Interface (TILE) Q4 2019 Earnings Call Transcript

Interface (TILE -0.03%)
Q4 2019 Earnings Call
Feb 26, 2020, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the fourth-quarter 2019 Interface, Inc. earnings conference call. [Operator instructions] I would now like to hand the conference over to your speaker today, Christine Needles, corporate communications. Please, go ahead.

Christine Needles -- Corporate Communications

Good morning, and welcome to Interface's conference call regarding fourth-quarter and full-year 2019 results, hosted by Dan Hendrix, chairman and CEO; and Bruce Hausmann, vice president and CFO. During today's conference call, any management comments regarding Interface's business, which are not historical information, are forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, by Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the intent, belief or current expectations of our management team, as well as the assumptions on which such statements are based. Any forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements, including risks and uncertainties associated with the economic conditions in the commercial interiors industry and risks related to lawsuits, investigations or similar legal proceedings that we are subject to from time to time as well as the risks and uncertainties discussed under the heading Risk Factors in Item 1A of the company's annual report on Form 10-K for the fiscal year ended December 30, 2018, and as updated by the additional risk factor included in Part 2, Item 1A of the quarterly report on Form 10-Q for the quarter ended September 29, 2019, which have been filed with the Securities and Exchange Commission.

We direct all listeners to those documents. The company assumes no responsibility to update or revise forward-looking statements made during this call and cautions listeners not to place undue reliance on any such forward-looking statements. Management's remarks during this call also refer to certain non-GAAP measures. The most comparable GAAP measures, as well as a reconciliation of the non-GAAP measures to the most comparable GAAP measures, is contained in the company's earnings release and Form 8-K furnished with the SEC today, which explains why Interface believes presentation of these non-GAAP measures provides useful information to investors, as well as any additional material purposes for which Interface uses these non-GAAP measures, each of which can be accessed in the Investor Relations section of the company's website, www.interface.com.

Lastly, this call is being recorded and broadcasted for Interface. It contains copyrighted material and may not be rerecorded or rebroadcasted without Interface's express permission. Your participation on the call confirms your consent to the company's taping and broadcasting of it. Now I'd like to turn the call over to Dan Hendrix, chairman and CEO.

Dan Hendrix -- Chairman and Chief Executive Officer

Thank you. Good morning, everyone, and thanks for joining our call today. I joined Interface 37 years ago, was leading the company as CEO from 2001 to 2017 and as CFO for 15 years before that. I've continued to be involved with the company as the board chairman and very fortunate now to have the opportunity to serve as CEO again while we search for a successor.

Our search for a new CEO will be a thoughtful process, one that will allow us to focus on executing our financial, operational and sustainability goals. Over the past several years, we've made exciting progress across the business and become a much stronger organization as a result. We have continued to run the strategy that we've been successfully executing for the last three years, focused on growing the top line, taking market share, optimizing our SG&A, and we will continue to execute on the important initiatives that we put in place in response to the changing market. I recently returned from the inspiring sales and management meetings with our teams in the Americas and Europe, and I cannot be more optimistic about the future of this company.

It is a really great time to be at Interface. Our new leader in the Americas is someone who is well-known and well-respected by our team. Jim Poppens was integral in the restructuring and commercial success of our floor business and instrumental in driving our global marketing initiatives. We expect a seamless transition and a strong momentum with this welcome change.

In Europe, I believe we have the strongest sales and leadership teams in that region than we've ever had in the history of the company. I feel strongly that this is a growth region for us, particularly in the U.K. where Brexit uncertainty is lifting and our sales team is positioned for success. We're executing industry-leading innovations.

We're investing approximately $50 million over three years in manufacturing, including tufting technology that will give us a new design capability and a new backing system to further separate us in the marketplace. But before I talk about what's ahead, let me first share with you the results of our fourth-quarter and full-year 2019. We delivered another solid quarter with net sales up 1% versus the fourth quarter last year and organic sales up 2%, ending full-year 2019 with net sales up 14% and organic sales up 2% versus the prior year. Fourth-quarter GAAP EPS was up 155% versus Q4 last year, while adjusted EPS was up 12% versus the fourth quarter last year.

GAAP earnings per share for the full-year 2019 was up 60% versus 2018, and adjusted earnings per share were up 7% versus the prior year. I want to thank the entire Interface team for a strong finish to the year and your steadfast commitment to delivering on our strategic and financial goals. Our core carpet tile business had a solid fourth quarter, contributing equally to organic growth with our expanding resilient business. Carpet tile remains a solid foundation for the company.

Our resilient business continues to be a key driver of growth. LVT had another strong quarter as we expand our product offerings to reach new market opportunities in this high-growth category. Our higher-margin three-millimeter LVT products are meeting customer needs in the healthcare, multifamily, and interior improvement segments and providing a new cross-selling opportunity. We're on track to reach a $100 million run rate in LVT in the first half of 2020, exceeding our initial expectations and taking share in this fast-growing commercial flooring category.

Our rubber business had a solid fourth quarter, also exceeding our growth expectations for the year. And I'm pleased with the progress we've made on integrating nora into the operations and the sales organization. We're continuing to strengthen our cross-selling efforts and joint marketing efforts as we expand opportunities across our product categories and segments, particularly in healthcare and education. By expanding our product portfolio beyond the soft surface, we have increased our addressable market and positioned our sales team to bring a variety of solutions to our customers and meet their diverse flooring needs across a wide range of market segments.

From a manufacturing standpoint, our productivity initiatives are generating our target results. GAAP gross margin was 40% in the fourth quarter with adjusted gross margin at 40.4%, up 80 basis points versus Q4 adjusted gross margin last year. SG&A expenses were in line with expectations during the quarter, allowing us to deliver GAAP operating income of $28 million in the fourth quarter of 8.2% of net sales and adjusted operating income of $42 million or 12.2% as a percentage of sales. This is gratifying performance especially considering we had a $4 million negative translation currency impact in operating income for the year.

Now I'll turn it over to Bruce for a more detailed discussion of our fourth-quarter and year-end results. Over to you, Bruce.

Bruce Hausmann -- Vice President and Chief Financial Officer

Thank you, Dan, and good morning, everyone. Fourth-quarter net sales were $339 million, up 1% over the prior-year period. Currency translation had a negative impact on fourth-quarter net sales of $5 million or 150 basis points year over year; and organic sales were up 2%, which was in line with our expectations. Our legacy Interface business in the Americas had a strong finish to the year, up 4% compared to the fourth quarter last year, with continued strong growth in LVT and solid carpet tile sales.

Legacy Interface sales in EMEA were up 1% in local currency, but down 2% in U.S. dollars due to currency headwinds driven by the euro to USD and pound sterling to USD exchange rates versus the prior year. Legacy Interface sales in Asia Pacific were up 2% in local currency compared to the fourth quarter last year, but were flat in U.S. dollars, largely due to the Australian dollar to USD exchange rate versus last year.

And in our global market segments, fourth-quarter growth was driven by office, education, and healthcare. The fourth-quarter gross profit margin was 40%, up 390 basis points versus fourth-quarter gross profit margin last year. The adjusted gross profit margin was 40.4%, which was an 80-basis-point improvement over adjusted gross profit margin last year. We're realizing the productivity savings of our Troup County optimization initiatives in the Americas, which we completed at the end of 2019.

SG&A expenses were $95 million in the fourth quarter or 28.1% of sales, which were in line with our expectations. As part of our previously announced restructuring plan, we recorded a $9 million restructuring charge in the fourth quarter. The charge was comprised of $8.8 million of severance charges in connection with the reduction of approximately 105 positions, primarily in our EAAA business and a $200,000 charge from early termination of two office leases in Shanghai and in the U.K. These charges were offset by a reversal of certain 2018 restructuring accruals of $1.7 million for a net restructuring charge of $7.3 million.

We expect this restructuring plan to yield annualized savings of approximately $6 million to be realized across fiscal years 2020 and 2021. In addition, we recorded a noncash charge of $5 million in the fourth quarter related to adjusting the carrying value of certain insurance-related assets. Operating income was $28 million for the fourth quarter compared with $4 million in the prior-year period. Adjusted operating income was $42 million in Q4 2019 compared to $37 million last year.

And fourth-quarter net income was $16 million or $0.28 per diluted share, up 155% compared to net income of $6 million or $0.11 per diluted share last year. Adjusted net income was $27 million or $0.46 per diluted share in Q4 2019 compared to $24 million or $0.41 per diluted share last year, representing 12% growth. Adjusted EBITDA was $54 million in Q4, which is approximately the same as Q4 last year. Now looking at full-year results, net sales were $1.3 billion in 2019, up 14% compared to $1.2 billion in 2018.

