Q4 2025 Interface Inc Earnings Call

February 24, 2026

Speaker #1: To INTERFACE INC Q4 and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Speaker #1: If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again.

Speaker #1: Thank you. I would now like to turn the call over to Christine Needles, Corporate Communications. Please go ahead.

Speaker #2: Good morning, and welcome to INTERFACE INC conference call regarding fourth quarter and full year 2025 results. Hosted by Laurel Hurd, CEO, and Bruce Hausmann, CFO.

Speaker #2: During today's conference call, any management comments regarding INTERFACE INC's business, which are not historical information, are forward-looking statements within the meaning of federal securities include statements regarding the intent, belief, or current expectations of our management team, as well as the assumptions on which such statements are based.

Speaker #2: Any forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, that could cause actual results to differ materially from any such statements.

Speaker #2: Including risks and uncertainties described in our most recent annual report on Form 10-K filed with the SEC, as supplemented in our first quarter 2025 10-Q.

Speaker #2: The company assumes no responsibility to update forward-looking statements. Management's remarks during this call also refer to certain non-GAAP measures. Reconciliations of the non-GAAP measures to the most comparable GAAP measures and explanations for their use are contained in the company's earnings release and Form 8-K furnished with the SEC today.

Speaker #2: Lastly, this call is being recorded and broadcasted for INTERFACE. It contains copyrighted material and may not be rerecorded or rebroadcasted without INTERFACE INC's expressed permission.

Speaker #2: Your participation on the call confirms your consent to the company's taping and broadcasting of it. After our prepared remarks, we will open up the call for call over to Laurel Hurd, CEO.

Speaker #3: Thank you, Christine, and good morning, for INTERFACE. As net sales, adjusted operating income, and adjusted EBITDA reached their highest levels in the company's history, driven by a one INTERFACE strategy.

Speaker #3: We introduced the one INTERFACE strategy in 2023, committing to a set of initiatives that focus on building strong global functions to support our world-class local selling teams.

Speaker #3: Accelerating growth through enhanced commercial productivity. Expanding margins through global supply chain management and simplifying operations. And leading in design, performance, and sustainability. Since launching this strategy, we've carried out these initiatives and delivered growth and margin expansion that has outpaced the industry through strong execution across the business.

Laurel Hurd: history, driven by a One Interface strategy. We introduced the One Interface strategy in 2023, committing to a set of initiatives that focus on building strong global functions to support our world-class local selling teams, accelerating growth through enhanced commercial productivity, expanding margins through global supply chain management and simplifying operations, and leading in design, performance, and sustainability. Since launching this strategy, we've carried out these initiatives and delivered growth and margin expansion that has outpaced the industry through strong execution across the business. For the full year, currency-neutral net sales increased 4% year-over-year, driven by broad-based growth across all regions and key market segments. In addition, all three product categories grew in both price and volume. This growth, coupled with operational efficiency gains, expanded our adjusted gross profit margin to 39%.

Speaker #1: History, driven by one interface strategy. We introduced the one interface strategy in 2023, committing to a set of initiatives that focus on building strong global functions to support our world-class local selling teams.

Speaker #3: For the full year, currency-neutral net sales, increased 4% year over year, driven by broad-based growth across all regions and key market segments. In addition, all three product categories grew in both price and volume.

Speaker #1: Accelerating growth through enhanced commercial productivity. Expanding margins through global supply chain management and simplifying operations. And leading in design, performance, and sustainability. Since launching this strategy, we've carried out these initiatives and delivered growth and margin expansion that has outpaced the industry through strong execution across the business.

Speaker #3: This growth, coupled with operational efficiency gains, expanded our adjusted gross profit margin to 39%. Commercial productivity has been a fundamental growth driver and remains central to our strategy.

Speaker #3: Our combined U.S. selling team model is a key enabler, allowing us to harness the full strength of our sales organization and present a single, cohesive INTERFACE to our customers across carpet tile, LVT, and Nora rubber.

Speaker #1: For the full year, currency-neutral net sales increased 4% year over year, driven by broad-based growth across all regions and key market segments. In addition, all three product categories grew in both price and volume.

Speaker #3: The U.S. team is successfully cross-selling, competing more effectively, winning more of the floor plate and deepening customer relationships. The growth of our Nora rubber business in 2025 is a standout example of how our combined teams can help drive momentum.

Speaker #1: This growth, coupled with operational efficiency gains, expanded our adjusted gross profit margin to 39%. Commercial productivity has been a fundamental growth driver and remains central to our strategy.

Laurel Hurd: Commercial productivity has been a fundamental growth driver and remains central to our strategy. Our combined US selling team model is a key enabler, allowing us to harness the full strength of our sales organization and present a single, cohesive Interface to our customers across carpet tile, LVT, and Nora Rubber. The US team is successfully cross-selling, competing more effectively, winning more of the floor plate, and deepening customer relationships. The growth of our Nora Rubber business in 2025 is a standout example of how our combined teams can help drive momentum. Global rubber billings were up 17% in 2025 compared to the prior year. We will continue to build on this in 2026 and beyond.

Speaker #3: Global rubber billings were up 17% in 2025 will continue to build on this in 2026 and beyond. The success in the U.S. reinforces our confidence in the scalability of this model, and it provides a lot of runway for us to expand our business in healthcare and education across the globe, further leveraging our local selling teams.

Speaker #1: Our combined U.S. selling team model is a key enabler, allowing us to harness the full strength of our sales organization and present a single, cohesive interface to our customers across carpet tile, LVT, and Nora rubber.

Speaker #1: The U.S. team is successfully cross-selling, competing more effectively, winning more of the floor plate, and deepening customer relationships. The growth of our nora rubber business in 2025 is a standout example of how our combined teams can help drive momentum.

Speaker #3: We're just getting started, and excited to build on our early success. Supporting this commercial momentum, we have continued to strengthen and globalize our manufacturing and supply chain team.

Speaker #3: In 2025, we further aligned our global supply chain around productivity, continuous improvement, and technology-enabled solutions. Our ongoing investments in automation and robotics generated productivity gains and margin expansion.

Speaker #1: Global rubber billings were up 17% in 2025 compared to the prior year. We will continue to build on this in 2026 and beyond. The success in the U.S.

Laurel Hurd: This success in the US reinforces our confidence in the scalability of this model. It provides a lot of runway for us to expand our business in healthcare and education across the globe, further leveraging our local selling teams. We're just getting started and excited to build on our early success. Supporting this commercial momentum, we have continued to strengthen and globalize our manufacturing and supply chain teams. In 2025, we further aligned our global supply chain around productivity, continuous improvement, and technology-enabled solutions. Our ongoing investments in automation and robotics generated productivity gains and margin expansion. During the year, we automated key processes in our US carpet tile operations, including material handling and other labor-intensive steps. We also invested in automation in our Nora plant to support growth in our core Nora platform.

Speaker #1: reinforces our confidence in the scalability of this model, and it provides a lot of runway for us to expand our globe, further leveraging our local selling teams.

Speaker #3: During the year, we automated key processes in our U.S. carpet tile operation. Including material handling and other labor-intensive steps. We also invested in automation in our Nora plant to support growth in our core Nora platform.

Speaker #1: We're just getting started, and excited to build on our early success. Supporting this commercial momentum, we have continued to strengthen and globalize our manufacturing and supply chain team.

Speaker #3: These actions have improved efficiency, reduced waste, and enhanced customer service levels while positioning us for growth. Building on the success of automation in our U.S.

Speaker #1: In 2025, we further aligned our global supply chain around productivity, continuous improvement, and technology-enabled solutions. Our ongoing investments in automation and robotics generated productivity gains and margin expansion.

Speaker #3: carpet tile operations, we are now extending these robotic solutions to our facilities in Europe and Australia. We are also further automating our carpet tile facilities to include more efficient cutting and packaging processes, that will drive additional efficiencies.

Speaker #1: During the year, we automated key processes in our U.S. carpet tile operations, including material handling and other labor-intensive steps. We also invested in automation in our Nora plant to support growth in our core Nora platform.

Speaker #3: Looking ahead, we will continue to reinvest efficiency-driven savings into additional automation, productivity initiatives, and workflow optimization, scaling proven solutions across our global operations. Paramount to our strategy is a continued focus on product innovation that expands our addressable market as a key driver of growth.

Speaker #1: These actions have improved efficiency, reduced waste, and enhanced customer service levels while positioning us for growth. Building on the success of automation in our U.S.

Laurel Hurd: These actions have improved efficiency, reduced waste, and enhanced customer service levels while positioning us for growth. Building on the success of automation in our US carpet tile operations, we are now extending these robotic solutions to our facilities in Europe and Australia. We are also further automating our carpet tile facilities to include more efficient cutting and packaging processes that will drive additional efficiencies. Looking ahead, we will continue to reinvest efficiency-driven savings into additional automation, productivity initiatives, and workflow optimization, scaling proven solutions across our global operations. Paramount to our strategy is a continued focus on product innovation that expands our addressable market as a key driver of growth. With this as the backdrop, this week, we are launching Noravant, a groundbreaking rubber flooring innovation that will open new design possibilities in the resilient category.

Speaker #1: carpet tile operations, we are now extending these robotic solutions to our facilities in Europe and Australia. We are also further automating our carpet tile facilities to include more efficient cutting and packaging processes that will drive additional efficiencies.

Speaker #3: With this as the backdrop, this week we are launching Noravant, a groundbreaking rubber flooring innovation that will open new design possibilities in the resilient category.

Speaker #3: This sheet platform that is PVC-free combines high-performance, design flexibility, and enhanced sustainability, complementing our existing Norament and NoraPlan platforms. We've developed a completely new rubber offering that will compete at the premium end of the vinyl sheet category.

Speaker #1: Looking ahead, we will continue to reinvest efficiency-driven savings into additional automation, productivity initiatives, and workflow optimization, scaling proven solutions across our global operations. Paramount to our strategy is a continued focus on product innovation that expands our addressable market as a key driver of growth.

Speaker #3: This is an incremental growth opportunity that we expect will meaningfully expand our addressable market in resilient over time. Importantly, it will allow us to deliver elevated rubber aesthetics to more spaces where we continue to see opportunity for growth, particularly in healthcare and education.

Speaker #1: With this as the backdrop, this week we are launching Noravant, a groundbreaking rubber flooring innovation that will open new design possibilities in the resilient category.

Speaker #1: This sheet platform, which is PVC-free, combines high performance, design flexibility, and enhanced sustainability, complementing our existing Norament and Noraplan platforms. We've developed a completely new rubber offering that will compete at the premium end of the vinyl sheet category.

Laurel Hurd: This sheet platform, that is PVC-free, combines high performance, design flexibility, and enhanced sustainability, complementing our existing norament and noraplan platforms. We've developed a completely new rubber offering that will compete at the premium end of the vinyl sheet category. This is an incremental growth opportunity that we expect will meaningfully expand our addressable market and resilience over time. Importantly, it will allow us to deliver elevated rubber aesthetics to more spaces where we continue to see opportunity for growth, particularly in healthcare and education. The initial product, noravant timber, is the industry's first woodgrain design in rubber flooring and expands the range of environments where rubber might be specified, including patient rooms, classrooms, corridors, and waiting areas. Looking specifically at our opportunity in healthcare, patient rooms represent a sizable portion of the hospital's floor plate. noravant timber is ideal for this type of application.

Speaker #3: The initial product, Noravant Timber, is the industry's first wood grain design in rubber flooring. And expands the range of environments where rubber might be specified, including patient rooms, classrooms, corridors, and waiting areas.

Speaker #3: Looking specifically at our opportunity in healthcare, patient rooms represent a sizable portion of the hospital's floor plate. Noravant Timber is ideal for this type of application.

Speaker #1: This is an incremental growth opportunity that we expect will meaningfully expand our addressable market in resilient over time. Importantly, it will allow us to deliver elevated rubber aesthetics to more spaces where we continue to see opportunity for growth, particularly in healthcare and education.

Speaker #3: We launched with a wood grain look to support strong demand from healthcare customers for patient rooms to look more like luxury hotel rooms. Noravant is a design-forward PVC-free sheet solution that also meets elevated performance, cleaning, and durability requirements.

Speaker #1: The initial product, Noravant Timber, is the industry's first wood grain design in rubber flooring and expands the range of environments where rubber might be specified, including patient rooms, classrooms, corridors, and waiting areas.

Speaker #3: Needs that aren't fully served by other products on the market or in our portfolio. We view Noravant as an important multi-year growth platform, given Nora's longer selling cycle, which can span several quarters, we expect Noravant Timber to begin contributing to growth in the fourth quarter of 2026 and build over time.

Speaker #1: Looking specifically at our opportunity in healthcare, patient rooms represent a sizable portion of the hospital's floor plate. Noravant Timber is ideal for this type of application.

Speaker #1: We launched with a wood grain look to support strong demand from healthcare customers for patient rooms to look more like luxury hotel rooms. Noravant is a design-forward PVC-free sheet solution that also meets elevated performance, cleaning, and durability requirements.

Laurel Hurd: We launched with a woodgrain look to support strong demand from healthcare customers for patient rooms to look more like luxury hotel rooms. Noravant is a design-forward, PVC-free sheet solution that also meets elevated performance, cleaning, and durability requirements, needs that aren't fully served by other products on the market or in our portfolio. We view Noravant as an important multi-year growth platform. Given Nora's longer selling cycle, which can span several quarters, we expect Noravant timber to begin contributing to growth in Q4 2026 and build over time. We will continue to invest in Nora automation to support growth in our existing Nora platforms, while also expanding capacity to meet anticipated demand for Noravant. We also continue to lead in design.

Speaker #3: We will continue to invest in Nora automation to support growth in our existing Nora platforms, while also expanding capacity to meet anticipated demand for Noravant.

Speaker #3: We also continue to lead in design. We've been focused on expanding our addressable market by offering collections at more approachable price points. While pushing our design leadership at premium price points.

Speaker #1: Needs that aren't fully served by other products on the market or in our portfolio. We view Noravant as an important multi-year growth platform, given Nora's longer selling cycle, which can span several quarters.

Speaker #3: We've done this with the open-air collection in carpet tile, and with our 3-millimeter offering of LVT. These collections are largely incremental to our business and help us to better serve our customers' needs, and to drive market share gains, while also achieving our growth margin goals.

