Interface Reports Third Quarter 2023 Results

Interface, Inc. (Nasdaq: TILE), a worldwide commercial flooring company and global leader in sustainability, today announced results for the third quarter ended October 1, 2023.

Third quarter highlights:

  • Net sales totaled $311.0 million, down 5.1% year-over-year.
  • Gross profit margin increased to 35.5%, up 226 basis points year-over-year.
  • GAAP earnings per share of $0.17; Adjusted earnings per share of $0.28.
  • Generated $66.3 million of cash from operations, repaid $30.6 million of debt in the quarter.

“Our third quarter results reflect the resiliency of our global diversification strategy and effective execution in a relatively sluggish market. Net sales declined in the quarter primarily driven by an outsized impact from retail sector softness and broader macroeconomic uncertainty. This was partially offset by strength in healthcare, up 13% year-over-year, and performance in other key segments. Despite lower volumes in the quarter, we increased gross profit margin by 226 basis points and our strong cash flow generation enabled us to pay down debt, driving accelerated improvements in our balance sheet,” commented Laurel Hurd, CEO of Interface.

“We hit an important milestone in our One Interface journey with the global product launch of our Past Forward carpet tile collection, which was the first time we launched a global collection at the same time around the world. As we close out 2023, we remain focused on leveraging the power of our entire organization to drive profitable growth and value for our shareholders,” concluded Hurd.

“With strong cash flow from operations, debt repayment remains our top capital allocation priority. During the quarter we repaid $30.6 million of debt, reducing our debt balances by $75.7 million year-over-year, ahead of expectations. Moving into the last quarter of the year, we are revising our full year guidance to reflect ongoing retail sector softness and sluggish global demand. We are focused on winning business, taking share, paying down debt, and disciplined cost management to further strengthen our financial position,” added Bruce Hausmann, CFO of Interface.

Third Quarter 2023 Financial Summary

Sales: Third quarter net sales were $311.0 million, down 5.1% versus $327.8 million in the prior year period.

Gross profit margin was 35.5% in the third quarter, an increase of 226 basis points from the prior year period. Adjusted gross profit margin was 35.9%, an increase of 217 basis points from adjusted gross profit margin for the prior year period due primarily to input cost deflation, higher selling prices and product mix, partially offset by lower fixed cost absorption.

Third quarter SG&A expenses were $79.3 million, or 25.5% of net sales, compared to $80.8 million, or 24.7% of net sales in the third quarter last year. Adjusted SG&A expenses were $79.2 million, or 25.5% of net sales, in the third quarter of 2023, compared to $79.2 million, or 24.2% of net sales, in the third quarter last year.

Operating Income: Third quarter operating income was $31.0 million, compared to operating income of $28.0 million in the prior year period. Third quarter 2023 adjusted operating income ("AOI") was $32.4 million versus AOI of $31.2 million in the third quarter of 2022.

Net Income and EPS: On a GAAP basis, the Company recorded net income of $9.9 million in the third quarter of 2023, or $0.17 per diluted share, compared to third quarter 2022 GAAP net income of $14.1 million, or $0.24 per diluted share. Third quarter 2023 adjusted net income was $16.4 million, or $0.28 per diluted share, versus third quarter 2022 adjusted net income of $17.4 million, or $0.30 per diluted share.

Adjusted EBITDA: In the third quarter of 2023, adjusted EBITDA was $43.7 million. This compares with adjusted EBITDA of $42.9 million in the third quarter of 2022.

First Nine Months of 2023 Summary

Sales: Net sales for the first nine months of 2023 were $936.4 million, down 2.7% versus $962.4 million in the prior year period.

Gross profit margin was 34.0% for the first nine months of 2023, a decrease of 58 basis points from the prior year period. Adjusted gross profit margin was 34.4%, a decrease of 83 basis points from adjusted gross profit margin for the prior year period due to lower fixed cost absorption, partially offset by higher selling prices, input cost deflation and product mix.

