Interface (TILE) 6 Nov 202020 Q3 Earnings call transcript

[00:00:03] Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Interface Earnings Conference call. At this time, all participants are in a listen only mode. After the speakers presentation, they'll be a question and answer session to ask a question during the session.

You'll need to press one on your telephone if you require any further assistance, please. Press Star zero. to conference like speaker to now today. would hand over the your I you. Needles, Christine thank ahead. go Please

[XX:XX:XX] Good Hendrix, welcome CFO. XXXX and morning and Hausmann, results third Call Bruce hosted quarter regarding by president Dan vice chairman CEO, to and and Interfaces Conference

today's of comments interfaces federal are Any securities business looking statements management Our historical laws. information? forward call. within conference which During regarding not the meaning

the team, assumptions involve measures comparable measures, statements belief not Reconciliation's our number materially guarantees company's of and also uncertainties statements future non the and use performance ongoing which or cause risks to assumes during Form the current release contained including as risks and could include well in responsibility uncertainties to covid-XX pandemic differ our Management's actual associated FCC statement, gap of are to forward for results described a refer explanations that X-K looking are with as Forward and such any from statements of intent, the management this certain on of no looking such based. those statements their expectations forward and regarding today. remarks filings. gap company statements. gap measures earnings looking with update call The the FEC and the are the in to furnished non most Any

broadcasted it rebroadcasted copyrighted contains and interface, material not for recorded express interfaces, without or being permission. be may call's rerecorded this Lastly, and

the After taping prepared open our the for Your will participation call consent broadcasting and remarks, on the it. of your question. company's confirms we to call

chairman and call the turn to CEO. to Hendrix, Dan like I'd Now, over

joining for Good [XX:XX:XX] and morning you us today. thank

initiatives, continue on team our in quarter, to we results for ongoing on let to status about first our for work safety Thank us this We'll you and covid-XX levels we're term can innovation for things managing I'm the invest the that and ensuring continue the seeing your We Before best impact specifically service as our to down were class hard that XX net the system encouraged we interface what selling in spots focused through versus business. long business. the and me control. of very our I'm are we the discuss manage third there business pandemic talk for team marketplace. some quarter quarter year. people will of the proud in financial of remain set early our in last success. sales in while pipeline the percent by the providing product bright that the up

States. positive the quarter, third in maintain to manufacturing necessary. a with reflects maintain in a second beginning particular, when Australia for is our sequentially profitability orders most returning This quarter world, to increased see of outside China Germany are signal Asia-Pacific We half quarter, XX percent remain This of flexibility business rubber despite production. Third tile in we're standout to trends common. and less the XX is home work on a improvement office to our handle committed of better and operation in a compared our seems carpet the having Europe. returned stabilization. to and We in chain rightsizing the decline people In saw cost improving or year in growth. to to categories. north the XX our teams business structure. have all across the product capabilities We're our business percent the has covid-XX percent variable [XX:XX:XX] than gross the supply strong and adjusted more percent revenues United the XX our sequential of from modestly in us potentially margins modest healthy, We signaling

business for response XXXX doubled XXXX. conversion for our dollars business and problem total expanding our an to the of further taken grown adjusted billion progress XX Overall, since to We've only have commercial to anticipate made year to sales. and for coming approaching our launching nine And of actions essaying market have dollar billion. XXXX, is addressable nearly opportunity albizzi expense rubber strengthen product reductions full million and revenue. rubber In billion our two and reach Today, competitive in percent Carpitella additional million. thirds approximately in XX it the the we of run quickly Albizzi believe ongoing pandemic XXX require four cost software lines. realize We We Provençal of annual XXX market XXXX up have to our there's in rate interfaces about made position.

