Key Takeaways Wolverine World Wide posted an average four-quarter earnings surprise of 39.1%.Interface delivered an average four-quarter earnings surprise of 33.5%.BuildABear Workshop and Analog Devices logged surprises of 21.3% and 5.8%, respectively.Efficiency level measures a company’s capability to transform available input into output, and is often considered an important parameter for gauging its potential to generate profits. A company with a high efficiency level is expected to provide stellar retur ...

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Core Insights - Marvell Technology, Inc. has introduced the industry's first 2nm 64 Gbps bi-directional die-to-die (D2D) interconnect, which significantly enhances bandwidth and performance for next-generation XPUs while minimizing power consumption and silicon area [1][4] Technology Advancements - The 64 Gbps bi-directional D2D interface offers a bandwidth density exceeding 30 Tbps/mm, which is more than three times that of UCIe at equivalent speeds, and reduces compute die area requirements by 15% compared to conventional implementations [2] - The interface features advanced adaptive power management that can lower power consumption by up to 75% under normal workloads and 42% during peak traffic periods [2][6] - Unique features such as redundant lanes and automatic lane repair enhance performance and reliability, improving yield and reducing bit-error rates [3] Strategic Positioning - Marvell's introduction of the 64 Gbps D2D interface aligns with its strategy to develop a comprehensive portfolio of technologies aimed at accelerating the development of custom devices and diversifying options for semiconductor designers [4] - The company has a proven track record of delivering industry firsts, including the announcement of a 2nm platform in March 2024 and the demonstration of working 2nm silicon by March 2025 [4] Custom Platform Strategy - Marvell's custom platform strategy focuses on delivering breakthrough results through unique semiconductor designs and innovative approaches, combining expertise in system and semiconductor design with a comprehensive portfolio of semiconductor solutions [5]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the strategy of buying high and hoping to sell even higher [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Interface (TILE) currently holding a Momentum Style Score of B [2] - Style Scores complement the Zacks Rank, which has a strong track record of outperformance, with TILE rated as 1 (Strong Buy) [3] Group 2: Performance Metrics - TILE shares have increased by 7.04% over the past week, outperforming the Zacks Textile - Home Furnishing industry, which rose by 2.46% [5] - Over the past quarter, TILE shares have risen by 30.74%, and by 47.05% in the last year, compared to the S&P 500's increases of 9.37% and 14.67%, respectively [6] - The average 20-day trading volume for TILE is 430,229 shares, indicating a bullish sign if the stock continues to rise with above-average volume [7] Group 3: Earnings Outlook - In the past two months, one earnings estimate for TILE has moved higher, increasing the consensus estimate from $1.58 to $1.70 [9] - For the next fiscal year, one estimate has also moved upwards, with no downward revisions during the same period [9] Group 4: Conclusion - Given the positive performance metrics and earnings outlook, TILE is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a promising pick for investors [11]

Core Insights - The article emphasizes the importance of efficiency levels in assessing a company's potential for profitability, suggesting that higher efficiency correlates with better price performance [1] Efficiency Ratios - Receivables Turnover: This ratio measures a company's ability to collect debts and extend credit, with a higher ratio indicating better performance [2] - Asset Utilization: This ratio reflects a company's efficiency in converting assets into sales, with higher values suggesting better efficiency [3] - Inventory Turnover: This ratio indicates how well a company manages its inventory relative to its cost of goods sold, with higher values signaling effective inventory management [4] - Operating Margin: This ratio assesses a company's control over operating expenses, with higher values indicating more efficient expense management [5] Screening Criteria - The screening process included a favorable Zacks Rank (1 Strong Buy) alongside the efficiency ratios, narrowing down over 7,906 stocks to 15 strong candidates [6][9] Top Stocks Identified - The top five stocks identified for their efficiency include: - Tsakos Energy Navigation Limited (TEN) with an average four-quarter earnings surprise of 46.7% [10] - 10x Genomics, Inc. (TXG) also with an average four-quarter earnings surprise of 46.7% [11] - Pan American Silver Corp. (PAAS) with an average four-quarter earnings surprise of 45.2% [12] - Wolverine World Wide, Inc. (WWW) with an average four-quarter earnings surprise of 39.1% [13] - Interface (TILE) with an average four-quarter earnings surprise of 33.5% [14]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion of the company's financial performance and condition [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated condensed financial statements, including balance sheets, income statements, comprehensive income, and cash flows, with detailed explanatory notes [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets%20%E2%80%93%20June%2029%2C%202025%20and%20December%2029%2C%202024) This section presents the consolidated condensed balance sheets, detailing assets, liabilities, and equity at specific reporting dates **Consolidated Condensed Balance Sheet Highlights (in thousands):** | Item | June 29, 2025 | December 29, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | **Assets** | | | | | | Cash and cash equivalents | $121,701 | $99,226 | $22,475 | 22.65% | | Accounts receivable, net | $194,251 | $171,135 | $23,116 | 13.51% | | Inventories, net | $288,165 | $260,581 | $27,584 | 10.59% | | Total current assets | $643,086 | $564,297 | $78,789 | 13.96% | | Total assets | $1,278,222 | $1,170,816 | $107,406 | 9.17% | | **Liabilities & Equity** | | | | | | Accounts payable | $86,621 | $68,943 | $17,678 | 25.64% | | Accrued expenses | $122,850 | $134,996 | $(12,146) | -8.99% | | Total current liabilities | $223,548 | $216,717 | $6,831 | 3.15% | | Total liabilities | $703,197 | $681,668 | $21,529 | 3.16% | | Total shareholders' equity | $575,025 | $489,148 | $85,877 | 17.56% | | Total liabilities and shareholders' equity | $1,278,222 | $1,170,816 | $107,406 | 9.17% | [Consolidated Condensed Statements of Operations](index=4&type=section&id=Consolidated%20Condensed%20Statements%20of%20Operations%20%E2%80%93%20Three%20Months%20and%20Six%20Months%20Ended%20June%2029%2C%202025%20and%20June%2030%2C%202024) This