8-K
Interface Inc (TILE)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 5, 2023
INTERFACE INC
(Exact name of Registrant as Specified in its Charter)
| Georgia | 001-33994 | 58-1451243 | |||||
|---|---|---|---|---|---|---|---|
| (State or other Jurisdiction of Incorporation or Organization) | (Commission File<br>Number) | (IRS Employer<br>Identification No.) | 1280 West Peachtree Street NW | Atlanta | Georgia | 30309 | |
| --- | --- | --- | --- | ||||
| (Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: (770) 437-6800
Not Applicable
(Former name or former address, if changed since last report)
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 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ¨
Item 2.02 Results of Operations and Financial Condition.
On May 5, 2023, Interface, Inc. (the “Company”) issued a press release reporting its financial results for the first quarter of 2023 (the “Earnings Release”). A copy of the Earnings Release is included as Exhibit 99.1 hereto and hereby incorporated by reference. The information set forth in this Item 2.02, including the exhibit hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Non-GAAP Financial Measures in the Earnings Release
The Earnings Release includes, as additional information for investors, the Company’s adjusted earnings per share, adjusted net income, adjusted operating income ("AOI"), adjusted gross profit, adjusted gross profit margin, adjusted selling, general and administrative (“SG&A”) expenses, currency neutral sales and currency neutral sales growth, net debt, and adjusted earnings before interest taxes, depreciation and amortization (“EBITDA”). These measures are not in accordance with financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) and may be different from similarly titled non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be used as a substitute for, or considered superior to, GAAP financial measures.
Adjusted EPS, adjusted net income, and AOI exclude nora purchase accounting amortization, the Thailand plant closure inventory write-down, cyber event costs, property casualty loss, restructuring charges, asset impairment, severance and other charges. Adjusted EPS and adjusted net income also excludes the loss on the discontinuance of interest rate swaps. Adjusted gross profit and adjusted gross profit margin exclude nora purchase accounting amortization, property casualty loss, and the Thailand plant closure inventory write-down. Adjusted SG&A expenses exclude the cyber event impact and restructuring, asset impairment, severance, and other charges.
Currency neutral sales and currency neutral sales growth exclude the impact of foreign currency fluctuations. Net debt is total debt less cash on hand. Adjusted EBITDA is GAAP net income excluding interest expense, income tax expense, depreciation and amortization, stock compensation amortization, goodwill and intangible asset impairment charges, cyber event costs, property casualty loss, restructuring charges, asset impairment, severance and other charges, nora purchase accounting amortization, and the Thailand plant closure inventory write-down.
Because the Company engages in acquisitions only episodically, and not as an everyday matter, the Company believes presenting certain measures excluding the effects of acquisitions facilitates focus on normal ongoing operations. The Company also believes presenting sales information absent the effect of foreign currency exchange rate fluctuations facilitates comparison of the Company’s operational performance between periods.
The Company generally believes reporting its adjusted results helps investors’ understanding of historical operating trends, because it facilitates comparison of current and prior periods during which one or more unique events may have occurred. The Company also believes that adjusted results provide supplemental information for comparisons to other companies which may not have experienced the same events underlying the adjustments. Furthermore, the Company uses adjusted results internally as supplemental information to evaluate its own performance, for planning purposes and in connection with its compensation programs.
Item 7.01 Regulation FD Disclosure
Management of Interface, Inc. (the “Company”) has updated the slide presentation which may be used in whole or in part in meetings with and presentations to investors and potential investors. A copy of the slide presentation is attached as Exhibit 99.2.
The information furnished pursuant to this Item 7.01, including Exhibit 99.2, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release of Interface, Inc., dated May5, 2023, reporting its financial results for the first quarter of 2023(furnished pursuant to Item 2.02 of this Report). |
| 99.2 | Interface Inc. slide presentation dated May 2023. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| INTERFACE, INC. | |
|---|---|
| By: | /s/ Bruce A. Hausmann |
| Bruce A. Hausmann | |
| Chief Financial Officer | |
| Date: May 5, 2023 |
Document
FOR IMMEDIATE RELEASE
| Media Contact:<br><br>Christine Needles<br><br>Global Corporate Communications<br><br>Christine.Needles@interface.com<br><br>+1 404-491-4660 | Investor Contact:<br><br>Bruce Hausmann<br><br>Chief Financial Officer<br><br>Bruce.Hausmann@interface.com<br><br>+1 770-437-6802 |
|---|
Interface Reports First Quarter 2023 Results
ATLANTA – May 5, 2023 – Interface, Inc. (Nasdaq: TILE), the global flooring solutions company where everything is certified carbon neutral, today announced results for the first quarter ended April 2, 2023.
First quarter highlights:
•Net sales totaled $295.8 million, up 2.7% year-over-year. Currency neutral net sales were up 5.2% year-over-year.
•GAAP loss per share of $0.01; Adjusted earnings per share of $0.07.
•Strong year-over-year order growth in the Americas and Australia offset by softness in China.
•Generated $29.6 million cash from operations, repaid $19.2 million of debt in the quarter.
“In the first quarter, we delivered currency-neutral revenue growth of 5%, driven by the Education and Corporate Office segments. Currency neutral orders were up 6% in the Americas, 19% in Australia, and 3% in Europe excluding Russia. Weakness in China, and the exit of our Russia business, drove an overall 2% currency neutral decline in consolidated orders year-over-year. We are investing in customer-facing activities and innovation to drive our short and long-term growth, while managing all other costs and focusing on productivity to improve our margins,” commented Laurel Hurd, CEO of Interface.
“Last quarter, Interface embarked on a multi-year journey to drive sustainable revenue and gross margin growth while enhancing value creation for stakeholders. We are reorganizing our innovation team globally to efficiently deliver more new products to our customers. We have also begun to globalize our core marketing, design, R&D, and our back-office functions to eliminate unnecessary costs and duplicative efforts, while bringing the best of Interface to the market. We are working to reduce the complexity of our business model and optimize our supply chain and global footprint. While these are multi-year initiatives, we believe they will allow us to continue to take market share and maintain a leadership position while meaningfully improving profitability,” concluded Hurd.
“We have adjusted our full-year guidance given the continued macro-economic uncertainty in 2023, particularly as we navigate persistent inflation and rising interest rates. During this period, Interface will continue to execute on our disciplined capital allocation strategy, focusing on paying down debt and generating strong returns for our shareholders," added Bruce Hausmann, CFO of Interface.