continue we the the especially represent now helps we renovating The health commercial in sustainability. revenue, than In of the also care past remodeling environment, revenue are on used we opportunities hotels health capitalize to during This the consumer our market our beyond in composition. office sciences, hospitality, shifts price business. presence in adapt includes our office. compete hospitality, market the trends us our care, service, K and economic markets diversification multifamily, in corporate XX. retail, where and years, design, less life and to and education, in resulted current This of times capacity, and see education, [XX:XX:XX] are majority is expand efforts limited market, through half to volatility. innovation, same and have major We In which these where on few

schools design platform having consumer direct double Renovations seeing needs offices. is core year, strong e-commerce our make of the growing digits large addition, In in expect change reopen. We're business that we distancing social traction exceptionally get about with address our covid-XX. and new an of to XX and a companies remodel measures compared accommodating And percent begin businesses as business. redesigns to up commercial to in and construction

the According of XXXX. office to [XX:XX:XX] anticipate say office hybrid study, companies the product as in to of Our our pick up time recent and they the coming design the strategy. as the also force. XX to we in demand innovation, coming arrangement. bodes for focus to focus time, discretionary on full to cues. off quarters prefer from challenges be view of space there zoning the office address comeback office and will culture increasing second culture, like believe XX necessity while visual employees home help and we elements Every well still prefer market. shading be through beach dealer We're for This engineered a direction, back commercial selling sales in guide increasing half market percent products with other U.S. pattern can percent value our market these a and traffic a Ginzler and Ultimately,

to Beauty, base our product States. styles States. biotech's part with are opportunity bio beauty collection price based vinyl, carbon called is where this EPS in with bio nano are on I'm customer that opportunity excited United out our new new first first billion offering our in Embodied latest the of share we take as our product low to an dollar market non growing objective fair at option along and of embody our Credle backings currently share offerings Our to market sequenced measured important today. very And to our backings. the new a in rolled global sound mid dealers seaQuest two this PVC Expanding prefer products available also the that's our negative These milestone a journey. by points. and Hidesign launched carpet sustainability focusing We United

to You may XXXX. them expect launch in globally

be more demand commitment I'd are the interface customers, companies to over made be to encouraged results like the space toward to increase third built our XXXX. early turn as the their targets We a call quarter. carbon have own by about carbon to only commitment We carbon our from Bruce that, will is embodied to enterprise whom the care the demand future. firmly in carbon set negative big With by that and of reduction discuss many and their financial step believe in negative for for

[XX:XX:XX] good everyone. you, Dan, Thank and morning,

in currency by rubber. sales As quarter, declines equity and Rubber in lesser categories. Sales America's, performance That percent Asia increased with orders global offset with compared the third down with over the down categories sales percent orders percent down year, to all capital the were compared Pacific. second XX XX in media down moderated seven dollars. percent in were we and in dollars. Fed QX. Again, down in closed local Declines out XX eight XX prior orders in percent declines to U.S. percent period, in were XX down in product up XX XX to were percent, percent but XX million, XX a stabilization percent the and and in that quarter were XX potentially year solid percent down signaling were compared and in in in segments. the market sales by somewhat all currency Americas across Declines declines local were LTT in down were demand prior the percent U.S. And sequentially in both Asia-Pacific third XXX the percent quarter, and XXXX capital product they in our across signaling

living, to housing, residential. student and includes continue We in see which living multi growth senior

We transportation and also saw quarter. growth in in buildings the public

thirty was gross two seven profit adjusted percent. quarter Third point margin

from supply two down plants a were healthy our over recorded and twenty it of cost million. and with period, to point XXXX. of sales, the and voluntary seven involuntary expenses to reduced year This the The third we hundred still is adjusted Gené and program, cost for approximately and quarter operators payments for customer That's ability [XX:XX:XX] percent XX one are and while points anticipates when thirty was world. has was year was full this in sales plant net percent various down our changes quarter strong company carpet third expenses percent implemented chain, basis related structure nine expenses eight support around employee to to to XXX of very initiatives approximately quarter, While flex demand. In million year and demand benefited in five for production several the XX seventy severance of point in retention net million prior the strong our third our wage a programs outcome adjusted separation one year. XXXX with we've five seventy in charges the reducing from line testament point and six three million

while innovation strong company investing cost realign the agile long to in We structure to to medium and the keep for term. company's the continue