Speaker #1: We expect Noravant Timber to begin contributing to growth in the fourth quarter of 2026 and build over time. We will continue to invest in Nora automation to support growth in our existing Nora platforms, while also expanding capacity to meet anticipated demand for Noravant.

Speaker #3: We have a high confidence that this is working, and we will continue to expand our offerings in these areas in 2026. Our commitment to sustainability continues to underpin our product development and innovation.

Speaker #1: We also continue to lead in design. We've been focused on expanding our addressable market by offering collections at more approachable price points. While pushing our design leadership at premium price points.

Laurel Hurd: We've been focused on expanding our addressable market by offering collections at more approachable price points while pushing our design leadership at premium price points. We've done this with the Open Air collection in carpet tile and with our 3-millimeter offering of LVT. These collections are largely incremental to our business and help us to better serve our customers' needs and to drive market share gains, while also achieving our gross margin goals. We have high confidence that this is working, and we will continue to expand our offerings in these areas in 2026. Our commitment to sustainability continues to underpin our product development and innovation. It differentiates us in the marketplace.

Speaker #3: And it differentiates us in the marketplace. We make sustainability specifiable. With a broad range of low-carbon products, the highest amount of recycled and bio-based materials globally in the flooring industry, and tools that make it easier for our customers to understand the carbon impact of their choices, like our carbon calculator and carbon footprint data, on our floor plans.

Speaker #1: We've done this with the Open Air collection in carpet tile and with our 3-millimeter offering of LVT. These collections are largely incremental to our business and help us to better serve our customers' needs, and to drive market share gains while also achieving our gross margin goals.

Speaker #1: We have a high confidence that this is working, and we will continue to expand our offerings in these areas in 2026. Our commitment to sustainability continues to underpin our product development and innovation.

Speaker #3: In 2025, we unveiled the first-ever Cradle-to-Gate carbon-negative rubber prototype, and began incorporating captured carbon in our U.S. and European carpet tile manufacturing processes. We also continue to be recognized externally, including earning a spot on Newsweek's Most Responsible Companies list, and being named for the 28th consecutive year in Globe Scan and ERM's 2025 Sustainability Leader Survey.

Speaker #1: And it differentiates us in the marketplace. We make sustainability specifiable, with a broad range of low-carbon products the highest amount of recycled and bio-based materials globally in the flooring industry, and tools that make it easier for our customers to understand the carbon impact of their choices, like our carbon calculator and carbon footprint data on our floor plans.

Laurel Hurd: We make sustainability specifiable with a broad range of low carbon products, the highest amount of recycled and bio-based materials globally in the flooring industry, and tools that make it easier for our customers to understand the carbon impact of their choices, like our Carbon Calculator and carbon footprint data on our floor plans. In 2025, we unveiled the first-ever cradle-to-gate carbon negative rubber prototype and began incorporating captured carbon in our US and European carpet tile manufacturing processes. We also continued to be recognized externally, including earning a spot on Newsweek's Most Responsible Companies list and being named for the 28th consecutive year in GlobeScan and ERM's 2025 Sustainability Leader Survey. As we move forward, sustainability remains embedded in how we design and innovate and how we stand out and differentiate in the market. Let me now turn to our financial results.

Speaker #3: As we move forward, sustainability remains embedded in how we design and innovate, and how we stand out and differentiate in the market. Let me now turn to our financial results.

Speaker #1: In 2025, we unveiled the first-ever cradle-to-gate carbon-negative rubber prototype, and began incorporating captured carbon in our U.S. and European carpet tile manufacturing processes. We also continue to be recognized externally, including earning a spot on Newsweek's Most Responsible Companies List, and being named for the 28th consecutive year in GlobeScan and ERM's 2025 Sustainability Leader Survey.

Speaker #3: For the full year, we delivered 4% year-over-year currency-neutral net sales growth, with both price and volume increasing across all three product categories. Reflecting strong execution and continued share gains.

Speaker #3: Growth was fueled by strong performance in the Americas, where currency-neutral net sales increased 5% year-over-year, driven by a one-interface combined selling team and strength across key market segments, particularly healthcare and education.

Speaker #1: As we move forward, sustainability remains embedded in how we design and innovate, and how we stand out and differentiate in the market. Let me now turn to our financial results.

Speaker #3: In EAAA, currency-neutral net sales increased 2% for the year, reflecting improving trends despite still challenging macro environment in certain markets. Turning to our market segments, in 2025, global healthcare billings were up 21% year-over-year, with double-digit gains in the Americas and EAAA.

Speaker #1: For the full year, we delivered 4% year-over-year currency-neutral net sales growth, with both price and volume increasing across all three product categories. Reflecting strong execution and continued share gains.

Laurel Hurd: For the full year, we delivered 4% year-over-year currency-neutral net sales growth, with both price and volume increasing across all three product categories, reflecting strong execution and continued share gains. Growth was fueled by strong performance in the Americas, where currency-neutral net sales increased 5% year-over-year, driven by our One Interface combined selling team and strength across key market segments, particularly healthcare and education. In EAAA, currency-neutral net sales increased 2% for the year, reflecting improving trends despite still challenging macro environment in certain markets. Turning to our market segments, in 2025, global healthcare billings were up 21% year-over-year, with double-digit gains in the Americas and EAAA. Our broad and differentiated product portfolio, with segment-focused offerings across carpet tile, LVT, and rubber, is helping us capture opportunities as the global healthcare sector evolves.

Speaker #1: Growth was fueled by strong performance in the Americas, where currency-neutral net sales increased 5% year-over-year, driven by a one-Interface combined selling team and strength across key market segments, particularly healthcare and education.

Speaker #3: Our broad and differentiated product portfolio was segment-focused offerings across carpet tile, LVT, and rubber, is helping us capture opportunities as the global healthcare sector evolves.

Speaker #3: We're seeing increased investment in healthcare facilities to adapt to the needs of aging populations, and a growing focus on preventative care. Nora remains a standout performer in this segment, and we continue to accelerate investments to support sustained growth in healthcare globally.

Speaker #1: In each AAA, currency-neutral net sales increased 2% for the year, reflecting improving trends despite still challenging macro environment in certain markets. Turning to our market segments, in 2025, global healthcare billings were up 21% year-over-year, with double-digit gains in the Americas and EAA.

Speaker #3: Education billings increased 8% for the full year. Reflecting the success of our expanded, more approachable collection offering. We remain well-positioned across both K-12 and higher education.

Speaker #1: Our broad and differentiated product portfolio was segment-focused offerings across carpet tile, LVT, and rubber, is helping us capture opportunities as the global healthcare sector evolves.

Speaker #3: Our design leadership, durable performance characteristics, and low-carbon footprint products are resonating with specifiers and procurement teams. Macro tailwinds continue to underpin multi-year demand, modernization continues, and our broader range of price points help us win projects across a wide range of budgets.

Speaker #1: We're seeing increased investment in healthcare facilities to adapt to the needs of aging populations, and a growing focus on preventative care. Nora remains a standout performer in this segment, and we continue to accelerate investments to support sustained growth in healthcare globally.

Laurel Hurd: We're seeing increased investment in healthcare facilities to adapt to the needs of aging populations and a growing focus on preventative care. Nora remains a standout performer in this segment, and we continue to accelerate investments to support sustained growth in healthcare globally. Education billings increased 8% for the full year, reflecting the success of our expanded, more approachable collection offerings. We remain well-positioned across both K-12 and higher education. Our design leadership, durable performance characteristics, and low carbon footprint products are resonating with specifiers and procurement teams. Macro tailwinds continue to underpin multiyear demand. Modernization continues, and our broader range of price points help us win projects across a wide range of budgets. Corporate office billings were up slightly for the year, as expected. We continued to take share in Class A spaces, where our brand positioning, design leadership, and sustainability credentials differentiate us.

Speaker #1: Education billings increased 8% for the full year, reflecting the success of our expanded, more approachable collection offering. We remain well positioned across both K-12 and higher education.

Speaker #3: Corporate office billings were up slightly for the year as expected. We continue to take share in Class A spaces where our brand positioning, design leadership, and sustainability credentials differentiate us.

Speaker #1: Our design leadership, durable performance characteristics, and low-carbon footprint products are resonating with specifiers and procurement teams. Macro tailwinds continue to underpin multi-year demand, modernization continues, and our broader range of price points helps us win projects across a wide range of budgets.

Speaker #3: Companies continue to reinvest in higher-quality spaces and execute targeted refresh programs to support return-to-office, and hybrid work environments. We are capturing refresh and spec opportunities that position us well for continued growth.

Speaker #3: As we look to 2026, our focus is to continue leveraging what's working and to advance to the next phase of our one-interface strategy. We expect to continue gaining share by expanding our addressable market through approachable price points, in addition to our premium designs.

Speaker #1: Corporate office billings were up slightly for the year as expected. We continue to take share in Class A spaces where our brand positioning, design leadership, and sustainability credentials differentiate us.

Speaker #3: Through launching innovative new platforms like Noravant Timber, and through scaling commercial productivity globally. This will deepen our presence in healthcare and education, to further strengthen our market segment diversification efforts, and continue to drive growth.

Speaker #1: Companies continue to reinvest in higher-quality spaces and execute targeted refresh programs to support return-to-office and hybrid work environments. We are capturing refresh and spec opportunities that position us well for continued growth.

Laurel Hurd: Companies continue to reinvest in higher quality spaces and execute targeted refresh programs to support return to office and hybrid work environments. We are capturing refresh and spec opportunities that position us well for continued growth. As we look to 2026, our focus is to continue leveraging what's working and to advance to the next phase of our One Interface strategy. We expect to continue gaining share by expanding our addressable market through approachable price points, in addition to our premium designs, through launching innovative new platforms like Noravant Timber, and through scaling commercial productivity globally. This will deepen our presence in healthcare and education to further strengthen our market segment diversification efforts and continue to drive growth. The progress we've made under our One Interface strategy also gives us confidence in our ability to continue expanding margins.

Speaker #3: The progress we've made under our one-interface strategy also gives us confidence in our ability to continue expanding margins. We will continue to pursue automation and productivity gains in our manufacturing facilities, and leverage mix by prioritizing growth in our most profitable categories and markets.

Speaker #1: As we look to 2026, our focus is to continue leveraging what's working and to advance to the next phase of our one-interface strategy. We expect to continue gaining share by expanding our addressable market through approachable price points, in addition to our premium designs.

Speaker #3: We will maintain a disciplined approach on SG&A, prioritizing investments that drive profitable growth and innovation, while continuing to deliver efficiencies that expand margins. With that, I'll turn it over to Bruce.

Speaker #1: Through launching innovative new platforms like Noravant Timber and through scaling commercial productivity globally. This will deepen our presence in healthcare and education to further strengthen our market segment diversification efforts and continue to drive growth.

Speaker #1: Well, thank you, Laurel, and good morning, everyone. All comparisons provided are year-over-year versus the fourth quarter of 2024, unless otherwise noted. Fourth-quarter net sales were $349.4 million.

Speaker #1: The progress we've made under our one-interface strategy also gives us confidence in our ability to continue expanding margins. We will continue to pursue automation and productivity gains in our manufacturing facilities, and leverage mix by prioritizing growth in our most profitable categories and markets.

Laurel Hurd: We will continue to pursue automation and productivity gains in our manufacturing facilities and leverage mix by prioritizing growth in our most profitable categories and markets. We will maintain a disciplined approach on SG&A, prioritizing investments that drive profitable growth and innovation while continuing to deliver efficiencies that expand margins. With that, I'll turn it over to Bruce.

Speaker #1: Up 4.3% as reported, and 1.6% on a currency-neutral basis. Fourth-quarter currency-neutral net sales were flat in Americas, on a strong prior-year comp of 9.6%.

Speaker #1: We will maintain a disciplined approach on SG&A, prioritizing investments that drive profitable growth and innovation, while continuing to deliver efficiencies that expand margins. With that, I'll turn it over to Bruce.

Speaker #1: And up 4.1% in EAAA. Adjusted gross profit margin was 38.6%, up 169 basis points on favorable pricing, and favorable product mix, partially offset by higher input costs.

Speaker #2: Well, thank you, Laurel, and good morning, everyone. All comparisons provided are year-over-year versus the fourth quarter of 2024, unless otherwise noted. Fourth-quarter net sales were $349.4 million.

Bruce: Well, thank you, Laurel, and good morning, everyone. All comparisons provided are year-over-year versus Q4 2024, unless otherwise noted. Q4 net sales were $349.4 million, up 4.3% as reported, and 1.6% on a currency-neutral basis. Q4 currency-neutral net sales were flat in Americas on a strong prior year comp of 9.6% and up 4.1% in EAAA. Adjusted gross profit margin was 38.6%, up 169 basis points on favorable pricing and favorable product mix, partially offset by higher input costs. In Q4 2025, we recorded a non-recurring inventory reserve adjustment that benefited Adjusted gross profit margin by approximately 80 basis points. This item will not recur going forward.

Bruce Hausmann: Well, thank you, Laurel, and good morning, everyone. All comparisons provided are year-over-year versus Q4 2024, unless otherwise noted. Q4 net sales were $349.4 million, up 4.3% as reported, and 1.6% on a currency-neutral basis. Q4 currency-neutral net sales were flat in Americas on a strong prior year comp of 9.6% and up 4.1% in EAAA. Adjusted gross profit margin was 38.6%, up 169 basis points on favorable pricing and favorable product mix, partially offset by higher input costs. In Q4 2025, we recorded a non-recurring inventory reserve adjustment that benefited Adjusted gross profit margin by approximately 80 basis points. This item will not recur going forward.

Speaker #1: In the fourth quarter of 2025, we recorded a non-recurring inventory reserve adjustment that benefited adjusted gross profit margin by approximately 80 basis points. This item will not recur going forward.

Speaker #2: Up 4.3% as reported and 1.6% on a currency-neutral basis. Fourth-quarter currency-neutral net sales were flat in the Americas on a strong prior-year comp of 9.6%, and up 4.1% in each AAA.

Speaker #1: Adjusted SG&A expenses were 96.6 million in the fourth quarter, compared to 90.8 million. The increase was primarily due to FX translation, higher salary infringe on merit-related inflation, and higher variable compensation on increased sales and profits.

Speaker #2: Adjusted gross profit margin was 38.6%, up 169 basis points on favorable pricing, and favorable product mix partially offset by higher input costs. In the fourth quarter of 2025, we recorded a non-recurring inventory reserve adjustment that benefited adjusted gross profit margin by approximately 80 basis points.

