Interface Reports Second Quarter 2017 Results
— Earnings Per Share of $0.33 —
— GAAP Net Sales Up 1%; Organic Sales Up 4% —
— $25 Million in Share Repurchases —
INTERFACE, Inc. (Nasdaq: TILE), a worldwide modular flooring company and global leader in sustainability, today announced results for the second quarter ended July 2, 2017.
“We delivered a solid second quarter of 2017, and we’re seeing momentum in line with our expectations as we execute on our value creation strategy. Both sales and orders were up in the quarter, with broad-based growth in our core carpet tile business and LVT,” said Jay Gould, CEO of Interface.
Second quarter highlights include:
- On a GAAP basis, net sales grew 1.4% year over year. Organic sales, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, grew 4% year over year. Organic order growth was 6% year over year.
- Gross margin remained in line with expectations at 38.9%.
- SG&A continued to be well managed at $64.9 million, or 25.8% of net sales, and was in-line with the Company’s targeted 2017 annual run rate.
- Operating income margin was 13.1%, an increase of 30 basis points over last year’s second quarter.
- The Company completed $25 million in stock repurchases in the second quarter, executing on the previously announced $100 million share repurchase program.
With the fundamentals in place, Interface remains committed to its full year plan, which targets 3-4% organic sales growth, 38.0-38.5% gross margin, and $260-265 million in SG&A expenses for 2017.
Second Quarter 2017 Financial Summary & Highlights
Sales: On a GAAP basis, second quarter net sales were $251.7 million, up 1.4% over the prior year period on broad-based growth, particularly in the Americas and Asia-Pacific.
Organic order growth, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, was up 6% year over year. The growth was evenly balanced between the core carpet tile business and the recently launched LVT modular resilient flooring business.
Operating Income: Second quarter operating income was $33.0 million, or 13.1% of sales, compared with operating income of $31.8 million, or 12.8% of sales, in the prior year period.
Gross margin was 38.9% for the second quarter, which was an anticipated reduction compared to the second quarter of 2016 due to higher raw material input costs and the previously announced restructuring in which the Company exited the FLOR specialty retail stores.
The Company continued to manage SG&A expenses, at $64.9 million or 25.8% of sales, compared to $67.3 million or 27.1% of sales in the second quarter of 2016. This improvement in both absolute dollars and as a percent of sales is due to effective cost management, as well as repurposing SG&A from the exited FLOR specialty retail stores to the core carpet tile business and LVT business.
Net Income: Net income during the second quarter of 2017 was $20.9 million, or $0.33 per diluted share, an increase over the prior year period net income of $20.7 million, or $0.32 per diluted share.
Year to Date 2017 Financial Results
Sales: On a GAAP basis, for the first six months of 2017, net sales were $472.8 million, up 0.4% compared with $470.8 million in the first half of last year. Organic sales, which adjusts for the impact of foreign currency fluctuations and exiting the FLOR specialty retail stores, grew 3% over the same period.
Operating Income: On a GAAP basis, for the first half of 2017, the Company reported operating income of $48.4 million, or 10.2% of sales, which included previously announced restructuring and asset impairment costs. Excluding these costs, operating income for the 2017 six-month period was $55.7 million, or 11.8% of sales, versus $52.8 million, or 11.2% of sales in the first six months of 2016.
Net Income: On a GAAP basis, the Company reported net income of $29.5 million, or $0.46 per share, for the first half of 2017, which included previously announced restructuring and asset impairment costs. Excluding these costs, the Company reported net income of $34.2 million, or $0.54 per share, for the first half of 2017 versus $33.6 million, or $0.51 per share, for the first six months of 2016.
Webcast and Conference Call Information
The full text of Interface’s 2Q17 earnings release, including all tables, may be accessed via the Investor Relations section of the company’s website at http://www.interfaceglobal.com/Investor-Relations.aspx. An archived replay of the company’s Jul. 27 conference call will be available for one year.
Interface, Inc. is the world’s largest manufacturer of modular carpet, and recently expanded into modular resilient flooring with a new luxury vinyl tile line. Our hard and soft tiles are designed to work together in an integrated flooring system. We are committed to sustainability and minimizing our impact on the environment while enhancing shareholder value. Our mission, Climate Take Back™, focuses on driving positive impacts in the world to create a climate fit for life. For additional information: INTERFACE.COM and BLOG.INTERFACE.COM. Follow Interface on TWITTER, YOUTUBE, FACEBOOK, PINTEREST, LINKEDIN, INSTAGRAM, and VIMEO.