eight twenty XXXX and operating and cents of operating per third forty per operating million quarter operating net the In share compared The third ten to non of million. sixteen income for release adjusted was eight third was of income period adjusted was refer seven last We versus six million. recorded of million million income the quarter net in adjusted twenty prior cents forty six quarter for third to thirty reconciliations diluted of XXXX quarter of million the dollars XXXX year. year numbers. third quarter four million income Please or gap share income the diluted to press in adjusted Gath seventeen and our income

from flows. flow. cash balance seventy three our the We to XX liquidity. operations sheet costs of Turning million closely of we and cash million in controlled At had generated effectively end our the and cash eight and quarter, managed hundred

full third During of decline of million million the inventory depreciation over times EBITDA in in to period with XX at million repaid amortization five year the be in percent last in XX working a seven hundred or demand, XX million ended down minus the expenditures was year million hand as to quarter in debt in decreased moderated compared driven year. reduce quarter interest and Net a EBITDA third two capital. softened to the year, continues last expense million quarter, gross XX of was spending adjusted net the full plans further for by next plan million with the year. and for four XX million last quarter point top inventory XXX two third in to metrics a in priority. cash capital XX on and million the during XXXX year quarter, quarter, months this be end adjusted million this Notably, [XX:XX:XX] seven XXX million over of we the eighty We debt year XX anticipate debt capital the in cash quarter. the year, XXXX expenditures for quarter resulting debt and the finished of to were third Capital million ratio eight XX them and year leverage compared goods our of capital last year. the of the versus XX or nine ongoing third year. third we've of Managing approximately to is percent of quarter And approximately million

markets, level stabilization of seeing the our While by uncertainty a end of indications created remains. pandemic in we are still global high

pipeline We [XX:XX:XX] recent the Bruce. trends segmentation a growth. bolster in strong interfaces of call the revenue to We're XXXX year we that of decline exciting encouraged we will focused with QX result, back new a everything points you, based are XXXX Thank providing profit to QX said, innovation anticipate not similar today, some strategy, I'll of and in our coupled terms share be to know committed we products. As concluding And will fiscal a remarks. year the guidance. gross margins. That for and turn over end seeing year more by Dan and And we're broad XXXX now on markets. a data portfolio, believe have our

For focus company interface strong the liquidity during flow. you and the Generation, always right agile for world to and cash XXXX, to size continue successful, demand entire to around times, continue resilient dedication to on challenging will team and notably our most resilience been. to our the your Thank organization we as and customers. and interface have we these be meet will

questions. customers and safety navigating company with for of health it Thank support. on I'm your Your our success you also we for value way focused is Remain and I'll business covid-XX. [XX:XX:XX] and term this to our year for open shareholders top and the continued and challenging well up remain our that proud work priority, strong hard your our positioned long truly keeping commitment.

[XX:XX:XX] questions. take At time we'd this like to any

ask have a to and may Press on number You question, star keypad. one please. your the telephone

comes Group. Thompson Research from question Kathryn Thompson first with Our

Your open. line is

similar bridge sequentially, were good up the my morning. with you taking QX questions. Hey, gap maybe start than [XX:XX:XX] to of more statements for a QX. scene I it like of a and Brian track, on two bit QX be similar QX actually be is guess would help XX bit between in Thank sort But for sounds I orders kind wanted percent It's Orders the up the if are And QX. should little more. to to for thought a it down on outlook little Kathryn. of QX. but

two? So I how guess between do gap we the us bridge

thinking that way know we to top good what we're Brian. QX, housemen, year Bruce about And we about course, really it'll on about if margins, QX. they'll year it'll full if we're be Gené, far. the profit approximately for based think you morning, the if line have similar XXX in growth, million gross over year. very we think Yeah, thinking banked what in year about full about so [XX:XX:XX] saw that we be you everything so today, three is to think similar And be of we And quarters QX. saw

