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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-10 · 120 added, 77 removed, 78 unchanged (72% of the section changed)

1 unchanged sentence

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 2, 2022, under Part II, Item 7 of that Form 10-K.

Our discussions here focus on our results during the quarter ended April 3, 2022, or as of, April 3, 2022, and the comparable periods of 2021, 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.

Our discussions here focus on our results during the quarter and six months ended July 3, 2022, or as of, July 3, 2022, and the comparable periods of 2021, 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 three-month periods ended April 3, 2022 and April 4, 2021 both include 13 weeks.

The six-month periods ended July 3, 2022 and July 4, 2021 both include 26 weeks.

The three-month periods ended July 3, 2022 and July 4, 2021 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 ongoing COVID-19 pandemic and 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 2, 2022, as supplemented in Part II, Item 1A of this report.

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 April 3, 2022, we had consolidated net sales of $288.0 million, up 13.7% compared to $253.3 million in the first quarter last year, primarily due to the continued rebound in economic activity in certain countries following the impacts of COVID-19.

Higher sales were primarily in the corporate office, education and healthcare market segments.

Consolidated operating income was $27.4 million for the first quarter of 2022 compared to $16.9 million in the first quarter last year primarily due to higher sales in the current year period.

Consolidated net income for the quarter ended April 3, 2022 was $13.3 million or $0.22 per share compared to $6.9 million or $0.12 per share in the first quarter last year.

During the quarter ended July 3, 2022, we had consolidated net sales of $346.6 million, up 17.6% compared to $294.8 million in the second quarter last year, primarily due to the continued rebound in economic activity in certain countries following the impacts of COVID-19.

Higher sales were primarily in the corporate office, education and retail market segments.

Consolidated operating income was $34.5 million for the second quarter of 2022 compared to $29.2 million in the second quarter last year, primarily due to higher sales in the current year period.

Consolidated net income for the quarter ended July 3, 2022 was $16.8 million or $0.28 per share, compared to $15.5 million or $0.26 per share in the second quarter last year.

During the first six months of 2022, we had consolidated net sales of $634.6 million, up 15.8% compared to $548.0 million in the first six months of last year.

Higher sales were primarily in the corporate office, education, healthcare and retail market segments.

Consolidated operating income was $61.9 million for the first six months of 2022 compared to $46.1 million in the same period last year, due to the continued rebound in commercial markets and higher sales.

Consolidated net income for the six months ended July 3, 2022 was $30.1 million or $0.51 per share, compared to $22.4 million or $0.38 per share in the same period last year.

Impact of the COVID-19 Pandemic

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The duration of the pandemic will ultimately determine the extent to which our operations are impacted.

During the first quarter of 2022, the COVID-19 pandemic continued to impact our global supply chain and manufacturing operations, which resulted in raw material shortages, raw material cost increases, higher freight costs, higher labor costs and shipping delays.

These global supply chain and manufacturing challenges increased our costs and adversely affected our gross profit margin–particularly in our EAAA segment.

New government imposed COVID-19 lockdowns in parts of China during the first quarter of 2022 adversely impacted sales in China by approximately 14% compared with the first quarter last year.

During the second quarter of 2022, continuing government imposed COVID-19 lockdowns in parts of China resulted in the temporary closure of our manufacturing facility.

These lockdowns adversely impacted sales in China by approximately 15% for the first six months of 2022 compared with the same period last year.

Continuing global supply chain challenges and inflationary pressures resulted in higher raw material costs, higher freight costs, higher labor costs and shipping delays during the second quarter and first six months of 2022, which increased our operating costs and adversely impacted our gross profit margin.

