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What changed in INTERFACE INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of INTERFACE INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+324 added−365 removedSource: 10-K (2025-02-26) vs 10-K (2023-03-01)

Top changes in INTERFACE INC's 2024 10-K

324 paragraphs added · 365 removed · 248 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+10 added−24 removed45 unchanged
Biggest changeEmbodied carbon is the carbon footprint (meaning the global warming potential of emissions of greenhouse gases measured in carbon dioxide equivalents) of a product from raw material creation, growth and extraction (the “cradle”) through processing until it is packaged and ready to be shipped from our factory (the “gate”), thus referred to as “cradle-to-gate” in the life cycle assessment of a product.
Biggest changeThese pioneering products, which are part of our Embodied Beauty ™ collection, are created with a combination of our CQuestBioX carpet backing (featuring bio-based materials and more recycled content), specialty yarns and tufting processes that create a carpet tile with a net negative value of “embodied carbon”. 4 Table of Contents Embodied carbon is the carbon footprint (meaning the global warming potential of emissions of greenhouse gases measured in carbon dioxide equivalents) of a product from raw material creation, growth and extraction (the “cradle”) through processing until it is packaged and ready to be shipped from our factory (the “gate”), thus referred to as “cradle-to-gate” in the life cycle assessment of a product.
Our carpet design and development team is recognized as an industry leader in carpet design and product engineering for the commercial and institutional markets. David Oakey Designs provides carpet design and consulting services to us pursuant to a consulting agreement, and this firm augments our internal research, development and design staff.
Our design and development team is recognized as an industry leader in design and product engineering for the commercial and institutional markets. David Oakey Designs provides carpet design and consulting services to us pursuant to a consulting agreement, and this firm augments our internal research, development and design staff.
Some of them are engineered to the same or similar height as our modular carpet, which means our customers have the ability to install our LVT and modular carpet products side by side without transition strips or layering.
Some of our LVT products are engineered to the same or similar height as our modular carpet, which means our customers have the ability to install our LVT and modular carpet products side by side without transition strips or layering.
Although our number of principal yarn suppliers is limited, we do have the capability to manufacture carpet using face fiber produced from two separate polymer feedstocks — nylon 6 and nylon 6,6 — which provides additional flexibility with respect to yarn supply inputs, if needed.
Although our number of principal yarn suppliers is limited, we do have the capability to manufacture carpet using yarn produced from two separate polymer feedstocks — nylon 6 and nylon 6,6 — which provides additional flexibility with respect to yarn supply inputs, if needed.
Available Information We make available free of charge on or through our Internet website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Available Information We make available free of charge on or through our Internet website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”).
Competition We compete, on a global basis, in the sale of our modular carpet products with other carpet manufacturers and manufacturers of vinyl and other types of floorcoverings, including broadloom carpet. Although the industry has experienced significant consolidation, a large number of manufacturers remain in the industry.
Competition We compete, on a global basis, in the sale of our modular carpet products with other carpet manufacturers and manufacturers of vinyl and other types of floorcoverings. Although the industry has experienced significant consolidation, a large number of manufacturers remain in the industry.
Some of our more prominent registered trademarks include: Interface, FLOR, GlasBac, CQuest, Climate Take Back, nora, norament, noraplan, nTX solution, noraplan unita, noraplan valua, and TacTiles. Trademark registrations in the United States are valid for a period of 10 years and are renewable for additional 10-year periods as long as the mark remains in actual use.
Some of our more prominent registered trademarks include: Interface, FLOR, GlasBac, CQuest, nora, norament, noraplan, nTX solution, noraplan unita, noraplan valua, and TacTiles. Trademark registrations in the United States are valid for a period of 10 years and are renewable for additional 10-year periods as long as the mark remains in actual use.
Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed below in Item 1A, “Risk Factors.” 11 Ta b le of Contents
Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed below in Item 1A, “Risk Factors.” 11 Table of Contents
We have developed innovative ways to work with recycled content and bio-based materials, which has led us to make carpet tiles that store carbon, preventing its release into the atmosphere. For our nora rubber flooring products, the innovation focus is on performance and design. A key innovation is the fast growing self-adhesive nTx solution for nora tiles and sheet goods.
We have developed innovative ways to work with recycled content and bio-based materials, which has led us to make carpet tiles that store carbon, preventing its release into the atmosphere. Our nora rubber flooring products have also focused on innovative performance and design. A key innovation is the self-adhesive nTx solution for nora tiles and sheet goods.
Forward-Looking Statements This report on Form 10-K contains “forward-looking statements” within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements.
Forward-Looking Statements This report on Form 10-K contains “forward-looking statements” within the meaning of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “anticipates,” “plans,” “expects,” “projects,” “estimates” and similar expressions are intended to identify forward-looking statements.
The duration of trademarks registered in other jurisdictions varies. 9 Ta b le of Contents Human Capital Interface is a purpose-driven company with a passionate team that shares a unique set of values. We strive to do the right thing and to be generous to people and the planet.
The duration of trademarks registered in other jurisdictions varies. 9 Table of Contents Human Capital Interface is a purpose-driven company with a passionate team that shares a unique set of values. We strive to do the right thing and to be generous to people and the planet.
He was promoted to Assistant Secretary in April 2002, Senior Counsel in April 2006, Assistant Vice President in April 2007, Vice President in July 2012, Associate General Counsel in May 2014, and Secretary and General Counsel in January 2017. 10 Ta b le of Contents Mr. Hausmann joined us in April 2017 as Vice President and Chief Financial Officer.
He was promoted to Assistant Secretary in April 2002, Senior Counsel in April 2006, Assistant Vice President in April 2007, Vice President in July 2012, Associate General Counsel in May 2014, and Secretary and General Counsel in January 2017. 10 Table of Contents Mr. Hausmann joined us in April 2017 as Vice President and Chief Financial Officer.
Our carpet tile systems permit distinctive styling and patterning that can be used to complement interior designs, to set off areas for particular purposes, create visual cues, and to convey graphic information.
Our carpet tile systems permit distinctive styling and patterning that can be used to complement interior designs, to set off areas for particular purposes and create visual cues.
We may open offices in other locations around the world as necessary to capitalize on emerging marketing opportunities. 6 Ta b le of Contents Business Strategy and Principal Initiatives Our business strategy is to continue to use our leading position in modular carpet, product design and global made-to-order capabilities as a platform from which to position our modular carpet, LVT products, other resilient products and rubber flooring products across several industry segments.
We may open offices in other locations around the world as necessary to capitalize on opportunities. 6 Table of Contents Business Strategy and Principal Initiatives Our business strategy is to continue to use our leading position in modular carpet, product design and global made-to-order capabilities as a platform from which to position our modular carpet, LVT products, rubber flooring, and other resilient products across several industry segments.
Our Internet address is http://www.interface.com . The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including the Company) file electronically with the SEC. The SEC’s website is http://www.sec.gov . Interface, Inc. was incorporated in Georgia in 1973.
The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including the Company) file electronically with the SEC. The SEC’s website is http://www.sec.gov . Interface, Inc. was incorporated in Georgia in 1973.