So into can number. you much pretty the back QX

the business. the puts seeing will news sequentially up. But And people takes stabilization based best kind the we numbers, in are our know, how The on of we're have and is that is orders of come good probably all estimate of where out. good you that the that's so, news

back And [XX:XX:XX] And it I are Hopefully, little guess quarter, a a production in think QX for margins gross more have of that takes XX we we costs for seen the performance the then, the the QX. year. seems income is the half the XXXX from in statement in quarter? than guess points, basis were lower the think puts flow in what down that in I through lower March volume down, I been about the of how on of have I drivers the costs was like quarter. and some the guess should little would the higher the half in I input first kind input

is This Brian. again. morning, Good Yeah. [XX:XX:XX] Bruce

landed level. you organization great felt anticipating a plants, and our So, there where about takes There lot quarter good production you a about strong in our the on know, to QX we're operators was In mentioned, similar chain that. XX and manage supply puts based in was ability percent as it grid are about We for gross QX, QX, percent. costs. of and down a really are, and in XX down the margins

is heavy from You inflationary standpoint, this an not a seeing input not deflationary know, environment but environment necessarily inflation not we're necessarily an it's either.

goods we point. finished a to down So goods those XX you we you kind the And take know, point, similar a QX. of is. was if Yeah. is. all bring in heard again, Jeep a thought factors. we're and don't which down good where finished for know well. landed, anticipating we that's but Which And was percent, inventory as outcome inventory continue great and it you Yeah, really that I outcome

continue our we So working capital. on focused be to very

you. Thank [XX:XX:XX]

is next Your question Open. Securities known Keith Truist [XX:XX:XX] as Hughes from with

Thank [XX:XX:XX] you.

Given market surface rate some from the out tunnel an production downturn capacity addressing, soft towards permanently and looking take now, some with you of you professional given the the to are carpet shifts in you given earlier? you're talked about discussed this

now, [XX:XX:XX] capacity to continue we we're look Not and in at not Asia. know, you right

And have We plant to market the have and our to capture China market. of know, we a Australian Chinese want rest plant. a going services you we we services, there the China Thailand And we that the lot capacity have plan to, we're and in an of want Asia.

look flows. out and So it we're but not it and looking demand at flex today, as to continue we'll take to ebbs it

and of XX? savings. that realized and XX about a you you cost be Can talk million Ok, in in run of discussed dollar will rate much [XX:XX:XX] how much how

annual working we're still through going department, we're and [XX:XX:XX] ask was numbers. plan through our question. you're the all by wondering AOP I is line by Bruce. department if grinding to And know, We're line our or process. Keith, operating that this you going

we demand. don't Estudiantes that that And that line. our that's going provide continue I guidance for any our And have to think our call. you've year managing we're I way current call. that just And current with sure But that would say our this we our noticed of job structure and the on will so And with alignment in with in sure next a we're on line number business down our controlling over cost that line forward making year. top I'm with good doing of but the

it [XX:XX:XX] It's of the fair XX. majority to say in be will seen

there XXXX, you know, happen things some will increases example, [XX:XX:XX] merit in back. like, You will that know, for will be come

For based all reset of things example, the bonuses, know, get you and that. sort like new on targets

So number that's a that we're all the back. working that math furloughs furloughs of and come through and furloughs. the had We the

We country we sponsored sure some And, get just Europe, approve country you those know, that that's, government by principally this. you programs to this government has government support also by not next government. if know, wage be But in we're if programs will had year, they're where reimbursed. year, recurring

costs we some [XX:XX:XX] So out well. but taken have permanent as structural

We have.

part That's million. of [XX:XX:XX] incorrect. the That's XX

Yes, OK. it is. Yes. [XX:XX:XX]

just on And of you guess CEO that. kind any stand on us I where the [XX:XX:XX] search update

that We're next next to It's doing off we're kick a looking [XX:XX:XX] year. so this at to search year. looking a pandemic, in tough time do it

right, [XX:XX:XX] you. thank Ok. All

with question from longer [XX:XX:XX] Your David next is MacGregor research.

