Q1 2024 Interface Inc Earnings Call
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Operator: Good day, and welcome to the first quarter 2024 Interface Inc earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Christine Needles, Corporate Communications, to begin the conference. Christine, over to you.
Speaker Change: Good day and welcome to the first quarter 2020 full interface, Inc earnings Conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: After the Speakers' remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question. Please press star one again.
Speaker Change: For all of her to assistance throughout the call. Please press star Zero, and finally, I would like to advise all participants that this call is being recorded thank you.
Speaker Change: I'd now like to welcome Christine Needles corporate communications to begin the conference Christine <unk> over to you.
Christine Needles: Good morning and welcome to Interface's conference call regarding first quarter 2024 results, hosted by Laurel Hurd, CEO, and Bruce Hausmann, CFO. During today's conference call, any management comments regarding Interface's business, which are not historical information, are forward-looking statements within the meaning of federal securities laws. Forward-looking statements include statements regarding the intent, belief, or current expectations of our management team, as well as the assumptions on which such statements are based. However, any forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including risks and uncertainties described in our most recent annual report on Form 10-K filed with the FCC.
Christine Needles: Good morning, and welcome to interfaces conference call regarding first quarter 2024 result.
Hosted by Laurel Hurd, CEO and Bruce Hausmann CFO during today's conference call any management comments regarding interfaces business, which are not historical information are forward looking statements within the meaning of federal securities laws.
Christine Needles: Forward looking statements include statements regarding the intent belief or current expectations of our management team as well as the assumptions on which such statements are based.
Any forward looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements, including risks and uncertainties described in our most recent annual report on Form 10-K filed with the SEC.
Christine Needles: The company assumes no responsibility to update forward-looking statements. Management's remarks during this call also refer to certain non-GAAP measures. Reconciliations of the non-GAAP measures to the most comparable GAAP measures and explanations for their use are contained in the company's earnings release and Form 8K furnished with the SEC today. Lastly, this call is being recorded and broadcasted for Interface. It contains copyrighted material and may not be re-recorded or re-broadcast without Interface's express permission.
Christine Needles: The company assumes no responsibility to update forward looking statements.
Christine Needles: Management's remarks during this call also refer to certain non-GAAP measures reconciliations of the non-GAAP measures to the most comparable GAAP measures and explanations for their use are contained in the company's earnings release and form 8-K furnished with the SEC today.
Christine Needles: Lastly, this call is being recorded and broadcast it for interface. It contains copyrighted material and may not be rerecorded or rebroadcast without interfaces express permission.
Christine Needles: Your participation in the call confirms your consent to the company's taping and broadcasting of it. After our prepared remarks, we will open up the call for questions. Now, I will turn the call over to Laurel Hurd, CEO.
Christine Needles: Your participation on the call confirms your consent to the company's taping and broadcasting of it.
Christine Needles: After our prepared remarks, we will open up the call for questions now I will turn the call over to Laurel Hurd CEO.
Laurel M. Hurd: Thank you, Christine, and good morning, everyone. To start our call, I want to thank the entire Interface team for a very strong quarter. Thanks to their efforts and the support of our customers and partners, we achieved robust performance in the first quarter, fueled by comprehensive strength across the Americas. These strong results reinforce the fact that our one interface strategy is working and yielding tangible results. With that in mind, I'd like to take a few minutes to update you on our progress.
Thank you Christine and good morning, everyone.
Laurel M. Hurd: Our call I want to thank the entire interface team for a very strong quarter.
Thanks to their efforts and the support of our customers and partners. We achieved robust performance in the first quarter fueled by a comprehensive strength across the Americas.
Laurel M. Hurd: Strong results reinforced the fact that our one interface strategy is working and yielding tangible results.
Laurel M. Hurd: That backdrop in mind I'd like to take a few minutes to update you on our progress.
Laurel M. Hurd: As a reminder, our strategy is focused on reducing complexity, driving continuous improvement, and globalizing our core functions to support our world-class selling team. After a successful pilot in 2023, our territories throughout the U.S. have transitioned to combined NORA and Interface selling teams, and we continue to see tremendous synergies between the two. During the first quarter, the One Interface Selling Team drove strong order growth, outpacing our expectations in a challenging macro environment. This collaborative and consolidated approach aligns incentives and maximizes coverage to win business together. Reducing complexity is a core tenet of our strategy.
Laurel M. Hurd: As a reminder, our strategy is focused on reducing complexity driving continuous improvement and globalizing, our core functions to support our world class selling team.
Laurel M. Hurd: After a successful pilot in 2023, our territory throughout the U S have transitioned to combine nor an interface selling team and we continue to see tremendous synergies between the two.
Laurel M. Hurd: During the first quarter, the one interface selling teams drove strong order growth outpacing our expectations in a challenging macro environment.
Laurel M. Hurd: This collaborative and consolidated approach aligns incentives and maximize its coverage to win business together.
Laurel M. Hurd: Where do you think complexity is a core tenant of our strategy. We are continuing to simplify how we work across the enterprise and around the globe and everything we do in every functional area and importantly in how we provide the best products and services in the industry through our customers.
Laurel M. Hurd: We are continuing to simplify how we work across the enterprise and around the globe in everything we do in every functional area, and importantly, in how we provide the best products and services in the industry to our customers. We are also on track with operational improvements in manufacturing, including investments in new automation and robotic solutions, which will drive improved margins. We're adding robotics to some of the more manual parts of our carpet towel manufacturing process in the U.S., better for our workforce in these hard-to-fill, labor-intensive roles. These robotic solutions will drive labor efficiencies and reduce raw material waste. We're in the preliminary stages of implementation, which will roll out in phases over the next 24 months.
Laurel M. Hurd: We're also on track with operational improvements and manufacturing, including investments in new automation and robotic solutions, which will drive improved margins.
Laurel M. Hurd: We're adding robotics to some of the more manual parts of our carpet tile manufacturing process in the U S.
Laurel M. Hurd: Which is better for our workforce and the heart itself labor intensive role.
Laurel M. Hurd: These robotic solutions will drive labor efficiencies and reduced raw material waste.
Laurel M. Hurd: We are in the preliminary stages of implementation, which will roll out in phases over the next 24 months.
Laurel M. Hurd: We're being prudent with our investments, and as we see the desired results, we will continue to assess and invest in efficiency opportunities. Bruce and I recently visited our facilities in Germany, the Netherlands, and Australia. In Germany, we witnessed firsthand our automation investments that work in our NORA rubber manufacturing facility. By automating the rubber press and cutting processes, we enhance employee safety and increase production throughput.
Laurel M. Hurd: We're being prudent with our investments and as we see the desired result, we will continue to assess and in fact in efficiency opportunities.
Laurel M. Hurd: Okay.
Speaker Change: Bruce and I recently visited our facilities in Germany, the Netherlands and Australia.
