UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Form 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 1, 2023March 31, 2024
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-33994
INTERFACE INC
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Georgia | | 58-1451243 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
| | | | | | | | | | | |
| 1280 West Peachtree Street | Atlanta | Georgia | 30309 |
| (Address of principal executive offices) | (zip code) |
Registrant’s telephone number, including area code: (770) 437-6800
Securities Registered Pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
| Common Stock, $0.10 Par Value Per Share | TILE | Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Large accelerated filer | þ¨ | Accelerated filer | ¨þ | Non-accelerated filer | ¨ | Smaller reporting company | ☐ | Emerging growth company | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
Number of shares outstanding of each of the registrant’s classes of common stock, as of NovemberMay 2, 2023:2024:
| | | | | |
| Class | Number of Shares |
| Common Stock, $0.10 par value per share | 58,106,97558,242,833 |
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except par values)
| | OCTOBER 1, 2023 | | JANUARY 1, 2023 |
| (UNAUDITED) | | |
| MARCH 31, 2024 | | | MARCH 31, 2024 | | DECEMBER 31, 2023 |
| (UNAUDITED) | |
| ASSETS | |
| ASSETS | |
| ASSETS | ASSETS | |
| Current assets | Current assets | |
| Current assets | |
| Current assets | |
| Cash and cash equivalents | |
| Cash and cash equivalents | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 119,633 | | | $ | 97,564 | |
| Accounts receivable, net | Accounts receivable, net | 143,884 | | | 182,807 | |
| Inventories, net | Inventories, net | 289,320 | | | 306,327 | |
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | 33,003 | | | 30,339 | |
| Total current assets | Total current assets | 585,840 | | | 617,037 | |
| Property, plant and equipment, net | Property, plant and equipment, net | 282,401 | | | 297,976 | |
| Operating lease right-of-use assets | Operating lease right-of-use assets | 75,604 | | | 81,644 | |
| Deferred tax asset | Deferred tax asset | 16,263 | | | 17,767 | |
| Goodwill and intangibles, net | 156,487 | | | 162,195 | |
| Goodwill and intangible assets, net | |
| Other assets | Other assets | 85,046 | | | 89,884 | |
| | | | | |
| Total assets | Total assets | $ | 1,201,641 | | | $ | 1,266,503 | |
| Total assets | |
| Total assets | |
| | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| Current liabilities | Current liabilities | |
| Current liabilities | |
| Current liabilities | |
| Accounts payable | |
| Accounts payable | |
| Accounts payable | Accounts payable | $ | 75,602 | | | $ | 78,264 | |
| Accrued expenses | Accrued expenses | 115,266 | | | 120,138 | |
| Current portion of operating lease liabilities | Current portion of operating lease liabilities | 10,829 | | | 11,857 | |
| Current portion of long-term debt | Current portion of long-term debt | 8,492 | | | 10,211 | |
| Total current liabilities | Total current liabilities | 210,189 | | | 220,470 | |
| Long-term debt | Long-term debt | 435,899 | | | 510,003 | |
| Operating lease liabilities | Operating lease liabilities | 67,554 | | | 72,305 | |
| Deferred income taxes | Deferred income taxes | 37,052 | | | 38,662 | |
| Other long-term liabilities | Other long-term liabilities | 63,383 | | | 63,526 | |
| | | | | |
| Total liabilities | Total liabilities | 814,077 | | | 904,966 | |
| Total liabilities | |
| Total liabilities | |
| | | | | |
| Commitments and contingencies | |
| Commitments and contingencies (Note 14) | |
| Commitments and contingencies (Note 14) | |
| Commitments and contingencies (Note 14) | | | | |
| | | |
| Shareholders’ equity | Shareholders’ equity | |
| Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at October 1, 2023 and January 1, 2023 | — | | | — | |
| Common stock, par value $0.10 per share; 120,000 shares authorized; 58,107 and 58,106 shares issued and outstanding at October 1, 2023 and January 1, 2023, respectively | 5,811 | | | 5,811 | |
| Shareholders’ equity | |
| Shareholders’ equity | |
| Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at March 31, 2024 and December 31, 2023 | |
| Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at March 31, 2024 and December 31, 2023 | |
| Preferred stock, par value $1.00 per share; 5,000 shares authorized; none issued or outstanding at March 31, 2024 and December 31, 2023 | |
| Common stock, par value $0.10 per share; 120,000 shares authorized; 58,273 and 58,112 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | |
| Additional paid-in capital | Additional paid-in capital | 249,979 | | | 244,159 | |
| Retained earnings | Retained earnings | 301,859 | | | 278,639 | |
| Accumulated other comprehensive loss – foreign currency translation | Accumulated other comprehensive loss – foreign currency translation | (141,660) | | | (138,775) | |
| Accumulated other comprehensive loss – cash flow hedge | — | | | (749) | |
| Accumulated other comprehensive loss – pension liability | Accumulated other comprehensive loss – pension liability | (28,425) | | | (27,548) | |
| | | | | |
| Total shareholders’ equity | Total shareholders’ equity | 387,564 | | | 361,537 | |
| Total shareholders’ equity | |
| Total shareholders’ equity | |
| | | | | |
| Total liabilities and shareholders’ equity | Total liabilities and shareholders’ equity | $ | 1,201,641 | | | $ | 1,266,503 | |
| Total liabilities and shareholders’ equity | |
| Total liabilities and shareholders’ equity | |
See accompanying notes to consolidated condensed financial statements.
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
| | THREE MONTHS ENDED | | NINE MONTHS ENDED |
| OCTOBER 1, 2023 | | OCTOBER 2, 2022 | | OCTOBER 1, 2023 | | OCTOBER 2, 2022 |
| THREE MONTHS ENDED | | | THREE MONTHS ENDED |
| MARCH 31, 2024 | | | MARCH 31, 2024 | | APRIL 2, 2023 |
| Net sales | Net sales | $ | 311,006 | | | $ | 327,757 | | | $ | 936,380 | | | $ | 962,364 | |
| Cost of sales | Cost of sales | 200,748 | | | 218,972 | | | 618,463 | | | 630,074 | |
| Gross profit | Gross profit | 110,258 | | | 108,785 | | | 317,917 | | | 332,290 | |
| | | |
| Selling, general and administrative expenses | Selling, general and administrative expenses | 79,273 | | | 80,848 | | | 251,049 | | | 240,711 | |
| Restructuring, asset impairment, other (gains) and charges | — | | | (105) | | | (2,502) | | | 1,592 | |
| Selling, general and administrative expenses | |
| Selling, general and administrative expenses | |
| Restructuring, asset impairment and other charges | |
| Operating income | Operating income | 30,985 | | | 28,042 | | | 69,370 | | | 89,987 | |
| | | |
| Interest expense | Interest expense | 8,163 | | | 7,747 | | | 24,986 | | | 21,787 | |
| Other expense, net | 6,702 | | | 124 | | | 7,674 | | | 1,688 | |
| Interest expense | |
| Interest expense | |
| Other (income) expense, net | |
| | | | | | | | | |
| Income before income tax expense | 16,120 | | | 20,171 | | | 36,710 | | | 66,512 | |
| Income (loss) before income tax expense | |
| Income (loss) before income tax expense | |
| Income (loss) before income tax expense | |
| Income tax expense | Income tax expense | 6,241 | | | 6,106 | | | 11,748 | | | 22,336 | |
| | | | | | | | | |
| Net income | $ | 9,879 | | | $ | 14,065 | | | $ | 24,962 | | | $ | 44,176 | |
| Net income (loss) | |
| Net income (loss) | |
| Net income (loss) | |
| | | | | | | | | |
| Earnings per share – basic | $ | 0.17 | | | $ | 0.24 | | | $ | 0.43 | | | $ | 0.75 | |
| Earnings per share – diluted | $ | 0.17 | | | $ | 0.24 | | | $ | 0.43 | | | $ | 0.75 | |
| Earnings (loss) per share – basic | |
| Earnings (loss) per share – basic | |
| Earnings (loss) per share – basic | |
| Earnings (loss) per share – diluted | |
| | | |
| Common shares outstanding – basic | Common shares outstanding – basic | 58,107 | | | 58,681 | | | 58,087 | | | 59,099 | |
| Common shares outstanding – basic | |
| Common shares outstanding – basic | |
| Common shares outstanding – diluted | Common shares outstanding – diluted | 58,342 | | | 58,681 | | | 58,233 | | | 59,099 | |
See accompanying notes to consolidated condensed financial statements.
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | NINE MONTHS ENDED |
| OCTOBER 1, 2023 | | OCTOBER 2, 2022 | | OCTOBER 1, 2023 | | OCTOBER 2, 2022 |
| Net income | $ | 9,879 | | | $ | 14,065 | | | $ | 24,962 | | | $ | 44,176 | |
| Other comprehensive loss, after tax: | | | | | | | |
| Foreign currency translation adjustment | (9,176) | | | (36,800) | | | (2,885) | | | (86,654) | |
| Reclassification from accumulated other comprehensive loss – discontinued cash flow hedge | 150 | | | 492 | | | 749 | | | 1,673 | |
| Pension liability adjustment | 202 | | | 3,393 | | | (877) | | | 8,774 | |
| Other comprehensive loss | (8,824) | | | (32,915) | | | (3,013) | | | (76,207) | |
| | | | | | | | |
| Comprehensive income (loss) | $ | 1,055 | | | $ | (18,850) | | | $ | 21,949 | | | $ | (32,031) | |
| | | | | | | | | | | |
| THREE MONTHS ENDED |
| MARCH 31, 2024 | | APRIL 2, 2023 |
| Net income (loss) | $ | 14,179 | | | $ | (714) | |
| Other comprehensive (loss) income, after tax: | | | |
| Foreign currency translation adjustment | (11,092) | | | 4,930 | |
| Reclassification from accumulated other comprehensive loss – discontinued cash flow hedge | — | | | 299 | |
| Pension liability adjustment | 458 | | | (279) | |
| Other comprehensive (loss) income | (10,634) | | | 4,950 | |
| | | |
| Comprehensive income | $ | 3,545 | | | $ | 4,236 | |
See accompanying notes to consolidated condensed financial statements.
INTERFACE, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| | NINE MONTHS ENDED |
| OCTOBER 1, 2023 | | OCTOBER 2, 2022 |
| THREE MONTHS ENDED | | | THREE MONTHS ENDED |
| MARCH 31, 2024 | | | MARCH 31, 2024 | | APRIL 2, 2023 |
| OPERATING ACTIVITIES: | OPERATING ACTIVITIES: | | | |
| Net income | $ | 24,962 | | | $ | 44,176 | |
| Adjustments to reconcile net income to cash provided by operating activities: | |
| Net income (loss) | |
| Net income (loss) | |
| Net income (loss) | |
| Adjustments to reconcile net income (loss) to cash provided by operating activities: | |
| Depreciation and amortization | |
| Depreciation and amortization | |
| Depreciation and amortization | Depreciation and amortization | 30,591 | | | 30,661 | |
| Share-based compensation expense | Share-based compensation expense | 7,334 | | | 6,679 | |
| Gain on disposal of property, plant and equipment, net | (2,531) | | | — | |
| Loss on foreign subsidiary liquidation | 6,221 | | | — | |
| Deferred income taxes and other | Deferred income taxes and other | (671) | | | 13,616 | |
| Amortization of acquired intangible assets | Amortization of acquired intangible assets | 3,886 | | | 3,817 | |
| Working capital changes: | Working capital changes: | |
| Accounts receivable | |
| Accounts receivable | |
| Accounts receivable | Accounts receivable | 37,396 | | | (8,860) | |
| Inventories | Inventories | 14,135 | | | (71,487) | |
| Prepaid expenses and other current assets | Prepaid expenses and other current assets | (2,842) | | | 2,321 | |
| Accounts payable and accrued expenses | Accounts payable and accrued expenses | (4,264) | | | (6,040) | |
| | | | | |
| Cash provided by operating activities | Cash provided by operating activities | 114,217 | | | 14,883 | |
| Cash provided by operating activities | |
| Cash provided by operating activities | |
| | | | | |
| INVESTING ACTIVITIES: | INVESTING ACTIVITIES: | |
| INVESTING ACTIVITIES: | |
| INVESTING ACTIVITIES: | |
| Capital expenditures | |
| Capital expenditures | |
| Capital expenditures | Capital expenditures | (17,238) | | | (13,314) | |
| Proceeds from sale of property, plant and equipment | Proceeds from sale of property, plant and equipment | 6,593 | | | — | |
| Insurance proceeds from property casualty loss | |
| | | | | |
| Cash used in investing activities | |
| Cash used in investing activities | |
| Cash used in investing activities | Cash used in investing activities | (10,645) | | | (13,314) | |
| | | | | |
| FINANCING ACTIVITIES: | FINANCING ACTIVITIES: | |
| FINANCING ACTIVITIES: | |
| FINANCING ACTIVITIES: | |
| Repayments of long-term debt | |
| Repayments of long-term debt | |
| Repayments of long-term debt | Repayments of long-term debt | (149,738) | | | (151,662) | |
| Borrowing of long-term debt | Borrowing of long-term debt | 74,000 | | | 159,363 | |
| Tax withholding payments for share-based compensation | Tax withholding payments for share-based compensation | (1,514) | | | (398) | |
| Repurchase of common stock | — | | | (14,451) | |
| Dividends paid | Dividends paid | (1,742) | | | (1,773) | |
| Finance lease payments | Finance lease payments | (1,853) | | | (1,535) | |
| | | | | |
| Cash used in financing activities | Cash used in financing activities | (80,847) | | | (10,456) | |
| Cash used in financing activities | |
| Cash used in financing activities | |
| | | | | |
| Net cash provided by (used in) operating, investing and financing activities | 22,725 | | | (8,887) | |
| Net cash (used in) provided by operating, investing and financing activities | |
| Net cash (used in) provided by operating, investing and financing activities | |
| Net cash (used in) provided by operating, investing and financing activities | |
| Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | (656) | | | (8,916) | |
| | | | | |
| CASH AND CASH EQUIVALENTS: | CASH AND CASH EQUIVALENTS: | |
| Net increase (decrease) | 22,069 | | | (17,803) | |
| CASH AND CASH EQUIVALENTS: | |
| CASH AND CASH EQUIVALENTS: | |
| Net (decrease) increase | |
| Net (decrease) increase | |
| Net (decrease) increase | |
| Balance, beginning of period | Balance, beginning of period | 97,564 | | | 97,252 | |
| | | | | |
| Balance, end of period | Balance, end of period | $ | 119,633 | | | $ | 79,449 | |
| Balance, end of period | |
| Balance, end of period | |
See accompanying notes to consolidated condensed financial statements.
INTERFACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
References in this Quarterly Report on Form 10-Q to “Interface,” “the Company,” “we,” “our,” “ours” and “us” refer to Interface, Inc. and its subsidiaries or any of them, unless the context requires otherwise.
As contemplated by the Securities and Exchange Commission (the “Commission”) instructions to Form 10-Q, the following footnotes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to the Company’s year-end financial statements and notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023, as filed with the Commission.
The financial information included in this report has been prepared by the Company, without audit. In the opinion of management, the financial information included in this report contains all adjustments necessary for a fair presentation of the results for the interim periods. All such adjustments are of a normal recurring nature unless otherwise disclosed. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The January 1,December 31, 2023, consolidated condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States (“GAAP”).
The nine-month periods ended October 1, 2023 and October 2, 2022, both include 39 weeks. The three-month periods ended October 1,March 31, 2024 and April 2, 2023 and October 2, 2022, both include 13 weeks.
Risks and Uncertainties
Global economic challenges, including the impacts of the Russia-Ukraine and Israel-Hamas wars, inflation, and supply chain disruptions, and the slow macro environment in China could cause economic uncertainty and volatility. The Company considered these impacts and subsequent general uncertainties and volatility in the global economy on the assumptions and estimates used herein. In connection with the Cyber Event discussed below, security breaches may expose us to fines and other liabilities to the extent sensitive data stored in our IT systems, including data related to customers, suppliers or employees, are misappropriated. The Company considered these impacts and subsequent general uncertainties and volatility in the global economy on the assumptions and estimates used herein. These uncertainties could result in a future material adverse effect to the amounts reported within the Company’s consolidated condensed financial statements if actual results differ from these estimates.
Cybersecurity Event
On November 20, 2022, we discovered a cybersecurity attack, perpetrated by unauthorized third parties, affecting our IT systems (the “Cyber Event”). In response to this Cyber Event, we notified law enforcement and took steps to supplement existing security monitoring, including scanning and protective measures. The investigation of the Cyber Event by our forensic experts was substantially completed early in the third quarter ofduring fiscal year 2023.
Recently AdoptedIssued Accounting Pronouncements– Not Yet Adopted
In JulyDecember 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03,2023-09, “Presentation of Financial StatementsIncome Taxes (Topic 205),740): Improvements to Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), Compensation — Stock Compensation (Topic 718)Tax Disclosures..”This ASU amends various paragraphsrequires public entities on an annual basis to disclose a rate reconciliation with explicit categories, as outlined in the accounting codification pursuant to the issuance of Commission Staff Accounting Bulletin (“SAB”) number 120. The ASU, provides clarifying guidance related to employee and non-employee share-based payment accounting, including guidance related to spring-loaded awards. ASU 2023-03 is effective upon issuance. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” This ASU clarifies that a contractual restriction on the sale of an equity security is not considered in measuring fair value. The ASU also requires certainadditional disclosures for equity securities subject to contractual sale restrictions.reconciling items that meet certain quantitative thresholds. Other disclosures include disaggregation of income taxes paid, pre-tax income, and income tax expense. The new guidance is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2023.2024. Early adoption is permitted. The Company is currently evaluating the impact of this ASU to its income tax disclosures.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU requires additional disclosures in annual and interim periods for significant segment expenses included in the measure of segment profit provided to the chief operating decision maker (“CODM”). Disclosure of other segment items by reportable segment as well as a description of its composition is also required. The new guidance is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. Early adoption is permitted. The Company adopted this standard on April 2, 2023. The adoptionis currently evaluating the impact of this standard did not have a material impact on the Company’s consolidated financial statements.ASU to its segment disclosures.
NOTE 2 – REVENUE RECOGNITION
The Company generates revenue from sales of modular carpet, resilient flooring, rubber flooring, and other flooring-related material, and from the installation of carpet and other flooring-related material. A summary of these revenue streams, as a percentage of net sales, for the three and nine months ended October 1,March 31, 2024 and April 2, 2023 and October 2, 2022 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| Revenue from the sale of flooring material | 98 | % | | 96 | % | | 98 | % | | 97 | % |
| Revenue from installation of flooring material | 2 | % | | 4 | % | | 2 | % | | 3 | % |
| | | | | | | | | | | |
| Three Months Ended |
| March 31, 2024 | | April 2, 2023 |
| Revenue from the sale of flooring material | 99 | % | | 98 | % |
| Revenue from installation of flooring material | 1 | % | | 2 | % |
Disaggregation of Revenue
For the three and nine months ended October 1,March 31, 2024 and April 2, 2023, and October 2, 2022, revenue from the Company’s customers is broken down by geography as follows:
| | Three Months Ended | | Nine Months Ended |
| Three Months Ended | | | Three Months Ended |
| Geography | Geography | October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | Geography | March 31, 2024 | | April 2, 2023 |
| Americas | Americas | 57.3 | % | | 59.4 | % | | 58.6 | % | | 57.9 | % | Americas | 58.6 | % | | 57.2 | % |
| Europe | Europe | 30.3 | % | | 28.2 | % | | 30.0 | % | | 29.3 | % | Europe | 31.6 | % | | 32.0 | % |
| Asia-Pacific | Asia-Pacific | 12.4 | % | | 12.4 | % | | 11.4 | % | | 12.8 | % | Asia-Pacific | 9.8 | % | | 10.8 | % |
Revenue from the Company’s customers in the Americas corresponds to the AMS reportable segment, and the EAAA reportable segment includes revenue from the Europe and Asia-Pacific geographies. See Note 1110 entitled “Segment Information” for additional information.
NOTE 3 – INVENTORIES
Inventories are summarized as follows:
| | October 1, 2023 | | January 1, 2023 |
| (in thousands) |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| (in thousands) | | | (in thousands) |
| Finished goods | Finished goods | $ | 207,885 | | | $ | 209,478 | |
| Work-in-process | Work-in-process | 19,103 | | | 15,463 | |
| Raw materials | Raw materials | 62,332 | | | 81,386 | |
| Inventories, net | Inventories, net | $ | 289,320 | | | $ | 306,327 | |
NOTE 4 – EARNINGS PER SHARE
The Company computes basic earnings (loss) per share (“EPS”) by dividing net income (loss) by the weighted average common shares outstanding, including participating securities outstanding, during the period as discussed below. Diluted EPS reflects the potential dilution beyond shares for basic EPS that could occur if securities or other contracts to issue common stock were exercised, converted into common stock or resulted in the issuance of common stock that would have shared in the Company’s earnings.earnings (loss).
The Company includes all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding for basic EPS as these awards are considered participating securities. Any unvested stock awards considered non-participating securities are included in diluted EPS calculations when the inclusion of these shares would be dilutive. Unvested share-based awards of restricted stock are paid dividends equally with all other shares of common stock. As a result, the Company includes all outstanding restricted stock awards in the calculation of basic and diluted EPS. Distributed earnings include common stock dividends and dividends earned on unvested share-based payment awards. Undistributed earnings represent earnings that were available for distribution but were not distributed. The following table shows the computation of basic and diluted EPS:
| | Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| (in thousands, except per share data) |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| (in thousands, except per share data) | | | (in thousands, except per share data) |
| Numerator: | Numerator: | |
| Net income | $ | 9,879 | | | $ | 14,065 | | | $ | 24,962 | | | $ | 44,176 | |
| Net income (loss) | |
| Net income (loss) | |
| Net income (loss) | |
| Less: distributed and undistributed earnings available to participating securities | Less: distributed and undistributed earnings available to participating securities | (117) | | | (246) | | | (327) | | | (716) | |
| Distributed and undistributed earnings available to common shareholders | $ | 9,762 | | | $ | 13,819 | | | $ | 24,635 | | | $ | 43,460 | |
| Distributed and undistributed earnings (loss) available to common shareholders | |
| | | | | | | | | |
| Denominator: | Denominator: | |
| Denominator: | |
| Denominator: | |
| Weighted average shares outstanding | |
| Weighted average shares outstanding | |
| Weighted average shares outstanding | Weighted average shares outstanding | 57,420 | | | 57,656 | | | 57,326 | | | 58,139 | |
| Participating securities | Participating securities | 687 | | | 1,025 | | | 761 | | | 960 | |
| Shares for basic EPS | Shares for basic EPS | 58,107 | | | 58,681 | | | 58,087 | | | 59,099 | |
| Dilutive effect of non-participating securities | Dilutive effect of non-participating securities | 235 | | | — | | | 146 | | | — | |
| Shares for diluted EPS | Shares for diluted EPS | 58,342 | | | 58,681 | | | 58,233 | | | 59,099 | |
| | | | | | | | | |
| Basic EPS | Basic EPS | $ | 0.17 | | | $ | 0.24 | | | $ | 0.43 | | | $ | 0.75 | |
| Basic EPS | |
| Basic EPS | |
| Diluted EPS | Diluted EPS | $ | 0.17 | | | $ | 0.24 | | | $ | 0.43 | | | $ | 0.75 | |
For both the three and nine months ended October 1,March 31, 2024 and April 2, 2023, 855,7851,049,405 and 1,728,579 non-participating securities that could potentially dilute basic EPS in the future, respectively, consisting of restricted share units and performance shares, were excluded from the computation of diluted EPS as these securities would have been antidilutive for the respective periods.
NOTE 5 – LONG-TERM DEBT
Long-term debt consisted of the following:
| | March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Outstanding Principal | | | Outstanding Principal | | Interest Rate(1) | | Outstanding Principal | | Interest Rate(1) |
| (in thousands) | |
Syndicated Credit Facility(2): | |
Syndicated Credit Facility(2): | |
Syndicated Credit Facility(2): | |
| | Term loan borrowings | |
| | Term loan borrowings | |
| | Term loan borrowings | | $ | 95,988 | | | 6.26 | % | | $ | 121,658 | | | 6.61 | % |
| | | October 1, 2023 | | January 1, 2023 |
| 5.50% Senior Notes due 2028 | |
| | Outstanding Principal | | Interest Rate(1) | | Outstanding Principal | | Interest Rate(1) |
| (in thousands) | | | | (in thousands) | | |
| Syndicated Credit Facility: | |
| Revolving loan borrowings | $ | 5,895 | | | 7.33 | % | | $ | 24,250 | | | 5.29 | % |
| Term loan borrowings | 143,361 | | | 6.63 | % | | 202,082 | | | 5.84 | % |
| Total borrowings under Syndicated Credit Facility | 149,256 | | | 6.66 | % | | 226,332 | | | 5.78 | % |
| 5.50% Senior Notes due 2028 | |
| | 5.50% Senior Notes due 2028 | 5.50% Senior Notes due 2028 | 300,000 | | | 5.50 | % | | 300,000 | | | 5.50 | % | 300,000 | | | 5.50 | | 5.50 | % | | 300,000 | | | 5.50 | | 5.50 | % |
| | | | | | |
| Total debt | Total debt | 449,256 | | | 526,332 | | |
| Total debt | |
| Total debt | |
| Less: Unamortized debt issuance costs | |
| Less: Unamortized debt issuance costs | |
| Less: Unamortized debt issuance costs | Less: Unamortized debt issuance costs | (4,865) | | | (6,118) | | |
| | | | | | |
| | |
| | |
| Total debt, net | |
| Total debt, net | |
| Total debt, net | Total debt, net | 444,391 | | | 520,214 | | |
| Less: Current portion of long-term debt | Less: Current portion of long-term debt | (8,492) | | | (10,211) | | |
| Less: Current portion of long-term debt | |
| Less: Current portion of long-term debt | |
| | |
| | |
| | | | | | |
| Total long-term debt, net | Total long-term debt, net | $ | 435,899 | | | $ | 510,003 | | |
| Total long-term debt, net | |
| Total long-term debt, net | |
(1) Represents the weighted average rate of interest for borrowings under the Syndicated Credit Facility and the stated rate of interest for the 5.50% Senior Notes due 2028, without the effect of debt issuance costs.
(2) The Syndicated Credit Facility also includes a multicurrency revolving loan facility up to $300.0 million. There were no revolving loan borrowings outstanding as of March 31, 2024 or December 31, 2023.
Syndicated Credit Facility
The Company’s Syndicated Credit Facility (the “Facility”) provides to the Company U.S. denominated and multicurrency term loans and provides to the Company and certain of its subsidiaries a multicurrency revolving credit facility. Interest on base rate loans is charged at varying rates computed by applying a margin depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. Interest on SOFR-based and alternative currency loans and fees for letters of credit areis charged at varying rates computed by applying a margin over the applicable SOFR rate or alternative currency rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. In addition, the Company pays a commitment fee per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.
Fees for commercial letters of credit are computed as a percentage of the amount available to be drawn under such letters of credit. Fees for standby letters of credit are charged at varying rates computed by applying a margin of the amount available to be drawn under such standby letters of credit, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter. As of both October 1, 2023March 31, 2024 and January 1,December 31, 2023, the Company had $1.6 million in letters of credit outstanding under the Facility.
