Core Insights - Interface reported a record year in 2025 with all-time highs in net sales, adjusted operating income, and adjusted EBITDA, driven by broad-based regional and segment growth, price and volume gains across all product categories, and operational improvements [4][7] Financial Performance - For the full year 2025, Interface achieved net sales of $1.39 billion, a 5.4% increase year-over-year, with adjusted EBITDA of $217.9 million and adjusted EPS of $1.94, reflecting a 33% increase [7][17] - Fourth-quarter net sales were $349.4 million, up 4.3% as reported and 1.6% on a currency-neutral basis, with adjusted gross margin at 38.6%, up 169 basis points [13][14] Growth Drivers - Global healthcare billings increased by 21% year-over-year in 2025, while education billings rose by 8%, attributed to expanded offerings at more approachable price points [1] - The combined U.S. selling team model across carpet tile, LVT, and nora Rubber has enhanced cross-selling effectiveness, contributing to a 17% increase in global rubber billings [2] Strategic Initiatives - The "One Interface" strategy focuses on strengthening global functions to support local selling teams, improving commercial productivity, and expanding margins through global supply chain management [3] - Interface launched "noravant," a PVC-free rubber sheet platform, expected to contribute $5–10 million in 2026 and potentially $50–100 million over five years [6][9] Capital Allocation and Outlook - For 2026, Interface projects net sales of $1.42–$1.46 billion and capital expenditures of about $55 million, while also extending its debt and increasing the quarterly dividend to $0.03 per share [5][19] - The company entered 2026 with solid orders and a healthy backlog, up 7% year-to-date, despite macroeconomic uncertainties [19] Sustainability Efforts - Sustainability remains a central theme, with Interface offering low-carbon products and incorporating captured carbon in manufacturing processes, recognized in various sustainability rankings [12]

Financial Data and Key Metrics Changes - In 2025, the company achieved record net sales, Adjusted Operating Income, and Adjusted EBITDA, with currency-neutral net sales increasing by 4% year-over-year [4][14] - Full year net sales totaled $1.39 billion, up 5.4%, with currency-neutral net sales in the Americas increasing by 5.5% and in EAAA by 2.4% [21][22] - Adjusted gross profit margin increased to 39%, up 187 basis points, driven by favorable pricing and manufacturing efficiencies [22] - Adjusted EPS for the fourth quarter was $0.49, up 44.1% compared to $0.34 [19] Business Line Data and Key Metrics Changes - All three product categories (carpet tile, LVT, and nora Rubber) experienced growth in both price and volume [5] - Global rubber billings increased by 17% in 2025 compared to the prior year [6] - Healthcare billings were up 21% year-over-year, while education billings increased by 8% [14][15] Market Data and Key Metrics Changes - In the Americas, currency-neutral net sales increased by 5% year-over-year, particularly strong in healthcare and education segments [14] - EAAA region saw a 2% increase in currency-neutral net sales, reflecting improving trends despite a challenging macro environment [14] - Corporate office billings were slightly up, with a focus on Class A spaces [15] Company Strategy and Development Direction - The company is committed to the "One Interface" strategy, focusing on global functions to support local selling teams and enhancing commercial productivity [4] - Continued investments in automation and robotics are expected to drive productivity gains and margin expansion [7][8] - The launch of Noravant, a new rubber flooring innovation, aims to expand the addressable market in the resilient category [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the scalability of the combined selling team model, particularly in healthcare and education [7] - The company anticipates continued growth driven by strong demand in healthcare and education, supported by macro tailwinds [15][16] - For 2026, the company expects net sales of $1.42 billion to $1.46 billion, with an adjusted gross profit margin of approximately 38.5%-39% [28][29] Other Important Information - The company generated $167.9 million in cash from operating activities in 2025, compared to $148.4 million in 2024 [24] - Capital expenditures for 2025 were $46.2 million, with an expected increase to $55 million in 2026 to support automation initiatives [25] - The board approved an increase in the quarterly dividend from $0.02 to $0.03 per share, reflecting confidence in cash flow generation [26] Q&A Session Summary Question: Can you talk about the One Interface selling strategy? - Management highlighted the success of the combined selling teams in the U.S., with healthcare billings up 21% and nora business up 17% [34] Question: Can you discuss gross margins for 2026? - Management noted that gross margins achieved 38.5%, with expectations for continued expansion driven by automation and efficiency initiatives [36][38] Question: How is the corporate market performing compared to healthcare and education? - Management indicated that the corporate business was flat, with retail business being soft, but healthcare and education showed strong growth [46][47] Question: Can you provide details on the backlog increase? - Management described the backlog as solid and well-distributed across initiatives, providing confidence entering 2026 [50][51] Question: How is SG&A being managed while pursuing growth? - Management emphasized disciplined spending and variable compensation tied to revenue, ensuring efficient use of resources [54][55] Question: What is the impact of tariffs on gross margins? - Management indicated that tariffs diluted gross profit percentage by around 20 basis points in 2025, with an anticipated 50 basis points impact in 2026 [91] Question: Can you provide global billings by category for Q4? - Management reported that corporate was flat, education was up 11.6%, and healthcare was up 11.7% [105]

