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]

Core Insights - Interface reported quarterly earnings of $0.6 per share, exceeding the Zacks Consensus Estimate of $0.47 per share, and showing an increase from $0.4 per share a year ago, resulting in an earnings surprise of +27.66% [1] - The company achieved revenues of $375.52 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.31%, compared to $346.64 million in the same quarter last year [2] - Interface has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.48 on revenues of $352 million, and for the current fiscal year, it is $1.58 on revenues of $1.35 billion [7] - The estimate revisions trend for Interface was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Textile - Home Furnishing industry, to which Interface belongs, is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Company Overview - Interface reported net sales of $1.3 billion in FY2024[9] - The company has a global presence with 6 manufacturing locations on 4 continents[9] - Interface is recognized as a leader in sustainability with over 50 years of innovation[11] Financial Performance (Q2 2025) - Net sales increased by 8.3% year-over-year to $375.5 million[63, 64, 66] - Currency neutral net sales increased by 7.1% year-over-year to $371.1 million[63, 80] - Gross profit increased by 20.7% to $148.0 million, representing 39.4% of net sales[64] - Operating income increased by 36.4% to $52.0 million, representing 13.9% of net sales[64] - Adjusted operating income increased by 41.2% to $55.9 million, representing 14.9% of net sales[63, 66] - Adjusted EBITDA was $64.8 million, representing 17.3% of net sales[66] - Adjusted earnings per share was $0.60[63, 66] Sustainability Metrics (2024) - Scope 1 emissions reduced by 30%[49] - Scope 2 emissions reduced by 28%[49] - Scope 3 emissions (Purchased Goods & Services) reduced by 42%[49] - 80% of total energy sourced at manufacturing sites is renewable[52]

```markdown [Executive Summary & Q2 2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q2%202025%20Highlights) Interface exceeded Q2 2025 expectations with **7%** currency-neutral net sales growth and **403 bps** gross margin expansion, raising full-year guidance Q2 2025 Performance Highlights | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Net Sales | $376 million | +8% | | Currency-Neutral Net Sales | - | +7% | | GAAP Earnings per Diluted Share | $0.55 | +45% | | Adjusted Earnings per Diluted Share | $0.60 | +50% | - The 'One Interface' strategy is yielding measurable results, fueling growth across all product categories and key market segments[5](index=5&type=chunk) - Global billings saw significant increases in key market segments: Healthcare grew by **28%**, Education by **11%**, and Corporate Office by **3%**[5](index=5&type=chunk) - Gross profit margin expanded by **403 basis points**, attributed to higher pricing, favorable product mix, and manufacturing cost benefits from increased sales volumes[6](index=6&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) Interface achieved robust Q2 2025 financial health, driven by Americas segment growth and a solid balance sheet with reduced net debt [Consolidated Results](index=2&type=section&id=Consolidated%20Results) Q2 2025 consolidated net sales grew **8.3%** to **$375.5 million**, with operating income up **36.4%** and adjusted EPS increasing **50%** to **$0.60** Consolidated Financial Metrics | Metric | 6/29/2025 | 6/30/2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $375.5M | $346.6M | +8.3% | | Gross Profit Margin % | 39.4% | 35.4% | +403 bps | | Operating Income | $52.0M | $38.2M | +36.4% | | Net Income | $32.6M | $22.6M | +44.3% | | Adjusted Operating Income | $55.9M | $39.6M | +41.2% | | Adjusted Net Income | $35.4M | $23.6M | +49.9% | | Adjusted EPS | $0.60 | $0.40 | +50.0% | - Adjusted SG&A expenses increased by **$9.1 million** year-over-year, driven by higher sales commissions, variable compensation, healthcare costs, inflation, and foreign currency exchange variances[9](index=9&type=chunk) [Segment Results](index=3&type=section&id=Segment%20Results) Americas segment drove Q2 2025 growth with **11.5%** currency-neutral net sales and **81.3%** adjusted operating income surge, while EAAA declined Segment Performance Overview | Segment | Currency-Neutral Net Sales Change | Adjusted Operating Income Change | | :--- | :--- | :--- | | **AMS** | +11.5% | +81.3% | | **EAAA** | -0.1% | -44.2% | - Currency-neutral orders increased by **2.1%** year-over-year in the AMS segment, while they decreased by **4.3%** in the EAAA segment[11](index=11&type=chunk) [Balance Sheet & Key Metrics](index=2&type=section&id=Balance%20Sheet%20%26%20Key%20Metrics) Balance sheet shows improved liquidity with cash up **22.6%** to **$121.7 million**, net debt down **10.2%** to **$182.7 million**, and a **0.9x** Net Leverage Ratio Balance Sheet