As of both October 1, 2023March 31, 2024 and January 1,December 31, 2023, the carrying value of the Company’s borrowings under the Facility approximated its fair value as the Facility bears interest rates that are similar to existing market rates. The fair value of borrowings under the Facility is estimated using observable market rates and is considered Level 2 within the fair value hierarchy.
Under the Facility, the Company is required to make quarterly amortization payments of the term loan borrowings, which are due on the last day of the calendar quarter.
The Company is in compliance with all covenants under the Facility and anticipates that it will remain in compliance with the covenants for the foreseeable future.
Senior Notes due 2028
The 5.50% Senior Notes due 2028 (the “Senior Notes”) bear an interest rate at 5.50% per annum and mature on December 1, 2028. Interest is paid semi-annually on June 1 and December 1 of each year. The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its Facility.
As of October 1, 2023,March 31, 2024, the estimated fair value of the Senior Notes was $258.8$287.0 million, compared with a net carrying value recorded in the Company’s consolidated condensed balance sheet of $296.3$296.7 million ($300.0 million gross, excluding $3.7the impact of $3.3 million of unamortized debt issuance costs). The fair value of the Senior Notes is derived using quoted prices for similar instruments and is considered Level 2 within the fair value hierarchy.
The Company is in compliance with all covenants under the indenture governing the Senior Notes and anticipates that it will remain in compliance with the covenants for the foreseeable future.
Debt Issuance Costs
Debt issuance costs associated with the Company’s Senior Notes and term loans under the Facility are reflected as a reduction of long-term debt in accordance with applicable accounting standards. As these fees are expensed over the life of the outstanding borrowing, the debt balance will increase by the same amount as the fees that are expensed. As of October 1, 2023March 31, 2024 and January 1,December 31, 2023, the unamortized debt issuance costs recorded as a reduction of long-term debt were $4.9$4.2 million and $6.1$4.4 million, respectively.
Debt issuance costs related to the issuance of revolving debt, which include underwriting, legal and other direct costs, net of accumulated amortization, were $1.5$1.3 million and $1.8$1.4 million as of October 1, 2023March 31, 2024 and January 1,December 31, 2023, respectively. These amounts are included in other assets in the Company’s consolidated condensed balance sheets. The Company amortizes these costs over the life of the related debt.
NOTE 6 – DERIVATIVE INSTRUMENTS
Interest Rate Risk Management
From time to time, the Company enters into interest rate swap transactions to fix the variable interest rate on a portion of its term loan borrowing in order to manage a portion of its exposure to interest rate fluctuations. The Company’s objective and strategy with respect to these interest rate swaps is to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability to cash flows relating to interest payments on a portion of its outstanding debt.
Cash Flow Interest Rate Swaps
In the fourth quarter of 2020, the Company terminated its designated interest rate swap transactions with a total notional value of $250 million. Hedge accounting was also discontinued at that time. Losses recorded in accumulated other comprehensive loss for these terminated interest rate swaps are reclassified and recorded in the consolidated condensed statements of operations to the extent it is probable that a portion of the original forecasted transactions related to the portion of the hedged debt repaid will not occur by the end of the originally specified time period. See Note 14 entitled “Items Reclassified From Accumulated Other Comprehensive Loss” for additional information.
As of October 1, 2023, all amounts related to the terminated interest rate swaps have been recognized in the consolidated condensed statements of operations, and there was no remaining balance in accumulated other comprehensive loss associated with the terminated interest rate swaps. As of January 1, 2023, the remaining accumulated other comprehensive loss associated with the terminated interest rate swaps to be amortized to earnings over the remaining term of the interest rate swaps prior to termination, before tax, was $1.0 million.
NOTE 76 – SHAREHOLDERS’ EQUITY
The following tables depict the activity in the accounts which make up shareholders’ equity for the ninethree months ended October 1, 2023March 31, 2024 and OctoberApril 2, 2022:2023:
| | SHARES | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | RETAINED
EARNINGS | | PENSION LIABILITY | | FOREIGN CURRENCY TRANSLATION ADJUSTMENT | | CASH FLOW
HEDGE |
| (in thousands, except per share data) |
| Balance, at January 1, 2023 | 58,106 | | | $ | 5,811 | | | $ | 244,159 | | | $ | 278,639 | | | $ | (27,548) | | | $ | (138,775) | | | $ | (749) | |
| Net loss | — | | | — | | | — | | | (714) | | | — | | | — | | | — | |
| Issuances of stock related to performance shares | 79 | | | 8 | | | (8) | | | — | | | — | | | — | | | — | |
| SHARES | |
| SHARES | |
| SHARES | | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | RETAINED
EARNINGS | | PENSION LIABILITY | | FOREIGN CURRENCY TRANSLATION ADJUSTMENT | | | | TOTAL |
| (in thousands, except per share data) | | | (in thousands, except per share data) |
| Balance, at December 31, 2023 | |
| Net income | |
| Issuances of stock related to restricted share units and performance shares | |
| Cash dividends declared, $0.01 per common share | Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (580) | | | — | | | — | | | — | |
| Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings | Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings | (132) | | | (14) | | | 1,850 | | | — | | | — | | | — | | | — | |
| Pension liability adjustment | Pension liability adjustment | — | | | — | | | — | | | — | | | (279) | | | — | | | — | |
| Foreign currency translation adjustment | Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | 4,930 | | | — | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 299 | |
| Balance, at April 2, 2023 | 58,053 | | | $ | 5,805 | | | $ | 246,001 | | | $ | 277,345 | | | $ | (27,827) | | | $ | (133,845) | | | $ | (450) | |
| Net income | — | | | — | | | — | | | 15,797 | | | — | | | — | | | — | |
| Issuances of stock related to restricted share units and performance shares | 5 | | | 1 | | | (1) | | | — | | | — | | | — | | | — | |
| Restricted stock issuances | 102 | | | 10 | | | 697 | | | — | | | — | | | — | | | — | |
| Unrecognized compensation expense related to restricted stock awards | — | | | — | | | (708) | | | — | | | — | | | — | | | — | |
| Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (581) | | | — | | | — | | | — | |
| Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings | (48) | | | (5) | | | 1,808 | | | — | | | — | | | — | | | — | |
| Pension liability adjustment | — | | | — | | | — | | | — | | | (800) | | | — | | | — | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | 1,361 | | | — | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 300 | |
| Balance, at July 2, 2023 | 58,112 | | | $ | 5,811 | | | $ | 247,797 | | | $ | 292,561 | | | $ | (28,627) | | | $ | (132,484) | | | $ | (150) | |
| Net income | — | | | — | | | — | | | 9,879 | | | — | | | — | | | — | |
| Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (581) | | | — | | | — | | | — | |
| Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings | (5) | | | — | | | 2,182 | | | — | | | — | | | — | | | — | |
| Pension liability adjustment | — | | | — | | | — | | | — | | | 202 | | | — | | | — | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | (9,176) | | | — | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 150 | |
| Balance, at October 1, 2023 | 58,107 | | | $ | 5,811 | | | $ | 249,979 | | | $ | 301,859 | | | $ | (28,425) | | | $ | (141,660) | | | $ | — | |
| Balance, at March 31, 2024 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SHARES | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | RETAINED
EARNINGS | | PENSION LIABILITY | | FOREIGN CURRENCY TRANSLATION ADJUSTMENT | | CASH FLOW
HEDGE | | TOTAL |
| (in thousands, except per share data) |
| Balance, at January 1, 2023 | 58,106 | | | $ | 5,811 | | | $ | 244,159 | | | $ | 278,639 | | | $ | (27,548) | | | $ | (138,775) | | | $ | (749) | | | $ | 361,537 | |
| Net loss | — | | | — | | | — | | | (714) | | | — | | | — | | | — | | | (714) | |
| Issuances of stock related to performance shares | 79 | | | 8 | | | (8) | | | — | | | — | | | — | | | — | | | — | |
| Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (580) | | | — | | | — | | | — | | | (580) | |
| Compensation expense related to share-based plans, net of forfeitures and shares received for tax withholdings | (132) | | | (14) | | | 1,850 | | | — | | | — | | | — | | | — | | | 1,836 | |
| Pension liability adjustment | — | | | — | | | — | | | — | | | (279) | | | — | | | — | | | (279) | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | 4,930 | | | — | | | 4,930 | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 299 | | | 299 | |
| Balance, at April 2, 2023 | 58,053 | | | $ | 5,805 | | | $ | 246,001 | | | $ | 277,345 | | | $ | (27,827) | | | $ | (133,845) | | | $ | (450) | | | $ | 367,029 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SHARES | | COMMON STOCK | | ADDITIONAL PAID-IN CAPITAL | | RETAINED
EARNINGS | | PENSION LIABILITY | | FOREIGN CURRENCY TRANSLATION ADJUSTMENT | | CASH FLOW
HEDGE |
| (in thousands, except per share data) |
| Balance, at January 2, 2022 | 59,055 | | | $ | 5,905 | | | $ | 253,110 | | | $ | 261,434 | | | $ | (53,888) | | | $ | (100,441) | | | $ | (2,722) | |
| Net income | — | | | — | | | — | | | 13,293 | | | — | | | — | | | — | |
| Restricted stock issuances | 303 | | | 30 | | | 3,966 | | | — | | | — | | | — | | | — | |
| Unrecognized compensation expense related to restricted stock awards | — | | | — | | | (3,996) | | | — | | | — | | | — | | | — | |
| Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (592) | | | — | | | — | | | — | |
| Compensation expense related to share-based plans, net of shares received for tax withholdings | (30) | | | (2) | | | 1,787 | | | — | | | — | | | — | | | — | |
| Pension liability adjustment | — | | | — | | | — | | | — | | | 1,539 | | | — | | | — | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | (13,184) | | | — | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 641 | |
| Balance, at April 3, 2022 | 59,328 | | | $ | 5,933 | | | $ | 254,867 | | | $ | 274,135 | | | $ | (52,349) | | | $ | (113,625) | | | $ | (2,081) | |
| Net income | — | | | — | | | — | | | 16,818 | | | — | | | — | | | — | |
| Restricted stock issuances | 198 | | | 20 | | | 2,533 | | | — | | | — | | | — | | | — | |
| Unrecognized compensation expense related to restricted stock awards | — | | | — | | | (2,553) | | | — | | | — | | | — | | | — | |
| Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (595) | | | — | | | — | | | — | |
| Compensation expense related to share-based plans, net of forfeitures | (14) | | | (1) | | | 2,145 | | | — | | | — | | | — | | | — | |
| Share repurchases | (415) | | | (42) | | | (5,540) | | | — | | | — | | | — | | | — | |
| Pension liability adjustment | — | | | — | | | — | | | — | | | 3,842 | | | — | | | — | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | (36,670) | | | — | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 540 | |
| Balance, at July 3, 2022 | 59,097 | | | $ | 5,910 | | | $ | 251,452 | | | $ | 290,358 | | | $ | (48,507) | | | $ | (150,295) | | | $ | (1,541) | |
| Net income | — | | | — | | | — | | | 14,065 | | | — | | | — | | | — | |
| Cash dividends declared, $0.01 per common share | — | | | — | | | — | | | (586) | | | — | | | — | | | — | |
| Compensation expense related to share-based plans, net of forfeitures | (16) | | | (2) | | | 2,353 | | | — | | | — | | | — | | | — | |
| Share repurchases | (711) | | | (71) | | | (8,798) | | | — | | | — | | | — | | | — | |
| Pension liability adjustment | — | | | — | | | — | | | — | | | 3,393 | | | — | | | — | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | (36,800) | | | — | |
| Reclassification out of accumulated other comprehensive loss – discontinued cash flow hedge | — | | | — | | | — | | | — | | | — | | | — | | | 492 | |
| Balance, at October 2, 2022 | 58,370 | | | $ | 5,837 | | | $ | 245,007 | | | $ | 303,837 | | | $ | (45,114) | | | $ | (187,095) | | | $ | (1,049) | |
Repurchase of Common Stock
In the second quarter of 2022, the Company adopted a new share repurchase program in which the Company is authorized to repurchase up to $100 million of its outstanding shares of common stock. The program has no specific expiration date. No shares of common stock were repurchased during the nine months ended October 1, 2023. During the nine months ended October 2, 2022, the Company repurchased 1,126,176 shares of common stock at a weighted average price of $12.83 per share pursuant to this program..
Restricted Stock Awards
During the nine months ended October 1, 2023, the Company granted restricted stock awards for 102,300 shares of common stock. Awards of restricted stock (or a portion thereof) vest with respect to each recipient over a one to three-year period from the date of grant, provided the individual remains in the employment or service of the Company as of the vesting date. Additionally, certain awards (or a portion thereof) could vest earlier in the event of a change in control of the Company or upon involuntary termination without cause. For certain restricted stock awards with a graded vesting schedule, the Company has elected to recognize compensation expense on a straight-line basis over the requisite service period for the entire award.
Compensation expense related to restricted stock grants was $3.4$0.9 million and $4.0$1.4 million for the ninethree months ended October 1,March 31, 2024 and April 2, 2023, and October 2, 2022, respectively. The Company has reduced its expense for any restricted stock forfeited during the period.
The following table summarizes restricted stock outstanding as of October 1, 2023,March 31, 2024, as well as activity during the ninethree months then ended:
| | Restricted Shares | | Weighted Average
Grant Date
Fair Value |
| Outstanding at January 1, 2023 | 1,006,400 | | | $ | 13.91 | |
| Restricted Shares | | | Restricted Shares | | Weighted Average
Grant Date
Fair Value |
| Outstanding at December 31, 2023 | |
| Granted | Granted | 102,300 | | | 6.92 | |
| Vested | Vested | (405,100) | | | 14.43 | |
| Forfeited or canceled | Forfeited or canceled | (16,800) | | | 13.60 | |
| Outstanding at October 1, 2023 | 686,800 | | | $ | 12.56 | |
| Outstanding at March 31, 2024 | |
As of October 1, 2023,March 31, 2024, the unrecognized total compensation cost related to unvested restricted stock was $2.8$0.9 million. That cost is expected to be recognized by the first quarter of 2025.
Restricted Share Unit Awards
During the nine months ended October 1, 2023, the Company granted awards for 596,200 restricted share units to certain employees pursuant to the Company’s 2020 Omnibus Stock Incentive Plan. Each restricted share unit represents one share of the Company’s common stock to be issued to the award recipient once the vesting criteria have been satisfied. Awards of restricted share units have a graded vesting schedule over a two to three-year period from the date of grant, provided the individual remains in the employment or service of the Company as of each vesting date. Additionally, certain awards (or a portion thereof) could vest earlier in the event of a change in control of the Company, upon involuntary termination without cause, or upon retirement provided certain eligibility criteria are met.
The Company recognizes expense related to restricted share unit grants based on the grant date fair value of the units awarded, as determined by the market price of the Company’s common stock at date of grant. The expense is captured in selling, general and administrative expenses in the consolidated condensed statements of operations, which is consistent with the classification of expense for other share-based awards. The Company has elected to recognize compensation expense on a straight-line basis over the requisite service period for the entire award for awards with a graded vesting schedule.
Compensation expense related to the restricted share units was $1.5$0.9 million and $0.5 million for the ninethree months ended October 1, 2023.March 31, 2024 and April 2, 2023, respectively. The Company reduceshas reduced its expense for any restricted share units forfeited during the period. Grants of restricted share units are made primarily to executive-level personnel at the Company and, as a result, no compensation costs have been capitalized.
The following table summarizes restricted share units outstanding as of October 1, 2023,March 31, 2024, as well as activity during the ninethree months then ended:
| | Restricted Share Units | | Weighted Average
Grant Date
Fair Value |
| Outstanding at January 1, 2023 | — | | | $ | — | |
| Restricted Share Units | | | Restricted Share Units | | Weighted Average
Grant Date
Fair Value |
| Outstanding at December 31, 2023 | |
| Granted | Granted | 596,200 | | | 10.36 | |
| Vested | Vested | (2,100) | | | 10.80 | |
| Forfeited or canceled | Forfeited or canceled | (10,700) | | | 10.80 | |
| Outstanding at October 1, 2023 | 583,400 | | | $ | 10.35 | |
| Outstanding at March 31, 2024 | |
As of October 1, 2023,March 31, 2024, the unrecognized total compensation cost related to unvested restricted share units was $4.6$8.5 million. That cost is expected to be recognized by the endfirst quarter of 2026.2027.
Performance Share Awards
During the nine months ended October 1, 2023, the Company issued awards of performance shares to certain employees. These awards vest based on the achievement of certain performance-based goals over a performance period of one to three years, subject to (among other things) the employee’s continued employment through the last date of the performance period, and will be settled in shares of our common stock or in cash at the Company’s election. The number of shares that may be issued in settlement of the performance shares to the award recipients may be greater (up to 200%) or lesser than the nominal award amount depending on actual performance achieved as compared to the performance targets set forth in the awards. The Company evaluates the probability of achieving the performance-based goals as of the end of each reporting period and adjusts compensation expense based on this assessment.
The following table summarizes the performance shares outstanding as of October 1, 2023,March 31, 2024, as well as the activity during the ninethree months then ended:
| | Performance Shares | | Weighted Average
Grant Date
Fair Value |
| Outstanding at January 1, 2023 | 923,600 | | | $ | 13.91 | |
| Performance Shares | | | Performance Shares | | Weighted Average
Grant Date
Fair Value |
| Outstanding at December 31, 2023 | |
| Granted | Granted | 467,500 | | | 10.79 | |
| Vested | Vested | (82,300) | | | 15.11 | |
| Forfeited or canceled | Forfeited or canceled | (193,800) | | | 14.79 | |
| Outstanding at October 1, 2023 | 1,115,000 | | | $ | 12.36 | |
| Outstanding at March 31, 2024 | |
Compensation expense related to the performance shares was $2.4$2.1 million and $2.7$1.1 million for the ninethree months ended October 1,March 31, 2024 and April 2, 2023, and October 2, 2022, respectively. The Company has reduced its expense for any performance shares forfeited during the period. Unrecognized compensation expense related to these performance shares was approximately $7.3$9.0 million as of October 1, 2023. DependingMarch 31, 2024. The amount and timing of future compensation expense will depend on the performance of the Company, anyCompany. The compensation expense related to these outstanding performance shares willis expected to be recognized by the first quarter of 2026.2027.
The tax benefit recognized with respect to restricted stock, restricted share units and performance shares was approximately $0.7$0.5 million for the ninethree months ended October 1, 2023.March 31, 2024.
NOTE 87 – LEASES
General
The Company has operating and finance leases for manufacturing equipment, corporate offices, showrooms, distribution facilities, design centers, as well as computer and office equipment. The Company’s leases have terms ranging from 1 to 20 years, some of which may include options to extend the lease term for up to 5 years, and certain leases may include an option to terminate the lease. Our lease accounting may include these options to extend or terminate a lease when it is reasonably certain that we will exercise that option.
The Company records a right-of-use asset and lease liability for leases extending beyond one year for operating and finance leases once a contract that contains a lease is executed and we have the right to control the use of the leased asset. The right-of-use asset is measured as the present value of the lease obligation. The discount rate used to calculate the present value of the lease liability was the Company’s incremental borrowing rate for the applicable geographical region.
As of October 1, 2023, there were no significant leases that had not commenced.
The table below represents a summary of the balances recorded in the consolidated condensed balance sheets related to the Company’s leases as of October 1, 2023March 31, 2024 and January 1,December 31, 2023:
| | March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| Balance Sheet Location | | Balance Sheet Location | Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases |
| (in thousands) | | | (in thousands) |
| Operating lease right-of-use assets | |
| | | October 1, 2023 | | January 1, 2023 |
| Balance Sheet Location | Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases |
| (in thousands) |
| Operating lease right-of-use assets | $ | 75,604 | | | $ | 81,644 | | |
| | | | | | |
| Current portion of operating lease liabilities | Current portion of operating lease liabilities | $ | 10,829 | | | $ | 11,857 | | |
| Current portion of operating lease liabilities | |
| Current portion of operating lease liabilities | |
| Operating lease liabilities | |
| Operating lease liabilities | |
| Operating lease liabilities | Operating lease liabilities | 67,554 | | | 72,305 | | |
| Total operating lease liabilities | Total operating lease liabilities | $ | 78,383 | | | $ | 84,162 | | |
| Total operating lease liabilities | |
| Total operating lease liabilities | |
| | | | | | |
| | |
| | |
| Property, plant and equipment, net | |
| Property, plant and equipment, net | |
| Property, plant and equipment, net | Property, plant and equipment, net | | $ | 6,406 | | | $ | 5,845 | |
| | | | | | |
| Accrued expenses | Accrued expenses | | $ | 2,256 | | | $ | 2,101 | |
| Accrued expenses | |
| Accrued expenses | |
| Other long-term liabilities | Other long-term liabilities | | 4,534 | | | 4,138 | |
| Total finance lease liabilities | Total finance lease liabilities | | $ | 6,790 | | | $ | 6,239 | |
As of March 31, 2024, there were no significant leases that had not commenced.
Lease Costs
| | Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| (in thousands) |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| (in thousands) | | | (in thousands) |
| Finance lease cost: | Finance lease cost: | |
| Amortization of right-of-use assets | |
| Amortization of right-of-use assets | |
| Amortization of right-of-use assets | Amortization of right-of-use assets | $ | 696 | | | $ | 581 | | | $ | 2,056 | | | $ | 1,636 | |
| Interest on lease liabilities | Interest on lease liabilities | 79 | | | 45 | | | 224 | | | 115 | |
| Operating lease cost | Operating lease cost | 4,740 | | | 4,743 | | | 14,141 | | | 14,310 | |
| Short-term lease cost | Short-term lease cost | 187 | | | 204 | | | 934 | | | 642 | |
| Variable lease cost | Variable lease cost | 583 | | | 614 | | | 1,924 | | | 2,012 | |
| Total lease cost | Total lease cost | $ | 6,285 | | | $ | 6,187 | | | $ | 19,279 | | | $ | 18,715 | |
Other Supplemental Information
| | Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| (in thousands) |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| (in thousands) | | | (in thousands) |
| Cash paid for amounts included in the measurement of lease liabilities: | Cash paid for amounts included in the measurement of lease liabilities: | |
| Operating cash flows from finance leases | |
| Operating cash flows from finance leases | |
| Operating cash flows from finance leases | Operating cash flows from finance leases | $ | 60 | | | $ | 35 | | | $ | 167 | | | $ | 88 | |
| Operating cash flows from operating leases | Operating cash flows from operating leases | 4,130 | | | 4,406 | | | 12,771 | | | 13,854 | |
| Financing cash flows from finance leases | Financing cash flows from finance leases | 545 | | | 525 | | | 1,853 | | | 1,535 | |
| Right-of-use assets obtained in exchange for new finance lease liabilities | Right-of-use assets obtained in exchange for new finance lease liabilities | 1,414 | | | 182 | | | 2,450 | | | 2,525 | |
| Right-of-use assets obtained (adjusted) in exchange for new (remeasured) operating lease liabilities | 236 | | | (734) | | | 4,199 | | | 6,089 | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | |
Lease Term and Discount Rate
The table below presents the weighted average remaining lease terms and discount rates for finance and operating leases as of October 1, 2023March 31, 2024 and January 1,December 31, 2023:
| | | | October 1, 2023 | | January 1, 2023 | | March 31, 2024 | | December 31, 2023 |
| Weighted-average remaining lease term – finance leases (in years) | Weighted-average remaining lease term – finance leases (in years) | 3.76 | | 3.82 | Weighted-average remaining lease term – finance leases (in years) | 3.60 | | 3.70 |
| Weighted-average remaining lease term – operating leases (in years) | Weighted-average remaining lease term – operating leases (in years) | 8.77 | | 9.29 | Weighted-average remaining lease term – operating leases (in years) | 8.10 | | 8.29 |
| Weighted-average discount rate – finance leases | Weighted-average discount rate – finance leases | 5.16 | % | | 3.79 | % | Weighted-average discount rate – finance leases | 5.70 | % | | 5.51 | % |
| Weighted-average discount rate – operating leases | Weighted-average discount rate – operating leases | 5.99 | % | | 5.89 | % | Weighted-average discount rate – operating leases | 6.27 | % | | 6.25 | % |
Maturity Analysis
A maturity analysis of lease payments under non-cancellable leases is presented as follows:
| | Fiscal Year | Fiscal Year | Operating Leases | | Finance Leases | Fiscal Year | Operating Leases | | Finance Leases |
| (in thousands) |
| 2023 (excluding the nine months ended October 1, 2023) | $ | 2,733 | | | $ | 569 | |
| 2024 | 14,999 | | | 2,518 | |
| (in thousands) | | | (in thousands) |
| 2024 (excluding the three months ended March 31, 2024) | |
| 2025 | 2025 | 13,069 | | | 1,733 | |
| 2026 | 2026 | 12,767 | | | 1,202 | |
| 2027 | 2027 | 10,246 | | | 868 | |
| 2028 | |
| Thereafter | Thereafter | 48,882 | | | 662 | |
| Total future minimum lease payments (undiscounted) | Total future minimum lease payments (undiscounted) | 102,696 | | | 7,552 | |
| Less: Present value discount | Less: Present value discount | (24,313) | | | (762) | |
| Total lease liability | $ | 78,383 | | | $ | 6,790 | |
| Total lease liabilities | |
NOTE 98 – EMPLOYEE BENEFIT PLANS
During the threethree-month periods ended March 31, 2024 and nine months ended October 1,April 2, 2023, the Company recorded multi-employer pension expense related to multi-employer contributions of $0.7 million and $2.0 million, respectively. During the three and nine months ended October 2, 2022, the Company recorded multi-employer pension expense related to multi-employer contributions of $0.5 million and $1.8$0.6 million, respectively.
The following tables provide the components of net periodic benefit cost for the three and nine months ended October 1, 2023March 31, 2024 and OctoberApril 2, 2022:2023:
| | Three Months Ended | | Nine Months Ended |
| Three Months Ended | | | Three Months Ended |
Defined Benefit Retirement Plans (Europe) | Defined Benefit Retirement Plans (Europe) | October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | Defined Benefit Retirement Plans (Europe) | March 31, 2024 | | April 2, 2023 |
| (in thousands) |
| (in thousands) | | | (in thousands) |
| Interest cost | Interest cost | $ | 1,791 | | | $ | 801 | | | $ | 5,304 | | | $ | 2,574 | |
| Expected return on plan assets | Expected return on plan assets | (2,030) | | | (924) | | | (6,009) | | | (2,973) | |
| Amortization of prior service cost | Amortization of prior service cost | 30 | | | 27 | | | 89 | | | 89 | |
| Amortization of net actuarial losses | Amortization of net actuarial losses | 229 | | | 240 | | | 680 | | | 771 | |
| Net periodic benefit cost | Net periodic benefit cost | $ | 20 | | | $ | 144 | | | $ | 64 | | | $ | 461 | |
| | Three Months Ended | | Nine Months Ended |
| Three Months Ended | | | Three Months Ended |
| Salary Continuation Plan | Salary Continuation Plan | October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | Salary Continuation Plan | March 31, 2024 | | April 2, 2023 |
| (in thousands) |
| (in thousands) | | | (in thousands) |
| Interest cost | Interest cost | $ | 284 | | | $ | 193 | | | $ | 851 | | | $ | 579 | |
| Amortization of net actuarial losses | Amortization of net actuarial losses | 49 | | | 139 | | | 146 | | | 418 | |
| Net periodic benefit cost | Net periodic benefit cost | $ | 333 | | | $ | 332 | | | $ | 997 | | | $ | 997 | |
| | Three Months Ended | | Nine Months Ended |
| Three Months Ended | | | Three Months Ended |
nora Defined Benefit Plan | nora Defined Benefit Plan | October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | nora Defined Benefit Plan | March 31, 2024 | | April 2, 2023 |
| (in thousands) |
| (in thousands) | | | (in thousands) |
| Service cost | Service cost | $ | 116 | | | $ | 200 | | | $ | 345 | | | $ | 636 | |
| Interest cost | Interest cost | 275 | | | 98 | | | 822 | | | 313 | |
| Amortization of net actuarial (gains) losses | (110) | | | 44 | | | (330) | | | 142 | |
| Amortization of net actuarial gains | |
| Net periodic benefit cost | Net periodic benefit cost | $ | 281 | | | $ | 342 | | | $ | 837 | | | $ | 1,091 | |
In accordance with applicable accounting standards, the service cost component of net periodic benefit costs is presented within operating income in the consolidated condensed statements of operations, while all other components of net periodic benefit costs are presented within other (income) expense, net, in the consolidated condensed statements of operations.
NOTE 109 – GOODWILL AND OTHER INTANGIBLE ASSETS
The ending balance and the change in the carrying amount of goodwill forgoodwill for the ninethree months ended October 1, 2023, areMarch 31, 2024 is as follows:
| | | | | |
| Goodwill(1) |
| (in thousands) |
Balance, at January 1,December 31, 2023 | $ | 102,417105,448 | |
Foreign currency translation(2) | (1,193)(2,251) | |
Balance, at October 1, 2023March 31, 2024 | $ | 101,224103,197 | |
(1)The goodwill balance is allocated entirely to the AMS reportable segment. All goodwill allocated to the EAAA reportable segment was previously written off as a result of impairment charges.
(2)A portion of the goodwill balance is comprised of goodwill denominated in foreign currency attributable to the nora acquisition.
The net carrying value of intangible assets other than goodwill was $55.3$53.8 million and $59.8$56.3 million at October 1, 2023March 31, 2024 and January 1,December 31, 2023, respectively.
NOTE 1110 – SEGMENT INFORMATION
The Company determines that an operating segment exists if a component (i) engages in business activities from which it earns revenues and incurs expenses, (ii) has operating results that are regularly reviewed by the chief operating decision maker (“CODM”) and (iii) has discrete financial information. Additionally, accounting standards require the utilization of a “management approach” to report the financial results of operating segments, which is based on information used by the CODM to assess performance and make operating and resource allocation decisions. The Company determined that it has two operating segments organized by geographical area – namely (a) Americas (“AMS”) and (b) Europe, Africa, Asia and Australia (collectively “EAAA”). The AMS operating segment includes the United States, Canada and Latin America geographic areas.
Pursuant to the management approach discussed above, the Company’s CODM, our chief executive officer, evaluates performance at the AMS and EAAA operating segment levels and makes operating and resource allocation decisions based on segment adjusted operating income (“AOI”), which includes allocations of corporate selling, general and administrative expenses.(“SG&A”) expenses and allocations of global support SG&A as discussed below. AOI excludesexcludes: nora purchase accounting amortization, Thailand plant closure inventory write-down,amortization; Cyber Event impact,impact; property casualty loss; and restructuring, asset impairment, severance, and other, net. Intersegment revenues for the three and nine months ended October 1,March 31, 2024 and April 2, 2023 were $25.0$16.8 million and $72.3 million, respectively, and intersegment revenues for the three and nine months ended October 2, 2022, were $19.7 million and $56.4$22.6 million, respectively. Intersegment revenues are eliminated from net sales presented below since these amounts are not included in the information provided to the CODM.
The Company has determined that it has two reportable segments – AMS and EAAA, as each operating segment meets the quantitative thresholds defined in the accounting guidance.
During the first quarter of 2024, the Company implemented a cost center realignment initiative to centralize certain global/shared functions. For the quarter ended March 31, 2024, SG&A expenses for these global support functions were allocated to AOI for each reportable segment consistent with the allocation methodology used to allocate corporate overhead in prior periods. Prior year AOI amounts below were not recast as there was no material impact to the measure of segment profit for each reportable segment. There were no changes to the composition of the Company’s operating or reportable segments.
Segment information for the three and nine months ended October 1,March 31, 2024 and April 2, 2023 and October 2, 2022, is presented in the following table:
| | Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| (in thousands) |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| (in thousands) | | | (in thousands) |
| Net sales | Net sales | |
| AMS | |
| AMS | |
| AMS | AMS | $ | 178,194 | | | $ | 194,449 | | | $ | 548,716 | | | $ | 557,768 | |
| EAAA | EAAA | 132,812 | | | 133,308 | | | 387,664 | | | 404,596 | |
| Total net sales | Total net sales | $ | 311,006 | | | $ | 327,757 | | | $ | 936,380 | | | $ | 962,364 | |
| | | | | | | | | |
| Segment AOI | Segment AOI | |
| Segment AOI | |
| Segment AOI | |
| AMS | |
| AMS | |
| AMS | AMS | $ | 23,318 | | | $ | 24,975 | | | $ | 58,621 | | | $ | 74,502 | |
| EAAA | EAAA | 9,049 | | | 6,273 | | | 16,805 | | | 25,908 | |
| | | |
| Depreciation and amortization | Depreciation and amortization | |
| Depreciation and amortization | |
| Depreciation and amortization | |
| AMS | |
| AMS | |
| AMS | AMS | $ | 4,640 | | | $ | 4,344 | | | $ | 13,457 | | | $ | 12,585 | |
| EAAA | EAAA | 5,805 | | | 5,481 | | | 17,134 | | | 18,076 | |
| Total depreciation and amortization | Total depreciation and amortization | $ | 10,445 | | | $ | 9,825 | | | $ | 30,591 | | | $ | 30,661 | |
A reconciliation of the Company’s total operating segment assets to the corresponding consolidated amounts follows:
| | October 1, 2023 | | January 1, 2023 |
| (in thousands) |
| March 31, 2024 | | | March 31, 2024 | | December 31, 2023 |
| (in thousands) | | | (in thousands) |
| Assets | Assets | |
| AMS | |
| AMS | |
| AMS | AMS | $ | 587,424 | | | $ | 588,110 | |
| EAAA | EAAA | 637,825 | | | 652,921 | |
| Total segment assets | Total segment assets | 1,225,249 | | | 1,241,031 | |
| Corporate assets | Corporate assets | 101,224 | | | 110,495 | |
| Eliminations | Eliminations | (124,832) | | | (85,023) | |
| Total reported assets | Total reported assets | $ | 1,201,641 | | | $ | 1,266,503 | |
Reconciliations of operating income to income (loss) before income tax expense and segment AOI are presented as follows:
| | Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| (in thousands) |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| (in thousands) | | | (in thousands) |
| AMS operating income | AMS operating income | $ | 23,530 | | | $ | 24,955 | | | $ | 56,997 | | | $ | 74,618 | |
| EAAA operating income | EAAA operating income | 7,455 | | | 3,087 | | | 12,373 | | | 15,369 | |
| Consolidated operating income | Consolidated operating income | 30,985 | | | 28,042 | | | 69,370 | | | 89,987 | |
| Interest expense | Interest expense | 8,163 | | | 7,747 | | | 24,986 | | | 21,787 | |
| Other expense, net | 6,702 | | | 124 | | | 7,674 | | | 1,688 | |
| Income before income tax expense | $ | 16,120 | | | $ | 20,171 | | | $ | 36,710 | | | $ | 66,512 | |
| Other (income) expense, net | |
| Income (loss) before income tax expense | |
| | Three Months Ended October 1, 2023 | | Three Months Ended October 2, 2022 |
| AMS | | EAAA | | AMS | | EAAA |
| (in thousands) |
| Three Months Ended March 31, 2024 | | | Three Months Ended March 31, 2024 | | Three Months Ended April 2, 2023 |
| AMS | | | AMS | | EAAA | | AMS | | EAAA |
| (in thousands) | | | (in thousands) |
| Operating income | Operating income | $ | 23,530 | | | $ | 7,455 | | | $ | 24,955 | | | $ | 3,087 | |
| Purchase accounting amortization | Purchase accounting amortization | — | | | 1,302 | | | — | | | 1,204 | |
| Thailand plant closure inventory write-down | — | | | — | | | — | | | 477 | |
| Cyber Event impact | Cyber Event impact | 62 | | | 42 | | | — | | | — | |
| Property casualty loss | |
| Restructuring, asset impairment, severance, and other, net | Restructuring, asset impairment, severance, and other, net | (274) | | | 250 | | | 20 | | | 1,505 | |
| AOI | AOI | $ | 23,318 | | | $ | 9,049 | | | $ | 24,975 | | | $ | 6,273 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended October 1, 2023 | | Nine Months Ended October 2, 2022 |
| AMS | | EAAA | | AMS | | EAAA |
| (in thousands) |
| Operating income | $ | 56,997 | | | $ | 12,373 | | | $ | 74,618 | | | $ | 15,369 | |
| Purchase accounting amortization | — | | | 3,886 | | | — | | | 3,817 | |
| Thailand plant closure inventory write-down | — | | | — | | | — | | | 2,530 | |
| Cyber Event impact | 554 | | | 415 | | | — | | | — | |
| | | | | | | |
| Restructuring, asset impairment, severance, and other, net | 1,070 | | | 131 | | | (116) | | | 4,192 | |
| AOI | $ | 58,621 | | | $ | 16,805 | | | $ | 74,502 | | | $ | 25,908 | |
NOTE 1211 – SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for interest amounted to $17.6 million and $13.7 millionSupplemental cash flow information for the ninethree months ended October 1,March 31, 2024 and April 2, 2023 and October 2, 2022, respectively. Income tax payments, net of refunds, amounted to $17.6 million and $11.5 million foris presented in the nine months ended October 1, 2023 and October 2, 2022, respectively.following table:
| | | | | | | | | | | |
| Three Months Ended |
| March 31, 2024 | | April 2, 2023 |
| (in thousands) |
| Cash paid for interest | $ | 2,099 | | | $ | 3,667 | |
| Cash paid for income taxes, net of refunds | 7,161 | | | 5,148 | |
See Note 87 entitled “Leases” for additional supplemental disclosures related to finance and operating leases.
Non-Cash Financing Activities
On March 12, 2024, the Company declared cash dividends on its common stock of $0.6 million, which were paid during the second quarter of 2024 to shareholders of record as of March 29, 2024. At March 31, 2024, the dividends were recorded within accrued expenses in the consolidated condensed balance sheet.
NOTE 1312 – INCOME TAXES
The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate (“AETR”) and records any changes affecting the estimated AETR in the interim period in which the change occurs, including discrete tax items.
During the ninethree months ended October 1, 2023,March 31, 2024, the Company recorded a total income tax provision of $11.7$4.8 million on pre-tax income of $36.7$19.0 million resulting in an effective tax rate of 32.0%25.4%, as compared to a total income tax provision of $22.3$0.2 million on pre-tax incomeloss of $66.5$0.5 million resulting in ana negative effective tax rate of 33.6%35.2% during the ninethree months ended OctoberApril 2, 2022.2023. The decreaseyear-over-year change in the effective tax rate for the period ended October 1, 2023, as compared to the period ended October 2, 2022, wasis primarily due to favorable changes related to the cash surrender valuetax effects of Company-owned life insurance, non-recurring non-deductible charges related to the closure of the Company’s manufacturing facility in Thailand incurredpre-tax income in the first nine months of 2022,current year quarter compared to pre-tax loss in the prior year quarter and favorable changes related to foreign exchange movements. This decrease was partially offset by a non-recurring favorable changeshare-based compensation and the limitation on the deduction for business interest expenses under Internal Revenue Code section 163(j). The pre-tax loss for the three months ended April 2, 2023, included significant unusual or infrequent items that are specifically excluded from the AETR. The tax effects related to unrecognizedthese specifically excluded items are recognized discretely. The income tax benefits in the period ended October 2, 2022, non-deductible charges relatedrecognized discretely were at a lower effective tax rate compared to the substantial liquidationestimated AETR resulting in an overall negative effective tax rate for the three months ended April 2, 2023.
On December 20, 2021, the Organization for Economic Co-operation and Development (“OECD”) published Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of subsidiarieslarge corporations at a minimum rate of 15%. The OECD has since issued administrative guidance providing transition and safe harbor rules around the implementation of the Pillar Two global minimum tax. Many non-U.S. tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in Brazil2024 (including the European Union Member States) with the adoption of additional components in later years or announced their plans to enact legislation in future years. For fiscal year 2024, we expect to meet the Transitional Country-by-Country (CbCR) Safe Harbor rules for most if not all jurisdictions and Russia indo not expect these provisions to have a material impact on the period ended October 1, 2023,Company’s financial statements. We will continue to closely monitor ongoing developments and an increase in the valuation allowanceevaluate any potential impact on interest carryforwards.future periods.
In the first ninethree months of 2023,2024, the Company decreasedincreased its liability for unrecognized tax benefits by $0.3 million. As of October 1, 2023,March 31, 2024, the Company had accrued approximately $5.4$5.2 million for unrecognized tax benefits. In accordance with applicable accounting standards, the Company’s deferred tax asset as of October 1, 2023,March 31, 2024 reflects a reduction for $2.8 million of these unrecognized tax benefits.
Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including the progress of tax audits and the closing of statutes of limitations. Based on information currently available,While it is reasonably possible that approximately $0.5 millionsome of the unrecognized tax benefits maywill be recognized within the next 12 months, the Company does not expect the recognition of which $0.5 million would result insuch amounts will have a favorablematerial impact toon the effective tax rate.Company’s financial results.
NOTE 1413 – ITEMS RECLASSIFIED FROM ACCUMULATED OTHER COMPREHENSIVE LOSS
Amounts reclassified out of accumulated other comprehensive loss (“AOCI”), before tax, to the consolidated condensed statements of operations during the three and nine months ended October 1,March 31, 2024 and April 2, 2023 and October 2, 2022, are reflected in the tablestable below:
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| Statement of Operations Location | | October 1, 2023 | | October 2, 2022 |
| | | (in thousands) |
Loss on foreign subsidiary liquidation(1) | Other expense, net | | $ | (6,221) | | | $ | — | |
| Interest rate swap contracts loss | Interest expense | | (196) | | | (645) | |
| Amortization of benefit plan net actuarial losses and prior service cost | Other expense, net | | (198) | | | (450) | |
| Total loss reclassified from AOCI | | | $ | (6,615) | | | $ | (1,095) | |
| | Nine Months Ended |
| Statement of Operations Location | | October 1, 2023 | | October 2, 2022 |
| | | (in thousands) |
Loss on foreign subsidiary liquidation(1) | Other expense, net | | $ | (6,221) | | | $ | — | |
| | | Three Months Ended | | | | | Three Months Ended |
| Statement of Operations Location | | | Statement of Operations Location | | March 31, 2024 | | April 2, 2023 |
| | | (in thousands) | | | | | (in thousands) |
| Interest rate swap contracts loss | Interest rate swap contracts loss | Interest expense | | (982) | | | (2,416) | |
| Amortization of benefit plan net actuarial losses and prior service cost | Amortization of benefit plan net actuarial losses and prior service cost | Other expense, net | | (585) | | | (1,420) | |
| Total loss reclassified from AOCI | Total loss reclassified from AOCI | | $ | (7,788) | | | $ | (3,836) | |
(1) The Company’s foreign subsidiaries in Russia and Brazil were substantially liquidated during the three months ended October 1, 2023, and the cumulative foreign currency translation losses associated with these entities were recognized in the consolidated condensed statements of operations. The tax impact of the cumulative foreign currency translation reclassification is approximately $1.1 million.
NOTE 15 – RESTRUCTURING AND OTHER
Restructuring, asset impairment, other (gains) and charges were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| (in thousands) |
Restructuring, asset impairment, other (gains) and charges(1) | $ | — | | | $ | (105) | | | $ | (2,502) | | | $ | 1,592 | |
(1) Restructuring, asset impairment, other (gains) and charges are attributable to the EAAA reportable segment.
2021 Restructuring Plan
On September 8, 2021, the Company committed to a new restructuring plan that continued to focus on efforts to improve efficiencies and decrease costs across its worldwide operations. The plan involved a reduction of approximately 188 employees and the closure of the Company’s manufacturing facility in Thailand at the end of the first quarter of 2022.
Expected charges and cumulative charges incurred to date under the 2021 restructuring plan are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Workforce Reduction | | Retention Bonuses | | Asset Impairment and Other Related Charges | | Total |
| (in thousands) |
Estimated expected charges(1) | $ | 2,281 | | | $ | 474 | | | $ | 3,295 | | | $ | 6,050 | |
Cumulative charges incurred to date(1) | 2,281 | | | 474 | | | 3,295 | | | 6,050 | |
(1) Charges are attributable to the EAAA reportable segment.
A summary of the restructuring reserve balance, recorded within accrued expenses in the consolidated condensed balance sheets, for the 2021 restructuring plan is presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| Workforce Reduction | | Retention Bonuses | | Asset Impairment and Other Related Charges | | Total |
| (in thousands) |
| Balance, at January 1, 2023 | $ | 277 | | | $ | 179 | | | $ | — | | | $ | 456 | |
| Charged to expenses | 23 | | | (19) | | | 174 | | | 178 | |
| Deductions | (300) | | | (160) | | | — | | | (460) | |
| Charged to other accounts | — | | | — | | | (174) | | | (174) | |
| Balance, at October 1, 2023 | $ | — | | | $ | — | | | $ | — | | | $ | — | |
The Company recognized a gain of $2.7 million on the sale of the Thailand facility during the second quarter of 2023. See Note 16 entitled “Assets Disposed” for additional information.
In addition, during the nine months ended October 2, 2022, in conjunction with the closure of its Thailand facility, the Company recorded a write-down of inventory of $2.5 million within cost of sales in the consolidated condensed statements of operations.
The Company completed the 2021 restructuring plan in the second quarter of 2023, following the sale of the Thailand manufacturing facility, as described in Note 16 entitled “Assets Disposed,” and expects the plan to yield annualized savings of approximately $1.7 million. A portion of the annualized savings was realized on the consolidated condensed statements of operations in fiscal year 2022, with the remaining portion of the annualized savings expected to be realized in fiscal year 2023.
NOTE 16 – ASSETS DISPOSED
On September 8, 2021, the Company announced a restructuring plan that involved the closure of its manufacturing facility in Thailand and committed to a plan to sell the Thailand facility in connection with this restructuring plan. See Note 15 entitled “Restructuring and Other” for additional information.
During the second quarter of 2023, the Company completed the sale of the Thailand manufacturing facility for a selling price of $6.6 million and recognized a gain of $2.7 million, which is recorded in restructuring, asset impairment, other (gains) and charges in the consolidated condensed statements of operations and is attributable to the EAAA reportable segment.
The Company determined that the Thailand facility sale did not meet the criteria for classification as discontinued operations.
NOTE 1714 – COMMITMENTS AND CONTINGENCIES
From time to time, we are a party to legal proceedings, whether arising in the ordinary course of business or otherwise. See disclosure under the headingsheading “Lawsuit by Former CEO in Connection with Termination” and “Putative Class Action Lawsuit” set forth in Note 18 to the consolidated financial statements included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023. In the lawsuit by the former CEO, Mr. Gould filed a motion for reconsideration of the Court’s grant of summary judgment in favor of the Company on Mr. Gould’s breach of contract claim. On July 31, 2023, the Court denied that motion for reconsideration. Also on July 31, 2023, the Company filed a motion to dismiss without prejudice its counterclaim against Mr. Gould for breach of fiduciary duty. On August 2, 2023, the Court granted that motion to dismiss, resulting in a final judgment in the trial court. The court’s award of summary judgment in favor of the Company on Mr. Gould’s breach of contract claim has been appealed by Mr. Gould to the U.S. Court of Appeals for the 11th Circuit. The Company believes Mr. Gould’s lawsuit and the appeal therefrom is without merit and intends to defend vigorously against it.
In the putative class action, the Court preliminarily approved a settlement of the lawsuit for $7.5 million, and the Company’s insurers funded the settlement amount into escrow. As a result, in the second quarter of 2023, the Company reversed the $7.5 million asset and liability that were previously recorded in the first quarter of 2023. Putative class member proofs of claims were due by September 13, 2023, and in a hearing on October 19, 2023, the Court approved the final settlement of the action.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our discussions below in this Item 2 are based upon the more detailed discussions about our business, operations and financial condition included in our Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023, under Part II, Item 7 of that Form 10-K. Our discussions here focus on our results during the quarter and nine months ended October 1, 2023,March 31, 2024, or as of, October 1, 2023,March 31, 2024, and the comparable periods of 2022,2023, and to the extent applicable, any material changes from the information discussed in that Form 10-K or other important intervening developments or information since that time. These discussions should be read in conjunction with that Form 10-K for more detailed and background information. The nine-month periods ended October 1, 2023 and October 2, 2022, both include 39 weeks. The three-month periods ended October 1,March 31, 2024 and April 2, 2023 and October 2, 2022, both include 13 weeks.
Forward-Looking Statements
This report contains statements which may constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include risks and uncertainties associated with the economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading “Risk Factors” included in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
Executive Overview
During the quarter ended October 1, 2023,March 31, 2024, we had consolidated net sales of $311.0$289.7 million, down 5.1%2.0% compared to $327.8$295.8 million in the thirdfirst quarter last year, primarily due to decreased customer demand. Lower sales were primarilydemand — particularly in the retail, public buildings and corporate office and retail market segments. These decreases were partially offset by higher sales in the education market segment. Consolidated operating income was $31.0$24.4 million for the thirdfirst quarter of 20232024, compared to $28.0$9.5 million in the thirdfirst quarter last year, primarily due to higher gross profit margin as a result of higher pricinglower raw material and lower freight costs coupled with lower selling, general and administrative costs. Consolidated net income for the quarter ended October 1, 2023,March 31, 2024, was $9.9 million or $0.17 per share, compared to $14.1$14.2 million or $0.24 per share, in the third quarter last year.
During the first nine months of 2023, we hadcompared to consolidated net salesloss of $936.4 million, down 2.7% compared to $962.4 million in the first nine months of last year, primarily due to decreased customer demand. Lower sales were primarily in the retail and corporate office market segments, partially offset by increases in the education market segment. Consolidated operating income was $69.4 million for the first nine months of 2023, compared to $90.0 million in the same period last year. This decline was due to lower sales, inflationary pressures on raw materials, and lower manufacturing fixed cost absorption, partially offset by higher pricing, resulting in lower gross profit margin in the current year period coupled with higher selling, general and administrative costs. Consolidated net income for the nine months ended October 1, 2023, was $25.0$0.7 million or $0.43 per share, compared to $44.2 million or $0.75$0.01 per share in the same periodfirst quarter last year.
Cybersecurity Event
As previously disclosed in our current report on Form 8-K filed with the Commission on November 23, 2022, we discovered a cybersecurity attack on November 20, 2022, perpetrated by unauthorized third parties, affecting our IT systems on November 20, 2022. During the first nine months of 2023, we incurred approximately $1.0 million of additional expenses related to the investigation of the Cyber Event. These costs were primarily included in selling, general and administrative expenses in the consolidated condensed statement of operations.systems. The investigation of the Cyber Event was substantially completed early in the third quarter offiscal year 2023. We have cyber risk insurance and anticipate that a portion of our costs and expenses related to the Cyber Event will ultimately be recovered by insurance.
Our IT systems face a myriad of cybersecurity threats, including, without limitation, hacking, computer viruses, denial of service attacks, malware, ransomware, phishing scams, compromised or irretrievable backups, and other cyber attacks. Any of these events which deny us use of vital IT systems may seriously disrupt our normal business operations and lead to production or shipping stoppages, revenue loss, and reputational harm. We also expect to incur ongoing costs for enhanced data security against unauthorized access to, or manipulation of, our systems and data.
Impact of Macroeconomic Trends
The continued disruptionRecent disruptions in economic markets due to highpersistent inflation, increases inhigh interest rates, the Russia-Ukraine war and the Israel-Hamas war, a fairly stabilized but still challenging supply chain environment, a slow post COVID recovery in China and slow market conditions in the restparts of Asia, and significant financial pressures in the commercial office market globally, all pose challenges which may adversely affect our future performance.performance These impacts have increased our costs and adversely affected our gross profit margin.. To mitigate these impacts, we plan to continue evaluating our cost structure and global manufacturing footprint to identify and activate opportunities to decrease costs and optimize our global cost structure.
Analysis of Results of Operations
Consolidated Results
The following table presents, as a percentage of net sales, certain items included in our consolidated condensed statements of operations for the three-month and nine-month periods ended October 1, 2023March 31, 2024 and OctoberApril 2, 2022:2023:
| | Three Months Ended | | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| Net sales | Net sales | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % | Net sales | 100.0 | % | | 100.0 | % |
| Cost of sales | Cost of sales | 64.5 | | | 66.8 | | | 66.0 | | | 65.5 | |
| Gross profit | Gross profit | 35.5 | | | 33.2 | | | 34.0 | | | 34.5 | |
| Selling, general and administrative expenses | Selling, general and administrative expenses | 25.5 | | | 24.7 | | | 26.8 | | | 25.0 | |
| Restructuring, asset impairment, other (gains) and charges | — | | | 0.0 | | | (0.3) | | | 0.2 | |
| Restructuring, asset impairment and other charges | |
| Operating income | Operating income | 10.0 | | | 8.5 | | | 7.5 | | | 9.3 | |
| Interest/Other expense, net | 4.8 | | | 2.4 | | | 3.5 | | | 2.4 | |
| Income before income tax expense | 5.2 | | | 6.1 | | | 4.0 | | | 6.9 | |
| Interest/Other (income) expense, net | |
| Income (loss) before income tax expense | |
| Income tax expense | Income tax expense | 2.0 | | | 1.9 | | | 1.3 | | | 2.3 | |
| Net income | 3.2 | % | | 4.2 | % | | 2.7 | % | | 4.6 | % |
| Net income (loss) | | Net income (loss) | 4.8 | % | | (0.3) | % |
Consolidated Net Sales
Below is information regarding our consolidated net sales, and analysis of those results, for the three-month and nine-month periods ended October 1, 2023,March 31, 2024, and OctoberApril 2, 2022:2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Percentage
Change | | Nine Months Ended | | Percentage
Change |
| October 1, 2023 | | October 2, 2022 | | | October 1, 2023 | | October 2, 2022 | |
| (in thousands) | | | | (in thousands) | | |
| Consolidated net sales | $ | 311,006 | | | $ | 327,757 | | | (5.1) | % | | $ | 936,380 | | | $ | 962,364 | | | (2.7) | % |
| | | | | | | | | | | | | | | | | |
| Three Months Ended | | Percentage
Change |
| March 31, 2024 | | April 2, 2023 | |
| (in thousands) | | |
| Consolidated net sales | $ | 289,743 | | | $ | 295,792 | | | (2.0) | % |
For the quarter ended October 1, 2023,March 31, 2024, consolidated net sales decreased $16.8$6.0 million (5.1%(2.0%) versus the comparable period in 2022,2023, primarily due to lower sales volumevolumes (approximately 12%4%) partially offset by higher prices (approximately 7%2%). Currency fluctuations had a positiveno material impact on consolidated net sales of approximately $4.9 million (1.5%) for the thirdfirst quarter of 2023, due primarily2024 compared to the strengthening of the Euro and British Pound sterling against the U.S. dollar, partially offset by the weakening of the Australian dollar and Chinese Renminbi against the U.S. dollar.same period last year. On a market segment basis, the sales decrease was primarily in the retail, public buildings, and corporate office, retail, healthcare and hospitality market segments, partially offset by increases in the healthcare market segment.
For the nine months ended October 1, 2023, consolidated nethigher sales decreased $26.0 million (2.7%) versus the comparable period in 2022, primarily due to lower sales volume (approximately 8%) partially offset by higher prices (approximately 5%). Currency fluctuations had a negative impact on consolidated net sales of approximately $3.1 million (0.3%) for the first nine months of 2023, due primarily to the weakening of the Australian dollar, Chinese Renminbi and Canadian dollar against the U.S. dollar, partially offset by the strengthening of the Euro against the U.S. dollar. On a market segment basis, the sales decrease was primarily in the retail and corporate office market segments partially offset by increases in the education and residential living market segment.
Consolidated Cost and Expenses
The following table presents our consolidated cost of sales and selling, general and administrative expenses for the three-month and nine-month periods ended October 1, 2023,March 31, 2024, and OctoberApril 2, 2022:2023:
| | Three Months Ended | | Percentage
Change | | Nine Months Ended | | Percentage
Change |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | |
| (in thousands) | | | | (in thousands) | | |
| Three Months Ended | | | Three Months Ended | | Percentage
Change |
| March 31, 2024 | |
| (in thousands) | |
| (in thousands) | |
| (in thousands) | |
| Consolidated cost of sales | |
| Consolidated cost of sales | |
| Consolidated cost of sales | Consolidated cost of sales | $ | 200,748 | | | $ | 218,972 | | | (8.3) | % | | $ | 618,463 | | | $ | 630,074 | | | (1.8) | % | $ | 179,338 | | | $ | | $ | 199,919 | | | (10.3) | | (10.3) | % |
| Consolidated selling, general and administrative expenses | Consolidated selling, general and administrative expenses | 79,273 | | | 80,848 | | | (1.9) | % | | 251,049 | | | 240,711 | | | 4.3 | % | Consolidated selling, general and administrative expenses | 85,959 | | | 86,254 | | 86,254 | | | (0.3) | | (0.3) | % |
Consolidated Cost of Sales
For the quarter ended October 1, 2023,March 31, 2024, consolidated cost of sales decreased $18.2$20.6 million (8.3%(10.3%) compared to the thirdfirst quarter of 2022,2023, primarily due to lower sales as discussed above and the favorable impact of inflation on raw material costs and freight costs (approximately 2%) due to stabilizing supply chain conditions.lower sales. Currency translation had a negativeno material impact onto consolidated cost of sales in the third quarter of 2023 and partially increased our costs by approximately $3.2 million (1.5%) compared to the same period last year. As a percentage of net sales, our cost of sales decreased to 64.5% for the third quarter of 2023 versus 66.8% for the third quarter of 2022.
For the nine months ended October 1, 2023, consolidated cost of sales decreased $11.6 million (1.8%) versus the comparable period in 2022, primarily due to lower sales as discussed above. Currency translation had a positive impact on consolidated cost of sales61.9% for the first nine monthsquarter of 2023 and partially reduced our costs by approximately $2.5 million (0.4%) compared to the same period last year. As a percentage of net sales, our cost of sales increased to 66.0%2024 versus 67.6% for the first nine monthsquarter of 2023 versus 65.5% for the first nine months2023.
Consolidated Gross Profit
For the quarter ended October 1, 2023,March 31, 2024, consolidated gross profit, as a percentage of net sales, was 35.5%38.1% compared with 33.2%32.4% in the same period last year. The increase in gross profit margin was primarily due to (i) higher pricing (approximately 4%), (ii) the favorable impact of inflation on raw material and freight costs (approximately 1%), partially offset by (iii) lower manufacturing fixed cost absorption and product mix (approximately 3%).
For the nine months ended October 1, 2023, consolidated gross profit, as a percentage of net sales, was 34.0% compared with 34.5% in the same period last year. The decrease in gross profit percentage was primarily due to (i) lower manufacturing fixed cost absorption and product mix (approximately 3%) and (ii) the unfavorable impact of inflation on raw material and freight costs (approximately 3%), (ii) favorable product mix and other (approximately 2%), partially offset byand (iii) higher sales pricing (approximately 4%1%).
Consolidated Selling, General and Administrative (“SG&A”) Expenses
For the quarter ended October 1, 2023,March 31, 2024, consolidated SG&A expenses decreased $1.6$0.3 million (1.9%(0.3%) versus the comparable period in 2022.2023. Currency fluctuationstranslation had a negativeno material impact on consolidated SG&A expenses in the thirdfirst quarter of 2023 of approximately $1.3 million (1.7%)2024 compared to the same period last year. SG&A expenses were lower for the thirdfirst quarter of 20232024 primarily due to (i) $2.0 million of lower plant closure and severance costs driven by employee headcount reduction and cost saving initiatives in the prior year period, (ii) $1.0 million of approximately $1.3lower selling expenses, and (iii) $0.9 million relatedof lower Cyber Event costs due to completion of the closureinvestigation in the prior year as well as insurance recoveries in the current period. These decreases were mostly offset by $2.2 million of our Thailandhigher labor and Russia operations.variable compensation costs and $1.4 million of higher software license fees. As a percentage of net sales, SG&A expenses increased to 25.5% for the third quarter of 2023 versus 24.7% for the third quarter of 2022.
For the nine months ended October 1, 2023, consolidated SG&A expenses increased $10.3 million (4.3%) versus the comparable period in 2022. Currency translation had no material impact on consolidated SG&A expenses29.7% for the first nine monthsquarter of 2023 compared to the same period last year. SG&A expenses in the first nine months of 2023 compared to the same period last year included (i) $7.7 million of higher selling expenses due to sales and marketing initiatives, (ii) higher severance costs of approximately $2.6 million driven by employee reductions and cost saving initiatives, and (iii) Cyber Event costs of $1.0 million. These increases were partially offset by lower plant closure costs of approximately $1.2 million as discussed above. As a percentage of net sales, SG&A expenses increased to 26.8%2024 versus 29.2% for the first nine months of 2023 versus 25.0% for the first nine months of 2022.
Restructuring Activities
On September 8, 2021, the Company committed to a new restructuring plan that continued to focus on efforts to improve efficiencies and decrease costs across its worldwide operations, involving the closure of the Company’s manufacturing facility in Thailand. During the second quarter of 2023, the Company completed the sale of the Thailand manufacturing facility and recognized a gain of $2.7 million.
See Note 15 entitled “Restructuring and Other” and Note 16 entitled “Assets Disposed” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.2023.
Interest Expense
During the quarter ended October 1, 2023,March 31, 2024, interest expense was $8.2$6.4 million, an increasea decrease of $0.4$2.1 million from the comparable period in 2022,2023, primarily due to higher interest rates onlower outstanding term loan borrowings under the Facility. For the nine months ended October 1, 2023, interest expense was $25.0 million, an increase
Other Expense
During the quarter ended October 1, 2023, other expense, net, was $6.7 million, an increase of $6.6 million compared to the same period last year, driven by the substantial liquidation of our foreign subsidiaries in Brazil and Russia and the recognition of $6.2 million of cumulative translation adjustments reclassified from accumulated other comprehensive loss.
Segment Operating Results
During the first quarter of 2024, the Company implemented a cost center realignment initiative to centralize certain global/shared functions. For the quarter ended March 31, 2024, SG&A expenses for these global support functions were allocated to AOI for each reportable segment consistent with the allocation methodology used to allocate corporate overhead in prior periods. Prior year AOI amounts below were not recast as there was no material impact to the measure of segment profit for each reportable segment. There were no changes to the composition of the Company’s operating or reportable segments.
AMS Segment – Net Sales and Adjusted Operating Income (“AOI”)
The following table presents AMS segment net sales and AOI for the three-month and nine-month periods ended October 1, 2023,March 31, 2024, and OctoberApril 2, 2022:2023:
| | Three Months Ended | | Percentage Change | | Nine Months Ended | | Percentage Change |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | |
| (in thousands) | | | | (in thousands) | | |
| Three Months Ended | | | Three Months Ended | | Percentage Change |
| March 31, 2024 | |
| (in thousands) | |
| (in thousands) | |
| (in thousands) | |
| AMS segment net sales | |
| AMS segment net sales | |
| AMS segment net sales | AMS segment net sales | $ | 178,194 | | | $ | 194,449 | | | (8.4) | % | | $ | 548,716 | | | $ | 557,768 | | | (1.6) | % | $ | 169,915 | | | $ | | $ | 169,241 | | | 0.4 | | 0.4 | % |
AMS segment AOI(1) | AMS segment AOI(1) | 23,318 | | | 24,975 | | | (6.6) | % | | 58,621 | | | 74,502 | | | (21.3) | % | AMS segment AOI(1) | 18,080 | | | 11,269 | | 11,269 | | | 60.4 | | 60.4 | % |
(1) Includes allocation of corporate SG&A expenses.expenses and allocation of global support SG&A expenses as discussed above. Excludes Cyber Event costs,impact, property casualty loss, and restructuring, asset impairment, severance, and other, net. See Note 1110 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
During the thirdfirst quarter of 2023,2024, net sales in AMS decreased 8.4%increased 0.4% versus the comparable period in 2022,2023 primarily due to lowerhigher sales volumeprices partially offset by higher prices. Thelower volume. On a market segment basis, the AMS sales decreaseincrease was primarily in the retail, public buildings, and corporate office market segments partially offset by increases in the healthcare andeducation, residential living, market segments.
During the first nine months of 2023, net sales in AMS decreased 1.6% versus the comparable period in 2022, primarily due to lower sales volume partially offset by higher prices. The sales decrease was primarily in the retail and public buildings market segments, partially offset by increasesdecreases in the education, corporate office, healthcare,retail and residential livinghealthcare market segments.
AOI in AMS decreased 6.6%increased 60.4% during the thirdfirst quarter of 20232024 compared to the prior year period primarily due to higher sales pricing and lower sales partially offsetraw material and freight costs compared to the same period last year. During the first quarter of 2023, AOI in AMS was adversely impacted by lower freightinflation and higher input costs. As a percentage of net sales, AOI increased to 13.1%10.6% during the thirdfirst quarter of 20232024 compared to 12.8%6.7% in the same period last year.
AOI in AMS decreased 21.3% during the first nine months of 2023 compared to the prior year period, primarily due to higher raw material costs as a result of inflation, lower manufacturing fixed cost absorption in the current period, and lower sales. AMS SG&A expenses as a percentage of net sales for the first nine months of 2023 increased approximately 1.3%, which contributed to the decrease in AOI for the first nine months of 2023. As a percentage of net sales, AOI decreased to 10.7% during the first nine months of 2023 compared to 13.4% in the same period last year.
EAAA Segment – Net Sales and AOI
The following table presents EAAA segment net sales and AOI for the three-month and nine-month periods ended October 1, 2023,March 31, 2024, and OctoberApril 2, 2022:2023:
| | Three Months Ended | | Percentage Change | | Nine Months Ended | | Percentage Change |
| October 1, 2023 | | October 2, 2022 | | October 1, 2023 | | October 2, 2022 | |
| (in thousands) | | | | (in thousands) | | |
| Three Months Ended | | | Three Months Ended | | Percentage Change |
| March 31, 2024 | |
| (in thousands) | |
| (in thousands) | |
| (in thousands) | |
| EAAA segment net sales | |
| EAAA segment net sales | |
| EAAA segment net sales | EAAA segment net sales | $ | 132,812 | | | $ | 133,308 | | | (0.4) | % | | $ | 387,664 | | | $ | 404,596 | | | (4.2) | % | $ | 119,828 | | | $ | | $ | 126,551 | | | (5.3) | | (5.3) | % |
EAAA segment AOI(1) | EAAA segment AOI(1) | 9,049 | | | 6,273 | | | 44.3 | % | | 16,805 | | | 25,908 | | | (35.1) | % | EAAA segment AOI(1) | 7,445 | | | 3,929 | | 3,929 | | | 89.5 | | 89.5 | % |
(1)Includes allocation of corporate SG&A expenses.expenses and allocation of global support SG&A expenses as discussed above. Excludes purchase accounting amortization, Cyber Event costs, Thailand plant closure inventory write-down,impact, and restructuring, asset impairment, severance and other, net. See Note 1110 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.
During the thirdfirst quarter of 2023,2024, net sales in EAAA decreased 0.4%5.3% versus the comparable period in 2022,2023, primarily due to lower sales volume mostly offset by higher prices. Slower economic recovery and decreased customer demand in Asia resulted in approximately 15% lower netvolume. Currency fluctuations had no material impact on EAAA sales in Asia duringfor the currentfirst quarter 2024 compared to the same period last year. Currency fluctuations had a positive impact on EAAA sales of approximately $5.3 million (3.9%) for the third quarter of 2023 compared to the same period last year due to the strengthening of the Euro and British Pound sterling against the U.S. dollar, partially offset by the weakening of the Australian dollar and Chinese Renminbi against the U.S. dollar. On a market segment basis, the EAAA sales decrease was primarilymost significant in the retail,education, public buildings, and corporate office market segments.
During
AOI in EAAA increased 89.5% during the first nine monthsquarter of 2023, net sales in EAAA decreased 4.2%2024 versus the comparable period in 2022,2023, primarily due to lower sales in Asia, as discussed above. Higher prices partially offset lower EAAA sales volume. Currency fluctuations had a negative impact on EAAA sales of approximately $1.1 million (0.3%) for the first nine months of 2023 compared to the same period last year due to the weakening of the Australian dollar and Chinese Renminbi against the U.S. dollar, partially offset by the strengthening of the Euro against the U.S. dollar. On a market segment basis, the EAAA sales decrease was primarily in the corporate office, healthcare and retail market segments partially offset by increases in the education market segment.
