TILE Q2 Deep Dive: Americas Momentum and Automation Drive Margin Expansion

Modular flooring manufacturer Interface (NASDAQ:TILE) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 8.3% year on year to $375.5 million. The company expects next quarter’s revenue to be around $355 million, close to analysts’ estimates. Its non-GAAP profit of $0.60 per share was 27.7% above analysts’ consensus estimates.

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StockStory’s Take

Interface’s second quarter results were met with a highly positive market reaction, as the company delivered significant year-over-year growth in both revenue and profitability. Management attributed the outperformance to broad-based sales momentum, particularly in the Americas, and highlighted the success of the One Interface Strategy in consolidating sales teams across product categories. CEO Laurel Hurd pointed to nearly 40% growth in nora rubber sales in the Americas and strong results in education and healthcare market segments, noting, “We have positioned the Americas business to win across several dimensions, including our combined selling teams.”

Looking forward, Interface’s updated guidance reflects its expectation for continued momentum, underpinned by strategic investments in automation, new product launches, and expanded addressable markets. Management emphasized plans to leverage automation learnings from U.S. operations into Australia and Europe, while closely monitoring the tariff environment. CFO Bruce Hausmann stated that ongoing productivity initiatives and pricing actions are expected to offset cost headwinds, and Hurd added, “We’re committed to strategic investments that boost productivity, streamline workflows and optimize resources to support sustainable growth and long-term success.”

Key Insights from Management’s Remarks

Management credited second quarter growth to gains in key product lines, improved operational efficiency, and market share expansion in core segments.

• Americas sales acceleration: The Americas region saw double-digit net sales growth, driven by the integration of sales teams and a unified approach to customer engagement across carpet tile, luxury vinyl tile (LVT), and nora rubber. This resulted in significant market share gains, especially in carpet tile and nora rubber.
• nora rubber outperformance: Nora rubber sales in the Americas surged nearly 40%, with management citing new use cases in education and healthcare segments. The sales organization’s ability to solve customer needs across product types was a key factor, and management plans additional investments to support further nora growth.
• Operational efficiency and automation: Investments in automation and robotics at U.S. carpet tile manufacturing plants improved productivity and reduced waste, directly contributing to margin expansion. Management reported that these systems are now fully operational and exceeding expectations, with plans to replicate the approach in Australia and Europe next year.
• Diversification in end markets: Interface achieved growth across its primary market segments—education, healthcare, and corporate office—supported by new product offerings at more accessible price points. The education segment benefited from modernization trends and demographic shifts, while healthcare billings increased due to aging populations and preventative care demand.
• Balanced capital allocation: The company resumed share repurchases for the first time since 2022, while maintaining a focus on investing in growth and margin expansion. Management highlighted the flexibility provided by a strong balance sheet and low net leverage, enabling continued investment in both organic growth and potential strategic acquisitions.

Drivers of Future Performance

Interface’s outlook is shaped by automation investments, new market opportunities, and proactive responses to tariff-related costs.

• Productivity and margin initiatives: Management expects ongoing automation projects and supply chain optimization to drive continued productivity gains and margin expansion, with new systems being deployed in international operations in 2026. These initiatives are designed to mitigate cost inflation and enhance operational resilience.
• Addressable market and product expansion: Interface is targeting growth in the mid-market segment by introducing products at more accessible price points, broadening its customer base beyond the premium tier. Management believes this approach, along with product innovation in LVT and nora rubber, will sustain market share gains and revenue growth.
• Tariff and cost management: The company anticipates that tariffs will continue to affect about 15% of global product costs, primarily on U.S. imports. Management plans to offset these impacts through pricing adjustments and productivity improvements, noting the environment remains dynamic but manageable.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will monitor (1) the rollout and impact of automation in Australia and Europe, (2) continued market share gains and product traction in the mid-market segment, and (3) Interface’s ability to manage tariff headwinds through pricing and productivity. Execution on new product launches and backlog conversion will also be important markers for sustained momentum.

Interface currently trades at $26.07, up from $20.63 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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