Organic sales were up 2% for the year. Gross margin was 39.1% in 2019, and the adjusted gross margin was 39.6%, which was up 90 basis points versus adjusted gross margin last year. SG&A expenses were $382 million or 28.4% of sales compared to SG&A expenses of $327 million or 27.8% of sales last year. And full-year operating income was $131 million in 2019 compared to $76 million in 2018.

Adjusted operating income was $150 million in 2019, up 12% versus adjusted operating income of $134 million last year. Net income was $79 million or $1.34 per share in 2019 compared with $50 million or $0.84 per share in 2018, and adjusted net income was $93 million or $1.59 per share in 2019, compared with adjusted net income of $89 million or $1.49 per share in 2018, which represented a 7% year-over-year growth in adjusted earnings per share. Now moving over to the balance sheet and cash flows, our balance sheet is strong, and we remain committed to a disciplined deleveraging plan. We generated $17 million of cash via working capital in the fourth quarter and reduced total debt by $30 million while ending the year with $81 million of cash on hand and $596 million of gross debt.

Net debt or gross debt minus cash on hand was $515 million. Our liquidity also remains very strong with $277 million of borrowing availability under our revolving credit facility at the end of the year. Adjusted EBITDA was $200 million at the end of 2019, resulting in a leverage ratio at the end of the year of 2.6 times, which is calculated as net debt divided by adjusted EBITDA. Please note that some of these are non-GAAP measures so as a reminder, please refer to our reconciliation tables in our press release to reconcile GAAP to non-GAAP measures.

Interest expense was $5 million in the fourth quarter compared with $6 million in Q4 of last year, and full-year interest expense was $26 million in 2019 versus $15 million last year. Depreciation and amortization was $45 million for the year compared to $39 million last year. And as anticipated, capital expenditures were $75 million in 2019 compared to $55 million last year. In addition to the increased investments we have made to optimize our Americas manufacturing operations, we're making exciting new investments in our technology that Dan would like to share with you.

Dan?

Dan Hendrix -- Chairman and Chief Executive Officer

Thanks, Bruce. As we progress into 2020, my focus is to be on driving the top line and growing sales, reducing SG&A as a percentage of sales and paying down debt. We have a robust pipeline of new product design and innovations in both the hard and soft flooring categories, new cutting-edge tufting technology allows us to design products with dynamic highlights and pattern, reminiscent of handwoven and flatweave rugs. We have renewed focus on key strategic growth opportunities, including segment penetration, particularly in healthcare and education, and a diversified pricing strategy.

We are accelerating cross-selling opportunities across our product portfolio and across market segments, and we remain focused on driving productivity in the selling system. Now if you think about the outlook for the full-year 2020 and continue to build on our strategic agenda, we are targeting to achieve organic sales growth of 2% to 4%, and adjusted earnings per share of $1.60 to $1.70 in 2020. Capital expenditures are forecasted at $50 million to $60 million for the year. Our 2020 effective tax rate is anticipated to be approximately 28%, and our diluted share count is anticipated to be approximately 59.5 million shares.

Also note that 2020 is a 53-week fiscal year for Interface with the extra week reflected in the first quarter. With regard to China and the coronavirus crisis, we temporarily closed our manufacturing facility and local offices in China for an extended new year holiday in accordance with government requirements, lasting from January 24 through February 9. During this time, our manufacturing facility in Thailand absorbed the production required to service customers normally supplied from our China facility. While manufacturing operations have resumed production and limitations on movement in the region are expected to be temporary, the sales and supply chain disruption-related financial impact will continue to evolve.

The impact is already evident in our year-to-date Asia Pacific orders results, and we anticipate that our Asia business could experience sales decline as much as 10% to 20% below plan for the first half of the year. The health and safety of our colleagues and their families is utmost importance. We will continue to monitor the situation and provide an update on the outlook of our next earnings call. Thank you again to the global Interface team for another solid quarter and strong finish to 2019, and thank you to our customers and shareholders who continue to support Interface and our Climate Take Back mission.

Before we get into Q&A, I know you're likely to have questions about the lawsuit that was filed by a former CEO. We have no comments to this pending litigation beyond the company's statement that was issued on February 17. With that, I'll open up for questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question today comes from Kathryn Thompson from Thompson Research Group. Please, go ahead.

Brian Biros -- Thompson Research Group -- Analyst

Hey, good morning. This is actually a Brian Biros on for Kathryn. Thank you for taking my questions. I guess we start on the corona impacts.

You called out in the press release and also the prepared remarks. And I guess if you may provide more color on is impact only been seen in the Asian region or is it any impact in the other regions for you guys? And is that copper tile facility in China, you mentioned is that back to full operations or is this open but still not 100% back yet?

Bruce Hausman -- Vice President and Chief Financial Officer

Hey, Brian. This is Bruce Hausman. Good morning. So the impact is only being seen in Asia right now.

And the planet that we have in China is back up and running. And I guess what I was just told to say and the Coronavirus issue is that it is evolving every single day, as you know, from the front page of the newspaper. But so far, so good, we have not had any impact in our supply chain. And so far, so good, we think we're hopeful that for the full year, we can recover the impact that we're seeing.

However, the first half, as we mentioned, we could see an impact on the top line of 10% to 20% of the Asian operations, and Asia's about 200 million in revenue just to quantify that for you just put some bands around it.

Brian Biros -- Thompson Research Group -- Analyst

I have a quick follow up. I think 50 million in CAPEX, you guys mentioned for 2019 through 2021 spend on the manufacturing innovations. You gave some color in the prepared remarks. Can anyone just help us think about kind of what the benefits are for that going forward and whether that's mostly a margin savings play? Or maybe there's some revenue add there from the products more environmentally friendly or something that opens up new end markets or customers? Maybe some clarity on what that looks like going forward and impact to Interface.

That would be helpful.

Dan Hendrix -- Chairman and Chief Executive Officer

Sure. Yes. Yes. This is Dan.

We are investing in a backing system that will give us the lowest carbon footprint product in our industry. Climate change is a really big deal to our customer base, particularly end users and our design group. They're starting to measure specifications with carbon in the spec. And so it is an innovation that I think will actually grow the top line with specs that will hold.

They came out with its E3, which they actually calculate carbon, embedded carbon end up in their buildings. So I think we're way ahead of the game here. We already had the lowest-carbon products, but this will actually -- we hope to get to negative carbon products eventually. And then on the tufting side, it's a product, a technology called true tuft, and it gives you a design and a style that's not in the marketplace today.

I don't know if you remember when we introduced Tapestry in the day. This is similar to that technology and a lot more exciting. So these investments really aren't on the gross profit line. They're actually going out and getting sales.

Brian Biros -- Thompson Research Group -- Analyst

I'll get back in queue. Thanks.

Operator

Our next question comes from Michael Wood from Nomura Instinet. Please, go ahead.

Michael Wood -- Nomura Instinet -- Analyst

Dan, welcome back your old CEO.

Dan Hendrix -- Chairman and Chief Executive Officer

Thank you.

Michael Wood -- Nomura Instinet -- Analyst

Yes. First question. Yes. I just wanted to see if you could provide some color on your gross margin outlook and SG&A within guidance? And on SG&A in particular, how should we think about first-quarter comparisons given that large investment did elevate the SG&A in 1Q '19?

Bruce Hausmann -- Vice President and Chief Financial Officer

Michael, it's Bruce Hausmann. So as you can see from our press release, we're providing guidance for the full year, top line of 2% to 4%. We're providing EPS guidance of $1.60 to $1.70. And we're providing CAPEX guidance, as well as tax rate and share count.

What we're not doing is we're not breaking that down by quarter, and we're not necessarily breaking that down by components of the income statement, gross profit versus SG&A. We're really focused on making sure we hit the top-line number and making certain that we hit the bottom line number without trying to break apart the pieces.

Dan Hendrix -- Chairman and Chief Executive Officer

Right. One of the things, Mike, is that I think our SG&A as a percentage of sales was too high. We need to grow into our SG&A number, and we need to reduce it as a percentage. We've created a lot of muscle in this company, which I'm excited to actually get back in there and run the company with a muscle we've created through a lot of investments.

But we need to grow the top line and look at white spaces within the new LVT rubber markets that we have cross-selling opportunities with our modular carpet business. So I think we're going to try and focus on improving the top line in this company and taking share. We've never really gone after a dealer market, particularly in the United States that I think we really need to go after and focus on. So I'm actually focused on running the plan that we have.

It's a great strategic plan that we put in place for the last three years. We built a lot of muscle in the selling organization. We just need to get productivity out of our selling group. And I think we're going to focus on design, as well as a company because I think design is how you drive specs as well.

So to me, it's really about driving the operating income line and driving the top line and growing into our SG&A.

Michael Wood -- Nomura Instinet -- Analyst

OK. And in fourth quarter, you didn't see any acceleration in organic sales despite the fact that you had that large project that was creating an unfavorable headwind in the prior quarters. Can you just talk about what kind of offset that in fourth quarter in terms of your core organic growth? Was it Asia weakness that you saw or something else that took away?

Bruce Hausmann -- Vice President and Chief Financial Officer

Yes. Mike, this is Bruce. Just to clarify, we actually did have a headwind in Q4 related to that large order that we were lapping comparable from year 2018. So similar to Q2 and Q3, there was a headwind that we saw in Q4.

It just wasn't quite as large. But we did come in right where we thought we would. We came in with 2% organic growth, which is exactly where we thought we would come into the quarter.

Michael Wood -- Nomura Instinet -- Analyst

OK. Can you just finally, talking about what drove the higher tax rate? I just wanted to ask, within your guidance, just that you're guiding to a pretty high tax rate versus what you had in '19 and prior years. I appreciate those other comments that you had, Dan, on organic sales, but then the tax-rate question.

Bruce Hausmann -- Vice President and Chief Financial Officer

I'm sorry, Mike. Are you asking about the 2019 tax rate or are you asking about the 2020 guidance tax rate?

Michael Wood -- Nomura Instinet -- Analyst

2020, you're guiding to 28%, if I'm not mistaken. I think you ended an adjusted effect of around 23% for 2019. So just wondering why the big increase.

Bruce Hausmann -- Vice President and Chief Financial Officer

Yes. It's a good question. You might remember, we had a couple of pickups in 2019, like one was related to the Bentley Prince Street business that is a discontinued operation, and we've talked about that in the prior quarter. So that was a onetime pickup that does not recur in 2020.

And the other thing that we're seeing, just like every other global company, is just some erosion of the tax reform benefits around the global intangible tax, the so-called GILTI tax and also the FDII tax. We're seeing some erosion in some of those components as tax reform sort of continues to bake into the income statement and continues to get codified around the world.

Michael Wood -- Nomura Instinet -- Analyst

OK. Thank you.

Operator

Our next question comes from Keith Hughes from SunTrust. Please, go ahead.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

Question's on nora. How did nora do in the quarter year over year?

Bruce Hausmann -- Vice President and Chief Financial Officer

Keith, this is Bruce. nora continues to stay on track with our acquisition model and our expectations that we had when we announced the deal. We just continue to be so pleased with the progress around that acquisition and the pace of integration. And we're continuing to methodically integrate that business so that we're one company with three product lines and so right on target with where we said it would be.

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. Keith, this is Dan. I'd also say that as I get out and go see our various businesses, and I'm actually headed to Salem tomorrow to talk to the nora people, the cross-selling opportunities between nora and Interface are really exciting to me. We've never been really strong in healthcare on the modular carpet on side, and they're very strong in healthcare.

So I think we're going to focus on the education part and the healthcare part for cross-selling. And in the outlying markets, we're also giving our salespeople all three products. So I think the cross-selling, we haven't realized that to the extent I think we can, but I'm excited about that opportunity for us.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

OK. And you had talked in the numbers about resilient, half the organic growth being out of resilience. I assume LVT was up strong again in the quarter. Is that fair to say?

Bruce Hausmann -- Vice President and Chief Financial Officer

Yes. We continue to see fantastic momentum in LVT. And we're right on track, Keith, to where we had anticipated with that to be a $100 million business run rate in 2020, which is absolutely fantastic, right, with accretive margins.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

OK. And you gave some revenue guidance in the release. Did that assume this decline in Asia that you had talked about earlier? It seems like about a point of what you're talking about.

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. Well, I would say that despite what's going on with Asia and the decline in sales, we're up 4% in orders to date this quarter. So I'm excited about the other markets, Europe and the United States and the Americas.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

OK. And I guess, finally, the question on carpet tile because that gives up a little bit, which is a good bit about where this industry is at this point. It feels like some share gain here. Do you have any feel what markets you're going to invest in carpet tiles in North America?

Dan Hendrix -- Chairman and Chief Executive Officer

Well, I would say that we are actually investing in the, I don't know if you remember, we did the non-office segments. But we're actually going after the education, hospitality and healthcare markets with modular carpet and with the resilient part of our business. And now we've never really gone into lower product categories. We've actually forfeited that market.