Speaker #1: Adjusted operating income was 38.2 million, up 16.7% compared to 32.8 million. Adjusted EBITDA was 49.8 million, up 8.2%. Our fourth-quarter adjusted effective income tax rate benefited from the release of a $2.9 million valuation allowance, primarily related to the use of foreign tax credits.

Speaker #2: This item will not recur going forward. Adjusted SG&A expenses were 96.6 million in the fourth quarter, compared to 90.8 million. The increase was primarily due to FX translation, higher salary infringe on merit-related inflation, and higher variable compensation on increased sales and profits.

Bruce: Adjusted SG&A expenses were $96.6 million in Q4, compared to $90.8 million. The increase was primarily due to FX translation, higher salary and fringe on merit-related inflation, and higher variable compensation on increased sales and profits. Adjusted operating income was $38.2 million, up 16.7% compared to $32.8 million. Adjusted EBITDA was $49.8 million, up 8.2%. Our Q4 adjusted effective income tax rate benefited from the release of a $2.9 million valuation allowance, primarily related to the use of foreign tax credits. This benefit is not expected to recur, and this non-recurring benefit added $0.05 to our Q4 and full year adjusted EPS. Q4's adjusted EPS was $0.49, up 44.1% compared to $0.34.

Bruce Hausmann: Adjusted SG&A expenses were $96.6 million in Q4, compared to $90.8 million. The increase was primarily due to FX translation, higher salary and fringe on merit-related inflation, and higher variable compensation on increased sales and profits. Adjusted operating income was $38.2 million, up 16.7% compared to $32.8 million. Adjusted EBITDA was $49.8 million, up 8.2%. Our Q4 adjusted effective income tax rate benefited from the release of a $2.9 million valuation allowance, primarily related to the use of foreign tax credits. This benefit is not expected to recur, and this non-recurring benefit added $0.05 to our Q4 and full year adjusted EPS. Q4's adjusted EPS was $0.49, up 44.1% compared to $0.34.

Speaker #1: This benefit is not expected to recur, and this non-recurring benefit added 5 cents to our fourth quarter and full year adjusted EPS. Fourth quarter's adjusted EPS was 49 cents, up 44.1% compared to 34 cents.

Speaker #2: Adjusted operating income was 38.2 million, up 16.7% compared to 32.8 million. Adjusted EBITDA was 49.8 million, up 8.2%. Our fourth-quarter adjusted effective income tax rate benefited from the release of a $2.9 million valuation allowance, primarily related to the use of foreign tax credits.

Speaker #1: Fourth quarter consolidated currency-neutral orders increased 2% year-over-year. Americas was up 3% on top of a prior-year order growth rate of 9%. EAAA's fourth-quarter order growth was flat year-over-year on a softer macro environment.

Speaker #2: This benefit is not expected to recur and this non-recurring benefit added 5 cents to our fourth quarter and full year adjusted EPS. Fourth quarter's adjusted EPS was 49 cents, up 44.1% compared to 34 cents.

Speaker #1: Turning to our full-year 2025 results, all comparisons provided are year-over-year versus the fiscal year 2024, unless otherwise noted. Full-year net sales totaled $1.39 billion, up 5.4%, and at the high end of our expectations.

Speaker #2: Fourth quarter consolidated currency-neutral orders increased 2% year-over-year. Americas was up 3% on top of a prior-year order growth rate of 9%. Each AAA's fourth-quarter order growth was flat year-over-year on a softer macro environment.

Bruce: Q4 consolidated currency-neutral orders increased 2% year-over-year. Americas was up 3% on top of a prior-year order growth rate of 9%. EAAA's Q4 order growth was flat year-over-year on a softer macro environment. Turning to our full-year 2025 results, all comparisons provided are year-over-year versus the fiscal year 2024, unless otherwise noted. Full-year net sales totaled $1.39 billion, up 5.4%, and at the high end of our expectations. Currency-neutral net sales increased 4.3%. Currency-neutral net sales in the Americas increased 5.5%, while currency-neutral net sales in EAAA increased 2.4%, reflecting improving trends in our international markets.

Bruce Hausmann: Q4 consolidated currency-neutral orders increased 2% year-over-year. Americas was up 3% on top of a prior-year order growth rate of 9%. EAAA's Q4 order growth was flat year-over-year on a softer macro environment. Turning to our full-year 2025 results, all comparisons provided are year-over-year versus the fiscal year 2024, unless otherwise noted. Full-year net sales totaled $1.39 billion, up 5.4%, and at the high end of our expectations. Currency-neutral net sales increased 4.3%. Currency-neutral net sales in the Americas increased 5.5%, while currency-neutral net sales in EAAA increased 2.4%, reflecting improving trends in our international markets.

Speaker #1: Currency-neutral net sales increased 4.3%. Currency-neutral net sales in the Americas increased 5.5%, while currency-neutral net sales in EAAA increased 2.4%, reflecting improving trends in our international markets.

Speaker #2: Turning to our full-year 2025 results—all comparisons provided are year-over-year versus the fiscal year 2024, unless otherwise noted. Full-year net sales totaled $1.39 billion, up 5.4%, and at the high end of our expectations.

Speaker #1: Full-year adjusted gross profit margin increased to 39%, up 187 basis points driven by favorable pricing, improved mix, and manufacturing efficiencies, partially offset by higher input costs.

Speaker #2: Currency-neutral net sales increased 4.3%. Currency-neutral net sales in the Americas increased 5.5%, while currency-neutral net sales in EAAA increased 2.4%, reflecting improving trends in our international markets.

Speaker #1: This includes a 50 basis point benefit from a non-recurring inventory reserve adjustment as a result of strong inventory management. Excluding this benefit, adjusted gross profit margin would have been approximately 38.5%.

Speaker #1: Adjusted SG&A expenses were $366.7 million in 2025, compared to $346.7 million and flat year-over-year as a percentage of net sales. The increase in SG&A dollars was primarily due to FX translation, higher salary infringe on merit-related inflation, and higher variable compensation on increased sales and profits.

Speaker #2: Full-year adjusted gross profit margin increased to 39%, up 187 basis points, driven by favorable pricing, improved mix, and manufacturing efficiencies, partially offset by higher input costs.

Bruce: Full year adjusted gross profit margin increased to 39%, up 187 basis points, driven by favorable pricing, improved mix, and manufacturing efficiencies, partially offset by higher input costs. This includes a 50 basis point benefit from a non-recurring inventory reserve adjustment as a result of strong inventory management. Excluding this benefit, adjusted gross profit margin would have been approximately 38.5%. Adjusted SG&A expenses were $366.7 million in 2025, compared to $346.7 million and flat year-over-year as a percentage of net sales. The increase in SG&A dollars was primarily due to FX translation, higher salary and fringe on merit-related inflation, and higher variable compensation on increased sales and profits.

Bruce Hausmann: Full year adjusted gross profit margin increased to 39%, up 187 basis points, driven by favorable pricing, improved mix, and manufacturing efficiencies, partially offset by higher input costs. This includes a 50 basis point benefit from a non-recurring inventory reserve adjustment as a result of strong inventory management. Excluding this benefit, adjusted gross profit margin would have been approximately 38.5%. Adjusted SG&A expenses were $366.7 million in 2025, compared to $346.7 million and flat year-over-year as a percentage of net sales. The increase in SG&A dollars was primarily due to FX translation, higher salary and fringe on merit-related inflation, and higher variable compensation on increased sales and profits.

Speaker #2: This includes a 50 basis point benefit from a non-recurring inventory reserve adjustment as a result of strong inventory management. Excluding this benefit, adjusted gross profit margin would have been approximately 38.5%.

Speaker #1: Through the full year, adjusted operating income was $173.8 million. Up 22.9% compared to $141.4 million. Adjusted EBITDA was 217.9 million, up 15.3% compared to $189 million.

Speaker #2: Adjusted SG&A expenses were $366.7 million in 2025, compared to $346.7 million, and were flat year-over-year as a percentage of net sales. The increase in SG&A dollars was primarily due to FX translation, higher salary in fringe on merit-related inflation, and higher variable compensation on increased sales and profits.

Speaker #1: Adjusted earnings per diluted share was $1.94, up 33% increase versus $1.46. With the strong results as context, I'd now like to turn to capital allocation.

Speaker #2: Through the full year, adjusted operating income was $173.8 million, up 22.9% compared to $141.4 million. Adjusted EBITDA was $217.9 million, up 15.3% compared to $189.0 million.

Bruce: For the full year, adjusted operating income was $173.8 million, up 22.9% compared to $141.4 million. Adjusted EBITDA was $217.9 million, up 15.3% compared to $189 million. Adjusted earnings per diluted share was $1.94, a 33% increase versus $1.46. With these strong results as context, I'd now like to turn to capital allocation. As we've described previously, we follow a balanced capital allocation strategy that prioritizes investing in the business in areas like innovation and productivity, with the goal of driving operational efficiencies, margin expansion, and growth. Second, we focus on managing leverage through a disciplined use of debt to manage net debt conservatively.

Bruce Hausmann: For the full year, adjusted operating income was $173.8 million, up 22.9% compared to $141.4 million. Adjusted EBITDA was $217.9 million, up 15.3% compared to $189 million. Adjusted earnings per diluted share was $1.94, a 33% increase versus $1.46. With these strong results as context, I'd now like to turn to capital allocation. As we've described previously, we follow a balanced capital allocation strategy that prioritizes investing in the business in areas like innovation and productivity, with the goal of driving operational efficiencies, margin expansion, and growth. Second, we focus on managing leverage through a disciplined use of debt to manage net debt conservatively.

Speaker #1: As we've described previously, we follow a balanced capital allocation strategy. That prioritizes investing in the business in areas like innovation and productivity with the goal of driving operational efficiencies margin expansion and growth.

Speaker #2: Adjusted earnings per diluted share was $1.94, up 33% versus $1.46. With these strong results as context, I'd now like to turn to capital allocation.

Speaker #1: Second, we focus on managing leverage through a disciplined use of debt to manage net debt conservatively. Third, having achieved several operating goals ahead of schedule, reinforcing our confidence as we move into the next phase of our one interface strategy, we will continue exploring potential M&A opportunities through a rigorous and disciplined process.

Speaker #2: As we've described previously, we follow a balanced capital allocation strategy that prioritizes investing in the business in areas like innovation and productivity, with the goal of driving operational efficiencies, margin expansion, and growth.

Speaker #1: We do not need M&A to achieve our goals, but we will continue to evaluate opportunities that are aligned with our current strategy and that can accelerate growth and margins.

Speaker #2: Second, we focus on managing leverage through a disciplined use of debt to manage net debt conservatively. Third, having achieved several operating goals ahead of schedule, reinforcing our confidence as we move into the next phase of our one interface strategy, we will continue exploring potential M&A opportunities through a rigorous and disciplined process.

Speaker #1: Lastly, an importantly, we continue to be committed to returning excess cash to shareholders through a combination of dividends and disciplined share repurchases. These four objectives encapsulate our balanced capital allocation strategy.

Bruce: Third, having achieved several operating goals ahead of schedule, reinforcing our confidence as we move into the next phase of our One Interface strategy, we will continue exploring potential M&A opportunities through a rigorous and disciplined process. We do not need M&A to achieve our goals, but we will continue to evaluate opportunities that are aligned with our current strategy and that can accelerate growth and margins. Lastly, and importantly, we continue to be committed to returning excess cash to shareholders through a combination of dividends and disciplined share repurchases. These four objectives encapsulate our balanced capital allocation strategy. To recap our progress on these objectives, I'd like to highlight several key accomplishments from fiscal year 2025. We generated $167.9 million of cash from operating activities in 2025, compared to $148.4 million in fiscal year 2024.

Bruce Hausmann: Third, having achieved several operating goals ahead of schedule, reinforcing our confidence as we move into the next phase of our One Interface strategy, we will continue exploring potential M&A opportunities through a rigorous and disciplined process. We do not need M&A to achieve our goals, but we will continue to evaluate opportunities that are aligned with our current strategy and that can accelerate growth and margins. Lastly, and importantly, we continue to be committed to returning excess cash to shareholders through a combination of dividends and disciplined share repurchases. These four objectives encapsulate our balanced capital allocation strategy. To recap our progress on these objectives, I'd like to highlight several key accomplishments from fiscal year 2025. We generated $167.9 million of cash from operating activities in 2025, compared to $148.4 million in fiscal year 2024.

Speaker #1: To recap our progress on these objectives, I'd like to highlight several key accomplishments from fiscal year 2025. We generated $167.9 million of cash from operating activities in 2025, compared to $148.4 million in fiscal year 2024.

Speaker #2: We do not need M&A to achieve our goals, but we will continue to evaluate opportunities that are aligned with our current strategy and that can accelerate growth and margins.

Speaker #2: Lastly, an importantly, we continue to be committed to returning excess cash to shareholders through a combination of dividends and disciplined share repurchases. These four objectives encapsulate our balanced capital allocation strategy.

Speaker #1: With investing in the business as our top priority, capital expenditures were $46.2 million in fiscal year 2025, compared to $33.8 million in 2024. In fiscal year 2026, we expect capital expenditures to increase to $55 million as we invest in additional automation and productivity initiatives to support operational efficiencies and growth, including equipment investments related to the new Noravant product line.

Speaker #2: To recap our progress on these objectives, I'd like to highlight several key accomplishments from fiscal year 2025. We generated $167.9 million of cash from operating activities in 2025, compared to $148.4 million in fiscal year 2024.

Speaker #1: We also manage net leverage conservatively, through a disciplined use of debt. In December 2025, we opportunistically amended and extended the maturity date of our syndicated credit facility to 2030.

Speaker #2: With investing in the business as our top priority, capital expenditures were $46.2 million in fiscal year 2025, compared to $33.8 million in 2024. In fiscal year 2026, we expect capital expenditures to increase to $55 million as we invest in additional automation and productivity initiatives to support operational efficiencies and growth, including equipment investments related to the new Noravant product line.

Bruce: With investing in the business as our top priority, capital expenditures were $46.2 million in fiscal year 2025, compared to $33.8 million in 2024. In fiscal year 2026, we expect capital expenditures to increase to $55 million as we invest in additional automation and productivity initiatives to support operational efficiencies and growth, including equipment investments related to the new Noravant product line. We also managed net leverage conservatively through a disciplined use of debt. In December 2025, we opportunistically amended and extended the maturity date of our syndicated credit facility to 2030. The amendment added a new $170 million term loan facility that was used, along with cash on hand, to fully redeem our $300 million of senior notes that were due in 2028.

