TILE

One Interface Strategy Progress

• The multi-year One Interface strategy is delivering results, with growth broad-based across regions, products, and market segments.
• Core strategic priorities: building global functions to support local sales teams, accelerating growth via improved commercial productivity, expanding margins through global supply chain management, simplifying operations, and leading in design, performance, and sustainability.

Product Innovation and Market Expansion

• Noravant Timber, a new rubber flooring product with wood grain aesthetic launched earlier in 2026, is gaining market momentum; it won Best Product for Healthcare at Clerkenwell Design Week, with strong early specification activity from leading design firms, and creates new addressable market opportunities in healthcare.
• Two new carpet tile extensions were launched to expand price point coverage: Open Air Neutrals, extending the popular Open Air platform with warmer neutral tones compatible across carpet tile, LVT, and Nora rubber lines; and Twist and Texture, which pairs textile-inspired design with an accessible price point and quick delivery to drive market share gains.
• Product innovation is split into two core focus areas: driving share gains in existing markets via accessible price point offerings across the full portfolio, and expanding into new adjacent segments (e.g., Noravant targeting the premium vinyl sheet market for patient rooms, which Interface did not previously serve).

Manufacturing and Supply Chain

• Automation and robotics investments in carpet tile facilities in Europe and Australia, packaging automation in Australia, and robotics for rubber manufacturing in Germany are exceeding performance expectations.
• These investments reduce costs, improve efficiency, increase production throughput, enhance customer service, increase available capacity, and fill hard-to-staff roles, supporting scalable sustainable margin expansion.

Sustainability Progress

• Interface published its 2025 Impact Report, showing a 4% reduction in product carbon footprint across all lines compared to 2024, achieved via material and manufacturing innovation.
• 51% of all materials are now recycled or bio-based, the highest share in the commercial flooring industry; 79% of manufacturing energy comes from renewable sources; total global greenhouse gas emissions are down 36% from the 2019 baseline.

Capital Allocation

• The company maintains a balanced, disciplined capital allocation strategy: 1) prioritize internal investment in innovation and productivity to drive growth and margin expansion; 2) evaluate strategic M&A opportunities aligned with the company's strategy; 3) return excess cash to shareholders via dividends and disciplined opportunistic share repurchases.
• In Q2 2026, the company generated $38.4 million in cash from operating activities, spent $12.2 million on capital expenditures, repurchased $8.8 million of common stock, and paid its regular quarterly dividend.

• Management raised full year 2026 guidance, driven by a stronger than expected Q2 performance, healthy backlog, and strong order momentum entering the second half of the year. • For Q3 2026, the company guides: net sales of $370 to $380 million; adjusted gross profit margin of approximately 40.8%; adjusted SG&A expenses of approximately $100 million; adjusted interest and other expenses of approximately $4 million; adjusted effective tax rate of approximately 27.5%; fully diluted weighted average share count of approximately 58.2 million shares. • For full year 2026 (a 53-week year, with the extra week in Q1), the company guides: net sales of $1.455 to $1.485 billion; adjusted gross profit margin of approximately 40.6%, which includes 105 basis points of improvement from the one-time Q2 tariff refund, with no additional refunds assumed; adjusted SG&A expenses of approximately $395 million; adjusted interest and other expenses of approximately $15 million; adjusted effective tax rate of approximately 26%; capital expenditures of approximately $60 million. • Management expects back half 2026 gross margins to run approximately 39%, which is 60 basis points higher than the prior year back half baseline, putting full year 2026 margins 100 basis points above the prior year baseline, already ahead of the company's long-term 38.5% target reached ahead of schedule, with a continued focus on further margin expansion.

For the second quarter of 2026, Interface reported total net sales of $395.7 million, representing 5.4% growth as reported and 3.8% currency-neutral growth year-over-year. By region: Americas delivered 3.5% currency-neutral net sales growth, while EMEA/Asia/Australia (EAAA) delivered 4.5% currency-neutral net sales growth. By end market segment: Global healthcare billings grew 19% year-over-year, following 28% growth in the prior year quarter; global corporate office billings grew 5% year-over-year; global education billings grew 5% year-over-year, following double-digit growth in the prior year; government and retail segments saw minor single-digit growth, with no notable outperformance. Overall adjusted gross profit margin was 45%, up 524 basis points year-over-year, with 131 basis points from operational improvements and 393 basis points from a one-time $15.6 million IEPA tariff refund. Adjusted SG&A expenses were $103.1 million, and adjusted diluted earnings per share was 88 cents, up 47% from 60 cents year-over-year. Consolidated currency-neutral orders increased 5% year-over-year, with 5% growth in the Americas and 6% growth in EAAA. End-of-quarter backlog was up 22% year-to-date.

• Input cost inflation and volatility: The company is facing low single-digit raw material cost inflation, and operates in a broader macro environment with ongoing input cost volatility and general market uncertainty that can impact margins. • Ongoing tariff obligations: Approximately 15% to 20% of the company's cost of goods sold remain subject to ongoing tariffs, which are fully baked into current guidance, after the one-time Q2 2026 IEPA tariff refund from a Supreme Court ruling on previously illegal tariffs. • Uncertain macro and demand conditions: While current order momentum and backlog are strong, market conditions remain volatile, and actual performance may differ from forward-looking projections due to unforeseen changes in demand or macroeconomic conditions.

Q: The implied Q4 2026 margin is lower year-over-year, can you explain the puts and takes, and update your long-term margin outlook after outperforming your prior 38.5% target? / A: The lower implied Q4 margin is purely timing of proactive Q2 price increases that offset raw material inflation; price increases are recorded on inventory first and flow through the P&L in future quarters. Excluding the one-time refund, back half 2026 margins are tracking ~39%, 60 basis points above the prior year, with full year margins 100 basis points above baseline, already ahead of the original 2025 38.5% long-term target. Management remains committed to continued margin expansion, as productivity investments are delivering ahead of expectations, even as they monitor ongoing market volatility. (246 words)

Q: How is product innovation expanding your total addressable market, and do you have sufficient existing capacity to support this growth? / A: Interface systematically expands its addressable market in two ways: gaining share in existing markets by adding accessible price point offerings across carpet tile, LVT, and rubber lines, and entering new adjacent segments with innovative new products like Noravant Timber, which targets the premium vinyl sheet healthcare market that Interface did not previously serve. Existing automation investments have increased throughput and available capacity at current facilities, improving efficiency while adding capacity to support growing demand; management will continue to monitor demand and invest in additional capacity if needed. (228 words)

Q: Can you update on the corporate office segment, including its size and the outlook for acceleration amid return-to-office trends? / A: Corporate office currently represents ~44% of total year-to-date billings, and grew 5% year-over-year in Q2 on a broad global basis. Growth is driven by accelerating return-to-office trends, flight to quality in Class A office space, lease turnover that drives renovation spending, and companies investing in office upgrades as part of human capital and recruitment/retention strategies. Companies are reconfiguring offices for new collaborative and focused work patterns to improve employee engagement, creating sustained renovation demand, and management believes this trend is still in the early innings. (198 words)

Q: Why is SG&A spending higher than expected, and what should we expect for SG&A going forward? / A: Higher SG&A in Q2 is mostly driven by variable sales commissions and variable employee compensation, which increased because the company overachieved the high end of prior net sales guidance; additional translation impact from strengthening foreign currencies also increased reported USD-denominated SG&A. Most freight inflation impacts cost of goods sold, not SG&A. Management remains highly disciplined on SG&A spending, focusing investment on sales, customer-facing activities, and innovation while cutting unnecessary non-core spending, and is committed to maintaining margin expansion on the SG&A line. (168 words)