TRG | The Bottom Line – 11/1

Interface capped the week off with its earnings release, reporting Q3’24 adjusted operating EPS of $0.48 vs. consensus and our $0.34. TILE traded up a whopping 30% the day of its earnings call today versus the S&P 500 trading flattish. Sales came in above the high end of the range and gross margin handily beat expectations (Sales $344MM vs. guidance of $330-340MM, gross margin 37.1% vs. guidance of 36%). Net sales were up 10.7% (vs. TRG's = 7.8%). By region, Americas sales were up 17.9% and Europe/Africa/Asia/Australia sales were up 1%. TILE also increased the FY’24 guidance of sales to $1.315-$1.325B vs. prior $1.3-$1.32B. Why such a strong stock reaction? In part, TILE’s strategy is paying off, handily outperforming the market. Why such a strong stock reaction today? We think in part because of ongoing strategic initiatives paying dividends. TILE no longer is as correlated to office as it has been historically due to increased focused on diversification of both product and end market. The company successfully has expanded the sales through product diversification (selling more Nora product to end markets) and end market expansion (education is growing and building momentum in healthcare). TRG is marketing with TILE CEO and CFO in Boston on December 11th – stay tuned for additional details.