On July 18, 2000 Teknion Corporation (TSE:TKN) announced results for the three and six months ended May 31, 2000. Sales for the second quarter rose 57% to a new record for the company of $230.0 million from $146.2 million last year. For the first six months of the year sales increased 43% to $400.8 million compared to $280.8 million last year. Net earnings for the second quarter were $23.7 million or $0.37 per common share, also a new quarterly record for Teknion, and a 68% increase over the $14.1 million or $0.23 per share produced last year. For the six months ended May 31, 2000, net income was $37.8 million or $0.59 per share compared to $28.7 million or $0.46 per share last year.
The exceptional sales performance in the second quarter is attributed primarily to the success of the company’s strategies to increase its share of the North American and international contract office furniture markets. “It is clear that our industry-leading product portfolio, our understanding of the needs of our customers, and our ability to deliver innovative solutions quickly and cost effectively are the forces behind our consistent ability to far exceed overall industry growth rates,” stated David Feldberg, President and Chief Executive Officer. Superior growth was generated in each of the company’s key markets. Sales in the United States rose by 78% compared to last year’s second quarter, Canadian sales grew by 13% and international sales increased by 100%.
“Our largest opportunity remains the U.S. $12.4 billion American market, where our market share is currently less than 3%. Teknion continues to be the fastest growing participant in the U.S. contract office furniture business. We are confident that we will continue to grow at rates that will allow us to progressively increase our market share over the next few years,” Mr. Feldberg continued. Gross margin as a percentage of sales rose to 43.1% in the second quarter from 42.2% in last year’s second quarter and 39.9% in the current year’s first quarter. This improvement in gross margin is directly attributable to the leverage produced by the higher sales covering a larger component of fixed manufacturing costs. Selling, general and administrative expenses in the quarter fell to 23.9% from 24.5% as a percentage of sales, again due to the increase in sales.
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