Interface, Inc. (NASDAQ:TILE) Q4 2023 Earnings Call Transcript

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We’ve been really reluctant to fully integrate the selling team because it really is a different sale. When I go out to a Nora customer, I’m suited up head to toe in a bunny suit kind of crawling around on the hospital room floor versus what our Interface sellers spend a lot of their time with architects and designers and end users. But what we found in the example that we gave on a hospital campus, they love the Nora brand. And Nora has been sold in every operating room, in every one of their facilities around the world. And yet we haven’t necessarily landed the LVT or the carpet tile in patient rooms and waiting rooms. So now we’re launching combined selling teams, which have on quota. And when you have a variable comp structure and you align those selling systems, so we’ve seen some really strong results with order generation up double digits in those pilot markets.

So we’re rolling that across the Americas. We launched that in January. We had our selling teams together in the past few weeks and are really excited about the results there.

Joe Nolan: That’s great detail. Thanks. I’ll pass it on.

Operator: Your next question comes from the line of Keith Hughes with Truist. Your line is open.

Keith Hughes: Thank you. Within the revenue guide for the year, it’s a flat, modestly up. Could you just talk about how you think the various end-user markets will be performing under this point?

Laurel Hurd: Yes. Hi, Keith. As we mentioned, our retail end market has been challenged starting in the back half of last year. And as we mentioned also, it’s largely one customer and we see that continuing in the first half of this year. And the good news there, we haven’t lost that business. They’ve just delayed their store remodels, which we do expect they’re going to have to remodel at some point, but we’re being conservative about how we’re thinking about that. So that’s, I think, the biggest headwind that we’ve got in the first half of the year, and then we’ll be past that comp in the middle of the year. We are seeing strength in corporate as people are returning to work and that Class A space is really where we’re seeing the most activity.

And again, we believe we’re gaining share there. So we’re not naive to the market dynamics, but we’re cautiously optimistic that corporate will continue to hold in really steady. And then healthcare and education, we’re continuing to see growth there and expect that to continue.

Keith Hughes: In the corporate office comment you just made, is that from remodel activity? Is that what’s driving it? So it sounds like it’s going to be a positive number based on what you just said?

Laurel Hurd: Yes.

Keith Hughes: Or is it remodel and new construction?

Laurel Hurd: We’re primarily seeing the strength in remodel for sure. It’s people moving their spaces. There’s a lot of movement with return to office and people wanting to refresh their space, either encouraged to bring people back or in some cases, they are moving to new space that’s smaller, but that activity is really good for us, and we’re capitalizing on it. It’s definitely the remodel side of it.

Keith Hughes: Okay. And final question on revenue guide. What’s the — are units and pricing flattish in this scenario? Or is there some residual pricing that’s still going to be flowing through beginning of the year?

Laurel Hurd: We think there’s a little bit of residual price. We do a pretty good job when we roll out pricing to hold it. We’ll do that often times with new collections and other things that we’re able to hold. So there’s a little bit of price and then units about flattish, maybe down a little bit.

Keith Hughes: Okay. Thank you.

Laurel Hurd: Yeah.

Operator: There are no further questions at this time. I will now turn the call back over to Laurel Hurd for closing remarks.

Laurel Hurd: Great. Thank you, and thanks to everyone for listening to the call today. Thanks to the entire Interface team for their continued efforts, and we look forward to keep everyone — keeping everyone posted on our progress.

Operator: This concludes today’s call. You may now disconnect.

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