SG&A expenses for the first nine months of 2023 were $251.0 million, or 26.8% of net sales, compared to $240.7 million, or 25.0% of net sales, in the same period last year. Adjusted SG&A expenses were $246.3 million, or 26.3% of net sales, for the first nine months of 2023 compared to $238.2 million, or 24.8% of net sales, in the same period last year.

Operating Income: Operating income for the first nine months of 2023 was $69.4 million, compared to operating income of $90.0 million in the prior year period. AOI was $75.4 million for the first nine months of 2023 versus AOI of $100.4 million in the same period last year.

Net Income and EPS: On a GAAP basis, the Company recorded net income of $25.0 million in the first nine months of 2023, or $0.43 per diluted share, compared to the first nine months of 2022 net income of $44.2 million, or $0.75 per diluted share. Nine-month 2023 adjusted net income was $34.8 million, or $0.60 per diluted share, versus the first nine months of 2022 adjusted net income of $55.3 million, or $0.94 per diluted share.

Adjusted EBITDA: In the first nine months of 2023, adjusted EBITDA was $109.8 million. This compares with adjusted EBITDA of $134.8 million in the first nine months of 2022.

Cash and Debt: The Company had cash on hand of $119.6 million and total debt of $444.4 million at the end of the third quarter 2023, compared to $97.6 million of cash and $520.2 million of total debt at the end of fiscal year 2022.

Third Quarter Segment Results

AMS Results:

  • Q3 2023 net sales of $178.2 million, down 8.4% versus $194.4 million in the prior year period.
  • Q3 2023 orders were down 4.2% compared to the prior year period on a currency neutral basis.
  • Q3 2023 operating income was $23.5 million compared to $25.0 million in the prior year period.
  • Q3 2023 AOI was $23.3 million versus $25.0 million in the prior year period.

EAAA Results:

  • Q3 2023 net sales of $132.8 million, down 0.4% versus $133.3 million in the prior year period.
  • Currency fluctuations had a $5.3 million favorable impact to net sales in the 2023 third quarter compared with the prior year period.
  • Q3 2023 orders were up 4.5% compared to the prior year period on a currency neutral basis. EMEA was up 13.9%, Australia was down 4.8%, and Asia was down 23.0% due primarily to continued softness in the region.
  • Q3 2023 operating income of $7.5 million compared to $3.1 million in the prior year period.
  • Q3 2023 AOI was $9.0 million versus $6.3 million in the prior year period.

First Nine Months Segment Results

AMS Results:

  • Net sales for the first nine months of 2023 were $548.7 million, down 1.6% versus $557.8 million in the prior year period.
  • Operating income for the first nine months of 2023 was $57.0 million compared to $74.6 million in the prior year period.
  • AOI for the first nine months of 2023 was $58.6 million versus $74.5 million in the prior year period.

EAAA Results:

  • Net sales for the first nine months of 2023 were $387.7 million, down 4.2% versus $404.6 million in the prior year period.
  • Currency fluctuations had an approximately $1.1 million negative impact on net sales in the first nine months of 2023 compared to the prior year period, primarily due to the weakening of the Australian dollar and Chinese Renminbi against the U.S. dollar, partially offset by the strengthening of the Euro against the U.S. dollar. Excluding negative foreign currency impacts, for the first nine months of 2023, EAAA's net sales were down 3.9% year-over-year.
  • Operating income for the first nine months of 2023 was $12.4 million compared to $15.4 million in the prior year period.
  • AOI for the first nine months of 2023 was $16.8 million versus $25.9 million in the prior year period.

Outlook

Interface anticipates the following for the full fiscal year 2023:

  • Net sales of $1.245 billion to $1.265 billion.
  • Adjusted gross profit margin of approximately 34.4%.
  • Adjusted SG&A expenses of approximately $329 million.
  • Adjusted Interest & Other expenses of approximately $35 million.
  • An adjusted effective tax rate of approximately 29.5%.
  • Fully diluted weighted average share count of approximately 58.3 million shares.
  • Capital expenditures of approximately $32 million.