First Quarter 2023 Financial Summary
Sales: First quarter net sales were $295.8 million, up 2.7% versus $288.0 million in the prior year period. Growth across the product portfolio was partially offset by currency headwinds.
Gross profit margin was 32.4% in the first quarter, a decrease of 467 basis points from the prior year period. Adjusted gross profit margin was 33.3%, a decrease of 466 basis points from adjusted gross profit margin for the prior year period due to lower fixed cost absorption, and higher raw material costs, partially offset by higher selling prices.
First quarter SG&A expenses were $86.3 million, or 29.2% of net sales, compared to $78.5 million, or 27.3% of net sales in first quarter last year. Adjusted SG&A expenses were $83.2 million, or 28.1% of net sales, in first quarter 2023, compared to $78.6 million, or 27.3% of net sales, in the first quarter last year.
Operating Income: First quarter 2023 operating income was $9.5 million, compared to operating income of $27.4 million in the prior year period. First quarter 2023 adjusted operating income ("AOI") was $15.2 million versus AOI of $30.6 million in first quarter of 2022.
Net Income and EPS: On a GAAP basis, the Company recorded net loss of $0.7 million in the first quarter of 2023, or $0.01 per diluted share, compared to first quarter 2022 GAAP net income of $13.3 million, or $0.22 per diluted share. First quarter 2023 adjusted net income was $4.0 million, or $0.07 per diluted share, versus first quarter 2022 adjusted net income of $16.8 million, or $0.28 per diluted share.
Adjusted EBITDA: In the first quarter of 2023, adjusted EBITDA was $26.3 million. This compares with adjusted EBITDA of $42.9 million in the first quarter of 2022.
Cash and Debt: The Company had cash on hand of $101.3 million and total debt of $501.1 million at the end of the first quarter 2023, compared to $97.6 million of cash and $520.2 million of total debt at the end of fiscal year 2022.
First Quarter Segment Results
AMS Results:
•Q1 2023 net sales of $169.2 million, up 8.1% versus $156.5 million in the prior year period primarily due to the continued strong demand in the Corporate Office and Education market segments.
•Q1 2023 orders were up 6.2% compared to the prior year period on a currency neutral basis.
•Q1 2023 operating income was $8.7 million compared to $21.3 million in the prior year period.
•Q1 2023 AOI was $11.3 million versus AOI of $21.1 million in the prior year period.
EAAA Results:
•Q1 2023 net sales of $126.6 million, down 3.8% versus $131.5 million in the prior year period.
•Currency fluctuations negatively impacted Q1 2023 net sales by approximately $6.3 million as compared to Q1 2022 sales due to weakening of the Euro, British pound sterling and Australian dollar against the U.S. dollar. Excluding negative foreign currency impacts, EAAA's Q1 2023 net sales were up 1.0% year-over-year.
•Q1 2023 orders were down 11.5% compared to the prior year period on a currency neutral basis. Excluding Russia (which was operating in the first quarter of 2022 but not in the current year), Q1 2023 orders were down 4.7% compared to the prior year period on a currency neutral basis with EMEA up 2.9%, Australia up 18.5%, and Asia down 49.5% due to weakness in China.
•Q1 2023 operating income of $0.8 million compared to $6.2 million in the prior year period.
•Q1 2023 AOI was $3.9 million versus AOI of $9.5 million in the prior year period.
Outlook
Interface is well positioned to navigate through continued macro-economic uncertainty in 2023 and has successfully managed through challenging periods in the past. The company remains cautious given continued pressures from ongoing inflation and rising interest rates. As a result, Interface has updated its full-year 2023 guidance and now anticipates the following:
For the second quarter of 2023:
•Net sales of $325 million to $345 million.
•Adjusted gross profit margin of approximately 33.0%.
•Adjusted SG&A expenses of approximately $85 million to $86 million.
•Adjusted Interest & Other expenses of approximately $10 million.
•Fully diluted weighted average share count of approximately 58.2 million shares.
For the full fiscal year 2023:
•Year-over-year net sales growth of 0% to 3%, updated from prior guidance of 1% to 5%.
•Adjusted gross profit margin of 33.0% to 34.0%, updated from prior guidance of approximately 35%.
•Adjusted SG&A expenses that are approximately 25.0% to 25.5% of net sales.
•Adjusted Interest & Other expenses of approximately $36 million.
•An adjusted effective tax rate for the full year of approximately 30%, updated from prior guidance of approximately 28.5%.
•Capital expenditures of approximately $32 million.
Webcast and Conference Call Information
Interface will host a conference call on May 5, 2023, at 8:00 a.m. Eastern Time, to discuss its first quarter 2022 results. The conference call will be simultaneously broadcast live over the Internet.
Listeners may access the conference call live over the Internet at:
https://events.q4inc.com/attendee/327119569, or through the Company's website at: https://investors.interface.com.
The archived version of the webcast will be available at these sites for one year beginning approximately one hour after the call ends.
Non-GAAP Financial Measures
Interface provides adjusted earnings per share, adjusted net income, adjusted operating income ("AOI"), adjusted gross profit, adjusted gross profit margin, adjusted SG&A expenses, currency neutral sales and currency neutral sales growth, net debt, and adjusted EBITDA as additional information regarding its operating results in this press release. These non-GAAP measures are not in accordance with – or alternatives to – GAAP measures, and may be different from non-GAAP measures used by other companies. Adjusted EPS, adjusted net income, and AOI exclude nora purchase accounting amortization, the Thailand plant closure inventory write-down, cyber event costs, property casualty loss, restructuring charges, asset impairment, severance and other charges. Adjusted EPS and adjusted net income also excludes the loss on discontinuance of interest rate swaps. Adjusted gross profit and adjusted gross profit margin exclude nora purchase accounting amortization, property casualty loss, and the Thailand plant closure inventory write-down. Adjusted SG&A expenses exclude the cyber event impact and restructuring, asset impairment, severance, and other charges. Currency neutral sales and currency neutral sales growth exclude the impact of foreign currency fluctuations. Net debt is total debt less cash on hand. Adjusted EBITDA is GAAP net income excluding interest expense, income tax expense, depreciation and amortization, stock compensation amortization, goodwill and intangible asset impairment charges, cyber event costs, property casualty loss, restructuring charges, asset impairment, severance and other charges, nora purchase accounting amortization, and the Thailand plant closure inventory write-down. This news release should be read in conjunction with the Company's Current Report on Form 8-K furnished today to the U.S. Securities & Exchange Commission, which explains why Interface believes presentation of these non-GAAP measures provides useful information to investors, as well as any additional material purposes for which Interface uses these non-GAAP measures.