Speaker Change: In Germany, we witness firsthand, our automation investments and working our Nora rubber manufacturing facility.
Speaker Change: But automating the rubber processing cutting processes, we enhance employee safety and increased production throughput.
Laurel M. Hurd: In Australia, we met with several customers across corporate office, education, hospitality, and healthcare and also hosted an event at our showroom where we showcased new products and interacted with over 80 customers. It was great to spend time in the field seeing how our strategy and innovation are playing out. There's a lot of great work being done, leading to encouraging progress on the horizon. Earlier this month, Interface rolled out a fresh new brand attitude, Made for More, which showcases the best of Interface and encompasses our belief that our flooring is made with purpose and without compromise, meaning that our customers get beautiful design, quality, performance, innovation, and sustainability with all of our products all the time. We don't ask our customers to sacrifice design for performance or quality for sustainability.
Speaker Change: In Australia, we met with several customers across corporate office education, hospitality and health care and also that didn't know that at our showroom, where we showcase new products and interacted with over 80 customers.
Speaker Change: It was great to spend time in the field being how our strategy and innovation are playing out.
Speaker Change: A lot of great work being done leading to encouraging progress on the horizon.
Speaker Change: Earlier this month interface rolled out a fresh new brand attitude made for more which showcases the best of interface and encompasses our beliefs that our flooring is made with purpose and without compromise, meaning that our customers get beautiful design quality performance innovation and sustainability.
Speaker Change: With all of our products all the time.
Speaker Change: We don't ask our customers to sacrifice designed for performance or quality for sustainability.
Laurel M. Hurd: We are the preferred partner for flooring and design projects because we provide high-design, sustainability-focused products across all of our brands and categories to our customers, which significantly differentiates us in the marketplace. We've introduced Made for More around the globe at the same time, and it's another example of our One Interface strategy in action. We look forward to Clerkenwell Design Week in May and Neocon in June, where we will showcase several exciting new product launches.
We are the preferred partner for flooring and design projects, because we provide high design sustainability focused products across all of our brands and categories to our customers, which significantly differentiates us in the marketplace.
Speaker Change: We've introduced made for more around the globe at the same time and it's another example of our one interface strategy in action.
Speaker Change: We look forward to Clerkenwell design week in May at Neocon in June where we will showcase several exciting new product launches.
Laurel M. Hurd: Turning to our first quarter results, net sales came in at the high end of our expectations, driven by the Americas. We continue to see notable strength in education, with billings of double digits. Our K-12 business was particularly strong, driven by increased demand for our expanded open-air collection. Expanding our offering of carpet tile designs at more accessible price points allows us to connect with our customers' needs while ultimately driving increased carpet and LVT sales.
Speaker Change: Turning to our first quarter results net sales came in at the high end of our expectations driven by the Americas. We continue to see notable strength in education with billings up double digits.
Speaker Change: Our K 12 business was particularly strong driven by increased demand for expanded open air collection.
Speaker Change: Expanding our offering of carpet tile designs at more accessible price points allows us to connect with their customers needs, but ultimately driving increased carpet and ELV T cells.
Laurel M. Hurd: Corporate Office was down low single digits in the first quarter, which we viewed as a positive outcome given the volatility in that segment. Our renovation business remains strong as the trend for people returning to offices continues, and we grew share in the U.S. carpet tile market in the quarter. As expected, retail sales were soft in the first quarter due to ongoing headwinds in the sector.
Speaker Change: Corporate office was down low single digits in the first quarter, which we viewed as a positive outcome given the volatility in that segment.
Speaker Change: Our renovation business remains strong as the trend for people returning to office continues and we grew share in the U S carpet tile market in the quarter.
Speaker Change: As expected retail sales were soft in the first quarter due to ongoing headwinds in the sector. However, we are beginning to see increased demand and we expect stronger retail sales beginning in Q2, which is reflected in our updated guidance.
Laurel M. Hurd: However, we are beginning to see increased demand, and we expect stronger retail sales beginning in Q2, which is reflected in our updated guidance. While first quarter sales were down 2% year over year, adjusted growth profit margin increased by 528 basis points year over year. Our selling organization continues to successfully execute, holding price and driving favorable mix. For its profit margin, it also benefited from raw material deflation in the quarter. Turning to orders, total company orders were strong in the quarter, up 5% year over year. Orders were up 7% in the Americas and up 3% in EAAA. Strengthened EMEA in Asia was partially offset by softer orders in Australia, which had tough comps.
Speaker Change: Well first quarter sales were down 2% year over year adjusted gross profit margin increased by 528 basis points year over year for.
Speaker Change: Our selling organization continues to successfully execute holding price and driving favorable mix.
Speaker Change: Gross profit margin also benefited from raw material deflation in the quarter.
Speaker Change: Turning to orders total company orders were strong in the quarter up 5% year over year.
Speaker Change: Orders were up 7% in the Americas, and up 3% and a AAA.
Speaker Change: Strength in EMEA, and Asia was partially offset by softer orders in Australia, which had tough comps.
Laurel M. Hurd: Our backlog was strong as we finished Q1, up 19% year-to-date. We remained focused on commercial productivity and aligning our sales team to the fastest-growing geographic markets and segments. Before I turn the call over to Bruce, I want to talk about a recent update to our sustainability strategy, which marks a pivotal point in our climate journey. Beginning in 2025, we will redirect investments from carbon offset purchases into initiatives that will both reduce our carbon footprint and accelerate our growth, including low carbon innovation and circular solutions.
Speaker Change: Our backlog was strong as we finished Q1 up 19% year to date, we remain focused on commercial productivity and aligning our sales team to the fastest growing geographic markets and segments.
Speaker Change: Before I turn the call over to Bruce I want to talk about a recent update to our sustainability strategy, which marks a pivotal point in our climate journey.
Speaker Change: Beginning in 2025, we will redirect investments from carbon offset purchases into initiatives that will both reduce our carbon footprint and accelerate our growth, including low carbon innovation and circular solutions, we have proven over the past three decades that we can significantly reduce our carbon footprint, while growing our business.
Laurel M. Hurd: We have proven over the past three decades that we can significantly reduce our carbon footprint while growing our business, with our most recent figures showing an 82 percent reduction in our global carbon footprint from when we started the journey back in 1996 to 2023. We remain committed to helping our customers achieve their sustainability goals. And this change will enable us to continue to thoughtfully invest in differentiated innovation, accelerating the development of more sustainable solutions that our customers will love.
Speaker Change: With our most recent figures showing an 82% reduction in our global carpet carbon footprint. So when we started the journey back in 1996 to 2023.
Speaker Change: We remain committed to helping our customers achieve their sustainability goals.
Speaker Change: And this change will enable us to continue to thoughtfully invest in differentiated innovation accelerating.
Speaker Change: The development of more sustainable solutions that our customers will love.
