Orders for Interface carpet increase to $311.4 mn
Interface Inc, a worldwide floorcoverings company, announced results for the second quarter ended June 29, 2008.
Sales for the second quarter of 2008 increased 11.3% to $295.0 million from sales of $265.0 million in the year ago period. Gross profit margin for the 2008 second quarter grew 90 basis points to 35.7%, versus 34.8% in the second quarter of the previous year. Operating income for the second quarter of 2008 increased 8.2% to $33.4 million, or 11.3% of sales, compared with operating income of $30.9 million, or 11.7% of sales, in the second quarter of 2007.
Income from continuing operations for the 2008 second quarter was $15.9 million, an increase of 19.2% compared with income from continuing operations of $13.3 million in the second quarter of 2007. Net income for the 2008 second quarter was $15.9 million, or $0.26 per diluted share. Last year, second quarter results included a loss from discontinued operations of $12.3 million, or $0.20 per diluted share, which led to net income of $1.0 million, or $0.02 per diluted share.
"Our 2008 second quarter represented Interface's best second quarter ever in terms of operating income and earnings per share, despite the challenging market and economic environment," said Daniel T. Hendrix, President and Chief Executive Officer.
"We continued to grow our business and gain market share, as overall sales increased more than 11%, driven by our market segmentation strategy, the ongoing secular shift toward carpet tile, our presence in emerging geographic markets, and a positive currency impact. These factors more than offset softer sales volumes in the Western Europe and U.S. corporate office markets.
SG&A expenses were up $10.5 million year-over-year, with most of the increase attributable to a $4 million currency impact and $4 million of incremental costs related to our market segmentation strategy in Europe. We continued to see solid demand for our products, as orders grew 3% to $311 million versus the record level comparison in the second quarter last year and backlog increased 21% from the beginning of the year. We also added $24 million in cash to the balance sheet during the quarter."
Mr. Hendrix continued, "Our modular carpet business continued its excellent performance in the second quarter with year-over-year sales growth of 15%. Operating income in the modular business grew 12% and reflected increased sales volume, somewhat offset by the investments we are making to achieve the long-term success of our segmentation strategy in Europe. Bentley Prince Street continued to work through operational issues associated with the ramp up of its carpet tile backing operations as well as rising raw material and energy costs.
Going forward, our focus will be on right-sizing this business to make it more profitable at existing sales levels. On a positive note, Bentley Prince Street had a strong order backlog going into the third quarter, and the modular component of its business recorded a 23% increase in sales during the second quarter, reaffirming the broader shift we see in the marketplace to modular solutions. And it has raised prices to offset its cost increases."