Interface, Inc. (Nasdaq: TILE), a worldwide commercial flooring
company and global leader in sustainability, today announced
results for the third quarter ended October 1, 2023.
Third quarter highlights:
- Net sales totaled $311.0 million, down 5.1%
year-over-year.
- Gross profit margin increased to 35.5%, up 226 basis points
year-over-year.
- GAAP earnings per share of $0.17; Adjusted earnings per share
of $0.28.
- Generated $66.3 million of cash from operations, repaid $30.6
million of debt in the quarter.
“Our third quarter results reflect the resiliency of our global
diversification strategy and effective execution in a relatively
sluggish market. Net sales declined in the quarter primarily driven
by an outsized impact from retail sector softness and broader
macroeconomic uncertainty. This was partially offset by strength in
healthcare, up 13% year-over-year, and performance in other key
segments. Despite lower volumes in the quarter, we increased gross
profit margin by 226 basis points and our strong cash flow
generation enabled us to pay down debt, driving accelerated
improvements in our balance sheet,” commented Laurel Hurd, CEO of
Interface.
“We hit an important milestone in our One Interface journey with
the global product launch of our Past Forward carpet tile
collection, which was the first time we launched a global
collection at the same time around the world. As we close out 2023,
we remain focused on leveraging the power of our entire
organization to drive profitable growth and value for our
shareholders,” concluded Hurd.
“With strong cash flow from operations, debt repayment remains
our top capital allocation priority. During the quarter we repaid
$30.6 million of debt, reducing our debt balances by $75.7 million
year-over-year, ahead of expectations. Moving into the last quarter
of the year, we are revising our full year guidance to reflect
ongoing retail sector softness and sluggish global demand. We are
focused on winning business, taking share, paying down debt, and
disciplined cost management to further strengthen our financial
position,” added Bruce Hausmann, CFO of Interface.
Third Quarter 2023 Financial Summary
Sales: Third quarter net sales were $311.0 million, down
5.1% versus $327.8 million in the prior year period.
Gross profit margin was 35.5% in the third quarter, an increase
of 226 basis points from the prior year period. Adjusted gross
profit margin was 35.9%, an increase of 217 basis points from
adjusted gross profit margin for the prior year period due
primarily to input cost deflation, higher selling prices and
product mix, partially offset by lower fixed cost absorption.
Third quarter SG&A expenses were $79.3 million, or 25.5% of
net sales, compared to $80.8 million, or 24.7% of net sales in the
third quarter last year. Adjusted SG&A expenses were $79.2
million, or 25.5% of net sales, in the third quarter of 2023,
compared to $79.2 million, or 24.2% of net sales, in the third
quarter last year.
Operating Income: Third quarter operating income was
$31.0 million, compared to operating income of $28.0 million in the
prior year period. Third quarter 2023 adjusted operating income
("AOI") was $32.4 million versus AOI of $31.2 million in the third
quarter of 2022.
Net Income and EPS: On a GAAP basis, the Company recorded
net income of $9.9 million in the third quarter of 2023, or $0.17
per diluted share, compared to third quarter 2022 GAAP net income
of $14.1 million, or $0.24 per diluted share. Third quarter 2023
adjusted net income was $16.4 million, or $0.28 per diluted share,
versus third quarter 2022 adjusted net income of $17.4 million, or
$0.30 per diluted share.
Adjusted EBITDA: In the third quarter of 2023, adjusted
EBITDA was $43.7 million. This compares with adjusted EBITDA of
$42.9 million in the third quarter of 2022.
First Nine Months of 2023 Summary
Sales: Net sales for the first nine months of 2023 were
$936.4 million, down 2.7% versus $962.4 million in the prior year
period.
Gross profit margin was 34.0% for the first nine months of 2023,
a decrease of 58 basis points from the prior year period. Adjusted
gross profit margin was 34.4%, a decrease of 83 basis points from
adjusted gross profit margin for the prior year period due to lower
fixed cost absorption, partially offset by higher selling prices,
input cost deflation and product mix.
SG&A expenses for the first nine months of 2023 were $251.0
million, or 26.8% of net sales, compared to $240.7 million, or
25.0% of net sales, in the same period last year. Adjusted SG&A
expenses were $246.3 million, or 26.3% of net sales, for the first
nine months of 2023 compared to $238.2 million, or 24.8% of net
sales, in the same period last year.
Operating Income: Operating income for the first nine
months of 2023 was $69.4 million, compared to operating income of
$90.0 million in the prior year period. AOI was $75.4 million for
the first nine months of 2023 versus AOI of $100.4 million in the
same period last year.
Net Income and EPS: On a GAAP basis, the Company recorded
net income of $25.0 million in the first nine months of 2023, or
$0.43 per diluted share, compared to the first nine months of 2022
net income of $44.2 million, or $0.75 per diluted share. Nine-month
2023 adjusted net income was $34.8 million, or $0.60 per diluted
share, versus the first nine months of 2022 adjusted net income of
$55.3 million, or $0.94 per diluted share.
Adjusted EBITDA: In the first nine months of 2023,
adjusted EBITDA was $109.8 million. This compares with adjusted
EBITDA of $134.8 million in the first nine months of 2022.
Cash and Debt: The Company had cash on hand of $119.6
million and total debt of $444.4 million at the end of the third
quarter 2023, compared to $97.6 million of cash and $520.2 million
of total debt at the end of fiscal year 2022.
Third Quarter Segment Results
AMS Results:
- Q3 2023 net sales of $178.2 million, down 8.4% versus $194.4
million in the prior year period.
- Q3 2023 orders were down 4.2% compared to the prior year period
on a currency neutral basis.
- Q3 2023 operating income was $23.5 million compared to $25.0
million in the prior year period.
- Q3 2023 AOI was $23.3 million versus $25.0 million in the prior
year period.
EAAA Results:
- Q3 2023 net sales of $132.8 million, down 0.4% versus $133.3
million in the prior year period.
- Currency fluctuations had a $5.3 million favorable impact to
net sales in the 2023 third quarter compared with the prior year
period.
- Q3 2023 orders were up 4.5% compared to the prior year period
on a currency neutral basis. EMEA was up 13.9%, Australia was down
4.8%, and Asia was down 23.0% due primarily to continued softness
in the region.
- Q3 2023 operating income of $7.5 million compared to $3.1
million in the prior year period.
- Q3 2023 AOI was $9.0 million versus $6.3 million in the prior
year period.
First Nine Months Segment Results
AMS Results:
- Net sales for the first nine months of 2023 were $548.7
million, down 1.6% versus $557.8 million in the prior year
period.
- Operating income for the first nine months of 2023 was $57.0
million compared to $74.6 million in the prior year period.
- AOI for the first nine months of 2023 was $58.6 million versus
$74.5 million in the prior year period.
EAAA Results:
- Net sales for the first nine months of 2023 were $387.7
million, down 4.2% versus $404.6 million in the prior year
period.
- Currency fluctuations had an approximately $1.1 million
negative impact on net sales in the first nine months of 2023
compared to the prior year period, primarily due to the weakening
of the Australian dollar and Chinese Renminbi against the U.S.
dollar, partially offset by the strengthening of the Euro against
the U.S. dollar. Excluding negative foreign currency impacts, for
the first nine months of 2023, EAAA's net sales were down 3.9%
year-over-year.
- Operating income for the first nine months of 2023 was $12.4
million compared to $15.4 million in the prior year period.
- AOI for the first nine months of 2023 was $16.8 million versus
$25.9 million in the prior year period.
Outlook
Interface anticipates the following for the full fiscal year
2023:
- Net sales of $1.245 billion to $1.265 billion.
- Adjusted gross profit margin of approximately 34.4%.
- Adjusted SG&A expenses of approximately $329 million.
- Adjusted Interest & Other expenses of approximately $35
million.
- An adjusted effective tax rate of approximately 29.5%.
- Fully diluted weighted average share count of approximately
58.3 million shares.
- Capital expenditures of approximately $32 million.
Webcast and Conference Call Information
Interface will host a conference call on November 3, 2023, at
8:00 a.m. Eastern Time, to discuss its third quarter 2023 results.
The conference call will be simultaneously broadcast live over the
Internet.
Listeners may access the conference call live over the Internet
at:
https://events.q4inc.com/attendee/413657327, or through the
Company's website at: https://investors.interface.com.
The archived version of the webcast will be available at these
sites for one year beginning approximately one hour after the call
ends.
Non-GAAP Financial Measures
Interface provides adjusted earnings per share, adjusted net
income, adjusted operating income ("AOI"), adjusted gross profit,
adjusted gross profit margin, adjusted SG&A expenses, currency
neutral sales and currency neutral sales growth, net debt, and
adjusted EBITDA as additional information regarding its operating
results in this press release. These non-GAAP measures are not in
accordance with – or alternatives to – GAAP measures, and may be
different from non-GAAP measures used by other companies. Adjusted
EPS, adjusted net income, and AOI exclude nora purchase accounting
amortization, the Thailand plant closure inventory write-down,
cyber event costs, and restructuring, asset impairment, severance,
and other, net. Adjusted EPS and adjusted net income also exclude
the loss on discontinuance of interest rate swaps, property
casualty loss, and the loss on foreign subsidiary liquidation.
Adjusted gross profit and adjusted gross profit margin exclude nora
purchase accounting amortization, and the Thailand plant closure
inventory write-down. Adjusted SG&A expenses exclude the cyber
event impact and restructuring, asset impairment, severance, and
other, net. Currency neutral sales and currency neutral sales
growth exclude the impact of foreign currency fluctuations. Net
debt is total debt less cash on hand. Adjusted EBITDA is GAAP net
income excluding interest expense, income tax expense, depreciation
and amortization, share-based compensation expense, goodwill and
intangible asset impairment charges, cyber event costs, property
casualty loss, restructuring, asset impairment, severance, and
other, net, nora purchase accounting amortization, loss on foreign
subsidiary liquidation, and the Thailand plant closure inventory
write-down. This news release should be read in conjunction with
the Company's Current Report on Form 8-K furnished today to the
U.S. Securities & Exchange Commission, which explains why
Interface believes presentation of these non-GAAP measures provides
useful information to investors, as well as any additional material
purposes for which Interface uses these non-GAAP measures.
About Interface
Interface, Inc., (NASDAQ: TILE) is a global flooring solutions
enterprise with an integrated portfolio of carpet tile and
resilient flooring products, where everything is third-party
certified carbon neutral. With our design approach to flooring
systems, we help our customers create high-performance interior
spaces that have a positive impact on people’s lives and the
planet. Our range includes Interface® carpet tile and LVT, nora® by
Interface rubber flooring, and FLOR® premium area rugs for
commercial and residential spaces.
Interface is third-party certified as a Carbon Neutral
Enterprise. We neutralized our carbon impact across our entire
business, including all operations and our full value chain,
marking an important milestone toward our objective to become a
restorative and carbon negative enterprise by 2040.
Learn more about Interface at interface.com and
blog.interface.com, nora by Interface at nora.com, FLOR at
FLOR.com, our sustainability journey at
interface.com/sustainability, and our Carbon Neutral Enterprise
certification at
https://www.interface.com/US/en-US/sustainability/carbon-neutral-enterprise.html.
Follow us on Facebook, Instagram, LinkedIn, Twitter, and
Pinterest.
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. Forward-looking statements may be identified by words
such as “may,” “expect,” “forecast,” “anticipate,” “intend,”
“plan,” “believe,” “could,” "should," "goal," "aim," "objective,"
“seek,” “project,” “estimate,” “target,” “will” and similar
expressions. Forward-looking statements in this press release
include, without limitation, any projections we make regarding the
Company’s full year 2023 under “Outlook” above. 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 but not limited to the risks
under the following subheadings in “Risk Factors” in the Company's
Annual Report on Form 10-K for the fiscal year ended January 1,
2023: "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. We may
face challenges competing on price, making investments in our
business, or competing on product design or sustainability", "Our
earnings could be adversely affected by non-cash adjustments to
goodwill, when a test of goodwill assets indicates a material
impairment of those assets", "Our success depends significantly
upon the efforts, abilities and continued service of our senior
management executives, our principal design consultant and other
key personnel (including experienced sales and manufacturing