Laurel M. Hurd: In summary, I'm pleased with our strong first quarter results, and I'm more confident than ever that our strategy is working and yielding tangible results. With that, I will turn it over to Bruce to go through the financials.
Speaker Change: In summary, I'm pleased with our strong first quarter results and are more confident than ever that our strategy is working and yielding tangible results.
Speaker Change: With that I will turn it over to Bruce to go through the financials Bruce.
Bruce A. Hausmann: Well, thank you, Laurel, and good morning, everyone. First quarter net sales totaled $289.7 million, a decrease of 2% versus the first quarter of 2023. First quarter FX-neutral net sales in the Americas were up 0.5% year over year. We saw strength in education offset by softness in the retail sector, driven mostly by project deferral.
Bruce: Well, thank you Laurel and good morning, everyone first.
Bruce: First quarter net sales totaled $289 7 million.
Bruce: Decrease of 2% versus the first quarter of 2023.
Bruce: First quarter FX neutral net sales in the Americas were up 0.5% year over year, we saw strengths in education offset by softness in the retail sector driven mostly by project deferrals.
Bruce A. Hausmann: FX Neutral Net Sales and EAAA were down 5.1% driven by a softer macro environment. First quarter adjusted gross profit margin was 38.6%, an increase of 528 basis points from the prior year's first quarter, primarily due to strong execution from our selling organization to hold prices, favorable product mix, and raw material input cost deflation. Adjusted debt to UNA expenses were $86.2 million in the first quarter, compared to $83.2 million in the first quarter of 2023. The increase is primarily due to inflation.
Bruce: FX neutral net sales in future Palais were down five 1% driven by a softer macro environment.
Bruce: First quarter adjusted gross profit margin was 38, 6% an increase of 528 basis points from prior year's first quarter, primarily due to strong execution from our selling organization to hold price favorable product mix and raw material input cost deflation.
Bruce: Adjusted SG&A expenses were $86 2 million in the first quarter compared to $83 2 million in the first quarter of 2023.
Bruce: The increase was primarily due to inflation.
Bruce A. Hausmann: First quarter adjusted operating income was $25.5 million compared to adjusted operating income of $15.2 million in the first quarter of 2023. The increase is due to higher gross profit margins in the quarter. First quarter adjusted EPS was $0.24 versus $0.07 in the first quarter of 2023. Adjusted EBITDA was $38.8 million versus $26.3 million in the first quarter of 2023. We generated $12.6 million of cash from operating activities in the first quarter, and liquidity totaled $388 million, which consisted of $90 million of cash and $298 million of revolver capacity.
Bruce: First quarter adjusted operating income was $25 5 million compared to adjusted operating income of $15 2 million in the first quarter of 2023.
Bruce: The increase was due to higher gross profit margins in the quarter.
Bruce: First quarter adjusted EPS was <unk> 24 cents.
Bruce: Versus seven in the first quarter of 2023.
Bruce: Adjusted EBITDA was $38 8 million versus $26 3 million in the first quarter of 2023.
Bruce: We generated $12 6 million of cash from operating activities in the first quarter and liquidity totaled $388 million, which consisted of $90 million of cash and $298 million our revolver capacity.
Bruce A. Hausmann: In line with our capital allocation strategy, we repaid $24.8 million of debt in the first quarter, resulting in net debt, or total debt minus cash on hand, of $302 million at the end of the quarter. Our leverage ratio was 1.7 times, calculated as net debt divided by LTM adjusted EBITDA.
Bruce: In line with our capital allocation strategy, we repaid $24 $8 million of debt in the first quarter, resulting in net debt. Our total debt minus cash on hand of $302 million at the end of the quarter.
Bruce: Our leverage ratio was one seven times calculated as net debt divided by LTM adjusted EBITDA.
Bruce A. Hausmann: We remain focused on paying down debt, which continues to strengthen our balance sheet and positions us to capitalize on future growth opportunities as they arise. Capital expenditures were $4 million in the first quarter of 2024 compared to $5.7 million in the first quarter of 2023. And as we look to 2024, while the macroeconomic environment remains dynamic, we continue to be encouraged by improving trends. We are increasing our full-year net sales estimate, and we continue to expect gross profit margin expansion this year.
Bruce: We remain focused on paying down debt, which continues to strengthen our balance sheet and positions us to capitalize on future growth opportunities as they arise.
Capital expenditures were $4 million in the first quarter of 2024 compared to $5 7 million in the first quarter of 2023.
Speaker Change: And as we look to 2024, while the macroeconomic environment remains dynamic we continue to be encouraged by improving trends.
Speaker Change: We're increasing our full year net sales estimate and we continue to expect gross profit margin expansion this year.
Bruce A. Hausmann: As Laurel mentioned earlier, we now expect higher retail segment sales, which generally have lower gross profit margins compared to our more premium product offerings. This sequential change in mix is reflected in our Adjusted Gross Profit Margin Guide. And with that backdrop in mind, we've updated our full year 2024 guidance, and we are anticipating the following. For the second quarter of fiscal 2024, net sales of $335 to $345 million, adjusted gross profit margin of approximately 34.5 percent, and adjusted SG&A expenses of approximately $86 million.
Speaker Change: As Laurel mentioned earlier, we now expect higher retail segment sales, which generally have lower gross profit margins compared to our more premium product offerings.
Speaker Change: The sequential change in mix is reflected in our adjusted gross profit margin guide.
Speaker Change: And with that backdrop in mind, we have updated our full year 2020 for guidance and we are anticipating following.
Speaker Change: For second quarter of fiscal 2024, net sales of $335 million to $345 million.
Speaker Change: Adjusted gross profit margin of approximately 34, 5%.
Speaker Change: Adjusted SG&A expenses of approximately $86 million.
Bruce A. Hausmann: Adjusted interest and other expenses of approximately $8 million. Fully diluted weighted average share count of approximately 58.8 million shares, and for the full year of 2024, net sales of $1.29 billion to $1.31 billion, adjusted gross profit margin of approximately 35.5 to 36 percent, adjusted SG&A expenses of approximately 26% of net sales, adjusted interest and other expenses of approximately $30 million, an adjusted effective tax rate for the full year of approximately 28 percent, and capital expenditures of approximately $42 million. Now, I'll turn the call back to Laurel for her concluding remarks. Thank you.
Speaker Change: Adjusted interest and other expenses of approximately $8 million.
Speaker Change: Fully diluted weighted average share count of approximately $58 8 million shares.
Speaker Change: And for the full year of 2024 net sales of $1, two 9 billion to $1 three 1 billion.
Speaker Change: Adjusted gross profit margin of approximately $35, 5% to 36%.
Speaker Change: Adjusted SG&A expenses of approximately 26% of net sales.
Adjusted interest and other expenses of approximately $30 million.
Speaker Change: And adjusted effective tax rate for the full year of approximately 28%.
Speaker Change: And capital expenditures of approximately $42 million.
Now I will turn the call back to Laura for concluding remarks.
