Interface(TILE)2025-02-25 21:50Financial Data and Key Metrics Changes - In 2024, the company achieved a 4% increase in currency-neutral net sales and nearly doubled GAAP earnings per diluted share [7][17] - Fourth quarter net sales totaled 1.32 billion, a 4.3% increase from 2023 [36] - Adjusted gross profit margin for 2024 was 37.1%, an increase of 173 basis points from the prior year [37] - Fourth quarter adjusted EPS was 0.41 in the fourth quarter of 2023 [35] Business Line Data and Key Metrics Changes - Global billings in the Americas increased by 9% year-over-year, while EAAA saw a 2% decline [18] - Global Education billings were up 10% for the year, driven by strength in the Americas [19] - Health care segment saw a 2% decline in global billings for 2024, but a 12% increase in the fourth quarter [23] - Corporate office segment experienced a 1% decline in global billings for the year, which was favorable compared to the overall industry [24] - Retail billings were up in 2024 compared to a weak 2023, benefiting from previously deferred projects [25] Market Data and Key Metrics Changes - Currency-neutral orders in the Americas increased by 9% year-over-year in the fourth quarter [26] - EAAA's fourth quarter currency-neutral orders were down 1% year-over-year [27] - The backlog at the end of 2024 was up 15% year-over-year, indicating strong positioning for 2025 [27] Company Strategy and Development Direction - The company is focused on its One Interface strategy, which aims to enhance global functions, improve productivity, and expand margins [8][28] - Investments in automation and robotics at manufacturing plants are expected to drive operational efficiencies and improve margins [11][12] - The company aims to be carbon negative by 2040 without relying on carbon offsets, enhancing its sustainability strategy [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and its ability to outperform the industry in 2025 [28][29] - The company is closely monitoring global geopolitical and macroeconomic environments, particularly in Europe and Australia, which are currently softer [29] - Management anticipates a lighter Q1 in 2025, followed by stronger Q2 and Q3, with a focus on maintaining a disciplined capital allocation strategy [41] Other Important Information - The company generated 398.5 million at year-end [39] - Capital expenditures for 2024 were 45 million for 2025 [40][62] Q&A Session Summary Question: Impact of One Interface selling strategy on 2025 - Management is optimistic about the continued benefits of the One Interface strategy, expecting it to contribute positively to 2025 results [48][51] Question: Outlook for the office segment in 2025 - Management noted a rise in return-to-office mandates and demand for premium Class A spaces, indicating a positive outlook for the office segment in 2025 [54][56] Question: Capital allocation priorities with reduced debt - The company plans to continue investing in manufacturing efficiency and growth, leveraging its strong balance sheet [57][58] Question: CapEx breakdown for 2025 - Of the projected 10 million is for investment CapEx and $35 million for maintenance CapEx [93] Question: Exposure to government business - The company's government business is a small portion of total revenue, around 4%, and includes various government buildings [95] Question: Retail performance in 2024 - Retail was up in the second half of 2024, primarily due to previously deferred projects from 2023 [98] Question: Tariff exposure and sourcing of raw materials - The company has limited exposure to tariffs, sourcing carpet locally in the US and Europe, LVT from South Korea, and rubber products from Germany [100][108]