Interface Inc Revisited

Interface, Inc., is the future of carpeting for both the home and the office. It's the world's largest manufacturer of modular carpet that needs minimal installation and can be done literally by anyone. By installing it as squares or planks, the carpet can be easily removed or replaced in a single afternoon. It's also easy for the home owner to redesign the look of the home's living space over and over again. The company was founded in 1973, and is based in Atlanta, Georgia.

In 1973, Carpets International was founded by Ray Anderson. In the same decade, Interface introduced GlasBac, a patented structured backing system that has become the industry standard for high-performance modular backings. They also introduced Intersept, a proprietary antimicrobial preservationsless.

• In 1982, Carpets International becomes Interface Flooring Systems, Inc, and Compact Carpet of Canada was acquired and named Interface Flooring Systems Canada, Inc.

• In 1994, Interface began designing products utilizing a "Less is More" philosophy, and reduces average consumption of fiber by 10% per square yard in just 12 months. That year founder Ray Anderson read Paul Hawken's book The Ecology of Commerce, and then delivered his first environmental speech, which began Interface's journey to sustainability. Interface then launched ReEntry, a carpet reclamation program.

• In 1998, Interface introduced a carpet tile product made with 100% recycled nylon face fiber and a layer of 100% recycled vinyl material in the backing. The company also introduced NexStep polyurethane cushion backing. Interface introduces the Portable Creel System, resulting in yarn savings of one million dollars per year.

• In 1999, Interface introduced the first online product catalog for carpet - TheSampleCenter.com.

• In 2003, Interface becomes the first carpet company to receive Environmentally Preferable Product (EPP) certification for its products and the first company to introduce Climate Neutral product offering through its Cool Carpet program. The company also announced a partnership with Tricycle Inc. to dematerialize their product development and sampling processes on a global basis.

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​Interface, Inc. designs, produces, and sells modular carpet products primarily in the Americas, Europe, and the Asia-Pacific. It offers modular carpets under the Interface and FLOR brands; and carpet tiles under the GlasBacRE brand name for use in commercial interiors, including offices, healthcare facilities, airports, educational and other institutions, hospitality spaces, and retail facilities, as well as residential interiors. The company also provides two-meter roll goods that are structure-backed for use in education, healthcare, and government markets; and an adapted version of its carpet tile for the healthcare facilities market, as well as offers carpet replacement, installation, and maintenance services. In addition, it offers proprietary antimicrobial chemical compound for interior finishes under the Intersept trademark; TacTiles carpet tile installation system; raised/access flooring products under the Intercell brand; and turnkey project management services for national accounts and other customers through its InterfaceSERVICES business, as well as sells traditional adhesives and products for carpet installation and maintenance. The company sells its products directly to end-users; and to architects, engineers, interior designers, contracting firms, and other specifiers through independent contractors or distributors, as well as sells its FLOR branded products through catalogs and Internet. It operates 21 stores under the FLOR brand name in the United States and Canada; and has product showrooms or design studios in United States, Canada, Mexico, Brazil, Denmark, England, France, Germany, Spain, the Netherlands, India, Australia, Norway, the United Arab Emirates, Russia, Singapore, Hong Kong, Thailand, and China. The company was founded in 1973 and is headquartered in Atlanta, Georgia.
(Summary) (Company) (Chart)

24 September 2017
Price $21.40
1yr Target $21.40
Analysts 5
Dividend $0.26
Payout Ratio 32.91%

1yr Cap Gain 0.00%
Yield 1.21%
1yr Tot Return 1.21%

P/E 27.26
PEG 0.82
Beta 1.20

EPS (ttm) $0.79
EPS next yr $1.32
Forward P/E 16.27
EPS next 5yr 33.10%
1yr Price Support $43.69

Market Cap $1.31 Bil
Revenues $960.70 Mil
Earnings $50.10 Mil
Profit Margin 5.21%

Quick Ratio 1.50
Current Ratio 2.60
Debt/Equity 0.69

1yr RevGR -4.30%
3yr RevGR 0.00%
5yr RevGR 0.11%

1yr EarnGR -24.55%
3yr EarnGR 4.32%
5yr EarnGR 7.06%

1yr DivGR 21.42%
3yr DivGR 100.00%
5yr DivGR ---

ROA 6.30%
ROE 14.50%

​My Perspective

The idea of carpet tiles is not new and Interface has plenty of competition as traditional carpet manufacturers branch out into the carpet tile business. In addition, the cost of design and innovation has caused its earnings to be a little volatile although positive.

The business is also tied to the economy as a good portion of their business is to other businesses, so a business recession would impact earnings. But I think that may be changing as their designs become more interesting to the DIY home remodeler. 

I've owned shares in this company since January 2016 and it's been a nice investment but not a very exciting investment. I got in at a price of about $16 per share and today it sits at $21.40. That's about a 33% return. Add in about 2% in dividends and the return becomes acceptable for less than two years but nothing to get overly excited about. 

But recently the stock has been hitting new highs. And that's what got my attention again. When I originally bought these shares I expected a price target of $25 within a year. And although it didn't make that price target, I think it may once again be on a trajectory toward $25. That's about 17% above today's current price. That's not an exciting return but it's not a bad return either.