Interface 2025 Q1 Earnings Misses Targets with Net Income Decline

Interface (TILE) reported its fiscal 2025 Q1 earnings on May 06th, 2025. Interface's results fell short of expectations as net income declined by 8.3% year-over-year, reflecting margin pressures amid rising manufacturing costs. The company raised its full-year sales guidance, projecting net sales from $1.340 billion to $1.365 billion, but maintained its adjusted gross profit margin outlook at 37.2% to 37.4%, highlighting persistent cost challenges. Despite these headwinds, the company anticipates a strong second quarter, with sales expected between $355 million and $365 million.

Revenue
The total revenue of Interface increased by 2.6% to $297.41 million in 2025 Q1, up from $289.74 million in 2024 Q1.

Earnings/Net Income
Interface's EPS declined 8.3% to $0.22 in 2025 Q1 from $0.24 in 2024 Q1. Meanwhile, the company's net income declined to $13 million in 2025 Q1, down 8.3% from $14.18 million reported in 2024 Q1. This decline reflects ongoing margin pressures.

Price Action
The stock price of Interface has climbed 3.48% during the latest trading day, has climbed 3.26% during the most recent full trading week, and has climbed 3.92% month-to-date.

Post-Earnings Price Action Review
The strategy of buying Interface (TILE) shares after a revenue drop quarter-over-quarter and holding for 30 days has historically resulted in a loss of 2.4% over the past five years. This approach has been unprofitable, underperforming the market with a beta of 1.2, indicating slightly higher volatility than the S&P 500. Despite the positive short-term price movement, the strategy's lack of success suggests that investors may be better served by considering alternative approaches to capitalizing on Interface's stock performance. The company's volatility and market dynamics emphasize the importance of cautious investment strategies in navigating fluctuating revenue and earnings results.

CEO Commentary
"We delivered a solid start to the year, with currency-neutral net sales growth of 4% year-over-year," commented Laurel Hurd, CEO of Interface. Hurd highlighted the 6% growth in the Americas segment and a 10% increase in currency-neutral orders as key growth drivers, despite a softer macro environment in EAAA. The CEO emphasized the effectiveness of the "One Interface" strategy in achieving these results and the importance of innovation and sustainability in driving performance. Hurd expressed optimism regarding order momentum and a healthy backlog, reinforcing the company's commitment to accelerating growth and expanding margins.

Guidance
Interface anticipates a strong second quarter, projecting net sales between $355 million and $365 million. For the full fiscal year 2025, the company expects net sales to range from $1.340 billion to $1.365 billion, an increase from previous guidance of $1.315 billion to $1.365 billion. The adjusted gross profit margin is expected to be approximately 37.2%.

Additional News
Interface has recently made strategic moves to enhance its sustainability efforts and product innovation. The company launched Terra Nova, expanding its carbon negative rug collection, reinforcing its commitment to becoming carbon negative by 2040. Additionally, Interface has begun utilizing captured carbon in its carpet tile manufacturing processes, aligning with its climate commitments. The company also declared a regular quarterly cash dividend of $0.01 per share, payable on April 11, 2025. These initiatives underscore Interface's focus on sustainability and shareholder value amidst a challenging economic environment.