Core Insights - Investors prioritize companies with consistent profitability, measured effectively by net profit margin, which reflects operational efficiency and management quality [1][2] Profitability Metrics - Net profit margin is calculated as Net profit divided by Sales multiplied by 100, indicating a company's ability to convert sales into profits [2] - A strong net profit margin suggests effective cost control and operational strength, essential for rewarding stakeholders and attracting investors [2] Industry Comparisons - Net profit margin varies across industries, complicating direct comparisons; it is crucial for traditional sectors but may be less relevant for technology firms [3] - Differences in accounting practices, particularly regarding non-cash expenses, further complicate comparisons [4] Investment Strategy - A healthy net profit margin and solid EPS growth are key elements sought in a business model, supplemented by additional criteria for maximizing returns [5] Screening Parameters - Criteria for screening include a net margin of at least 0%, positive percentage change in EPS, high broker ratings, and a favorable Zacks Rank [6] - Stocks with a VGM Score of A or B combined with a Zacks Rank of 1 or 2 are identified as having the best upside potential [7] Company Highlights - **SkyWest, Inc. (SKYW)**: Operates as a regional airline with a Zacks Rank of 1 and a VGM Score of A; 2025 earnings estimate revised upward by 3.8% to $10.33 per share [8] - **Interface, Inc. (TILE)**: Largest manufacturer of modular carpets, also holds a Zacks Rank of 1 and a VGM Score of A; 2025 earnings estimate revised to $1.85 per share from $1.70 [9] - **FreightCar America, Inc. (RAIL)**: Specializes in manufacturing railroad freight cars, currently has a Zacks Rank of 2 and a VGM Score of A; earnings estimate remained unchanged [10][11] - **Standard Motor Products, Inc. (SMP)**: Leading manufacturer of automotive replacement parts, holds a Zacks Rank of 2 and a VGM Score of A; 2025 earnings estimate revised upward by $0.04 to $3.80 per share [12][13]

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ATLANTA--(BUSINESS WIRE)--Interface, Inc. (Nasdaq: TILE), the global flooring solutions company and leader in sustainability, today announced that its Board of Directors has declared a regular quarterly cash dividend of $0.02 per share. The dividend is payable on December 12, 2025 to shareholders of record as of November 28, 2025. About Interface Interface, Inc. (NASDAQ: TILE) is a global flooring solutions company and sustainability leader, offering an integrated portfolio of carpet tile and r. ...

Core Insights - Interface's third quarter results demonstrate effective execution of its One Interface strategy, with strong momentum in the health care segment and broad regional growth as key drivers [1] - CEO Laurel Hurd highlighted a 29% growth in global health care billings and improvements in manufacturing productivity [1] - The company reported benefits from product mix, automation, and a steady pace of orders, indicating resilience in a challenging macro environment [1] Financial Performance - Revenue reached $364.5 million, exceeding analyst estimates of $357.3 million, reflecting a 5.9% year-on-year growth and a 2% beat [6] - Adjusted EPS was $0.61, surpassing analyst estimates of $0.48, marking a 27.1% beat [6] - Adjusted EBITDA stood at $66.2 million, beating analyst estimates of $55.22 million, with an 18.2% margin [6] - The company slightly raised its full-year revenue guidance to $1.38 billion at the midpoint [6] - Operating margin improved to 14.6%, up from 12.3% in the same quarter last year [6] - Market capitalization is reported at $1.51 billion [6] Analyst Insights - Analyst Brian Biros inquired about the factors driving sales outperformance, to which CEO Hurd attributed strength in the health care segment and productive collaboration between Interface and Nora teams [6] - Biros also questioned the upcoming Nora Rubber investments, with Hurd explaining that these investments focus on capacity support, productivity, and innovation [6] - CFO Bruce Hausman discussed the balance between margin improvement and volume growth, indicating a focus on finding an optimal equilibrium [6] - Alexander Paris sought clarification on the education segment's softness, with Hurd noting a decline of less than 3% due to timing, while Hausman linked margin gains to manufacturing efficiencies and favorable product mix [6] - David S. MacGregor probed into the incremental margin potential from automation initiatives, with Hausman emphasizing ongoing efforts to drive efficiencies and expand product lines [6]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, but identifying such stocks can be challenging due to their inherent risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing a company's real growth prospects beyond traditional metrics [2] - Interface (TILE) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive [4] - Interface has a historical EPS growth rate of 8.1%, but projected EPS growth for this year is 26.7%, significantly surpassing the industry average of 16.4% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important indicator of efficiency in growth investing [6] - Interface has an S/TA ratio of 1.1, indicating it generates $1.1 in sales for every dollar in assets, outperforming the industry average of 1.04 [6] Group 4: Sales Growth - Sales growth is another key metric, with Interface expected to achieve a sales growth of 5.1% this year, compared to an industry average of 0% [7] Group 5: Earnings Estimate Revisions - Trends in earnings estimate revisions are crucial, with positive revisions indicating potential stock price movements [8] - Interface has seen an 8.8% increase in current-year earnings estimates over the past month, reflecting a positive trend [8] Group 6: Overall Positioning - Interface has earned a Growth Score of A and a Zacks Rank 1 due to favorable metrics and positive earnings estimate revisions, positioning it well for potential outperformance [10]

