Image source: Interface.

What: Shares of carpet tile company Interface (NASDAQ:TILE) dropped as much as 21% today after reporting quarterly results. As of 11:00 ET, shares are down 12%.

So what: Fourth-quarter revenue dropped 9% to $246.6 million, but net income more than doubled to $18.2 million, or $0.28 per share. The revenue figure fell well short of the $261.9 million analysts were expecting and earnings were a penny short of expectations.  

Currency headwinds were a big drag on Interface's business in the fourth quarter. After adjusting for currency changes, sales were down 3.5%, making the decline look a little more reasonable.

Now what: Cost reductions are helping drive results and gross margin hit a record 39.8%. That's something management thinks it can continue to improve upon in coming quarters and they said currency headwinds appear to be behind the business. Weak results on the top line are something to keep an eye on going forward because margin expansion can only go so far. But if business spending is indeed delayed, and not depressed permanently, as management predicts, the stock is a reasonable value at 14 times earnings.