Interface Lifts Outlook as Margins Widen
Second-quarter net sales rose 5.4% to $395.7 million.
Interface Inc. (TILE), the commercial flooring maker, posted a sharp increase in second-quarter profit as tariff refunds and operating improvements widened margins.
Sales growth slowed from the first quarter’s 11.3%, which included an extra week, while currency-neutral order growth moderated to 5.4% from 8.0%. Orders continued to grow faster than in the fourth quarter of 2024, when they increased 1.9%.
Revenue rose 5.4% from a year earlier and 19.5% sequentially. Adjusted earnings increased 46.7% to $0.88 a share, more than doubling from $0.41 in the first quarter, while GAAP operating income climbed 43.9% to $74.9 million.
Adjusted gross margin expanded 524 basis points to 45.0%, compared with 38.3% in the first quarter. Refunds of tariffs collected under the International Emergency Economic Powers Act contributed 393 basis points, with the remaining improvement stemming from price and mix, manufacturing efficiencies and lower production costs on higher volume.
Americas sales rose 3.4% to $247.7 million as adjusted operating income increased 24.9% to $61.0 million. Sales in Europe, Africa, Asia and Australia grew 8.8% to $148.0 million, and the segment’s adjusted operating income nearly doubled to $14.0 million. Healthcare led the end markets with global billings growth of 19%, while Corporate Office and Education each grew 5%.
Interface raised its 2025 sales outlook to between $1.455 billion and $1.485 billion, increasing both ends of the range by $5 million. The company now expects an adjusted gross margin of 40.6%, up from its previous forecast of 38.8% to 39.0%, including the second-quarter tariff refund. It guides to adjusted selling, general and administrative expenses of $395 million.
Adjusted SG&A had risen 10.4% to $103.1 million during the quarter, increasing to 26.1% of sales from 24.9% a year earlier. Interface ended the period with net debt of $122.8 million, down from $135.3 million in the first quarter, and net leverage improved to 0.5 times.