Financial Performance - Consolidated net sales for the quarter ended September 28, 2025, were $364.5 million, a 5.9% increase from $344.3 million in the same quarter last year[96]. - Consolidated net income for the quarter was $46.1 million, or $0.78 per diluted share, compared to $28.4 million, or $0.48 per diluted share, in the prior year[96]. - For the first nine months of 2025, consolidated net sales reached $1,037.5 million, up 5.8% from $980.6 million in the same period last year[97]. Profitability Metrics - Gross profit margin for the quarter was 39.4%, an increase from 37.1% in the same quarter last year, driven by higher average sales prices and favorable product mix[105]. - AMS segment adjusted operating income (AOI) for the third quarter was $40.5 million, a 25.8% increase from $32.2 million in the prior year[112]. - AOI in AMS rose by 41.4% in the first nine months of 2025, with AOI as a percentage of net sales increasing to 17.1% from 13.0% in the prior year[116]. - AOI in EAAA for Q3 2025 increased by 21.0%, with AOI as a percentage of net sales rising to 9.4% from 8.4% in the same period last year[120]. Cost and Expenses - Consolidated cost of sales for the quarter was $220.9 million, a 2.0% increase from $216.6 million in the same period last year[102]. - Selling, general and administrative (SG&A) expenses for the quarter increased by $4.8 million (5.6%) to $90.3 million[107]. - The effective tax rate for the three months ended September 28, 2025, was 4.8%, down from 21.2% in the same period last year[110]. Segment Performance - AMS segment net sales for the third quarter were $218.6 million, a 4.0% increase from $210.2 million in the same quarter last year[112]. - Net sales in AMS increased by 7.2% during the first nine months of 2025 compared to the same period in 2024, driven by higher average sales prices and increased rubber flooring volume[114]. - EAAA segment net sales increased by 8.8% in Q3 2025, primarily due to favorable currency fluctuations of approximately $6.0 million (4.5%) and higher sales volume[118]. Cash Flow and Investments - Cash provided by operating activities was $118.6 million for the nine months ended September 28, 2025, an increase of $8.2 million from the prior year[126]. - Cash used in investing activities was $25.5 million for the nine months ended September 28, 2025, primarily due to increased capital investment in manufacturing automation[127]. - The company had $187.4 million in cash as of September 28, 2025, with additional borrowing capacity of $294.8 million under its Facility[122]. Future Outlook - As of October 19, 2025, the consolidated backlog of unshipped orders was approximately $244.4 million, up from $223.4 million in February 2025[132]. - The company anticipates net sales growth in Q4 2025 compared to the same period last year, despite a challenging global macroeconomic environment[130]. - The company plans to evaluate its cost structure and global manufacturing footprint to optimize costs amid macroeconomic challenges[98]. Shareholder Actions - The company repurchased 250,000 shares of common stock at a weighted average price of $20.57 per share during the nine months ended September 28, 2025[129].

Financial Data and Key Metrics Changes - Third quarter net sales were $364.5 million, up 5.9% as reported and 4.2% on a currency-neutral basis compared to the third quarter of 2024, both exceeding expectations [13] - Adjusted gross profit margin was 39.5%, an increase of 208 basis points year over year, driven by favorable pricing and product mix along with manufacturing efficiencies [14] - Adjusted operating income rose to $54.1 million, reflecting a 24.5% year-over-year increase [14] - Adjusted EBITDA for the third quarter was $66.2 million, compared to $53.7 million in the same quarter of 2024 [15] - Adjusted earnings per share increased by 27% to $0.61 from $0.48 in the third quarter of 2024 [15] - The company ended the quarter with $482 million in liquidity and a net leverage ratio of 0.6 times [15] Business Line Data and Key Metrics Changes - The nora rubber segment grew by 20% in the third quarter and is up 19% year to date, driven by the One Interface strategy [5] - Corporate office billings increased by 5% in the third quarter, with year-to-date growth expected [9] - Global healthcare billings surged by 29%, with double-digit gains across both the Americas and EAAA [9] - Education billings saw a slight decline of less than 3% in the third quarter but remain at high single digits year to date [10] Market Data and Key Metrics Changes - In the Americas, currency-neutral net sales increased by 4.1% year over year, while EAAA saw a 4.3% increase [13] - Consolidated currency-neutral orders rose by 2.4% year over year, with the Americas up 1.7% and EAAA up 3.5% [10] Company Strategy and Development Direction - The company is focused on its One Interface strategy, which aims to build strong global functions to support local selling teams and enhance commercial productivity [5] - Investments in automation, productivity, and innovation are being accelerated to strengthen the nora product portfolio and drive long-term growth [6] - The company is preparing to launch a new rubber flooring innovation in early 2026, targeting growth in the healthcare segment [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and disciplined execution, highlighting strong results despite a challenging macro environment [11] - The company is raising its full-year guidance based on year-to-date results, anticipating net sales of $1.375 to $1.390 billion for the fiscal year 2025 [17] Other Important Information - The company received multiple awards for design and sustainability, including Manufacturer of the Year in ED's Net Zero Awards [11] - Tariffs diluted the adjusted gross profit percentage by approximately 30 basis points in the third quarter, with a similar dilution expected in the fourth quarter [16] Q&A Session Summary Question: What drove the sales outperformance this quarter? - Management noted that healthcare was the outperformer, with a 29% increase, exceeding expectations due to a focus on expanding the product portfolio in that segment [21][23] Question: Can you provide more details on investments in nora rubber? - Management confirmed ongoing investments in capacity, productivity initiatives, and innovation to support the growth of the nora rubber business [25][26] Question: How do you view margins going forward? - Management indicated that while they aim for a gross profit margin of 38.5%, they will balance share growth and business expansion [28] Question: Can you provide insights on the tax rate and special items in Q3? - The unusual tax rate of 4.8% was due to a non-cash pickup related to changes in German tax legislation, which required remeasuring deferred tax assets and liabilities [39][40] Question: What is the outlook for capital expenditures in 2026? - Management anticipates a slight increase in capital expenditures, primarily associated with nora rubber and other automation investments [74][76]

Company Overview - Interface is a global leader in commercial flooring with net sales of $1.3 billion in FY2024[9] - The company has 3,600 global employees and 6 manufacturing locations on 4 continents[9] - Interface has a diversified revenue stream with 61% from the Americas, 28% from EMEA, and 10% from APAC[14] - The company's revenue is also diversified by customer segment, with 45% from Corporate Office, 20% from Education, 10% from Healthcare, and 25% from Other segments[15] Financial Performance (Q3 2025) - Net sales increased by 5.9% to $364.5 million compared to $344.3 million in Q3 2024[65, 66, 67] - Currency neutral net sales increased by 4.2% year-over-year to $358.6 million[65, 80] - Adjusted operating income was $54.1 million, representing 14.9% of net sales[65] - Adjusted earnings per share was $0.61[65] Financial Performance (LTM Q3 2025) - Adjusted EBITDA was $214 million, representing 15.6% of net sales[65] - Adjusted diluted earnings per share was $1.79[65] - Net debt to adjusted EBITDA ratio was 0.6x[65]