Bruce Hausmann: With investing in the business as our top priority, capital expenditures were $46.2 million in fiscal year 2025, compared to $33.8 million in 2024. In fiscal year 2026, we expect capital expenditures to increase to $55 million as we invest in additional automation and productivity initiatives to support operational efficiencies and growth, including equipment investments related to the new Noravant product line. We also managed net leverage conservatively through a disciplined use of debt. In December 2025, we opportunistically amended and extended the maturity date of our syndicated credit facility to 2030. The amendment added a new $170 million term loan facility that was used, along with cash on hand, to fully redeem our $300 million of senior notes that were due in 2028.

Speaker #1: The amendment added a new $170 million term loan facility that was used along with cash on hand to fully redeem our $300 million of senior notes that were due in 2028.

Speaker #1: These transactions strengthened our balance sheet by reducing interest expense, and extending our remaining debt maturities while providing flexibility to continue paying down debt. During fiscal year 2025, we repaid approximately $124 million of debt.

Speaker #2: We also manage net leverage conservatively, through a disciplined use of debt. In December 2025, we opportunistically amended and extended the maturity date of our syndicated credit facility to 2030.

Speaker #2: The amendment added a new $170 million term loan facility that was used, along with cash on hand, to fully redeem our $300 million of senior notes that were due in 2028.

Speaker #1: In addition, we remain focused on returning excess cash to shareholders. In the fourth quarter of 2025, we repurchased $13 million of interface common stock, and for the full fiscal year, we repurchased $18.2 million.

Speaker #2: These transactions strengthened our balance sheet by reducing interest expenses and extending our remaining debt maturities while providing flexibility to continue paying down debt. During fiscal year 2025, we repaid approximately $124 million of debt.

Bruce: These transactions strengthened our balance sheet by reducing interest expense and extending our remaining debt maturities while providing flexibility to continue paying down debt. During fiscal year 2025, we repaid approximately $124 million of debt. In addition, we remain focused on returning excess cash to shareholders. In the Q4 of 2025, we repurchased $13 million of Interface common stock, and for the full fiscal year, we repurchased $18.2 million. In 2026, we plan to continue executing share repurchases in a disciplined and opportunistic fashion. In addition, our board recently approved an increase in the quarterly dividend from $0.02 to $0.03 per share, reflecting confidence in our cash flow generation and our earnings durability.

Bruce Hausmann: These transactions strengthened our balance sheet by reducing interest expense and extending our remaining debt maturities while providing flexibility to continue paying down debt. During fiscal year 2025, we repaid approximately $124 million of debt. In addition, we remain focused on returning excess cash to shareholders. In the Q4 of 2025, we repurchased $13 million of Interface common stock, and for the full fiscal year, we repurchased $18.2 million. In 2026, we plan to continue executing share repurchases in a disciplined and opportunistic fashion. In addition, our board recently approved an increase in the quarterly dividend from $0.02 to $0.03 per share, reflecting confidence in our cash flow generation and our earnings durability.

Speaker #1: In 2026, we plan to continue executing share repurchases in a disciplined and opportunistic fashion. In addition, our board recently approved an increase in the quarterly dividend from $0.02 to $0.03 per share.

Speaker #1: Reflecting confidence in our cash flow generation and our earnings durability. Turning to our outlook, we entered 2026 with solid orders and a healthy backlog, up 7% year to date.

Speaker #2: In addition, we remain focused on returning excess cash to shareholders. In the fourth quarter of 2025, we repurchased $13 million of interface common stock, and for the full fiscal year, we repurchased $18.2 million.

Speaker #1: While remaining mindful of ongoing macro uncertainty and a competitive industry environment, notably, fiscal year 2026 includes $53 weeks. A realignment that happens every five or six years to synchronize our fiscal calendar with the calendar year.

Speaker #2: In 2026, we plan to continue executing share repurchases in a disciplined and opportunistic fashion. In addition, our board recently approved an increase in the quarterly dividend from $0.02 to $0.03 per share.

Speaker #1: With an extra week in the first quarter of 2026 in the way that holidays fall in the fourth quarter of fiscal 2026, net-net we anticipate this will add approximately $5 million to $10 million to net sales for the full fiscal year.

Speaker #2: Reflecting confidence in our cash flow generation and our earnings durability. Turning to our outlook, we entered 2026 with solid orders and a healthy backlog, up 7% year to date.

Bruce: Turning to our outlook, we entered 2026 with solid orders and a healthy backlog, up 7% year to date, while remaining mindful of ongoing macro uncertainty and a competitive industry environment. Notably, fiscal year 2026 includes 53 weeks, a realignment that happens every five or six years to synchronize our fiscal calendar with the calendar year. With an extra week in Q1 of 2026, and the way that holidays fall in Q4 of fiscal 2026, net net, we anticipate this will add approximately $5 million to $10 million to net sales for the full fiscal year. With that context, we anticipate the following: For Q1 of fiscal 2026, net sales of $315 million to $325 million. adjusted gross profit margin of approximately 38% of net sales.

Bruce Hausmann: Turning to our outlook, we entered 2026 with solid orders and a healthy backlog, up 7% year to date, while remaining mindful of ongoing macro uncertainty and a competitive industry environment. Notably, fiscal year 2026 includes 53 weeks, a realignment that happens every five or six years to synchronize our fiscal calendar with the calendar year. With an extra week in Q1 of 2026, and the way that holidays fall in Q4 of fiscal 2026, net net, we anticipate this will add approximately $5 million to $10 million to net sales for the full fiscal year. With that context, we anticipate the following: For Q1 of fiscal 2026, net sales of $315 million to $325 million. adjusted gross profit margin of approximately 38% of net sales.

Speaker #2: While remaining mindful of ongoing macro uncertainty and a competitive industry environment, notably, fiscal year 2026 includes 53 weeks—a realignment that happens every five or six years to synchronize our fiscal calendar with the calendar year.

Speaker #1: With that context, we anticipate the following: for the first quarter of fiscal 2026, net sales of $315 to $325 million. Adjusted gross profit margin of approximately 38% of net sales.

Speaker #2: With an extra week in the first quarter of 2026, in the way that holidays fall in the fourth quarter of fiscal 2026, net-net net we anticipate this will add approximately $5 million to $10 million to net sales for the full fiscal year.

Speaker #1: Adjusted SG&A expenses of approximately $94 million. Adjusted interest in other expenses of approximately $4 million. And adjusted effective income tax rate of approximately 18%.

Speaker #1: And fully diluted weighted average share count of approximately 59.1 million shares. And for the full fiscal year of 2026, we anticipate net sales of $1.42 to $1.46 billion.

Speaker #2: With that context, we anticipate the following: for the first quarter of fiscal 2026, net sales of $315 to $325 million. Adjusted gross profit margin of approximately 38% of net sales.

Speaker #1: Adjusted gross profit margin of approximately 38.5 to 39% of net sales. Adjusted SG&A expenses of approximately $26.2% to $26.4% of net sales. Adjusted interest in other expenses of approximately $16 million.

Speaker #2: Adjusted SG&A expenses of approximately $94 million. Adjusted interest in other expenses of approximately $4 million. And adjusted effective income tax rate of approximately 18%.

Bruce: Adjusted SG&A expenses of approximately $94 million. Adjusted interest and other expenses of approximately $4 million. An adjusted effective income tax rate of approximately 18%, and fully diluted weighted average share count of approximately 59.1 million shares. For the full fiscal year of 2026, we anticipate net sales of $1.42 to 1.46 billion. Adjusted gross profit margin of approximately 38.5% to 39% of net sales. Adjusted SG&A expenses of approximately 26.2% to 26.4% of net sales. Adjusted interest in other expenses of approximately $16 million. An adjusted effective income tax rate of approximately 25% to 26%, and capital expenditures of approximately $55 million. With that, I'll turn the call back to Laurel for concluding remarks.

Bruce Hausmann: Adjusted SG&A expenses of approximately $94 million. Adjusted interest and other expenses of approximately $4 million. An adjusted effective income tax rate of approximately 18%, and fully diluted weighted average share count of approximately 59.1 million shares. For the full fiscal year of 2026, we anticipate net sales of $1.42 to 1.46 billion. Adjusted gross profit margin of approximately 38.5% to 39% of net sales. Adjusted SG&A expenses of approximately 26.2% to 26.4% of net sales. Adjusted interest in other expenses of approximately $16 million. An adjusted effective income tax rate of approximately 25% to 26%, and capital expenditures of approximately $55 million. With that, I'll turn the call back to Laurel for concluding remarks.

Speaker #2: And fully diluted weighted average share count of approximately 59.1 million shares. And for the full fiscal year of 2026, we anticipate net sales of $1.42 to $1.46 billion.

Speaker #1: And adjusted effective income tax rate of approximately 25% to 26%. And capital expenditures of approximately $55 million. And with that, I'll turn the call back to Laurel for concluding remarks.

Speaker #2: Adjusted gross profit margin of approximately 38.5% to 39% of net sales. Adjusted SG&A expenses of approximately 26.2% to 26.4% of net sales. Adjusted interest and other expenses of approximately $16 million.

Speaker #1: Thanks, Bruce. I want to close by saying how proud I am of what our team's accomplished in 2025. And I want to thank our customers for trusting us and choosing Interface.

Speaker #1: This was a record year for the company, delivered through strong execution of our one interface strategy. And we're just getting started. We enter 2026 with confidence in our strategy and our ability to create long-term value for our shareholders.

Speaker #2: And adjusted effective income tax rate of approximately 25% to 26%. And capital expenditures of approximately $55 million. And with that, I'll turn the call back to Laurel for concluding remarks.

Speaker #1: With that, I will open it up to questions. Operator?

Speaker #2: Ladies and gentlemen, we will now begin the question-and-answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad.

Speaker #1: Thanks, Bruce. I want to close by saying how proud I am of what our team's accomplished in 2025. And I want to thank our customers for trusting us and choosing Interface.

Laurel Hurd: Thanks, Bruce. I want to close by saying how proud I am of what our team's accomplished in 2025, and I want to thank our customers for trusting us and choosing Interface. This was a record year for the company, delivered through strong execution of our One Interface strategy, and we're just getting started. We enter 2026 with confidence in our strategy and our ability to create long-term value for our shareholders. With that, I will open it up to questions. Operator?

Speaker #2: If you would like to withdraw your question, please press star one again. One moment, please, for your first question. Your first question comes from the line of Brian Biros of TRG.

Speaker #2: Please go ahead.

Speaker #3: Hey, good morning. Thank you for taking my questions. Can you maybe talk a little bit further about the one interface selling strategy here? It seems like it's been very successful so far, a few years into it, given the outperformance in sales and margins so far.

Speaker #1: With that, I will open it up to questions. Operator?

Speaker #3: Ladies and gentlemen, we will now begin the question-and-answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad.

Operator: Ladies and gentlemen, we will now begin the question and answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment please, for your first question. Your first question comes from the line of Brian Byers of TRG. Please go ahead.

Speaker #3: Maybe just help us understand a little bit more on what is still to be rolled out and felt across the business.

Speaker #3: If you would like to withdraw your question, please press star one again. One moment, please, for your first question. Your first question comes from the line of Brian Byers of TRG.

Speaker #1: Yeah, that's a great question. So we're really proud of the execution today at the one interface strategy, as you said, is especially with the combined selling teams in the US, is off to a really strong start.

Speaker #3: Please go ahead.

Speaker #1: We're making a lot of progress, as you saw. Our healthcare billings in the year were up 21%. Our NORA business was up 17%. And I really do think that's a lot to do with this combined selling team.

Speaker #4: Hey, good morning. Thank you for taking my questions. Can you maybe talk a little bit further about the One Interface selling strategy here? It seems like it's been very successful so far, a few years into it, given the outperformance in sales and margins so far.

Brian Byers: Good morning. Thank you for taking my questions. Can you maybe talk a little bit further about the One Interface selling strategy here? You know, it seems like it's been very successful so far, a few years into it, given the outperformance in sales and margins so far. Maybe just help us understand a little bit more on what is still to be rolled out and felt across the business.

Brian Biros: Good morning. Thank you for taking my questions. Can you maybe talk a little bit further about the One Interface selling strategy here? You know, it seems like it's been very successful so far, a few years into it, given the outperformance in sales and margins so far. Maybe just help us understand a little bit more on what is still to be rolled out and felt across the business.

Speaker #4: Maybe just help us understand a little bit more on what is still to be rolled out and felt across the business.

Speaker #1: But I think we're just getting started. We have two main opportunities that I'll hit on. The first is the launch of NORA Vaunt, which is really exciting for us.

Laurel Hurd: Yeah, that's a great question. We're really proud of the execution to date. The One Interface strategy, as you said, is especially with the combined selling teams in the US, is off to a really strong start. We're making a lot of progress. As you saw, our healthcare billings in the year were up 21%. Our Nora business was up 17%, and I really do think that's a lot to do with this combined selling team. I think we're just getting started. We have two main opportunities that I'll hit on. The first is the launch of Noravant, which is really exciting for us. This is a wood grain look in rubber, a first of its kind, and we expect that to be a really exciting long-term growth opportunity.

Speaker #1: This is a wood grain look in rubber, a first-of-its-kind. And we expect that to be a really exciting long-term growth opportunity. As you know, our NORA selling cycle is a bit longer.

Speaker #1: So we expect that we just rolled it out last week at our sales meeting. And our sellers now have samples in hand. So they're now starting to share that with customers.

Speaker #1: And we expect that to start generating revenue by the fourth quarter. It'll probably be somewhere 5, 10 million this year. But then expand over time.

Speaker #1: But I think we're just getting started. We have two main opportunities that I'll hit on. The first is the launch of NORA Vaunt, which is really exciting for us.

Speaker #1: This is a wood grain look in rubber, a first-of-its-kind. And we expect that to be a really exciting long-term growth opportunity. As you know, our NORA selling cycle is a bit longer.

Speaker #1: So we're excited about that. And then secondly, we've learned a lot about our combined selling teams in the US. And we're taking those learnings across the globe.

Speaker #1: We still have a lot of runway to go to expand healthcare and education, not only in the US market, but in markets around the world.

Laurel Hurd: As you know, our Nora selling cycle is a bit longer, so we expect that. We just rolled it out last week at our sales meeting, and our sellers now have samples in hand, so they're now starting to share that with customers, and we expect that to start generating revenue by Q4. It'll probably be somewhere $5 to 10 million this year, but then expand over time. We're excited about that. Secondly, you know, we've learned a lot about our combined selling teams in the US, and we're taking those learnings across the globe. We still have a lot of runway to go to expand healthcare and education, not only in the US market, but in markets around the world.

Speaker #1: So we expect that we just rolled it out last week at our sales meeting. And our sellers now have samples in hand. So they're now starting to share that with customers.

Speaker #3: Thank you for that. On gross margins, came a very strong at the end of the year here, I guess, on an adjusted basis. Kind of at that aspirational 38.5% you've talked about before, great to see.

Speaker #1: And we expect that to start generating revenue by the fourth quarter. It'll probably be somewhere between $5 million and $10 million this year, but then expand over time.

Speaker #1: So we're excited about that. And then secondly, we've learned a lot about our combined selling teams in the US. And we're taking those learnings across the globe.

Speaker #3: 2026 guidance, also great to see, continued expansion there. 38.5 to 39. Can you, I guess, maybe just talk about some puts and takes for margins in 2026?

Speaker #1: We still have a lot of runway to go to expand healthcare and education, not only in the U.S. market, but in markets around the world.

Speaker #4: Yeah. So, Brian, thanks for noticing. It was great to see its achieve our long-term ambition of 38.5%. And it had a schedule. And as you mentioned, anything north of that baseline of So just to put a finer point on it, if we achieve our high end, it's actually about 100 basis points of improvement that we will achieve this year.

Speaker #4: Thank you for that. On gross margins, came a very strong at the end of the year here, I guess, on an adjusted basis. Kind of at that aspirational 38.5% you've talked about before, great to see.

Brian Byers: Thank you for that. On gross margins, you know, came in very strong at the end of the year here, I guess, on an adjusted basis, kind of at that aspirational 38.5% you've talked about before. Great to see. 2026 guidance, also great to see. Continued expansion there, 38.5% to 39%. Can you, I guess, maybe just talk about some puts and takes for margins in 2026?

Brian Biros: Thank you for that. On gross margins, you know, came in very strong at the end of the year here, I guess, on an adjusted basis, kind of at that aspirational 38.5% you've talked about before. Great to see. 2026 guidance, also great to see. Continued expansion there, 38.5% to 39%. Can you, I guess, maybe just talk about some puts and takes for margins in 2026?

Speaker #4: 2026 guidance, also great to see continued expansion there. 38.5 to 39. Can you, I guess, maybe just talk about some puts and takes for margins in 2026?

Speaker #4: And there's two components to that. We're offsetting about 50 basis points of tariff-related headwinds. And then we're offsetting about 50 basis points of due to the inventory adjustment that we mentioned in our prepared remarks.

Speaker #3: Yeah. So, Brian, thanks for noticing. It was great to see it's achieved our long-term ambition of 38.5%. And it had a schedule. And as you mentioned, anything north of that baseline of 38.5 will be improvement.

Bruce: Brian, thanks for noticing. It was great to see us achieve our long-term ambition of 38.5% and ahead of schedule. As you mentioned, you know, anything north of that baseline of 38.5 will be improvement. Just to put a finer point on it, you know, if we achieve our high end, it's actually about 100 basis points of improvement that we will achieve this year, and there's two components to that. We're offsetting about 50 basis points of tariff-related headwinds, and then we're offsetting about 50 basis points due to the inventory adjustment that we mentioned in our prepared remarks, that got us to the baseline. We are very pleased with the progress that we've made around gross profit margin.

Bruce Hausmann: Brian, thanks for noticing. It was great to see us achieve our long-term ambition of 38.5% and ahead of schedule. As you mentioned, you know, anything north of that baseline of 38.5 will be improvement. Just to put a finer point on it, you know, if we achieve our high end, it's actually about 100 basis points of improvement that we will achieve this year, and there's two components to that. We're offsetting about 50 basis points of tariff-related headwinds, and then we're offsetting about 50 basis points due to the inventory adjustment that we mentioned in our prepared remarks, that got us to the baseline. We are very pleased with the progress that we've made around gross profit margin.

Speaker #4: That got us to the baseline. So we are very pleased with the progress that we've made. Around gross profit margin, a lot of the benefit is going to continue coming from the automation that we have put in place.

Speaker #3: So, just to put a finer point on it, if we achieve our high end, it's actually about 100 basis points of improvement that we will achieve this year.

Speaker #4: In our existing factories, I sometimes call that we'll get a little bit of a wraparound effect of that. And we're also putting some more of that same equipment into our international markets.

Speaker #3: And there's two components to that. We're offsetting about 50 basis points of tariff-related headwinds. And then we're offsetting about 50 basis points of due to the inventory adjustment that we mentioned in our prepared remarks.

Speaker #4: We're putting some equipment into our Australia plant. Some equipment into our plant in Northern Ireland. And we continue to also make investments in automation and efficiency-related equipment in our NORA plant.

Speaker #3: That got us to the baseline. So we are very pleased with the progress that we've made. Around gross profit margin, a lot of the benefit is going to continue coming from the automation that we have put in place.

Speaker #4: So you put all that together, and we're expecting to continue to drive gross margin expansion. And I think that we're really pleased with the progress.

Bruce: A lot of the benefit is gonna continue coming from the automation that we have put in place in our existing factories. I sometimes call that, we'll get a little bit of a wraparound effect of that. We're also putting some more of that same equipment into our international markets. We're putting some equipment into our Australia plant, some equipment into our plant in Northern Ireland, and we continue to also make investments in automation and efficiency-related equipment in our Nora plant. You put all that together and, you know, we're expecting to continue to drive gross margin expansion, and I think that we're really pleased with the progress. I think we're off to a good start to continue driving for this year.

Bruce Hausmann: A lot of the benefit is gonna continue coming from the automation that we have put in place in our existing factories. I sometimes call that, we'll get a little bit of a wraparound effect of that. We're also putting some more of that same equipment into our international markets. We're putting some equipment into our Australia plant, some equipment into our plant in Northern Ireland, and we continue to also make investments in automation and efficiency-related equipment in our Nora plant. You put all that together and, you know, we're expecting to continue to drive gross margin expansion, and I think that we're really pleased with the progress. I think we're off to a good start to continue driving for this year.

Speaker #3: In our existing factories, I sometimes call that we'll get a little bit of a wraparound effect of that. And we're also putting some more of that same equipment into our international markets.

Speaker #4: And we're off to a good start, continuing to drive to continue driving for this year.

Speaker #3: And I kind of see where that goes for '26. Last one for me. Can you talk about the introduction of these more accessible price point products?

Speaker #3: We're putting some equipment into our Australia plant, some equipment into our plant in Northern Ireland, and we continue to also make investments in automation and efficiency-related equipment in our NORA plant.

Speaker #3: Kind of if that's fully rolled out already, or if there are still more products in that kind of category to introduce in '26? And maybe if there's any difference in kind of the sales growth between those products and the other kind of legacy products.

Speaker #3: So you put all that together, and we're expecting to continue to drive gross margin expansion. And I think that we're really pleased with the progress.

Speaker #3: Thank you.

Speaker #1: Yeah, sure. So we have one platform that we continue to build on. We call it the open-air platform or the open collective, as we continue to expand it.

Speaker #3: And we're off to a good start, continuing to drive, to continue driving for this year.

Speaker #4: And I kind of see where that goes for '26. Last one for me. Can you talk about the introduction of these more accessible price-point products?

Brian Byers: I kind of see where that goes for 2026. Last one for me. Can you talk about the introduction of these more accessible price point products, kind of if that's fully rolled out already, or if there are still more products in that kind of category to introduce in 2026, and maybe if there's any difference in kind of the sales growth between those products and the other kind of legacy products? Thank you.

Brian Biros: I kind of see where that goes for 2026. Last one for me. Can you talk about the introduction of these more accessible price point products, kind of if that's fully rolled out already, or if there are still more products in that kind of category to introduce in 2026, and maybe if there's any difference in kind of the sales growth between those products and the other kind of legacy products? Thank you.

Speaker #1: So we're seeing a lot of success in that collection. We continue to roll out new colors and styles there, which is great. We've got some warmer colors rolling out there.

Speaker #4: Kind of, if that's fully rolled out already, or if there are still more products in that kind of category to introduce in '26? And maybe if there's any difference in the sales growth between those products and the other, kind of, legacy products.

Speaker #1: And then we will be launching a whole new collection as well in the middle of the year. Which has a different design look and feel.

Speaker #1: So we're finding we do a lot, as you know. We do a lot of test and learns. And we wanted to make sure that we could maintain our premium offering in carpet tile, as an example, while expanding incrementally this more mid-price point for us.

Speaker #4: Thank you.

Speaker #1: Yeah, sure. So we have one platform that we continue to build on. We call it the open-air platform or the open collective, as we continue to expand it.

Laurel Hurd: Yeah, sure. We have one platform that we continue to build on. We call it the Open Air platform or the Open Collective as we continue to expand it. We're seeing a lot of success in that collection. We continue to roll out new colors and styles there, which is great. We've got some warmer colors rolling out there. We will be launching a whole new collection as well in the middle of the year, which has a different design look and feel. We're finding, you know, as you know, we do a lot of tests and learns, and we wanted to make sure that we could maintain our premium offering in carpet tile, as an example, while expanding incrementally this more mid-price point for us.

Speaker #1: So we're seeing a lot of success in that collection. We continue to roll out new colors and styles there, which is great. We've got some warmer colors rolling out there.

Speaker #1: And we really have proven that we could do that. We've also done the design work. I'm really proud of our design and manufacturing teams working together.

Speaker #1: And then we will be launching a whole new collection as well in the middle of the year. Which has a different design look and feel.

Speaker #1: So the designs that we come out with in those price points, we still are happy with the margins on. So we're not deleted there.

Speaker #1: So we are pleased with the progress. And we'll continue the momentum there.

Speaker #3: Got it. Thank you.

Speaker #1: Thanks, Brian.

Speaker #2: Your next question comes from the line of David McGregor of Longbow Research. Please go ahead.

Speaker #4: Yes, good morning, everyone. Congratulations on all the progress. It's wonderful to see. I guess I wanted to begin by just asking you about the difference between kind of the corporate growth, which was kind of flat, versus what was obviously very strong healthcare and education.

Speaker #1: And we really have proven that we could do that. We've also done the design work. I'm really proud of our design and manufacturing teams working together.

Laurel Hurd: We really have proven that we could do that. We've also done the design work. I'm, you know, I'm really proud of our design and manufacturing teams working together. The designs that we come out with in those price points, we still are happy with the margins on, so we're not diluted there. We are pleased with the progress, and we'll continue the momentum there.

Speaker #1: So the designs that we come out with in those price points, we still are happy with the margins on, so we're not dilutive there.

Speaker #4: How would you characterize the corporate market right now? And was there something that was there as an offset that left you flat, or just maybe help us better understand that differential?

Speaker #1: So we are pleased with the progress. And we'll continue the momentum there.

Speaker #4: Got it. Thank you.

Brian Byers: Got it. Thank you.

Brian Biros: Got it. Thank you.

Speaker #1: Thanks, Brian.

Laurel Hurd: Thanks, Brian.

Speaker #2: Your next question comes from the line of David McGregor of Longbow Research. Please go ahead.

Operator: Your next question comes from the line of David MacGregor of Longbow Research. Please go ahead.

Speaker #1: Yeah. So I would say that the corporate business, we've said we wanted to grow that business this year. We were up about half a point globally for the year.

Speaker #3: Yes, good morning, everyone. Congratulations on all the progress—it's wonderful to see. I guess I wanted to begin by just asking you about the difference between the corporate growth, which was kind of flat, versus what was obviously very strong in healthcare and education.

David MacGregor: Yes. Good morning, everyone. Congratulations on all the progress. It's wonderful to see. I guess I wanted to begin by just asking you about the difference between kind of the corporate growth, which was kind of flat, versus what was obviously very strong healthcare and education. How would you characterize the corporate market right now? Was there something that was there as a, as an offset that left you flat, or, just maybe help us better understand that differential?

Speaker #1: And that was about in line with our expectations. The market continues to we feel great about the overall corporate market, as we've said before.

Speaker #1: The class A space remains in demand. We're also excited to see that markets like New York and San Francisco are coming back stronger. But globally, it's a competitive market.

Speaker #3: How would you characterize the corporate market right now? And was there something that was there as an offset that left you flat? Or just maybe help us better understand that differential?

Speaker #1: And we continue to focus on gaining share in that space, which we're doing nicely. And then, as you said, our healthcare and education grew very nicely for the year, for the quarter.

Speaker #1: Yeah. So I would say that the corporate business, we've said we wanted to grow that business this year. We were up about half a point globally for the year.

Laurel Hurd: Yeah. I would say this, the corporate business, you know, we've said we wanted to grow that business this year. We were up about half a point globally for the year. That was about in line with our expectations. You know, we feel great about the overall corporate market. As we've said before, the Class A space remains in demand. We're also excited to see that markets like New York and San Francisco are coming back stronger. Globally, it's a competitive market, and we continue to focus on gaining share in that space, which we're doing nicely. As you said, our healthcare and education grew very nicely for the year, for the quarter, and feel good about that.

Speaker #1: And feel good about that. Our retail business in the quarter, I think that's what you're poking at in the quarter growth. Our retail business can be a little bit choppy, as we've seen over time.

Speaker #1: And that was about in line with our expectations. The market continues to we feel great about the overall corporate market, as we've said before.

Speaker #1: The Class A space remains in demand. We're also excited to see that markets like New York and San Francisco are coming back stronger. But globally, it's a competitive market.

Speaker #1: And that was a little bit soft in the quarter. So that dragged us down a bit. But more than offset by the healthcare and education growth.

Speaker #4: And David, I think what you're seeing is strong execution in place. We've talked a lot about diversifying the company around product categories. Which we've done with carpet tile, LBT, and rubber.

Speaker #1: And we continue to focus on gaining share in that space, which we're doing nicely. And then, as you said, our healthcare and education grew very nicely.

Speaker #1: For the year, for the quarter. And feel good about that. Our retail business in the quarter, I think that's what you're poking at in the quarter growth.

Speaker #4: And we've also talked about continuing to strengthen the company through segmentation. And we're really seeing that demonstrated on the P&L through these growth rates.

Laurel Hurd: Our retail business in the quarter, I think that's what you're poking at in the quarter growth. Our retail business can be a little bit choppy, as we've seen over time. That was a little bit soft in the quarter. That dragged us down a bit, more than offset by the healthcare and education growth.

Speaker #1: Our retail business can be a little bit choppy, as we've seen over time. And that was a little bit soft in the quarter. So that dragged us down a bit.

Speaker #4: And education and healthcare, which is fantastic to see. So often you see companies state a strategy and you wonder, where is that showing up on the P&L?

Speaker #1: But more than offset by the healthcare and education growth.

Speaker #4: And I think we're the dead opposite of that. Our strategy is actually revealing itself on the P&L, which is fantastic to see. Okay. Good.

Speaker #3: And David, I think what you're seeing is strong execution in place. We've talked a lot about diversifying the company around product categories. Which we've done with carpet tile, LBT, and rubber.

Bruce: David, I think what you're seeing is strong execution in place. You know, we've talked a lot about diversifying the company around product categories, which we've done with carpet tile, LVT, and rubber. We've also talked about continuing to strengthen the company through segmentation. We're really seeing that demonstrated on the P&L through these growth rates in education and healthcare, which is fantastic to see. Often you see companies state a strategy, and you wonder, where is that showing up on the P&L? I think we're the dead opposite of that. You know, our strategy is actually revealing itself on the P&L, which is fantastic to see.

Bruce Hausmann: David, I think what you're seeing is strong execution in place. You know, we've talked a lot about diversifying the company around product categories, which we've done with carpet tile, LVT, and rubber. We've also talked about continuing to strengthen the company through segmentation. We're really seeing that demonstrated on the P&L through these growth rates in education and healthcare, which is fantastic to see. Often you see companies state a strategy, and you wonder, where is that showing up on the P&L? I think we're the dead opposite of that. You know, our strategy is actually revealing itself on the P&L, which is fantastic to see.

Speaker #4: Thank you for that. And then you talked about the 7% increase in backlog. Could you just kind of open that up a little bit to the extent you can, or you feel comfortable discussing?

Speaker #3: And we've also talked about continuing to strengthen the company through segmentation. And we're really seeing that demonstrated on the P&L through these growth rates.

Speaker #4: And just help us understand, in North America, versus EAAA, and the contribution from the open-air platform versus the premium spec product, and just maybe a little more detail around that backlog number.

Speaker #3: And education and healthcare, which is fantastic to see. So often you see companies state a strategy and you wonder, where is that showing up on the P&L?

Speaker #3: And I think we're the dead opposite of that. Our strategy is actually revealing itself on the P&L, which is fantastic to see.

Speaker #5: So it's our normal blend of business. It's a good, solid backlog. If you're really good about it. And that gives us air cover, as we enter into 2026, which also gives us comfort around as you can see, we gave a good, strong guide for Q1.

Speaker #4: Okay. Good. Thank you for that. And then you talked about the 7% increase in backlog. Could you just kind of open that up a little bit to the extent you can or you feel comfortable discussing?

David MacGregor: Okay, good. Thank you for that. You talked about the 7% increase in backlog. Could you just kind of open that up a little bit to the extent you can or you feel comfortable discussing, and just help us understand, you know, North America versus EAAA, and the contribution from the Open Air platform versus, you know, the premium spec product, and just maybe a little more detail around that backlog number?

Speaker #4: And just help us understand North America versus EAA. And the contribution from the open-air platform versus the premium spec product and just maybe a little more detail around that backlog number.

Speaker #5: And so with our order rates and our backlog, it gives us confidence as we enter into 2026 and for our guide for Q1.

Speaker #1: And it's pretty consistently spread across all the initiatives. I don't think there's one thing weighing it more heavily than others.

Speaker #3: So it's our normal blend of business. It's a good, solid backlog. If you're really good about it. And that gives us air cover, as we enter into 2026.

Bruce: It's our normal blended business. It's a good, solid backlog. We feel really good about it. You know, that gives us air cover as we enter into 2026, which also gives us comfort around. As you can see, we gave a good, strong guide for Q1. With our order rates and our backlog, it gives us confidence as we enter into 2026 and enter our guide for Q1.

Speaker #4: Yeah. So it's pretty broad. Okay. That's interesting. Thank you. And then maybe just talk a little bit about you talked about the SG&A discipline on your prepared remarks.

Bruce Hausmann: It's our normal blended business. It's a good, solid backlog. We feel really good about it. You know, that gives us air cover as we enter into 2026, which also gives us comfort around. As you can see, we gave a good, strong guide for Q1. With our order rates and our backlog, it gives us confidence as we enter into 2026 and enter our guide for Q1.

Speaker #4: I mean, a lot of growth opportunity here, which is really encouraging. But how do you make sure that as you pursue those growth opportunities, you're also kind of managing that SG&A and we don't repeat the sins of the past that occurred long before your arrival?

Speaker #3: Which also gives us comfort around as you can see, we gave a good, strong guide for Q1. And so with our order rates and our backlog, it gives us confidence as we enter into 2026.

Speaker #3: And for our guide for Q1.

Speaker #4: But we're obviously a big issue. And just talk about the leverage opportunity there.

Speaker #1: And it's pretty consistently spread across all the initiatives. I don't think there's one thing weighing it more heavily than others.

Laurel Hurd: It's pretty consistently spread across all the initiatives. I don't think there's one thing weighing it more heavily than others.

Speaker #5: Yeah. I would say that's and Bruce is an awesome partner. On SG&A control, I feel very comfortable. Man, we know where every dollar is.

Speaker #3: Yeah, so it's pretty broad. Okay, that's interesting. Thank you. And then, maybe just talk a little bit about—you talked about the SG&A discipline in your prepared remarks.

David MacGregor: Yeah. It's pretty broad. Okay, that's interesting. Thank you.

Laurel Hurd: Yep.

David MacGregor: Um, and then-

Laurel Hurd: Yeah.

David MacGregor: Just talk a little bit about. You talked about the SG&A discipline on, in your prepared remarks. I mean, a lot of growth opportunity here, which is really encouraging. You know, how do you make sure that as you pursue those growth opportunities, you're also kind of managing that SG&A, and we don't repeat the sins of the past that occurred long.

Speaker #5: And are very, very disciplined in what and how we spend it. We do a lot of gating of spend as well. So we're sure that we're ready to spend the money.

Speaker #3: I mean, there's a lot of growth opportunity here, which is really encouraging. But how do you make sure that as you pursue those growth opportunities, you're also kind of managing that SG&A, and we don't repeat the sins of the past that occurred long before your arrival?

Speaker #5: As we've mentioned before, we're focused on making sure that we drive the front end of the business. So the sales and innovation. Get the investment while we do everything possible to be efficient on the back end of the business.

Laurel Hurd: Mm-hmm

David MacGregor: -before your arrival, but, were obviously-

Speaker #3: But we're obviously a big issue. And just talk about the leverage opportunity there.

Laurel Hurd: Mm-hmm

David MacGregor: a big issue. Just talk about the leverage opportunity there.

Laurel Hurd: Mm-hmm

David MacGregor: a big issue. Just talk about the leverage opportunity there.

Speaker #1: Yeah. I would say this. And Bruce is an awesome partner on SG&A control. I feel very comfortable. Man, we know where every dollar is.

Laurel Hurd: Yeah, I would say this, Bruce is an awesome partner, on SG&A control. I feel very comfortable, man. We know where every dollar is and are very, very disciplined in what and how we spend it. We do a lot of gating of spend as well, so we're sure that, you know, we're ready to spend the money. As we've mentioned before, we're focused on making sure that we drive the front end of the business, so the sales and innovation get the investment while we do everything possible to be efficient on the back end of the business. As you know, also, a lot of our SG&A is variable compensation that's tied to revenue.

Speaker #5: And as you know, also, our a lot of our SG&A is variable compensation that's tied to revenue. So that's also another nice element that we have that will flex up and down.

Speaker #1: And are very, very disciplined in what and how we spend it. We do a lot of gating of spend as well, so we're sure that we're ready to spend the money.

Speaker #4: Okay. And then the last question for me was just costs. And you talked about costs a couple of times, both on the quarter and on the annual numbers.

Speaker #1: As we've mentioned before, we're focused on making sure that we drive the front end of the business—so, the sales and innovation. Get the investment while we do everything possible to be efficient on the back end of the business.

Speaker #4: As offsets to price makes benefit. How should we think about what you've got embedded in your guide and kind of where the surprises could potentially occur?

Speaker #1: And as you know also, our a lot of our SG&A is variable compensation that's tied to revenue. So that's also another nice element that we have that will flex up and down.

Speaker #5: Well, let's talk about our assumptions first. We're assuming some modest inflation in our raw materials. We're assuming status quo around tariff-related costs. And obviously, that's a moving target that we're watching daily.

David MacGregor: Mm-hmm.

Laurel Hurd: That's also another, you know, another nice element that we have that will flex up and down.

Speaker #4: Okay. And then the last question for me was just costs. And you talked about costs a couple of times, both on the quarter and on the annual numbers.

David MacGregor: Okay. The last question for me was just costs. And you know, you talked about costs a couple of times, both on the quarter and on the annual numbers, as offsets to price mix benefit. How should we think about what you've got embedded in your guide and kind of where the surprises could potentially occur?

Speaker #5: And David, the second part of your question was surprises. I think that one of the things that we are really focused on is that as a good management team, and it's being strong operators, surprises are going to come our way.

Speaker #4: As offsets to price/mix benefit, how should we think about what you've got embedded in your guide, and kind of where the surprises could potentially occur?

Speaker #5: And we just have to navigate through them. And we just have to work through them. And we need to, for example, if there's an increase in tariff costs, we just need to make sure that we offset those through continued pricing and productivity initiatives.

Bruce: Well, let's talk about our assumptions first. We're assuming some modest inflation in our raw materials. We're assuming status quo around tariff-related costs, and obviously, that's a moving target that we're watching daily. You know, David, the second part of your question was surprises. You know, I think that, one of the things that we are really focused on is that, as a good management team and as being strong operators, surprises are going to come our way, and we just have to navigate through them, and we just have to work through them, and we need to... For example, if there's a, if there's an increase in tariff costs, we just need to make sure that we offset those through continued pricing and productivity initiatives.

Bruce Hausmann: Well, let's talk about our assumptions first. We're assuming some modest inflation in our raw materials. We're assuming status quo around tariff-related costs, and obviously, that's a moving target that we're watching daily. You know, David, the second part of your question was surprises. You know, I think that, one of the things that we are really focused on is that, as a good management team and as being strong operators, surprises are going to come our way, and we just have to navigate through them, and we just have to work through them, and we need to... For example, if there's a, if there's an increase in tariff costs, we just need to make sure that we offset those through continued pricing and productivity initiatives.

Speaker #3: Well, let's talk about our assumptions first. We're assuming some modest inflation in our raw materials. We're assuming status quo around tariff-related costs. And obviously, that's a moving target that we're watching daily.

Speaker #5: And so we take this business day by day, week by week, month by month. And we make sure that whatever's coming at us, that we continue to navigate through it.

Speaker #3: The question was surprises. I think that one of the things that we are really focused on is that, as a good management team and as being strong operators, surprises are going to come our way.

Speaker #5: And that we achieve our goals.

Speaker #4: Got it. Congratulations on all the progress. Thank you.

Speaker #1: Thanks, David.

Speaker #6: Your next question comes from the line of Reuben Garner, Benchmark. Please go ahead.

Speaker #3: And we just have to navigate through them. And we just have to work through them. And we need to, for example, if there's an increase in tariff costs, we just need to make sure that we offset those through continued pricing and productivity initiatives.

Speaker #5: Thank you. Good morning, everybody.

Speaker #1: Hey, Reuben.

Speaker #5: I was wondering if you had any insight into your business in the US by geography and/or customer size. In other words, any signs of acceleration in maybe some of the major cities?

Speaker #3: And so we take this business day by day, week by week, month by month. And we make sure that whatever's coming at us, that we continue to navigate through it.

Bruce: We take this business day by day, week by week, month by month, and we make sure that whatever's coming at us, that we continue to navigate through it and that we achieve our goals.

Bruce Hausmann: We take this business day by day, week by week, month by month, and we make sure that whatever's coming at us, that we continue to navigate through it and that we achieve our goals.

Speaker #3: And that we achieve our goals.

Speaker #4: Got it. Congratulations on all the progress. Thank you.

David MacGregor: Got it. Congratulations on all the progress. Thank you.

Speaker #5: Any signs of acceleration with some of your larger customers of late?

Speaker #1: Thanks, David.

Laurel Hurd: Thanks, David.

Speaker #2: Your next question comes from the line of Ruben Garner, Benchmark. Please go ahead.

Operator: Your next question comes from the line of Reuben Garner, Benchmark. Please go ahead.

Speaker #1: Yeah. We've seen the in the US, I would say, and this is maybe particularly to the corporate side of the business. We've really seen New York and the Bay Area come back strong.

Speaker #3: Thank you. Good morning, everybody.

Reuben Garner: Thank you. Good morning, everybody.

Speaker #1: Hey, Ruben.

Laurel Hurd: Hey, Reuben.

Reuben Garner: I was wondering if you had any insight into your business in the US by geography and/or customer size. In other words, any signs of acceleration in maybe some of the major cities, any signs of acceleration with some of your larger customers of late?

Speaker #3: I was wondering if you had any insight into your business in the U.S. by geography and/or customer size. In other words, any signs of acceleration in maybe some of the major cities?

Speaker #1: So they were definitely obviously harder hit in COVID. It took a longer time to recover. But we're seeing those really strengthen, which is encouraging.

Speaker #1: Texas remained strong. The Southeast, again, remained strong. So we're seeing that regional migration continue to happen. And with respect to our customer size, we do a lot of our business, about 80% of our business is renovation.

Speaker #3: Any signs of acceleration with some of your larger customers of late?

Speaker #1: Yeah. We've seen the in the US, I would say, and this is maybe particularly to the corporate side of the business. We've really seen New York and the Bay Area come back strong.

Laurel Hurd: Yeah, we've seen, you know, In the US, I would say, and this is maybe particularly to the corporate side of the business, we've really seen New York and the Bay Area come back strong. They were definitely, you know, obviously harder hit in COVID. It took a longer time to recover, but we're seeing those really strengthen, which is encouraging. Texas remains strong. The Southeast, again, remains strong. We're seeing that regional migration continue to happen. With respect to our customer size, you know, we do a lot of our business, about 80% of our business is renovation and 20% new construction. I don't have a lot to add with respect to customer size. I think they're all kind of in the same trend.

Speaker #1: And 20% new construction. So I don't have a lot to add with respect to customer size. I think they're all kind of in the same trend.

Speaker #5: Yeah. And one thing that helps us, Reuben, is that our customer concentration is so low. That I think that that's another strength of the business.

Speaker #1: So they were definitely obviously harder hit in COVID. It took a longer time to recover. But we're seeing those really strengthen, which is encouraging.

Speaker #5: We're not dependent on any one or two or three or four customers. We have a big diverse group of customers. Which I think is actually a strength.

Speaker #5: Great. And then the healthcare and education pieces of your business were very strong. Can you dive a little more in how much of that you think is shared gain?

Speaker #1: And 20% new construction. So I don't have a lot to add with respect to customer size. I think they're all kind of in the same trend.

Speaker #3: Yeah, and one thing that helps us, Ruben, is that our customer concentration is so low.

Bruce: Yeah. One thing that helps us, Reuben, is that our customer concentration is so low...

Bruce Hausmann: Yeah. One thing that helps us, Reuben, is that our customer concentration is so low...

Speaker #5: How much kind of runway you see in spending in those two particular categories as we get into '26 and beyond?

Speaker #2: Yeah. Good point.

Laurel Hurd: Yeah, good point.

Bruce: ... that, you know, I think that's another strength of the business. We're not dependent on any one or two or three or four customers. We have a big, diverse group of customers, which I think is actually a strength.

Bruce Hausmann: ... that, you know, I think that's another strength of the business. We're not dependent on any one or two or three or four customers. We have a big, diverse group of customers, which I think is actually a strength.

Speaker #3: That I think that that's another strength of the business. We're not dependent on any one or two or three or four customers. We have a big diverse group of customers.

Speaker #1: Yeah. Sure. We love the macro environment around both healthcare and education for Interface. But I'll take each of them. Education, we both K through 12 and higher ed have some nice tailwinds around them.

Speaker #3: Which I think is actually a strength.

Speaker #2: Great. And then the healthcare and education pieces of your business were very strong. Can you dive a little more in how much of that you think is shared gain?

Reuben Garner: Great. The healthcare and education pieces of your business were very strong. Can you dive a little more in how much of that you think is share gain? How much kind of runway you see in spending in those two particular categories as we get into 2026 and beyond?

Speaker #1: There's investment happening there. And they prefer products like Interface. So we've got a strong product offering. They care about their carbon footprint. And really well-aligned to our strategy.

Speaker #2: How much kind of runway you see in spending in those two particular categories as we get into '26 and beyond?

Speaker #1: There are some share gains in education. A lot of the expanding our approachable price points across both LET and carbon tile has given us more access and share gains in K through 12 especially.

Laurel Hurd: Yeah, sure. You know, we love the macro environment around both health, healthcare and education for Interface. I'll take each of them. Education is, both K-12 and higher ed have some nice tailwinds around them. There's investment happening there. They prefer products like Interface. We've got a strong product offering. They care about their carbon footprint, really well-aligned to our strategy. There are some share gains in education. A lot of the expanding our approachable price points across both LVT and carpet tile has given us more access and share gains in K-12, especially. That's been a nice win for us.

Speaker #1: So that's been a nice win for us. And then healthcare, again, great macros there with the aging population, more focus on preventative care. A lot of technology happening in healthcare that we think will continue to benefit us.

Speaker #1: There's investment happening there, and they prefer products like Interface. So we've got a strong product offering. They care about their carbon footprint and are really well-aligned to our strategy.

Speaker #1: So strong environment. And then again, some share gains there. So this is the place that has been most strongly impacted by our combined selling team.

Speaker #1: There are some share gains. In education, a lot of the expanding our approachable price points across both LET and carbon tile has given us more access and share gains in K through 12 especially.

Speaker #1: Where we have our Salesforce focused on each market. They're focused on all of the product categories that we sell. Interface and Nora. And that's really unlocked some healthcare environment.

Speaker #1: So that's been a nice win for us. And then healthcare, again, great macros there with the aging population more focused on preventative care. A lot of technology happening in healthcare that we think will continue to benefit us.

Laurel Hurd: Healthcare, again, great macros there with the aging population, more focus on preventative care, a lot of technology happening in healthcare that we think will continue to benefit us. Strong environment, again, some share gains there. This is the place that has been most strongly impacted by our combined selling team where we have our sales force focused on each market. They're focused on all of the product categories that we sell, Interface and Nora, that's really unlocked some healthcare environments. An example of that, where we may have had a really strong Nora business with a particular healthcare customer, but we hadn't had carpet tile in the waiting rooms or LVT outside of an elevator bank.

Speaker #1: So an example of that where we may have had a really strong Nora business with a particular healthcare customer. But we hadn't had carpet tile in the waiting rooms or LVT in outside of an elevator bank.

Speaker #1: So strong environment. And then again, some share gains there. So this is the place that has been most strongly impacted by our combined selling team.

Speaker #1: We're now selling them the full suite of products, which is really helping us grow our overall healthcare business.

Speaker #5: And Brian, I'm sorry, Reuben. We have a one of the things that's great about these two market segments is we just have such a strong right to win inside of them.

Speaker #5: If you look at how our products are made and how they are catered around design, performance, and sustainability, both of these market segments are just so well-suited for exactly what we do and where we're and how we do it, which is that's why we are I think seeing the traction that we're seeing.

Speaker #1: We're now selling them the full suite of products, which is really helping us grow our overall healthcare business.

Laurel Hurd: We're now selling them the full suite of products, which is really helping us grow our overall healthcare business.

Speaker #6: Great. Thanks for the detail, guys. Congrats on the strong close to the year and good luck in '26.

Speaker #3: And Brian, I'm sorry, Ruben. We have a one of the things that's great about these two market segments is we just have such a strong right to win inside of them.

Bruce: Brian, I'm sorry, Reuben, one of the things that's great about these two market segments is we just have such a strong right to win inside of them. If you look at how our products are made and how, and how they are catered around design, performance, and sustainability, both of these market segments are just so well suited for exactly what we do and how we do it, which is, you know, that's why we are, I think, seeing the traction that we're seeing.

Bruce Hausmann: Brian, I'm sorry, Reuben, one of the things that's great about these two market segments is we just have such a strong right to win inside of them. If you look at how our products are made and how, and how they are catered around design, performance, and sustainability, both of these market segments are just so well suited for exactly what we do and how we do it, which is, you know, that's why we are, I think, seeing the traction that we're seeing.

Speaker #1: Thanks, Reuben.

Speaker #6: Your next question comes from the line of Alex Parris of Barrington Research. Please go ahead.

Speaker #3: If you look at how our products are made and how they are catered around design, performance, and sustainability, both of these market segments are just so well-suited for exactly what we do and where we're and how we do it, which is that's why we are I think seeing the traction that we're seeing.

Speaker #7: Hi, guys. Thanks for taking my questions. And I'll just do a few cleanup cats and dogs here. Congrats on the quarter. Much better than expected.

Speaker #7: Even if you exclude that non-recurring inventory adjustment, I think adjusted gross margins would have been 37.8% if you exclude it. And that's above both our estimate and consensus.

Speaker #2: Great. Thanks for the detail, guys. Congrats on the strong close to the year. And good luck in '26.

Reuben Garner: Great. Thanks for the detail, guys. Congrats on the strong close to the year, and good luck in 2026.

Speaker #1: Thanks, Ruben.

Speaker #7: Yeah. So.

Laurel Hurd: Thanks, Reuben.

Speaker #1: Yeah. Exactly. Yep.

Speaker #7: And then EPS, 44 cents excluding that. And that's still exceeds. So I just wanted to talk first of all about Q1. I get it.

Speaker #2: Your next question comes from the line of Alex Parris of Barrington Research. Please go ahead.

Operator: Your next question comes from the line of Alex Paris of Barrington Research. Please go ahead.

Speaker #4: Hi, guys. Thanks for taking my questions. And I'll just do a few cleanup cats and dogs here. Congrats on the quarter. Much better than expected.

Alex Paris: Hi, guys. Thanks for taking my questions. I'll just do a few cleanup cats and dogs here. Congrats on the quarter. Much better than expected, even if you exclude that non-recurring inventory adjustment. I think adjusted gross margins would have been 37.8% if you exclude it, that's above both-

Speaker #7: Extra week. Oh, and also before we get into it, adjusted gross margin is really just gross margin because the amortization is the add-back of amortization is behind us, right?

Speaker #4: Even if you exclude that non-recurring inventory adjustment, I think adjusted gross margins would have been 37.8% if you exclude it. And that's above both our estimate and consensus.

Speaker #5: That's right. Are you referring to the Nora purchase accounting amortization?

Speaker #7: Yes. I'm sorry. Yes.

Speaker #5: Yes. That's no longer hitting the P&L. That's fully burned off, so.

Laurel Hurd: Yeah.

Alex Paris: Our estimate and consensus. Yeah.

Speaker #4: Yeah. So.

Laurel Hurd: Yeah, exactly.

Speaker #1: Yeah. Exactly. Yep.

Alex Paris: So-

Laurel Hurd: Yep.

Speaker #4: And then EPS, 44 cents excluding that. And that's still exceeds. So I just wanted to talk first of all about Q1. I get it.

Alex Paris: Then EPS, $0.44, excluding that, and that still exceeds. I just wanted to talk, first of all, about Q1. I get it, extra week. The, oh, also before we get into it, adjusted gross margin is really just gross margin because the amortization, the add back of amortization is behind us, right?

Speaker #7: Okay. And that was essentially the add-back for adjusted gross margin. So we're just talking gap gross margin. All right. So the gross margin forecast for first quarter is above our expectations.

Speaker #4: Extra week. The oh, and also before we get into it, adjusted gross margin is really just gross margin because the amortization is the add-back of amortization is behind us, right?

Speaker #7: Why is the tax rate so low? Does that have something to do with the inventory adjustment?

Speaker #5: And are you referring to Q1? In Q1? Yeah. There's a the main reason is that so this is when stock or when our employees have their LTI vest.

Speaker #3: That's right. Are you referring to the Nora purchase accounting amortization?

Bruce: That's right. Are you referring to the nora purchase accounting amortization?

Bruce Hausmann: That's right. Are you referring to the nora purchase accounting amortization?

Speaker #4: Yes. I'm sorry. Yes.

Alex Paris: Yes. I'm sorry. Yes.

Speaker #3: Yes. That's no longer hitting the P&L. That's fully burned off, so.

Bruce: Yes. That's no longer hitting the P&L. That's fully burned off, so.

Bruce Hausmann: Yes. That's no longer hitting the P&L. That's fully burned off, so.

Speaker #5: And this is pretty mechanical. But I'll get into it. So if you take the strike price between the market price that is a tax deduction that the company gets and you get that deduction in the period of vesting, which happens in Q1.

Speaker #4: Okay. And that was essentially the add-back for adjusted gross margin. So we're just talking gap gross margins. All right. So the gross margin forecast for first quarter is above our expectations.

Alex Paris: Okay. That was essentially the add back for adjusted gross margin.

Bruce: Mm-hmm.

Bruce Hausmann: Mm-hmm.

Alex Paris: We're talking gap gross margin.

Bruce: Yeah.

Bruce Hausmann: Yeah.

Alex Paris: All right.

Bruce: That's right.

Bruce Hausmann: That's right.

Alex Paris: The gross margin forecast for Q1 is above our expectations. Why is the tax rate so low? Does that have something to do with the inventory adjustment?

Speaker #4: Why is the tax rate so low? Does that have something to do with the inventory adjustment?

Speaker #5: And so that is a tax deduction in the quarter in Q1, which is why the rates are tax rates lower in Q1, so.

Bruce: I know you're referring to-

Speaker #3: And are you referring to Q1? In Q1? Yeah. There's a the main reason is that so this is when stock or when our employees have their LTI vest.

Bruce Hausmann: I know you're referring to-

Alex Paris: In Q1.

Bruce: Q1. In Q1? Yeah, the main reason is that, this is when our employees have their LPI vest, and this is pretty mechanical, but I'll get into it. If you take the strike price between the market price, that is a tax deduction that the company gets, and you get that deduction in the period of vesting, which happens in Q1. That is a tax deduction in the quarter in Q1, which is why the rate, our tax rate is lower in Q1.

Bruce Hausmann: Q1. In Q1? Yeah, the main reason is that, this is when our employees have their LPI vest, and this is pretty mechanical, but I'll get into it. If you take the strike price between the market price, that is a tax deduction that the company gets, and you get that deduction in the period of vesting, which happens in Q1. That is a tax deduction in the quarter in Q1, which is why the rate, our tax rate is lower in Q1.

Speaker #7: Gotcha. Because for the full year, it's 25 to 26 percent, which is more in line with our expectations.

Speaker #5: Exactly. But in Q1, we get a nice we get a deduction for that, what I just described, so.

Speaker #3: And this is pretty mechanical. But I'll get into it. So if you take the strike price between the market price that is a tax deduction that the company gets and you get that deduction in the period of vesting, which happens in Q1.

Speaker #7: Gotcha. Appreciate that color. And then Bruce, your comments about gross margins lead me to another question for the full year. You're guiding for adjusted gross margins of 38 and a half to 39, you said, at the high end, that would kind of represent a 100 basis point increase because you got a couple of grow-overs, the tariff impact and the inventory adjustment.

Speaker #3: And so that is a tax deduction in the quarter, in Q1, which is why the tax rates are lower in Q1, so.

Speaker #4: Gotcha. Because for the full year, it's 25 to 26 percent, which is more in line with our expectations.

Alex Paris: Gotcha, because for the full year, it's 25% to 26%, which is more in line.

Bruce: Right

Bruce Hausmann: Right

Alex Paris: ... with our expectations.

Bruce: Exactly. In Q1, we get a nice deduction for that, what I just described, so.

Bruce Hausmann: Exactly. In Q1, we get a nice deduction for that, what I just described, so.

Speaker #3: Exactly. But in Q1, we get a nice we get a deduction for that, what I just described, so.

Speaker #7: First question about the tariffs. What was the impact of tariffs in 2025? And what is the impact of tariffs based on what you know now?

Speaker #4: Gotcha. Appreciate that color. And then Bruce, your comments about gross margins lead me to another question. For the full year, you're guiding for adjusted gross margins of 38 and a half to 39, you said, at the high end, that would kind of represent a 100 basis point increase because you got a couple of grow-overs, the tariff impact and the inventory adjustment.

Alex Paris: Gotcha. Appreciate that color. Bruce, your comments about gross margins lead me to another question. For the full year, you're guiding for Adjusted Gross Margins of 38.5% to 39%. You said at the high end, that would kinda represent a 100 basis point increase because you got a couple of grow overs, the tariff impact and the

Speaker #7: I know it's a moving target in 2026.

Speaker #5: Yeah. So in 2025, if you look at our gross profit percentage, it diluted our percentage by around 20 basis points. And we're anticipating that it'll be about 50 basis points year-over-year impact going into 2026.

Speaker #7: Is that part of the is it because there was no impact in Q1 of 2025? You got four quarters of it this time.

Laurel Hurd: Yeah

Alex Paris: ... inventory adjustment. First question about the tariffs: What was the impact of tariffs in 2025, and what is the impact of tariffs? Based on what you know now, I know it's a moving target in 2026.

Speaker #4: First question about the tariffs. What was the impact of tariffs in 2025? And what is the impact of tariffs based on what you know now?

Speaker #5: That's right. The tariffs started kicking in sort of in the middle of last year or they started, I think, in Q2. But they really started kicking in the back half.

Speaker #4: I know it's a moving target in 2026.

Speaker #3: So in 2025, if you look at our gross profit percentage, it diluted our percentage by around 20 basis points. And we're anticipating that it'll be about 50 basis points year-over-year impact going into 2026.

Bruce: Yeah. In 2025, if you look at our gross profit percentage, it diluted our percentage by around 20 basis points. We're anticipating that it'll be about 50 basis points, year-over-year impact in going into 2026.

Bruce Hausmann: Yeah. In 2025, if you look at our gross profit percentage, it diluted our percentage by around 20 basis points. We're anticipating that it'll be about 50 basis points, year-over-year impact in going into 2026.

Speaker #5: So anyway. So I just want to clarify. We're covering dollar for dollar. I just want to I want to make sure that I'm doing a good job communicating.

Speaker #5: We're covering dollar for dollar. But it does have a dilutive impact on our GP percentage, so.

Speaker #4: Is that part of the is it because there was no impact in Q1 of 2025? You got four quarters of it this time?

Alex Paris: Is that part of the re-

Bruce: Yeah.

Bruce Hausmann: Yeah.

Alex Paris: Is it because there was no impact in Q1 of 2025. You got 4 quarters of it this time?

Speaker #7: Yeah. I think you mentioned it last quarter. I appreciate that. And then any impact that you could determine at this point with the Supreme Court's decision to strike down the previous tariffs and replace them with 10 and 15 percent reciprocal tariffs?

Speaker #3: That's right. The tariffs started kicking in sort of in the middle of last year or they started, I think, in Q2. But they really started kicking in the back half.

Bruce: That's right. I think tariffs started kicking in sort of in the middle of, you know, last year. They started, I think, in Q2, but, you know, they really started kicking in the back half. Anyway.

Bruce Hausmann: That's right. I think tariffs started kicking in sort of in the middle of, you know, last year. They started, I think, in Q2, but, you know, they really started kicking in the back half. Anyway.

Speaker #7: Is there any incremental impact? Or is it too soon to figure that out right now?

Speaker #3: So anyway. So I just want to clarify. We're covering dollar for dollar. I just want to I want to make sure that I'm doing a good job communicating.

Alex Paris: And then any impact-

Bruce: I just wanna clarify. We're covering dollar for dollar.

Bruce Hausmann: I just wanna clarify. We're covering dollar for dollar.

Speaker #5: Yeah. Great question. We're obviously watching it day by day. It was interesting. We were at 15% tariffs last week. And then the Supreme Court struck that down, as you just mentioned.

Laurel Hurd: Exactly.

Bruce: I just wanna make sure that I'm doing a good job communicating. We're covering dollar for dollar, but it does have a dilutive impact on our GP percentage, so.

Bruce Hausmann: I just wanna make sure that I'm doing a good job communicating. We're covering dollar for dollar, but it does have a dilutive impact on our GP percentage, so.

Speaker #3: We're covering dollar for dollar. But it does have a dilutive impact on our GP percentage, so.

Speaker #5: And then on Saturday, we were back to 15%, kind of right back where we started. So we'll see. It's to be determined. It's obviously a moving target day by day, so.

Alex Paris: Yeah, yeah, I think you mentioned it last quarter. I appreciate that.

Speaker #4: Yeah, I think you mentioned it last quarter. I appreciate that. And then, any impact that you could determine at this point with the Supreme Court's decision to strike down the previous tariffs and replace them with 10% and 15% reciprocal tariffs?

Bruce: Yeah.

Bruce Hausmann: Yeah.

Alex Paris: Any impact that you could determine at this point with the Supreme Court's decision to strike down the previous tariffs and replace them with 10% and 15% reciprocal tariffs? Is there any incremental impact, or is it too soon to figure that out right now?

Speaker #7: Okay. Thanks. And then I think my last question here. Can I get global billings by category? Healthcare, corporate office, education for Q4? You gave it for a full year.

Speaker #4: Is there any incremental impact? Or is it too soon to figure that out right now?

Bruce: Yeah, great question. We're obviously watching it day by day. It was interesting, you know, we were at 15% tariffs last week, the Supreme Court struck that down, as you just mentioned. On Saturday, we were back to 15%, kinda right back where we started. We'll see. It's to be determined. It's obviously a moving target day by day, so.

Bruce Hausmann: Yeah, great question. We're obviously watching it day by day. It was interesting, you know, we were at 15% tariffs last week, the Supreme Court struck that down, as you just mentioned. On Saturday, we were back to 15%, kinda right back where we started. We'll see. It's to be determined. It's obviously a moving target day by day, so.

Speaker #3: Yeah. Great question. We're obviously watching it day by day. It was interesting. We were at 15 percent tariffs last week. And then the Supreme Court struck that down, as you just mentioned.

Speaker #1: Yeah. Yeah. I can give you that, Alex. So let's see. Corporate globally in the quarter, corporate was flat. Education was up 11.6. So between 11 and 12.

Speaker #3: And then on Saturday, we were back to 15 percent, kind of right back where we started. So we'll see. It's to be determined. It's obviously a moving target day by day, so.

Speaker #4: Okay, thanks. And then I think my last question here—can I get global billings by category: healthcare, corporate office, education—for Q4? You gave it for the full year.

Alex Paris: Okay, thanks. I think my last question here, can I get global billings by category, healthcare, corporate office, education for Q4? You gave it for full year.

Speaker #1: And healthcare was up 11.7.

Speaker #7: Great. I'm just trying to see if there's anything else here. No, I think that's it. Again, great quarter. And great guide. Thanks for the additional color.

Laurel Hurd: Yeah, I can give you that, Alex. Let's see. corporate globally in the quarter, corporate was flat. education was up 11.6, so between 11 and 12, and healthcare was up 11.7.

Speaker #1: Yeah. Yeah. I can give you that, Alex. So let's see. Corporate globally in the quarter, corporate was flat. Education was up 11.6. So between 11 and 12.

Speaker #7: And we will follow up offline.

Laurel Hurd: Yeah, I can give you that, Alex. Let's see. corporate globally in the quarter, corporate was flat. education was up 11.6, so between 11 and 12, and healthcare was up 11.7.

Speaker #1: Sounds great. Thanks, Alex.

Speaker #5: Thank you, Alex.

Speaker #6: Your next question comes from the line of David McGregor of Longbow Research. Please go ahead.

Speaker #5: Yeah. Thanks for taking the follow-up. Just, I guess, a high-level question that kind of ties back to the Norevont. And you've made such great progress with one interface in terms of the reconfiguration of how you go to market.

Speaker #1: And healthcare was up 11.7.

Speaker #4: Great. I'm just trying to see if there's anything else here. No, I think that's it. Again, great quarter. And great guide. Thanks for the additional color.

Alex Paris: Great. Just trying to see if there's anything else here. No, I think that's it. Again, great quarter and great guide. Thanks for the additional color, and we will follow up offline.

Speaker #5: So much more efficient. You're coverage is so much better now than it's been in the past. Does that lead you to within the broader thought of capital allocation, start thinking more about investing in new product development and coming up with whatever comes after Norevont and just pursuing other product categories, other marketeers?

Speaker #4: And we will follow up offline.

Speaker #1: Sounds great. Thanks, Alex.

Laurel Hurd: Sounds great. Thanks, Alex.

Speaker #3: Thank you, Alex.

Speaker #5: Your next question comes from the line of David McGregor of Longbow Research. Please go ahead.

Operator: Your next question comes from the line of David MacGregor of Longbow Research. Please go ahead.

Speaker #5: Just maybe talk about the inclination to lean more aggressively into product development and leverage the benefits on the go-to-market.

Speaker #3: Yeah. Thanks for taking the follow-up. Just, I guess, a high-level question that kind of ties back to the Norevont. And you've made such great progress with one interface in terms of the reconfiguration of how you go to market.

David MacGregor: Yeah, thanks for taking the follow-up. Just, I guess, a high-level question that kind of ties back to Norvant. You know, you've made such great progress with One Interface in terms of the reconfiguration of how you go to market. So much more efficient. Your coverage is so much better now than it's been in the past. Does that lead you to, you know, within the broader thought of capital allocation, start thinking more about investing in new product development and coming up with, you know, whatever comes after Norvant and just pursuing other product categories, other market tiers? Just maybe talk about the inclination to lean more aggressively into product development and leverage the benefits on the go-to market.

Speaker #1: Yeah. Thanks for asking the question. And we're really excited about Norevont. I think you're hitting on exactly the right point. So I appreciate you bringing it up.

Speaker #3: So much more efficient. Your coverage is so much better now than it's been in the past. Does that lead you to within the broader thought of capital allocation, start thinking more about investing in new product development and coming up with whatever comes after Norevont and just pursuing other product categories or the market tiers?

Speaker #1: We're really focused on innovation. And I think we're just getting started here as well. Obviously, innovation takes time. And we've got incredible folks across our R&D organization and our product organization and design who have incredible ideas and technology that really support our strategy and align with our brand.

Speaker #3: Just maybe talk about the inclination to lean more aggressively into product development and leverage the benefits on the go-to-market.

Speaker #1: So very sustainable technologies, and we're lining them up, as you know. We added a new leader of product category management who's really focused on helping us identify the commercial opportunities that take all of the great innovation that we're working on and bring it to market effectively.

Speaker #1: Yeah. Thanks for asking the question. And we're really excited about Norevont. I think you're hitting on exactly the right point. So I appreciate you bringing it up.

Laurel Hurd: Yeah, thanks for asking the question. We're really excited about Noravant. I think you're hitting on exactly the right point, I appreciate you bringing it up. We're really focused on innovation, I think we're just getting started here as well. Obviously, innovation takes time. We've got incredible folks across our R&D organization and our product organization and design who have incredible ideas and technology that really support our strategy and align with our brand. Very sustainable technologies, we're lining them up. As you know, we added a new leader of product category management, who's really focused on helping us identify the commercial opportunities that take all of the great innovation that we're working on and bring it to market effectively. Noravant, I think, is a really big platform for us that we expect to drive growth.

Speaker #1: So Norevont, I think, is a really big platform for us that we expect to drive growth. We would say this product category, and it is really a new category for us, could deliver somewhere 50 to 100 million over the next five years.

Speaker #1: So it's a really important platform. And we'll continue to bring out the beauty of this product category. We're starting with a wood grain look.

Speaker #1: But it gives us a ton of design flexibility and the ability for us to bring interfaces design capabilities to rubber in a whole new way is really, really exciting.

Speaker #1: So I think you're going to see a lot of runway on this category for us. And we've got more in the works. So again, it takes time.

Laurel Hurd: You know, we would say this product category, and it is really a new category for us, could deliver somewhere $50 to 100 million over the next five years. It's a really important platform, and we'll continue to bring out the beauty of this product category. We're starting with a wood grain look, but it gives us a ton of design flexibility, and the ability for us to bring Interface's design capabilities to rubber in a whole new way is really, really exciting. I think you're going to see a lot of runway on this category for us, and we've got more in the works. Again, it takes time, but we're really focused on it and think there's a lot of ammunition here for us to go.

Speaker #1: But we're really focused on it and think there's a lot of ammunition here for us to go.

Speaker #5: Great. Thanks very much.

Speaker #1: Okay. Thanks, David.

Speaker #1: So, it's a really important platform, and we'll continue to bring out the beauty of this product category. We're starting with a wood grain look.

Speaker #6: There are no further questions at this time. And with that, I will now turn the call over to Laurel Hurd, President and Chief Executive Officer for Final Closing Remarks.

Speaker #1: But it gives us a ton of design flexibility, and the ability for us to bring interface design capabilities to rubber in a whole new way is really, really exciting.

Speaker #6: Please go ahead.

Speaker #1: Great. Thanks, all. I just want to thank the entire Interface team on all for all of the progress in 2025. Just a fantastic year.

Speaker #1: So I think you're going to see a lot of runway on this category for us. And we've got more in the works. So again, it takes time.

Speaker #1: And thanks to everyone's support. Thanks to all of our customers. And thanks to everyone for joining the call.

Speaker #1: But we're really focused on it and think there's a lot of ammunition here for us to go.

Speaker #3: Great. Thanks very much.

David MacGregor: Great. Thanks very much.

Speaker #1: Okay. Thanks, David.

Laurel Hurd: Okay. Thanks, David.

Speaker #5: There are no further questions at this time. And with that, I will now turn the call over to Laurel Hurd, President and Chief Executive Officer, for final closing remarks.

Operator: There are no further questions at this time. With that, I will now turn the call over to Laurel Hurd, President and Chief Executive Officer, for final closing remarks. Please go ahead.

Speaker #5: Please go ahead.

Speaker #1: Great. Thanks, all. I just want to thank the entire interface team on all for all of the progress in 2025. Just a fantastic year.

Laurel Hurd: Great. Thanks, all. I just want to thank the entire Interface team for all of the progress in 2025. Just a fantastic year, and thanks to everyone's support, thanks to all of our customers, and thanks to everyone for joining the call.

Speaker #1: And thanks to everyone's support. Thanks to all of our customers. And thanks to everyone for joining the call.

Operator: Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.

Q4 2025 Interface Inc Earnings Call

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