Interface(TILE) - 2026 Q2 - Quarterly Results

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)