Laurel M. Hurd: Thank you, Bruce. Interface delivered a strong start to 2024. Despite the dynamic global market, we continue to see positive trends in our business. We remain focused on executing your strategy and driving sustainable growth to increase value for our shareholders. With that, I'll open it up to questions. Operator?
Laura: Thank you Bruce interface delivered a strong start to 2024, despite the dynamic global market. We continue to see positive trends in our business. We remain focused on executing our strategy and driving sustainable growth to increase value for our shareholders.
Laura: With that I'll open it up to questions operator.
Operator: If you wish to ask a question, please press star followed by 1 on your telephone and wait for your name to be announced. That is star one if you wish to ask a question. And your first question comes from Catherine Thompson from Thompson Research Group. Your line is open.
Speaker Change: If you wish to ask a question. Please press star followed by one on your telephone and wait for your name to be announced that is star. One if you wish to ask a question.
Speaker Change: And just last question comes from the line of Kathryn Thompson from Thompson Research Group. Your line is open.
Kathryn Ingram Thompson: Hi, thank you for your commentary today. A couple different things. First of all, let's just discuss the balance of price versus volumes for the quarter. Any color that you can give, in terms of volume to price, with carpet tile and other major categories would be great. And then also against the backdrop of very solid growth in backlogs. Any color that you can give on mix there would be great by product category. Thank you.
Kathryn Ingram Thompson: Hi, Thank you for your.
Kathryn Ingram Thompson: Our commentary today, a couple of different things first of all let's just discuss.
Kathryn Ingram Thompson: Discuss the balance of price versus volume in the quarter any.
Kathryn Ingram Thompson: Any color that you can give.
Kathryn Ingram Thompson: In terms of volumes price with carpet tile.
And other major categories would be great.
Kathryn Ingram Thompson: And then also against the backdrop very solid growth in backlogs.
Kathryn Ingram Thompson: Hmm.
Kathryn Ingram Thompson: Any color that you can give on mix there would be great by product category. Thank you.
Kathryn Ingram Thompson: Right.
Laurel M. Hurd: Maybe I'll take your second one, Captain. This is Laurel.
Kathryn Ingram Thompson: Maybe I'll take your second one Catharine this is Laura if.
Bruce A. Hausmann: If we look at our order growth, we feel really good about where we sit. A really strong quarter for order growth, and we're showing growth in all categories. So across carpetile, a little bit stronger growth in LVT and rubber, but carpetile is also showing growth, which we were really excited about.
Laura: If we look at our order growth, we feel really good about where we sit.
Laura: Really strong quarter in order growth and it's we were showing growth in all categories, so across carpet tile a little bit stronger growth in <unk>.
Laura: T and rubber, but carpet tile also showing growth, which we're really excited about.
Bruce A. Hausmann: Can I just say you asked a little bit about the mix of price versus volume in the quarter, Catherine? So price was up around 2%, volume was down around 4, and that's where you see the negative 2 on the P&L. And that's all across all product categories globally.
Speaker Change: And I would just say you asked a little bit about the mix of price versus volume in the quarter. Catherine So price was up around 2% volume was down around four and that's where you see the negative too on the P&L and that's all in across all product categories globally.
Speaker Change: Yeah.
Laurel M. Hurd: Okay, great. And then?
Speaker Change: Okay, Great and then.
Bruce A. Hausmann: I know you gave some commentary about margins, just really the upper end down slightly given the mix going forward. But against that backdrop, you did have some good solid performance this quarter in terms of margins because of various tailwinds, including better raw materials. Maybe talk a little bit more about what to expect from the X mix in terms of the puts and takes for gross margins as we look into it.
Speaker Change: I know you gave some commentary about margins.
Speaker Change: Really the upper end.
Speaker Change: Down slightly given the mix going forward.
Against that backdrop, you did have some some good solid performance this quarter in margins because of various tailed lines, including better raw materials, maybe talk a little bit more about what.
Speaker Change: But ex next in terms of the puts and takes for gross margins as we look into 2024.
Bruce A. Hausmann: Yeah, sure, and just to clarify, we actually brought the high end of our gross margins up compared to our prior guide, so I just wanted to make sure that was noted.
Speaker Change: Yeah, sure and just to clarify we actually brought the high end of our gross margins up compared to our prior guide. So I just wanted to make sure that was noted.
Speaker Change: Yes.
Speaker Change: At this point, yes.
Bruce A. Hausmann: The thing I want, the thing that we also wanted to flag is that, I'm sure you'll notice, sequentially from Q1 to Q2, the gross margins will go down. Most of that is due to the mix. So here's the good news.
Speaker Change: Exactly.
Speaker Change: The thing I want the thing that we also wanted to flag is that I'm sure you noticed sequentially from Q1 to Q2. The gross margins will go down most of that is due to the mix. So here's the good news, we're raising our revenue $30 million.
Laurel M. Hurd: We're raising our revenue by $30 million, which is fantastic. It's just that our best estimate is that that will probably come in at a slightly lower gross profit margin than our more premium products. So we're really happy with the volume. It's carpet volume, which is also at a slightly lower gross margin than rubber and LVT for us. So we're happy for the volume, and we're pleased to be able to take the revenue up. It's just the note in our guide that it is at a slightly lower gross margin than what we saw in Q1.
Speaker Change: Which is fantastic it's just that.
Speaker Change: Our best estimate is that that will probably come in at a slightly lower gross profit margin than our more premium products.
Speaker Change: So we're really happy with the volume its carpet volume.
Speaker Change: Which is also at a slightly lower gross margin than rubber and <unk> for us. So we're happy for the volume and we're pleased to be able to take in the revenue.
Speaker Change: It's just that.
Speaker Change: The note in our guide is that it is at a slightly lower gross margin than what we saw in Q1.
Laurel M. Hurd: And Katherine, I'll just jump in on carpet. As Bruce mentioned, the strength we're seeing there compared to the industry is really encouraging. So our, you know, our Q1 billings in carpet in the Americas were pretty strong compared to the industry. So we're feeling good about that.
Speaker Change: And Catherine I'll, just jump in tier one.
Catherine: On carpet as Bruce mentioned the strength, we're seeing there compared to the industry, we're really encouraged by.
Catherine: R.
Catherine: Our Q1 billings in carpet in the Americas.
Catherine: Strong compared to the industry.
Catherine: So we're feeling good about that.
Kathryn Ingram Thompson: Perfect. Thanks. I'll jump back in the queue.
Catherine: Perfect.
Speaker Change: Thanks, I'll jump back in the queue.
Speaker Change: Yes.
David Sutherland MacGregor: Your next question comes from David MacGregor from Longbow Research. Your line is open.
Speaker Change: Your next question comes from the line of David Macgregor from Longbow Research. Your line is open.
Speaker Change: Okay.
David Sutherland MacGregor: Good morning and congratulations on the results. A strong quarter. Thanks, David.