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 periods ended April 3, 2022 and April 4, 2021:

Three Months Ended

April 3, 2022 April 4, 2021

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 six-month periods ended July 3, 2022 and July 4, 2021:

Three Months Ended Six Months Ended

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

Net sales 100.0 % 100.0 % 100.0 % 100.0 %

Cost of sales 66.3 63.0 64.8 62.6

Gross profit on sales 37.1 37.9

Gross profit 33.7 37.0 35.2 37.4

Selling, general and administrative expenses 23.5 27.1 25.2 29.0

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Consolidated Net Sales

Below is information regarding our consolidated net sales, and analysis of those results, for the three-month periods ended April 3, 2022, and April 4, 2021:

Below is information regarding our consolidated net sales, and analysis of those results, for the three-month and six-month periods ended July 3, 2022, and July 4, 2021:

Three Months Ended Percentage

April 3, 2022 April 4, 2021

(in thousands)

Change Six Months Ended Percentage

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands) (in thousands)

Consolidated net sales $ 346,605 $ 294,785 17.6 % $ 634,607 $ 548,045 15.8 %

For the quarter ended April 3, 2022, consolidated net sales increased $34.7 million (13.7%) versus the comparable period in 2021, primarily due to higher sales volume and prices.

Currency fluctuations had a negative impact on consolidated net sales of approximately $7.9 million (3.1%) for the first quarter of 2022, due primarily to the weakening of the Euro, Australian dollar and British Pound sterling against the U.S.

On a market segment basis, the sales increase was primarily in the corporate office, education and healthcare market segments as a result of higher corporate reinvestment and government spending on school renovation projects.

For the quarter ended July 3, 2022, consolidated net sales increased $51.8 million (17.6%) versus the comparable period in 2021, primarily due to higher sales volume and prices.

Currency fluctuations had a negative impact on consolidated net sales of approximately $15.5 million (5.3%) for the second quarter of 2022, due primarily to the weakening of the Euro, Australian dollar and the British Pound sterling against the U.S.

On a market segment basis, the sales increase was primarily in the corporate office, education and retail market segments as a result of higher corporate reinvestment and government spending on school renovation projects.

For the six months ended July 3, 2022, consolidated net sales increased $86.6 million (15.8%) versus the comparable period in 2021, primarily due to higher sales volume and prices.

Currency fluctuations had a negative impact on consolidated net sales of approximately $23.4 million (4.3%) for the first six months of 2022, due to the weakening of the Euro, Australian dollar and British Pound sterling against the U.S.

On a market segment basis, the sales increase was primarily in the corporate office, education, healthcare and retail market segments partially offset by decreases in the public buildings and transportation market segments.

Consolidated Cost and Expenses

The following table presents our consolidated cost of sales and selling, general and administrative expenses for the three-month periods ended April 3, 2022, and April 4, 2021:

The following table presents our consolidated cost of sales and selling, general and administrative expenses for the three-month and six-month periods ended July 3, 2022, and July 4, 2021:

Three Months Ended Percentage

April 3, 2022 April 4, 2021

(in thousands)

Cost of sales $ 181,203 $ 157,222 15.3 %

Selling, general and administrative expenses 78,492 79,302 (1.0) %

For the quarter ended April 3, 2022, consolidated cost of sales increased $24.0 million (15.3%) compared to the first quarter of 2021, primarily due to higher sales and continuing inflationary pressures on raw materials, freight and labor costs.

Currency translation had a positive impact on consolidated cost of sales in the first quarter of 2022 and partially reduced our costs by approximately $5.2 million (3.3%) compared to the same period last year.

As a percentage of net sales, our cost of sales increased to 62.9% for the first quarter of 2022 versus 62.1% for the first quarter of 2021.

For the quarter ended April 3, 2022, consolidated selling, general and administrative (“SG&A”) expenses decreased $0.8 million (1.0%) versus the comparable period in 2021.

Currency translation had a positive impact on consolidated SG&A expenses in the first quarter of 2022 and partially reduced our costs by approximately $1.9 million (2.7%) compared to the same period last year.

SG&A expenses were also lower for the first quarter of 2022 due to lower severance costs and lower labor costs of approximately $2.6 million driven by employee headcount reduction initiatives in response to the impacts of COVID-19.

These lower costs were partially offset by higher selling expenses of approximately $1.8 million during the first quarter of 2022 due to higher sales.

As a percentage of sales, SG&A expenses decreased to 27.3% for the first quarter of 2022 versus 31.3% for the first quarter of 2021.

Change Six Months Ended Percentage

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands) (in thousands)

Consolidated cost of sales $ 229,899 $ 185,793 23.7 % $ 411,102 $ 343,015 19.8 %

Consolidated selling, general and administrative expenses 81,371 79,830 1.9 % 159,863 159,132 0.5 %

Consolidated Cost of Sales

For the quarter ended July 3, 2022, consolidated cost of sales increased $44.1 million (23.7%) compared to the second quarter of 2021, primarily due to higher sales and continuing inflationary pressures on raw materials, freight and labor costs.

