Interface — Third Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the three months ended October 4, 2026, totaled $366.7 million, a 0.6% increase year-over-year (0.4% currency-neutral).
• GAAP earnings per diluted share were $0.67, a 14.1% decrease from the prior year; Adjusted earnings per diluted share were $0.68, an 11.5% increase.
• GAAP operating income was $56.3 million (5.5% increase), while Adjusted Operating Income was $57.2 million (5.7% increase).
• GAAP net income was $39.2 million (15.0% decrease); Adjusted Net Income was $39.9 million (11.1% increase).
• Adjusted Gross Profit Margin was 40.6%, an increase of 103 basis points year-over-year, driven by favorable pricing, product mix, and manufacturing efficiencies, partially offset by higher raw material and tariff costs.
• Adjusted SG&A expenses were $91.5 million, a 1.7% increase, attributed to higher inflation and marketing costs.
• Cash on hand was $81.1 million; Total Debt was $130.2 million, a 28.3% decrease from the prior period.
• Net Debt (Total Debt minus Cash) was $49.1 million, a 55.4% decrease year-over-year.
• Last 12-month Adjusted EBITDA was $253.6 million; Net Leverage Ratio was 0.2x.
• For the nine months ended October 4, 2026, Net Sales were $1,093.5 million (5.4% increase), and Adjusted Earnings per diluted share were $1.97 (35.9% increase).

Guidance and Future Outlook

• Interface reaffirmed full fiscal year 2026 Adjusted Earnings per Share guidance.
• Full fiscal year 2026 Net Sales outlook was revised down to $1.440–$1.455 billion (previously $1.455–$1.485 billion) to reflect softer conditions in Europe.
• Revised full-year Adjusted Gross Profit Margin outlook is 40.4% of net sales (previously 40.6%).
• Revised full-year Adjusted SG&A expenses outlook is $387 million (previously $395 million).
• Revised full-year Adjusted Interest & Other Expenses outlook is $14 million (previously $15 million).
• Revised full-year Adjusted Effective Income Tax Rate outlook is 25.0% (previously 26.0%).
• Capital expenditures guidance remains at $60 million.
• Fully diluted weighted average share count guidance is 58.5 million shares.
• Guidance includes $15.6 million of IEEPA tariff refunds received in Q2 2026.

Business Segments and Product Lines

• Global billings grew across all three primary market segments: Healthcare (up 5%), Education (low single-digit growth), and Corporate Office (low single-digit growth).
• AMS Segment Net Sales were $219.4 million (0.3% increase); Currency-Neutral Orders increased 6.2% year-over-year.
• EAAA Segment Net Sales were $147.4 million (1.0% increase); Currency-Neutral Orders decreased 6.8% year-over-year.
• EAAA Segment Adjusted Operating Income was $16.0 million, a 17.0% increase year-over-year.
• Certain Retail and nora deliveries shifted into future periods, impacting current quarter sales.

Market and Competitive Landscape

• Interface stated it continues to outperform the broader industry.
• Momentum in the Americas and disciplined execution offset softer conditions in EMEA.
• The company operates in a highly competitive floorcovering products market with a large number of manufacturers, some possessing greater financial resources.

Risks and Challenges

• Softer market conditions in Europe impacted the full-year net sales outlook.
• Higher raw material and tariff-related costs partially offset margin improvements.
• Inflation and marketing costs contributed to increased SG&A expenses.
• Potential risks include foreign trade policies, tariffs, raw material cost increases, supply chain disruptions, geopolitical conflicts, and foreign currency fluctuations.

Management Commentary and Tone

• CEO Laurel Hurd emphasized the strength of the diversified portfolio and the effectiveness of the "One Interface" strategy, expressing confidence in driving growth, expanding margins, and creating value.
• CFO Bruce Hausmann noted that operating discipline enabled adjusted earnings growth ahead of expectations despite modest sales growth, citing a solid backlog and healthy balance sheet.
• Management remains focused on margin expansion, cost discipline, and long-term sustainable growth.

Other Key Points

• Interface reaffirmed its goal of becoming carbon negative by 2040 without the use of offsets.
• The company received $15.6 million in IEEPA tariff refunds in Q2 2026, included in the full-year guidance.
• The portfolio includes Interface carpet tile and LVT, nora rubber flooring, and FLOR premium area rugs.
• The press release includes reconciliations of GAAP to Non-GAAP financial measures, excluding items such as restructuring, asset impairment, severance, purchase accounting amortization, and warehouse fire recovery.