Interface biz in Europe continues to struggle with poor economy
Interface, Inc. announced results for the third quarter ended October 4, 2009.
Sales for the third quarter of 2009 were $218.4 million, compared with sales of $278.4 million in the third quarter of 2008, a decline of 21.6%. Approximately 3% of the sales decline was related to fluctuations in currency exchange rates relative to the year ago period. On a sequential basis, sales increased 3.3% over sales of $211.3 million in the second quarter of 2009. Operating income for the 2009 third quarter was $18.9 million, or 8.7% of sales, compared with operating income of $31.0 million, or 11.1% of sales, in the third quarter of last year. Operating income improved 13.0% over second quarter 2009 adjusted operating income of $16.8 million (see table below), or 8.0% of sales. Unadjusted, operating income in the second quarter of 2009 was $20.9 million, or 9.9% of sales.
Net income attributable to Interface, Inc. for the 2009 third quarter was $5.5 million, or $0.09 per diluted share, compared with $8.4 million, or $0.13 per diluted share, in the year ago period. Included in the Company's results for the third quarter of 2008 was a previously announced after-tax loss from discontinued operations of $5.2 million, or $0.08 per diluted share.
"We saw steady sequential improvement in our business in the third quarter despite the challenging market conditions," said Daniel T. Hendrix, President and Chief Executive Officer. "Demand for modular carpet in the education, retail and government sectors held up well, offsetting in part the continuing softness in the corporate office segment. Geographically, our business in the Americas has been remarkably resilient, due primarily to our focus on non-office segments. Our business in Europe continued to struggle with the poor economy, but in an encouraging sign orders exceeded sales for the quarter. Asia-Pacific remains tepid overall, as multinational corporate customers have not yet returned to the market. However, Australia has been turning around and we're beginning to see a firming pipeline of orders in China. While the global economic environment continues to be difficult, we feel we've made the appropriate restructuring decisions and investments in our business, and continue to gain share as a leader in the carpet tile market."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "We've successfully realigned our cost structure to match demand and strengthened our balance sheet to maintain our competitive position through this market cycle. On a sequential basis, our gross margin expanded almost 50 basis points from 2009 second quarter levels, reflecting the leverage built into our operating model. Our commitment to prudent cost management and capital allocation resulted in strong cash flow generation, and we ended the quarter with $106 million in cash and equivalents on hand."
For the first nine months of 2009, sales were $629.0 million, compared with $835.2 million for the same period a year ago, a decrease of 24.7%. Approximately 4% of the sales decline was related to fluctuations in currency exchange rates relative to the first nine months of last year. Operating income for the 2009 nine-month period was $42.9 million, compared with operating income of $95.4 million in the 2008 nine-month period. Income from continuing operations was $6.1 million, or $0.09 per diluted share, in the 2009 nine-month period, compared with income from continuing operations of $44.4 million, or $0.69 per diluted share, in the same period a year ago. Net income attributable to Interface, Inc. was $5.0 million, or $0.08 per diluted share, in the first nine months of 2009, compared with $38.4 million, or $0.61 per diluted share, for the first nine months of 2008. The Company's results for the first nine months of 2009 included the following items: