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]