AOI in EAAA increased 44.3% during the third quarter of 2023 versus the comparable period in 2022 primarily due to higher pricing and the impact of lower raw material costs compared to the same period last year. During the first quarter of 2023, AOI in EAAA was adversely impacted by inflation and higher input costs. Currency fluctuations had no material impact to EAAAon AOI for the thirdfirst quarter of 20232024 compared to the same periodfirst quarter last year. As a percentage of net sales, AOI increased to 6.8%6.2% during the thirdfirst quarter of 20232024 compared to 4.7%3.1% in the same period last year.
AOI in EAAA decreased 35.1% during the first nine months of 2023 versus the comparable period in 2022, primarily due to the impact of lower sales, inflationary pressures on raw material costs, and lower manufacturing fixed cost absorption on lower manufacturing production volumes partially offset by higher pricing. Currency fluctuations had no material impact to EAAA AOI for the first nine months of 2023 compared to the same period in 2022. As a percentage of net sales, AOI decreased to 4.3% during the first nine months of 2023 compared to 6.4% in the same period last year.
Financial Condition, Liquidity and Capital Resources
General
At October 1, 2023,March 31, 2024, the Company had $119.6$89.8 million in cash. At that date, the Company had $143.4$96.0 million in term loan borrowings, $5.9 million inno revolving loan borrowings, and $1.6 million in letters of credit outstanding under our Facility, and we had $300.0 million of Senior Notes outstanding. As of October 1, 2023,March 31, 2024, we had additional borrowing capacity of $292.5$298.4 million under the Facility. We anticipate that our liquidity is sufficient to meet our obligations for the next 12 months, and we expect to generate sufficient cash to meet our long-term obligations.
The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its Facility. The Company’s foreign subsidiaries and certain non-material domestic subsidiaries are considered non-guarantors. Net sales for the non-guarantor subsidiaries were approximately $148$133 million and $431$141 million for the three-month and nine-month periods ended October 1,March 31, 2024 and April 2, 2023, respectively, and net sales for the non-guarantor subsidiaries were approximately $147 million and $443 million for the three-month and nine-month periods ended October 2, 2022, respectively. Total indebtedness of the non-guarantor subsidiaries was approximately $131$128 million and $133 million as of October 1, 2023. Included in this $131 million is $99 million of indebtedness from the non-guarantor subsidiaries to guarantor subsidiaries, resulting from the dividend of an asset — a note receivable — by a non-guarantor subsidiary to a guarantor subsidiary. Total indebtedness of non-guarantor subsidiaries was approximately $43 million as of January 1, 2023. There was no indebtedness from non-guarantor subsidiaries to guarantor subsidiaries as of January 1, 2023.March 31, 2024 and December 31, 2023, respectively.
Balance Sheet
Accounts receivable, net, were $143.9$147.2 million at October 1, 2023,March 31, 2024, compared to $182.8$163.4 million at January 1,December 31, 2023. The decrease of $38.9$16.2 million was primarily due to customer collections in the first nine months of 2023, includingand the impact of delayslower net sales as a result of decreased customer demand in customer billings from the Cyber Event, in which the due dates for those delayed billings were pushed from the fourth quarter of 2022 to the first quarter of 2023.2024.
Inventories, net, were $289.3$296.3 million at October 1, 2023,March 31, 2024, compared to $306.3$279.1 million at January 1,December 31, 2023. The decreaseincrease of $17.0$17.2 million was primarily due to lower manufacturing volume andfinished goods inventory build dueattributable to reducedexpected higher customer demand and improvements in working capital management.the remainder of 2024, partially offset by lower raw material costs.
Analysis of Cash Flows
The following table presents a summary of cash flows for the nine-monththree-month periods ended October 1,March 31, 2024 and April 2, 2023, and October 2, 2022, respectively:
| | Nine Months Ended |
| October 1, 2023 | | October 2, 2022 |
| (in thousands) |
| Three Months Ended | | | Three Months Ended |
| March 31, 2024 | | | March 31, 2024 | | April 2, 2023 |
| (in thousands) | | | (in thousands) |
| Net cash provided by (used in): | Net cash provided by (used in): | |
| Operating activities | |
| Operating activities | |
| Operating activities | Operating activities | $ | 114,217 | | | $ | 14,883 | |
| Investing activities | Investing activities | (10,645) | | | (13,314) | |
| Financing activities | Financing activities | (80,847) | | | (10,456) | |
| Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | (656) | | | (8,916) | |
| Net change in cash and cash equivalents | Net change in cash and cash equivalents | 22,069 | | | (17,803) | |
| Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | 97,564 | | | 97,252 | |
| Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | $ | 119,633 | | | $ | 79,449 | |
Cash provided by operating activities was $114.2$12.6 million for the ninethree months ended October 1, 2023,March 31, 2024, which represents an increasea decrease of $99.3$17.0 million from the prior year comparable period. The increase in operating cash flowsdecrease was primarily due to changes in working capital during the first three months of 2024 compared with the first three months of 2023. Specifically, the prior year comparable period includes a greater source of cash from working capital duringaccounts receivable collections compared with the first ninethree months of 2023. Specifically, customer collections in the first nine months of 2023 contributed to a decrease in accounts receivable,2024, primarily attributable to delays in customer billings from the Cyber Event, in which the due dates for those delayed billings were pushed from the fourth quarter of 2022 tocollected in the first quarter of 2023. The 2022 nine-month period also includedAdditionally, the increase in inventories during the first three months of 2024, as described above, resulted in a greater use of cash for working capital attributable to an increase in inventories compared with the nine months ended October 1, 2023.
same period in the prior year. Cash used in investing activities was $10.6$2.0 million for the ninethree months ended October 1, 2023,March 31, 2024, which represents a decrease of $2.7$3.7 million from the prior year comparable period. The decreased use of cash from the comparable prior year perioddecrease was primarily attributable to cash proceeds of approximately $6.6 millionreceived from the sale of the Company’s Thailand manufacturing facility in the second quarterequipment and insurance proceeds for property casualty losses, both of 2023,which partially offset by highercash used for capital expenditures due to increased capital investment.during the three months ended March 31, 2024.
Cash used in financing activities was $80.8$29.8 million for the ninethree months ended October 1, 2023,March 31, 2024, which represents an increase of $70.4$8.7 million from the prior year comparable period. The increased use of cash from the comparable periodyear-over-year increase was primarily due to lower revolving loan borrowings combined with higher repayments of term loan and revolving loan borrowings during the three months ended March 31, 2024.
Outlook
We anticipate revenue growth in 2023 as a resultthe second quarter of cash generated from operating activities as described above. The priorfiscal year comparable period also includes repurchases of the Company’s common stock that did not occur in 2023, which partially offset the increased use of cash for financing activities in 20232024 compared with the prior year period.
Outlook
We anticipate that net sales will be down forfirst quarter of 2024. During the first half of fiscal year 2023 compared with fiscal year 2022. We are2024, the Company also anticipatingexpects continued year-over-year decreases in the cost per unit of various raw materialsmaterial purchases which will benefit gross profit margins in 2024. We also anticipate that the continued slow macro environment in China, high interest rates, and freight offset by continued lower manufacturing fixed cost absorption versussignificant financial pressures in the comparable prior year period. We are also anticipating higher selling, general,commercial office market globally will continue to adversely impact our performance and administrative costsdemand for fiscal year 2023 versus the comparable prior year period primarily due to inflation.our products.
Cash flows from operations, cash and cash equivalents, and other sources of liquidity are expected to be available and sufficient to meet foreseeable cash requirements. However, the Company’s cash flows from operations can be affected by numerous factors — including raw material availability and cost, and demand for our products, and the timing of accounts receivable collections and the timing of payments for accounts payable and accrued liabilities.products.
Backlog
As of October 22, 2023,April 21, 2024, the consolidated backlog of unshipped orders was approximately $210.3$224.3 million. As disclosed in our Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023, backlog was approximately $197.4$195.5 million as of February 5, 2023. The increase4, 2024. Disruptions in the backlog is due to the impact ofsupply and distribution chains have resulted in delays and timing of construction projects and flooring installations.installations in many regions worldwide, which have also caused, and may continue to cause, fluctuations in our backlog.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The discussion below in this Item 3 is based upon the more detailed discussions of our market risk and related matters included in our Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023, under Part II, Item 7A of that Form 10-K. The discussion here focuses on the ninethree months ended October 1, 2023,March 31, 2024, and any material changes from (or other important intervening developments since the time of) the information discussed in that Form 10-K. This discussion should be read in conjunction with that Form 10-K for more detailed and background information.
Sensitivity Analysis
For purposes of specific risk analysis, we use sensitivity analysis to measure the impact that market risk may have on the fair values of our market sensitive instruments. To perform sensitivity analysis, we assess the risk of loss in fair values associated with the impact of hypothetical changes in interest rates and foreign currency exchange rates on market sensitive instruments.
Because the debt outstanding under our Facility has variable interest rates based on an underlying prime lending rate, SOFR, or other benchmark rate, we do not believe changes in interest rates would have any significant impact on the fair value of that debt instrument. Changes in the underlying prime lending rate, SOFR, or other benchmark rate would, however, impact the amount of our interest expense. For a discussion of these hypothetical impacts on our interest expense, please see the discussion in Part II, Item 7A of our Annual Report on Form 10-K for the year ended January 1,December 31, 2023.
As of October 1, 2023,March 31, 2024, based on a hypothetical immediate 100 basis point increase in interest rates, with all other variables held constant, the fair value of our fixed rate long-term debt would be impacted by a net decrease of $10.9$11.3 million. Conversely, a 100 basis point decrease in interest rates would result in a net increase in the fair value of our fixed rate long-term debt of $11.5$11.9 million.
As of October 1, 2023,March 31, 2024, a 10% decrease or increase in the levels of foreign currency exchange rates against the U.S. dollar, with all other variables held constant, would result in a decrease in the fair value of our financial instruments of $12.0$9.1 million or an increase in the fair value of our financial instruments of $14.6$11.1 million, respectively. As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was performed under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Act”), pursuant to Rule 13a-14(c) under the Act.
No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that the system of controls has operated effectively in all cases. Our disclosure controls and procedures however are designed to provide reasonable assurance that the objectives of disclosure controls and procedures are met.
Based on the evaluation, our President and Chief Executive Officer and our Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report to provide reasonable assurance that the objectives of disclosure controls and procedures are met.
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended January 1,December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table contains information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during our thirdfirst quarter ended October 1, 2023:March 31, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period(1) | | Total
Number of
Shares
Purchased | | Average
Price
Paid
Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2) |
July 3 – July 30, 2023(3) | | 3,033 | | | $ | 8.79 | | | — | | | $ | 82,828,595 | |
| July 31 – August 27, 2023 | | — | | | — | | | — | | | 82,828,595 | |
| August 28 – October 1, 2023 | | — | | | — | | | — | | | 82,828,595 | |
| Total | | 3,033 | | | $ | 8.79 | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period(1) | | Total
Number of
Shares
Purchased | | Average
Price
Paid
Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2) |
January 1 – January 28, 2024(3) | | 63,293 | | | $ | 12.05 | | | — | | | $ | 82,828,595 | |
| January 29 – February 25, 2024 | | — | | | — | | | — | | | 82,858,595 | |
February 26 – March 31, 2024(3) | | 246,578 | | | 14.21 | | | — | | | 82,828,595 | |
| Total | | 309,871 | | | $ | 13.77 | | | — | | | |
(1) The monthly periods identified above correspond to the Company’s fiscal thirdfirst quarter of 2023,2024, which commenced July 3, 2023January 1, 2024 and ended October 1, 2023.March 31, 2024.
(2) On May 17, 2022, the Company announced a share repurchase program authorizing the repurchase of up to $100 million of common stock. The program has no specific expiration date. There were no shares repurchased pursuant to this program during the Company’s fiscal thirdfirst quarter of 2023.2024.
(3) Comprised of shares acquiredreceived by the Company from employees to satisfy income tax withholding obligations in connection with the vesting of previous equity awards.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended October 1, 2023,March 31, 2024, one of our directors, Daniel T. Hendrix, adopted a Rule 10b5-1 trading arrangement for the potential sale of our common stock in amounts and prices determined in accordance with such plan, as outlined in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Title | | Action | | Date Adopted | | Expiration Date | | Aggregate Number of Securities to be Purchased / Sold |
Daniel T. Hendrix, Director | | Adoption of Rule 10b5-1 Plan(1) | | March 6, 2024 | | February 5, 2025 | | 100,000 | |
(1) Intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934.
Transactions in our securities by directors or officers of Interface or its subsidiaries are required to be made in accordance with our Insider Trading Policy, which incorporates applicable U.S. federal securities laws that prohibit trading Interface common stock and other Company securities while aware of material non-public information about Interface.
Except as set forth above, during the three months ended March 31, 2024, no other director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
ITEM 6. EXHIBITS
The following exhibits are filed or furnished with this report:
| | | | | |
| Exhibit Number | Description of Exhibit |
| 19.1 | |
| 31.1 | |
| 31.2 | |
| 32.1 | |
| 32.2 | |
| 101.INS | XBRL Instance Document – The Instance Document does not appear in the Interactive Data Files because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | XBRL Taxonomy Extension Schema Document. |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document. |
| 101.DEF | XBRL Taxonomy Definition Linkbase Document. |
| 104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended October 1, 2023,March 31, 2024, formatted in Inline XBRL |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | |
| INTERFACE, INC. |
| | |
Date: NovemberMay 7, 20232024 | By: | /s/ Bruce A. Hausmann |
| | Bruce A. Hausmann
Chief Financial Officer
(Principal Financial Officer) |