Financial Data and Key Metrics Changes - In 2025, the company achieved record net sales, adjusted operating income, and adjusted EBITDA, marking the highest levels in its history [4] - Full year net sales totaled $1.39 billion, up 5.4%, with currency-neutral net sales increasing 4.3% [21] - Adjusted gross profit margin increased to 39%, up 187 basis points, driven by favorable pricing and manufacturing efficiencies [22] - Adjusted EPS for the fourth quarter was $0.49, up 44.1% compared to $0.34 [19] Business Line Data and Key Metrics Changes - All three product categories (carpet tile, LVT, and rubber) grew in both price and volume [5] - Global healthcare billings were up 21% year-over-year, with double-digit gains in the Americas and EAAA [14] - Education billings increased 8% for the full year, reflecting the success of expanded collection offerings [15] - Corporate office billings were up slightly for the year, with a focus on gaining share in Class A spaces [15] Market Data and Key Metrics Changes - Currency-neutral net sales in the Americas increased 5.5%, while EAAA saw a 2.4% increase [21] - The company reported a 2% increase in consolidated currency-neutral orders year-over-year [20] - The healthcare and education sectors are experiencing increased investment, driven by aging populations and modernization efforts [15] Company Strategy and Development Direction - The "One Interface" strategy focuses on building strong global functions to support local selling teams and enhancing commercial productivity [4] - The company is committed to sustainability, with initiatives including the launch of a cradle-to-gate carbon negative rubber prototype [12] - The introduction of the noravant product line is expected to open new design possibilities and expand the addressable market [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the scalability of the combined selling team model, particularly in healthcare and education [7] - The company anticipates continued growth in 2026, with a focus on expanding its addressable market through innovative products and pricing strategies [16] - Management acknowledged ongoing macro uncertainties but highlighted a solid order backlog and healthy growth expectations [27] Other Important Information - The company plans to increase capital expenditures to $55 million in 2026 to support automation and productivity initiatives [25] - A quarterly dividend increase from $0.02 to $0.03 per share was approved, reflecting confidence in cash flow generation [26] Q&A Session Summary Question: Can you talk about the One Interface selling strategy? - Management highlighted the success of the combined selling teams, with healthcare billings up 21% and expectations for continued growth through the launch of noravant [35][36] Question: Can you discuss gross margins for 2026? - Management noted that gross margins achieved 38.5%, with expectations for continued expansion driven by automation and efficiency initiatives [38][39] Question: What is the outlook for the corporate market? - Management indicated that the corporate market remains competitive, with growth expectations aligned with strong demand in Class A spaces [48] Question: Can you elaborate on the backlog increase? - Management described the backlog as solid and well-distributed across various initiatives, providing confidence for entering 2026 [51][53] Question: How is the company managing SG&A expenses? - Management emphasized a disciplined approach to SG&A, focusing on investments that drive growth while maintaining efficiency [56][57] Question: What is the impact of tariffs on gross margins? - Management indicated that tariffs had a dilutive impact on gross profit percentage, with expectations for modest inflation in raw materials [95][96]

Financial Data and Key Metrics Changes - 2025 was a record year for the company, with net sales, Adjusted Operating Income, and Adjusted EBITDA reaching their highest levels in history, driven by the One Interface strategy [4] - Full year net sales totaled $1.39 billion, up 5.4%, with currency-neutral net sales increasing 4.3% [18] - Adjusted gross profit margin increased to 39%, up 187 basis points, driven by favorable pricing and manufacturing efficiencies [19] - Adjusted EPS was $1.94, a 33% increase compared to $1.46 [20] Business Line Data and Key Metrics Changes - All three product categories (carpet tile, LVT, and rubber) grew in both price and volume, with global rubber billings up 17% in 2025 [5][12] - Healthcare billings were up 21% year-over-year, while education billings increased 8% [12][13] - Corporate office billings were up slightly, reflecting a competitive market environment [14] Market Data and Key Metrics Changes - Currency-neutral net sales in the Americas increased 5.5%, while EAAA saw a 2.4% increase, indicating improving trends in international markets [18] - The healthcare sector is experiencing increased investment due to aging populations and a focus on preventative care, benefiting the company [13] - The corporate market remains competitive, with Class A spaces in demand, particularly in major cities like New York and San Francisco [44][64] Company Strategy and Development Direction - The One Interface strategy focuses on building strong global functions to support local selling teams, enhancing commercial productivity, and expanding margins through supply chain management [4] - The company is committed to sustainability, with a focus on low-carbon products and innovative solutions like the new Noravant rubber flooring [11][9] - Future growth will be driven by expanding addressable markets through innovative product offerings and maintaining a disciplined approach to SG&A expenses [15][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the scalability of the combined selling team model, particularly in healthcare and education markets [6] - The company anticipates continued growth in 2026, with a focus on leveraging successful strategies and expanding product offerings [14][24] - Management acknowledged ongoing macro uncertainties but remains optimistic about solid orders and a healthy backlog entering 2026 [24] Other Important Information - The company generated $167.9 million in cash from operating activities in 2025, compared to $148.4 million in 2024 [21] - Capital expenditures were $46.2 million in 2025, with expectations to increase to $55 million in 2026 to support automation and productivity initiatives [22] - The quarterly dividend was increased from $0.02 to $0.03 per share, reflecting confidence in cash flow generation [23] Q&A Session Summary Question: Can you elaborate on the One Interface selling strategy? - Management highlighted the success of the combined selling teams and the potential for further expansion in healthcare and education markets [29][30] Question: What are the expectations for gross margins in 2026? - Management indicated that gross margins are expected to continue improving, driven by automation and efficiency initiatives [33][34] Question: How is the corporate market performing compared to healthcare and education? - Management noted that while corporate business was flat, healthcare and education saw significant growth, with ongoing demand in Class A spaces [42][44] Question: Can you provide details on the backlog increase? - Management described the backlog as solid and well-distributed across various initiatives, providing confidence for 2026 [47][49] Question: How is SG&A being managed while pursuing growth opportunities? - Management emphasized disciplined spending and a focus on variable compensation tied to revenue, ensuring efficiency [52][56] Question: What is the impact of tariffs on gross margins? - Management indicated that tariffs had a dilutive impact on gross profit percentage, with expectations for continued monitoring and adjustments [93][94]