We also sell our TacTiles carpet tile installation system, along with a variety of traditional adhesives and products for carpet installation and maintenance that are manufactured by a third party.
Other Products and Services We sell our TacTiles carpet tile installation system, along with a variety of traditional adhesives and products for carpet installation and maintenance that are manufactured by a third party.
We began this initiative as part of a market diversification strategy to reduce our exposure to the economic cyclicality of the corporate office market segment, and it has become a principal strategy generally for growing our business and enhancing profitability. Develop a Substantial Resilient Flooring Business .
This initiative is part of a market diversification strategy to reduce our exposure to the economic cyclicality of the corporate office market segment, and it has become a principal strategy generally for growing our business and enhancing profitability. Develop a Substantial Resilient Flooring Business .
Recent changes in design are noraplan Iona introducing a rubber on rubber print, noraplan valua introducing natural woodlike colors and embossing, and noraplan unita that incorporates real granite parts in a rubber floor. The combination of performance and design makes nora the recognized market leader in rubber flooring.
Notable changes in design include noraplan Iona introducing a rubber on rubber print, noraplan valua introducing natural woodlike colors and embossing, and noraplan unita that incorporates real granite parts in a rubber floor. The combination of performance and design makes nora the recognized market leader in rubber flooring.
It features the same superior performance with a construction of post-consumer recycled content from carpet tiles, bio-based additives, and pre-consumer recycled materials. • CQuest™Bio - A non-vinyl bio-composite backing made with bio-based and recycled fillers. • CQuest™BioX - The same material make-up as CQuestBio with a higher concentration of carbon negative materials.
The CQuest backings are: • CQuest™GB – Which features superior performance with a construction of post-consumer recycled content from carpet tiles, bio-based additives, and pre-consumer recycled materials. • CQuest™Bio – A non-vinyl bio-composite backing made with bio-based and recycled fillers. • CQuest™BioX – The same material make-up as CQuestBio with a higher concentration of carbon negative materials.
Our management believes that its relations with the Works Councils, the unions and our employees are good. Information About Our Executive Officers Our executive officers, their ages as of January 1, 2023, and their principal positions with us are set forth below. Executive officers serve at the pleasure of the Board of Directors. Name Age Principal Position(s) Laurel M.
Our management believes that its relations with the Works Councils, the unions and our employees are good. Information About Our Executive Officers Our executive officers, their ages as of December 29, 2024, and their principal positions with us are set forth below. Executive officers serve at the pleasure of the Board of Directors. Name Age Principal Position(s) Laurel M.
We also continue to provide “turnkey” project management services for a number of global accounts and other large customers through our InterfaceSERVICES™ business. 5 Ta b le of Contents Manufacturing and Raw Materials We manufacture carpet tile at two locations in the United States and at facilities in the Netherlands, the United Kingdom, China and Australia.
We also continue to provide “turnkey” project management services for a number of global accounts and other large customers through our InterfaceSERVICES™ business. 5 Table of Contents Manufacturing and Raw Materials We manufacture carpet tile at two locations in the United States and at facilities in the Netherlands, the United Kingdom, China and Australia. We manufacture rubber flooring in Germany.
We produce carpet tiles in a wide variety of colors, patterns, textures, pile heights and densities. These varieties are designed to meet both the practical and aesthetic needs of a broad spectrum of commercial interiors particularly offices, healthcare facilities, airports, educational and other institutions, hospitality spaces, retail facilities and residential interiors.
We produce carpet tiles in a wide variety of colors, patterns, textures, pile heights and densities. These varieties are designed to meet both the practical and aesthetic needs of a broad spectrum of commercial interiors — particularly offices, educational facilities, healthcare facilities, government-related facilities (including but not limited to airports), hospitality spaces, retail facilities, and residential interiors.
We manufacture carpet tiles cut in precise, dimensionally stable squares (usually 50 cm x 50 cm) or rectangles (such as planks and Skinny Planks ™ ). Our GlasBac® technology employs a fiberglass-reinforced polymeric composite backing that provides dimensional stability and reduces the need for adhesives or fasteners.
We manufacture carpet tiles cut in precise, dimensionally stable squares (usually 50 cm x 50 cm) or rectangles (such as planks and Skinny Planks™ ). Our GlasBac® technology employs a fiberglass-reinforced polymeric composite backing that provides dimensional stability and reduces the need for adhesives or fasteners. We also make carpet tiles with a backing containing post-industrial and/or post-consumer recycled materials.
We believe the quality, service, design, better and longer average product performance, flexibility (such as design options, selective rotation or replacement, and use in combination with our resilient products), environmental footprint and convenience of our modular carpet are our principal competitive advantages. 7 Ta b le of Contents We believe we have competitive advantages in several other areas as well.
We believe the quality, service, design, better product performance, flexibility (such as design options, selective rotation or replacement, and use in combination with our resilient products), environmental footprint and convenience of our flooring products are our principal competitive advantages. 7 Table of Contents We believe we have competitive advantages in several other areas as well.
Our nora business, with its rubber flooring products, is also a key component of our strategy in this area. Sustain Leadership in Product Design and Development. Our CQuest backings, Embodied Beauty collection, and our plank, Skinny Plank , and i2 products and TacTiles installation system have confirmed our position as an innovation leader in modular carpet.
Our nora products are a key component of our strategy in this area. Sustain Leadership in Product Design, Product Development, and Sustainability. Our CQuest backings, Embodied Beauty collection, and our plank, Skinny Plank , and i2 products and TacTiles installation system have confirmed our position as an innovation leader in modular flooring.
We will seek to increase revenues and profitability by pursuing the following key initiatives: Continue to Penetrate Non-Corporate Office Market Segments. We plan to continue our strategic focus on product design and marketing and sales efforts for non-corporate office market segments such as government, education, healthcare, hospitality, and residential living.
Through these strategies, we will seek to increase revenues and profitability by pursuing the following key initiatives: Continue to Penetrate Diversified Market Segments. We plan to continue our strategic focus on product design and marketing and sales efforts in the corporate office, government, education, healthcare, hospitality, and residential living market segments.
The environmental management systems of our floorcovering manufacturing facilities in LaGrange, Georgia, West Point, Georgia, Northern Ireland, the Netherlands, China, Germany and Australia are certified under ISO Standard No. 14001. Backlog Our backlog of unshipped orders was approximately $197.4 million at February 5, 2023, compared with approximately $215.6 million at February 6, 2022.
The environmental management systems of our floorcovering manufacturing facilities in LaGrange, Georgia, West Point, Georgia, Northern Ireland, the Netherlands, China, Germany and Australia are certified under ISO Standard No. 14001. Backlog Our backlog of unshipped orders was approximately $223.4 million at February 2, 2025, compared with approximately $195.5 million at February 4, 2024.
In addition, some of the competing carpet manufacturers have the ability to extrude at least some of their requirements for fiber used in carpet products, which decreases their dependence on third party suppliers of fiber.
In addition, some of the competing carpet manufacturers have the ability to extrude at least some of their requirements for fiber used in carpet products and own manufacturing facilities for their resilient product offerings, which decreases their dependence on third-party suppliers.
As a global company with a reputation for high quality, reliability and premium positioning, we market modular carpet under the established brand names Interface® and FLOR® , and we market LVT and vinyl sheet under the brand Interface®.
As a global company with a reputation for high quality, reliability and premium positioning, we market modular carpet under the established brand names Interface® and FLOR® , we market LVT under the brand Interface®, and we market rubber flooring under the brands noraplan ® and norament ®.
The research and development team provides us with technical support and advanced materials research and development. Innovation and increased customization in product design and styling are the principal focus of our product development efforts, and this focus has led to several design breakthroughs such as our CQuest backings, plank and Skinny Plank products, as well as our i2 product line.
Innovation and increased customization in product design and styling are the principal focus of our product development efforts, and this focus has led to several design breakthroughs such as our CQuest backings, plank and Skinny Plank products, as well as our i2 product line.
The materials in the CQuest backings, when measured on a stand-alone basis, are net carbon negative — meaning that their global warming potential emissions are net negative. The CQuest backings are: • CQuest™GB - The next evolution of our GlasBacRE backing.
The materials in the CQuest backings, when measured on a stand-alone basis, are net carbon negative — meaning that their global warming potential emissions are net negative.
Our TacTiles® carpet tile installation system uses small squares of adhesive plastic film to connect intersecting carpet tiles, thus eliminating the need for traditional carpet adhesive and resulting in a reduction in installation time and material waste. We also produce and sell a specially adapted version of our carpet tile for the healthcare facilities market.
Our TacTiles® carpet tile installation system uses small squares of adhesive plastic film to connect intersecting carpet tiles, thus eliminating the need for traditional carpet adhesive and resulting in a reduction in installation time and material waste.
We are using raw materials and production technologies, such as our ReEntry 2.0 reclaimed carpet separation process and our new CQuest backings, that directly reduce the adverse impact of those operations on the environment and limit our dependence on petrochemicals.
We are using raw materials and production technologies, such as our ReEntry 2.0 reclaimed carpet separation process and our CQuest backings, that directly reduce adverse impacts of those operations on the environment and limit our dependence on petrochemicals. Product Design, Research and Development We maintain an active research and development, product development and design staff.
Embodied carbon is distinct from operational carbon, which refers to the carbon footprint of everything that happens after the product leaves our factory, such as shipment, customer use, and end of life. The Embodied Beauty collection was expanded into our EAAA geographical regions in 2021.
Embodied carbon is distinct from operational carbon, which refers to the carbon footprint of everything that happens after the product leaves our factory, such as shipment, customer use, and end of life.
We believe the principal competitive factors in our primary floorcovering markets are brand recognition, quality, design, service, broad product lines, product performance, marketing strategy, pricing and sustainability. In the corporate office market segment, modular carpet competes with various floorcoverings including broadloom carpet, LVT and polished concrete.
We believe the principal competitive factors in our primary floorcovering markets are brand recognition, quality, design, service, broad product lines, product performance, marketing strategy, pricing and sustainability. We compete against various floorcoverings including carpet tile, broadloom carpet, LVT and other hard surface flooring, and polished concrete.
Historically, backlog is subject to significant fluctuations due to the timing of orders for individual large projects and currency fluctuations. Disruptions in supply and distribution chains, global travel restrictions and government orders due to the impact of COVID-19 have resulted in delays of construction projects and flooring installations in many regions worldwide, which also have caused fluctuations in our backlog.
Historically, backlog is subject to significant fluctuations due to the timing of orders for individual large projects. D isruptions in supply and distribution chains have resulted in delays of construction projects and flooring installations in many regions worldwide, which also have caused, and may continue to cause, fluctuations in our backlog.
Moreover, we sell our FLOR line of products to specifically target modular carpet sales to the residential market segment, and in recent years FLOR products have had crossover success in commercial markets.
We also sell our FLOR line of products to specifically target modular carpet sales to the residential market segment, and in recent years FLOR products have had crossover success in commercial markets. In addition, we have created modular carpet products designed for each of the education, healthcare, hospitality and retail market segments.
In 2020, we achieved a substantial milestone in our journey toward becoming a sustainable enterprise. Simultaneously with the launch of our new CQuest backings described above, we introduced in the Americas our first ever “cradle-to-gate” carbon negative carpet tile products in three unique styles: Shishu Stitch ™, Tokyo Texture ™, and Zen Stitch ™.
Simultaneously with the launch of our CQuest backings described above, we introduced in the Americas and subsequently in our EAAA geographical regions, our first ever “cradle-to-gate” carbon negative carpet tile products in three unique styles: Shishu Stitch ™, Tokyo Texture ™, and Zen Stitch ™.
Building upon the success of our products in the high growth LVT market, we plan to expand our LVT product offerings while also seeking to introduce new products in the resilient flooring category, such as our rigid core resilient flooring that was launched in early 2022.
Building upon the success of our products in the LVT market, we plan to expand our LVT product offerings while also seeking to introduce new products in the resilient flooring category.
In addition, some of our LVT products include a backing system that provides acoustic insulation without the need for additional underlayment, which can reduce the impact of sound in the space where the flooring is used. In 2022, we introduced our rigid core Even Path ™ collection of LVT with high-quality wood and stone designs.
In addition, some of our LVT products include a backing system that provides acoustic insulation without the need for additional underlayment, which can reduce the impact of sound in the space where the flooring is used.
Our rigid core resilient flooring products are designed for hard-working spaces and commercial markets. Rubber Flooring With the acquisition of nora in 2018, we began offering rubber flooring products under the established noraplan and norament brands which enhances the Company’s fast-growing resilient flooring portfolio. Rubber flooring is ideal for applications that require hygienic, safe flooring with strong chemical resistance.
Rubber Flooring With the acquisition of nora in 2018, we began offering rubber flooring products under the established noraplan and norament brands, which enhances the Company’s resilient flooring portfolio. Rubber flooring is ideal for applications that require hygienic, safe flooring with strong chemical resistance. Rubber flooring is extremely durable compared to other flooring alternatives.
In 2020, we introduced the next generation of our carpet tile backings called CQuest™ backings. Guided by materials science and inspired by nature’s carbon-storing abilities, we added new bio-based materials and more recycled content to our backings.
Innovations in both design and manufacturing allow us to create these high-quality, high-performance carpet products at a lower price point. Launched in 2020, our next generation carpet tile backings are called CQuest™ backings. Guided by materials science and inspired by nature’s carbon-storing abilities, we added new bio-based materials and more recycled content to our backings.
Product Design, Research and Development We maintain an active research and development, product development and design staff of approximately 150 people and also draw on the research and development efforts of our suppliers, particularly in the areas of fibers, yarns and modular carpet backing materials.
We also draw on the research and development efforts of our suppliers, particularly in the areas of fibers, yarns and modular carpet backing materials. The research and development team provides us with technical support and advanced materials research and development.
Percentages for fiscal year 2020 have been recast to reflect the current reportable segment structure: 2022 2021 2020 AMS 58% 54% 54% EAAA 42% 46% 46% Market Segmentation Our business, as well as the commercial interiors industry in general, is cyclical in nature and is impacted by economic conditions and trends that affect the markets for commercial and institutional business space.