And I think we're determined to figure out how to sell into that market, particularly in the United States.

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

Thanks so much.

Operator

Our next question comes from John Baugh from Stifel. Please, go ahead.

John Baugh -- Stifel Financial Corp. -- Analyst

Thank you. Good morning, and welcome back, Dan, as well. Let's jump right in. I wanted to maybe discuss the 2 to 4% organic growth guide for '20.

Could you provide any color because that's a little bit of an acceleration where we just completed. Where that would either come from geographically or product-wise, Dan?

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. Well, I'm excited about the European business, which is kind of odd. A lot of people aren't excited about Europe. We've invested in a lot of what I call commercial leaders.

We have five new commercial leaders in Europe. And I just think we're poised to take share in the European market and also capitalizing on the fact we've got hard surfaces now there. And I think the U.S. has got pretty good momentum going as well, particularly with the nora integration and cross-selling.

We built a lot of muscle in the last two or three years in sales tools and productivity tools. We put in Salesforce. We put an Interface advance. And I just think we're ready to capitalize on some of that.

So I think it's U.S. I think it's Europe as well.

John Baugh -- Stifel Financial Corp. -- Analyst

OK. And then what, if anything, is going on with LVT sales around the world. You mentioned the $100 million, I assume that's consolidated. What are you seeing around the globe in that product category?

Bruce Hausmann -- Vice President and Chief Financial Officer

John, this is Bruce Hausmann. The sales just continue to accelerate. And we have not seen any stopping in terms of the momentum of that product line globally, which is great.

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. I would say that we've adopted it earlier in the United States, and Europe was following the U.S. from an adoption standpoint, and Asia is next to come. So I think Europe is going to see some pretty good LVT growth as well as rubber growth.

We introduced it first in the United States, then Europe, and then Asia. So you've got an adoption that the U.S. should be ahead of everybody else, so they got it first.

John Baugh -- Stifel Financial Corp. -- Analyst

Understood. And then is there any margin profile change in the LVT business?

Bruce Hausmann -- Vice President and Chief Financial Officer

John, this is Bruce. So as we mentioned last quarter, we launched some three-millimeter LVT. That actually comes at a slightly higher margin than some of our previous product lines. So not only are we bringing additional LVT products to market, but we continue to be able to bring it to market at very competitive and at strong margins.

John Baugh -- Stifel Financial Corp. -- Analyst

And then lastly, just to clarify, you used to give out sort of a backlog number, but I didn't see that. I guess you're not doing that. But you did comment, I think, your orders were up 4%. Is that a consolidated comment? And in what period is that through?

Bruce Hausmann -- Vice President and Chief Financial Officer

John, this is Bruce. So the 4% number is the year to date. Orders are up total company. We don't provide backlog.

You guys have heard me talk about this previously. It's not necessarily indicative of the future. Just sort of you snap the line and look at your backlog, which is why we don't necessarily talk about it. It's one component of many components about where the future of revenue growth is going to come from.

John Baugh -- Stifel Financial Corp. -- Analyst

Thanks for answering my questions. Good luck.

Bruce Hausmann -- Vice President and Chief Financial Officer

Thank you, John.

Operator

Our next question comes from David McGregor from Longbow Research. Please, go ahead.

David MacGregor -- Longbow Research -- Analyst

Yeah. Good morning, everyone, and welcome back to you.

Dan Hendrix -- Chairman and Chief Executive Officer

Thank you.

David MacGregor -- Longbow Research -- Analyst

I guess, just while we're on orders, a lot of talk on the last quarter's call about orders, and the observation was made that the patterns had become recently choppy. So I thought maybe just to start with, if you could update us just on cadence within the quarter, how orders had looked? And if you saw the sort of the velocity of the orders, it seems to be picking up a little bit, but has it stabilized in terms of the flow or is it still very choppy? And just talk a little bit about what you're seeing in terms of the quality of the order book.

Bruce Hausmann -- Vice President and Chief Financial Officer

Yes. David, this is Bruce. I think I was the one who said the word choppy, and I think that people read too much into that. When you look week to week, things bounce around.

It's just been a smooth progression throughout the quarter, the way I would sort of describe it. And I think looking at it, up 4%, that's a good number for our year to date.

