tile-20231001

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

Form 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 1, 2023

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-33994

INTERFACE INC

(Exact name of registrant as specified in its charter)


Georgia						58-1451243
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1280 West Peachtree Street	Atlanta	Georgia	30309
(Address of principal executive offices)			(zip code)

Registrant’s telephone number, including area code: (770) 437-6800

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.10 Par Value Per Share	TILE	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Number of shares outstanding of each of the registrant’s classes of common stock, as of November 2, 2023:


Class			Number of Shares
Common Stock, $0.10 par value per share			58,106,975

TABLE OF CONTENTS


			Page
PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements (Unaudited)	3

		Consolidated Condensed Balance Sheets – October 1 , 2023 and January 1, 2023	3

		Consolidated Condensed Statements of Operations – Three Months and Nine Months Ended Octo ber 1 , 2023 and Oc tober 2 , 2022	4

		Consolidated Statements of Comprehensive Income (Loss) – Three Months and Nine Months Ended October 1 , 2023 and October 2 , 2022	5

		Consolidated Condensed Statements of Cash Flows – Nine Months Ended October 1 , 2023 and October 2 , 2022	6

		Notes to Consolidated Condensed Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

	Item 4.	Controls and Procedures	39

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	40

	Item 1A.	Risk Factors	40

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

	Item 3.	Defaults Upon Senior Securities	42

	Item 4.	Mine Safety Disclosures	42

	Item 5.	Other Information	42

	Item 6.	Exhibits	43

SIGNATURE			44

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except par values)


	OCTOBER 1, 2023		JANUARY 1, 2023
	(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents	$	119,633	$	97,564
Accounts receivable, net	143,884		182,807
Inventories, net	289,320		306,327
Prepaid expenses and other current assets	33,003		30,339
Total current assets	585,840		617,037
Property, plant and equipment, net	282,401		297,976
Operating lease right-of-use assets	75,604		81,644
Deferred tax asset	16,263		17,767
Goodwill and intangibles, net	156,487		162,195
Other assets	85,046		89,884

Total assets	$	1,201,641	$	1,266,503

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	75,602	$	78,264
Accrued expenses	115,266		120,138
Current portion of operating lease liabilities	10,829		11,857
Current portion of long-term debt	8,492		10,211
Total current liabilities	210,189		220,470
Long-term debt	435,899		510,003
Operating lease liabilities	67,554		72,305
Deferred income taxes	37,052		38,662
Other long-term liabilities	63,383		63,526

Total liabilities	814,077		904,966

Commitments and contingencies

Shareholders’ equity
Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at October 1, 2023 and January 1, 2023	—		—
Common stock, par value $0.10 per share; 120,000 shares authorized; 58,107 and 58,106 shares issued and outstanding at October 1, 2023 and January 1, 2023, respectively	5,811		5,811
Additional paid-in capital	249,979		244,159
Retained earnings	301,859		278,639
Accumulated other comprehensive loss – foreign currency translation	(141,660)		(138,775)
Accumulated other comprehensive loss – cash flow hedge	—		(749)
Accumulated other comprehensive loss – pension liability	(28,425)		(27,548)

Total shareholders’ equity	387,564		361,537

Total liabilities and shareholders’ equity	$	1,201,641	$	1,266,503

See accompanying notes to consolidated condensed financial statements.

Table of Contents

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)


	THREE MONTHS ENDED				NINE MONTHS ENDED
	OCTOBER 1, 2023		OCTOBER 2, 2022		OCTOBER 1, 2023		OCTOBER 2, 2022
Net sales	$	311,006	$	327,757	$	936,380	$	962,364
Cost of sales	200,748		218,972		618,463		630,074
Gross profit	110,258		108,785		317,917		332,290

Selling, general and administrative expenses	79,273		80,848		251,049		240,711
Restructuring, asset impairment, other (gains) and charges	—		(105)		(2,502)		1,592
Operating income	30,985		28,042		69,370		89,987

Interest expense	8,163		7,747		24,986		21,787
Other expense, net	6,702		124		7,674		1,688

Income before income tax expense	16,120		20,171		36,710		66,512
Income tax expense	6,241		6,106		11,748		22,336

Net income	$	9,879	$	14,065	$	24,962	$	44,176

Earnings per share – basic	$	0.17	$	0.24	$	0.43	$	0.75
Earnings per share – diluted	$	0.17	$	0.24	$	0.43	$	0.75

Common shares outstanding – basic	58,107		58,681		58,087		59,099
Common shares outstanding – diluted	58,342		58,681		58,233		59,099

See accompanying notes to consolidated condensed financial statements.

Table of Contents

INTERFACE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in thousands)


	THREE MONTHS ENDED				NINE MONTHS ENDED
	OCTOBER 1, 2023		OCTOBER 2, 2022		OCTOBER 1, 2023		OCTOBER 2, 2022
Net income	$	9,879	$	14,065	$	24,962	$	44,176
Other comprehensive loss, after tax:
Foreign currency translation adjustment	(9,176)		(36,800)		(2,885)		(86,654)
Reclassification from accumulated other comprehensive loss – discontinued cash flow hedge	150		492		749		1,673
Pension liability adjustment	202		3,393		(877)

SEC Form 10-Q filed by Interface Inc.