Below is a summary of total net sales percentages by reportable segment for the last three fiscal years. 2024 2023 2022 AMS 61% 58% 58% EAAA 39% 42% 42% Market Segmentation Our business, as well as the commercial interiors industry in general, is cyclical in nature and is impacted by economic conditions and trends that affect the markets for commercial and institutional business spaces.
As more customers in our target markets share our view that sustainability is an important factor, we expect sustainability will become a determining factor in purchasing and design decisions. In 2021, we set a goal to reduce our CO2 emissions across our Company and supply chain by 2030 with a target validated by the Science Based Targets Initiative.
In 2021, we set a goal to reduce our CO2 emissions across our Company and supply chain by 2030 with targets validated by the Science Based Targets Initiative.
We believe the appeal and utilization of modular carpet and resilient flooring will continue to grow in corporate office and non-corporate office market segments, and we are using our considerable skills and experience with designing, producing and marketing modular products that make us a market leader in the corporate office market segment to support and facilitate our penetration into more non-corporate office market segments around the world.
We believe the appeal and utilization of our products will continue to grow, and we are using our considerable skills and experience with designing, producing and marketing our products to make us a market leader. We primarily focus our sales efforts on the corporate office, education, healthcare, government, hospitality, and residential living market segments.
The AMS operating segment continues to include the United States, Canada and Latin America geographic areas. See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information . Below is a summary of total net sales percentages by reportable segment for the last three fiscal years.
Reportable Segments The Company has two operating and reportable segments – namely Americas (“AMS”) and Europe, Africa, Asia and Australia (collectively “EAAA”). The AMS operating segment includes the United States, Canada and Latin America geographic areas. See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information .
David Oakey Designs has developed products that are manufactured using state-of-the-art tufting technology, which allows us to pinpoint tufts of different colored yarns in virtually any arrangement within a carpet tile. These unique designs are best exemplified by our Urban Retreat® , Net Effect®, Human Nature® and World Woven® collections, which are sold throughout our international operations.
The award-winning design firm David Oakey Designs has had a pivotal role in developing many of our innovative product designs. David Oakey Designs has developed products that are manufactured using state-of-the-art tufting technology, which allows us to pinpoint tufts of different colored yarns in virtually any arrangement within a carpet tile.
Compliance with Government Regulations We are subject to various federal, state and foreign laws and regulations that address various aspects of our business such as worker safety (including but not limited to safety measures in response to the COVID-19 pandemic), privacy, trade sanctions and anticorruption.
We also set a separate goal to become a carbon negative enterprise by 2040. 8 Table of Contents Compliance with Government Regulations We are subject to various federal, state and foreign laws and regulations that address various aspects of our business such as worker safety, privacy, trade sanctions and anticorruption.
Interface is a global flooring company specializing in carbon neutral carpet tile and resilient flooring, including luxury vinyl tile (“LVT”), vinyl sheet, and nora® rubber flooring. We help our customers create high-performance interior spaces that support well-being, productivity, and creativity, as well as the sustainability of the planet.
We help our customers create high-performance interior spaces that support well-being, productivity, and creativity, as well as sustainability of the planet.
Hurd 53 President and Chief Executive Officer David B. Foshee 52 Vice President, General Counsel and Secretary Bruce A. Hausmann 53 Vice President and Chief Financial Officer James Poppens 58 Vice President (President - Americas) (1) Nigel Stansfield 55 Vice President (President - Europe, Africa, Australia and Asia) (1) (1) See below for changes effective February 2023 Ms.
Hurd 55 President and Chief Executive Officer David B. Foshee 54 Vice President, General Counsel and Secretary Bruce A. Hausmann 55 Vice President and Chief Financial Officer James Poppens 60 Vice President and Chief Commercial Officer Nigel Stansfield 57 Vice President and Chief Innovation and Sustainability Officer Ms.
Our customers are increasingly concerned about the environmental and broader ecological implications of their operations and the products they use in them. Our leadership, knowledge and expertise in the area, especially in the “green building” movement and related environmental certification programs, resonate deeply with many of our customers and prospects around the globe.
Our leadership, knowledge and expertise in the area, especially in the “green building” movement and related environmental certification programs, resonate deeply with many of our customers and prospects around the globe. Our modular carpet products historically have had inherent installation and maintenance advantages that have translated into greater efficiency and waste reduction.
We are committed to an equitable and inclusive culture and achieve this by living our values. Our core values represent who we are, how we see the world, how we treat each other and our external customers and stakeholders, and how we approach our work every day.
Our core values represent who we are, how we see the world, how we treat each other and our external customers and stakeholders, and how we approach our work every day. These core values are: • Design a better way; • Be genuine and generous; • Inspire others; • Connect the whole; and • Embrace tomorrow, today.
In 2021, we introduced our Open Air™ collection of more affordable carpet tiles — an expansive platform of hard-working carpet tile styles designed with open spaces in mind. Innovations in both design and manufacturing allow us to create high-quality, high-performance carpet products at a lower price point.
In addition, we make carpet tile with yarn containing varying degrees of recycled post-consumer nylon, depending on the style and color. In 2021, we introduced our Open Air™ collection of more affordable carpet tiles — an expansive platform of hard-working carpet tile styles designed with open spaces in mind.
We will continue initiatives to sustain, augment and capitalize upon that strength to continue to increase our market share in targeted market segments. Our Climate Take Back initiative, which was advanced in 2020 with the launch of our first ever cradle-to-gate carbon negative carpet tile, promotes our commitment to the pursuit of sustainability.
We plan to continue to pursue initiatives to sustain, augment and capitalize upon that strength to continue to increase our market share in targeted market segments.
These core values are: • Design a better way; • Be genuine and generous; • Inspire others; • Connect the whole; and • Embrace tomorrow, today. At January 1, 2023, we employed a total of 3,671 employees worldwide. Of such total, 1,452 were clerical, staff, sales, supervisory and management personnel and 2,219 were manufacturing personnel.
At December 29, 2024, we employed a total of 3,636 employees worldwide. Of such total, 1,371 were clerical, staff, sales, supervisory and management personnel and 2,265 were manufacturing personnel. Some of our employees in Australia, the United Kingdom and China are represented by unions.
Environmental and Sustainability Initiatives Our sustainability strategy began more than 25 years ago with initiatives aimed at reducing waste, environmental footprint and costs. With our more recent Climate Take Back initiative, we seek to lead industry in designing and making products in ways that will maintain a climate fit for life.
In January 2025, the Company unveiled the first of a kind carbon negative nora rubber flooring prototype, which has a carbon negative footprint when measured cradle to gate. Environmental and Sustainability Initiatives Our sustainability strategy began more than 25 years ago with initiatives aimed at reducing waste, environmental footprint and costs.
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In 2018, the Company acquired nora Holding GmbH (“nora”), a worldwide leader in the rubber flooring category under the established nora brands norament ® and noraplan ®.
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Interface is a global flooring solutions company and sustainability leader, offering an integrated portfolio of carpet tile and resilient flooring products that includes Interface® carpet tile and luxury vinyl tile (“LVT”), nora® rubber flooring, and FLOR® premium area rugs for commercial and residential spaces.
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Reportable Segments In 2021, the Company largely completed its integration of the nora acquisition, and integration of its European and Asia-Pacific commercial areas, and determined that it has two operating and reportable segments – namely Americas (“AMS”) and Europe, Africa, Asia and Australia (collectively “EAAA”).
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Disruptions in economic markets due to inflation, high interest rates, geo-political tensions, including the Russia-Ukraine war and the Middle East conflict, a still challenging supply chain environment, slow economic conditions in several markets that we serve, and significant financial pressures in the commercial office market globally, all pose challenges for us and impact the markets we operate in. 3 Table of Contents Products and Services Modular Carpet Our AMS and EAAA reportable segments sell the same products within their respective geographical regions.
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During fiscal years 2022, 2021 and 2020, t he COVID-19 pandemic impacted areas where we operate and sell our products and services. Government restrictions and shutdowns around the world impacted sales in the corporate office market segment and resulted in lower corporate reinvestment compared to the few years immediately preceding the pandemic.
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These unique designs are best exemplified by our Urban Retreat® , Net Effect®, Human Nature® and World Woven® collections, which are sold throughout our international operations. In 2020, we achieved a substantial milestone in our journey toward becoming a sustainable enterprise.
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To mitigate the effects of COVID-19 on our business, we capitalized on our ongoing market diversification strategy to increase our presence and market penetration for modular carpet and resilient flooring sales in non-corporate office market segments. 3 Ta b le of Contents Below is a summary of our sales mix between corporate office and non-corporate office market segments for the last three fiscal years by reportable segment: 2022 2021 2020 Corporate Office Non-Corporate Office Corporate Office Non-Corporate Office Corporate Office Non-Corporate Office AMS 38% 62% 39% 61% 37% 63% EAAA 61% 39% 57% 43% 60% 40% Products and Services Modular Carpet Our AMS and EAAA reportable segments sell the same products within their respective geographical regions.
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Recently, we also launched our One Interface strategy which is a multi-year effort focused on: • Building strong global functions like Marketing, IT, Human Resources, and Finance to support our world-class local selling teams. • Accelerating growth through enhanced productivity of our commercial team. • Expanding margins through global supply chain management and simplifying operations. • Leading in design, innovation, and sustainability.
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We also make carpet tiles with a backing containing post-industrial and/or post-consumer recycled materials, which we now market under the CQuest™GB name (formerly known as GlasBacRE ). In addition, we make carpet tile with yarn containing varying degrees of recycled post-consumer nylon, depending on the style and color.
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We also plan to continue to focus on carbon reductions in our products and operations as we work toward achieving our science-based targets by 2030 and as we work toward our goal of becoming a carbon negative enterprise by 2040.
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Our carpet tile possesses characteristics — such as the use of the Intersept® antimicrobial, static-controlling nylon yarns, and thermally pigmented, colorfast yarns — which make it suitable for use in these facilities in place of hard surface flooring.
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Seasonality As we have executed on our strategy, sales in the education market segment have increased, in recent years, particularly in the second and third quarters as schools often schedule renovation projects during the summer months when schools are typically closed.
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In addition, we have created modular carpet products specifically designed for each of the education, hospitality and retail market segments. 4 Ta b le of Contents The award-winning design firm David Oakey Designs has had a pivotal role in developing many of our innovative product designs.
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Our sustainability goals are a brand-enhancing, competitive strength as well as a strategic initiative. Many of our customers are concerned about the environmental and broader ecological implications of their operations and the products they use in them.
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These pioneering products, which are part of our Embodied Beauty ™ collection, are created with a combination of our new CQuestBioX carpet backing (featuring new bio-based materials and more recycled content), specialty yarns and tufting processes that create a carpet tile with a net negative value of “embodied carbon”.
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With our CQuestGB, CQuestBio and CQuestBioX backings, we are able to use more bio-based and recycled materials. As more customers in our target markets share our view that sustainability is an important factor, we expect sustainability will become an increasingly important factor in purchasing and design decisions.
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In addition, through our third party verified Carbon Neutral Floors ™ program, all of our carpet tile, LVT and norament and noraplan rubber flooring products are made carbon neutral across their entire life cycle, including both embodied carbon and operational carbon, by our purchase and retirement of third party verified carbon offsets.
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Our Internet address is http://www.interface.com . The content of our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our website is intended to be inactive textual references only.
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We believe our cradle-to-gate carbon negative carpet tile products and our Carbon Neutral Floors program provide us with a competitive advantage, particularly with our global account customers who are increasingly setting their own goals to reduce their carbon footprints.
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Forward-looking statements in this report include, without limitation, any statements regarding the effects of inflation, high interest rates, current wars and conflicts, the supply chain environment, slow market conditions in certain geographic areas, tariffs, freight costs, pressures in the commercial office market and other macroeconomic factors, and our future production volumes per unit fixed costs, on our future performance.
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Rubber flooring is extremely durable compared to other flooring alternatives. Other Products and Services We sell a proprietary antimicrobial chemical compound under the registered trademark Intersept that we incorporate in some of our modular carpet products.
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We also manufactured carpet tile at a location in Thailand for many years, but in 2021 we announced the closure of the Thailand plant, in which manufacturing was permanently halted at the end of the first quarter of 2022. We manufacture rubber flooring in Germany.
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Seasonality Historically, sales in our first quarter had typically been our lowest quarter while our fourth quarter sales had typically been our best quarter, as sales generally increased throughout the course of the fiscal year.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese types of events could also affect our suppliers, installers, and customers, which could have a material adverse impact on our business. 14 Ta b le of Contents Disruptions to or failures of our information technology systems could adversely affect our business. We rely heavily on information technology systems—both software and computer hardware—to operate our business.
Biggest changeDisruptions to or failures of information technology systems we use could adversely affect our business. We rely heavily on information technology systems—both software and computer hardware—to operate our business. Some of these systems are owned and operated by us, and some are owned or operated by third parties pursuant to leases, licenses or other contracts with those third parties.
The unanticipated termination or interruption of any of our supply arrangements with our current suppliers of synthetic fiber (nylon), our primary suppliers of LVT, or other key raw material suppliers, including failure by any third party supplier to meet our product specifications, could have a material adverse effect on us because we do not have the capability to manufacture our own fiber for use in our carpet products or our own LVT.
The unanticipated termination or interruption of any of our supply arrangements with our current suppliers of synthetic fiber (nylon), our primary supplier of LVT, or other key raw material suppliers, including failure by any third-party supplier to meet our product specifications, could have a material adverse effect on us because we do not have the capability to manufacture our own fiber for use in our carpet products or our own LVT.
If any of our supply arrangements with our primary suppliers of synthetic fiber, our primary suppliers of LVT, or suppliers of other key raw materials are terminated or interrupted, we likely would incur increased manufacturing costs and experience delays in our manufacturing process (thus resulting in decreased sales and profitability) associated with shifting more of our synthetic fiber purchasing to another synthetic fiber supplier or developing new supply chain sources for LVT.
