Interface, Inc.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. I would now like to turn the call over to Christine Needles, Corporate Communications. You may begin.

Good morning, and welcome to Interface's conference call regarding second quarter 2024 results. hosted by Laurel Hurd, CEO, and Bruce Hausman, 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 statements, 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 rerecorded or rebroadcasted 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. To begin our call, I want to thank the entire Interface team for achieving another very strong quarter. The team continues to be committed to our One Interface strategy, and combined with strong commercial execution and operational discipline, we delivered excellent performance in the second quarter, as currency-neutral net sales increased 6% year-over-year and adjusted gross profit margins increased 183 basis points to 35.7%. Our One Interface strategy is working and yielding tangible results. As a reminder, One Interface 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. We delivered a very strong second quarter with year-over-year currency neutral net sales growth of 6% and significantly expanded profitability. Billings were up across all product categories, including carpet, LVT, and rubber. Much of this growth was fueled by our strength in the Americas. You may recall that earlier this year, we transitioned to combined Nora and Interface selling teams in the U.S. as part of our one interface strategy. This unified selling approach aligns incentives and maximizes coverage to win business together, and we continue to see tremendous results. In the Americas, currency neutral net sales grew 7% year over year in Q2, and orders were up 15% year over year. Although we are still in the early stages of this integrated sales approach, we are encouraged by the initial results. particularly given NORA's longer selling cycle that can often span several quarters. In EAAA, we saw currency-neutral net sales increase by 4%, driven by growth in EMEA and Asia, partially offset by lower sales in Australia. And while our business in China is relatively small at about 3% of consolidated net sales, we are starting to see signs of growth after a slow post-COVID recovery. We recently visited our local operations in China, where we had the opportunity to tour a manufacturing facility and our showroom and spend time with the local team and our customers on the ground. I was very impressed by the team's energy and engagement for winning business and growing sales in the region. I also got to see firsthand our recently installed Nora product in a large Shanghai museum, highlighting Nora's premium quality that can withstand high foot traffic with beautiful designs. providing the premium experience that our customers depend on with our products and brand. Our market segmentation focus continues to fuel growth and performance as well. Education continues to be a prominent segment for Interface. We're differentiated in education because of our reputation for sustainability, high-quality scoring, overall product performance, and the breadth of our services and support. In both K-12 and higher ed, Our products stand up to the wear and tear of high traffic areas and provide design aesthetics for positive learning environments for students and teachers. Q2 is a seasonally strong quarter for education, and global billings were up 13% year-over-year, on top of a 7% year-over-year increase in the prior year period. Momentum continues in education, driven by our expanded open-air collection, which has a compelling price point and was designed to run efficiently through our plants to meet margin requirements. Building on the success of our open-air collection, we are expanding our LVT offering to include more designs at accessible price points, allowing us to connect with customer needs while driving increased sales. For example, we have added 3-millimeter options to some of our top-selling wood grain designs in addition to existing 4.5-millimeter offerings. In corporate office, billings were up 4% year-over-year. Based on industry trends, we believe we are gaining global market share. We continue to see an increase in overall tenant activity, as well as companies moving to Class A space, where we have a strong right to win with our premium products and design and sustainability leadership. Our commercial organization leverages their deep relationships with architects and design firms to provide our integrated and broad selection of carpet tile and LVT offerings beneath the needs of the AMD community and the projects they're working on. As companies continue to return to office and in some cases relocate their space, that's great for our business. The one thing they are all looking for is flexibility, as how they use their space continues to evolve, and our modular flooring system is the answer. Turning to orders, consolidated currency neutral orders were up 8%, driven by strong wind rates in the Americas, with orders up 15%. Currency neutral orders in each AAA were down 1% year over year on a softer environment in Europe and a strong comp in Australia, partially offset by growth in Asia. As we enter Q3, our backlog is strong, up 33% year to date. Our focus has been on commercial productivity, the