Currency translation had a positive impact on consolidated costs of sales in the second quarter of 2022 and partially reduced our costs by approximately $10.4 million (5.6%) compared to the same period last year.

As a percentage of net sales, our cost of sales increased to 66.3% for the second quarter of 2022 versus 63.0% for the second quarter of 2021.

For the six months ended July 3, 2022, consolidated cost of sales increased $68.1 million (19.8%) versus the comparable period in 2021, primarily due to higher sales and the continuing impact of inflation as discussed above.

Currency translation had a positive impact on consolidated cost of sales for the first six months of 2022 and partially reduced our costs by approximately $15.6 million (4.6%) compared to the same period last year.

As a percentage of net sales, our cost of sales increased to 64.8% for the first six months of 2022 versus 62.6% for the first six months of 2021.

Consolidated Gross Profit

For the quarter ended July 3, 2022, gross profit, as a percentage of net sales, was 33.7% compared with 37.0% in the same period last year.

The decrease was primarily due to inflationary pressures on raw materials, freight and labor costs as discussed above.

For the six months ended July 3, 2022, gross profit, as a percentage of net sales, was 35.2% compared with 37.4% in the same period last year.

The decrease was primarily due to the continuing impact of inflation as discussed above.

Consolidated Selling, General and Administrative (“SG&A”) Expenses

For the quarter ended July 3, 2022, consolidated SG&A expenses increased $1.5 million (1.9%) versus the comparable period in 2021.

Currency translation had a positive impact on consolidated SG&A expenses in the second quarter of 2022 of approximately $3.3 million (4.1%) compared to the same period last year.

SG&A expenses for the second quarter of 2022 included higher selling expenses of approximately $6.5 million compared to the same period last year due to higher sales, which were partially offset by lower labor costs of approximately $4.2 million due to headcount reduction initiatives in the prior year in response to the impacts of COVID-19.

As a percentage of net sales, SG&A expenses decreased to 23.5% for the second quarter of 2022 versus 27.1% for the second quarter of 2021.

For the six months ended July 3, 2022, consolidated SG&A expenses increased $0.7 million (0.5%) versus the comparable period in 2021.

Currency translation had a positive impact on consolidated SG&A expenses for the first six months of 2022 of approximately $5.2 million (3.4%) compared to the same period last year.

SG&A expenses included $9.5 million of higher selling expenses in the first six months of 2022 compared to the same period last year due to higher sales, which were partially offset by lower labor costs of approximately $5.6 million due to the employee headcount reduction initiatives discussed above and approximately $2.7 million in lower professional fees.

As a percentage of net sales, SG&A expenses decreased to 25.2% for the first six months of 2022 versus 29.0% for the first six months of 2021.

Restructuring Activities

On September 8, 2021, the Company committed to a new restructuring plan that continues 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 at the end of the first quarter of 2022.

In the first quarter of 2022, we recognized restructuring charges of approximately $0.9 million under this plan primarily related to the impairment of property, plant and equipment at the Thailand facility.

In addition, in conjunction with the closure of its Thailand Facility, the Company recorded a write-down of inventory of $1.1 million in the first quarter of 2022 within cost of sales in the consolidated condensed statements of operations.

On September 8, 2021, the Company committed to a new restructuring plan that continues to focus on efforts to improve efficiencies and decrease costs across its worldwide operations, including the closure of the Company’s manufacturing facility in Thailand at the end of the first quarter of 2022.

During the first six months of 2022, we recognized restructuring charges of approximately $1.7 million under this plan primarily related to the impairment of property, plant and equipment at the Thailand facility.

In addition, in conjunction with the closure of its Thailand facility, the Company recorded a write-down of inventory of $2.1 million in the first six months of 2022 within cost of sales in the consolidated condensed statements of operations.

See Note 15 entitled “Restructuring and Other Charges” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

Interest Expense

During the quarter ended April 3, 2022, interest expense was $6.9 million, a decrease of $0.4 million from the comparable period in 2021, primarily due to lower outstanding term loan borrowings under the Facility.