If any of our supply arrangements with our primary suppliers of synthetic fiber, our primary supplier of LVT, or suppliers of other key raw materials are terminated or interrupted, we likely would incur increased manufacturing costs and experience delays in our manufacturing process (thus resulting in decreased sales and profitability) associated with shifting more of our synthetic fiber purchasing to another synthetic fiber supplier or developing new supply chain sources for LVT.
In addition, the effects of cyclicality and other factors affecting the corporate office segment have traditionally tended to be more pronounced than the effects on other market segments. Historically, we have generated more sales in the corporate office segment than in any other segment.
In addition, the effects of cyclicality and other factors affecting the corporate office segment have traditionally tended to be more pronounced than the effects on other market segments. Historically, we have generated more sales in the corporate office market segment than in any other market segment.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and corporate and consumer spending; disruptions to our global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; our ability to maintain or increase our prices, including fuel surcharges in response to rising fuel costs; further disruptions in global supply chains; terrorist activities targeting business infrastructure; our exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including inflation and reduced corporate and consumer spending; disruptions to our global technology infrastructure, including through cyberattack, ransom attack, or cyber-intrusion; adverse changes in international trade policies and relations; our ability to maintain or increase our prices, including fuel surcharges in response to rising fuel costs; further disruptions in global supply chains; terrorist activities targeting business infrastructure; our exposure to foreign currency fluctuations; and constraints, volatility, or disruption in the capital markets.
This level of debt could have significant consequences on our future operations, including: • making it more difficult for us to meet our payment and other obligations under our outstanding debt; • resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which event of default could result in all of our debt becoming immediately due and payable; • reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions or strategic investments and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • subjecting us to the risk of increasing interest expense on variable rate indebtedness, including borrowings under our Syndicated Credit Facility; • limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; • placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged; • limiting our ability to attract certain investors to purchase our common stock due to the amount of debt we have outstanding; and • limiting our ability to refinance our existing indebtedness as it matures.
This level of debt could have significant consequences on our future operations, including: • making it more difficult for us to meet our payment and other obligations under our outstanding debt; • resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which event of default could result in all of our debt becoming immediately due and payable; • reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions or strategic investments and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • subjecting us to the risk of increasing interest expense on variable rate indebtedness, including borrowings under our Syndicated Credit Facility; • limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; • placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged; • limiting our ability to attract certain investors to purchase our common stock due to the amount of debt we have outstanding; and • limiting our ability to refinance our existing indebtedness as it matures. • limiting our ability to pay dividends or repurchase our shares.
In particular, the currently reduced Russian exports of natural gas to Europe may materially impede our European manufacturing operations and may result in higher energy costs to operate our facilities. Our customers’ businesses, results of operations and financial positions also could be adversely impacted by the conflict in Ukraine, which could reduce their spending on our products.
In particular, reduced Russian exports of natural gas and oil to Europe may materially impede our European manufacturing operations and may result in higher energy costs to operate our facilities. Our customers’ businesses, results of operations and financial positions also could be adversely impacted by the conflict in Ukraine, which could reduce their spending on our products.
While these changes are intended to yield stronger financial results, they could potentially impact our financial results in negative ways due to project delays, business disruption as new facilities and equipment come online, increase customer complaints, or increase warranty claims; all of which could negatively affect our operations, reputation, financial condition and results of operations.
While these changes are intended to yield stronger financial results, they could potentially impact our financial results in negative ways due to project delays, business disruption as new facilities and equipment come online, increased customer complaints, or increased warranty claims; all of which could negatively affect our operations, reputation, financial condition and results of operations.
Despite our focused efforts to attract and retain employees, including by offering higher levels of compensation in certain instances, we experienced attrition rates within our hourly workforce in recent years, particularly in 2021, that exceeded historical levels and we incurred higher operating costs at certain of our facilities in the form of higher levels of overtime pay.
Despite our focused efforts to attract and retain employees, including by offering higher levels of compensation in certain instances, we experienced attrition rates within our hourly workforce in recent years, that exceeded historical levels and we incurred higher operating costs at certain of our facilities in the form of higher levels of overtime pay.
Such a development could have other unpredictable adverse effects, including a material adverse effect on demand for office space and our flooring products in the U.K. and in Europe if the U.K. exit leads to economic difficulties in Europe. 18 Ta b le of Contents Risk Factors Related to our Indebtedness We have a substantial amount of debt, which could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under our debt.
Such a development could have other unpredictable adverse effects, including a material adverse effect on demand for office space and our flooring products in the U.K. and in Europe if the U.K. exit leads to economic difficulties in Europe. 18 Table of Contents Risk Factors Related to our Indebtedness We have a substantial amount of debt, which could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations under our debt.
We have been, and may in the future become, party to lawsuits including, without limitation, actions and proceedings in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or claims relating to intellectual property matters.
We have been, and may in the future become, party to lawsuits including, without limitation, actions and proceedings in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or claims relating to intellectual property matters or regulatory investigations and enforcement.
As approximately 47% of our revenue is denominated in foreign currencies, these exchange rate fluctuations have had, and could continue to have, a significant adverse impact on our financial results.
As approximately 43% of our revenue is denominated in foreign currencies, these exchange rate fluctuations have had, and could continue to have, a significant adverse impact on our financial results.
The primary manufacturing facility of our largest supplier of LVT is located in South Korea.
The primary manufacturing facility of our primary supplier of LVT is located in South Korea.
Future impairment charges could result if these macroeconomic conditions or other negative market events or conditions continue to impact our operations. 12 Ta b le of Contents Our success depends significantly upon the efforts, abilities and continued service of our senior management executives, our principal design consultant and other key personnel (including experienced sales and manufacturing personnel), and our loss of any of them could affect us adversely.
Future impairment charges could result if these macroeconomic conditions or other negative market events or conditions continue to impact our operations. 12 Table of Contents Our success depends significantly upon the efforts, abilities and continued service of our senior management executives, our principal design consultant and other key personnel (including experienced sales and manufacturing personnel), and our loss of any of them could affect us adversely.
ITEM 1A. RISK FACTORS You should carefully consider the following factors, in addition to the other information included in this Annual Report on Form 10-K and the other documents incorporated herein by reference, before deciding whether to purchase or sell our common stock.
ITEM 1A. RISK FACTORS You should carefully consider the following factors, in addition to the other information included in this Annual Report on Form 10-K and the other documents incorporated herein by reference, before deciding whether to purchase or sell our securities.
We depend on a small number of third-party suppliers of synthetic fiber and are largely dependent upon two primary suppliers for our LVT products.
We depend on a small number of third-party suppliers of synthetic fiber and are largely dependent upon a primary supplier for our LVT products.
We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition and results of operations.
We have experienced such losses in the past. We could incur uninsured losses and liabilities arising from such events, including damage to our reputation, and suffer material losses in operational capacity, which could have a material adverse impact on our business, financial condition and results of operations.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under our debt. 19 Ta b le of Contents Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our operations to pay our indebtedness.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations under our debt. 19 Table of Contents Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our operations to pay our indebtedness.
While we manufacture our products in several facilities and maintain insurance covering our facilities, including business interruption insurance, our manufacturing facilities could be materially damaged by natural disasters, such as floods, tornadoes, hurricanes and earthquakes, whether or not as a result of climate change, or by fire or other unexpected events such as adverse weather conditions, acts of war, terrorism, energy shortages and disruptions, pandemics or other public health crises (such as the COVID-19 pandemic described below), or other disruptions to our facilities, supply chain or our customers’ facilities.