About Interface
Interface, Inc., (NASDAQ: TILE) is a global flooring solutions enterprise with an integrated portfolio of carpet tile and resilient flooring products, where everything is third-party certified carbon neutral. With our design approach to flooring systems, we help our customers create high-performance interior spaces that have a positive impact on people’s lives and the planet. Our range includes Interface® carpet tile and LVT, nora® by Interface rubber flooring, and FLOR® premium area rugs for commercial and residential spaces.
Interface is third-party certified as a Carbon Neutral Enterprise. We neutralized our carbon impact across our entire business, including all operations and our full value chain, marking an important milestone toward our objective to become a restorative and carbon negative enterprise by 2040.
Learn more about Interface at interface.com and blog.interface.com, nora by Interface at nora.com, FLOR at FLOR.com, and our sustainability journey at interface.com/sustainability, and our Carbon Neutral Enterprise certification at https://www.interface.com/US/en-US/sustainability/carbon-neutral-enterprise.html.
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
Except for historical information contained herein, the other matters set forth in this news release are forward-looking statements. Forward-looking statements may be identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” "should," "goal," "aim," "objective," “seek,” “project,” “estimate,” “target,” “will” and similar expressions. Forward-looking statements in this press release include, without limitation, any projections we make regarding the Company’s 2023 second quarter and full year 2023 under “Outlook” above. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including but not limited to the risks under the following subheadings in “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023: "We compete with a large number of manufacturers in the highly competitive floorcovering products market, and some of these competitors have greater financial resources than we do. We may face challenges competing on price, making investments in our business, or competing on product design or sustainability", "Our earnings could be adversely affected by non-cash adjustments to goodwill, when a test of goodwill assets indicates a material impairment of those assets", "Our success depends significantly upon the efforts, abilities and continued service of our senior management executives, our principal design consultant and other key personnel (including experienced sales and manufacturing personnel), and our loss of any of them could affect us adversely", "Large increases in the cost of our raw materials, shipping costs, duties or tariffs could adversely affect us if we are unable to pass these cost increases through to our customers", "Unanticipated termination or interruption of any of our arrangements with our primary third-party suppliers of synthetic fiber or our primary third-party supplier for luxury vinyl tile (“LVT”) or other key raw materials could have a material adverse effect on us", "The market price of our common stock has been volatile and the value of your investment may decline", "Changes to our facilities, manufacturing processes, product construction, and product composition could disrupt our operations, increase our manufacturing costs, increase customer complaints, increase warranty claims, negatively affect our reputation, and have a material adverse effect on our financial condition and results of operations", "Our business operations could suffer significant losses from natural disasters, acts of war, terrorism, catastrophes, fire, adverse weather conditions, pandemics, endemics, unstable geopolitical situations or other unexpected events", "Disruptions to or failures of our information technology systems could adversely affect our business", "The impact of potential changes to environmental laws and regulations and industry standards regarding climate change could lead to unforeseen disruptions to our business operations", "The COVID-19 pandemic has had and could continue to have (and other public health emergencies could have in the future) a material adverse effect on our ability to operate, our ability to keep employees safe from the pandemic, our results of operations, financial condition, liquidity, capital investments, our near term and long term ability to stay in compliance with debt covenants under our Syndicated Credit Facility and Senior Notes, our ability to refinance our existing indebtedness, and our ability to obtain financing in capital markets", "Sales of our principal products have been and may continue to be affected by the COVID-19 pandemic, adverse economic cycles, and effects in the new construction market and renovation market", "Our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results, including foreign currency fluctuations, restrictive taxation, custom duties, border closings or other adverse government regulations", "The conflict between Russia and Ukraine could adversely affect our business, results of operations and financial position", "Fluctuations in foreign currency exchange rates have had, and could continue to have, an adverse impact on our financial condition and results of operations", "The uncertainty surrounding the ongoing implementation and effect of the U.K.’s exit from the European Union, and related negative developments in the European Union could adversely affect our business, results of operations or financial condition", "We have a substantial amount of debt, which could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under our debt", "Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our operations to pay our indebtedness", "We may incur substantial additional indebtedness, which could further exacerbate the risks associated with our substantial indebtedness", "We face risks associated with litigation and claims". You should consider any additional or updated information we include under the heading “Risk Factors” in our subsequent quarterly and annual reports.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. The Company assumes no responsibility to update or revise forward-looking statements made in this press release and cautions readers not to place undue reliance on any such forward-looking statements.
