Interface Inc (NASDAQ:TILE) Q1 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 09:00 am ET

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Interface Inc (NASDAQ:TILE) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Bruce Hausmann

decrease of 80 basis points over the prior-year period driven by higher input costs as well as exiting FLOR specialty retail.

SG&A expenses were $71 million, which was flat and on plan at 29.3% of sales. First quarter operating income margin was 9.6% compared to 7.1% in Q1 of 2017. And excluding last year's restructuring and asset impairment charges, adjusted operating income margin was 10.4% in Q1 of last year. Our effective tax rate was down to 26% compared to 33% in Q1 of 2017, primarily due to the US Tax Cuts and Jobs Act enacted in December 2017.

We delivered net income of $15.1 million or $0.25 per diluted share compared to Q1 of 2017 net income of $8.5 million or $0.13 per diluted share, and adjusted prior year net income, which excludes the restructuring and asset impairment charge, was $13.2 million or $0.21 per diluted share.

Now, moving over to the balance sheet and cash flow statement. We ended Q1 of 2018 with total cash on hand of $68 million, debt of $244 million and strong liquidity, as we had $167 million available under our revolving credit facility.

Interest expense was $2.1 million for the first quarter compared with $1.6 million in Q1 of last year. Depreciation and amortization was $11.6 million for the first quarter of 2018 compared with $8.1 million in Q1 of 2017. And capital expenditures for the first quarter were $8.9 million compared with $7.2 million in the same period last year.

And now, I'd like to turn the call back to Jay to provide an update on our fiscal year 2018 outlook.

Executive
Jay Gould

We are continuing to focus on the execution of our strategic agenda to become the world's most valuable interior products and services company. As we close out the first quarter and move into the second quarter, we are reaffirming our outlook for 2018.

We are targeting to achieve 3% to 5% organic sales growth, gross profit margin of 39.0% to 39.5%, SG&A expenses that are flat as a percentage of net sales, and an effective tax rate of 26% to 27%. Interest and other expenses are projected to be $2 million to $3 million higher than last year, and capital expenditures are projected to be $50 million to $60 million.

Based on the historic seasonality, current forecast and prior year comparables, we continue to expect our strongest operating income growth in the second and third quarters of this year, with softer operating income growth in the first and fourth quarters.

And so with that, I'll open the call for questions. Ashley?