Patrick C. Lynch, Vice President and Chief Financial Officer of Interface, commented, "The combination of higher revenues and the sustained reduction in the cost base resulted in increased operating leverage and profitability. Raw material costs stabilized during the quarter, which allowed our price increases to take hold and offset the cost increases they had experienced in the preceding six months. As a result, gross margin in the second quarter improved to 31.3 percent from 30.9 percent in the second quarter of 2004. They also have now completed the divestiture of their dealer businesses, in line with their stated timeline, and they expect to realize additional cost structure efficiencies and improvements in our cash flow in the second half of the year."
For the first six months of 2005, sales were $481.3 million, compared with $426.2 million for the same period a year ago, an increase of 12.9 percent. Operating income for the 2005 six-month period increased to $38.4 million, versus operating income of $29.6 million for the comparable 2004 six-month period. Income from continuing operations for the first six months of 2005 increased to $6.9 million, from $2.2 million in the prior year period.
Hendrix concluded, "Company continue to be bullish about the momentum they have in their business and their prospects. They focus will remain on leveraging the leading position of their core modular carpet business and enlarging our presence in all market segments worldwide, while at the same time taking the additional actions necessary to ensure that improvements in their fabrics and broadloom businesses continue throughout the year. They believe that with the execution of our business strategy, and the ongoing strengthening of their markets, they can continue to generate top-line growth while expanding profitability in all areas of their business."
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