section provides the consolidated condensed statements of operations, presenting revenues, expenses, and net income for specified periods **Consolidated Condensed Statements of Operations Highlights (in thousands, except per share data):** | Item | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | % Change (3M) | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | % Change (6M) | | :-------------------------------- | :------------------------------- | :------------------------------- | :-------------- | :------------------------------- | :------------------------------- | :-------------- | | Net sales | $375,522 | $346,635 | 8.33% | $672,935 | $636,378 | 5.75% | | Gross profit | $147,977 | $122,613 | 20.68% | $258,940 | $233,018 | 11.12% | | Operating income | $52,047 | $38,151 | 36.42% | $75,274 | $62,597 | 20.26% | | Net income | $32,561 | $22,558 | 44.35% | $45,563 | $36,737 | 23.99% | | Earnings per share – basic | $0.56 | $0.39 | 43.59% | $0.78 | $0.63 | 23.81% | | Earnings per share – diluted | $0.55 | $0.38 | 44.74% | $0.77 | $0.63 | 22.22% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20Months%20and%20Six%20Months%20Ended%20June%2029%2C%202025%20and%20June%2030%2C%202024) This section presents the consolidated statements of comprehensive income, detailing net income and other comprehensive income components **Consolidated Statements of Comprehensive Income Highlights (in thousands):** | Item | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $32,561 | $22,558 | $45,563 | $36,737 | | Foreign currency translation adjustment | $33,445 | $(2,022) | $49,279 | $(13,114) | | Pension liability adjustment | $(1,782) | $534 | $(2,477) | $992 | | Other comprehensive income (loss) | $31,663 | $(1,488) | $46,802 | $(12,122) | | Comprehensive income | $64,224 | $21,070 | $92,365 | $24,615 | [Consolidated Condensed Statements of Cash Flows](index=6&type=section&id=Consolidated%20Condensed%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20Months%20Ended%20June%2029%2C%202025%20and%20June%2030%2C%202024) This section presents the consolidated condensed statements of cash flows, categorizing cash movements from operating, investing, and financing activities **Consolidated Condensed Statements of Cash Flows Highlights (in thousands):** | Item | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | Change | % Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :----- | :------- | | Net cash provided by operating activities | $41,867 | $34,158 | $7,709 | 22.57% | | Net cash used in investing activities | $(14,821) | $(11,567) | $(3,254) | 28.13% | | Net cash used in financing activities | $(13,740) | $(36,960) | $23,220 | -62.82% | | Effect of exchange rate changes on cash | $9,169 | $(1,942) | $11,111 | -572.14% | | Net increase / (decrease) in cash | $22,475 | $(16,311) | $38,786 | -237.79% | | Cash and cash equivalents at end of period | $121,701 | $94,187 | $27,514 | 29.21% | [Notes to Consolidated Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Condensed%20Financial%20Statements) This section provides detailed notes explaining the significant accounting policies and specific financial statement line items [NOTE 1 – Summary of Significant Accounting Policies](index=7&type=section&id=NOTE%201%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation for the unaudited financial statements, discusses global economic challenges, and details recently issued accounting pronouncements - The unaudited financial information includes all necessary normal recurring adjustments for fair presentation, but interim results are not indicative of full-year expectations[21](index=21&type=chunk) - Global economic challenges, including tariffs, inflation, supply chain disruptions, and geopolitical conflicts, pose risks and uncertainties that could materially affect financial statements if actual results differ from estimates[23](index=23&type=chunk) - The FASB issued ASU 2024-03 (effective after Dec 15, 2026) requiring additional footnote disclosures for disaggregating income statement costs and expenses, and ASU 2023-09 (effective after Dec 15, 2024) requiring improved income tax disclosures. The Company is evaluating their impact[25](index=25&type=chunk)[26](index=26&type=chunk) [NOTE 2 – Revenue Recognition](index=9&type=section&id=NOTE%202%20%E2%80%93%20REVENUE%20RECOGNITION) This note details the company's revenue sources, primarily from flooring materials and installation services, disaggregated by geographical segments - Revenue from sales of flooring material accounted for **98% of total revenue** for both the three and six months ended June 29, 2025, and June 30, 2024, with the remaining **2% from installation services**[28](index=28&type=chunk) **Revenue Disaggregation by Geography:** | Geography | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :---------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Americas | 63.8 % | 62.0 % | 62.3 % | 60.5 % | | Europe | 27.2 % | 27.6 % | 28.3 % | 29.4 % | | Asia-Pacific | 9.0 % | 10.4 % | 9.4 % | 10.1 % | [NOTE 3 – Inventories](index=10&type=section&id=NOTE%203%20%E2%80%93%20INVENTORIES) This note provides a breakdown of the company's inventories, net, showing changes across finished goods, work-in-process, and raw materials **Inventories Summary (in thousands):** | Item | June 29, 2025 | December 29, 2024 | Change | % Change | | :-------------- | :------------ | :---------------- | :----- | :------- | | Finished goods | $210,910 | $192,705 | $18,205 | 9.45% | | Work-in-process | $21,243 | $18,552 | $2,691 | 14.50% | | Raw materials | $56,012 | $49,324 | $6,688 | 13.56% | | Inventories, net | $288,165 | $260,581 | $27,584 | 10.59% | [NOTE 4 – Earnings Per Share](index=11&type=section&id=NOTE%204%20%E2%80%93%20EARNINGS%20PER%20SHARE) This note details the computation of basic and diluted earnings per share, including the treatment of participating and non-participating securities **Earnings Per Share Computation (in thousands, except per share data):** | Item | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $32,561 | $22,558 | $45,563 | $36,737 | | Shares for basic EPS | 58,555 | 58,281 | 58,495 | 58,260 | | Shares for diluted EPS | 59,073 | 58,692 | 59,123 | 58,703 | | Basic EPS | $0.56 | $0.39 | $0.78 | $0.63 | | Diluted EPS | $0.55 | $0.38 | $0.77 | $0.63 | - All unvested stock awards with non-forfeitable dividend rights are considered participating securities and included in basic EPS. Non-participating securities (restricted share units and performance shares) are included in diluted EPS when dilutive[33](index=33&type=chunk) [NOTE 5 – Long-Term Debt](index=12&type=section&id=NOTE%205%20%E2%80%93%20LONG-TERM%20DEBT) This note details the company's long-term debt, including the Syndicated Credit Facility and Senior Notes, and confirms covenant compliance **Long-Term Debt Summary (in