David Sutherland MacGregor: Yes, good morning, and congratulations on the results strong quarter.
David Sutherland MacGregor: Thanks, David.
Laurel M. Hurd: I guess I have lots of questions, but let me just pick up on the observation in the backlog that rubber and LVT are stronger than carbon. Is that a reflection of market demand? Or is it more a reflection of some of the initiatives that you've undertaken in the one interface where you're really focusing on the attachment sale of the LVT and the rubber product to a tile order?
David Sutherland MacGregor: I guess what.
Lots of questions, but.
David Sutherland MacGregor: Let me just pick up on the observation in the backlog that Robert L. B T or stronger than carpet is that a reflection of market demand or is it more a reflection of some of the initiatives that you've undertaken.
David Sutherland MacGregor: One interface, where youre really focusing on the attachment sale of <unk> and with.
David Sutherland MacGregor: Robert product to a title order.
Laurel M. Hurd: Yeah, I think it's that. So what we're seeing, and it's early days yet, so we kicked off the OneInterface selling team in the U.S. on January 1st, and what we're seeing now is actually, we had a bunch of our sales leaders in this week and we were talking about the order momentum and trying to put our finger on it, because honestly it's a tough market out there, and we feel good that we're gaining share, and as you said, we're seeing more attachment across rubber and LVT.
Speaker Change: Yes, I think it's I think it's that so what we're seeing and it's early days yet so we kicked off the one interface selling team in the U S. On January 1st and what we're seeing now is actually we had a bunch of our sales leaders in this week and we were talking about the order momentum I'm trying to put our finger on it because honestly, it's a tough market out there.
Speaker Change: And we feel good that we're gaining share and as you said, we're seeing more attachment across Robert <unk>.
Laurel M. Hurd: It's early days, so we're encouraged by the momentum of holding each other accountable to deliver growth in a single market, regardless of what product family is really starting to take hold, but we're encouraged. I don't think we expected to see it so soon, so more to come.
Speaker Change: It's early days, so we're encouraged where that the momentum of holding each other accountable to deliver growth in a single market.
Speaker Change: Godless of what product family is really starting to take hold.
Speaker Change: But we're encouraged I don't think we expected to see it.
Speaker Change: So soon so.
Speaker Change: More to come.
Laurel M. Hurd: And I mean, how much forward visibility do you have on that? It seems as though this is probably early innings if this is kind of a structural change in terms of how you go to market. Do you respond to that by adding more resources in your sales organization and just trying to take that new basket of products to let you mix a product into the market?
Speaker Change: Okay.
I mean, how much forward visibility do you have on that it seems as though this is probably early innings of this as kind of a structural change in terms of how you go to market.
Speaker Change: Do you respond to that by adding more <unk>.
Speaker Change: Resources.
Speaker Change: Your sales organization, just tried to take that new <unk>.
Speaker Change: Basket of products, so that your mix of product to the market.
Laurel M. Hurd: Yes, it's a great question. So it takes a while, you know; we've got a specified sales team, and it takes them a while to actually build their momentum. And we added seven, almost eight, I think it is, new sellers in Nora that's really amplifying that growth. What we're finding right now is, in addition to potentially looking at, you know, we'll learn as we go. And if we need to add more resources to fuel the growth, we'll definitely do that.
Speaker Change: Yes, it's a great question. So it takes a while you know we've got a specified sales team and it takes them a while to actually build their momentum and.
Speaker Change: And we added seven almost eight I think it is new sellers in Nora that's really amplifying that growth.
Speaker Change: What we're finding right now is in addition to potentially looking at you know, we'll learn as we go and if we need to add more resources to fuel the growth will definitely do that we're also looking at some of our supporting functions that this momentum is having on our business. We do some design services for our customers. It's a great indicator of how strong our.
Laurel M. Hurd: We're also looking at some of our supporting functions that this momentum is having on our business. We do some design services for our customers, and it's a great indicator of how strong our order momentum is when our internal design services start getting pressured. So we're looking at some supporting functions to make sure that we're there to service the growth.
Speaker Change: Our order momentum is when our internal design services start getting pressured.
Speaker Change: So we're looking at some supporting functions to make sure that we're there to service the growth.
Speaker Change: Thanks.
Laurel M. Hurd: I wanted to ask you as well about the lower costs that you achieved in the quarter and how much of that would be a reflection of just, you know, market pricing versus some of the improvements you've made, the investments you've made in your procurement function.
Speaker Change: Wanted to ask you as well about the lower cost that you achieved in the quarter and how much of that would be a reflection of just.
Speaker Change: Market pricing versus some of the improvements you've made the investments you've made in your procurement function.
Laurel M. Hurd: Yeah, I think it's probably both. So we're seeing some of the investments roll through. We talked about Bruce and I being out in Weinheim, Germany, looking at our Nora facility, and we made some investments there, excuse me, in automation, and seeing that flow through is starting to have a nice impact. But I think that's the early days, too. So a lot of those investments are just getting started, the investments we're making in LaGrange. We're ramping up, but we can only get so many machines so quickly. So some of that will take time over the next 24 months. I think that's another one that's in the early innings, honestly.
Speaker Change: Yes, I think it's I think it's probably bolt so we're seeing some of the.
Speaker Change: The investments roll through we talked about.
Speaker Change: Bruce and I were out in <unk>, Germany, looking at our North facility and we made some investments there.
Speaker Change: Excuse me in automation and seeing that flow through is starting to have a nice impact, but I think thats early days too. So a lot of those investments are just laying in.
Speaker Change: The investments, we're making in la Grange or ramping up but we can only get so many machines. So quickly and so some of that will take time over the next 24 months. So I think that's another one that's in early innings honestly.
Laurel M. Hurd: Yeah, it sounds that way. And then I wanted to ask you about your balance sheet. You're down to 1.7 times. Boy, the whole discussion around the interface balance sheet has really evolved over the last couple of years, and you've done a great job of deleveraging. I guess, what do you do now with that? Do you start looking more seriously at developing an acquisition funnel or just talk about it? Bruce mentioned in his comments that it creates opportunity. I guess I just want you to drill a little further on that, what you're thinking.
Yes, it sounds that way.
Speaker Change: And then I wanted to ask you about your balance sheet, you're down to one seven times boiler.
Speaker Change: Sure on the interface balance sheet has really evolved.
Speaker Change: Over the last couple of years and you've done a great job of deleveraging I guess, what do you do now.
With that.
Speaker Change: Do you start looking more seriously at developing an acquisition funnel or.
Speaker Change: Just to talk about.
Speaker Change: Bruce mentioned in his comments with it creates opportunity, which I guess I just wanted to drill a little further on that.
Laurel M. Hurd: Yeah, I think, as you said, I'm really proud of the team for how aggressively we've gone after the debt. It helps us give us a lot of options going forward. And I think we're really assessing our number one investment, you know; we'll continue to pay down debt, but our number one investment will be internally things that we can do to service our business growth, which, you know, we're finding more and more of those.
