ATLANTA, July 26, 2017 /PRNewswire/ -- Interface, Inc. (Nasdaq: TILE), a worldwide modular flooring company and global leader in sustainability, today announced results for the second quarter ended July 2, 2017.
"We delivered a solid second quarter of 2017, and we're seeing momentum in line with our expectations as we execute on our value creation strategy. Both sales and orders were up in the quarter, with broad-based growth in our core carpet tile business and LVT," said Jay Gould, CEO of Interface.
Second quarter highlights include:
With the fundamentals in place, Interface remains committed to its full year plan, which targets 3-4% organic sales growth, 38.0-38.5% gross margin, and $260-265 million in SG&A expenses for 2017.
Second Quarter 2017 Financial Summary & Highlights
Sales: On a GAAP basis, second quarter net sales were $251.7 million, up 1.4% over the prior year period on broad-based growth, particularly in the Americas and Asia-Pacific.
Organic order growth, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, was up 6% year over year. The growth was evenly balanced between the core carpet tile business and the recently launched LVT modular resilient flooring business.
Operating Income: Second quarter operating income was $33.0 million, or 13.1% of sales, compared with operating income of $31.8 million, or 12.8% of sales, in the prior year period.
Gross margin was 38.9% for the second quarter, which was an anticipated reduction compared to the second quarter of 2016 due to higher raw material input costs and the previously announced restructuring in which the Company exited the FLOR specialty retail stores.
The Company continued to manage SG&A expenses, at $64.9 million or 25.8% of sales, compared to $67.3 million or 27.1% of sales in the second quarter of 2016. This improvement in both absolute dollars and as a percent of sales is due to effective cost management, as well as repurposing SG&A from the exited FLOR specialty retail stores to the core carpet tile business and LVT business.
Net Income: Net income during the second quarter of 2017 was $20.9 million, or $0.33 per diluted share, an increase over the prior year period net income of $20.7 million, or $0.32 per diluted share.
Year to Date 2017 Financial Results
Sales: On a GAAP basis, for the first six months of 2017, net sales were $472.8 million, up 0.4% compared with $470.8 million in the first half of last year. Organic sales, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, grew 3% over the same period.
Operating Income: On a GAAP basis, for the first half of 2017, the Company reported operating income of $48.4 million, or 10.2% of sales, which included previously announced restructuring and asset impairment costs. Excluding these costs, operating income for the 2017 six-month period was $55.7 million, or 11.8% of sales, versus $52.8 million, or 11.2% of sales in the first six months of 2016.
Net Income: On a GAAP basis, the Company reported net income of $29.5 million, or $0.46 per share, for the first half of 2017, which included previously announced restructuring and asset impairment costs. Excluding these costs, the Company reported net income of $34.2 million, or $0.54 per share, for the first half of 2017 versus $33.6 million, or $0.51 per share, for the first six months of 2016.
Webcast and Conference Call Information
The Company will host a conference call tomorrow morning, July 27, 2017, at 9:00 a.m. Eastern Time, to discuss its second quarter 2017 results. The conference call will be simultaneously broadcast live over the Internet.
Listeners may access the conference call live over the Internet at the following address:
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Except for historical information contained herein, the other matters set forth in this news release are forward‑looking statements. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading "Risk Factors" included in Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2017, which discussion is incorporated herein by this reference, including, but not limited to, the discussion of specific risks and uncertainties under the headings "Sales of our principal products have been and may continue to be affected by adverse economic cycles in the renovation and construction of commercial and institutional buildings," "We compete with a large number of manufacturers in the highly competitive floorcovering products market, and some of these competitors have greater financial resources than we do," "Our success depends significantly upon the efforts, abilities and continued service of our senior management executives and our principal design consultant, and our loss of any of them could affect us adversely," "Our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results, including by restrictive taxation or other government regulation and by foreign currency fluctuations," "Concerns regarding the European sovereign debt crisis and market perceptions about the instability of the euro, the potential re-introduction of individual currencies within the Eurozone, the potential dissolution of the euro entirely, or the U.K. exiting the European Union, could adversely affect our business, results of operations or financial condition," "Large increases in the cost of petroleum-based raw materials could adversely affect us if we are unable to pass these cost increases through to our customers," "Unanticipated termination or interruption of any of our arrangements with our primary third party suppliers of synthetic fiber could have a material adverse effect on us," "We have a significant amount of indebtedness, which could have important negative consequences to us," "The market price of our common stock has been volatile and the value of your investment may decline," "Our earnings in a future period could be adversely affected by non-cash adjustments to goodwill, if a future test of goodwill assets indicates a material impairment of those assets," "Our business operations could suffer significant losses from natural disasters, catastrophes, fire or other unexpected events," and "Our Rights Agreement could discourage tender offers or other transactions for our stock that could result in shareholders receiving a premium over the market price for our stock." Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. The Company assumes no responsibility to update or revise forward-looking statements made in this press release and cautions readers not to place undue reliance on any such forward-looking statements.
- TABLES FOLLOW -
The impacts of changes in foreign currency presented in the tables are calculated based on applying the prior year period's average foreign currency exchange rates to the current year period.
The Company believes that the above non-GAAP performance measures, which management uses in managing and evaluating the Company's business, may provide users of the Company's financial information with additional meaningful bases for comparing the Company's current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, these non‑GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Tax effects identified above (when applicable) are calculated using the statutory tax rate for the jurisdictions in which the charge or income occurred.
SOURCE Interface, Inc.
Media Contact: Christine Needles, Global Corporate Communications, Christine.Needles@interface.com, +1 404-491-4660; Investor Contact: Bruce Hausmann, Chief Financial Officer, Bruce.Hausmann@interface.com, +1 770-437-6802
Interface Reports Second Quarter 2017 Results