Webcast and Conference Call Information

Interface will host a conference call on November 3, 2023, at 8:00 a.m. Eastern Time, to discuss its third quarter 2023 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/413657327, 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, and restructuring, asset impairment, severance, and other, net. Adjusted EPS and adjusted net income also exclude the loss on discontinuance of interest rate swaps, property casualty loss, and the loss on foreign subsidiary liquidation. Adjusted gross profit and adjusted gross profit margin exclude nora purchase accounting amortization, and the Thailand plant closure inventory write-down. Adjusted SG&A expenses exclude the cyber event impact and restructuring, asset impairment, severance, and other, net. 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, share-based compensation expense, goodwill and intangible asset impairment charges, cyber event costs, property casualty loss, restructuring, asset impairment, severance, and other, net, nora purchase accounting amortization, loss on foreign subsidiary liquidation, 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, 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 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", and "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

 

Nine Months Ended

(In thousands, except per share data)

10/1/2023

 

10/2/2022

 

10/1/2023

 

10/2/2022

 

 

 

 

 

 

 

 

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 & 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 Taxes

 

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

 

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets

 

 

 

(In thousands)

10/1/2023

 

1/1/2023

Assets

 

 

 

Cash

$

119,633

 

$

97,564

Accounts Receivable

 

143,884

 

 

182,807

Inventory

 

289,320

 

 

306,327

Other Current Assets

 

33,003

 

 

30,339

Total Current Assets

 

585,840

 

 

617,037

Property, Plant & Equipment

 

282,401

 

 

297,976

Operating Lease Right-of Use Asset

 

75,604

 

 

81,644

Goodwill and Intangible Assets

 

156,487

 

 

162,195

Other Assets

 

101,309

 

 

107,651

Total Assets

$

1,201,641

 

$

1,266,503

 

 

 

 

Liabilities

 

 

 

Accounts Payable

$

75,602

 

$

78,264

Accrued Liabilities

 

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

Other Long-Term Liabilities

 

100,435

 

 

102,188

Total Liabilities

 

814,077

 

 

904,966

Shareholders’ Equity

 

387,564

 

 

361,537

Total Liabilities and Shareholders’ Equity

$

1,201,641

 

$

1,266,503

Consolidated Condensed Statements of Cash Flows

 

Three Months Ended

 

Nine Months Ended

(In thousands)

 

10/1/2023

 

10/2/2022

 

10/1/2023

 

10/2/2022

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net Income

 

$

9,879

 

 

$

14,065

 

 

$

24,962

 

 

$

44,176

 

Adjustments to Reconcile Net Income to Cash Provided by Operating Activities:

 

 

 

 

 

 

 

 

Depreciation and Amortization

 

 

10,445

 

 

 

9,825

 

 

 

30,591

 

 

 

30,661

 

Share-Based Compensation Expense

 

 

2,209

 

 

 

2,352

 

 

 

7,334

 

 

 

6,679

 

(Gain) Loss on Disposal of Property, Plant and Equipment, net

 

 

10

 

 

 

 

 

 

(2,531

)

 

 

 

Loss on Foreign Subsidiary Liquidation

 

 

6,221

 

 

 

 

 

 

6,221

 

 

 

 

Amortization of Acquired Intangible Assets

 

 

1,302

 

 

 

1,204

 

 

 

3,886

 

 

 

3,817

 

Deferred Income Taxes and Other Non-Cash Items

 

 

(53

)

 

 

4,675

 

 

 

(671

)

 

 

13,616

 

Change in Working Capital

 

 

 

 

 

 

 

 

Accounts Receivable

 

 

19,626

 

 

 

(1,078

)

 

 

37,396

 

 

 

(8,860

)

Inventories

 

 

(5,808

)

 

 

(8,261

)

 

 

14,135

 

 

 

(71,487

)

Prepaid Expenses and Other Current Assets

 

 

769

 

 

