Atlanta, GA, July 28, 2010—Interface in the second quarter reported net income of $7.6 million, or $0.12 per share compared with (excluding $6.1 million of bond retirement expenses and the items described above) of $5.1 million, or $0.08 per diluted share, in the second quarter of 2009. Including all items, the Company reported second quarter 2009 net income attributable to Interface, Inc. of $3.7 million, or $0.06 per diluted share. Analysts had forecast EPS of $0.12.
Sales for the second quarter were $226.6 million, compared with sales of $211.3 million in the second quarter of 2009, an increase of 7.2%.
"We had a strong second quarter that built upon the momentum we created at the start of the year," said Daniel T. Hendrix, President and Chief Executive Officer. "We saw significant year-over-year increases in sales, margins and earnings, as we continued to realize the benefits of our end market diversification strategy and cost control initiatives. Importantly, the recovery in the corporate office segment that began in the first quarter has continued, and we also saw solid growth in the retail, institutional and hospitality sectors. Performance in the Asia-Pacific region remains excellent, and demand in North America also showed strength, led by the corporate office segment. In Europe, we saw significant profitability improvement, as sales held steady in local currency terms while manufacturing efficiencies and the benefits of our restructuring activities gained traction. The emerging markets, particularly China, Latin America, Russia and India, also delivered solid results. Perhaps most exciting, orders for the second quarter improved to $257 million, our highest level in seven quarters, with Europe making the turn and posting a significant order increase."
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "As sales grew year over year, we continued to generate significant expansion in profit margin as a result of the tight cost controls and improved efficiency in our operations. We continued to balance reducing our fixed cost base with selective reinvestment in the business, namely capital expenditures related to our China manufacturing facility and strategic investments in sales and marketing to advance our end market diversification strategy. In addition, reducing our debt level remains a strategic priority. As a result of the prudent actions that we took as the downturn hit, we believe that we are now in a strong financial position to execute against our strategic plans and capitalize on the opportunities we see in the marketplace."
For the first six months of 2010, sales were $443.8 million, compared with $410.6 million for the same period a year ago, an increase of 8.1%. Approximately 3% of the sales increase was related to fluctuations in currency exchange rates relative to the first six months of last year. Operating income for the 2010 six-month period (excluding a previously announced $3.1 million restructuring charge in the first quarter of 2010) was $38.4 million, or 8.6% of sales. These figures compare with operating income for the 2009 six-month period (excluding the 2009 second quarter items described above, as well as a previously announced restructuring charge of $5.7 million in the first quarter of 2009) of $25.6 million, or 6.2% of sales. Including all items in both periods, operating income for the 2010 six-month period was $35.2 million, or 7.9% of sales, compared with operating income for the 2009 six-month period of $23.9 million, or 5.8% of sales. Net income attributable to Interface, Inc. in the first six months of 2010 was $9.5 million, or $0.15 per diluted share, compared with net loss attributable to Interface, Inc. in the year-ago period of $0.5 million, or $0.01 per diluted share.
Mr. Hendrix concluded, "We are very pleased with our results for the first half of the year. Our recent sales growth is evidence of share gains and improving demand we are seeing for our products, but even more encouraging is the 16% increase in orders during the quarter, which reflects growth in demand across all geographic regions. While we are encouraged by our recent performance and optimistic about the opportunities ahead, we realize that we are operating in an uncertain environment in which the outlook remains challenging to predict. We will continue to be vigilant in monitoring any shifts in market conditions and flexible in our approach. At the same time, we will focus on building on our current position as a leader in the marketplace while also investing to continue driving the market's secular shift to carpet tile."