During the quarter ended July 3, 2022, interest expense was $7.2 million, a decrease of $0.1 million from the comparable period in 2021.

For the six months ended July 3, 2022, interest expense was $14.0 million, a decrease of $0.5 million from the comparable period in 2021.

The decrease in both the three months and six months ended July 3, 2022 was primarily due to lower outstanding term loan borrowings under the Facility.

Segment Operating Results

AMS Segment – Net Sales and Adjusted Operating Income (“AOI”)

The following table presents AMS segment net sales and AOI for the three-month periods ended April 3, 2022, and April 4, 2021:

Three Months Ended Percentage Change

April 3, 2022 April 4, 2021

(in thousands)

The following table presents AMS segment net sales and AOI for the three-month and six-month periods ended July 3, 2022, and July 4, 2021:

Three Months Ended Percentage Change Six Months Ended Percentage Change

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands) (in thousands)

AMS segment net sales $ 206,810 $ 156,665 32.0 % $ 363,319 $ 283,632 28.1 %

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See Note 11 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

During the first quarter of 2022, net sales in AMS increased 23.3% versus the comparable period in 2021 primarily due to higher sales volume and prices in the corporate office, education and healthcare market segments.

AOI in AMS increased 77.4% during the first quarter of 2022 compared to the prior year period primarily due to higher sales.

The increase in AOI was also due to higher pricing and favorable fixed cost absorption, partially offset by higher raw material costs, higher freight costs, and higher labor costs as a result of continuing inflationary pressures.

During the second quarter of 2022, net sales in AMS increased 32.0% versus the comparable period in 2021, primarily due to higher sales in the corporate office, education, retail and consumer residential market segments.

Higher selling prices also contributed to the increase in net sales for the quarter.

During the first six months of 2022, net sales in AMS increased 28.1% versus the comparable period in 2021, primarily due to higher sales volume and prices.

The sales increase was primarily in the corporate office, education, retail, healthcare and consumer residential market segments.

AOI in AMS increased 34.6% during the second quarter of 2022 compared to the prior year period, primarily due to higher sales.

AMS SG&A expenses as a percentage of net sales in the second quarter of 2022 decreased approximately 2% compared to the second quarter of 2021, which contributed to the increase in AOI for the current quarter.

AOI in the second quarter of 2022 was impacted by higher raw material costs, higher freight costs, and higher labor costs as a result of continuing inflationary pressures.

AOI in AMS increased 50.0% during the first six months of 2022 compared to the prior year period, primarily due to higher sales.

AMS SG&A expenses as a percentage of net sales for the first six months of 2022 decreased approximately 2%, which contributed to the increase in AOI for the first six months of 2022.

AOI in AMS for the first six months of 2022 was impacted by continuing inflationary pressures, as discussed above.

EAAA Segment – Net Sales and AOI

The following table presents EAAA segment net sales and AOI for the three-month periods ended April 3, 2022, and April 4, 2021:

Three Months Ended Percentage Change

April 3, 2022 April 4, 2021

(in thousands)

The following table presents EAAA segment net sales and AOI for the three-month and six-month periods ended July 3, 2022, and July 4, 2021:

Three Months Ended Percentage Change Six Months Ended Percentage Change

July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021

(in thousands) (in thousands)

EAAA segment net sales $ 139,795 $ 138,120 1.2 % $ 271,288 $ 264,413 2.6 %

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See Note 11 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

During the first quarter of 2022, net sales in EAAA increased 4.1% versus the comparable period in 2021.

Currency fluctuations had a negative impact on EAAA sales of approximately $7.9 million (6.3%) for the first quarter 2022 compared to the same period last year due to the weakening of the Euro, British Pound sterling, and Australian dollar against the U.S.

During the first quarter of 2022, EAAA sales were adversely impacted by new government imposed COVID-19 lockdowns in parts of China.

On a market segment basis, the EAAA sales increase was most significant in the corporate office and healthcare market segments, partially offset by decreases in the public buildings market segment.

AOI in EAAA increased 18.6% during the first quarter of 2022 versus the comparable period in 2021 primarily due to the impact of higher sales.

