tile-20210404

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarterly Period Ended April 04, 2021

Commission File Number 001-33994

INTERFACE INC

(Exact name of registrant as specified in its charter)


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

1280 West Peachtree Street, Atlanta, Georgia 30309

(Address of principal executive offices and zip code)

(770) 437-6800

(Registrant’s telephone number, including area code)

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


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

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company ☐

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

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

Shares outstanding of each of the registrant’s classes of common stock at May 7, 2021:


Class			Number of Shares
Common Stock, $0.10 par value per share			59,013,341


			PAGE
PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements (Unaudited)	3

		Consolidated Condensed Balance Sheets – April 4, 2021 and January 3, 2021	3

		Consolidated Condensed Statements of Operations - Three Months Ended April 4, 2021 and April 5, 2020	4

		Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended April 4, 2021 and April 5, 2020	5

		Consolidated Condensed Statements of Cash Flows – Three Months Ended April 4, 2021 and April 5, 2020	6

		Notes to Consolidated Condensed Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35

	Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings	37

	Item 1A.	Risk Factors	37

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

	Item 3.	Defaults Upon Senior Securities	39

	Item 4.	Mine Safety Disclosures	39

	Item 5.	Other Information	39

	Item 6.	Exhibits	40

SIGNATURE			41


	APRIL 4, 2021		JANUARY 3, 2021
	(UNAUDITED)
ASSETS
Current Assets
Cash and cash equivalents	$	106,923	$	103,053
Accounts receivable, net	128,610		139,869
Inventories, net	243,067		228,725
Prepaid expenses and other current assets	38,827		23,747
Total current assets	517,427		495,394
Property, plant and equipment, net	348,632		359,036
Operating lease right-of-use assets	94,609		98,013
Deferred tax asset	15,007		18,175
Goodwill and intangibles, net	239,158		253,536
Other assets	80,493		81,857

Total assets	$	1,295,326	$	1,306,011

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	72,029	$	58,687
Accrued expenses	116,590		105,739
Current portion of operating lease liabilities	13,289		13,555
Current portion of long-term debt	15,176		15,319
Total current liabilities	217,084		193,300
Long-term debt	547,395		561,251
Operating lease liabilities	83,173		86,468
Deferred income taxes	32,462		34,307
Other long-term liabilities	100,397		104,147

Total liabilities	980,511		979,473

Commitments and contingencies

Shareholders’ equity
Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at April 4, 2021 and January 3, 2021	—		—
Common stock, par value $0.10 per share; 120,000 shares authorized; 59,014 and 58,664 shares issued and outstanding at April 4, 2021 and January 3, 2021, respectively	5,901		5,865
Additional paid-in capital	248,571		247,920
Retained earnings	214,911		208,562
Accumulated other comprehensive loss – foreign currency translation	(79,928)		(60,331)
Accumulated other comprehensive loss – cash flow hedge	(5,441)		(6,190)
Accumulated other comprehensive loss – pension liability	(69,199)		(69,288)

Total shareholders’ equity	314,815		326,538

Total liabilities and shareholders’ equity	$	1,295,326	$	1,306,011


	THREE MONTHS ENDED
	APRIL 4, 2021		APRIL 5, 2020
NET SALES	$	253,260	$	288,169
Cost of Sales	157,222		173,858
GROSS PROFIT ON SALES	96,038		114,311

Selling, General and Administrative Expenses	79,302		87,683
Restructuring Charges	(130)		(1,118)
Goodwill and Intangible Asset Impairment Charge	—		121,258
OPERATING INCOME (LOSS)	16,866		(93,512)

Interest Expense	7,256		5,630
Other Expense	715		1,491

INCOME (LOSS) BEFORE INCOME TAX EXPENSE	8,895		(100,633)
Income Tax Expense	1,957		1,534

NET INCOME (LOSS)	$	6,938	$	(102,167)

Earnings (Loss) Per Share – Basic	$	0.12	$	(1.75)
Earnings (Loss) Per Share – Diluted	$	0.12	$	(1.75)