Speaker Change: Yes, I think as you said I'm really I'm proud of the team for how aggressively we have gone after that that it helps us gives us a lot of options going forward and I think we're really assessing our number one investment we will continue to pay down debt, but our number one investment will be internally or things that we can do to to service our business growth, which we're finding more.
Speaker Change: More and more of those.
Laurel M. Hurd: But it does give us options to, you know, pick our heads up and see what's out there. I think right now we're really focused on the here and now, and we think we've got a lot to invest in with respect to innovation and automation going forward.
Speaker Change: But it does give us options.
Speaker Change: Pick your head up and see what's out there I think right now we're really focused on on the here and now and we think we've got a lot to invest in with respect to innovation and automation going forward.
David Sutherland MacGregor: Okay, great; congratulations on all the progress.
Speaker Change: Okay, great congratulations on all the progress.
Speaker Change: Thanks, Kevin.
Speaker Change: Okay.
Operator: As a reminder, if you wish to ask a question, please press star followed by 1 on your telephone and wait for your name to be announced. And your next question comes from the line of Alex Paris from Barrington Research. Your line is open.
Speaker Change: As a reminder, if you wish to ask a question. Please press star followed by one on your telephone and wait for your name to be announced and your next question comes from the line of Alex Paris from Barrington Research. Your line is open.
Alex Paris: Morning, Laurel and Bruce. Congratulations on a strong quarter. A lot of good questions so far. I got a couple.
Alex Paris: I'm wondering laurel and Bruce congratulations.
Alex Paris: Patients on the strong quarter.
Alex Paris: Thank you.
Alex Paris: Hi.
Alex Paris: A lot of good questions. So far I got a couple of being sort of newer to the story I just want to understand.
Alex Paris: Being sort of newer to the story, I just want to understand a little bit more the dynamics of the gross margin, an area of focus clearly, and it continues to benefit from a favorable mix in price and input cost deflation. So, starting in reverse order, input cost deflation. Just catch me up to today. How long have we been benefiting from that, and will it continue, or has it been largely an anniversary at this point? Great question!
Speaker Change: A little bit more of the dynamics of the gross margin.
Speaker Change: An area of focus clearly.
Speaker Change: And it continues to benefit from favorable mix and price and input cost deflation. So youre starting in reverse order input cost deflation.
Speaker Change: But.
Speaker Change: Just catch me up to today, how long have we been benefiting from that and and.
Speaker Change: Will it continue or has it been largely anniversaried at this point.
Bruce A. Hausmann: question Alex and actually for being new to the story I think you're very strongly up to speed in the current quarter if you think about our gross margin expansion about a third of that came from price a third of that came from raw material deflation and a third of that came from mix and we have benefited from raw material deflation over the last few quarters what we're seeing right now is really pretty enough to be fair a ton of puts and takes but pretty steady raw material pricing right now with the exception of a little bit of pressure on freight and our best estimate is that the year-over-year pickups on raw materials will come to a close in the back half of this year
Great question, Alex and actually for being new to the story I think you're very strongly up to speed.
Speaker Change: Okay.
Speaker Change: In the current quarter, if you think about our gross margin expansion about a third of that came from price a third of that came from raw material deflation and a third of that came from mix and we have benefited from raw material deflation over the last few quarters.
Bruce A. Hausmann: Right, that's helpful. And then the other two, let's talk about mix and price. You say a third comes from price, those are price increases, and they're durable; you don't usually take them back once they're put into place. Yeah, I can come. I can comment on that Alex.
Speaker Change: What we're seeing right now is really pretty.
Speaker Change: To be fair a ton.
Speaker Change: Puts and takes but pretty steady raw material pricing right now with the exception of a little bit of pressure on freight and our best estimate is that the year over year pickups on raw materials will come to a close in the back half of this year.
Speaker Change: Great that's helpful.
Speaker Change: And then.
Speaker Change: The other two lets talk about mix in price you say, a third comes from price those price increases and they're durable.
Speaker Change: You don't take them back once they are put into place.
Speaker Change: Yeah.
Speaker Change: Yes, I can comment I can't comment Alex just to give a little bit of context, especially in the U S where we have a.
Laurel M. Hurd: a, um, uh, uh, incentivized selling organization. Those guys really do a nice job putting prices out and holding prices. So to your point, we don't often, you know; we won't take prices down. And in the US, which is our largest market, they're really incented to hold them. So they're fighting every day for it. It's a tough market, but they're proud of the progress.
Speaker Change: Uh huh.
Incentive five selling organization.
Those guys really do a nice job, putting price out and holding price. So to your point, we don't often we won't take prices down and then in the U S, which is our largest market, they're really incentive to hold them. So they are fighting everyday for it it's a tough market, but proud of the progress.
Bruce A. Hausmann: Great. And then lastly, on this line of questioning the mix, it's clear that LVT and rubber have higher gross margins than tile. How about by market segment, corporate office, education, healthcare, government, etc., retail?
Speaker Change: Great and then lastly on this line of questioning the mix, it's clear that <unk> and rubber have higher gross margins and tayo.
Speaker Change: How about by market segment.
Corporate office Education health care government et cetera retail.
Speaker Change: Okay.
Bruce A. Hausmann: It has a mix of customers across all those segments. Clearly, health care and education come at higher gross margins than, say, retail. But to be fair, we also have very strong margins in our corporate office business. So it varies by mix, it varies by segment, it varies by customer, and it varies by geography. So there are a lot of different puts and takes. I think the headline is that everything that we sell comes in at a gross margin that we like.
Speaker Change: It's a mix of customers across all those segments.
Speaker Change: Clearly healthcare and education comment stronger gross margins than say retail does.
Speaker Change: But to be fair. We also have very strong margins in our corporate office business.
Speaker Change: So it varies by mix it varies by segment it varies by customer it varies by geography. So so there are a lot of different puts and takes I think the headline is that everything that we sell comes in at gross margins that we like.
Bruce A. Hausmann: And so, but if you were to stack rank them, I think you're aware of this, Alex, you know, rubber is the strongest grist margin, followed by LVT, followed by carpet, so. And then just to add to that,
Speaker Change: And so.
Speaker Change: But if you were to stack rank them I think youre aware of this Alex rubber is the strongest gross margins followed by <unk> followed by carpet.
Bruce A. Hausmann: And then just to add to that as well, our margins in the U.S. are stronger, so that helps too when we mix up.
Speaker Change: And then just add on that as well or our margins in the in the U S are stronger so.
Speaker Change: That helps too when we mix up in the U S.
Speaker Change: Okay.
Alex Paris: Great, super helpful. And then, kind of continuing down the line of the new guys, stupid questions, because I have the license to do that at this point. Order growth of 5.1% is very encouraging. You talked a little bit about it in the prepared comments, and you were questioned about it already. Here's a fundamental question. How quickly do orders turn into revenue at Interface?
