Interface Reports Sales of $248.3 Million for Q3

Atlanta, GA, October 27, 2016—Interface has reported net sales of $248.3 million for Q3 2016, down 2.5% compared with sales of $254.7 million in Q3 2015.

Net income during the third quarter of 2016 declined to $15.9 million, or $0.25 per share, compared with net income of $20.1 million, or $0.31 per share, in the third quarter last year.

Third quarter 2016 sales in our Americas business were down 3.4% compared with the third quarter last year. The decline occurred in the U.S. (down 4%) and Canada (down 13%), somewhat mitigated by an increase in Latin/South America (up 2%). The InterfaceServices business increased 3%, as it began to deliver more retail projects that had been delayed to the second half of this year. Overall, the corporate office segment was down 10%, while non-office segments in the aggregate were up 1%. Among non-office segments, strong gains in the hospitality (up 19%) and healthcare (up 13%) segments were largely offset by a decrease in the government segment (down 16%). FLOR sales grew 1% year over year.

"For the first time in the past year and a half, our quarterly orders were positive versus the prior year period,” says Daniel T. Hendrix, chairman and chief executive officer of the company. “Importantly, we also saw increasing order strength over the quarter from July through September. Net sales in the first half of the year were down nearly 6%, and the third quarter saw a slight improvement with sales down only 2.5%. With our order trends, we expect to deliver positive sales growth in the fourth quarter."

"After six straight quarters of triple-digit gross margin expansion, we had a 105 basis point contraction to 37.4%,” says Jay Gould, the company's president and chief operating officer commented. “This decline was directly linked to investments we are making to improve our flagship Troup County, Georgia manufacturing and warehousing facilities. Upon completion of this transformational project, we anticipate a $30 million annualized cost improvement. As a percentage of sales, our SG&A expenses remained at elevated levels. Consequently, we are tightly controlling and continually targeting reductions in SG&A expenses worldwide. We also launched our new modular resilient flooring product line in the third quarter. The customer reaction has been highly positive and we anticipate solid orders over the coming year."