Summary | Metric | 6/29/2025 | 12/29/2024 | Change | | :--- | :--- | :--- | :--- | | Cash | $121.7M | $99.2M | +22.6% | | Total Debt | $304.4M | $302.8M | +0.6% | | Net Debt | $182.7M | $203.5M | -10.2% | | Net Leverage Ratio | 0.9x | N/A | N/A | - Total assets increased to **$1,278.2 million** from **$1,170.8 million** at the end of fiscal year 2024[30](index=30&type=chunk) [Statement of Operations](index=8&type=section&id=Statement%20of%20Operations) Q2 2025 consolidated operations report net income of **$32.6 million** on **$375.5 million** net sales, with diluted EPS rising to **$0.55** Consolidated Statement of Operations | Metric (Thousands USD) | Three Months Ended 6/29/2025 | Three Months Ended 6/30/2024 | | :--- | :--- | :--- | | Net Sales | $375,522 | $346,635 | | Gross Profit | $147,977 | $122,613 | | Operating Income | $52,047 | $38,151 | | Net Income | $32,561 | $22,558 | | Earnings Per Share – Diluted | $0.55 | $0.38 | [Statement of Cash Flows](index=10&type=section&id=Statement%20of%20Cash%20Flows) Six months ended June 29, 2025, cash from operations increased to **$41.9 million**, with a net positive change in cash of **$22.5 million** Consolidated Statement of Cash Flows | Metric (Thousands USD) | Six Months Ended 6/29/2025 | Six Months Ended 6/30/2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $41,867 | $34,158 | | Cash Used in Investing Activities | ($14,821) | ($11,567) | | Cash Used in Financing Activities | ($13,740) | ($36,960) | | **Net Change in Cash** | **$22,475** | **($16,311)** | - The company repurchased **$4.3 million** of common stock in the first six months of 2025, with no repurchases in the same period of 2024[31](index=31&type=chunk) [Business Outlook](index=4&type=section&id=Business%20Outlook) Interface raised full fiscal year 2025 guidance, projecting net sales between **$1.370 billion** and **$1.390 billion**, and Q3 net sales between **$350 million** and **$360 million** Q3 2025 Business Outlook | Metric | Q3 2025 Outlook | | :--- | :--- | | Net sales | $350 million to $360 million | | Adjusted gross profit margin | 38.0% of net sales | | Adjusted SG&A expenses | $92 million | | Adjusted effective income tax rate | 27.0% | Full Year 2025 Business Outlook | Metric | Updated Full Year 2025 Outlook | Previous Full Year 2025 Outlook | | :--- | :--- | :--- | | Net sales | $1.370B to $1.390B | $1.340B to $1.365B | | Adjusted gross profit margin | 37.7% of net sales | 37.2% to 37.4% of net sales | | Adjusted SG&A expenses | $362 million | 26% of net sales | | Adjusted effective income tax rate | 26.0% | 27.0% | [Appendix: Non-GAAP Reconciliations](index=5&type=section&id=Appendix%3A%20Non-GAAP%20Reconciliations) Appendix provides detailed reconciliations of GAAP to non-GAAP financial measures, including adjusted EPS, AOI, and adjusted EBITDA, to clarify core operating performance - Non-GAAP measures like adjusted EPS, adjusted net income, and AOI exclude items such as nora purchase accounting amortization, restructuring, asset impairment, and severance costs[18](index=18&type=chunk) - For Q2 2025, GAAP Net Income of **$32.6 million** was adjusted by **$2.8 million** for items like purchase accounting amortization and restructuring, resulting in an Adjusted (non-GAAP) Net Income of **$35.4 million**[32](index=32&type=chunk) - Adjusted EBITDA for the last twelve months (LTM) ended June 29, 2025, was calculated to be **$201.6 million**, up from **$189.0 million** for the fiscal year 2024[39](index=39&type=chunk) [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) Section outlines Interface, Inc.'s profile as a global flooring and sustainability leader, details investor call, defines non-GAAP measures, and includes Safe Harbor Statement - Interface is a global flooring company offering carpet tile and resilient flooring products, with a strong focus on sustainability and a goal to become a carbon negative enterprise by **2040**[20](index=20&type=chunk)[21](index=21&type=chunk) - A conference call to discuss Q2 2025 results will be hosted on August 1, 2025, at 8:00 a.m. Eastern Time[16](index=16&type=chunk) - The press release contains forward-looking statements, including the financial outlook for Q3 and the full year 2025, which are subject to numerous risks and uncertainties detailed in the company's Form 10-K[24](index=24&type=chunk) ```

Group 1 - Interface operates as a global flooring solutions firm, indicating its role in the flooring industry [1] - The company has been recognized for years, suggesting a level of stability and potential for investment [1] Group 2 - Crude Value Insights focuses on cash flow and companies in the oil and natural gas sector, highlighting the importance of financial health in investment decisions [1] - The service offers a stock model account and in-depth cash flow analyses, which can provide valuable insights for investors [2]