Great.
Speaker Change: Super helpful.
Speaker Change: And then kind of continuing down the line of the new guys are stupid questions because I have.
Speaker Change: I will do that at this point.
[laughter] order order growth of five 1% very encouraging you talked a little bit about it in the prepared comments and you were questioned about it already.
Speaker Change: Here's the fundamental question how quickly do orders turned into revenue at interface.
Laurel M. Hurd: There is a big range. The average is sort of, you know.
Speaker Change: There is a big range the average is sort of.
Bruce A. Hausmann: 12 to 13-ish weeks. However, some stuff goes out the same day, and then some stuff doesn't go out for a few quarters. So when you peel into the data, there's a huge range. But if you were to average it out, it's around 12-ish weeks. And I'll just
Speaker Change: 12, 13 ish weeks. However, some stuff goes out same day and then some stuff doesn't go out for a few quarters.
Speaker Change: So when you Peel into the data there is a huge range, but if you were to average it out.
Speaker Change: It's about it's around 12 weeks.
Laurel M. Hurd: And I'll just comment on our, I think Bruce already said this, but our orders in April continue with the same trend, so we're feeling, we're feeling good about the order strength in April.
And I will just comment to R. R. R. I think we've already said this but our orders than in April continue with the same trends that we're feeling we're feeling good about the order strength in April.
Alex Paris: Excellent. Um, and then Oh, and then retail, you know, so retail is going to be, is a contributor to the increase in net sales guidance, as I heard. Is the recovery in retail faster than you had expected? I realize that puts some pressure on revenue, even though it's a small segment, puts some pressure on revenue in the second half, and you expected that to continue through the first half.
Speaker Change: Excellent.
Speaker Change: And then.
Speaker Change: Oh, and then retail so retail is going to be.
Speaker Change: It is a contributor to the increase in net sales guidance is I heard.
Speaker Change: Is the recovery in retail faster than you had expected I realize that put some pressure on.
Speaker Change: On revenue, even though it's a small segment.
Speaker Change: Put some pressure on revenue in the second half and you expected that to continue through the first half.
Laurel M. Hurd: Yeah, I'll take that. And then Bruce, you can jump in on it.
Speaker Change: Yeah, I'll take that and then Bruce you can jump in as you said our retail business is small we don't we don't talk about it a lot is about 4% of our total business. So it's not a huge segment, but in the back half of last year.
Bruce: We had some significant pullback that impacted our revenue and.
Bruce: We weren't sure when they're going to come back we didn't lose the business, but some retailers made a decision to not refresh their stores and that has.
Speaker Change: We were pleasantly we're pleased I would say that this person.
Laurel M. Hurd: So Ruth, as you said, our retail business is small, we don't, we don't talk about it a lot. It's about 4% of our total business. So it's not a huge segment.
Bruce: We need to get refreshed eventually and we're starting to see that come through which is what I will start impacting us in Q2.
Bruce A. Hausmann: But in the back half of last year, we had some significant pullbacks that impacted our revenue. And we weren't sure when they were going to come back. We didn't lose the business, but some retailers made a decision to not refresh their stores. And that has, you know, we were pleasantly surprised, we're pleased, I would say that, you know, those stores need to get refreshed eventually. And we're starting to see that come through, which is what will start impacting us in Q2.
Speaker Change: Yes, I would just add.
Speaker Change: Reiterate with Laurel side. It was project deferrals instead of loss business, which we knew we were going to get that business to question was timing so.
Bruce A. Hausmann: Yeah, I would just add, I'll reiterate what Laurel said, it was project deferrals instead of lost business, which we knew we were going to get that business; the question was timing. So, and we're starting to see it come back.
Speaker Change: And we're starting to see it come back.
Alex Paris: So, from a timing perspective, is it coming back a little sooner than expected? You know, again, I expected to see pressure on that front during both the first and the second quarters, but it sounds like it's coming back a bit in the second.
Speaker Change: So from a timing perspective is it coming back a little sooner than expected again I expected to see pressure on that front during both the first and the second quarters, but it sounds like it's coming back a bit in the second quarter.
Laurel M. Hurd: It is. It's coming back a bit in the second quarter, sooner than expected, and then our current view is that it will also be there in Q3. So it is, and it's doing to your right.
Speaker Change: It is coming back a bit in the second quarter sooner than expected and then our current view is that it will also be there in Q3.
Speaker Change: So it is youre right.
Alex Paris: Okay, great, good news. And then last question, again, from my ignorance, there was a $400,000 charge for a cyber event. I wasn't aware of that. When did that occur? Is that behind the company now, or do you expect more expenses in that regard?
Speaker Change: Okay, Great. Good news and then the last question again from my ignorance.
Speaker Change: There was a $400000.
Speaker Change: Charge for a cyber event.
Speaker Change: I wasn't aware of that.
Speaker Change: When did that occur is that behind the company now or do you expect more expenses in that regard.
Bruce A. Hausmann: So Alex, that was actually a credit. We had an insurance claim related to our 2022 cyber event, and we incurred some hard costs. And so we actually got insurance recovery on that. And so what you're seeing on the on-gap adjustment schedule is actually a pickup.
Speaker Change: Yes, so Alex that was actually a credit we had uninsured <unk> claim related to our 2022 cyber event and those firms we incurred some hard costs and so we actually got insurance recovery on that.
Speaker Change: And so what youre seeing on the.
Speaker Change: The gap on GAAP.
Speaker Change: Adjustments schedule is actually a pickup.
Alex Paris: Gotcha. All right, I missed that. So, thank you very much. I appreciate the additional color, and I'll talk to you on our follow-up call. Thanks.
Alex Paris: Got you alright, I missed that so thank you very much I appreciate the additional color.
Speaker Change: I'll talk to you on a follow up call. Thanks cool. Thank you.
David Sutherland MacGregor: Cool, thank you. Your next question comes from David MacGregor from Longbow Research. Your line is open.
Speaker Change: Your next question comes from the line of David Macgregor from Longbow Research. Your line is open.
David Sutherland MacGregor: Yeah, just a follow-up. Thanks for taking the follow-up. It seems like we've got a few minutes here. I just wanted to get you to comment on the observation in the press release that You're talking about the drivers of the gross margin, I believe, we're referring to synergies from globalization of core fund, And so I guess we've talked a little bit about some of the things you've done in terms of sales resources and spec writers, but I just thought I'd get you to comment on anything maybe that we haven't talked about that you feel is worth noting.
David Sutherland MacGregor: Yes, just a follow up thanks for taking the follow up.
David Sutherland MacGregor: Okay.
David Sutherland MacGregor: Seems like we got a few minutes here I just wanted to get you to comment on the observation in the press release.
David Sutherland MacGregor: You were talking about the drivers of the <unk>.
David Sutherland MacGregor: Margin I believe.
