Modular carpet business drives growth of Interface
26 Apr '07
4 min read
"Setting aside the one-time charges, we had a great start to 2007, even though the first quarter seasonally has been our slowest time of the year," said Daniel T. Hendrix, President and Chief Executive Officer.
"Our improving sales performance reflects the success we are experiencing across our primary market segments, as growth in our non-office commercial segments, and particularly in hospitality and education facilities, outpaced the growth of the recovering corporate office market."
"Perhaps the most exciting news, though, is that orders received during the quarter were up 21.5% to $288 million, which is the highest mark reached in more than six years."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "Our modular carpet business was the principal driver of our growth, with sales increasing 24% and orders increasing 26% compared with the same period last year. Sales of modular carpet increased across all key regions, with the Americas and Europe leading the way, as we built upon our leadership position in this growing market category. The strong sales performance in modular carpet resulted in excellent profitability growth for the business.
We also continued to see robust sales improvement in our Bentley Prince Street business, which was up 24% and continued to gain market share. Bentley Prince Street's operating income doubled over the prior year, despite some isolated manufacturing inefficiencies due to a changeover in materials processing, and we expect to see further profitability growth throughout 2007.
We were disappointed with the performance of our fabrics business, which reported an operating loss during the quarter due to costs associated with headcount reductions and continued manufacturing inefficiencies resulting from our plant consolidation program.
"While we are continuing with our plans to improve the performance of this business, we also are exploring possible strategic options, and our analyses have led us to conclude that it is necessary to record an impairment charge for the first quarter."
Mr. Hendrix concluded, "The outlook for our core businesses remains very positive, and we have positioned ourselves well to benefit from the market opportunities we helped create and are now seeing come to fruition. Specifically, we are benefiting from the secular market shift toward modular carpet and the continuing recovery of the office market.
Further, our segmentation strategy has been successful and we are benefiting from our presence in these other commercial and residential markets, on a global basis. Looking forward, we remain optimistic about the strength of the office market, especially in the U.S. and Europe, the prospects for our segmentation strategy to further drive sales growth across our key markets, and the progress of our product introductions in the residential market.
"Through the first three weeks of our second quarter, sales and order activity continue to be strong."
The Company will host a conference call tomorrow, April 26, 2007, at 9:00 a.m. Eastern Time, to discuss its first quarter 2007 results. The conference call will be simultaneously broadcast live over the Internet.
Listeners may access the conference call live over the Internet or through the Company's website.The archived version of the webcast will be available at these sites for one year beginning approximately 1 hour after the call ends.
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