personnel), and our loss of any of them could affect us adversely",
"Large increases in the cost of our raw materials, shipping costs,
duties or tariffs 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 or our primary
third-party supplier for luxury vinyl tile (“LVT”) or other key raw
materials could have a material adverse effect on us", "The market
price of our common stock has been volatile and the value of your
investment may decline", "Changes to our facilities, manufacturing
processes, product construction, and product composition could
disrupt our operations, increase our manufacturing costs, increase
customer complaints, increase warranty claims, negatively affect
our reputation, and have a material adverse effect on our financial
condition and results of operations", "Our business operations
could suffer significant losses from natural disasters, acts of
war, terrorism, catastrophes, fire, adverse weather conditions,
pandemics, endemics, unstable geopolitical situations or other
unexpected events", "Disruptions to or failures of our information
technology systems could adversely affect our business", "The
impact of potential changes to environmental laws and regulations
and industry standards regarding climate change could lead to
unforeseen disruptions to our business operations", "The COVID-19
pandemic has had and could continue to have (and other public
health emergencies could have in the future) a material adverse
effect on our ability to operate, our ability to keep employees
safe from the pandemic, our results of operations, financial
condition, liquidity, capital investments, our near term and long
term ability to stay in compliance with debt covenants under our
Syndicated Credit Facility and Senior Notes, our ability to
refinance our existing indebtedness, and our ability to obtain
financing in capital markets", "Sales of our principal products
have been and may continue to be affected by the COVID-19 pandemic,
adverse economic cycles, and effects in the new construction market
and renovation market", "Our substantial international operations
are subject to various political, economic and other uncertainties
that could adversely affect our business results, including foreign
currency fluctuations, restrictive taxation, custom duties, border
closings or other adverse government regulations", "The conflict
between Russia and Ukraine could adversely affect our business,
results of operations and financial position", "Fluctuations in
foreign currency exchange rates have had, and could continue to
have, an adverse impact on our financial condition and results of
operations", "The uncertainty surrounding the ongoing
implementation and effect of the U.K.’s exit from the European
Union, and related negative developments in the European Union
could adversely affect our business, results of operations or
financial condition", "We have a substantial amount of debt, which
could adversely affect our business, financial condition and
results of operations and our ability to meet our payment
obligations under our debt", "Servicing our debt requires a
significant amount of cash, and we may not have sufficient cash
flow from our operations to pay our indebtedness", "We may incur
substantial additional indebtedness, which could further exacerbate
the risks associated with our substantial indebtedness", and "We
face risks associated with litigation and claims". You should
consider any additional or updated information we include under the
heading “Risk Factors” in our subsequent quarterly and annual
reports.
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 -
Consolidated Condensed Statements of
Operations
Three Months Ended
Nine Months Ended
(In thousands, except per share data)
10/1/2023
10/2/2022
10/1/2023
10/2/2022
Net Sales
$
311,006
$
327,757
$
936,380
$
962,364
Cost of Sales
200,748
218,972
618,463
630,074
Gross Profit
110,258
108,785
317,917
332,290
Selling, General & Administrative
Expenses
79,273
80,848
251,049
240,711
Restructuring, asset impairment, other
(gains) and charges
—
(105
)
(2,502
)
1,592
Operating Income
30,985
28,042
69,370
89,987
Interest Expense
8,163
7,747
24,986
21,787
Other Expense, net
6,702
124
7,674
1,688
Income Before Taxes
16,120
20,171
36,710
66,512
Income Tax Expense
6,241
6,106
11,748
22,336
Net Income
$
9,879
$
14,065
$
24,962
$
44,176
Earnings Per Share – Basic
$
0.17
$
0.24
$
0.43
$
0.75
Earnings Per Share – Diluted
$
0.17
$
0.24
$
0.43
$
0.75
Common Shares Outstanding – Basic
58,107
58,681
58,087
59,099
Common Shares Outstanding – Diluted
58,342
58,681
58,233
59,099
Consolidated Condensed Balance
Sheets
(In thousands)
10/1/2023
1/1/2023
Assets
Cash
