'We are encouraged by the stabilizing trends' – Interface President
Daniel T. Hendrix (President and CEO)
Interface Inc, a worldwide floorcoverings company and global leader in sustainability, announced results for the first quarter ended April 5, 2009.
Sales for the first quarter of 2009 were $199.3 million, compared with sales of $261.7 million in the first quarter of 2008, a decline of 23.9%. Approximately 9% of the sales decline was related to fluctuations in currency exchange rates relative to the year ago period. Excluding the previously announced restructuring charge of $5.7 million, operating income for the 2009 first quarter was $8.8 million, or 4.4% of sales, compared with operating income of $31.0 million, or 11.8% of sales, in the first quarter last year. Including the charge, operating income in the 2009 first quarter was $3.1 million, or 1.5% of sales.
Income from continuing operations, excluding the restructuring charge, for the first quarter of 2009 was $0.5 million, or $0.01 per share, compared with income from continuing operations of $14.1 million, or $0.22 per diluted share, in the first quarter of 2008. Including the charge, the Company reported a first quarter 2009 loss from continuing operations of $3.5 million, or $0.06 per share. Net loss for the 2009 first quarter was $4.2 million, or $0.07 per share, compared with net income in the year ago period of $14.1 million, or $0.22 per diluted share.
"Historically, the first quarter is our seasonally slowest period, and this year market conditions were even more challenging due to the global economic recession," said Daniel T. Hendrix, President and Chief Executive Officer. "We did see initial signs of stabilization by the end of the quarter, as our consolidated order trend settled at an approximate 25% decline versus the prior year, and our backlog increased $8 million versus the beginning of the year.
These factors, which have continued into the second quarter, encourage us to believe that we may be seeing the bottom of the cycle. Overall, the corporate office segment saw the largest sales decline in the quarter, while geographically the emerging markets and the U.K. were the hardest hit. The effects were less pronounced in the Americas, where our market diversification strategy has positioned us with a presence in certain segments, such as government, that have held up better in this environment."
Mr. Hendrix continued, "Throughout the quarter, we continued to actively manage our cost base to adjust to current demand levels and position our business for economic recovery. As a result of these efforts, we saw sequential monthly improvements in operating profitability in both February and March, as our cost-cutting and restructuring initiatives began to take hold. With most of our restructuring activities behind us, we expect to realize close to the full amount of the projected annualized cost savings from these actions beginning in the second quarter."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "From a financial perspective, our focus remains on cutting costs, generating solid cash flow and reducing our overall debt. The first quarter typically is a heavy cash use period for us. However, our tightened spending policies resulted in a net use of cash in operating, investing and financing activities during the first quarter of 2009 that, excluding bond repurchases, was $18.0 million less than the prior year period.