Interface Q1 Earnings Call Highlights

Key Points

• Interface delivered a strong first quarter, with net sales up and adjusted EPS jumping to $0.41 from $0.25 a year ago. Management credited broad-based demand and the company’s One Interface strategy for the better-than-expected results.
• Growth was led by corporate office and healthcare, while orders rose 8% on a currency-neutral basis and backlog increased 18% year to date. The company also highlighted new product launches, including noravant and updated carpet tile collections, to expand its addressable market.
• Interface raised full-year guidance for fiscal 2026, now expecting revenue of $1.45 billion to $1.48 billion and improved margins despite tariff and Middle East-related cost pressures. It also reiterated disciplined capital allocation, including buybacks, investments, and selective M&A.

Interface NASDAQ: TILE reported a stronger-than-expected start to fiscal 2026, with management pointing to broad-based sales gains, higher profitability and continued benefits from its One Interface strategy.

Chief Executive Officer Laurel Hurd said first-quarter net sales rose 7% year over year on a currency-neutral basis, while adjusted earnings per diluted share increased 64%. She said growth came across product categories and key market segments, supported by execution in the company’s global selling and supply chain initiatives.

“Our One Interface strategy is working, and it continues to drive strong results,” Hurd said on the call.

Sales, Margins and Earnings Improve

Chief Financial Officer Bruce Hausmann said first-quarter net sales were $331 million, up 11.3% as reported and 6.8% on a currency-neutral basis compared with the prior-year quarter. He noted that fiscal 2026 is a 53-week year for Interface, with the extra week falling in the first quarter.

Currency-neutral net sales increased 8.4% in the Americas and 4.3% in EAAA, which includes Europe, Asia, Australia and Africa. Adjusted gross margin improved 55 basis points to 38.3%, reflecting favorable pricing, product mix and manufacturing efficiencies. Adjusted SG&A expenses were $94 million, compared with $86.8 million a year earlier, but improved as a percentage of net sales to 28.4%.

Adjusted operating income rose 28.6% to $32.7 million, while adjusted net income increased to $23.9 million from $14.6 million. Adjusted EBITDA was $46.8 million, compared with $37 million. Adjusted EPS was $0.41, up from $0.25 in the year-ago period.

Corporate Office and Healthcare Lead Segment Growth

Hurd said Interface’s diversification strategy continued to support growth. Corporate office billings increased 16% globally, with management citing return-to-office activity, renovation work and demand for Class A office space. Hurd said the company is benefiting from its brand, design leadership and a broader range of price points.

Healthcare billings rose 11%, helped by combined selling teams under the One Interface strategy and long-term demand trends. Nora rubber billings increased 15% in the quarter, and Hurd said the company expects its new noravant product to expand its healthcare opportunity over time.

Education billings were up 1% in the first quarter. Hurd characterized the more modest increase as a timing issue ahead of the primary education buying season in the second quarter and early third quarter. In response to analyst questions, she also said retail and government were up slightly in the quarter.

Orders also showed momentum. Consolidated currency-neutral orders rose 8% year over year, with orders up 6% in the Americas and 11% in EAAA. Backlog was up 18% year to date at the end of the quarter.

Product Launches and One Interface Initiatives

Interface highlighted several product and operational initiatives during the call. Hurd said the company aligned its EMEA commercial organization under a single leader as part of the next phase of One Interface. She also said robotic solutions went live in Europe and Australia, which management expects to support manufacturing efficiency, waste reduction and customer service levels.

The company launched noravant in late February, describing it as a rubber flooring innovation within the resilient category. The first product, noravant timber, is aimed in part at healthcare patient rooms. Hurd said customer response has been positive and that the product is expected to begin contributing to growth in the fourth quarter of 2026 and build over time.

Interface also introduced two carpet tile collections, Crafted Connections and Open Forms, aimed at the middle of the market. Carpet tile billings were up double digits in the quarter. Hurd said the company has expanded its addressable market through more accessible price points while maintaining discipline around margins.

In nora, Interface expanded norament kivo with additional color options, including vibrant accents and classic tones. Hurd said K-12 education remains one of the fastest-growing segments for nora.

Guidance Raised Amid Dynamic Cost Environment

Hausmann said Interface entered the second quarter with healthy backlog and order momentum and raised its full-year outlook. For the second quarter, the company expects:

• Net sales of $385 million to $395 million
• Adjusted gross profit margin of approximately 39.9% of net sales
• Adjusted SG&A expenses of approximately $100 million
• Adjusted interest and other expenses of approximately $4 million
• An adjusted effective tax rate of approximately 28%

For fiscal 2026, Interface expects net sales of $1.45 billion to $1.48 billion, adjusted gross margin of approximately 38.8% to 39.0%, adjusted SG&A expenses of approximately 26.2% to 26.4% of net sales, adjusted interest and other expenses of $14 million to $16 million, an adjusted effective tax rate of approximately 26% and capital expenditures of approximately $60 million.

Hurd said the company is monitoring developments in the Middle East, which represents approximately 1% of Interface’s net sales. She said management currently expects events there to drive a low single-digit increase in input costs across the global business, with plans to offset the impact through incremental pricing and productivity actions. Hausmann also said 15% to 20% of cost of goods sold is subject to tariffs, with related costs blended into COGS, and no tariff refund assumed in guidance.

Cash Use, Sustainability and M&A

Interface generated $13.5 million of cash from operating activities in the first quarter, spent $10.3 million on capital expenditures and repurchased $12 million of common stock. Hausmann said the company’s capital allocation priorities remain investing in the business, managing leverage, evaluating strategic M&A and returning excess cash through dividends and share repurchases.

In response to analyst questions about potential acquisitions, Hurd said M&A is not required for Interface to achieve its goals, but the company will be disciplined and look for opportunities that align with its strategy and can accelerate growth and margins.

Management also emphasized sustainability as part of Interface’s value proposition. Hurd said more than 50% of the materials in the company’s products globally are recycled or bio-based, which she said lowers carbon footprint and reduces reliance on virgin raw materials. She said circularity is important to Interface’s science-based targets for 2030 and its ambition to be carbon negative by 2040.

About Interface NASDAQ: TILE

Interface, Inc NASDAQ: TILE is a global manufacturer of modular flooring and resilient commercial flooring solutions. The company specializes in carpet tiles, luxury vinyl tile (LVT) and other environmentally responsible hard-surface products designed for use in corporate, education, healthcare, hospitality and retail environments. Interface's portfolio also includes broadloom carpet, rubber flooring and acoustic underlays, all engineered to meet performance, design and sustainability requirements in modern interior spaces.

Founded in 1973 by Ray C.

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