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]

Market Overview - The carpet and rugs market size is projected to grow from USD 52.46 billion in 2025 to USD 66.26 billion by 2030, reflecting a compound annual growth rate (CAGR) of 4.78% driven by rising residential spending, urbanization, and increasing online retail adoption [1][11] - North America is the largest market, while Asia-Pacific is emerging as a significant contributor to market expansion [1] Consumer Trends - There is a shift in consumer preferences towards sustainable and premium products, leading to diversification in materials, designs, and sales channels [2] - Eco-conscious consumers are favoring carpets made from recycled or bio-based fibers, and companies adopting environmentally friendly practices are strengthening their market presence [4] Design and Aesthetics - Increasing demand for home décor and interior design is evident as consumers view carpets and rugs as statement pieces, with bold colors and custom patterns gaining popularity [3] - Suppliers are innovating designs to enhance home aesthetics, catering to the desire for unique and stylish flooring solutions [3] E-Commerce Impact - The growth of e-commerce is reshaping the carpet and rugs market by providing customers with visualization tools, a wide range of designs, and flexible delivery options [5] - Online platforms are enabling manufacturers and retailers to reach a larger audience, particularly in regions with limited traditional showrooms [5] Regulatory Environment - Government policies, trade regulations, and export incentives are influencing market dynamics, with tariff adjustments and regional trade agreements facilitating market entry for manufacturers [6] Market Segmentation - The market is segmented by product type (tufted, woven, needle-punched, knotted, etc.), distribution channels (mass merchandisers, home centers, specialty stores), and end-use sectors (residential, commercial, industrial) [10] Key Players - Major players in the carpet and rugs market include Mohawk Industries Inc., Shaw Industries Group, Inc., and Oriental Weavers Carpet Co., each known for their diverse product offerings and strong distribution networks [10][12] Conclusion - The carpet and rugs market is on a steady growth path, driven by consumer interest in home décor, sustainability, and digital shopping convenience, with strong residential demand supported by premiumization in mature markets and urbanization in Asia-Pacific [11]

Core Points - Interface plans to release its third quarter 2025 results on October 31, 2025, before the market opens [1]

Core Insights - The article promotes a premium service called "Value in Corporate Events" that focuses on major corporate events such as earnings reports, mergers and acquisitions, and IPOs, providing actionable investment ideas [1] Group 1 - The service covers 10 major events each month, aiming to identify the best investment opportunities [1] - It offers members the chance to capitalize on significant corporate activities, enhancing their investment strategies [1] - The article emphasizes that the analysis is independent and not influenced by any business relationships with the companies mentioned [1]

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]

[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].