Currency fluctuations had a negative impact on AOI of approximately $1.0 million (6.8%) for the first quarter of 2022 compared to the first quarter last year.

EAAA SG&A expenses as a percentage of net sales in the first quarter of 2022 decreased approximately 3% compared to the first quarter of 2021, which contributed to the increase in AOI for the first quarter of 2022.

AOI in the first quarter of 2022 was adversely impacted by higher raw material costs, higher freight costs, and higher labor costs as a result of continuing inflationary pressures.

Liquidity and Capital Resources

At April 3, 2022, the Company had $76.1 million in cash.

During the second quarter of 2022, net sales in EAAA increased 1.2% versus the comparable period in 2021.

Higher sales volume and prices were mostly offset by the impact of negative currency fluctuations of approximately $15.0 million (10.9%) for the second quarter 2022 compared to the same period last year due to the weakening of the Euro, Australian dollar and British Pound sterling against the U.S.

EAAA sales were also adversely impacted by government imposed COVID-19 lockdowns in parts of China during the second quarter of 2022.

On a market segment basis, the EAAA sales increase was primarily in the corporate office and healthcare market segments, partially offset by decreases in the public buildings, education and transportation market segments.

During the first six months of 2022, net sales in EAAA increased 2.6% versus the comparable period in 2021.

Higher sales volume and prices were mostly offset by the impact of negative currency fluctuations of approximately $22.9 million (8.7%) for the first six months of 2022 compared to the same period last year due to the weakening of the Euro, Australian dollar and British Pound sterling against the U.S.

On a market segment basis, the EAAA sales increase was primarily in the corporate office and healthcare market segments partially offset by decreases in the public buildings, education and transportation market segments.

AOI in EAAA increased 1.7% during the second quarter of 2022 versus the comparable period in 2021 primarily due to the impact of higher net sales.

Currency fluctuations had a negative impact on AOI of approximately $2.0 million (12.5%) for the second quarter of 2022 compared to the second quarter of 2021.

AOI in the second quarter of 2022 was adversely impacted by higher raw material costs, higher freight costs, and higher labor costs as a result of continuing inflationary pressures.

AOI in EAAA increased 9.3% during the first six months of 2022 versus the comparable period in 2021 primarily due to higher sales and lower SG&A expenses as a percentage of net sales of approximately 3%.

Currency fluctuations had a negative impact on AOI of approximately $3.0 million (9.9%) for the first six months of 2022 compared to the same period in 2021.

AOI in EAAA for the first six months of 2022 was adversely impacted by continuing inflationary pressures, as discussed above.

Financial Condition, Liquidity and Capital Resources

At July 3, 2022, the Company had $91.7 million in cash.

At that date, the Company had $207.3 million in term loan borrowings, $44.5 million in 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 April 3, 2022, we had additional borrowing capacity of $283.4 million under the Facility and $4.0 million of borrowing capacity under other credit facilities in place at other non-U.S.

As of July 3, 2022, we had additional borrowing capacity of $253.8 million under the Facility and $4.0 million of borrowing capacity under other credit facilities in place at other non-U.S.

subsidiaries.

We anticipate that our liquidity is sufficient to meet our obligations for the next 12 months.

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 existing 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 $144 million and $136 million for the three-month periods ended April 3, 2022 and April 4, 2021, respectively.

Total indebtedness of the non-guarantor subsidiaries was approximately $43 million and $45 million as of April 3, 2022 and January 2, 2022, respectively.

Net sales for the non-guarantor subsidiaries were approximately $152 million and $296 million for the three-month and six-month periods ended July 3, 2022, respectively, and net sales for the non-guarantor subsidiaries were approximately $148 million and $284 million for the three-month and six-month periods ended July 4, 2021, respectively.

Total indebtedness of the non-guarantor subsidiaries was approximately $48 million and $45 million as of July 3, 2022 and January 2, 2022, respectively.

Balance Sheet

Inventories, net, were $318.1 million at July 3, 2022 compared to $265.1 million at January 2, 2022.

The increase of $53.0 million was primarily due to higher customer demand and inventory build as well as higher raw material costs and freight costs due to continuing inflationary pressures.

