Interface(US:TILE)2021-03-03 21:45Financial Performance - Consolidated net sales for 2020 were $1,103.3 million, a decline of 17.9% compared to $1,343.0 million in 2019, primarily due to the impacts of COVID-19 [127]. - The operating loss for 2020 was $39.3 million, compared to operating income of $130.9 million in 2019, with a net loss of $71.9 million or $1.23 per share [133]. - The company reported a net loss of $71,929 for 2020, compared to a net income of $79,200 in 2019 [228]. - Gross profit on sales for 2020 was $410,574, down from $532,967 in 2019, reflecting a gross margin decline [228]. - Cash provided by operating activities was $119.1 million for 2020, a decrease of $22.7 million compared to 2019, primarily due to lower net income from COVID-19 impacts [189]. - Cash provided by operating activities was $119.1 million in 2020, down from $141.8 million in 2019, indicating a decrease of approximately 16% [235]. Regional Sales Performance - The Americas region experienced a sales decline of 21.6% in 2020, with significant decreases in corporate office (down 33.8%) and retail (down 34.8%) market segments [147]. - Net sales in the Asia-Pacific region decreased by 17.7% in 2020, reflecting the impact of government shutdowns and reduced demand [146]. - Net sales in Europe decreased by 10.7% in U.S. dollars and 12.5% in local currency, with significant declines in corporate office (down 18.0%), hospitality (down 47.5%), and public buildings (down 14.2%) segments [148]. - In the Asia-Pacific region, net sales decreased by 17.7%, with the corporate office segment down 21.4% and retail down 43.2% [149]. - Revenue distribution by geography for 2020: Americas 53.8%, Europe 31.8%, Asia-Pacific 14.4% [289]. Cost Management and Savings - The company recorded $12.9 million in severance costs during 2020, with anticipated future annualized savings of approximately $15 million from these initiatives [127]. - The company implemented various cost-cutting initiatives, including reductions in labor costs and marketing expenses, to mitigate the effects of COVID-19 [127]. - The restructuring plan initiated in December 2019 is expected to yield annualized savings of approximately $6.0 million, with a pre-tax restructuring charge of $9.0 million recorded [136]. - SG&A expenses for 2020 decreased by $55.9 million (14.4%) versus 2019, with a significant portion attributed to lower selling expenses due to reduced net sales [156]. - The company implemented cost reduction initiatives in 2020, including temporary employee furloughs and suspension of merit-based salary increases [194]. Debt and Financing - As of January 3, 2021, the company had $285.2 million of borrowings outstanding under its Syndicated Credit Facility, with additional borrowing capacity of $295.4 million [165]. - The Company issued $300 million aggregate principal amount of 5.50% Senior Notes due 2028, using the net proceeds to repay $290.7 million of outstanding term and revolving loan borrowings [183]. - Total contractual cash obligations amount to $940.1 million, with long-term debt obligations of $585.2 million and expected interest payments of $160.3 million [191]. - The Company anticipates remaining in compliance with all covenants under the Facility for the foreseeable future [181]. - The Company is required to maintain a Consolidated Secured Net Leverage Ratio of no greater than 3.00:1.00 and a Consolidated Interest Coverage Ratio of no less than 2.25:1.00 [316]. Asset and Equity Changes - Total assets decreased from $1,423,049 in 2019 to $1,306,011 in 2020 [232]. - Total liabilities decreased from $1,054,847 in 2019 to $979,473 in 2020 [232]. - Shareholders' equity decreased from $368,202 in 2019 to $326,538 in 2020 [232]. - The company had state net operating loss carryforwards of $142.7 million as of January 3, 2021, with certain amounts reserved due to uncertainty in utilization [201]. Inventory and Reserves - The inventory reserve was $35.0 million as of January 3, 2021, and a 10% difference in actual obsolescence could impact net income by approximately $3.2 million [206]. - Total inventories decreased from $253.6 million in 2019 to $228.7 million in 2020 [296]. - Reserves for inventory obsolescence increased from $28.3 million in 2019 to $35.0 million in 2021 [296]. - Warranty and sales allowance reserves amounted to $3.2 million and $3.9 million as of January 3, 2021 and December 29, 2019, respectively [267]. Tax and Compliance - The company recorded an income tax benefit of $7.5 million on a pre-tax loss of $79.4 million for the year ended January 3, 2021, resulting in an effective tax rate of 9.4% [160]. - The Company recorded a valuation allowance to reduce its deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will expire before realization [269]. Other Financial Metrics - Research and development expenses increased to $18.6 million in 2020 from $17.8 million in 2019, reflecting a growth of about 4.5% [252]. - The Company capitalized net interest costs on qualifying expenditures of approximately $1.9 million, $2.1 million, and $0.7 million for the fiscal years 2020, 2019, and 2018 respectively [262]. - Depreciation expense amounted to approximately $42.4 million, $41.5 million, and $37.6 million for the years 2020, 2019, and 2018 respectively [262]. - The Company recognized a loss on extinguishment of debt of $3.6 million in the consolidated statement of operations [307].