are pleased that the company generated $20 million in free cash flow during the third quarter, and we expect to generate a similar amount in the fourth quarter. The company used $5 million in cash to repurchase 9-1/2% senior subordinated bonds in the third quarter and had approximately $17 million in cash on the balance sheet as of the end of the quarter, with no bank debt outstanding under its $100 million revolving credit facility."
