Interface Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kathryn Thompson - Thompson Research Group - Analyst : Hi. Thank you for taking my questions today. First, I want to focus on non res repair and remodel and we've heard very, a few companies this earning season talk about an improvement in activity in non res repair and model. And you seem to be seeing that as well. Given the pace of orders in the past few quarters and bigger growth this quarter and education and health care. Could you how would you characterize the state of nonres repair model leading into 2025? And how does it compare to going into the current year last year? So really, you know, what's the pace now going into next year? And how does it compare to last year at the same time as you think about momentum?

Question: Kathryn Thompson - Thompson Research Group - Analyst : Okay, helpful and just follow on to that on order growth in Americas, can you give any detail on the breakout across verticals or products?

Question: Kathryn Thompson - Thompson Research Group - Analyst : Really leading the.

Question: Kathryn Thompson - Thompson Research Group - Analyst : Okay, great. Thanks so much.

Question: Alexander Paris - Barrington Research - Analyst : Hi, guys. Thanks for taking my question. Congratulations on another big raise. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 12:00PM, TILE.OQ - Q3 2024 Interface Inc Earnings Call I, I just had a question kind of following up on Katherine's regarding billing. So again, education was up very strong. Up, 18% corporate office was up 2% kind of bucking the industry trend and you made some favorable comments about return to office. I just thought what whatever additional color I can get in those two categories, but also wanted to talk a little bit about retail and health care. So, retail is finally up as a from down last year due to product project delays. So, what's going on in retail? I'll, start there.

Question: Alexander Paris - Barrington Research - Analyst : That's great. And then, and then health care. You, you know, you said that that orders were up nicely, which is great, but revenue net sales were down in health care slightly. What do you attribute that to?

Question: Alexander Paris - Barrington Research - Analyst : Does that that strength in orders in health care translate into higher net sales in health care in the fourth quarter?

Question: Alexander Paris - Barrington Research - Analyst : Great. That's I appreciate that color and then I might have missed it. But did you comment on billings across product categories? I think you said

Question: Alexander Paris - Barrington Research - Analyst : Great.

Question: Alexander Paris - Barrington Research - Analyst :

Question: Alexander Paris - Barrington Research - Analyst : Ab Absolutely. Thank you. Then the final question for me, great out performance on the adjusted gross margin versus your guidance. I think you had guided to approximately 36%. It came in at 37.5%. What is your long term target there? I think you want to get back to pre COVID levels. What it, what is that? And then how long will it take you to get there? Is it like a 50 bits per year sort of thing or is it faster sooner?

Question: Alexander Paris - Barrington Research - Analyst : Great news. Thank you so much. I appreciate the additional color. I'll get back into the queue.

Question: David MacGregor - Longbow Research - Analyst : Yeah, thanks for taking my questions and good morning to everyone. Congratulations on all the progress. Tremendous to see. I guess what percentage of wins at this point have more than just carpet tile. So, include the LBT and, and the Nora versus how that KPI might have stood a year ago, 18 months ago.

Question: David MacGregor - Longbow Research - Analyst : That's encouraging. And I guess this is all just one interface. It's not necessarily evolving preferences with the customer. It's more you're taking share in those categories with increasing presence.

Question: David MacGregor - Longbow Research - Analyst : And so with the growth in Nora and just in terms of penetrating your existing base and then, in addition to that, you're talking about growth beyond health care. How do you stand in terms of available capacity? NORA do you have the capacity to support how much growth and when do you have to start deploying capital to, to expand that?

Question: David MacGregor - Longbow Research - Analyst : Got it on the raw materials. How much of the benefit that you achieved? Well, first of all, maybe can you can you just talk about what price/cost might have contributed to the gross margins?

Question: David MacGregor - Longbow Research - Analyst : It's true, I guess I'm trying to get a sense of how much benefit there is from just movement in the raw material markets themselves in terms of the, the price you're paying for these factors versus some of the benefits associated with bringing on a new supply chain leader and really getting much more process oriented around procurement.

Question: David MacGregor - Longbow Research - Analyst : And that's versus, I think you had one line up and running last quarter.

Question: David MacGregor - Longbow Research - Analyst : So good progress there. I guess just thinking through the 2025 and I'm not sure, you know, obviously there's a lot of uncertainty still remaining with regard to what 25 may bring. But I'd be interested in your thoughts in terms of your ability to maintain kind of a gross margin progression, not so much based on what the market may bring because as we've said, that's uncertain but just based on the idiosyncratic drivers that you've got in place, the automation, the procurement, the one interface initiatives. What do you think that could contribute to gross margin progression as you move into the next year?

Question: David MacGregor - Longbow Research - Analyst : Okay. And then just wrapping up for me, I guess the question on SG&A you know, you're guiding to $345 million this year of SG&A. I guess a couple of questions here, you know, how much revenue growth can you support based on kind of that level of spend? I I'm guessing you're going to get some inflation there in 2025 3% inflation would be an extra $10 million, but maybe I set that some productivity and maybe offset, you know, increasing growth spending with cutbacks and non-growth SG&A I'm not sure how you approach that, but, but I guess the question is just how much upside is left in terms of your ability to grow revenue off SG&A A before you have to really take SG& A to the next level.

Question: David MacGregor - Longbow Research - Analyst : Great. Well, thanks very much for answering my questions and congratulations on all the progress.