$
119,633
$
97,564
Accounts Receivable
143,884
182,807
Inventory
289,320
306,327
Other Current Assets
33,003
30,339
Total Current Assets
585,840
617,037
Property, Plant & Equipment
282,401
297,976
Operating Lease Right-of Use Asset
75,604
81,644
Goodwill and Intangible Assets
156,487
162,195
Other Assets
101,309
107,651
Total Assets
$
1,201,641
$
1,266,503
Liabilities
Accounts Payable
$
75,602
$
78,264
Accrued Liabilities
115,266
120,138
Current Portion of Operating Lease
Liabilities
10,829
11,857
Current Portion of Long-Term Debt
8,492
10,211
Total Current Liabilities
210,189
220,470
Long-Term Debt
435,899
510,003
Operating Lease Liabilities
67,554
72,305
Other Long-Term Liabilities
100,435
102,188
Total Liabilities
814,077
904,966
Shareholders’ Equity
387,564
361,537
Total Liabilities and Shareholders’
Equity
$
1,201,641
$
1,266,503
Consolidated Condensed Statements of
Cash Flows
Three Months Ended
Nine Months Ended
(In thousands)
10/1/2023
10/2/2022
10/1/2023
10/2/2022
OPERATING ACTIVITIES
Net Income
$
9,879
$
14,065
$
24,962
$
44,176
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Depreciation and Amortization
10,445
9,825
30,591
30,661
Share-Based Compensation Expense
2,209
2,352
7,334
6,679
(Gain) Loss on Disposal of Property, Plant
and Equipment, net
10
—
(2,531
)
—
Loss on Foreign Subsidiary Liquidation
6,221
—
6,221
—
Amortization of Acquired Intangible
Assets
1,302
1,204
3,886
3,817
Deferred Income Taxes and Other Non-Cash
Items
(53
)
4,675
(671
)
13,616
Change in Working Capital
Accounts Receivable
19,626
(1,078
)
37,396
(8,860
)
Inventories
(5,808
)
(8,261
)
14,135
(71,487
)
Prepaid Expenses and Other Current
Assets
769
8,017
(2,842
)
2,321
Accounts Payable and Accrued Expenses
21,693
(3,208
)
(4,264
)
(6,040
)
Cash Provided by Operating Activities
66,293
27,591
114,217
14,883
INVESTING ACTIVITIES
Capital Expenditures
(5,907
)
(4,187
)
(17,238
)
(13,314
)
Proceeds from Sale of Property, Plant and
Equipment
—
—
6,593
—
Cash Used in Investing Activities
(5,907
)
(4,187
)
(10,645
)
(13,314
)
FINANCING ACTIVITIES
Repayments of Long-term Debt
(37,631
)
(71,980
)
(149,738
)
(151,662
)
Borrowing of Long-term Debt
7,000
49,986
74,000
159,363
Tax Withholding Payments for Share-Based
Compensation
(27
)
—
(1,514
)
(398
)
Repurchase of Common Stock
—
(8,869
)
—
(14,451
)
Dividends Paid
(581
)
(586
)
(1,742
)
(1,773
)
Finance Lease Payments
(545
)
(525
)
(1,853
)
(1,535
)
Cash Used in Financing Activities
(31,784
)
(31,974
)
(80,847
)
(10,456
)
Net Cash Provided by (Used in) Operating,
Investing and Financing Activities
28,602
(8,570
)
22,725
(8,887
)
Effect of Exchange Rate Changes on
Cash
(1,904
)
(3,634
)
(656
)
(8,916
)
CASH AND CASH EQUIVALENTS
Net Change During the Period
26,698
(12,204
)
22,069
(17,803
)
Balance at Beginning of Period
92,935
91,653
97,564
97,252
Balance at End of Period
$
119,633
$
79,449
$
119,633
$
79,449
Segment Results
Three Months Ended
Nine Months Ended
(in thousands)
10/1/2023
10/2/2022
10/1/2023
10/2/2022
Net Sales
AMS
$
178,194
$
194,449
$
548,716
$
557,768
EAAA
132,812
133,308
387,664
404,596
Consolidated Net Sales
$
311,006
$
327,757
$
936,380
$
962,364
Segment AOI
AMS
$
23,318
$
24,975
$
58,621
$
74,502
EAAA
9,049
6,273
16,805
25,908
Consolidated AOI
$
32,367
$
31,248
$
75,426
$
100,410
* Note: Segment AOI includes allocation of
corporate SG&A expenses
Reconciliation of GAAP Financial
Measures to Non-GAAP Financial Measures
(In millions, except per share
amounts)
Third Quarter 2023
Third Quarter 2022
Adjustments
Adjustments
Gross
Profit
SG&A
Operating Income
Pre-tax
Tax
Effect
Net
Income
Diluted
EPS
Gross
Profit
SG&A
Operating Income
Pre-tax
Tax
Effect
Net
Income
Diluted
EPS
GAAP As Reported
$
110.3
$
79.3
$
31.0
$
9.9
$
0.17
$
108.8
$
80.8
$
28.0
$
14.1
$
0.24
Non-GAAP Adjustments:
Purchase Accounting Amortization
1.3
—
1.3
1.3
(0.4
)
0.9
0.02
1.2
—
1.2
1.2
(0.4
)
0.9
0.01
Thailand Plant Closure Inventory
Write-down
—
—
—
—
—
—
—
0.5
—
0.5
0.5
—
0.5
0.01
Restructuring, Asset Impairment,
Severance, and Other, net
—
—
—
—
0.2
0.2
—
—
(1.6
)
1.5
1.5
—
1.5
0.03
Cyber Event
—
(0.1
)
0.1
0.1
—
0.1
—
—
—
—
—
—
—
—
Loss on Foreign Subsidiary Liquidation
(1)
—
—
—
6.2
(1.1
)
5.1
0.09
—
—
—
—
—
—
—
Loss on Discontinuance of Interest Rate
Swaps
—
—
—
0.2
—
0.1
—
—
—
—
0.6
(0.2
)
0.5
0.01
Adjustments Subtotal *
1.3
(0.1
)
1.4
7.8
(1.3
)
6.5
0.11
1.7
(1.6
)
3.2
3.9
(0.5
)
3.3
0.06
Adjusted (non-GAAP) *
$
111.6
$
79.2
$
32.4
$
16.4
$
0.28
$
110.5
$
79.2
$
31.2
$
17.4
$
0.30
(1) Russia and Brazil foreign subsidiaries
were substantially liquidated during the current period. The
related cumulative translation adjustment was recognized in other
expense.