thousands):** | Item | June 29, 2025 (Outstanding Principal) | December 29, 2024 (Outstanding Principal) | Interest Rate (June 29, 2025) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------- | | Revolving loan borrowings | $1,306 | $0 | 5.06% | | Term loan borrowings | $5,590 | $5,564 | 5.02% | | Total borrowings under Syndicated Credit Facility | $6,896 | $5,564 | 5.03% | | 5.50% Senior Notes due 2028 | $300,000 | $300,000 | 5.50% | | Total debt, net | $304,449 | $302,757 | | | Total long-term debt, net | $303,943 | $302,275 | | - The Company is in compliance with all covenants under its Syndicated Credit Facility and Senior Notes due 2028 and anticipates continued compliance[38](index=38&type=chunk)[40](index=40&type=chunk) [NOTE 6 – Shareholders' Equity](index=14&type=section&id=NOTE%206%20%E2%80%93%20SHAREHOLDERS%27%20EQUITY) This note details changes in shareholders' equity, including net income, stock issuances, dividends, share repurchases, and compensation costs **Shareholders' Equity Activity (Six Months Ended June 29, 2025, in thousands):** | Item | Common Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | Foreign Currency Translation Adjustment | Pension Liability | Total | | :-------------------------------- | :------------ | :----------- | :------------------------- | :---------------- | :-------------------------------------- | :---------------- | :------ | | Balance, at December 29, 2024 | 58,304 | $5,830 | $261,028 | $405,441 | $(143,317) | $(39,834) | $489,148 | | Net income | — | — | — | $45,563 | — | — | $45,563 | | Issuances of stock related to RSUs and performance shares | 659 | $66 | $(66) | — | — | — | — | | Cash dividends declared | — | — | — | $(1,227) | — | — | $(1,227) | | Compensation expense related to share-based plans, net | (352) | $(35) | $(781) | — | — | — | $(816) | | Share repurchases | (218) | $(22) | $(4,423) | — | — | — | $(4,445) | | Foreign currency translation adjustment | — | — | — | — | $49,279 | — | $49,279 | | Pension liability adjustment | — | — | — | — | — | $(2,477) | $(2,477) | | Balance, at June 29, 2025 | 58,393 | $5,839 | $255,758 | $449,777 | $(94,038) | $(42,311) | $575,025 | - During the six months ended June 29, 2025, the Company repurchased **217,500 shares** of common stock at a weighted average price of **$20.44 per share** under its **$100 million share repurchase program**[43](index=43&type=chunk) - Unrecognized compensation cost for unvested restricted share units was **$9.3 million** as of June 29, 2025, expected to be recognized by Q1 2028. For performance shares, unrecognized compensation expense was approximately **$9.9 million**, also expected by Q1 2028[46](index=46&type=chunk)[48](index=48&type=chunk) [NOTE 7 – Leases](index=18&type=section&id=NOTE%207%20%E2%80%93%20LEASES) This note summarizes lease-related balance sheet items, lease costs, and provides a maturity analysis for operating and finance leases **Lease Balances (in thousands):** | Item | June 29, 2025 | December 29, 2024 | | :-------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $80,619 | $76,815 | | Total operating lease liabilities | $85,112 | $80,388 | | Total finance lease liabilities | $8,448 | $8,454 | **Total Lease Cost (in thousands):** | Period | June 29, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :---------------- | | Three Months Ended | $6,975 | $6,525 | | Six Months Ended | $13,897 | $13,276 | **Weighted-Average Lease Terms and Discount Rates:** | Item | June 29, 2025 | December 29, 2024 | | :-------------------------------- | :------------ | :---------------- | | Weighted-average remaining lease term – finance leases (in years) | 3.47 | 3.61 | | Weighted-average remaining lease term – operating leases (in years) | 7.44 | 7.68 | | Weighted-average discount rate – finance leases | 6.60 % | 6.44 % | | Weighted-average discount rate – operating leases | 6.41 % | 6.39 % | [NOTE 8 – Employee Benefit Plans](index=20&type=section&id=NOTE%208%20%E2%80%93%20EMPLOYEE%20BENEFIT%20PLANS) This note details the company's multi-employer and defined benefit pension plans, including net periodic benefit costs - Multi-employer pension expense was **$0.6 million** for the three months and **$1.3 million** for the six months ended June 29, 2025, consistent with the prior year[57](index=57&type=chunk) **Net Periodic Benefit Cost (in thousands):** | Plan | Period | June 29, 2025 | June 30, 2024 | | :-------------------------------- | :----- | :------------ | :---------------- | | Defined Benefit Retirement Plans (Europe) | 3 Months | $313 | $58 | | | 6 Months | $607 | $116 | | Salary Continuation Plan | 3 Months | $322 | $326 | | | 6 Months | $644 | $652 | | nora Defined Benefit Plan | 3 Months | $293 | $386 | | | 6 Months | $567 | $776 | [NOTE 9 – Goodwill and Other Intangible Assets](index=21&type=section&id=NOTE%209%20%E2%80%93%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS) This note details the company's goodwill and other intangible assets, including foreign currency translation impacts and segment allocation **Goodwill and Other Intangible Assets (in thousands):** | Item | June 29, 2025 | December 29, 2024 | | :-------------------------------- | :------------ | :---------------- | | Goodwill balance | $111,636 | $99,887 | | Foreign currency translation impact on goodwill | $11,749 (increase) | | | Net carrying value of intangible assets (other than goodwill) | $51,100 | $48,300 | - The goodwill balance is entirely allocated to the AMS reportable segment[59](index=59&type=chunk) [NOTE 10 – Segment Information](index=22&type=section&id=NOTE%2010%20%E2%80%93%20SEGMENT%20INFORMATION) This note provides financial information for the Americas (AMS) and Europe, Africa, Asia, and Australia (EAAA) segments, evaluated by Adjusted Operating Income - The Company has two reportable segments: Americas (AMS) and Europe, Africa, Asia and Australia (EAAA)[62](index=62&type=chunk)[64](index=64&type=chunk) - Segment performance is evaluated using Adjusted Operating Income (AOI), which excludes nora purchase accounting amortization, restructuring, asset impairment, severance, and cyber event impacts[63](index=63&type=chunk) **Segment Net Sales (in thousands):** | Segment | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | AMS | $239,443 | $215,012 | $419,380 | $384,927 | | EAAA | $136,079 | $131,623 | $253,555 | $251,451 | | TOTAL | $375,522 | $346,635 | $672,935 | $636,378 | **Segment Adjusted Operating Income (AOI) (in thousands):** | Segment | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | AMS | $48,845 | $26,947 | $68,708 | $45,027 | | EAAA | $7,065 | $12,658 | $12,655 | $20,103 | | TOTAL | $55,910 | $39,605 | $81,363 | $65,130 | **Total Segment Assets (in thousands):** | Item | June 29, 2025 | December 29, 2024 | | :---------------- | :------------ | :---------------- | | AMS | $608,894 | $644,085 | | EAAA | $643,327 | $587,639 | | Total segment assets | $1,252,221 | $1,231,724 | | Total reported assets | $1,278,222 | $1,170,816 | [NOTE 11 – Supplemental Cash Flow Information](index=25&type=section&id=NOTE%2011%20%E2%80%93%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides supplemental cash flow details, specifically cash paid for interest and income taxes for the reported periods **Supplemental Cash Flow Information (in thousands):** | Item | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Cash paid for interest | $8,935 | $11,977 | | Cash paid for income taxes, net of refunds | $18,803 | $16,014 | [NOTE 12 – Income Taxes](index=26&type=section&id=NOTE%2012%20%E2%80%93%20INCOME%20TAXES) This note discusses the company's income tax provision, effective tax rates, and the impact of new tax legislation and unrecognized tax benefits **Income Tax Provision and Effective Tax Rate:** | Period | Pre-Tax Income (in thousands) | Income Tax Provision (in thousands) | Effective Tax Rate | | :-------------------------------- | :---------------------------- | :-------------------------- | :----------------- | | Six Months Ended June 29, 2025 | $61,302 | $15,739 | 25.6% | | Six Months Ended June 30, 2024 | $50,145 | $13,408 | 26.7% | | Three Months Ended June 29, 2025 | | | 26.3% | | Three Months Ended June 30, 2024 | | | 27.6% | - The decrease in the effective tax rate for the six months ended June 29, 2025, was primarily due to favorable changes in the geographic mix of earnings and an increase in tax benefits related to share-based compensation[74](index=74&type=chunk) - The Company is assessing the impact of the U.S. OBBBA (enacted July 4, 2025) and expects to meet Transitional Country-by-Country (CbCR) Safe Harbor rules for most jurisdictions under OECD Pillar Two Model Rules for fiscal year 2025, with no material impact expected[75](index=75&type=chunk)[76](index=76&type=chunk) - As of June 29, 2025, the Company accrued approximately **$5.0 million** for unrecognized tax benefits, with no material impact expected from their recognition within the next 12 months[77](index=77&type=chunk)[78](index=78&type=chunk) [NOTE 13 – Items Reclassified from Accumulated Other Comprehensive Loss](index=27&type=section&id=NOTE%2013%20%E2%80%93%20ITEMS%20RECLASSIFIED%20FROM%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This note details amounts reclassified from accumulated other comprehensive loss to the consolidated condensed statements of operations **Loss Reclassified from AOCL (in thousands):** | Statement of Operations Location | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Amortization of benefit plan net actuarial losses and prior service cost (Other expense (income), net) | $(403) | $(371) | $(787) | $(745) | | Total loss reclassified from AOCL | $(403) | $(371) | $(787) | $(745) | [NOTE 14 – Commitments and Contingencies](index=28&type=section&id=NOTE%2014%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's legal proceedings, including a new PFAS lawsuit and an ongoing lawsuit by a former CEO - In April 2025, Interface, Inc. and its subsidiary were named as defendants in a PFAS lawsuit alleging contamination of a water supply, which has been moved to Multi-District Litigation (MDL). The Company believes it has meritorious defenses and intends to defend vigorously[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - There have been no material changes to the lawsuit by the former CEO in connection with termination since December 29, 2024[86](index=86&type=chunk) [NOTE 15 – Fair Value of Financial Instruments](index=29&type=section&id=NOTE%2015%20%E2%80%93%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note presents the carrying and estimated fair values of financial instruments, categorized by the fair value hierarchy **Fair Value of Financial Instruments (in thousands):** | Item | June 29, 2025 Carrying Value | June 29, 2025 Fair Value (Level 1) | June 29, 2025 Fair Value (Level 2) | December 29, 2024 Carrying Value | December 29, 2024 Fair Value (Level 1) | December 29, 2024 Fair Value (Level 2) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Company-owned life insurance | $22,977 | $0 | $22,977 | $22,911 | $0 | $22,911 | | Deferred compensation investments | $30,248 | $7,213 | $23,035 | $30,521 | $8,697 | $21,824 | | Borrowings under Syndicated Credit Facility | $6,896 | $0 | $6,896 | $5,564 | $0 | $5,564 | | 5.50% Senior Notes due 2028 | $300,000 | $0 | $295,236 | $300,000 | $0 | $294,738 | - The fair value of borrowings under the Syndicated Credit Facility approximates carrying value due to variable interest rates similar to market rates. The fair value of Senior Notes is derived using quoted prices for similar instruments[89](index=89&type=chunk)[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, liquidity, and capital resources [Executive Overview](index=31&type=section&id=Executive%20Overview) This overview highlights key consolidated financial performance metrics, including sales, operating income, and net income growth **Consolidated Financial Performance Overview (in millions, except per share data):** | Metric | Q2 2025 | Q2 2024 | % Change (Q2) | H1 2025 | H1 2024 | % Change (H1) | | :-------------------- | :------ | :------ | :------------ | :------ | :------ | :------------ | | Net Sales | $375.5 | $346.6 | 8.3% | $672.9 | $636.4 | 5.7% | | Operating Income | $52.0 | $38.2 | 36.1% | $75.3 | $62.6 | 20.3% | | Net Income | $32.6 | $22.6 | 44.2% | $45.6 | $36.7 | 24.2% | | Diluted EPS | $0.55 | $0.38 | 44.7% | $0.77 | $0.63 | 22.2% | - Q2 2025 net sales increase was primarily due to higher customer demand in education, healthcare, and corporate office segments, and higher average sales prices. Operating income and gross profit margin improved due to lower manufacturing costs from favorable fixed cost absorption and production efficiencies[95](index=95&type=chunk) [Impact of Macroeconomic Trends](index=31&type=section&id=Impact%20of%20Macroeconomic%20Trends) This section discusses global economic challenges, such as tariffs, inflation, and supply chain disruptions, and their potential impact on performance - Global economic challenges, including tariffs, fluctuating freight costs, supply chain disruptions, commercial office market pressures, inflation, and geopolitical conflicts, continue to pose risks to future performance[97](index=97&type=chunk) - The Company plans to evaluate its cost structure and global manufacturing footprint to identify opportunities for cost reduction and optimization[97](index=97&type=chunk) [Analysis of Results of Operations](index=32&type=section&id=Analysis%20of%20Results%20of%20Operations) This section provides a detailed analysis of the company's consolidated and segment-specific operating results, including sales, costs, and profits [Consolidated Results (as a percentage of net