Dan Hendrix -- Chairman and Chief Executive Officer

Yes, it is. And one thing, it was in the script, but we had a sales meeting in the United States. It's one of the best sales meetings I probably ever attended. And then I went to a management meeting with the top 125 in Europe.

And those two groups are very optimistic about what's going on in their geographic regions and pretty excited about going out and be able to grow the top line. So that sort of gives me a little bit of encouragement about -- we haven't been up 4% in orders. That's a good sign for us.

David MacGregor -- Longbow Research -- Analyst

And the observation, I think, Bruce, you made, call it, 4% was across the company. Is there much disparity in that number if you look at the region by region?

Bruce Hausmann -- Vice President and Chief Financial Officer

David, we don't normally give out order growth rates on a geographic basis. However, given all the sensitivity around the coronavirus side. This quarter, I'd like to just tell you that orders are down 8% year to date in Asia. But for the total company, they're up 4%, which obviously means that we're seeing strong order growth in Europe and in the Americas.

David MacGregor -- Longbow Research -- Analyst

Right. Yes. I would expect that in Asia. You talked about cross-selling as well.

And it sounds like an exciting opportunity. But frankly, it's an opportunity we've been talking about for over a year now. Maybe could you just update us in terms of, is there a metric you're using in terms of specified wins that have both hard and soft content or what's the metric you're using on that, Dan? And could you update us?

Dan Hendrix -- Chairman and Chief Executive Officer

Well, to me, we really haven't been focused on cross-selling. We've been focused on trying to actually get nora settled into the Interface culture and vice versa. And it takes a while to get the cross-selling or actually get the people identified, get the products identified, getting the markets identified. And me stepping in here in the last six weeks, I think we finally got all that right.

We got the people identified. They're going to actually carry the three products. So I'd say that we always had a cross-selling opportunity, but I think we're able to execute it better now given that we've got 18 months to get it going to me.

David MacGregor -- Longbow Research -- Analyst

OK. Just last question for me on the carbon-negative products initiative. I think the conversation has been around $15 million to $20 million of cost-reduction benefits overlapping '20 and '21. Is that still $15 million to $20 million? Is that still a good number to use?

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. I think based on the carbon negative side of the equation, that one is closer to $10 million. I'm not familiar with the other $5 million, where that comes from, except we've got a lot of improvement in manufacturing that we're targeting. So, yes, that whole pipeline is probably more like $15 million.

Bruce Hausmann -- Vice President and Chief Financial Officer

And David, this is Bruce. Just to clarify, that's the kind of savings that bleeds in not just this year, but it bleeds into next year.

David MacGregor -- Longbow Research -- Analyst

'21. Yes. I think you indicated that last quarter as well. One more, if I could.

But just on the balance sheet, you thought you could get it down to 2.0 times by the end of '20. Is that still the goal?

Bruce Hausmann -- Vice President and Chief Financial Officer

You're talking about net debt to EBITDA, David?

David MacGregor -- Longbow Research -- Analyst

Correct.

Bruce Hausmann -- Vice President and Chief Financial Officer

Yes. That's -- we are -- let me just say this. We are very, very focused on continuing to deleverage the company. So we're super.

We're right on track with where we said we would be, being at 2.6 as we ended up this quarter, which is fantastic. And we're going to continue focusing on deleveraging. We do have a goal of getting down to 2.0 by the end of this year. But I just wanted to say for everybody's benefit that deleveraging the balance sheet is a very, very keen focus of ours.

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. I want to echo that.

David MacGregor -- Longbow Research -- Analyst

Thanks very much.

Operator

And we have no further questions in queue at this time. I'll turn the call back for closing remarks.

Dan Hendrix -- Chairman and Chief Executive Officer

Yes. Well, thank you all for listening to the call. It's good to be back for me in this role, and I'm looking forward to having this year be a great year. I hope to talk to you next quarter.

Thanks.

Operator

[Operator signoff]

Duration: 39 minutes

Call participants:

Christine Needles -- Corporate Communications

Dan Hendrix -- Chairman and Chief Executive Officer

Bruce Hausmann -- Vice President and Chief Financial Officer

Brian Biros -- Thompson Research Group -- Analyst

Bruce Hausman -- Vice President and Chief Financial Officer

Michael Wood -- Nomura Instinet -- Analyst

Keith Hughes -- SunTrust Robinson Humphrey -- Analyst

John Baugh -- Stifel Financial Corp. -- Analyst

David MacGregor -- Longbow Research -- Analyst

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