Interface Inc (TILE) Q2 2024 Earnings Call Highlights: Strong Sales Growth and Margin Expansion

GuruFocus News
4 min read

In This Article:

  • Net Sales: $346.6 million, an increase of 5% year-over-year.

  • Americas FX-Neutral Net Sales: Up 7% year-over-year.

  • EAAA Net Sales: Up 3% year-over-year; EMEA up 5%, Asia up 12%, Australia down 6%.

  • Adjusted Gross Profit Margin: 35.7%, an increase of 183 basis points.

  • Adjusted SG&A Expenses: $84.3 million or 24.3% of net sales.

  • Adjusted Operating Income: $39.6 million, up 42% year-over-year.

  • Adjusted EPS: $0.40 versus $0.25 year-over-year.

  • Adjusted EBITDA: $50.5 million versus $39.8 million year-over-year.

  • Cash from Operating Activities: $21.5 million.

  • Liquidity: $385 million, including $94 million in cash and $291 million in revolver capacity.

  • Net Debt: $293.4 million at the end of the second quarter.

  • Capital Expenditures: $9.6 million in Q2 2024 compared to $5.6 million in 2023.

  • Full Year 2024 Net Sales Estimate: $1.3 billion to $1.32 billion.

  • Q3 2024 Net Sales Estimate: $330 million to $340 million.

Release Date: August 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Interface Inc (NASDAQ:TILE) reported a 6% year-over-year increase in currency-neutral net sales and a significant improvement in adjusted gross profit margin by 183 basis points to 35.7%.

  • The One Interface strategy is yielding tangible results, with strong commercial execution and operational discipline contributing to the company's success.

  • The Americas region showed robust performance with a 7% year-over-year increase in currency-neutral net sales and a 15% rise in orders.

  • The education segment continues to be a strong growth driver, with global billings up 13% year-over-year, supported by the expanded open-air collection.

  • Interface Inc (NASDAQ:TILE) has been recognized as one of America's best midsized companies by Time Magazine and as a sustainability leader in Globescan's annual survey.

Negative Points

  • Sales in Australia were down 6% year-over-year, partially offsetting growth in other regions.

  • Currency-neutral orders in the EAAA region decreased by 1% year-over-year due to a softer environment in Europe and a strong comparison in Australia.

  • The healthcare segment experienced a slight decline in global billings during the quarter.

  • Retail has been challenged by project delays, although there is an expectation of recovery in the back half of the year.

  • Freight costs have increased, impacting the overall cost structure despite other input cost deflations.

Q & A Highlights

Q: Could you discuss the factors driving the better-than-expected top line performance, especially in the non-residential market? A: Laurel Hurd, CEO: We are pleased with our top line progress, particularly in the Americas, where orders were up 15%. Education is a significant growth area, with billings up 13% year-over-year. Our One Interface strategy and product assortment are working well, especially in education and corporate office segments, where we are gaining market share.

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