sales)](index=32&type=section&id=Consolidated%20Results) This section presents consolidated financial results expressed as a percentage of net sales for comparative periods **Consolidated Results as % of Net Sales:** | Item | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | 100.0 % | 100.0 % | 100.0 % | 100.0 % | | Cost of sales | 60.6 % | 64.6 % | 61.5 % | 63.4 % | | Gross profit | 39.4 % | 35.4 % | 38.5 % | 36.6 % | | Selling, general and administrative expenses | 25.5 % | 24.4 % | 27.3 % | 26.8 % | | Operating income | 13.9 % | 11.0 % | 11.2 % | 9.8 % | | Net income | 8.7 % | 6.5 % | 6.8 % | 5.7 % | [Consolidated Net Sales](index=32&type=section&id=Consolidated%20Net%20Sales) This section analyzes consolidated net sales, detailing changes driven by volume, pricing, and currency impacts across market segments **Consolidated Net Sales (in thousands):** | Period | June 29, 2025 | June 30, 2024 | Percentage Change | | :-------------------------------- | :------------ | :------------ | :---------------- | | Three Months Ended | $375,522 | $346,635 | 8.3 % | | Six Months Ended | $672,935 | $636,378 | 5.7 % | - Q2 2025 net sales increased **8.3%** due to higher sales volume (approx. **6%**) and average sales prices (approx. **2%**), with a positive currency impact of **$4.4 million (1.3%)** from a stronger Euro. Sales growth was primarily in education, healthcare, and corporate office market segments[99](index=99&type=chunk) - H1 2025 net sales increased **5.7%** due to higher sales volume (approx. **5%**) and average sales prices (approx. **1%**), with no material currency impact. Sales growth was mainly in education, healthcare, and retail, partially offset by a decrease in corporate office[100](index=100&type=chunk) [Consolidated Cost and Expenses](index=33&type=section&id=Consolidated%20Cost%20and%20Expenses) This section analyzes the company's consolidated cost of sales, gross profit, and selling, general, and administrative expenses [Consolidated Cost of Sales](index=33&type=section&id=Consolidated%20Cost%20of%20Sales) This section details changes in consolidated cost of sales, influenced by sales volume, input costs, and manufacturing efficiencies **Consolidated Cost of Sales (in thousands):** | Period | June 29, 2025 | June 30, 2024 | Percentage Change | | :-------------------------------- | :------------ | :------------ | :---------------- | | Three Months Ended | $227,545 | $224,022 | 1.6 % | | Six Months Ended | $413,995 | $403,360 | 2.6 % | - Q2 2025 cost of sales increased **1.6%** due to higher sales and input costs, largely offset by lower manufacturing costs from favorable fixed cost absorption and production efficiencies. As a percentage of net sales, cost of sales decreased to **60.6%** from **64.6%**[102](index=102&type=chunk) - H1 2025 cost of sales increased **2.6%** due to higher sales, partially offset by lower manufacturing costs. As a percentage of net sales, cost of sales decreased to **61.5%** from **63.4%**[103](index=103&type=chunk) [Consolidated Gross Profit](index=33&type=section&id=Consolidated%20Gross%20Profit) This section analyzes consolidated gross profit and gross profit margin, highlighting impacts from manufacturing costs and efficiencies - Q2 2025 gross profit as a percentage of net sales increased to **39.4%** from **35.4%** in the prior year, primarily due to lower manufacturing costs per unit (approx. **4%**) driven by favorable fixed cost absorption and production efficiencies[104](index=104&type=chunk) - H1 2025 gross profit as a percentage of net sales increased to **38.5%** from **36.6%** in the prior year, primarily due to lower manufacturing costs (approx. **2%**)[105](index=105&type=chunk) [Consolidated Selling, General and Administrative ("SG&A") Expenses](index=33&type=section&id=Consolidated%20Selling%2C%20General%20and%20Administrative%20%28%22SG%26A%22%29%20Expenses) This section details changes in consolidated SG&A expenses, driven by labor costs, variable compensation, and severance **Consolidated SG&A Expenses (in thousands):** | Period | June 29, 2025 | June 30, 2024 | Percentage Change | | :-------------------------------- | :------------ | :------------ | :---------------- | | Three Months Ended | $95,930 | $84,462 | 13.6 % | | Six Months Ended | $183,666 | $170,421 | 7.8 % | - Q2 2025 SG&A expenses increased **13.6%** due to higher employee benefits and labor costs (**$5.0 million**), higher variable compensation (**$2.9 million**) from increased sales and improved operating results, and higher severance costs (**$2.7 million**). As a percentage of net sales, SG&A increased to **25.5%** from **24.4%**[106](index=106&type=chunk) - H1 2025 SG&A expenses increased **7.8%** due to similar factors as Q2. As a percentage of net sales, SG&A increased to **27.3%** from **26.8%**[107](index=107&type=chunk) [Interest Expense](index=34&type=section&id=Interest%20Expense) This section analyzes changes in interest expense, primarily influenced by outstanding term loan borrowings - Interest expense decreased by **$1.7 million** to **$4.4 million** for Q2 2025 and by **$3.7 million** to **$8.9 million** for H1 2025, primarily due to lower outstanding term loan borrowings under the Facility[108](index=108&type=chunk) [Provision for Income Taxes](index=34&type=section&id=Provision%20for%20Income%20Taxes) This section discusses the effective tax rate and its drivers, including geographic mix of earnings and share-based compensation benefits - The effective tax rate decreased to **26.3%** for Q2 2025 (from **27.6%** in Q2 2024) and to **25.7%** for H1 2025 (from **26.7%** in H1 2024)[109](index=109&type=chunk) - The decrease in effective tax rate was primarily due to favorable changes in the geographic mix of earnings and increased tax benefits related to share-based compensation, and for Q2, favorable changes related to the cash surrender value of Company-owned life insurance[109](index=109&type=chunk) [Segment Operating Results](index=34&type=section&id=Segment%20Operating%20Results) This section provides a detailed analysis of net sales and Adjusted Operating Income for the AMS and EAAA segments [AMS Segment – Net Sales and Adjusted Operating Income ("AOI")](index=34&type=section&id=AMS%20Segment%20%E2%80%93%20Net%20Sales%20and%20Adjusted%20Operating%20Income%20%28%22AOI%22%29) This section analyzes the AMS segment's net sales and Adjusted Operating Income, highlighting growth drivers and margin improvements **AMS Segment Performance (in thousands):** | Metric | Q2 2025 | Q2 2024 | % Change (Q2) | H1 2025 | H1 2024 | % Change (H1) | | :-------------------- | :------ | :------ | :------------ | :------ | :------ | :------------ | | Net Sales | $239,443 | $215,012 | 11.4% | $419,380 | $384,927 | 9.0% | | AOI | $48,845 | $26,947 | 81.3% | $68,708 | $45,027 | 52.6% | | AOI as % of Net Sales | 20.4% | 12.5% | | 16.4% | 11.7% | | - AMS net sales increased due to higher sales volume and average sales prices, primarily in education, healthcare, and corporate office market segments[111](index=111&type=chunk)[112](index=112&type=chunk) - AMS AOI increased significantly due to higher sales and gross profit margin, driven by favorable product mix, production efficiencies, and fixed cost absorption[113](index=113&type=chunk)[114](index=114&type=chunk) [EAAA Segment – Net Sales and AOI](index=35&type=section&id=EAAA%20Segment%20%E2%80%93%20Net%20Sales%20and%20AOI) This section analyzes the EAAA segment's net sales and Adjusted Operating Income, noting currency impacts and margin changes **EAAA Segment Performance (in thousands):** | Metric | Q2 2025 | Q2 2024 | % Change (Q2) | H1 2025 | H1 2024 | % Change (H1) | | :-------------------- | :------ | :------ | :------------ | :------ | :------ | :------------ | | Net Sales | $136,079 | $131,623 | 3.4% | $253,555 | $251,451 | 0.8% | | AOI | $7,065 | $12,658 | (44.2)% | $12,655 | $20,103 | (37.0)% | | AOI as % of Net Sales | 5.2% | 9.6% | | 5.0% | 8.0% | | - EAAA net sales increased **3.4%** in Q2 2025, primarily due to favorable currency fluctuations (**$4.6 million, 3.5%**) partially offset by lower volume. Sales growth was mainly in public buildings and transportation[116](index=116&type=chunk) - EAAA AOI decreased **44.2%** in Q2 2025 and **37.0%** in H1 2025, primarily due to lower gross profit margin driven by unfavorable fixed cost absorption and higher input costs[118](index=118&type=chunk)[119](index=119&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=36&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) This section discusses the company's financial position, liquidity, capital resources, cash flows, share repurchases, and future outlook [General](index=36&type=section&id=General) This section provides an overview of the company's cash position, outstanding debt, borrowing capacity, and liquidity expectations - As of June 29, 2025, the Company had **$121.7 million** in cash, **$6.9 million** in borrowings under its Syndicated Credit Facility, and **$300.0 million** in Senior Notes outstanding[121](index=121&type=chunk) - The Company had an additional borrowing capacity of **$298.2 million** under its Facility and anticipates sufficient liquidity to meet both short-term and long-term obligations[121](index=121&type=chunk) - Non-guarantor subsidiaries had net sales of approximately **$154 million** (Q2 2025) and **$283 million** (H1 2025), with total indebtedness of approximately **$115 million** as of June 29, 2025[122](index=122&type=chunk) [Balance Sheet](index=36&type=section&id=Balance%20Sheet) This section analyzes key balance sheet changes, including increases in accounts receivable and inventories - Accounts receivable, net, increased by **$23.1 million** to **$194.3 million** at June 29, 2025, primarily due to higher net sales from increased customer demand[123](index=123&type=chunk) - Inventories, net, increased by **$27.6 million** to **$288.2 million** at June 29, 2025, primarily due to finished goods inventory build in anticipation of higher expected customer demand[124](index=124&type=chunk) [Analysis of Cash Flows](index=36&type=section&id=Analysis%20of%20Cash%20Flows) This section analyzes cash flows from operating, investing, and financing activities, detailing significant changes and their drivers **Summary of Cash Flows (Six Months Ended, in thousands):** | Activity | June 29, 2025 | June 30, 2024 | Change | | :-------------------------------- | :------------ | :------------ | :----- | | Operating activities | $41,867 | $34,158 | $7,709 | | Investing activities | $(14,821) | $(11,567) | $(3,254) | | Financing activities | $(13,740) | $(36,960) | $23,220 | | Net change in cash and cash equivalents | $22,475 | $(16,311) | $38,786 | - Cash provided by operating activities increased by **$7.7 million**, primarily due to higher net income, partially offset by higher inventory build[125](index=125&type=chunk) - Cash used in investing activities increased by **$3.3 million**, mainly due to greater capital investment in manufacturing automation and robotics solutions[126](index=126&type=chunk) - Cash used in financing activities decreased by **$23.2 million**, primarily due to lower outstanding borrowings under the credit facility and lower repayments, partially offset by common stock repurchases[127](index=127&type=chunk) [Share Repurchases](index=37&type=section&id=Share%20Repurchases) This section details the company's common stock repurchases under its authorized share repurchase program - During the six months ended June 29, 2025, the Company repurchased **217,500 shares** of common stock at a weighted average price of **$20.44 per share** under its **$100 million share repurchase program**, which has no specific expiration date[128](index=128&type=chunk) [Outlook](index=37&type=section&id=Outlook) This section provides the company's updated fiscal year outlook, anticipating sales growth and discussing future liquidity - Based on strong Q2 2025 results, the Company increased its full fiscal year 2025 outlook, anticipating net sales growth in Q3 2025 compared to the prior year[129](index=129&type=chunk) - The Company expects to incur tariff costs in the remainder of 2025 and plans to offset these through pricing and productivity initiatives[129](index=129&type=chunk) - Cash flows from operations and other liquidity sources are expected to be sufficient, though subject to factors like raw material availability, cost, and product demand[130](index=130&type=chunk) [Backlog](index=37&type=section&id=Backlog) This section reports the consolidated backlog of unshipped orders and discusses factors influencing its fluctuations - As of July 20, 2025, the consolidated backlog of unshipped orders was approximately **$263.2 million**, an increase from **$223.4 million** as of February 2, 2025[131](index=131&type=chunk) - Disruptions in supply and distribution chains have caused, and may continue to cause, fluctuations in backlog due to delays in construction projects and flooring installations[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to interest rate and foreign currency exchange rate risks, using sensitivity analysis - A hypothetical immediate **100 basis point increase** in interest rates would result in a net decrease of **$8.9 million** in the fair value of fixed-rate long-term debt as of June 29, 2025, while a **100 basis point decrease** would result in a **$5.3 million** net increase[135](index=135&type=chunk) - A **10% decrease or increase** in foreign currency exchange rates against the U.S. dollar would result in a respective decrease or increase of **$13.7 million** in the net fair value of financial instruments as of June 29, 2025[136](index=136&type=chunk) - Changes in variable interest rates on the