Interface, Inc.

What they do

Interface manufactures and sells floorcovering products, primarily modular carpet under the Interface and FLOR brands, luxury vinyl tile (LVT) under the Interface brand, and rubber flooring under the noraplan and norament brands, plus installation services and accessories. Carpet tile is made in standard styles and made-to-order specifications, with yarn containing varying degrees of recycled post-consumer nylon and backing containing recycled materials, including the CQuest carbon negative backing line launched in 2020. Operations are reported in two segments: AMS (United States, Canada, Latin America) and EAAA, both selling the same product portfolio in their regions.

Revenue drivers

• AMS segment — The Americas segment was 61% of total net sales in both 2025 and 2024, up from 58% in 2023, selling carpet tile, LVT, and rubber flooring across corporate office, education, healthcare, public buildings, retail, and residential markets.
• EAAA segment — The Europe, Africa, Asia and Australia segment was 39% of total net sales in 2025 and 2024, down from 42% in 2023, selling the same product portfolio in those geographies.
• Non-corporate office markets — More than half of consolidated net sales in fiscal 2025, 2024 and 2023 came from non-corporate office segments, primarily education, healthcare, public buildings, retail, residential/living, hospitality and transportation.
• Product expansion beyond modular carpet — LVT was introduced in select markets in late 2016 and expanded globally in 2017, and nora rubber flooring was added through the 2018 acquisition of nora systems GmbH, diversifying revenue beyond the traditional corporate office carpet business.

Recent performance

Second quarter 2026 net sales were $395.7 million, up 5.4% from $375.5 million a year earlier, or up 3.8% currency neutral, with GAAP gross margin of 45.0% versus 39.4%. The quarter included approximately $15.6 million of IEEPA tariff refunds recorded as a reduction to cost of sales, plus about $0.5 million of related interest income; adjusted gross margin rose 524 basis points. Q2 2026 operating income was $74.9 million versus $52.0 million, net income was $51.4 million versus $32.6 million, and diluted EPS was $0.88 versus $0.55. First-half 2026 sales were $726.7 million, up 8.0%, with net income of $75.0 million or $1.28 per diluted share versus $45.6 million or $0.77. CEO Laurel Hurd said growth was broad-based across all regions and product categories, led by Healthcare billings up 19%, with Education and Corporate Office billings each up 5%.

Strategy

Interface is executing its One Interface strategy, described as a multi-year organizational initiative to operate as one global team across the integrated product portfolio. The company focuses on both corporate office and non-corporate office markets to reduce exposure to corporate office cycles and gain share. Management has said it will continue evaluating its cost structure and global manufacturing footprint to decrease costs, and it expects higher production volumes and lower per-unit fixed costs to benefit 2026 gross margin. Sustainability remains a stated differentiator, including low-carbon and cradle-to-gate carbon negative products, CQuest backings, and Science Based Targets Initiative-validated carbon reduction targets.

Risks

• Highly competitive floorcovering market — The industry remains fragmented despite consolidation, and some competitors, including large diversified companies that treat modular carpet and resilient flooring as one segment, have greater financial resources than Interface.
• Tariffs and trade policy — Interface incurred higher tariff costs on rubber and LVT products imported into the U.S. in fiscal 2025 and the first half of 2026, and the recent benefit came from IEEPA refunds after the Supreme Court found those tariffs invalid in February 2026.
• Commercial office market pressure — The company cites significant financial pressures in the commercial office market globally, and demand is tied to corporate reinvestment in workplaces, which depends on employment, office vacancy, work-from-home policies and capital spending.
• Macroeconomic and geopolitical disruption — Inflation, supply chain challenges, slow market conditions in certain regions, and geopolitical factors including wars and other conflicts are all cited as challenges that may adversely affect future performance.

Outlook

Management raised full-year guidance based on strong first-half performance and a robust backlog, according to CFO Bruce Hausmann. The company expects higher production volumes and lower per-unit fixed costs in 2026 and anticipates these will benefit gross profit margin. Management also said it remains well positioned with a healthy balance sheet for disciplined capital allocation and sustainable growth, while continuing to evaluate its cost structure and global manufacturing footprint. The 10-K cautioned that macroeconomic and tariff-related challenges are reasonably likely to affect operations and demand to some degree during fiscal 2026.