Interface, Inc.

Hello, and welcome to the Q2 2023 Interface, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press star 1 on your telephone keypad. I will now turn the call over to Christine Needles. Please go ahead.

Good morning, and welcome to Interface's conference call regarding second quarter 2023 results. hosted by Laurel Hurd, CEO, and Bruce Hausman, Vice President and CFO. During today's conference call, any management comments regarding Interface's business which are not historical information are forward-looking statements within the meaning of federal securities laws. Forward-looking statements include statements regarding the intent, belief, or current expectations of our management team, as well as the assumptions on which such statements are based. 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 statement, including risks and uncertainties described in our most recent annual report on Form 10-K filed with the SEC. 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 8K furnished with the SEC today. Lastly, this call is being recorded and broadcasted for interface. It contains copyrighted material and may not be re-recorded or re-broadcasted without Interface's express permission. 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 questions. Now, I will turn the call over to Laurel Hurd, CEO.

Thank you, Christine, and good morning, everyone. Once again, I want to thank the Interface team for delivering a solid quarter that was in line with our guidance and expectations on strong execution around the globe. Currency-neutral net sales were down 5% year-over-year as we anticipated compared to a strong prior-year comp that was up 23%. Overall, given ongoing macro challenges, we're pleased with Q2's net sales results and the steady customer demand that we saw throughout the quarter. We are executing well on our segment diversification strategy to help insulate and strengthen us even further from unpredictable market dynamics in the corporate office segment. Education has grown to 18% of our global billings over the last 12 months, and we anticipate this trend to continue as U.S. schools tap into remaining funds in the $122 billion American Rescue Plan legislation and tackle critical refurbishment and new construction projects across our primary geographies. Education is seasonally stronger in Q2, so we'll provide a bit more detail on this segment, and it was a bright spot for us this quarter. We saw increased activity in sales in the quarter across several of our larger markets, including the U.S., U.K., and Germany, as school administrations invested in refurbishment and maintenance projects during summer break, driving global sales in this segment up 7% year-over-year on top of 20% growth last year. We're differentiated in education because of our reputation for high quality flooring, overall product performance, and the breadth of our services, support, and product warranties. And especially in higher education, many customers have their own sustainability goals and seek out our low carbon footprint flooring to help achieve them. In both K through 12 and higher ed, our products stand up to the wear and tear of high traffic areas and provide design aesthetic for positive learning environments for students and teachers. We effectively leverage our full product portfolio in this segment, with broad use of both carpet tile and LVT, as well as Nora rubber in key geographies such as Germany. Q2 is also when our biggest interior design event of the year occurs, Neocon, where we had our second largest attendance of showroom visitors in our history, as attendance continues to rebuild to pre-COVID levels. We've invested in enhanced digital capabilities to improve the customer experience, and showcased new interface design studio software that allows us to design the entire floor plate and share the carbon impact of different flooring decisions with our customers. This is a true differentiator, as more and more customers need to specify lower carbon products in their projects. And, of course, we are focused on driving growth with new products. At Neocon, we launched impactful new designs, including lost palm and woven gradient carpet tile collections and silk complex LVT. We also previewed a new global collection launching later this year that features a modern take on designs of the past as we celebrate our 50th anniversary this year. We are making meaningful progress in accelerating our new product development, a key component to our strategy, and believe these new products will help us drive market share gains in the back half. Turning to orders, we continue to see steady order demand and enter Q3 with a strong backlog. Consolidated currency neutral orders in the second quarter were down 2% year over year on a strong prior year comp that was up 10%. Orders were down 3% in the Americas and flat in EAAA. In EMEA, orders were steady while stronger than Australia helped offset continued soft post-COVID recovery in Asia. We enter the back half of the year with a solid backlog that is up 13% since the beginning of the year. We feel good about the steady demand we're seeing as customers continue to choose Interface for their flooring solutions while remaining cautious about the dynamic market conditions around the world. Before I turn the call over to Bruce to discuss our financial results and outlook, I wanted to provide a brief update on our One Interface strategy, which is progressing as planned. As a reminder, this is a multi-year effort focused on resetting our operating model to leverage the power of our entire company to accelerate growth and improve profits. We are building strong global functions to support our world-class local selling teams. expanding margins through global supply chain management and improved productivity, and accelerating new products and designs to drive incremental growth. Earlier this year, we announced changes to our executive leadership team roles and responsibilities, and I shared that we have created a new role, Chief Supply Chain Officer, to lead efforts on supply chain optimization and help us unlock expanded growth margins. I'm pleased to share that Bill Blackerby joined us this week, filling this important role on my leadership team. Bill brings more than 25 years of experience leading and managing highly successful teams across complex international supply chain, manufacturing, and distribution operations. Bill will leverage his extensive global experience to accelerate our productivity initiatives and increase agility across our global supply chain organization. With our executive leadership now in place, I'm confident in our team's ability to better leverage the strength of our entire organization to drive improved margins and profitable growth across the business. I'm excited for the future of Interface and the opportunities that lie ahead. With that, I'll turn it over to Bruce to go through the financials. Bruce?