Syndicated Credit Facility would impact interest expense, not the fair value of the debt instrument[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures, with no material changes reported - The Company's disclosure controls and procedures were effective as of June 29, 2025, providing reasonable assurance that objectives are met[138](index=138&type=chunk)[140](index=140&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[141](index=141&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings and risk factors [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 14 for summaries of legal proceedings, including a new PFAS lawsuit and an ongoing lawsuit by a former CEO - Legal proceedings are summarized in Note 14 of Part I, Item 1, including a PFAS lawsuit and a lawsuit by a former CEO[144](index=144&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q for comprehensive risk factors - Readers should refer to the risk factors in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024, and the Quarterly Report on Form 10-Q for the quarter ended March 30, 2025[145](index=145&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details common stock repurchases made under the company's share repurchase program during the reported quarter **Common Stock Repurchases (Q2 2025):** | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :-------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------ | | March 31 – April 27, 2025 | 325 | $19.51 | — | $82,828,595 | | April 28 – May 25, 2025 | 45,000 | $20.35 | 45,000 | $81,912,902 | | May 26 – June 29, 2025 | 172,500 | $20.46 | 172,500 | $78,383,890 | | Total | 217,825 | $20.43 | 217,500 | | - The Company's share repurchase program, adopted in May 2022, authorizes repurchases of up to **$100 million** of common stock and has no specific expiration date[146](index=146&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reported period - There were no defaults upon senior securities[147](index=147&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the Company[147](index=147&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) This section confirms no director or officer adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 29, 2025[148](index=148&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes Section 302 and 18 U.S.C. § 1350 certifications from the Chief Executive Officer and Chief Financial Officer, along with various XBRL documents[150](index=150&type=chunk) [SIGNATURE](index=44&type=section&id=SIGNATURE) This section contains the signature block, confirming the report was duly signed by the Chief Financial Officer - The report is signed by Bruce A. Hausmann, Chief Financial Officer of Interface, Inc., on August 5, 2025[154](index=154&type=chunk)

Core Viewpoint - Wearable Devices Ltd. has been granted a continuation patent that enhances its gesture recognition technology, allowing for more intuitive and touchless control in various digital ecosystems, including AR and smart devices [1][4][5]. Group 1: Patent and Technology - The newly granted patent expands the protection around the company's neural interface technologies, reinforcing its leadership in user interactions [1][4]. - The patent introduces a method to accurately extract start and end points from continuous gestures, enabling seamless control gestures without physical contact or voice triggers [3][4]. - This innovation aims to improve user experience by eliminating the need for clunky workarounds often found in traditional gesture-based systems [2][3]. Group 2: Company Vision and Market Position - The continuation patent supports the company's vision of creating a world where natural human intent seamlessly integrates with digital systems, enhancing user experiences [5]. - Wearable Devices is positioned as a pioneering growth company in human-computer interaction, leveraging AI-powered neural input technology for both consumer and business markets [6]. - The company offers products like the Mudra Band and Mudra Link, which enable touch-free interaction and are designed for the expanding AR/VR/XR markets [6].

Core Viewpoint - Interface significantly outperformed Wall Street expectations in Q2 2025, reporting non-GAAP EPS of $0.60 and GAAP revenue of $375.5 million, indicating strong sales momentum and improved profitability [1][5]. Financial Performance - Non-GAAP EPS was $0.60, exceeding the estimate of $0.47, and up 50% from $0.40 in Q2 2024 [2]. - GAAP revenue reached $375.5 million, surpassing the estimate of $360.74 million and reflecting an 8.3% increase from $346.6 million in Q2 2024 [2]. - Gross profit margin improved to 39.4%, up 4.0 percentage points from 35.4% in the previous year [2][7]. - Operating income was $52.0 million, a 36.1% increase from $38.2 million in Q2 2024 [2]. - Net income rose to $32.6 million, up 44.3% from $22.6 million in the same quarter last year [2]. Business Model and Focus Areas - Interface specializes in modular carpet tiles and resilient flooring products, focusing on design innovation and sustainability [3]. - The company prioritizes sustainability leadership, market diversification, innovative product design, robust supply chain management, and expanding its resilient flooring portfolio [4]. Market Performance - The Americas segment led revenue growth with an 11.4% year-over-year increase, while operating income for this segment rose 82.2% [5]. - The EAAA segment saw a 3.4% revenue growth, but operating income fell 71.8%, indicating regional economic challenges [6]. Profitability Drivers - Gross margin expansion contributed significantly to profitability, driven by higher pricing, better product mix, and increased manufacturing volumes [7]. - SG&A expenses increased by 10.8%, attributed to higher commissions and compensation linked to sales performance [7]. Order and Backlog Trends - Consolidated currency-neutral orders increased by 2.9% year-over-year, with a 12% rise in backlog at the end of Q1 [8]. - Key market segments such as healthcare and education saw billings grow by 28% and 11% respectively, supporting market diversification efforts [11]. Balance Sheet Strength - Cash holdings rose to $121.7 million, a 22.6% increase since December 2024, while net debt decreased to $182.7 million, resulting in a net leverage ratio of 0.9 times [9]. Sustainability and Product Strategy - Sustainability is central to Interface's strategy, with a goal to become carbon-negative by 2040 [10]. - The company continues to invest in product innovation, launching new styles in its modular carpet and resilient flooring lines [12][13]. Future Guidance - Management raised full-year guidance for net sales to between $1.37 billion and $1.39 billion, and adjusted gross profit margin to 37.7% [14]. - For Q3, expected GAAP net sales are between $350 million and $360 million, with an adjusted gross margin of 38.0% [14].

