Interface Reports First Quarter 2021 Results
Interface, Inc. (Nasdaq: TILE), a worldwide commercial flooring company and global leader in sustainability, today announced results for the first quarter ended April 4, 2021.
Quarterly Highlights:
- Q1 2021 GAAP earnings per share of $0.12; Q1 2021 adjusted earnings per share of $0.17.
- Orders increased 11% from Q4 2020 to Q1 2021.
- Strong liquidity of $405 million at quarter end comprised of $107 million in cash and $298 million of availability under the revolving credit facility.
- Cash generated by operating activities of $25 million in Q1 2021.
“We delivered solid results for the first quarter 2021 benefiting from our reduced cost structure and a currency tailwind. The dynamic market environment is beginning to show tangible signs of recovery, including an 11% sequential increase in orders, primarily driven by rising demand in the Americas and parts of Europe and APAC,” commented Dan Hendrix, Chairman and CEO of Interface.
“We remain committed to product development and have a robust launch pipeline planned throughout 2021. Additionally, our carbon neutral and carbon negative products are increasingly being written into specifications as major companies make good on their carbon reduction commitments. And we are winning in the dealer network as evidenced by the consistent increase in our Net Promoter Score® since the third quarter of 2020.”
“We are encouraged by the positive indicators we are seeing in many of our market verticals for an eventual economic recovery. Orders and overall customer activity increased notably from last quarter making us optimistic on improved performance in the second half of the calendar year,” Hendrix concluded.
“The actions we have taken to reduce our cost structure, strengthen our balance sheet and improve cash flows have created significant earnings power for Interface as our markets continue to recover. We are well positioned for growth in the back half of 2021,” added Bruce Hausmann, CFO of Interface.
First Quarter 2021 Financial Summary
Sales:Â First quarter net sales were $253 million, down 12% versus $288 million in the prior year period. Declines in carpet tile were somewhat moderated by lesser declines in LVT and gains in rubber flooring. The first quarter of 2021 consisted of 13 weeks, compared to 14 weeks in the prior year period.
Gross profit margin was 37.9% in the first quarter, a decrease of 180 basis points from the prior year period. Adjusted gross profit margin was 38.5%, a decrease of 160 basis points from adjusted gross margin for the prior year period.
First quarter SG&A expenses were $79 million, or 31.3% of net sales, compared to $88 million, or 30.4% of net sales in first quarter last year. Adjusted SG&A expenses were $78 million, or 30.6% of sales in first quarter 2021.
Operating Income:Â First quarter operating income was $17 million, compared to operating loss of $94 million in the prior year period. First quarter 2021 adjusted operating income (“AOI”) was $20 million versus AOI of $29 million in first quarter of 2020.
Net Income and EPS:Â On a GAAP basis, the Company recorded net income of $7 million in the first quarter of 2021, or $0.12 per diluted share, compared to first quarter 2020 GAAP net loss of $102 million, or $1.75 per diluted share. First quarter 2021 adjusted net income was $10 million, or $0.17 per diluted share, versus first quarter 2020 adjusted net income of $19 million, or $0.32 per diluted share.
Adjusted EBITDA:Â In the first quarter of 2021, adjusted EBITDA was $31 million. This compares with adjusted EBITDA of $34 million in the first quarter of 2020.
Cash and Debt: The Company had cash on hand of $107 million and total debt of $563 million at April 4, 2021, compared to $103 million of cash and $577 million of total debt at the end of fiscal year 2020.
Segment Results
In the first quarter of fiscal 2021, the Company expanded its financial reporting into two operating and reportable segments: 1) Americas (“AMS”) and 2) Europe, Africa, Asia and Australia (collectively “EAAA”). The realignment solely impacts the Company’s segment reporting and there is no change to previously reported consolidated results.
AMS Results:
- First quarter 2021 net sales in AMS were $127 million, down 19.7% versus $158 million in the prior year period primarily due to the continued impacts of COVID-19.
- First quarter 2021 operating income in AMS was $12 million compared to operating income of $20 million in the prior year period. First quarter 2021 AOI in AMS was $12 million versus AOI of $24 million in first quarter of 2020. Both declines were primarily due to lower net sales and lower profit margins related to impacts of COVID-19, partially offset by lower SG&A expenses.
EAAA Results:
- First quarter 2021 net sales in EAAA were $126 million, down 2.9% versus $130 million in the prior year period primarily due to the continued impacts of COVID-19. Currency fluctuations had an approximately $11 million positive impact on EAAA’s first quarter 2021 sales compared to 2020 due to strengthening of the Euro, British pound sterling and the Australian dollar against the U.S. dollar.
- First quarter 2021 operating income in EAAA was $5 million compared to an operating loss of $114 million in the prior year period. The first quarter of 2020 includes a goodwill and intangible asset impairment charge of $119 million. First quarter 2021 AOI in EAAA was $8 million versus AOI of $6 million in first quarter of 2020. EAAA AOI improved due to higher gross profit margins, lower SG&A, and favorable currency fluctuations.
Outlook
There continues to be disruption in the global economy due to COVID-19, and a significant level of uncertainty created by the global pandemic. As the Company continues to monitor this situation, it is anticipating:
- Net sales in the second quarter of 2021 of approximately $290 million.
- Adjusted gross profit percentage in the second quarter of 2021 of approximately 38.5%.
- Adjusted SG&A expense for the full year of 2021 of approximately $325 million, with the remaining portion spread fairly evenly across the second quarter, third quarter and fourth quarter of 2021.
- Interest & Other expense for the full year of 2021 of approximately $34 million.
- The adjusted effective tax rate for the full year of 2021 is anticipated to be approximately 27%.
- Capital expenditures of approximately $30 million for full year of 2021.
Fully diluted share count at the end of the first quarter of 2021 was 58.9 million shares
The full text of Interface’s 1Q21 earnings release, including all tables, and a replay of the company’s May 7 conference call webcast may be accessed through the Company’s website at: https://investors.interface.com.
About Interface
Interface, Inc. is a global flooring company specializing in carbon neutral carpet tile and resilient flooring, including luxury vinyl tile (LVT) and nora® rubber flooring. We help our customers create high-performance interior spaces that support well-being, productivity, and creativity, as well as the sustainability of the planet. Our mission, Climate Take Back™, invites you to join us as we commit to operating in a way that is restorative to the planet and creates a climate fit for life.Â
Learn more about Interface at interface.com and blog.interface.com, our nora brand at nora.com, our FLOR® brand at FLOR.com, and our Carbon Neutral Floors™ program at interface.com/carbonneutral. Learn more about our carbon negative products at interface.com/carbonnegative.
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