While we manufacture our products in several facilities and maintain insurance covering our facilities, including business interruption insurance, our manufacturing facilities could be materially damaged by natural disasters, such as floods, storms, tornadoes, hurricanes and earthquakes, whether or not as a result of climate change, or by fire or other unexpected events such as adverse weather conditions, acts of war, terrorism, protests, energy shortages and disruptions, pandemics or other public health crises or other disruptions to our facilities, supply chain or our customers’ facilities.
To the extent the conflict between Russia and Ukraine adversely affects our business, it may also have the effect of heightening other risks disclosed in our Annual Report, any of which could materially and adversely affect our business, results of operations and financial condition.
To the extent the conflicts between Russia and Ukraine and in the Middle East adversely affects our business, the conflict and war may also have the effect of heightening other risks disclosed in our Annual Report, any of which could materially and adversely affect our business, results of operations and financial condition.
Litigation might result in substantial costs and may divert management’s attention and resources, which may adversely affect our business, results of operations and financial condition. An unfavorable judgment against us in any legal proceeding or claim could require us to pay monetary damages.
Litigation might result in substantial costs and may divert management’s attention and resources, which may adversely affect our business, results of operations and financial condition. An unfavorable judgment against us in any legal proceeding or claim could require us to pay monetary damages and, depending on the nature of the claim and proceeding, may harm our reputation.
Our IT systems may be disrupted or fail for a number of reasons, including: • natural disasters, like fires; • power loss; • software “bugs”, hardware defects or human error; and • hacking, computer viruses, denial of service attacks, malware, ransomware, phishing scams, compromised or irretrievable backups or other cyber attacks.
The IT systems we use may be disrupted or fail for a number of reasons, including: • natural disasters, such as fires; • power loss; • software “bugs”, hardware defects or human error; and • hacking, computer viruses, denial of service attacks, malware, ransomware, phishing scams, compromised or irretrievable backups or other cyber-attacks.
While we attempt to match cost increases with corresponding price increases, continued inflation and volatility in the cost of raw materials, transportation and shipping costs could continue to adversely affect our financial results if we are unable to pass through such cost increases to our customers. 13 Ta b le of Contents Unanticipated termination or interruption of any of our arrangements with our primary third-party suppliers of synthetic fiber or our primary third-party supplier for luxury vinyl tile (“LVT”) or other key raw materials could have a material adverse effect on us.
While we attempt to match cost increases with corresponding price increases, inflation and volatility in the cost of raw materials, foreign currency fluctuations, tariffs and potential retaliatory tariffs, transportation, shipping costs, and other costs could adversely affect our financial results if we are unable to pass through such cost increases to our customers. 13 Table of Contents Unanticipated termination or interruption of any of our arrangements with our primary third-party suppliers of synthetic fiber or our primary third-party supplier for luxury vinyl tile (“LVT”) or other key raw materials could have a material adverse effect on us.
For information regarding the current variable interest rates of these borrowings and the potential impact on our interest expense from hypothetical increases in short term interest rates, please see the discussion in Item 7A of this Report. Furthermore, on July 27, 2017, the U.K.
For information regarding the current variable interest rates of these borrowings and the potential impact on our interest expense from hypothetical increases in short term interest rates, please see the discussion in Item 7A of this Report.
The continued efforts to combat climate change could include more restrictive federal, state, and foreign environmental laws and regulations, heightened industry standards, or other mitigation measures that may have a material adverse effect on our global operations.
Addressing the effects of climate change has taken on increased importance throughout the world. The continued efforts to combat climate change could include more restrictive federal, state, and foreign environmental laws and regulations, heightened industry standards, or other mitigation measures that may have a material adverse effect on our global operations.
Following the Cyber Event, we implemented measures to enhance our cybersecurity protections against, and reduce the potential of, any future cybersecurity attack. We expect to incur ongoing costs to enhance cybersecurity and plan to take further steps to prevent unauthorized access to, or manipulation of, our systems and data.
Following the Cyber Event, we implemented measures to enhance our cybersecurity protections against, and reduce the potential of, any future cybersecurity attack. We expect to incur ongoing costs to enhance cybersecurity with the goal of preventing unauthorized access to, or manipulation of, our systems and data.
As a general matter, market price volatility has had a significant effect on the market values of securities issued by many companies for reasons unrelated to their operating performance. We cannot predict the market price for our common stock going forward.
As a general matter, market price volatility has had a significant effect on the market values of securities issued by many companies for reasons unrelated to their operating performance.
Such volatility may cause precipitous drops in the price of our common stock on the Nasdaq Global Select Market and may cause your investment in our common stock to lose significant value.
The market price of our common stock has been volatile in the past and may continue to be volatile going forward. Such volatility may cause precipitous drops in the price of our common stock on the Nasdaq Global Select Market and may cause your investment in our common stock to lose significant value.
In 2022, approximately 47% of our net sales and a significant portion of our production were outside the United States, primarily in Europe and Asia-Pacific.
In 2024 and 2023 approximately 43% and 46% of our net sales, respectively, and a significant portion of our production were outside the United States, primarily in Europe and Asia-Pacific.
This activity is cyclical and has been affected by the strength of a country’s or region’s general economy, prevailing interest rates and other factors that lead to cost control measures or reduction in the use of space by businesses and other users of commercial or institutional space.
This activity is cyclical and has been affected by the strength of a country’s or region’s general economy, prevailing interest rates and other factors, including increased office vacancies caused by lingering effects from the COVID-19 pandemic and hybrid work schedules, that lead to cost control measures or reduction in the use of space by businesses and other users of commercial or institutional space.
Despite our security design and internal controls, our IT systems have in the past experienced, and may in the future become subject to, attempts by unauthorized third parties to access and exfiltrate confidential information, manipulate data or disrupt our operations. In November 2022, we discovered a cybersecurity attack, perpetrated by unauthorized third parties, affecting our IT systems (the “Cyber Event”).
Despite security designs and internal controls, the IT systems we use have in the past experienced, and may in the future become subject to, attempts by unauthorized third parties to access and exfiltrate confidential information, manipulate data or disrupt our operations.
The conflict between Russia and Ukraine is ongoing and its duration is uncertain. We cannot predict the outcome of the conflict or its impact on the broader region, as the conflict and related government actions are evolving and are beyond our control.
We cannot predict the outcome of the conflict and war or the impact on the broader region, as the conflict and war and related government actions are evolving and are beyond our control.
We have a substantial amount of debt and debt service requirements. As of January 1, 2023, we had approximately $526.3 million of outstanding debt, and we had $274.1 million of undrawn borrowing capacity under our Syndicated Credit Facility.
We have a substantial amount of debt and debt service requirements. As of December 29, 2024, we had approximately $305.6 million of outstanding debt, and we had $299.3 million of undrawn borrowing capacity under our Syndicated Credit Facility.