- TABLES FOLLOW -
| Consolidated Condensed Statements of Operations | Three Months Ended | |||
|---|---|---|---|---|
| (In thousands, except per share data) | 4/2/2023 | 4/3/2022 | ||
| Net Sales | $ | 295,792 | $ | 288,002 |
| Cost of Sales | 199,919 | 181,203 | ||
| Gross Profit | 95,873 | 106,799 | ||
| Selling, General & Administrative Expenses | 86,254 | 78,492 | ||
| Restructuring, Asset Impairment, and Other Charges | 142 | 887 | ||
| Operating Income | 9,477 | 27,420 | ||
| Interest Expense | 8,505 | 6,850 | ||
| Other Expense, net | 1,500 | 170 | ||
| Income (Loss) Before Taxes | (528) | 20,400 | ||
| Income Tax Expense | 186 | 7,107 | ||
| Net Income (Loss) | $ | (714) | $ | 13,293 |
| Earnings (Loss) Per Share – Basic | $ | (0.01) | $ | 0.22 |
| Earnings (Loss) Per Share – Diluted | $ | (0.01) | $ | 0.22 |
| Common Shares Outstanding – Basic | 58,079 | 59,248 | ||
| Common Shares Outstanding – Diluted | 58,079 | 59,248 | ||
| Consolidated Condensed Balance Sheets | ||||
| --- | --- | --- | --- | --- |
| (In thousands) | 4/2/2023 | 1/1/2023 | ||
| Assets | ||||
| Cash | $ | 101,273 | $ | 97,564 |
| Accounts Receivable | 147,759 | 182,807 | ||
| Inventory | 312,745 | 306,327 | ||
| Assets Held for Sale | 3,433 | — | ||
| Other Current Assets | 46,563 | 30,339 | ||
| Total Current Assets | 611,773 | 617,037 | ||
| Property, Plant & Equipment | 291,838 | 297,976 | ||
| Operating Lease Right-of Use Asset | 80,226 | 81,644 | ||
| Goodwill and Intangible Assets | 162,890 | 162,195 | ||
| Other Assets | 106,478 | 107,651 | ||
| Total Assets | $ | 1,253,205 | $ | 1,266,503 |
| Liabilities | ||||
| Accounts Payable | $ | 85,640 | $ | 78,264 |
| Accrued Liabilities | 114,027 | 120,138 | ||
| Current Portion of Operating Lease Liabilities | 11,601 | 11,857 | ||
| Current Portion of Long-Term Debt | 10,216 | 10,211 | ||
| Total Current Liabilities | 221,484 | 220,470 | ||
| Long-Term Debt | 490,901 | 510,003 | ||
| Operating Lease Liabilities | 71,325 | 72,305 | ||
| Other Long-Term Liabilities | 102,466 | 102,188 | ||
| Total Liabilities | 886,176 | 904,966 | ||
| Shareholders’ Equity | 367,029 | 361,537 | ||
| Total Liabilities and Shareholders’ Equity | $ | 1,253,205 | $ | 1,266,503 |
| Consolidated Condensed Statements of Cash Flows | Three Months Ended | |||
| --- | --- | --- | --- | --- |
| (In thousands) | 4/2/2023 | 4/3/2022 | ||
| OPERATING ACTIVITIES | ||||
| Net Income (Loss) | $ | (714) | $ | 13,293 |
| Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used In) Operating Activities: | ||||
| Depreciation and Amortization | 9,991 | 10,670 | ||
| Stock Compensation Amortization | 3,004 | 2,182 | ||
| Amortization of Acquired Intangible Assets | 1,283 | 1,342 | ||
| Deferred Income Taxes and Other Non-Cash Items | 599 | 4,196 | ||
| Change in Working Capital | ||||
| Accounts Receivable | 35,791 | 26,135 | ||
| Inventories | (5,306) | (56,464) | ||
| Prepaid Expenses and Other Current Assets | (16,148) | (5,252) | ||
| Accounts Payable and Accrued Expenses | 1,084 | (13,798) | ||
| Cash Provided by (Used In) Operating Activities | 29,584 | (17,696) | ||
| INVESTING ACTIVITIES | ||||
| Capital Expenditures | (5,712) | (4,781) | ||
| Cash Used in Investing Activities | (5,712) | (4,781) | ||
| FINANCING ACTIVITIES | ||||
| Repayments of Long-term Debt | (53,225) | (44,729) | ||
| Borrowing of Long-term Debt | 34,000 | 48,500 | ||
| Tax Withholding Payments for Share-Based Compensation | (1,167) | (398) | ||
| Finance Lease Payments | (643) | (479) | ||
| Cash (Used in) Provided by Financing Activities | (21,035) | 2,894 | ||
| Net Cash Provided by (Used In) Operating, Investing and Financing Activities | 2,837 | (19,583) | ||
| Effect of Exchange Rate Changes on Cash | 872 | (1,581) | ||
| CASH AND CASH EQUIVALENTS | ||||
| Net Change During the Period | 3,709 | (21,164) | ||
| Balance at Beginning of Period | 97,564 | 97,252 | ||
| Balance at End of Period | $ | 101,273 | $ | 76,088 |
Segment Results
| Three Months Ended | ||||
|---|---|---|---|---|
| (in thousands) | 4/2/2023 | 4/3/2022 | ||
| Net Sales | ||||
| AMS | $ | 169,241 | $ | 156,509 |
| EAAA | 126,551 | 131,493 | ||
| Consolidated Net Sales | $ | 295,792 | $ | 288,002 |
| Segment AOI | ||||
| AMS | $ | 11,269 | $ | 21,138 |
| EAAA | 3,929 | 9,504 | ||
| Consolidated AOI | $ | 15,198 | $ | 30,642 |
| * Note: Segment AOI includes allocation of corporate SG&A expenses |
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures
(In millions, except per share amounts)
| First Quarter 2023 | First Quarter 2022 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjustments | Adjustments | |||||||||||||||||||||||
| Gross Profit | SG&A | Operating Income | Pre-tax | Tax Effect | Net Income (Loss) | Diluted EPS | Gross Profit | SG&A | Operating Income | Pre-tax | Tax Effect | Net Income | Diluted EPS | |||||||||||
| GAAP As Reported | $ | 95.9 | $ | 86.3 | $ | 9.5 | $ | (0.7) | $ | (0.01) | $ | 106.8 | $ | 78.5 | $ | 27.4 | $ | 13.3 | $ | 0.22 | ||||
| Non-GAAP Adjustments: | ||||||||||||||||||||||||
| Purchase Accounting Amortization | 1.3 | — | 1.3 | 1.3 | (0.4) | 0.9 | 0.02 | 1.3 | — | 1.3 | 1.3 | (0.4) | 1.0 | 0.02 | ||||||||||