Financial Performance - Net sales for Q3 2025 totaled $364.5 million, representing a 5.9% increase year-over-year and a 4.2% increase on a currency-neutral basis[6] - GAAP earnings per diluted share increased by 62.5% to $0.78, while adjusted earnings per diluted share rose by 27.1% to $0.61[6] - Gross profit margin expanded by 233 basis points to 39.4%, driven by favorable product mix and manufacturing efficiencies[7] - Net sales for the three months ended September 28, 2025, were $364.5 million, a 5.3% increase from $344.3 million for the same period in 2024[22] - Gross profit for the three months ended September 28, 2025, was $143.6 million, representing a gross margin of 39.4%, compared to $127.6 million and a gross margin of 37.1% in the prior year[22] - Operating income increased to $53.4 million for the three months ended September 28, 2025, up 26.4% from $42.2 million in the same period last year[22] - Net income for the three months ended September 28, 2025, was $46.1 million, a significant increase of 62.1% compared to $28.4 million in the prior year[22] - Earnings per share (EPS) for the three months ended September 28, 2025, were $0.79 (basic) and $0.78 (diluted), compared to $0.49 (basic) and $0.48 (diluted) in the same period last year[22] - For the first nine months of 2025, GAAP net income was $91.7 million with diluted EPS of $1.55, compared to $65.2 million and $1.11 in the same period of 2024, marking a 40.7% increase in net income and a 39.6% increase in EPS[29] - The company experienced a total revenue of $1,037.5 million for the first nine months of 2025, up from $980.6 million in the same period of 2024, which is a 5.8% increase[31] Balance Sheet and Cash Flow - Cash increased by 88.8% to $187.4 million, while total debt rose slightly by 1.7% to $307.8 million[9] - The net leverage ratio improved to 0.6x, indicating a stronger balance sheet position[9] - Total assets as of September 28, 2025, were $1.33 billion, an increase of 13.6% from $1.17 billion as of December 29, 2024[24] - Cash and cash equivalents increased to $187.4 million as of September 28, 2025, compared to $99.2 million at the end of the previous fiscal year[24] - Cash provided by operating activities for the three months ended September 28, 2025, was $76.7 million, slightly up from $76.2 million in the same period last year[25] - The company reported a total current liabilities of $240.2 million as of September 28, 2025, compared to $216.7 million as of December 29, 2024[24] - Long-term debt stood at $307.3 million as of September 28, 2025, a slight increase from $302.3 million at the end of the previous fiscal year[24] Operational Efficiency - Adjusted SG&A expenses increased by $4.5 million year-over-year due to higher sales commissions and inflation[8] - Adjusted EBITDA for the last 12 months reached $214.1 million, reflecting robust operational performance[9] - Non-GAAP adjusted operating income for Q3 2025 was $54.1 million, up from $43.5 million in Q3 2024, reflecting a 24.8% year-over-year growth[26] - The company reported a GAAP operating income of $53.4 million in Q3 2025, compared to $42.2 million in Q3 2024, representing a 26.4% increase[33] - Adjusted (non-GAAP) operating income for the first nine months of 2025 was $135.5 million, compared to $108.6 million in the same period of 2024, reflecting a 24.8% increase[29] - Non-GAAP Adjusted Operating Income (AOI) for the first nine months of 2025 was $135.5 million, up from $108.6 million in 2024, reflecting a 24.8% growth[34] Strategic Initiatives - The One Interface strategy contributed to a 29% increase in Healthcare segment sales and a 5% increase in Corporate Office segment sales[4] - The company plans to continue focusing on market expansion and new product development as part of its strategic initiatives moving forward[38] - The company believes that non-GAAP performance measures provide a meaningful basis for comparing current results with prior periods, aiding in business evaluation[38] Tax and Currency Impact - The company recognized a non-cash credit to income tax expense in Q3 2025 due to a reduction in the German corporate income tax rate, which will decrease by 1% annually from 2028 to 2032[27] - The impact of changes in currency for the first nine months of 2025 was a decrease of $6.0 million in consolidated net sales[31] Adjustments and Expenses - The total adjustments for non-GAAP measures in Q3 2025 amounted to $10.2 million, primarily due to purchase accounting amortization and restructuring costs[26] - The company incurred a total of $6.9 million in non-GAAP adjustments for the first nine months of 2025, compared to $3.8 million in 2024, showing an increase of 81.6%[34] - Interest Expense for the first nine months of 2025 was $13.1 million, down from $18.3 million in the same period of 2024, a decrease of 28.0%[36] - Depreciation and Amortization expenses for the first nine months of 2025 were $28.3 million, slightly up from $27.7 million in 2024, reflecting a 2.2% increase[36] Cyber Event Impact - The company reported a Cyber Event Impact of $(5.1) million for the fiscal year 2024, which was a significant factor in the financial results[37]

Core Insights - Interface, Inc. reported strong third-quarter results for 2025, exceeding expectations with significant year-over-year growth and profitability expansion [2][6] - The company raised its full-year guidance based on robust year-to-date performance, despite acknowledging a challenging global macro environment [8] Financial Performance - Net sales for Q3 2025 reached $364.5 million, a 5.9% increase from $344.3 million in Q3 2024, with a currency-neutral growth of 4.2% [5][6] - Gross profit margin improved by 233 basis points to 39.4% compared to 37.1% in the previous year, driven by favorable product mix and manufacturing efficiencies [4][5] - Operating income rose by 26.5% to $53.4 million, while net income surged by 62.2% to $46.1 million [5][6] - Earnings per diluted share increased to $0.78, reflecting a 62.5% rise from $0.48 in the prior year [5][6] Strategic Initiatives - The "One Interface" strategy is credited with driving growth by enhancing global functions, empowering local sales teams, and streamlining operations [3][6] - The company experienced a 29% increase in Healthcare segment sales and a 5% increase in Corporate Office sales, indicating strong performance across various market segments [3][5] Outlook - Interface raised its full fiscal year 2025 outlook for net sales to a range of $1.375 billion to $1.390 billion, up from the previous estimate of $1.370 billion to $1.390 billion [8] - The adjusted gross profit margin expectation for the full year is now set at 38.5% of net sales, an increase from the prior estimate of 37.7% [8] Segment Performance - In the Americas, net sales increased by 4.0% to $218.6 million, while the EAAA segment saw an 8.8% rise to $145.9 million [7] - Operating income in the Americas grew by 26.8% to $40.4 million, while the EAAA segment's operating income increased by 25.5% to $12.9 million [7]