Interface (NASDAQ: TILE) reported Q4 EPS of $0.46, $0.05 better than the analyst estimate of $0.41. Revenue for the quarter came in at $339 million versus the consensus estimate of $344.63 million.

Highlights:

• Q4 net sales up 1%; Q4 organic sales up 2%
• Q4 GAAP EPS of $0.28, up 155%; Q4 adjusted EPS of $0.46, up 12%
• FY net sales up 14%; FY organic sales up 2%
• FY GAAP EPS of $1.34, up 60%; FY adjusted EPS of $1.59, up 7%
• Reduced total debt in the quarter by $30 million

"We ended 2019 with a solid finish, delivering strong operating and financial performance, and executing on our strategic plan. Organic sales grew 2% in the fourth quarter with carpet tile and resilient flooring contributing equally to growth, while adjusted EPS grew 12% through continued gross margin expansion and SG&A optimization," said Dan Hendrix, Chairman and CEO of Interface. "Full year 2019 growth was in-line with our most recent guidance at 2% organic sales growth and 7% adjusted EPS growth, ending the year with $1.3 billion in sales and adjusted EPS of $1.59."

"We enter 2020 with strong momentum, as our team remains focused on delivering robust new product innovation to capitalize on the expanded market opportunities we have in front of us," Hendrix added. "We also continue to make significant progress on our Climate Take Back™ journey. We expect to invest approximately $50 million between 2019 and 2021 in manufacturing innovations. This includes tufting technology that will provide us with new design capability, and a new backing system that should increase our addressable market and further differentiate us in the marketplace. We believe these advancements will have great value for our customers. Our goal is to keep driving increased value to our shareholders by continuing the strategic investments and operational improvements we have made over the past several years."

"In addition to achieving strong profitability, we remain committed to a disciplined deleveraging strategy," commented Bruce Hausmann, CFO of Interface. "We generated $17 million of cash via working capital and reduced total debt by $30 million in the fourth quarter, lowering our net debt to adjusted EBITDA ratio to 2.6x at year end."

"With regard to the coronavirus situation," Hausmann added, "we were able to service production demand during the temporary closure of our carpet tile facility in China, and we continue to monitor the supply chain impacts very closely. The negative sales impact to our Asia business is evident in our year-to-date results, but we remain hopeful that we will be able to make up for the declines in the back half of the year."

GUIDANCE:

Interface sees FY2020 EPS of $1.60-$1.70, versus the consensus of $1.69.

Looking ahead to the full year of 2020, Interface is targeting to achieve organic sales growth of 2 - 4% and adjusted earnings per share of $1.60 - $1.70. The tax rate is anticipated to be approximately 28%. The fully diluted share count is forecast to be 59.5 million shares, and capital expenditures are anticipated to be $50 - $60 million.

Starting in 2020, and as part of the implementation of a global financial consolidation tool and the integration of nora®, we are reclassifying and standardizing cost categories globally, resulting in the reclassification of certain expenses between Cost of Sales and Selling, General & Administrative Expenses. As adjusted for these anticipated reclassifications, full year 2019 Gross Profit margin would increase approximately 50 basis points and full year 2019 Selling, General & Administrative Expenses as a percentage of Net Sales would increase by the same amount; with zero net impact to Operating Income or Operating Income margin. Starting in the first quarter of 2020, these reclassifications will be presented retrospectively to make all periods comparable.

For earnings history and earnings-related data on Interface (TILE) click here.