day know, a the the then to between, work. you Welcome morning, [XX:XX:XX] the day. What Yes, the Good question order good morning. observation thought, asked book and on back the about, that discrepancy know, was you first everyone. to the

the ask building book. wanted guess you is XQ. point I like will orders guess are And and a order in you of you revisions I sense elaborate patterns? Is that slowdown a that? question about further in in number the encouragement happening maybe is, the just deferrals? order seeing look some it? I giving to out this the on little You any improving outs what's on talk little further Or Is and a the of when the you push lot

pandemic is order we're said and next I book wave and going we know think in as like and seeing what even look actually, year the a to cancelations, with the second of I order the book but seeing fourth David, not pandemic. bit delays, has don't we're But little [XX:XX:XX] quarter we are the grown the seeing just not

the we've thinking that's We're and come So actually going hopefully are, we're back. office that the we're office see sitting But we're today. where market And XX not market. stabilized we just on other go care with out market for we'll talked down and that this our we've trying David. the lot about after trying deal to health other on opportunities last of a of go business, after call, to business percent the

So well. there out we're trying take share to as

And that how kind then I wanted And come [XX:XX:XX] the to flow trying terms know, your business, new you discretionary build discretionary for about go just we is a think, CapEx my business sharply it? maintenance a burden these you XXXX. is, for back regard you, cash of ask pretty probably a dealer to bit to think against, Clearly, because, Ok. thoughts of and to in you days. should you it's capex know, I your going what about understand isn't view the to I'm of guess business are is But a working discretionary capital. as of with

you for just guidance could flow should but year. about model the realize And just in provide about the yet, conceptually, XX next pieces cash how XX? you directionally talk moving all So I think to have we

if business can maintenance and paying we're that. around the going It's debt that see XX were CapEx CapEx I down [XX:XX:XX] the hold it to me focused year to U.S. on and focused We're far answer business. really on for the dollars let as Well, on line. we're the next dealer million as

back really the XX we And our and control. the also market that always through because never on this has discretionary we've community. dealer You business but it hold the we of we dealer. the pull end we've percent of dealers and through business its discretionary with specify of our all user But the on know, piece focused almost they and that dealer, the business goes focused

salespeople and with focus and them a our treat really and with call like on some love technology the to we're customer. actually with pivot So products and dealer them going and show

build should required? we inventory just that how that's of the think So in about terms [XX:XX:XX]

[XX:XX:XX] There's all. inventory that not build an at on

the sort capture [XX:XX:XX] capital to We to piece that working of anticipate increase meaningful market. of don't any go and

is there There goes market. low going be after [XX:XX:XX] mid inventory the pricing around product won't But to in it some development be that new Right. dealer is to that related. Right.

going of be the successful. to somewhat margins This extent going just a be you're over headwind bit to it is for it to year. is a to gross little So [XX:XX:XX] next of

engineers Well, [XX:XX:XX] go out product to engineer the market. will that to

healthy We in margins have OK. there. pretty

for just of [XX:XX:XX] next how down a should And And bit finally me, should goals I months? for how think about the think little XX deleveraging XX in I quarter? about keeping the debt to

who my Well, I've going always we're two. our to available my And to goal? [XX:XX:XX] be one goal to down cash is pay is or all debt. take been

can there get Dan? [XX:XX:XX] How to you quickly

years. Two [XX:XX:XX]

years, looking my at I think I'm but that's for looking two I'm CFO sure.

Yeah. [XX:XX:XX]

a year, number is order which Our of free materially we're policy, mentioned, will next to capital additional in going both debt up to allocation decrease David, do free one to pay first. as we CapEx cash, down lot And that.

[XX:XX:XX] guys. much, OK, Thanks great. very

[XX:XX:XX] As turn Two reminder, presenters staff calls like question, no a the closing further remarks. one ask for telephone keypad. on press number we please questions, if for I the to you'd a on. And have your

calling [XX:XX:XX] you. the I'm talking third quarter to to call, everybody looking quarter Thank Thank be fourth safe. you our for Please, about listening forward in. and

today's This and. call, concludes conference now you [XX:XX:XX] may disconnect