TRG | The Bottom Line – 10/24

Interface is in early stages of a new corporate strategy that is resulting in improved sales, improved margins, and solid stock price appreciation. We believe there is still plenty of room to run for both the strategy, and, in turn, the stock price. The crux of the evolution is the One Interface strategy implemented in early 2024 that implemented multiple changes across the organization. Key in our mind is the combination of the selling teams that turned into a cohesive sales force selling Interface’s full suite together. Benefits are already materializing across sales by product, sales into certain verticals, and margins. On the product front, LVT and rubber sales continue to outpace carpet tile. On the end market front, Interface continues to outpace the overall office market headlines and is seeing strong growth in education and healthcare. On the margin front, we believe the 38-39% gross margin range is achievable and balances volume and price dynamics. Interface is expected to deliver gross margins in the 37.7% range for FY’25E, up from 37.1% in FY’24.