 

8,017

 

 

 

(2,842

)

 

 

2,321

 

Accounts Payable and Accrued Expenses

 

 

21,693

 

 

 

(3,208

)

 

 

(4,264

)

 

 

(6,040

)

Cash Provided by Operating Activities

 

 

66,293

 

 

 

27,591

 

 

 

114,217

 

 

 

14,883

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Capital Expenditures

 

 

(5,907

)

 

 

(4,187

)

 

 

(17,238

)

 

 

(13,314

)

Proceeds from Sale of Property, Plant and Equipment

 

 

 

 

 

 

 

 

6,593

 

 

 

 

Cash Used in Investing Activities

 

 

(5,907

)

 

 

(4,187

)

 

 

(10,645

)

 

 

(13,314

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Repayments of Long-term Debt

 

 

(37,631

)

 

 

(71,980

)

 

 

(149,738

)

 

 

(151,662

)

Borrowing of Long-term Debt

 

 

7,000

 

 

 

49,986

 

 

 

74,000

 

 

 

159,363

 

Tax Withholding Payments for Share-Based Compensation

 

 

(27

)

 

 

 

 

 

(1,514

)

 

 

(398

)

Repurchase of Common Stock

 

 

 

 

 

(8,869

)

 

 

 

 

 

(14,451

)

Dividends Paid

 

 

(581

)

 

 

(586

)

 

 

(1,742

)

 

 

(1,773

)

Finance Lease Payments

 

 

(545

)

 

 

(525

)

 

 

(1,853

)

 

 

(1,535

)

Cash Used in Financing Activities

 

 

(31,784

)

 

 

(31,974

)

 

 

(80,847

)

 

 

(10,456

)

Net Cash Provided by (Used in) Operating, Investing and Financing Activities

 

 

28,602

 

 

 

(8,570

)

 

 

22,725

 

 

 

(8,887

)

Effect of Exchange Rate Changes on Cash

 

 

(1,904

)

 

 

(3,634

)

 

 

(656

)

 

 

(8,916

)

CASH AND CASH EQUIVALENTS

 

 

 

 

 

 

 

 

Net Change During the Period

 

 

26,698

 

 

 

(12,204

)

 

 

22,069

 

 

 

(17,803

)

Balance at Beginning of Period

 

 

92,935

 

 

 

91,653

 

 

 

97,564

 

 

 

97,252

 

Balance at End of Period

 

$

119,633

 

 

$

79,449

 

 

$

119,633

 

 

$

79,449

 

Segment Results

 

 

Three Months Ended

 

Nine Months Ended

(in thousands)

10/1/2023

 

10/2/2022

 

10/1/2023

 

10/2/2022

Net Sales

 

 

 

 

 

 

 

AMS

$

178,194

 

$

194,449

 

$

548,716

 

$

557,768

EAAA

 

132,812

 

 

133,308

 

 

387,664

 

 

404,596

Consolidated Net Sales

$

311,006

 

$

327,757

 

$

936,380

 

$

962,364

 

 

 

 

 

 

 

 

Segment AOI

 

 

 

 

 

 

 

AMS

$

23,318

 

$

24,975

 

$

58,621

 

$

74,502

EAAA

 

9,049

 

 

6,273

 

 

16,805

 

 

25,908

Consolidated AOI

$

32,367

 

$

31,248

 

$

75,426

 

$

100,410

 

 

 

 

 

 

 

 

* 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter 2023

 

Third Quarter 2022

 

 

 

 

Adjustments

 

 

 

 

 

 

Adjustments

 

 

 

Gross

Profit

SG&A

Operating

Income

Pre-tax

Tax

Effect

Net

Income

Diluted EPS

 

Gross

Profit

SG&A

Operating

Income

Pre-tax

Tax

Effect

Net

Income

Diluted

EPS

GAAP As Reported

$

110.3

$

79.3

 

$

31.0

 

 

$

9.9

$

0.17

 

$

108.8

$

80.8

 

$

28.0

 

 

$

14.1

$

0.24

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Accounting Amortization

 

1.3

 

 

 

1.3

1.3

(0.4

)

 

0.9

 

0.02

 

 

1.2

 

 

 

1.2

1.2

(0.4

)

 

0.9

 

0.01

Thailand Plant Closure Inventory Write-down

 

 

 

 

 

 

 

 

 

0.5

 

 

 

0.5

0.5

 

 

0.5

 

0.01

Restructuring, Asset Impairment, Severance, and Other, net

 

 

 

 

0.2

 

 

0.2

 

 

 

 

(1.6

)

 

1.5

1.5

 

 

1.5

 

0.03

Cyber Event

 

 

(0.1

)

 

0.1

0.1

 

 

0.1

 

 

 

 

 

 

 

 

 

Loss on Foreign Subsidiary Liquidation (1)

 

 

 

 

6.2

(1.1

)

 

5.1

 

0.09

 

 

 

 

 

 

 

 

Loss on Discontinuance of Interest Rate Swaps

 

 

 

 

0.2

 

 

0.1

 

 

 

 

 

 

0.6

(0.2

)

 

0.5

 

0.01

Adjustments Subtotal *

 

1.3

 

(0.1

)

 

1.4

7.8

(1.3

)

 

6.5

 

0.11

 

 

1.7

 

(1.6

)

 

3.2

3.9

(0.5

)

 

3.3

 

0.06

Adjusted (non-GAAP) *

$

111.6

$

79.2

 

$

32.4

 

 

$

16.4

$

0.28

 

$

110.5

$

79.2

 

$

31.2

 

 

$

17.4

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Russia and Brazil foreign subsidiaries were substantially liquidated during the current period. The related cumulative translation adjustment was recognized in other expense.

* Note: Sum of reconciling items may differ from total due to rounding of individual components

 

First Nine Months 2023

 

First Nine Months 2022

 

 

 

 

Adjustments

 

 

 

 

 

 

Adjustments

 

 

 

Gross

Profit

SG&A

Operating

Income

Pre-tax

Tax

Effect

Net

Income

Diluted

EPS

 

Gross

Profit

SG&A

Operating

Income

Pre-tax

Tax

Effect

Net

Income

Diluted

EPS

GAAP As Reported

$

317.9

$

251.0

 

$

69.4

 

 

$

25.0

 

$

0.43

 

 

$

332.3

$

240.7

 

$

90.0

 

 

$

44.2

$

0.75

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Accounting Amortization

 

3.9

 

 

 

3.9

3.9

 

(1.1

)

 

2.8

 

 

0.05

 

 

 

3.8

 

 

 

3.8

3.8

(1.1

)

 

2.7

 

0.05

Thailand Plant Closure Inventory Write-down

 

 

 

 

 

 

 

 

 

 

 

 

2.5

 

 

 

2.5

2.5

 

 

2.5

 

0.04

Restructuring, Asset Impairment, Severance, and Other, net

 

 

(3.7

)

 

1.2

1.2

 

(0.4

)

 

0.8

 

 

0.01

 

 

 

 

(2.5

)

 

4.1

4.1

0.0

 

 

4.1

 

0.07

Property Casualty Loss(1)

 

 

 

 

(0.5

)

0.1

 

 

(0.4

)

 

(0.01

)

 

 

 

 

 

 

 

 

Cyber Event

 

 

(1.0

)

 

1.0

1.0

 

(0.2

)

 

0.7

 

 

0.01

 

 

 

 

 

 

 

 

 

Loss on Foreign Subsidiary Liquidation (2)

 

 

 

 

6.2

 

(1.1

)

 

5.1

 

 

0.09

 

 

 

 

 

 

 

 

 

Loss on Discontinuance of Interest Rate Swaps

 

 

 

 

1.0

 

(0.2

)

 

0.7

 

 

0.01

 

 

 

 

 

 

2.4

(0.6

)

 

1.8

 

0.03

Adjustments Subtotal *

 

3.8

 

(4.7

)

 

6.1

12.8

 

(2.9

)

 

9.8

 

 

0.17

 

 

 

6.3

 

(2.5

)

 

10.4

12.8

(1.7

)

 

11.1

 

0.19

Adjusted (non-GAAP) *

$

321.8

$

246.3

 

$

75.4

 

 

$

34.8

 

$

0.60

 

 

$

338.6

$

238.2

 

$

100.4

 

 

$

55.3

$

0.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents insurance recovery net of loss recognized in the first quarter of 2023.