success of our customers, and aligning our sales team with the fastest growing geographic markets and segments, beginning with the US. Our selling teams are doing a great job collaborating and winning business, which is evident in our order growth across all product categories in the quarter. We're also thrilled by increased order activity for our Nora products in the Americas, which gives us confidence that our strategy is working. Turning to manufacturing and supply chain, you might recall that last year we appointed our first global chief supply chain officer to lead efforts that optimize our supply chain globally and help us unlock productivity to generate gross profit margin expansion. We have now realigned our supply chain organization to emphasize globally aligned productivity, continuous improvement, and technology-enabled solutions, all in support of our one interface strategy. For example, as we've mentioned on prior calls, The supply chain team is leading efforts to invest in new automation and robotic solutions in our manufacturing plants. These robotic solutions will help us drive improved margins and operational efficiency that will be implemented over the next 18 to 24 months. They help to automate some of the most labor intensive parts of our carpet tile manufacturing processes in the US, which is better for our workforce in these hard to fill positions and better for our profitability. as we can manufacture carpet more efficiently. While we are in the initial stages of implementation, we are encouraged by early results, which are yielding more efficient labor costs and less raw material waste. Simplifying complexity is also a fundamental aspect of our one interface strategy. We continue to reduce complexity in our processes and functional areas across the enterprise. This includes simplifying how we provide our industry leading products and services to our customers. For example, we are reducing complexity in our LVT product line by driving a narrow and deep product assortment strategy that focuses on our best-selling products, such as our wood grain design, while prioritizing our customers' needs. Rationalizing SKUs effectively simplifies our LVT product offering, enabling us to go deep in the more desired products, like our most popular 4.5-millimeter design, and expanding into new products, like our new 3-millimeter options. Our One Interface strategy also enables consistent, faster launches of marketing campaigns and new global product offerings. This global approach unifies our internal resources while enhancing the overall customer experience. Our global customers can now experience Interface the same way everywhere they see us, including at major trade events and design fairs. Earlier this year, we introduced our new brand attitude, Made for More, around the world at the same time globally. During the second quarter, we launched our latest global carpet tile collection, Etched and Threaded, and LVT collection, Earthinformed, on the same day with the same message everywhere around the world. We believe Etched and Threaded is going to be a very strong performing collection, especially in corporate office. This is some of David Oke's best work with high-end designs that customers will want to specify to help soften their spaces. In the second quarter, We brought all of these amazing design developments to life at two important customer events. In May, at Clerkenwell Design Week in London, showroom traffic was up and we connected with top customers who came to our showrooms to see our new global products and learn from our sustainability and design experts. And in June, at Neocon and Chicago Design Days, our showroom was buzzing with very promising lead generation activities coming out of the event. Traffic was back to pre-COVID levels and customers came with projects in hand. and our new global collections were well received. We also infused the showroom's design with our made-for-more brand messaging and highlighted our third-party verified sustainability differentiation with a focus on low-carbon design. Before Bruce covers the financials, I want to share a couple of important accolades in the last quarter. Interface continues to be recognized globally for the great work we do and the more sustainable ways we do it. I'm proud to report that Interface was selected as one of America's best midsize companies in 2024 by Time Magazine. Separately, we were once again recognized as a sustainability leader in Globescan's annual survey of sustainability experts. In Globescan's annual survey, we were the fifth most cited corporate leader, along with brands like Patagonia and IKEA. These recognitions bolster our brand and drive differentiation and growth as we prioritize our customers, employees, shareholders, and the environment as a purpose-driven organization. Lastly, we launched our 2023 impact report last week, highlighting our ESG progress. It's available on our investor relations website. In sum, our second quarter was fantastic, and we enter the second half of 2024 with a strong order book, robust momentum, design leadership, a vigilant focus on operational excellence, and most of all, an acute focus on bolstering our brand and delivering for our customers every day. With that, I'll turn it over to Bruce to go through the financials. Bruce?