Analysis of Cash Flows

The following table presents a summary of cash flows for the three-month periods ended April 3, 2022 and April 4, 2021, respectively:

Three Months Ended

April 3, 2022 April 4, 2021

The following table presents a summary of cash flows for the six-month periods ended July 3, 2022 and July 4, 2021, respectively:

Six Months Ended

July 3, 2022 July 4, 2021

(in thousands)

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Cash and cash equivalents at end of period $ 91,653 $ 102,372

Cash used in operating activities was $17.7 million for the three months ended April 3, 2022, which represents a decrease of $42.6 million compared with cash provided by operating activities in the prior year comparable period.

The decrease was primarily due to a greater use of cash for working capital during the first three months of 2022.

Specifically, higher inventories as a result of increased customer demand, raw material costs and input costs contributed to the greater use of cash for working capital compared to last year.

Accrued bonus payments during the first quarter of 2022 also contributed to the increased use of cash.

These uses of cash were partially offset by higher accounts receivable collections during the first quarter of 2022.

Cash used in investing activities was $4.8 million for the three months ended April 3, 2022, which represents a decrease of $0.4 million from the prior year comparable period.

Cash used in operating activities was $12.7 million for the six months ended July 3, 2022, compared with $35.1 million of cash provided by operating activities in the prior year period.

The difference was primarily due to a greater use of cash for working capital during the first six months of 2022.

Specifically, higher inventories as a result of increased customer demand, higher raw material costs and input costs contributed to the greater use of cash for working capital compared to last year.

Accrued bonus payments during the first quarter of 2022 also contributed to the increased use of cash for the first six months of 2022.

Cash used in investing activities was $9.1 million for the six months ended July 3, 2022, which represents a decrease of $3.0 million from the prior year period.

The decrease from the comparable period was primarily due to a decrease in capital expenditures due to reduced capital investment.

Cash provided by financing activities was $2.9 million for the three months ended April 3, 2022, which represents an increase of $15.9 million compared with cash used in financing activities in the prior year comparable period.

The year-over-year increase was primarily due to higher revolving loan borrowings in 2022 to fund operating activities as described above.

Cash provided by financing activities was $21.5 million for the six months ended July 3, 2022, compared with $21.3 million of cash used in financing activities in the prior year period.

The year-over-year difference was primarily due to higher revolving loan borrowings in 2022 to fund operating activities as described above, partially offset by repurchases of the Company’s common stock pursuant to a new share repurchase program adopted in the second quarter of 2022.

Share Repurchases

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.

During the second quarter of 2022, the Company repurchased 415,223 shares of common stock at a weighted average price of $13.44 per share pursuant to this program.

Purchase Obligations

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Any or all of these factors could negatively impact our financial position, results of operations, cash flows, and outlook.

As the impact of the COVID-19 pandemic continues to affect companies with global operations, specifically as it relates to the global supply chain, we anticipate that, at a minimum, our business and results in the first half of 2022 will continue to be affected, and the timeline and pace of recovery is uncertain.

We anticipate revenue growth in the second quarter of fiscal year 2022 compared with the first quarter of 2022.

As the impact of the COVID-19 pandemic continues to affect companies with global operations, specifically as it relates to the global supply chain, we anticipate that, at a minimum, our business and results in the second half of 2022 will continue to be affected, and the timeline and pace of recovery is uncertain.

We anticipate a sequential revenue decline in the third quarter of fiscal year 2022 compared with the second quarter of 2022.

We are also anticipating continued impacts to our global supply chain and manufacturing operations.

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However, the Company’s cash flows from operations can be affected by numerous factors including the uncertainty of COVID-19 and its impact on global operations, raw material availability and cost, and demand for our products.

As of April 24, 2022, the consolidated backlog of orders was approximately $266.6 million.

As of July 24, 2022, the consolidated backlog of orders was approximately $246.4 million.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended January 2, 2022, backlog was approximately $215.6 million as of February 6, 2022.

Disruptions in supply and distribution chains, global travel restrictions and government imposed lockdowns due to the impact of COVID-19 have resulted in delays of construction projects and flooring installations in many regions worldwide.

Disruptions in global supply and distribution chains and government imposed lockdowns due to the impact of COVID-19 have resulted in delays of construction projects and flooring installations in many regions worldwide.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis