Interline Brands announced an update on business performance for the fourth quarter of 2008 and a comprehensive plan focused on additional expense reduction and efficiency gains across its operating platform.
Interline Brands, a leading distributor and direct marketer
of maintenance, repair and operations products, announced an update on business
performance for the fourth quarter of 2008 and a comprehensive plan focused on
additional expense reduction and efficiency gains across its operating
Based on unaudited results,the
companyanticipates reporting net sales for its fourth quarter ended
December 26, 2008 of approximately $277 million, and gross profit in the range
of $101 to $103 million. Additionally, the company expects to report a strong
cash position of over $60 million as of Dec. 26, 2008.
Commenting on current business conditions, Interline
Chairman and Chief Executive OfficerMichael Grebesaid, "Our core
end-markets were adversely impacted by macroeconomic headwinds that intensified
throughout the quarter. Accordingly, we will not meet our previously issued
earnings per share range of $0.30 to $0.35 for the fourth quarter of 2008.
However, we have been through difficult times before and will continue to
prudently manage the business by adjusting our cost structure and maximizing
cash flow generation. We have a strong cash balance, and we are well on track
to meet the high end of our previously stated goal of generating $30 to $40
million in free cash flow over the six-month period ending March 2009."
In response to the challenging environment, the company
recently announced the implementation of several cost actions, including the
elimination of 85 full-time positions. As a result of the workforce reduction
and other expense control actions, the company expects to generate annualized
savings of approximately $12 million. In the first quarter of 2009, Interline
expects to record one-time severance charges totaling approximately $1.0
million resulting from these actions.
"The decision to downsize is never easy to make, and we
thank our affected employees for their many important contributions. However,
these actions are necessary to ensure that our cost structure aligns with
current and expected market dynamics," added Grebe.
In an effort to further improve the long-term efficiency of
its operating platform, Interline also announced that it will accelerate the
streamlining of its distribution and logistics network by consolidating 10
distribution centers over the next six months. These consolidations are in
addition to those included in Project 20/20, the company's previously announced
cost- savings and efficiency plan. Interline expects to realize annualized
savings of approximately $4 million as a result of these consolidations, and
will record one-time severance and other charges totaling approximately $1.0
million in the first half of 2009. The company will continue to review its
distribution footprint for optimal efficiency and scale.
Grebe continued, "With these consolidations, we have a
great opportunity to reduce our fixed cost structure and to improve our scale.
As important, we will continue to provide excellent customer service because we
are not exiting any geographic markets. Streamlining our distribution network
is the right decision regardless of present market conditions, and we are very
excited by the prospect of establishing a more profitable operating platform.
We will execute this plan in an orderly fashion, taking into consideration
seasonality of demand and other market dynamics, and by timing the
consolidations with lease expirations to minimize associated costs."
Grebe concluded, "I am confident the actions announced
today reinforce our continued focus on prudent expense controls and underscore
our ongoing commitment to operational excellence. I look forward to discussing
more of the specifics of today's announced actions, as well as our full fourth
quarter 2008 results, on our quarterly conference call next month."
The Company expects to release fourth
quarter and full year 2008 results on Feb. 19, 2009, and host a conference call
on Feb. 20, 2009, at 9 a.m. Eastern Time.
Source: Interline Brands Inc.
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