Interface(US:TILE)2022-11-04 16:44Financial Data and Key Metrics Changes - Third quarter net sales totaled $328 million, an increase of 4.8% year-over-year, driven by a balanced contribution from AMS and EAAA, with FX-neutral net sales growth at 10.9% year-over-year [20][21] - Adjusted gross profit margin was 33.7%, a decrease of 75 basis points from the prior year [20][21] - Adjusted operating income was $31.2 million, up 3.5% from $30.2 million in the same quarter last year [23] - Fully diluted earnings per share was $0.24, up 26.3% from $0.19 in the third quarter last year [23] - Adjusted EBITDA was $42.9 million, with cash from operations at $27.6 million [24] Business Line Data and Key Metrics Changes - Corporate Office segment grew by 14%, Education by 12%, and Healthcare by 4% year-to-date [11] - Currency-neutral orders were down 4% in Q3, with the Americas down 5% and EAAA down 3% [13] Market Data and Key Metrics Changes - The company entered Q4 with a strong backlog that is up 7% since the beginning of the year [13] - The company is experiencing strong demand for carbon-neutral and carbon-negative products across its customer base [12] Company Strategy and Development Direction - The company is focused on a diversification strategy that is yielding customer wins across multiple market segments [10] - The company aims to leverage its competitive advantage as the first global foreign company certified as a carbon-neutral enterprise [16] - The company is positioned to take advantage of the US administration's Clean initiative, which prioritizes lower carbon materials [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged persistent inflationary pressures and currency headwinds but expressed confidence in the long-term strategy [9][14] - The company anticipates net sales for the full fiscal year 2022 to be between $1.285 billion and $1.305 billion [28] - Management noted that while they expect currency-neutral net sales growth to continue in Q4, year-over-year comparisons will be less robust due to strong Q4 2021 performance and FX headwinds [29] Other Important Information - The company signed an amendment to its existing credit facility, extending the term through October 2027 [26] - Capital expenditures were $4.2 million in Q3, with $8.9 million of common stock repurchased [27] Q&A Session Summary Question: Order cadence through the quarter - Management noted that orders in the Americas were leveling out with no deceleration, while Europe saw some slowing and Australia experienced a pickup [38] Question: Gross margins and cost pressures - Management indicated that while gross margins were down, they successfully offset significant input cost inflation, but persistent inflation remains a challenge [40][43] Question: Supply chain issues - Management confirmed that they are in good shape regarding raw material availability, with supply chain flow having loosened up [48][50] Question: Opportunities for growth - Management highlighted opportunities in selling a full portfolio of products, enhancing design leadership, and continuing to diversify market segments beyond corporate office [56][58]