Common Shares Outstanding – Basic	58,730		58,450
Common Shares Outstanding – Diluted	58,730		58,452


	Three Months Ended
Geography	April 4, 2021	April 5, 2020
Americas	50.1%	54.9%
Europe	35.1%	32.8%
Asia-Pacific	14.8%	12.3%


	April 4, 2021		January 3, 2021
	(in thousands)
Finished goods	$	169,213	$	152,836
Work in process	15,743		17,109
Raw materials	58,111		58,780
Inventories, net	$	243,067	$	228,725


	Three Months Ended
Earnings (Loss) Per Share	April 4, 2021		April 5, 2020
Basic Earnings (Loss) Per Share:
Distributed earnings	$	0.01	$	0.07
Undistributed earnings (loss)	0.11		(1.82)
Total	$	0.12	$	(1.75)

Diluted Earnings (Loss) Per Share:
Distributed earnings	$	0.01	$	0.07
Undistributed earnings (loss)	0.11		(1.82)
Total	$	0.12	$	(1.75)

Basic earnings (loss) per share	$	0.12	$	(1.75)
Diluted earnings (loss) per share	$	0.12	$	(1.75)


	April 4, 2021				January 3, 2021
	Outstanding Principal		Interest Rate(1)		Outstanding Principal		Interest Rate(1)
	(in thousands)				(in thousands)
Syndicated Credit Facility:
Revolving loan borrowings	$	—	4.00	%	$	3,000	4.00	%
Term loan borrowings	270,901		1.84	%	282,215		1.87	%
Total borrowings under Syndicated Credit Facility	270,901		1.84	%	285,215		1.89	%

5.50% Senior Notes due 2028	300,000		5.50	%	300,000		5.50	%

Total debt	570,901				585,215
Less: Unamortized debt issuance costs	(8,330)				(8,645)

Total debt, net	562,571				576,570
Less: Current portion of long-term debt	(15,176)				(15,319)

Total long-term debt, net	$	547,395			$	561,251


	THREE MONTHS ENDED
	APRIL 4, 2021		APRIL 5, 2020
Net Income (Loss)	$	6,938	$	(102,167)
Other Comprehensive Loss, Foreign Currency Translation Adjustment	(19,597)		(15,245)
Other Comprehensive Income (Loss), Cash Flow Hedge	749		(6,140)
Other Comprehensive Income, Pension Liability Adjustment	89		1,733
Comprehensive Loss	$	(11,821)	$	(121,819)


	THREE MONTHS ENDED
	APRIL 4, 2021		APRIL 5, 2020
OPERATING ACTIVITIES:
Net income (loss)	$	6,938	$	(102,167)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Depreciation and amortization	11,934		10,940
Stock compensation amortization expense (benefit)	924		(2,932)
Deferred income taxes and other	230		(15,732)
Amortization of acquired intangible assets	1,421		1,315
Goodwill and intangible asset impairment	—		121,258
Working capital changes:
Accounts receivable	9,794		28,635
Inventories	(19,046)		(22,514)
Prepaid expenses and other current assets	(15,852)		(7,464)
Accounts payable and accrued expenses	28,512		(27,056)

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	24,855		(15,717)

INVESTING ACTIVITIES:
Capital expenditures	(5,214)		(22,204)
Other	—		(90)

CASH USED IN INVESTING ACTIVITIES	(5,214)		(22,294)

FINANCING ACTIVITIES:
Repayments of long-term debt	(30,239)		(19,875)
Borrowing of long-term debt	18,000		54,000
Tax withholding payments for share-based compensation	(179)		(1,344)
Proceeds from issuance of common stock	—		93
Debt issuance costs	(36)		—
Finance lease payments	(527)		(399)

CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(12,981)		32,475

Net cash provided by (used in) operating, investing and financing activities	6,660		(5,536)
Effect of exchange rate changes on cash	(2,790)		(3,114)

CASH AND CASH EQUIVALENTS:
Net change during the period	3,870		(8,650)

SEC Form 10-Q filed by Interface, Inc.