Interface, Inc. a worldwide carpet tile company and global leader in sustainability, announced results for the fourth quarter and fiscal year ended December 30, 2012.
Fiscal Year 2012 Financial summary
Sales: For the full year 2012, sales were $932.0 million, compared with $953.0 million in 2011, a decrease of 2.2%.Fluctuations in currency exchange rates negatively impacted 2012 sales by approximately 2% (approximately $15 million) relative to the prior year.
Operating Income: Excluding restructuring and asset impairment charges totaling $19.4 million and $1.7 million of expenses related to the Australia fire, operating income for 2012 was $85.8 million, or 9.2% of sales. This compares with operating income in 2011, excluding restructuring charges, of $91.5 million, or 9.6% of sales. Including all items, operating income was $64.6 million in 2012, compared with $85.7 million in the prior year.
Income from continuing operations: Excluding restructuring and asset impairment charges and Australia fire expenses, income from continuing operations in 2012 was $39.4 million, or $0.60 per diluted share (with these items included, it was $22.9 million, or $0.35 per diluted share). This compares with 2011 income from continuing operations, excluding a restructuring charge, of $42.3 million, or $0.65 per diluted share (with the charge included, last year's income from continuing operations was $38.3 million, or $0.58 per diluted share).
Net income: Including all items, as well as a loss from discontinued operations of $17.0 million, the Company reported 2012 net income of $5.9 million, or $0.09 per diluted share. In 2011, net income was $38.7 million, or $0.59 per diluted share.
Patrick C. Lynch, Senior Vice President and Chief Financial Officer, commented, "We ended the year in a strong financial position, with a cash balance of $90.5 million. Orders were up 4.6% on a consolidated basis in the fourth quarter, with strength in the U.S. and decent improvements in Europe and Asia.
While the impact of the fire at our Australia plant remains difficult to quantify, we believe the diminished level of business in the country negatively affected operating income in the range of $2.5 million to $3.5 million in the fourth quarter. Our consumer business, FLOR, ended the quarter with a healthy year-over-year increase in sales, a consequence of robust retail store expansion in 2012. In addition, our China plant swung from a loss to a profit during the quarter, as its production volume ramped up to support our Australia business.
Fourth Quarter 2012 Financial Results
Sales: Sales for the fourth quarter of 2012 were $249.6 million, up slightly compared with sales of $244.5 million in the fourth quarter of 2011.
- The Americas division, up 8.2% year-over-year, led the increase, with segment growth in corporate office (up 16%), education (up 14%), government (up 22%) and hospitality (up 63%) offsetting decreases in the retail (down 31%) and healthcare (down 16%) segments.
- The Asia-Pacific region was essentially even year-over-year, with sales growth in China and Southeast Asia offsetting declines in Japan and Australia. Australia's sales continue to be impacted by the plant fire and the transition to a temporary import model, with product for Australia currently being manufactured at the Company's other plants worldwide. Corporate office sector sales in the Asia-Pacific region were up 14% year-over-year, with other segments steady or slightly down.
- The European region was down 3% in local currency, or 7% as reported in U.S. dollars. Sales in local currency increased in the government (up 11%), retail (up 27%) and hospitality (up 12%) segments.
- As previously announced, the Company completed the sale of its Bentley Prince Street business segment in August of 2012. Results for Bentley Prince Street for the 2012 fourth quarter and full year, and for all prior periods, have been classified as discontinued operations.
Operating income: Excluding a $2.3 million restructuring charge and $0.8 million of Australia fire expenses, operating income in the 2012 fourth quarter was $21.9 million, or 8.8% of sales. (Including those charges and expenses, operating income was $18.8 million, or 7.5% of sales.)
This compares with operating income in the 2011 fourth quarter of $20.7 million, or 8.5% of sales, excluding a restructuring charge of $5.8 million in that period. (Including the prior year period restructuring charge, operating income in the 2011 fourth quarter was $14.9 million, or 6.1% of sales).
SG&A expenses in the quarter were $63.2 million, or 25.3% of sales, versus 24.2% in the fourth quarter of 2011 and up sequentially from 23.9% in the third quarter of 2012. The increase was largely attributable to additional sales and marketing expenditures, primarily from the opening of five new FLOR stores, as well as higher incentive compensation.
Income from continuing operations: Excluding the above-mentioned restructuring charge and Australia fire expenses, the Company reported income from continuing operations of $10.4 million, or $0.16 per diluted share, in the fourth quarter of 2012. With these items, income from continuing operations was $7.4 million, or $0.11 per diluted share. Excluding the $5.8 million restructuring charge in the prior year period, income from continuing operations was $9.0 million, or $0.14 per diluted share (including the charge, $5.0 million, or $0.08 per diluted share) in the fourth quarter of 2011.
Net income: After the items discussed above, net income for the quarter was $7.4 million, or $0.11 per diluted share. This compares with net income of $3.9 million, or $0.06 per diluted share, in the fourth quarter last year, which included a loss from discontinued operations of $1.1 million related to the former Bentley Prince Street operations.
Interface, Inc. is the world's largest manufacturer of modular carpet, which it markets under the Interface and FLOR brands. The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value.