David Sutherland MacGregor: You were referring to synergies from globalization core functions.
Speaker Change: So I guess, we've talked a little bit about some of the things you're doing with Turkey sales resources, the speculators, but I just wanted to get you to comment on anything maybe that we haven't talked about that you feel is worth, noting and and then maybe factors that.
David Sutherland MacGregor: And then, you know, maybe factors that you've been working on that really haven't come into play yet in the numbers, but you would expect to have a more beneficial impact and become more visible in the second.
Speaker Change: <unk> been working on that really haven't come into play yet in the numbers, but you would expect to have a more beneficial impact will become more visible in the second half.
Laurel M. Hurd: Yeah, thanks for the follow-up. I appreciate it.
Yeah. Thanks, Thanks for the follow up I appreciate it.
Speaker Change: We'd love to talk about so we have we talked a lot about the selling combined teams in the Americas, we're doing a ton of work honestly across every function. So a couple of examples our marketing organization, which used to be very very regional and even country level. We have we have one marketing team that's driving <unk>.
Laurel M. Hurd: It's stuff we love to talk about. So, you know, we have talked a lot about the combined selling teams in the Americas. We're doing a ton of work, honestly, across every function. So a couple examples: our marketing organization, which used to be very, very regional and even country level. We have one marketing team that's driving initiatives around the world. So we launched our Made for More brand campaign, which is a hit, which is great, and exciting. You'll see it on our website and social media. Here's an example. That's speed to market, one voice for the brand that goes out and hits the globe all at one time. So really efficient.
Laurel M. Hurd: Another example that I think is yet to be seen, and we'll start to see signs of it at Kirk & Well and at NeuCon, is that we've globalized our design function. But that doesn't mean every product is a global product, because there are certainly regional nuances. But we're looking at it from a global point of view; we have one design team, they sit in different places around the world, but there's one team really putting our best efforts against our biggest opportunities. So we've got some exciting new product launches that we'll showcase at NEACON. That's another example.
Speaker Change: Initiatives around the world. So we launched our made for a more brand campaign.
Speaker Change: <unk> hit which is which.
Speaker Change: Which is great exciting you'll see it on our website and social media.
Speaker Change: That's an example that speed to market one voice for the brand that goes and hits the globe all at one time, so really efficient.
Speaker Change: Another example that I think is yet to be seen what will start to see signs of it at clerkenwell end at neocon as we've globalized our design function.
Speaker Change: And that doesn't mean every product is a global product is there certainly a regional nuances, but we're looking at it from a global point of view to have we have one design team. They sit in different places around the world, but theres one team really putting our best efforts against our biggest opportunities. So we've got some exciting new product launches that will showcase.
Speaker Change: At.
Laurel M. Hurd: And then the third, I'd say, as you know, we hired a chief supply chain officer, and we're globalizing that function as well. There's so much opportunity, as Bruce and I looked at, you know, we went to see the facilities in Australia, in Germany, and the Netherlands, and there's just so much learning that's happening and sharing, and everyone's on the same team, driving great results, helping each other to see how efficiently we can learn from each other.
Speaker Change: At Neocon. That's another example, and then the third I would say as you know, we hired a chief supply chain officer and.
Speaker Change: Globalizing that function as well, there's so much opportunity as Bruce and I looked at when we went to see the facilities in.
Speaker Change: In Australia in Germany and.
Speaker Change: In the Netherlands, and there's just so much learning that's happening and sharing and everyone's on the same team driving great results, helping each other to see how efficiently. We can learn from each other and there's really good best practices that are coming through some of the investments that we're making in lagrange.
Laurel M. Hurd: And there are really good best practices that are coming through some of the investments that we're making in LaGrange. We've showcased them to the other regions, and we're assessing whether that makes sense for those markets or not, but... That's where the beauty is. We do it efficiently, we do it once, and we scale it. So there's a lot more to come from that from that perspective. It's good work.
Speaker Change: We have showcase to the other regions and we're assessing whether that makes sense for those markets or not but.
So that's where that's where the beauty is we do it efficiently we do it once and we scale it.
So theres a lot more to come from that from that perspective, it's good work so far.
David Sutherland MacGregor: And do you find that as you're building out this capability with you know, the one team, one dream global scale opportunity? Are you finding that you're getting a better audience, or you're maybe getting a little more traction with larger global accounts, as opposed to maybe smaller, more fragmented accounts?
Speaker Change: Did you find that as Youre building out this capability with the one team one dream global scale opportunity are you finding that you're getting a better audience or you may be getting a little more traction with larger global accounts mhm mhm as opposed to maybe smaller more fragmented accounts.
Laurel M. Hurd: Yeah, yeah, it's interesting, you know, there are a couple examples of that. In Australia, we met with a large global account, and some of it is that, as you say, we're approaching it beyond one flooring solution. There's more than that.
Laurel M. Hurd: Yeah, yeah, it's
Speaker Change: Yeah, Yeah, it's interesting.
There are a couple of examples of that weather.
Speaker Change: And in Australia, we met with a large global account and some of it is that we're as you say we're approaching it beyond one.
Laurel M. Hurd: There's another example of a major retailer that we met with that's really looking at a multi-floor solution. And again, we'd shown up a little bit differently in the past, and we're now coming with one voice. So I think you're right. We're getting a higher-level audience, and we're also much more coordinated and making more impact as we do meet with our customers. And they're enjoying it. They don't have to work with separate teams, right? We show up with one voice, and we know their needs.
Speaker Change: One flooring solution, there's more than that there is another example.
Speaker Change: A major retailer that we met with its really looking at a multi floor solution.
David Sutherland MacGregor: Great. Great. Congratulations on the progress. Thank you.
Speaker Change: And again, we've shown up a little bit differently in the past and we're now coming with with one voice. So I think youre right were getting.
Speaker Change: We're getting.
Speaker Change: A higher level audience, and we're also much more coordinated and making more impact as we do meet with our customers and they're enjoying it. They don't have to work with separate teams right. We show up with one one voice and we know their needs.
Speaker Change:
Speaker Change: As well.
Speaker Change: Great great congratulations on the progress thank you.
David Sutherland MacGregor: Great. Thanks, David.
Speaker Change: Thanks, David.
Operator: There are no further questions at this time, so let's turn the call back over to Laurel Hurd.
Speaker Change: There are no further questions at this time, so let's turn the call back over to Laurel Hurd.
Speaker Change: Okay.
Laurel M. Hurd: Well, thank you so much. I appreciate you all listening today and want to again thank the team for all the work that they're doing and the great progress. Great start to the year, and we look forward to updating everyone next quarter.
Laurel M. Hurd: Well. Thank you so much I appreciate you all listening today and want to again, thank the team for all the work that they're doing and the great progress great start to the year and we look forward to updating everyone next quarter.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Speaker Change: That does conclude our conference for today. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Okay.
Okay.
Speaker Change: