Interface Reports First Quarter 2022 Results, Increases Full Year Revenue Outlook
Interface, Inc. (Nasdaq: TILE), a worldwide commercial flooring company and global leader in sustainability, today announced results for the first quarter ended April 3, 2022.
Q1 2022 Highlights:
- Net sales totaled $288 million, up 14% year-over-year.
- GAAP SG&A expenses at 27% of net sales, down from 31% in Q1 2021.
- GAAP operating income up 62% year-over-year; adjusted operating income up 54% year-over-year.
- GAAP earnings per share of $0.22, up 83% year-over-year; adjusted earnings per share of $0.28, up 65% year-over-year.
- Orders increased 15% year-over-year.
“We delivered strong first quarter results, with revenue growth of 14%, driven by increasing demand across our portfolio of carbon neutral and carbon negative flooring products. Orders in the first quarter increased 15% year-over-year, marking our fourth consecutive quarter of double-digit orders growth. Our team’s strong execution, including pricing and productivity gains, helped mitigate supply chain and inflationary headwinds during the quarter,” said Dan Hendrix, Chairman of Interface.
“Our position as an industry leader in design, sustainability, and innovation continues to drive demand and market share gains across our diverse end markets – particularly in a rapidly recovering office sector. As we move forward, we remain committed to advancing our growth and diversification strategies and are well-positioned to meet the growing demand for low carbon footprint flooring solutions,” Hendrix added.
“We have proactively increased efficiency across our business and we continue to implement cost control measures that, when paired with strong order momentum, provide a strong foundation for growth for the remainder of the year and beyond,” added Bruce Hausmann, CFO of Interface.
“Finally, we are thrilled to welcome Laurel Hurd as our new Chief Executive Officer. Laurel joined us on April 18, 2022, and she will help drive Interface through the next chapters of our journey,” concluded Hendrix.
First Quarter 2022 Financial Summary
Sales: First quarter net sales were $288.0 million, up 13.7% versus $253.3 million in the prior year period with growth across all product categories.
Gross profit margin was 37.1% in the first quarter, a decrease of 84 basis points from the prior year period. Adjusted gross profit margin was 37.9%, a decrease of 55 basis points from adjusted gross margin for the prior year period due primarily to higher freight and raw material costs.
First quarter SG&A expenses were $78.5 million, or 27.3% of net sales, compared to $79.3 million, or 31.3% of net sales in first quarter last year. Adjusted SG&A expenses were $78.6 million, or 27.3% of net sales in first quarter 2022, compared to $77.5 million, or 30.6% of net sales, in the first quarter last year.
Operating Income: First quarter operating income was $27.4 million, compared to operating income of $16.9 million in the prior year period. First quarter 2022 adjusted operating income (“AOI”) was $30.6 million versus AOI of $19.9 million in first quarter of 2021.
Net Income and EPS: On a GAAP basis, the Company recorded net income of $13.3 million in the first quarter of 2022, or $0.22 per diluted share, compared to first quarter 2021 GAAP net income of $6.9 million, or $0.12 per diluted share. First quarter 2022 adjusted net income was $16.8 million, or $0.28 per diluted share, versus first quarter 2021 adjusted net income of $10.0 million, or $0.17 per diluted share.
Adjusted EBITDA: In the first quarter of 2022, adjusted EBITDA was $42.9 million. This compares with adjusted EBITDA of $31.5 million in the first quarter of 2021.
Cash and Debt: The Company had cash on hand of $76.1 million and total debt of $521.7 million at the end of the first quarter 2022, compared to $97.3 million of cash and $518.1 million of total debt at the end of fiscal year 2021.
First Quarter Segment Results
- Q1 2022 net sales of $156.5 million, up 23.3% versus $127.0 million in the prior year period primarily due to the continued recovery of the commercial market.
- Q1 2022 orders were up 11.4% compared to the prior year period.
- Q1 2022 operating income was $21.3 million compared to $11.6 million in the prior year period.
- Q1 2022 AOI was $21.1 million versus AOI of $11.9 million in the prior year period.
- Q1 2022 net sales of $131.5 million, up 4.1% versus $126.3 million in the prior year period.
- Currency fluctuations negatively impacted Q1 2022 net sales by approximately $7.9 million as compared to Q1 2021 sales due to weakening of the Euro, British pound sterling and Australian dollar against the U.S. dollar.
- Q1 2022 orders were up 19.7% compared to the prior year period and 26.3% on a currency neutral basis.
- Q1 2022 operating income of $6.2 million compared to $5.2 million in the prior year period.
- Q1 2022 AOI was $9.5 million versus AOI of $8.0 million in the prior year period.
There continues to be a significant level of disruption in the global supply chain and general macro-economic uncertainty. As the Company continues to monitor this situation, it is anticipating:
For the second quarter of 2022:
- Net sales of $350 million to $360 million.
- Adjusted gross profit margin of approximately 33% to 34%.
- Adjusted SG&A expenses of approximately $85 million.
- Adjusted Interest & Other expenses of approximately $8 million.
- An adjusted effective tax rate of approximately 29%.
- Fully diluted weighted average share count at the end of the second quarter of approximately 59.4 million shares.
For the full fiscal year 2022:
- Year-over-year net sales growth of approximately 10% to 12%.
- Adjusted gross profit margin of 35% to 36%.
- Adjusted SG&A expenses that are approximately 25% to 26% of net sales.
- Adjusted Interest & Other expenses of approximately $31 million.
- An adjusted effective tax rate of approximately 27%.
- Capital expenditures of approximately $30 million.
Fully diluted share count at the end of the first quarter of 2022 was 59.2 million shares.
The full text of Interface’s 1Q22 earnings release, including all tables, and an archived replay of the company’s May 6 conference call webcast may be accessed at https://investors.interface.com.
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.
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.
Follow us on Twitter, YouTube, Facebook, Pinterest, LinkedIn, Instagram, and Vimeo.