| Thailand Plant Closure Inventory Write-down | — | — | — | — | — | — | — | 1.1 | — | 1.1 | 1.1 | — | 1.1 | 0.02 | ||||||||||
| Restructuring, Asset Impairment, Severance and Other Charges | — | (2.6) | 2.7 | 2.7 | (0.6) | 2.1 | 0.04 | — | 0.1 | 0.8 | 0.8 | 0.0 | 0.8 | 0.01 | ||||||||||
| Loss on Discontinuance of Interest Rate Swaps | — | — | — | 0.4 | (0.1) | 0.3 | 0.01 | — | — | — | 0.9 | (0.2) | 0.7 | 0.01 | ||||||||||
| Property Casualty Loss | 1.3 | — | 1.3 | 1.3 | (0.3) | 1.0 | 0.02 | — | — | — | — | — | — | — | ||||||||||
| Cyber Event Impact | — | (0.5) | 0.4 | 0.4 | (0.1) | 0.3 | 0.01 | — | — | — | — | — | — | — | ||||||||||
| Adjustments Subtotal * | 2.5 | (3.0) | 5.7 | 6.1 | (1.4) | 4.7 | 0.08 | 2.5 | 0.1 | 3.2 | 4.1 | (0.6) | 3.5 | 0.06 | ||||||||||
| Adjusted (non-GAAP) * | $ | 98.4 | $ | 83.2 | $ | 15.2 | $ | 4.0 | $ | 0.07 | $ | 109.3 | $ | 78.6 | $ | 30.6 | $ | 16.8 | $ | 0.28 | ||||
| * Note: Sum of reconciling items may differ from total due to rounding of individual components |
Reconciliation of Segment GAAP Financial Measures to Non-GAAP Financial Measures ("Currency Neutral Net Sales", "AOI")
(In millions)
| First Quarter 2023 | First Quarter 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| AMS Segment | EAAA Segment | Consolidated * | AMS Segment | EAAA Segment | Consolidated * | |||||||
| Net Sales as Reported (GAAP) | $ | 169.2 | $ | 126.6 | $ | 295.8 | $ | 156.5 | $ | 131.5 | $ | 288.0 |
| Impact of Changes in Currency | 0.9 | 6.3 | 7.2 | — | — | — | ||||||
| Currency Neutral Net Sales * | $ | 170.2 | $ | 132.9 | $ | 303.0 | $ | 156.5 | $ | 131.5 | $ | 288.0 |
| * Note: Sum of reconciling items may differ from total due to rounding of individual components | ||||||||||||
| First Quarter 2023 | First Quarter 2022 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| AMS Segment | EAAA Segment | Consolidated * | AMS Segment | EAAA Segment | Consolidated * | |||||||
| GAAP Operating Income | $ | 8.7 | $ | 0.8 | $ | 9.5 | $ | 21.3 | $ | 6.2 | $ | 27.4 |
| Non-GAAP Adjustments: | ||||||||||||
| Purchase Accounting Amortization | — | 1.3 | 1.3 | — | 1.3 | 1.3 | ||||||
| Thailand Plant Closure Inventory Write-down | — | — | — | — | 1.1 | 1.1 | ||||||
| Restructuring, Asset Impairment, Severance and Other Charges | 1.0 | 1.7 | 2.7 | (0.1) | 0.9 | 0.8 | ||||||
| Property Casualty Loss | 1.3 | — | 1.3 | — | — | — | ||||||
| Cyber Event Impact | 0.2 | 0.2 | 0.4 | — | — | — | ||||||
| Adjustments Subtotal * | 2.6 | 3.2 | 5.7 | (0.1) | 3.3 | 3.2 | ||||||
| AOI * | $ | 11.3 | $ | 3.9 | $ | 15.2 | $ | 21.1 | $ | 9.5 | $ | 30.6 |
| * Note: Sum of reconciling items may differ from total due to rounding of individual components | ||||||||||||
| First Quarter 2023 | First Quarter 2022 | Last Twelve Months (LTM) Ended 4/2/2023 | Fiscal Year 2022 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Net Income (Loss) as Reported (GAAP) | $ | (0.7) | $ | 13.3 | $ | 5.6 | $ | 19.6 | ||||
| Income Tax Expense | 0.2 | 7.1 | 15.4 | 22.4 | ||||||||
| Interest Expense (including debt issuance cost amortization) | 8.5 | 6.9 | 31.6 | 29.9 | ||||||||
| Depreciation and Amortization (excluding debt issuance cost amortization) | 9.6 | 10.2 | 38.1 | 38.7 | ||||||||
| Stock Compensation Amortization | 3.0 | 2.2 | 9.4 | 8.5 | ||||||||
| Purchase Accounting Amortization | 1.3 | 1.3 | 5.0 | 5.0 | ||||||||
| Goodwill and Intangible Asset Impairment | — | — | 36.2 | 36.2 | ||||||||
| Thailand Plant Closure Inventory Write-down | — | 1.1 | 1.4 | 2.5 | ||||||||
| Restructuring, Asset Impairment, Severance and Other Charges | 2.7 | 0.8 | 10.1 | 8.2 | ||||||||
| Property Casualty Loss | 1.3 | — | 1.3 | — | ||||||||
| Cyber Event Impact | 0.4 | — | 5.5 | 5.1 | ||||||||
| Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (AEBITDA)* | $ | 26.3 | $ | 42.9 | $ | 159.5 | $ | 176.1 | ||||
| As of 4/2/23 | ||||||||||||
| Total Debt | $ | 501.1 | ||||||||||
| Total Cash on Hand | (101.3) | |||||||||||
| Total Debt, Net of Cash on Hand (Net Debt) | $ | 399.8 | ||||||||||
| 4/2/2023 | ||||||||||||
| Total Debt / LTM Net Income | 90.2x | |||||||||||
| Net Debt / LTM AEBITDA | 2.5x | |||||||||||
| Note: Sum of reconciling items may differ from total due to rounding of individual components |
The impacts of changes in foreign currency presented in the tables are calculated based on applying the prior year period's average foreign currency exchange rates to the current year period.
The Company believes that the above non-GAAP performance measures, which management uses in managing and evaluating the Company’s business, may provide users of the Company’s financial information with additional meaningful basis for comparing the Company’s current results and results in a prior period, as these measures reflect factors that are unique to one period relative to the comparable period. However, these non‑GAAP performance measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under accounting principles generally accepted in the United States. Tax effects identified above (when applicable) are calculated using the statutory tax rate for the jurisdictions in which the charge or income occurred.
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investorpresentation5202
Investor Presentation | May 2023
This presentation contains forward-looking statements, including, in particular, statements about Interface’s plans, strategies and prospects. These are based on the Company’s current assumptions, expectations and projections about future events. Although Interface believes that the expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that these expectations will prove to be correct or that savings or other benefits anticipated in the forward-looking statements will be achieved. The forward-looking statements set forth involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including risks and uncertainties associated with economic conditions in the commercial interiors industry and the risks under the heading “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 2023, which discussions are hereby incorporated by reference. You should also consider any additional or updated information we include under the heading “Risk Factors” in our subsequent annual and quarterly reports. Forward-looking statements in this presentation include, without limitation, the information set forth on the slides titled “Interface: a compelling investment”, “Brand Leader in the Specified Channel”, and “Financial Policy”. Other forward-looking statements can be identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “should”, “goal”, “aim”, “objective”, “commitment”, “seek,” “project,” “estimate,” “target,” and similar expressions. Forward-looking statements speak only as of the date made. The Company assumes no responsibility to update or revise forward-looking statements and cautions listeners and meeting attendees not to place undue reliance on any such statements. This presentation includes certain financial measures not calculated in accordance with U.S. GAAP. They may be different from similarly titled non-GAAP measures used by other companies, and should not be used as a substitute for, or considered superior to, GAAP measures. Reconciliations to the most directly comparable GAAP measures appear in the Appendix. 2 Forward Looking Statements and Non-GAAP Measures
3 At Interface, we believe flooring is more than what you walk on. Who We Are Leading Established GlobalDedicated Engaged provider of commercial flooring: carpet tile, rubber, LVT, rigid core, and vinyl sheet brand with a history of innovation and a commitment to the pursuit of sustainability to performance and improving the built environment, industry, and the world manufacturing capabilities with a focus on local market needs customer-centric and purpose- driven culture with deep design and innovation roots
4 Interface at a Glance Interface is a global leader in commercial flooring $1.3 billion in net sales in FY2022 3,600 global employees 6 manufacturing locations on 4 continents ATL headquartered in Atlanta, GA Recognized leader in sustainability First cradle-to-gate carbon negative commercial carpet tile 50 years of innovation © C h ri s to p h e r P a yn e / E s to
5 Interface at a Glance Interface: a compelling investment Premium brands with attractive margins and leadership in core categories Carpet Tile LVT Rubber
6 Interface at a Glance Diversified portfolio positioned for growth with strength across market segments Interface: a compelling investment 59% Americas 29% EMEA 12% APAC Revenue by Region 52% Non-office 48% Office Revenue by Customer Vertical Corporate Education Healthcare & Senior Living TransportationGovernment AustraliaGermanyUnited States Note: Figures represent LTM Q1 2023
7 Interface at a Glance Interface: a compelling investment We are global leaders in… … with a strong financial foundation Design InnovationSustainability attractive margins strong liquidity healthy balance sheet Im a g e s © C h ri s to p h e r P a yn e / E s to … and unwavering commitment to our people winning culture commitment to talent development meaningful DEI progress
8 Interface at a Glance Interface: a compelling investment Strengths to Leverage • Selling system and customer partnerships • Sustainability leadership • Manufacturing expertise • Diversified portfolio • Strong cash generation and balance sheet Opportunities for Growth • Reset operating model to one global company with strong global functions • Expand margins through global supply chain management & improved productivity • Accelerate new global products & designs • Reallocate investment to big bets; drive profitable growth
Interface Positioning
Interface Positioning Attractive Product Portfolio 10 Carpet Tile • Industry-leading cradle-to-gate carbon negative carpet tile • Biomimicry-inspired design (i2) • No glue installation with TacTiles® • Faster, more profitable installation for contractors • Recyclable via our ReEntry® program • Carbon Neutral Floors™ Luxury Vinyl Tile (LVT) • Creative design freedom • Complements and enhances our carpet tile portfolio • No transition strips needed; same sizes as our carpet tiles • High acoustic value (Sound Choice™ backing) • Carbon Neutral Floors™ Rubber • Offered in modular tiles, sheet, and specialized surface sheet • Ideal for hygienic, high-traffic flooring applications • Extremely durable with strong chemical resistance • Carbon Neutral Floors™ © E lm a r W it t
Leading Global Provider of Commercial Flooring Solutions Total global commercial flooring market = $39 Billion Interface served market = $9+ Billion, up from ~$4.2 Billion prior to 2017 • Global share leader in $5B Carpet Tile segment (now exceeds Broadloom segment globally) • Entered high growth $3.3B LVT segment in 2017 • Entered $1.0B Rubber segment in 2018, acquisition of nora, the category leader Source: Management estimates $11.7 $7.4 $1.9 $1.0 $3.4 $3.3 $4.7 Other Global Commercial Flooring Segment (in Billions) 11 Interface Positioning Rubber $5.0
12 Interface Positioning Interface serves growing segments of hard and soft surface with the highest margins. Participating in Attractive Commercial Flooring Segments Source: Management estimates Segment Size vs. Forecasted Growth and Gross Margin Wood Laminate LVT Other Resilient Ceramic Tile Carpet Tile Rubber Broadloom (4%) (2%) 0% 2% 4% 6% 8% 10% 12% 14% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% E s ti m a te d C A G R t h ro u g h 2 0 2 4 Gross Margin Bubble size = Global commercial value of category, 2019