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
First Nine Months 2023
First Nine Months 2022
Adjustments
Adjustments
Gross
Profit
SG&A
Operating Income
Pre-tax
Tax
Effect
Net
Income
Diluted
EPS
Gross
Profit
SG&A
Operating Income
Pre-tax
Tax
Effect
Net
Income
Diluted
EPS
GAAP As Reported
$
317.9
$
251.0
$
69.4
$
25.0
$
0.43
$
332.3
$
240.7
$
90.0
$
44.2
$
0.75
Non-GAAP Adjustments:
Purchase Accounting Amortization
3.9
—
3.9
3.9
(1.1
)
2.8
0.05
3.8
—
3.8
3.8
(1.1
)
2.7
0.05
Thailand Plant Closure Inventory
Write-down
—
—
—
—
—
—
—
2.5
—
2.5
2.5
—
2.5
0.04
Restructuring, Asset Impairment,
Severance, and Other, net
—
(3.7
)
1.2
1.2
(0.4
)
0.8
0.01
—
(2.5
)
4.1
4.1
0.0
4.1
0.07
Property Casualty Loss(1)
—
—
—
(0.5
)
0.1
(0.4
)
(0.01
)
—
—
—
—
—
—
—
Cyber Event
—
(1.0
)
1.0
1.0
(0.2
)
0.7
0.01
—
—
—
—
—
—
—
Loss on Foreign Subsidiary Liquidation
(2)
—
—
—
6.2
(1.1
)
5.1
0.09
—
—
—
—
—
—
—
Loss on Discontinuance of Interest Rate
Swaps
—
—
—
1.0
(0.2
)
0.7
0.01
—
—
—
2.4
(0.6
)
1.8
0.03
Adjustments Subtotal *
3.8
(4.7
)
6.1
12.8
(2.9
)
9.8
0.17
6.3
(2.5
)
10.4
12.8
(1.7
)
11.1
0.19
Adjusted (non-GAAP) *
$
321.8
$
246.3
$
75.4
$
34.8
$
0.60
$
338.6
$
238.2
$
100.4
$
55.3
$
0.94
(1) Represents insurance recovery net of
loss recognized in the first quarter of 2023.
(2) Russia and Brazil foreign subsidiaries
were substantially liquidated during the current period. The
related cumulative translation adjustment was recognized in other
expense.
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
Reconciliation of Segment GAAP
Financial Measures to Non-GAAP Financial Measures ("Currency
Neutral Net Sales")
(In millions)
Third Quarter 2023
Third Quarter 2022
AMS Segment
EAAA Segment
Consolidated *
AMS Segment
EAAA Segment
Consolidated *
Net Sales as Reported (GAAP)
$
178.2
$
132.8
$
311.0
$
194.4
$
133.3
$
327.8
Impact of Changes in Currency
0.4
(5.3
)
(4.9
)
—
—
—
Currency Neutral Net Sales *
$
178.6
$
127.5
$
306.1
$
194.4
$
133.3
$
327.8
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
First Nine Months 2023
First Nine Months 2022
AMS Segment
EAAA Segment
Consolidated *
AMS Segment
EAAA Segment
Consolidated *
Net Sales as Reported (GAAP)
$
548.7
$
387.7
$
936.4
$
557.8
$
404.6
$
962.4
Impact of Changes in Currency
2.1
1.1
3.1
—
—
—
Currency Neutral Net Sales *
$
550.8
$
388.8
$
939.5
$
557.8
$
404.6
$
962.4
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
Reconciliation of GAAP Operating Income
to Adjusted Operating Income ("AOI")
(In millions)
Third Quarter 2023
Third Quarter 2022
AMS Segment
EAAA Segment
Consolidated *
AMS Segment
EAAA Segment
Consolidated *
GAAP Operating Income
$
23.5
$
7.5
$
31.0
$
25.0
$
3.1
$
28.0
Non-GAAP Adjustments:
Purchase Accounting Amortization
—
1.3
1.3
—
1.2
1.2
Thailand Plant Closure Inventory
Write-down
—
—
—
—
0.5
0.5
Restructuring, Asset Impairment,
Severance, and Other, net
(0.3
)
0.3
—
—
1.5
1.5
Cyber Event
0.1
—
0.1
—
—
—
Adjustments Subtotal *
(0.2
)
1.6
1.4
—
3.2
3.2
AOI *
$
23.3
$
9.0
$
32.4
$
25.0
$
6.3
$
31.2
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
First Nine Months 2023
First Nine Months 2022
AMS Segment
EAAA Segment
Consolidated *
AMS Segment
EAAA Segment
Consolidated *
GAAP Operating Income
$
57.0
$
12.4
$
69.4
$
74.6
$
15.4
$
90.0
Non-GAAP Adjustments:
Purchase Accounting Amortization
—
3.9
3.9
—
3.8
3.8
Thailand Plant Closure Inventory
Write-down
—
—
—
—
2.5
2.5
Restructuring, Asset Impairment,
Severance, and Other, net
1.1
0.1
1.2
(0.1
)
4.2
4.1
Cyber Event
0.6
0.4
1.0
—
—
—
Adjustments Subtotal *
1.6
4.4
6.1
(0.1
)
10.5
10.4
AOI *
$
58.6
$
16.8
$
75.4
$
74.5
$
25.9
$
100.4
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
Third Quarter 2023
Third Quarter 2022
First Nine Months 2023
First Nine Months 2022
Last Twelve Months (LTM) Ended
10/1/2023
Fiscal Year 2022
Net Income as Reported (GAAP)
$
9.9
$
14.1
$
25.0
$
44.2
$
0.3
$
19.6
Income Tax Expense
6.2
6.1
11.7
22.3
11.8
22.4
Interest Expense (including debt issuance
cost amortization)
8.2
7.7
25.0
21.8
33.1
29.9
Depreciation and Amortization (excluding
debt issuance cost amortization)
9.6
9.4
29.0
29.4
38.3
38.7
Share-Based Compensation Expense
2.2
2.4
7.3
6.7
9.2
8.5
Purchase Accounting Amortization
1.3
1.2
3.9
3.8
5.1
5.0
Goodwill and Intangible Asset
Impairment
—
—
—
—
36.2
36.2
Thailand Plant Closure Inventory
Write-down
—
0.5
—
2.5
—
2.5
Restructuring, Asset Impairment,
Severance, and Other, net
—
1.5
1.2
4.1
5.3
8.2
Property Casualty Loss(1)
—
—
(0.5
)
—
(0.5
)
—
Cyber Event
0.1
—
1.0
—
6.1
5.1
Loss on Foreign Subsidiary Liquidation
(2)
6.2
—
6.2
—
6.2
—
Adjusted Earnings before Interest,
Taxes, Depreciation and Amortization (AEBITDA)*
$
43.7
$
42.9
$
109.8
$
134.8
$
151.1
$
176.1
(1) Represents insurance recovery net of
loss recognized in the first quarter of 2023.
(2) Russia and Brazil foreign subsidiaries
were substantially liquidated in the current period. The related
cumulative translation adjustment was recognized in other
expense.
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
As of 10/1/23
Total Debt
$
444.4
Total Cash on Hand
(119.6
)
Total Debt, Net of Cash on Hand (Net
Debt)*
$
324.8
10/1/2023
Total Debt / LTM Net Income
1284.4x
Net Debt / LTM AEBITDA
2.1x
* Note: Sum of reconciling items may
differ from total due to rounding of individual components
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 basis 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231103991253/en/
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
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