INTERFACE INC Q4 FY2024 earnings call

• One Interface Strategy: Multiyear effort focusing on building global functions, accelerating commercial growth, expanding margins via global supply chain, simplifying operations, and leading in design, innovation, and sustainability.
• Commercial Productivity: Implemented integrated selling approach in US (combining Nora and Interface teams) leading to double-digit order growth in Americas; appointed Chief Supply Chain Officer 18 months ago to optimize supply chain.
• Supply Chain and Automation: Invested in automation/robotics in manufacturing plants (US carpet tile, Germany Nora rubber) to drive operational efficiencies and margin improvement.
• Branding and Sustainability: Introduced "Made for More" brand platform; committed to carbon negative by 2040; received Reuters sustainability award; launched carbon negative rubber flooring prototype.

In 2024, Interface achieved a 4% increase in currency-neutral net sales. Americas had a 9% year-over-year increase in currency-neutral net sales. EAAA saw currency-neutral net sales down 2% due to a softer macro; global Education billings were up 10% driven by strength in the Americas. Health care global billings were down 2% year-over-year but up 12% in Q4. Corporate Office global billings were down 1% for the year but favorable vs industry. Retail billings were up in 2024. EMEA was slightly down for the year, with fourth quarter currency-neutral orders up slightly but partially offset by softness in Australia. Revenue contribution details: Americas contributed significantly due to 9% growth, EAAA had mixed performance, EMEA was down, and retail was a small but impactful segment.

• 2025 Outlook: Expect growth to outpace industry; Q1 2025 net sales forecast $290M-$300M, adjusted gross profit margin ~37.5%, adjusted SG&A ~$88M; full year 2025 net sales forecast $1.315B-$1.365B, adjusted gross profit margin ~37.2%-37.4%, adjusted SG&A ~26% of net sales. FX translation effects expected to negatively impact net sales growth by ~2% in Q1 2025 and ~1%-2% in full 2025.

• Macro and Geopolitical Risks: Soft macro environments in Europe and Australia pose challenges; uncertainty around tariffs and retaliatory tariffs creates operational and revenue risks.

Q: Brian Biros asks about the impact of the One Interface selling strategy in 2025 and office segment momentum.

A: Laurel Hurd and Bruce Hausman discuss continued momentum from the combined selling strategy in Americas and its inclusion in 2025 guidance, noting early days but positive momentum.

Q: David MacGregor asks about CapEx, gross margin guide, SG&A leverage, and interest expense.

A: Bruce Hausman discusses CapEx details (approx $45M in 2025, with ~$10M investment CapEx and ~$35M maintenance), gross margin components including mix and input costs, SG&A focus on efficiency, and interest expense due to shift to more fixed-rate debt.

Q: Alexander Paris asks about CapEx breakdown, government exposure, retail performance, and tariff exposure.

A: Bruce Hausman and Laurel Hurd provide details on CapEx components (investment vs maintenance), limited government business exposure (low-single digits), retail performance with back half growth, and monitoring of tariffs with limited current impact but close vigilance.