13 Brand Leader in the Specified Channel Interface competes on design, sustainability and innovation, commanding a premium price point and industry leading margins. Interface Positioning Source: Management estimates ~15-25% +25% Opportunity to expand in low/mid-range price points Maintain significant share of the high-end and mid- range price points Share leader in the specified and end user channels of commercial carpet tile Global Carpet Tile Price Categories Interface Share 0 20 40 60 80 100 120 Low End Mid-Range High End <15% ~15 – 25% +25% V o lu m e ( s q u a re m e te rs i n m ill io n s )
Global Sales and Manufacturing Platform • Sales & marketing offices in over 45 locations across 20 countries • Global account management • Six manufacturing locations on four continents • Global supply chain management • Unique blend of efficiency and customization Note: Figures represent LTM Q1 2023, may not sum to 100% due to rounding Americas 59% of Net Sales Europe 29% of Net Sales Asia-Pacific 12% of Net Sales Carpet Manufacturing Facility Rubber Manufacturing Facility LVT Supplier Facility Showroom 14 Interface Positioning
Diversified Customer Verticals 15 Interface Positioning Note: Figures represent LTM Q1 2023, figures in chart may not sum to 100% due to rounding 48% Corporate 18% Education • Highest penetration of carpet tile vs broadloom • Global account management • New construction, renovations and remodels • Lease renewals result in recurring revenue • K-12 and higher education • Second highest penetration of carpet tile vs broadloom • Second largest market for rubber • Significant opportunity for broadloom conversion • Hospitals, Medical Office Building, Assisted Living, Senior Living and Life Sciences • Largest rubber market based on hygienic properties, chemical resistance, and durability • Significant opportunity for broadloom conversion • Retail and bank branches • Significant opportunity for broadloom conversion • High penetration of LVT • Federal, State, and Local procurement push for use of low carbon products • Low carbon footprint products support achievement of decarbonization goals outlined in US Inflation Reduction Act Corporate Education Healthcare Retail 10% Healthcare 6% Government 6% Retail 4% Residential Living 3% Hospitality 2% Consumer Residential 3% Other Revenue by Vertical Government
Environmental, Social and Governance Overview
17 ESG Overview 2021 ESG Highlights • Received validation of our 2030 greenhouse gas reduction targets as science-based from the Science-Based Targets initiative (SBTi) • Continued to deliver flooring products that are carbon neutral across their full product life cycle through Carbon Neutral Floors™ program • Collected 6.1 million pounds of post- consumer carpet through the ReEntry™ Reclamation & Recycling program • Became the first flooring company to sign The Climate Pledge, which brings together global organizations to drive climate action • Continued efforts to reduce our operational footprint, including waste, energy, greenhouse gas emissions, and water Environmental Sustainability in Action • Established a DEI framework and published our DEI Commitment statement • Invested in best-in-class tools and platforms to improve data visibility, including a best-in-class human capital management system • Launched a Global Culture Survey in partnership with Great Place to Work® • Continued to support the communities where we live and work • Implemented workplace strategies to support employee health and wellbeing globally • Completed 7,500+ hours of training for improved organizational effectiveness and to protect our people, processes, and technology Social Responsible Business • Delivered improved compliance training on key risks, including topics such as anti- bribery, anti-corruption, conflicts of interest, cybersecurity, and sanctions compliance • Reinforced our global compliance training, our Values, Code of Business Conduct and Ethics, and other policies throughout the year via local and global communications • Maintained a formal Enterprise Risk Management program tailored to our specific risk profile and needs • Continued to provide a Fraud & Ethics hotline, through EthicsPoint, to provide a simple, risk-free way to anonymously and confidentially report actual or suspected activities and behaviors Governance Compliance & Ethics
Click here to access our 2021 ESG Report, Design With Purpose This report highlights our progress to reduce environmental impacts, cultivate social responsibility, and operate with strong governance. 18 The linked 2021 ESG Report is not a part of, or incorporated into, this presentation
Financial Performance
20 Investor Presentation Financials At-a-Glance Currency Neutral Net Sales $303.0 +5.2% YoY Net Sales $295.8 +2.7% YoY Adjusted SG&A 28.1% % of Net Sales Adjusted Operating Income $15.2 5.1% of Net Sales Net Debt / Adjusted EBITDA 2.5x Net Sales $1,305.7 +5.7% YoY Adjusted EBITDA $159.5 12.2% of Net Sales Adjusted Operating Income $117.0 9.0% of Net Sales Q1 2023 LTM We are investing in customer-facing activities and innovation to drive our short and long-term growth, while managing all other costs and focusing on productivity to improve our margins.” Laurel Hurd, CEO “ * All financials in millions Adjusted Earnings Per Share $0.07 Adjusted Earnings Per Share $1.03
Financial Performance GAAP Financial Results 21 ($ in millions, except EPS) 2023 2022 Change Net Sales $296 $288 3% Gross Profit 96 107 (10%) % of Net Sales 32.4% 37.1% SG&A Expense 86 78 10% % of Net Sales 29.2% 27.3% Restructuring Charges 0 1 NM Operating Income 9 27 (65%) % of Net Sales 3.2% 9.5% Net Income (Loss) (1) 13 NM % of Net Sales (0.2%) 4.6% Diluted EPS ($0.01) $0.22 NM First Quarter
Financial Performance Adjusted Financial Results* 22 * See Appendix for a reconciliation of Non-GAAP figures ($ in millions, except EPS) 2023 2022 Change Net Sales $296 $288 3% Adjusted Gross Profit 98 109 (10%) % of Net Sales 33.3% 37.9% Adj SG&A Expense 83 79 6% % of Net Sales 28.1% 27.3% Adjusted Operating Income 15 31 (50%) % of Net Sales 5.1% 10.6% Adjusted Net Income 4 17 (77%) % of Net Sales 1.3% 5.8% Adjusted Diluted EPS $0.07 $0.28 (75%) Adjusted EBITDA $26 $43 (39%) First Quarter
