# Interface Inc: Form 10-Q for the period ended Mar 30, 2025

- Company: [Interface Inc](/companies/tile.md) (CIK 715787)
- Form: 10-Q
- Filed: 2025-05-06
- Accepted by EDGAR: May 6, 2025, 16:45 ET
- Period: 2025-03-30
- Accession: 0000715787-25-000015
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/715787/000071578725000015/tile-20250330.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/715787/000071578725000015/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-12-30 to 2025-03-30 | $297.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-12-30 to 2025-03-30 | $186.4m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-12-30 to 2025-03-30 | $111.0m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-12-30 to 2025-03-30 | $87.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-12-30 to 2025-03-30 | $23.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-12-30 to 2025-03-30 | $4.4m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-12-30 to 2025-03-30 | $4.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-12-30 to 2025-03-30 | $13.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-12-30 to 2025-03-30 | $0.22 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-12-30 to 2025-03-30 | $0.22 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-12-30 to 2025-03-30 | 59,173,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-12-30 to 2025-03-30 | $11.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-12-30 to 2025-03-30 | $7.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-12-30 to 2025-03-30 | $54.0k | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-30 | $97.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-30 | $579.4m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-30 | $1.19bn | us-gaap:Assets |
| Current liabilities | at 2025-03-30 | $210.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-30 | $678.7m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-30 | $302.4m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-03-30 | $487.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-03-30 | $513.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,011 characters.

Our discussions below in this Item 2 are based upon the more detailed discussions about our business, operations and financial condition included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, under Part II, Item 7 of that Form 10-K. Our discussions here focus on our results during the quarter ended March 30, 2025, or as of, March 30, 2025, and the comparable periods of 2024, and to the extent applicable, any material changes from the information discussed in that Form 10-K or other important intervening developments or information since that time. These discussions should be read in conjunction with that Form 10-K for more detailed and background information. The three-month periods ended March 30, 2025 and March 31, 2024 both include 13 weeks.

### Forward-Looking Statements

This report contains statements which may constitute “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include risks and uncertainties associated with the economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading “Risk Factors” included in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2024, as supplemented in Part II, Item 1A of this report. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

### Executive Overview

During the quarter ended March 30, 2025, we had consolidated net sales of $297.4 million, up 2.6% compared to $289.7 million in the first quarter last year, primarily due to higher sales volume — particularly in the education, healthcare, and retail market segments. Fluctuations in currency exchange rates negatively impacted net sales during the first quarter of 2025, as discussed below. Consolidated operating income was $23.2 million for the first quarter of 2025, compared to $24.4 million in the first quarter last year, primarily due to lower gross profit margin as a result of higher manufacturing costs in EAAA and higher freight costs, partially offset by higher pricing. Consolidated net income for the quarter ended March 30, 2025, was $13.0 million or $0.22 per diluted share, compared to consolidated net income of $14.2 million or $0.24 per diluted share, in the first quarter last year.

### Impact of Macroeconomic Trends

Disruptions in economic markets due to the potential impact of government-imposed tariffs and retaliatory tariffs, fluctuating freight costs, supply chain challenges and disruptions, significant pressures in the commercial office market globally, inflation, slow market conditions in certain parts of the globe, the Russia-Ukraine war and the conflict in the Middle East, all pose challenges which may adversely affect our future performance. We plan to continue evaluating our cost structure and global manufacturing footprint to identify and activate opportunities to decrease costs and optimize our global cost structure.

### Analysis of Results of Operations

### Consolidated Results

The following table presents, as a percentage of net sales, certain items included in our consolidated condensed statements of operations for the three-month periods ended March 30, 2025 and March 31, 2024:

|  | Three Months Ended March 30, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| Net sales | 100.0% | 100.0% |
| Cost of sales | 62.7 | 61.9 |
| Gross profit | 37.3 | 38.1 |
| Selling, general and administrative expenses | 29.5 | 29.7 |
| Operating income | 7.8 | 8.4 |
| Interest/Other expense, net | 2.0 | 1.9 |
| Income before income tax expense | 5.8 | 6.5 |
| Income tax expense | 1.4 | 1.7 |
| Net income | 4.4% | 4.8% |

### Consolidated Net Sales

Below is information regarding our consolidated net sales, and analysis of those results, for the three-month periods ended March 30, 2025, and March 31, 2024:

*(in thousands)*

|  | Three Months Ended March 30, 2025 | March 31, 2024 | Percentage Change |
| --- | ---: | ---: | ---: |
| Consolidated net sales | $297,413 | $289,743 | 2.6% |

For the quarter ended March 30, 2025, consolidated net sales increased $7.7 million (2.6%) versus the comparable period in 2024, primarily due to higher sales volumes (approximately 3%). Currency fluctuations had a negative impact on net sales of approximately $4.3 million (1.5%) for the first quarter of 2025, compared to the same period last year, primarily due to the weakening of the Euro, Australian dollar, and Canadian dollar against the U.S. dollar. On a market segment basis, the sales increase was primarily in the education, retail, and healthcare market segments partially offset by lower sales in the corporate office market segment.

### Consolidated Cost and Expenses

The following table presents our consolidated cost of sales and selling, general and administrative expenses for the three-month periods ended March 30, 2025, and March 31, 2024:

*(in thousands)*

|  | Three Months Ended March 30, 2025 | March 31, 2024 | Percentage Change |
| --- | ---: | ---: | ---: |
| Consolidated cost of sales | $186,450 | $179,338 | 4.0% |
| Consolidated selling, general and administrative expenses | 87,736 | 85,959 | 2.1% |

#### Consolidated Cost of Sales

For the quarter ended March 30, 2025, consolidated cost of sales increased $7.1 million (4.0%) compared to the first quarter of 2024, primarily due to higher sales and higher manufacturing and freight costs due to inflation. Currency fluctuations had a positive impact on consolidated cost of sales for the first quarter of 2025, and partially reduced our costs by approximately $2.9 million (1.6%) compared to the same period last year. As a percentage of net sales, our cost of sales increased to 62.7% for the first quarter of 2025 versus 61.9% for the first quarter of 2024.

#### Consolidated Selling, General and Administrative (“SG&A”) Expenses

For the quarter ended March 30, 2025, consolidated SG&A expenses increased $1.8 million (2.1%) versus the comparable period in 2024. Currency translation had no material impact on consolidated SG&A expenses in the first quarter of 2025 compared to the same period last year. SG&A expenses were higher for the first quarter of 2025 primarily due to higher commissions as a result of higher sales compared to the same period last year. As a percentage of net sales, SG&A expenses decreased to 29.5% for the first quarter of 2025 versus 29.7% for the first quarter of 2024.

#### Consolidated Gross Profit

For the quarter ended March 30, 2025, consolidated gross profit, as a percentage of net sales, was 37.3% compared with 38.1% in the same period last year. The decrease in consolidated gross profit percentage was primarily due to higher costs (approximately 1%) driven by higher manufacturing costs in EAAA and higher freight costs, partially offset by higher pricing (approximately 0.4%).

### Interest Expense

During the quarter ended March 30, 2025, interest expense was $4.4 million, a decrease of $2.0 million from the comparable period in 2024, primarily due to lower outstanding term loan borrowings under the Facility.

### Segment Operating Results

*AMS Segment – Net Sales and Adjusted Operating Income (“AOI”)*

The following table presents AMS segment net sales and AOI for the three-month periods ended March 30, 2025, and March 31, 2024:

*(in thousands)*

|  | Three Months Ended March 30, 2025 | March 31, 2024 | Percentage Change |
| --- | ---: | ---: | ---: |
| AMS segment net sales | $179,937 | $169,915 | 5.9% |
| AMS segment AOI(1) | 19,863 | 18,080 | 9.9% |

(1) Includes allocation of corporate and global support SG&A expenses. Excludes restructuring, asset impairment, severance, and other, net and the impact of a cyber event. See Note 10 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

During the first quarter of 2025, net sales in AMS increased 5.9% versus the comparable period in 2024 primarily due to higher sales volumes. On a market segment basis, the AMS sales increase was primarily in the education, retail, and healthcare market segments partially offset by a decrease in the corporate office market segment.

AOI in AMS increased 9.9% during the first quarter of 2025 compared to the prior year period primarily due to higher sales. As a percentage of net sales, AOI increased to 11.0% during the first quarter of 2025 compared to 10.6% in the same period last year.

*EAAA Segment – Net Sales and AOI*

The following table presents EAAA segment net sales and AOI for the three-month periods ended March 30, 2025, and March 31, 2024:

*(in thousands)*

|  | Three Months Ended March 30, 2025 | March 31, 2024 | Percentage Change |
| --- | ---: | ---: | ---: |
| EAAA segment net sales | $117,476 | $119,828 | (2.0)% |
| EAAA segment AOI(1) | 5,591 | 7,445 | (24.9)% |

(1) Includes allocation of corporate and global support SG&A expenses. Excludes purchase accounting amortization, restructuring, asset impairment, severance and other, net, and the impact of a cyber event. See Note 10 entitled “Segment Information” of Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

During the first quarter of 2025, net sales in EAAA decreased 2.0% versus the comparable period in 2024, primarily due to unfavorable currency fluctuations of approximately $3.6 million (3.0%) from the weakening of the Euro and Australian dollar against the U.S. dollar. On a market segment basis, the EAAA sales decrease was most significant in the corporate office market segment.

AOI in EAAA decreased 24.9% during the first quarter of 2025 versus the comparable period in 2024, primarily due to lower sales and lower gross profit margin as a result of higher manufacturing costs and higher freight costs. As a percentage of net sales, AOI decreased to 4.8% during the first quarter of 2025 compared to 6.2% in the same period last year.

### Financial Condition, Liquidity and Capital Resources

### General

At March 30, 2025, the Company had $97.8 million in cash. At that date, the Company had $5.5 million in term loan borrowings, no revolving loan borrowings, and $0.5 million in letters of credit outstanding under our Facility, and we had $300.0 million of Senior Notes outstanding. As of March 30, 2025, we had additional borrowing capacity of $299.5 million under the Facility. We anticipate that our liquidity is sufficient to meet our obligations for the next 12 months, and we expect to generate sufficient cash to meet our long-term obligations.

The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its Facility. The Company’s foreign subsidiaries and certain non-material domestic subsidiaries are considered non-guarantors. Net sales for the non-guarantor subsidiaries were approximately $129 million and $133 million for the three-month periods ended March 30, 2025 and March 31, 2024, respectively. Total indebtedness of the non-guarantor subsidiaries was approximately $105 million and $102 million as of March 30, 2025 and December 29, 2024, respectively.

### Balance Sheet

Accounts receivable, net, were $162.8 million at March 30, 2025, compared to $171.1 million at December 29, 2024. The decrease of $8.3 million was primarily due to customer collections in the first quarter of 2025.

Inventories, net, were $281.7 million at March 30, 2025, compared to $260.6 million at December 29, 2024. The increase of $21.1 million was primarily due to finished goods inventory build attributable to expected higher customer demand in the remainder of 2025.

### Analysis of Cash Flows

The following table presents a summary of cash flows for the three-month periods ended March 30, 2025 and March 31, 2024, respectively:

*(in thousands)*

| Net cash provided by (used in): | Three Months Ended March 30, 2025 | March 31, 2024 |
| --- | ---: | ---: |
| Operating activities | $11,739 | $12,619 |
| Investing activities | (7,467) | (1,993) |
| Financing activities | (8,668) | (29,776) |
| Effect of exchange rate changes on cash | 2,927 | (1,574) |
| Net change in cash and cash equivalents | (1,469) | (20,724) |
| Cash and cash equivalents at beginning of period | 99,226 | 110,498 |
| Cash and cash equivalents at end of period | $97,757 | $89,774 |

31

Cash provided by operating activities was $11.7 million for the three months ended March 30, 2025, which represents a decrease of $0.9 million from the prior year comparable period. The decrease was primarily due to changes in working capital during the first three months of 2025 compared with the first three months of 2024.

Cash used in investing activities was $7.5 million for the three months ended March 30, 2025, which represents an increase of $5.5 million from the prior year comparable period, primarily attributable to a greater capital investment in manufacturing automation and robotics solutions during the three months ended March 30, 2025.

Cash used in financing activities was $8.7 million for the three months ended March 30, 2025, which represents a decrease of $21.1 million from the prior year comparable period. The year-over-year decrease was primarily due to lower outstanding borrowings under the credit facility resulting in lower repayments during the three months ended March 30, 2025.

### Outlook

We anticipate a strong second quarter amid increased global macro-economic uncertainty. We anticipate revenue growth in the second quarter of fiscal year 2025 compared with the first quarter of 2025. We expect that tariffs will impact our results during the third quarter of 2025, and we expect to offset this impact through incremental pricing and productivity initiatives.

Cash flows from operations, cash and cash equivalents, and other sources of liquidity are expected to be available and sufficient to meet foreseeable cash requirements. However, the Company’s cash flows from operations can be affected by numerous factors including raw material availability and cost, and demand for our products.

### Backlog

As of April 20, 2025, the consolidated backlog of unshipped orders was approximately $255.4 million. As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, backlog was approximately $223.4 million as of February 2, 2025. Disruptions in supply and distribution chains have resulted in delays of construction projects and flooring installations in many regions worldwide, which also have caused, and may continue to cause, fluctuations in our backlog.

## Market risk

As filed, 2,482 characters.

The discussion below in this Item 3 is based upon the more detailed discussions of our market risk and related matters included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, under Part II, Item 7A of that Form 10-K. The discussion here focuses on the three months ended March 30, 2025, and any material changes from (or other important intervening developments since the time of) the information discussed in that Form 10-K. This discussion should be read in conjunction with that Form 10-K for more detailed and background information.

### Sensitivity Analysis

For purposes of specific risk analysis, we use sensitivity analysis to measure the impact that market risk may have on the fair values of our market sensitive instruments. To perform sensitivity analysis, we assess the risk of loss in fair values associated with the impact of hypothetical changes in interest rates and foreign currency exchange rates on market sensitive instruments.

Because the debt outstanding under our Facility has variable interest rates based on an underlying prime lending rate, SOFR, or other benchmark rate, we do not believe changes in interest rates would have any significant impact on the fair value of that debt instrument. Changes in the underlying prime lending rate, SOFR, or other benchmark rate would, however, impact the amount of our interest expense. For a discussion of these hypothetical impacts on our interest expense, please see the discussion in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 29, 2024.

As of March 30, 2025, based on a hypothetical immediate 100 basis point increase in interest rates, with all other variables held constant, the fair value of our fixed rate long-term debt would be impacted by a net decrease of $9.4 million. Conversely, a 100 basis point decrease in interest rates would result in a net increase in the fair value of our fixed rate long-term debt of $8.2 million.

As of March 30, 2025, a 10% decrease or increase in the levels of foreign currency exchange rates against the U.S. dollar, with all other variables held constant, would result in a respective decrease or increase in the net fair value of our financial instruments of $13.0 million. As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk.

## Controls and procedures

As filed, 1,523 characters.

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was performed under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Act”), pursuant to Rule 13a-14(c) under the Act.

No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that the system of controls has operated effectively in all cases. Our disclosure controls and procedures, however, are designed to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

Based on the evaluation, our President and Chief Executive Officer and our Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 3,346 characters.

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, as well as the following new risk factor which updates the risk factors set forth in our Annual Report:

**Changes in foreign trade policies and tariffs may adversely impact our business, financial condition, and results of operations.**

Recent changes in U.S. and international trade policies, including the implementation of tariffs, retaliatory tariffs, and other trade barriers, have created significant uncertainty and volatility in the global markets. The U.S. government has implemented substantial changes to trade policies, including increased tariffs on imports from various countries. These actions have affected and may continue to affect the cost of certain products we import into the U.S. They may also increase the risk of overall inflation, slower macro-economic activity, and they may temporarily delay or permanently stall when our customers decide to purchase our products.

We are particularly vulnerable to these trade policy changes as we source our luxury vinyl tile (LVT) products from a third-party manufacturer in South Korea and manufacture all our rubber flooring in Germany. The import of these goods into the U.S. represents our primary exposure to recently implemented and potential future tariffs. Increased tariffs on these imports could significantly increase our cost of goods sold, potentially requiring us to raise prices, which could decrease customer demand for our products, or reduce our profit margins if we are unable to fully pass these increased costs to our customers.

Various countries have announced or implemented retaliatory measures in response to U.S. trade actions, which could further complicate our international operations and supply chain. For example, the carpet tile we sell in Canada typically is manufactured at our plant in the U.S., and therefore may be subject to tariffs implemented by Canada on imports from the U.S. The current situation remains dynamic, and it is unknown if the U.S. and its trade partners will reach agreements to pause or eliminate currently enacted, pending, and threatened tariffs.

These trade policy changes and resulting uncertainty may lead to:

- Increased costs for our imported LVT and rubber flooring products
- Supply chain disruptions or delays in product availability
- Reduced demand for our products
- Increased competitive and consumer demand pressures, particularly if we increase prices to offset higher costs
- Competitive disadvantages if our competitors face different tariff structures
- Currency exchange rate fluctuations that further impact our costs and margins

While we are assessing options and taking actions to mitigate potential impacts, our ability to do so may be limited by operational and supply chain constraints, especially in the short term. The ultimate effect of these tariffs will depend on their magnitude, duration, how they affect consumer sentiment and behavior, how they affect the overall global macro environment, as well as which countries are implicated. These factors could have a material adverse effect on our business, financial condition, and results of operations.

Filed May 6, 2025.
Source: SEC EDGAR, the filing index for accession 0000715787-25-000015. Last ingested by Listed: Nov 3, 2026, 18:47 ET. No prices; not investment advice.