Interface (TILE) 1 Nov 24 2024 Q3 Earnings call transcript

Interface, Inc.'s third quarter 2024 earnings call, led by CEO Laurel Hurd and CFO Bruce Hausmann, showcased a company in the early stages of a multi-year strategic shift towards strengthening its global functions, enhancing commercial productivity, expanding margins, and leading in design, innovation, and sustainability. The call highlighted key themes of growth opportunities, strategic investments, and a commitment to sustainability.

Financial Performance and Market Trends

Interface reported a very strong third quarter with a currency-neutral net sales growth of 10%, driven by significant profitability expansion. The company's focus on building strong global functions, accelerating growth, and expanding margins through global supply chain management and complexity reduction is yielding tangible results. In the Americas, currency-neutral net sales were up 18% year-over-year, driven by a strong performance in the education market and retail billings. This growth is attributed to the combined selling teams' ability to effectively unlock new opportunities across the product portfolio and enhance the customer experience.

Strategic Investments and Sustainability

Interface's strategic investments in sustainability have been a significant focus. The company recently announced that it is making it easier for customers to understand the carbon impact of their product selection by delivering embodied carbon metrics on all floor plans created by the Interface Design Studio. This innovative approach, coupled with recent investments in expanding carpet recycling capabilities at their facility in the Netherlands, demonstrates Interface's commitment to sustainability and the circular economy. Additionally, the company's decision to go all in on becoming carbon-negative without offsets was recognized with the highest distinction in Reuters' recent Sustainability Awards in the Net Zero: Leadership category.

Looking Ahead

Looking ahead, Interface remains focused on commercial productivity, improving the customer experience, and aligning its sales teams with the fastest-growing geographic markets and segments, particularly in the U.S. The company's backlog is strong, up 29% year-to-date, and it continues to explore opportunities to reduce complexity through automation in its manufacturing facilities. Despite the challenges posed by the market, Interface is confident in its ability to navigate these dynamics while seizing opportunities that align with its long-term vision.

Conclusion

Interface's third quarter 2024 earnings call underscores the company's strategic shift towards growth and sustainability. With a focus on enhancing global functions, accelerating growth, and expanding margins, Interface is well-positioned to capitalize on the market's evolving trends and customer preferences. Its commitment to sustainability and innovation, coupled with a strong financial performance, makes Interface an exciting player to watch in the flooring industry.