Economic Overview - Inflation is cooling at a faster rate than expected, with the consumer price index (CPI) rising only 0.1% sequentially in May, lower than the consensus estimate of 0.2% [3][9] - Year-over-year, CPI increased 2.4%, aligning with analysts' expectations, while core CPI rose 0.1% sequentially and 2.8% year-over-year, both lower than expected [3][4] Consumer Discretionary Stocks - Positive sentiment in the market suggests investing in consumer discretionary stocks such as Carnival Corporation & plc (CCL), Fox Corporation (FOX), Netflix, Inc. (NFLX), and Interface, Inc. (TILE) [2][8] - These stocks have seen positive earnings estimate revisions in the last 60 days, with each carrying a Zacks Rank 2 (Buy) [2] Company-Specific Insights Carnival Corporation & plc - Carnival Corporation operates as the largest cruise operator globally, carrying nearly half of the global cruise guests [10] - The expected earnings growth rate for the current year is 31.7%, with the Zacks Consensus Estimate for current-year earnings improving by 1.1% over the last 60 days [10] Fox Corporation - Fox Corporation produces and distributes news, sports, and entertainment content, with brands including FOX News and FOX Sports [11] - The expected earnings growth rate for the current year is 32.4%, with the Zacks Consensus Estimate for current-year earnings improving by 1.1% over the past 60 days [11] Netflix, Inc. - Netflix is a pioneer in the streaming space, aggressively building its portfolio of original shows to maintain its leading position [12] - The expected earnings growth rate for the current year is 27.7%, with the Zacks Consensus Estimate for current-year earnings improving by 3.3% over the past 60 days [12] Interface, Inc. - Interface is the world's largest manufacturer of modular carpets, committed to sustainability while enhancing shareholder value [13] - The expected earnings growth rate for the current year is 8.2%, with the Zacks Consensus Estimate for current-year earnings improving by 2.6% over the past 60 days [13]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, but identifying such stocks can be challenging due to inherent risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing 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's projected EPS growth for the current year is 8.2%, surpassing the industry average of 6.5% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important metric for assessing a company's efficiency in generating sales [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 1.02 [6] Group 4: Sales Growth - Sales growth is another key indicator, with Interface expected to achieve a sales growth of 2.8% this year, compared to the industry average of 1.4% [7] Group 5: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements [8] - The current-year earnings estimates for Interface have increased by 2.6% over the past month, indicating a favorable outlook [8] Group 6: Overall Positioning - Interface has achieved a Zacks Rank of 2 and a Growth Score of B, positioning it well for potential outperformance in the growth stock category [10]

Core Insights - Soundhound AI has gained attention in the market due to the growing interest in AI technologies, particularly since the last coverage on December 10, 2024 [1] Company Analysis - The company is positioned within the tech sector, which is currently experiencing significant investor interest [1] - The investment philosophy emphasizes simplicity, focusing on fundamental financial ratios and metrics for clearer insights [1] Market Trends - There is a notable trend of investors eager to capitalize on the proliferation of AI technologies, indicating a potential growth area for companies like Soundhound AI [1]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong growth stocks can be challenging due to associated risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing 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 desirable [4] - Interface's projected EPS growth is 8.2% for the current year, significantly higher than the industry average of 4.8% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important indicator of efficiency in generating sales [6] - Interface has an S/TA ratio of 1.1, outperforming the industry average of 1.02, indicating better asset efficiency [6] Group 4: Sales Growth - Sales growth is another key metric, with Interface expected to achieve a 2.8% sales growth this year, compared to the industry average of 0% [7] Group 5: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with stock price movements [8] - The current-year earnings estimates for Interface have increased by 2.6% over the past month, indicating positive momentum [8] Group 6: Overall Positioning - Interface has achieved a Zacks Rank of 2 (Buy) and a Growth Score of B, positioning it well for potential outperformance in the growth stock category [10]