(2) Russia and Brazil foreign subsidiaries were substantially liquidated during the current period. The related cumulative translation adjustment was recognized in other expense.

* 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")

(In millions)

 

 

Third Quarter 2023

 

Third Quarter 2022

 

AMS

Segment

EAAA

Segment

Consolidated *

 

AMS

Segment

EAAA

Segment

Consolidated *

Net Sales as Reported (GAAP)

$

178.2

$

132.8

 

$

311.0

 

 

$

194.4

$

133.3

$

327.8

Impact of Changes in Currency

 

0.4

 

(5.3

)

 

(4.9

)

 

 

 

 

Currency Neutral Net Sales *

$

178.6

$

127.5

 

$

306.1

 

 

$

194.4

$

133.3

$

327.8

 

 

 

 

 

 

 

 

* Note: Sum of reconciling items may differ from total due to rounding of individual components

 

First Nine Months 2023

 

First Nine Months 2022

 

AMS

Segment

EAAA

Segment

Consolidated *

 

AMS

Segment

EAAA

Segment

Consolidated *

Net Sales as Reported (GAAP)

$

548.7

$

387.7

$

936.4

 

$

557.8

$

404.6

$

962.4

Impact of Changes in Currency

 

2.1

 

1.1

 

3.1

 

 

 

 

Currency Neutral Net Sales *

$

550.8

$

388.8

$

939.5

 

$

557.8

$

404.6

$

962.4

 

 

 

 

 

 

 

 

* Note: Sum of reconciling items may differ from total due to rounding of individual components

Reconciliation of GAAP Operating Income to Adjusted Operating Income ("AOI")

(In millions)

 

 

Third Quarter 2023

 

Third Quarter 2022

 

 

AMS

Segment

EAAA

Segment

Consolidated *

 

AMS

Segment

EAAA

Segment

Consolidated *

 

GAAP Operating Income

$

23.5

 

$

7.5

$

31.0

 

$

25.0

$

3.1

$

28.0

 

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

Purchase Accounting Amortization

 

 

 

1.3

 

1.3

 

 

 

1.2

 

1.2

 

Thailand Plant Closure Inventory Write-down

 

 

 

 

 

 

 

0.5

 

0.5

 

Restructuring, Asset Impairment, Severance, and Other, net

 

(0.3

)

 

0.3

 

 

 

 

1.5

 

1.5

 

Cyber Event

 

0.1

 

 

 

0.1

 

 

 

 

 

Adjustments Subtotal *

 

(0.2

)

 

1.6

 

1.4

 

 

 

3.2

 

3.2

 

AOI *

$

23.3

 

$

9.0

$

32.4

 

$

25.0

$

6.3

$

31.2

 

 

 

 

 

 

 

 

 

 

* Note: Sum of reconciling items may differ from total due to rounding of individual components

 

 

 

 

 

 

First Nine Months 2023

 

First Nine Months 2022

 

AMS

Segment

EAAA

Segment

Consolidated *

 

AMS

Segment

EAAA

Segment

Consolidated *

GAAP Operating Income

$

57.0

$

12.4

$

69.4

 

$

74.6

 

$

15.4

$

90.0

Non-GAAP Adjustments:

 

 

 

 

 

 

 

Purchase Accounting Amortization

 

 

3.9

 

3.9

 

 

 

 

3.8

 

3.8

Thailand Plant Closure Inventory Write-down

 