Financial Data and Key Metrics Changes - Interface reported currency neutral net sales growth of 7% and adjusted earnings per share of $0.60, both exceeding expectations [6][22] - Second quarter net sales totaled $375.5 million, an increase of 8.3% year-over-year, with FX neutral net sales up 7.1% [22] - Adjusted gross profit margin improved to 39.8%, a 402 basis points increase from the prior year, driven by higher pricing and favorable product mix [22][23] - Adjusted operating income rose 41% to $55.9 million compared to $39.6 million in the previous year [23] - Adjusted EBITDA increased to $64.8 million from $50.5 million year-over-year [23] Business Line Data and Key Metrics Changes - The Americas team achieved 11% sales growth, with significant market share gains in carpet tile and rubber [7][8] - Nora Rubber experienced nearly 40% growth in The Americas, indicating strong demand [8] - Global education billings increased by 11% year-over-year, with Nora becoming a growth engine in this segment [16][18] - Health care segment billings surged 28% year-over-year, driven by broad-based growth geographically [18] Market Data and Key Metrics Changes - Currency neutral consolidated orders were up 3% year-over-year, with a 2% increase in The Americas and a 4% increase in EAAA [20] - The backlog increased by 24% year-to-date, positioning the company for strong sales growth in 2025 [20][66] Company Strategy and Development Direction - The "One Interface" strategy focuses on building strong global functions to support local selling teams and enhance productivity [6][9] - The company is committed to strategic investments in automation and robotics to improve margins and operational efficiency [10][11] - Interface aims to be carbon negative by 2040, with significant reductions in carbon footprint across its product lines [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position despite a dynamic macro environment, highlighting strong balance sheet and disciplined execution [27] - The company raised its full-year guidance based on strong Q2 results, anticipating net sales of $1.37 billion to $1.39 billion for the fiscal year [26] Other Important Information - Interface repurchased $4.3 million of common stock in the quarter, reflecting a balanced capital allocation strategy [24][41] - The company is focused on expanding its addressable market through more accessible price points in product offerings [9] Q&A Session Summary Question: What was the shape of Q2 performance on a similar basis? - Management noted that order growth momentum was strong in April, saw a slight dip in May and June, but picked back up, with July also showing strong orders [32][33] Question: Can you provide color on government and retail performance in Q2? - Management indicated that almost every market saw growth, including government and retail, with corporate office billings returning to growth at 3% [34][36] Question: What are the business conditions in Australia and Asia? - Management reported strong business conditions in Australia and Asia, with no significant macro impacts affecting operations [37] Question: What are the plans for capital allocation regarding share repurchases? - Management confirmed that the last share repurchase occurred in 2022, and while the focus remains on investing in the business, they will continue to return capital to shareholders [39][41] Question: Is the "One Interface" strategy at full run rate? - Management believes there is still room for growth, citing strong performance in the Nora Rubber business and plans for further investments in automation [45][48] Question: Was there any timing benefit or pull forward in sales? - Management stated there was no awareness of any sales being pulled forward, although some larger orders in health care may have contributed to the strong performance [59][60] Question: How sustainable are the market share gains? - Management expressed confidence in the sustainability of market share gains, attributing it to product focus and expanding addressable markets [63][64] Question: What is the timeline for the backlog? - Most of the backlog is expected to ship within the year, with some longer-term contracts included [66] Question: What are the expected returns on investment in international manufacturing assets? - Management indicated that benefits from automation in The Americas will be rolled out to Europe and Australia, with expected returns starting next year [69] Question: How does the company view the buy versus build decision? - Management emphasized a focus on internal growth and innovation, while remaining open to acquisitions if they align with strategic goals [73][74]

Financial Data and Key Metrics Changes - Interface reported currency neutral net sales growth of 7% and adjusted earnings per share of $0.60, both exceeding expectations [5][14] - Second quarter net sales totaled $375.5 million, an increase of 8.3% year-over-year, with adjusted gross profit margin at 39.8%, up 402 basis points from the previous year [21][22] - Adjusted operating income rose to $55.9 million, a 41% increase compared to the previous year, while adjusted EBITDA was $64.8 million [22][24] Business Line Data and Key Metrics Changes - The Americas team achieved 11% sales growth, with significant market share gains in carpet tile and rubber, particularly a near 40% growth in Nora Rubber [6][14] - Global education billings increased by 11% year-over-year, while health care billings surged by 28% [15][16] - Corporate office billings returned to growth, up 3% year-over-year, reflecting ongoing investments in workplace refreshes [18] Market Data and Key Metrics Changes - Currency neutral consolidated orders were up 3% year-over-year, with a 2% increase in The Americas and a 4% increase in EAAA [19] - The backlog increased by 24% year-to-date, positioning the company strongly for future sales growth [19][67] Company Strategy and Development Direction - The "One Interface" strategy focuses on building strong global functions to support local selling teams, enhancing productivity, and expanding margins through global supply chain management [5][6] - The company is committed to strategic investments in automation and robotics to improve operational efficiency and support sustainable growth [9][10] - Interface aims to be carbon negative by 2040, having already reduced its carbon footprint significantly across various product lines [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position despite a dynamic macro environment, highlighting strong performance in The Americas and encouraging order growth in EAAA [14][31] - The company raised its full-year guidance based on strong Q2 results, anticipating net sales of $1.37 billion to $1.39 billion for the fiscal year [24][25] - Management emphasized the importance of maintaining a balanced capital allocation strategy while investing in growth and margin expansion [23][40] Other Important Information - Interface repurchased $4.3 million of common stock in the quarter, marking the first repurchase since 2022 [23][39] - The company is focused on expanding its addressable market through product offerings at more approachable price points [7][8] Q&A Session Summary Question: What was the shape of Q2 performance on a similar basis? - Management noted that order growth momentum was strong in April, saw a slight dip in May and June, but picked back up, with July also showing strong order growth [30][31] Question: Can you provide color on government and retail performance in Q2? - Management indicated that almost every market saw growth, including government and retail, with corporate, education, and health care being the primary markets [32][34] Question: What are the business conditions in Australia and Asia? - Management reported strong business conditions in Australia and Asia, with local teams and manufacturing mitigating macro impacts [36][37] Question: What are the plans for capital allocation regarding share repurchases? - Management confirmed that while the primary focus is on investing in the business, they will also return capital to shareholders through share repurchases and dividends [38][40] Question: Is the "One Interface" strategy at full run rate? - Management believes the strategy is still in the early stages, with significant growth potential remaining, particularly in the Nora Rubber business [44][47] Question: What drove the margin performance in the quarter? - Management attributed margin expansion to a combination of pricing, product mix, and manufacturing productivity, with a significant portion driven by operational excellence [48][50] Question: Was there any pull forward of sales in Q2? - Management stated there was no awareness of any sales being pulled forward, although some larger orders in health care may have contributed to lumpiness [59][60] Question: How sustainable are the market share gains? - Management expressed confidence in the sustainability of market share gains, supported by strong product offerings and a focus on expanding into mid-market price points [63][64] Question: What is the timeline for the backlog? - Most of the backlog is expected to ship within the year, with some longer-term contracts included [67] Question: What are the expected returns on investment in international manufacturing assets? - Management indicated that benefits from automation in The Americas will start to be seen in Europe and Australia next year [71] Question: What is the impact of tariffs on gross margins? - The impact of tariffs was largely neutral in the quarter, with some expenses offset by incremental pricing [72] Question: How does the company view the buy versus build decision for growth? - Management emphasized a focus on internal growth and innovation, while remaining open to acquisitions if they align with strategic goals [76]