An American maker of modular carpet tiles and flooring founded in 1973, when Ray Anderson brought fusion-bonding carpet-tile technology from Britain to the U.S. and built the company in LaGrange, Georgia. Its products, sold under the Interface, FLOR, and nora brands, cover offices, schools, hospitals, and homes. In 1994, after a customer asked what his company did for the environment, Anderson read a book he later described as a "spear in the chest," sparking the firm's famed sustainability drive, "Mission Zero."
Gross margin hit 45.0% in Q2 FY2026, the highest quarterly rate in over five years, as IEEPA tariff refunds cut costs.
reached 45.0%, the highest quarterly rate in over five years. rose 5.4% to $395.7 million and rose 43.9% to $74.9 million, driven by lower manufacturing costs and $15.6 million of recorded as a cost-of-sales reduction. The quarter's profitability was lifted by a one-time refund, leaving the underlying margin trajectory as the key question for the second half.
Key takeaways
expanded 5.6 points to 45.0%, driven by lower manufacturing costs and $15.6 million of recorded as a cost-of-sales reduction.
rose 43.9% to $74.9 million, with widening 5.1 points to 18.9%, as the expansion flowed through despite a 7.5% increase in SG&A expenses tied to higher sales commissions, variable compensation, and labor costs.
rose 5.4% to $395.7 million, driven by approximately 3% higher volume, 1% higher prices, and a $5.8 million currency , with corporate office, healthcare, and education segments leading growth.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 5.4% to $395.7M and operating income rose 44% to $74.9M, aided by IEEPA tariff refunds.
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Consolidated Q2 rose 5.4% to $395.7M on higher volume (~3%), higher prices (~1%), and favorable currency (~$5.8M), led by corporate office, healthcare, and education segments.
Q2 rose to $74.9M from $52.0M, and expanded to 45.0% from 39.4%, driven by lower manufacturing costs and $15.6M of IEEPA tariff refunds recorded as a cost-of-sales reduction.
The EAAA drove outperformance: rose 8.8% and rose 97.7%, aided by approximately $5.8 million of favorable currency, while the AMS segment grew sales 3.4% and adjusted operating income 24.9%.
rose 57.9% to $51.4 million, and rose 60.0% to $0.88, as the expansion and lower —down $2.1 million on lower borrowings after the senior notes redemption—flowed through to the bottom line.
rose to approximately $269.1 million as of July 20, 2026, from approximately $222.8 million as of February 2, 2026, while liquidity remained ample with $81.5 million in cash and $216.3 million in additional borrowing capacity.
What changed
The Q1 FY2026 watch item on whether would recover was answered: free cash flow rose 714.4% sequentially to $26.2 million, up from $3.2 million in Q1, as rose 183.3% to $38.4 million.
The Q1 FY2026 watch item on whether the 38.3% rate would hold into Q2 was exceeded: gross margin rose 6.7 points sequentially to 45.0%, though the increase was driven by $15.6 million of rather than underlying cost improvement alone.
The Q1 FY2026 watch item on the durability of the EAAA 's 57.9% increase was answered: the segment's adjusted operating income rose 97.7% in Q2, aided by favorable currency and lower manufacturing costs.
The FY2025 watch item on whether the 38.7% rate could be sustained into FY2026 was answered in Q2 with a 45.0% rate, though the make the underlying rate less clear.
rose 4.2% sequentially to $195.6 million, up from $187.7 million in Q1 FY2026, after falling 35.7% from $303.9 million in Q2 FY2025.
What to watch
Whether the 45.0% rate is sustainable into Q3 FY2026 once the $15.6 million IEEPA tariff refund is excluded, and what the underlying margin rate is without that one-time benefit.
The trajectory of the EAAA 's , to see whether the 97.7% increase is durable or reflects one-time factors including favorable currency and the tariff refunds.
Whether continues to strengthen in the second half as the working-capital build reverses, or whether higher on automation and robotics keep cash generation constrained.
The pace of capital allocation now that cash and equivalents have risen to $81.5 million and stands at $195.6 million, to see whether the company prioritizes rebuilding cash, continuing deleveraging, or share repurchases.
Six-month rose 8.0% to $726.7M, helped by an extra week in the 27-week period and favorable currency (~$19.2M), while rose to $107.2M from $75.3M.
AMS Q2 rose 3.4% and AOI rose 24.9%; EAAA segment Q2 net sales rose 8.8% and AOI rose 97.7%, with EAAA aided by ~$5.8M of favorable currency.
SG&A rose 7.5% in Q2 on higher sales commissions, variable compensation, and labor costs, partially offset by lower severance; fell $2.1M on lower borrowings after senior notes were redeemed in December 2025.
Liquidity remained ample with $81.5M cash and $216.3M additional borrowing capacity; rose to ~$269.1M as of July 20, 2026 from ~$222.8M as of February 2, 2026.
Quantitative and Qualitative Disclosures About Market Risk
Company sees limited fair-value risk from variable-rate debt but quantifies a $10.6M foreign-exchange sensitivity.
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The company uses to measure the impact of hypothetical interest-rate and foreign-currency changes on the fair values of its market-sensitive instruments.
Debt under the Facility carries variable rates tied to a prime lending rate, , or other benchmark, so interest-rate changes are not expected to significantly affect that debt's .
Changes in the underlying benchmark rates would instead affect the amount of , with details deferred to the fiscal 2025 Form 10-K.
As of July 5, 2026, a 10% increase or decrease in foreign currency exchange rates against the U.S. dollar would change the net of financial instruments by $10.6 million.
The foreign-exchange sensitivity model excludes offsetting changes in the fair market value of , so results are not indicative of actual currency exposure.
From time to time, we are a party to legal proceedings, whether arising in the ordinary course of business or otherwise. See Note 14 of Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 17 to the consolidated financial statements included in Item 8 of the Annual Repo…
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From time to time, we are a party to legal proceedings, whether arising in the ordinary course of business or otherwise. See Note 14 of Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 17 to the consolidated financial statements included in Item 8 of the Annual Report on Form 10-K for the fiscal year ended December 28, 2025, for summaries of some of those proceedings.
In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 28, 2025. 38 Table of Contents
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In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
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