23 Financial Performance Earnings Metrics* Adjusted EBITDA Adjusted Earnings Per Share (Diluted) * See Appendix for a reconciliation of Non-GAAP figures $ million $1.49 $1.59 $1.15 $1.23 $1.25 $1.03 2018 2019 2020 2021 2022 LTM Q1 2023 $185 $197 $146 $169 $176 $160 2018 2019 2020 2021 2022 LTM Q1 2023
Cash Total Debt Net Debt / LTM Adjusted EBITDA Financial Performance Capitalization and Liquidity* Net Debt 24 $ million * See Appendix for a reconciliation of Non-GAAP figures $81 $81 $103 $97 $98 $101 2018 2019 2020 2021 2022 Q1 2023 $619 $596 $577 $518 $520 $501 2018 2019 2020 2021 2022 Q1 2023 $538 $515 $474 $421 $423 $400 2018 2019 2020 2021 2022 Q1 2023 2.9x 2.6x 3.2x 2.5x 2.4x 2.5x 2018 2019 2020 2021 2022 Q1 2023
25 Financial Performance Balance capital allocation across investment in the business, managing our leverage ratio, and returning capital to shareholders. Financial Policy Reduce debt Optimize cost of capital and target Net Debt / Adjusted EBITDA < 2.0x Reinvest in the business Invest in strategic initiatives with high returns, including organic growth opportunities, innovation, manufacturing productivity, and salesforce effectiveness Explore M&A Opportunities Opportunistically evaluate accretive M&A transactions that are aligned with our strategy Return excess cash to Shareowners Utilize strong free cash flow to support future dividend payments and execute $100 million share repurchase authorization Capital Deployment Philosophy
Appendix
Appendix Reconciliation of Non-GAAP Figures 27 Note: Sum of reconciling items may differ from total due to rounding of individual components ($ in millions) Q1 2022 Q1 2023 Net Sales as Reported (GAAP) $288.0 $295.8 Impact of Changes in Currency - 7.2 Currency Neutral Sales $288.0 $303.0 Gross Profit as Reported (GAAP) $106.8 $95.9 Purchase Accounting Amortization 1.3 1.3 Cyber Event Impact - (0.0) Property Casualty Loss - 1.3 Thailand Plant Shutdown 1.1 - Adjusted Gross Profit $109.3 $98.4 SG&A Expense as Reported (GAAP) $78.5 $86.3 Restructuring, Asset Impairment, Severance and Other Charges 0.1 (2.3) Cyber Event Impact - (0.5) Thailand Plant Shutdown - (0.2) Adjusted SG&A Expense $78.6 $83.2 Q1 2022 Q1 2023 LTM Q1 2023 Operating Income (Loss) as Reported (GAAP) $27.4 $9.5 $57.5 Purchase Accounting Amortization 1.3 1.3 5.0 Thailand Plant Shutdown 1.1 0.2 1.7 Cyber Event Impact - 0.4 5.5 Property Casualty Loss - 1.3 1.3 Goodwill and Intangible Asset Impairment - - 36.2 Loss on Extinguishment of Debt - - 0.1 Restructuring, Asset Impairment, Severance and Other Charges 0.8 2.5 9.8 Adjusted Operating Income* $30.6 $15.2 $117.0
Appendix Reconciliation of Non-GAAP Figures 28 Note: Sum of reconciling items may differ from total due to rounding of individual components ($ in millions) Q1 2022 Q1 2023 LTM Q1 2023 Net Income (Loss) as Reported (GAAP) $13.3 ($0.7) $5.6 Purchase Accounting Amortization 1.0 0.9 3.5 Thailand Plant Shutdown 1.1 0.2 1.6 Restructuring, Asset Impairment, Severance and Other Charges 0.8 2.0 8.6 Cyber Event Impact - 0.3 4.2 Goodwill and Intangible Asset Impairment - - 34.1 Loss on Extinguishment of Debt - - 0.2 Property Casualty Loss - 1.0 1.0 Loss on Discontinuance of Interest Rate Swaps 0.7 0.3 1.8 Adjusted Net Income $16.8 $4.0 $60.6 2018 2019 2020 2021 2022 Q1 2022 Q1 2023 LTM Q1 2023 Diluted EPS as Reported (GAAP) $0.84 $1.34 ($1.23) $0.94 $0.33 $0.22 ($0.01) $0.09 Purchase Accounting Amortization 0.38 0.08 0.07 0.07 0.06 0.02 0.02 0.06 Transaction Related Expenses 0.12 - - - - - - - Thailand Plant Shutdown - - - - 0.04 0.02 0.00 0.03 Impact of Change in Equity Award Forfeiture Accounting - - 0.02 - - - - - Restructuring, Asset Impairment, Severance and Other Charges 0.26 0.17 0.23 0.16 0.13 0.01 0.03 0.15 Cyber Event Impact - - - - 0.07 - 0.01 0.07 Property Casualty Loss - - - - - - 0.02 0.02 Goodwill and Intangible Asset Impairment - - 2.05 - 0.58 - - 0.58 Tax Act Expense (Benefit) (0.11) - - - - - - - Warehouse Fire Loss - - 0.05 - - - - - SEC Fine - - 0.09 - - - - - Loss on Extinguishment of Debt - - 0.05 - 0.00 - - 0.00 Loss on Discontinuance of Interest Rate Swaps - - 0.05 0.06 0.04 0.01 0.01 0.03 FIN 48 Release on Discontinued Operations - - (0.22) - - - - - Adjusted Diluted EPS* $1.49 $1.59 $1.15 $1.23 $1.25 $0.28 $0.07 $1.03
Appendix Reconciliation of Non-GAAP Figures Note: Sum of reconciling items may differ from total due to rounding of individual components * Historical AEBITDA figures have been updated to reflect a change in depreciation and amortization values used to calculate AEBITDA. 29 ($ in millions) Q1 2022 Q1 2023 Net Income (Loss) as Reported (GAAP) $13.3 ($0.7) Income Tax Expense 7.1 0.2 Interest Expense (including debt issuance cost amortization) 6.9 8.5 Depreciation and Amortization (excluding debt issuance cost amortization) 10.2 9.6 Stock Compensation Amortization 2.2 3.0 Purchase Accounting Amortization 1.3 1.3 Thailand Plant Shutdown 1.1 0.2 Cyber Event Impact - 0.4 Property Casualty Loss - 1.3 Goodwill and Intangible Asset Impairment - - Restructuring, Asset Impairment, Severance and Other Charges 0.8 2.5 Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (AEBITDA)* $42.9 $26.3 ($ in millions) 2018 2019 2020 2021 2022 LTM Q1 2023 Net Income (Loss) as Reported (GAAP) $50.3 $79.2 ($71.9) $55.2 $19.6 $5.6 Income Tax Expense (Benefit) 4.7 22.6 (7.5) 17.4 22.4 15.4 Transaction Related Other Expense 4.2 - - - - - Interest Expense (includiing debt issuance cost amortization) 15.4 25.7 29.2 29.7 29.9 31.6 Depreciation and Amortization (excluding debt issuance cost amortization) 37.9 42.0 43.8 44.3 38.7 38.1 Stock Compensation Amortization 14.5 8.7 (0.5) 5.5 8.5 9.4 Purchase Accounting Amortization 32.1 5.9 5.5 5.6 5.0 5.0 Transaction and Integration Related Expenses 5.3 - - - - - Thailand Plant Shutdown - - - - 2.5 1.7 Cyber Event Impact - - - - 5.1 5.5 Property Casualty Loss - - - - - 1.3 Goodwill and Intangible Asset Impairment - - 121.3 - 36.2 36.2 Restructuring, Asset Impairment, Severance and Other Charges 20.5 12.9 16.7 11.8 8.2 9.9 Warehouse Fire Loss - - 4.2 (0.2) - - SEC Fine - - 5.0 - - - Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (AEBITDA)* $184.9 $197.0 $145.7 $169.4 $176.1 $159.5 ($ in millions) 2018 2019 2020 2021 2022 Q1 2023 Total Debt $619 $596 $577 $518 $520 $501 Less: Cash (81) (81) (103) (97) (98) (101) Net Debt $538 $515 $474 $421 $423 $400 Total Debt / LTM Net Income as Reported (GAAP) 12.3x 7.5x (8.0x) 9.4x 26.6x 90.2x Net Debt / LTM Adjusted EBITDA 2.9x 2.6x 3.2x 2.5x 2.4x 2.5x