Interface, Inc. Q4 FY2025 earnings call

2025 was a record year for Interface, Inc. driven by the One Interface strategy. Introduced in 2023, it focuses on building global functions, accelerating growth, expanding margins, and leading in design, performance, and sustainability. Commercial productivity is a growth driver, with the combined U.S. selling team model enabling cross-selling and deeper customer relationships. Nora Rubber business grew with global rubber billings up 17% in 2025. Strengthened and globalized manufacturing and supply chain team, invested in automation and robotics for productivity gains. Launched Noravant, a groundbreaking rubber flooring innovation. Focused on product innovation with collections at approachable and premium price points. Committed to sustainability, unveiled carbon negative rubber prototype and incorporated captured carbon in manufacturing, and received external recognitions.

For the full year, currency-neutral net sales increased 4% year over year, with both price and volume increasing across all three product categories. Currency-neutral net sales in the Americas increased 5% year over year, driven by the One Interface combined selling team and strength across key market segments; currency-neutral net sales in EAAA increased 2% for the year, reflecting improving trends despite still challenging macro environment in certain markets. Global health care billings were up 21% year over year in 2025; education billings increased 8% for the full year; corporate office billings were up slightly for the year.

Anticipates first quarter 2026 net sales of $315,000,000 to $325,000,000, adjusted gross profit margin of approximately 38% of net sales, adjusted SG&A expenses of approximately $94,000,000, adjusted interest and other expenses of approximately $4,000,000, adjusted effective income tax rate of approximately 18%, and fully diluted weighted average share count of approximately 59,100,000 shares. For full fiscal year 2026, anticipates net sales of $1,420,000,000 to $1,460,000,000, adjusted gross profit margin of approximately 38.5% to 39% of net sales, adjusted SG&A expenses approximately 26.2% to 26.4% of net sales, adjusted interest and other expenses of approximately $16,000,000, adjusted effective income tax rate of approximately 25% to 26%, and capital expenditures of approximately $55,000,000. Focuses on leveraging One Interface strategy to expand addressable market, launch innovative platforms, and scale commercial productivity globally.

There are risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including those described in the most recent Annual Report on Form 10-K filed with the SEC and first quarter 2025 10-Q, such as macro environment uncertainty, tariff changes, and competitive market risks.

Q: Talk a little bit further about the One Interface selling strategy here.

A: Laurel Hurd mentioned about the launch of Noravant as a long-term growth opportunity and taking learnings from combined selling teams in the U.S. across the globe.

Q: On gross margins, 2026 guidance?

A: Bruce Hausmann talked about offsetting tariff-related headwinds and inventory adjustment, and expecting gross margin expansion from automation.

Q: Introduction of more accessible price point products?

A: Laurel Hurd said they continue to build on the Open Air platform, roll out new colors and styles, and launch a new collection in the middle of the year.

Q: Difference between corporate growth, health care and education?

A: Laurel Hurd said corporate business was flat in line with expectations, health care and education grew strongly with health care billings up 21% and education up 8%.

Q: 7% increase in backlog?

A: Bruce Hausmann said it's a good solid backlog giving air cover.

Q: SG&A discipline?

A: Laurel Hurd said they are disciplined in spending, gate spend, and variable compensation tied to revenue.

Q: Costs and surprises?

A: Bruce Hausmann talked about assumptions on raw material inflation and tariff costs, and navigating through surprises.

Q: Business in the U.S. by geography and customer size?

A: Laurel Hurd said New York, Bay Area, Texas, Southeast are strong, and customer concentration is low.

Q: Health care and education share gain and runway?

A: Laurel Hurd said there are share gains in education and health care due to macro environment and combined selling team.

Q: Q1 tax rate and full year guidance?

A: Bruce Hausmann explained about tax deduction in Q1 and full year tax rate.

Q: Tariffs impact?

A: Bruce Hausmann talked about tariff impact in 2025 and 2026, and the moving target of tariffs.

Q: Global billings by category in Q4?

A: Laurel Hurd said corporate was flat, education up 11.6%, health care up 11.7%.

Q: New product development and Noravant?

A: Laurel Hurd said Noravant is a big platform with potential for growth and more in the works.