 

 

 

 

 

 

2.5

 

2.5

Restructuring, Asset Impairment, Severance, and Other, net

 

1.1

 

0.1

 

1.2

 

 

(0.1

)

 

4.2

 

4.1

Cyber Event

 

0.6

 

0.4

 

1.0

 

 

 

 

 

Adjustments Subtotal *

 

1.6

 

4.4

 

6.1

 

 

(0.1

)

 

10.5

 

10.4

AOI *

$

58.6

$

16.8

$

75.4

 

$

74.5

 

$

25.9

$

100.4

 

 

 

 

 

 

 

 

* Note: Sum of reconciling items may differ from total due to rounding of individual components

 

 

 

 

 

Third Quarter

2023

 

Third Quarter

2022

 

First Nine Months

2023

 

First Nine

Months 2022

 

Last Twelve

Months

(LTM) Ended

10/1/2023

 

Fiscal Year

2022

 

Net Income as Reported (GAAP)

$

9.9

 

 

$

14.1

 

$

25.0

 

 

$

44.2

 

$

0.3

 

 

$

19.6

 

Income Tax Expense

 

6.2

 

 

 

6.1

 

 

11.7

 

 

 

22.3

 

 

11.8

 

 

 

22.4

 

Interest Expense (including debt issuance cost amortization)

 

8.2

 

 

 

7.7

 

 

25.0

 

 

 

21.8

 

 

33.1

 

 

 

29.9

 

Depreciation and Amortization (excluding debt issuance cost amortization)

 

9.6

 

 

 

9.4

 

 

29.0

 

 

 

29.4

 

 

38.3

 

 

 

38.7

 

Share-Based Compensation Expense

 

2.2

 

 

 

2.4

 

 

7.3

 

 

 

6.7

 

 

9.2

 

 

 

8.5

 

Purchase Accounting Amortization

 

1.3

 

 

 

1.2

 

 

3.9

 

 

 

3.8

 

 

5.1

 

 

 

5.0

 

Goodwill and Intangible Asset Impairment

 

 

 

 

 

 

 

 

 

 

 

36.2

 

 

 

36.2

 

Thailand Plant Closure Inventory Write-down

 

 

 

 

0.5

 

 

 

 

 

2.5

 

 

 

 

 

2.5

 

Restructuring, Asset Impairment, Severance, and Other, net

 

 

 

 

1.5

 

 

1.2

 

 

 

4.1

 

 

5.3

 

 

 

8.2

 

Property Casualty Loss(1)

 

 

 

 

 

 

(0.5

)

 

 

 

 

(0.5

)

 

 

 

Cyber Event

 

0.1

 

 

 

 

 

1.0

 

 

 

 

 

6.1

 

 

 

5.1

 

Loss on Foreign Subsidiary Liquidation (2)

 

6.2

 

 

 

 

 

6.2

 

 

 

 

 

6.2

 

 

 

 

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (AEBITDA)*

$

43.7

 

 

$

42.9

 

$

109.8

 

 

$

134.8

 

$

151.1

 

 

$

176.1

 

(1) Represents insurance recovery net of loss recognized in the first quarter of 2023.

 

(2) Russia and Brazil foreign subsidiaries were substantially liquidated in the current period. The related cumulative translation adjustment was recognized in other expense.

 

* Note: Sum of reconciling items may differ from total due to rounding of individual components

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 10/1/23

 

 

 

 

 

 

 

 

 

 

 

Total Debt

$

444.4

 

 

 

 

 

 

 

 

 

 

 

 

Total Cash on Hand

 

(119.6

)

 

 

 

 

 

 

 

 

 

 

 

Total Debt, Net of Cash on Hand (Net Debt)*

$

324.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/1/2023

 

 

 

 

 

 

 

 

 

 

 

Total Debt / LTM Net Income

1284.4x

 

 

 

 

 

 

 

 

 

 

 

Net Debt / LTM AEBITDA

2.1x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* 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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