In fiscal 2022, in connection with the Cyber Event, we incurred approximately $5 million of idle plant costs, direct labor costs during the period our manufacturing facilities were idle and third-party remediation costs. We have insurance and anticipate that a portion of our financial losses related to the Cyber Event will ultimately be recovered by insurance.
Additionally, we incurred Cyber Event costs of approximately $5 million in fiscal year 2022 primarily due to idle plant costs, direct labor costs during the period our manufacturing facilities were idle and third-party remediation costs. We have cyber insurance and during 2024, we recovered $5.6 million of our financial losses related to the Cyber Event.
In response, we promptly shut down certain systems, including shipping, inventory management and production systems and engaged forensic experts to evaluate the extent of the Cyber Event and its disruption to our operations.
In November 2022, we discovered a cybersecurity attack, perpetrated by unauthorized third parties, affecting our IT systems (the “Cyber Event”). In response, we promptly shut down certain systems, including shipping, inventory management and production systems, and engaged forensic experts to evaluate the extent of the Cyber Event and its disruption to our operations.
Moreover, some of our competitors are adding manufacturing capacity into the industry throughout the globe which could increase the amount of supply in the market. Increased capacity at our competitors could result in pricing pressure on our products and less demand for our products, thus adversely affecting both revenues and profitability.
From time to time, our competitors add or modify manufacturing capacity throughout the globe, which increases the amount or cost structure of supply in the market. Increased capacity or manufacturing efficiencies at our competitors could result in pricing pressure on our products and less demand for our products, thus adversely affecting both revenues and profitability.
We also incur significant shipping and transport costs to move our products around the globe, and those costs have increased dramatically due to global supply chain, macroeconomic and geopolitical challenges.
We also incur significant shipping and transport costs to move our products around the globe, and those costs have increased dramatically due to global supply chain, macroeconomic and geopolitical challenges. The possibility of government-imposed tariffs in locations where we operate could have an adverse impact on our business.
While we permanently closed our operations in Russia in the third quarter of 2022, the broader consequences of this conflict and the extent of its effects on us as well as the global economy cannot be predicted.
While we permanently closed our operations in Russia in the third quarter of 2022, the effects of the conflict between Russia and Ukraine on us as well as the global economy cannot be predicted. The conflicts between Russia and Ukraine and in the Middle East are ongoing and the duration of the conflict and war are uncertain.
The conflict between Russia and Ukraine could adversely affect our business, results of operations and financial position. Given the nature of our business and our global operations, political, economic, and other conditions in foreign countries and regions, including geopolitical risks arising from the conflict between Russia and Ukraine, may adversely affect our business, results of operations and financial position.
Given the nature of our business and our global operations, political, economic, and other conditions in foreign countries and regions, including geopolitical risks arising from the conflicts between Russia and Ukraine and the Middle East, may adversely affect our business, results of operations and financial position. 17 Table of Contents Historically, Russia was a key supplier of natural gas, oil, and other raw materials to European countries.
The market for professional workers was, and remains, similarly challenging. Many of our professional workers continue to work from home, initially as part of our COVID-19 protocols and more recently as part of our flexible working arrangement policies. As a result, we may experience higher levels of attrition within our professional workforce in the future.
The market for professional workers was, and remains, similarly challenging. As a result, we may experience higher levels of attrition within our professional workforce in the future.
The effects of cyclicality and other factors on the new construction segment of the market have also tended in the past to be more pronounced than the effects on the renovation segment.
The effects of cyclicality and other factors on the new construction segment of the market have also tended in the past to be more pronounced than the effects on the renovation segment. These effects may recur and could be more pronounced if global economic conditions do not improve or are weakened by negative cycles or other factors.
While the investigation of the Cyber Event by our forensic experts is still ongoing and our operations have fully resumed, we estimate fiscal year 2022 revenues were adversely affected by approximately $8 million due to lost sales.
The investigation of the Cyber Event by our forensic experts was completed during fiscal year 2023. In fiscal year 2022, in connection with the Cyber Event, our revenues were adversely affected by approximately $8 million due to lost sales.
These consequences include or may include government sanctions, embargoes, unstable energy markets, regional instability, geopolitical shifts, potential retaliatory action by the Russian government against companies or other countries, and increased tensions between Russia and the United States or other countries in which we operate. 17 Ta b le of Contents Historically, Russia was a key supplier of natural gas, oil, and other raw materials to European countries.
Other potential consequences of the ongoing conflict and war include or may include government sanctions, embargoes, unstable energy markets, tariff wars, regional instability, geopolitical shifts, potential retaliatory action by the governments involved in the conflict and war against companies or other countries, and increased tensions between the involved governments and the United States or other countries in which we operate.
A public health emergency that occurs in the future could involve similar uncertainties. Sales of our principal products have been and may continue to be affected by the COVID-19 pandemic, adverse economic cycles, and effects in the new construction market and renovation market. Sales of our principal products are related to the renovation and construction of commercial and institutional buildings.
We cannot predict the market price for our common stock going forward. 14 Table of Contents Sales of our principal products have been and may continue to be affected by adverse economic cycles, and effects in the new construction market and renovation market. Sales of our principal products are related to the renovation and construction of commercial and institutional buildings.
There is also no guarantee that our CQuest™ backings will not fail to perform as expected and will not increase warranty claims or customer complaints. These efforts may also not yield the financial returns and improvements in the business that we hope to achieve from them.
These efforts may also not yield the financial returns and improvements in the business that we hope to achieve from them.
Our review is conducted during the fourth quarter of the year, unless there has been a triggering event prescribed by applicable accounting rules that warrants an earlier interim testing for possible goodwill impairment. A future goodwill impairment test may result in a future non-cash adjustment, which could adversely affect our earnings for any such future period.
As prescribed by accounting standards governing goodwill and other intangible assets, we undertake an annual review of the goodwill asset balance reflected in our financial statements. Our review is conducted during the fourth quarter of the year, unless there has been a triggering event prescribed by applicable accounting rules that warrants an earlier interim testing for possible goodwill impairment.
Large scale changes or moves could disrupt our normal operations, leading to possible loss of productivity, which may adversely affect our results. We are also making significant investments and modifications to our manufacturing facilities, processes, product compositions, and product construction including but not limited to the production of our CQuest™ carpet tile backings. These changes can be disruptive.
We are also making significant investments and modifications to our manufacturing facilities, processes, product compositions, and product construction including but not limited to the production of our CQuest™ carpet tile backings. These changes can be disruptive. There is also no guarantee that our CQuest™ backings will perform as expected and will not increase warranty claims or customer complaints.
However, there is no guarantee that these enhancements and steps will be adequate to mitigate future losses due to IT system disruptions, and we may incur significant expense in correcting and recovering from future disruptions.
However, there is no guarantee that these enhancements and steps will be adequate to mitigate future losses due to IT system disruptions, and we may incur significant expense in correcting and recovering from future disruptions. 15 Table of Contents To the extent our IT systems store sensitive data, including data related to customers, employees or other parties, security breaches may expose us to fines and other liabilities, and reputational harm if such data is misappropriated.
These effects may recur and could be more pronounced if global economic conditions do not improve or are weakened by negative cycles or other factors, including as a result of the continuing COVID-19 pandemic. 16 Ta b le of Contents International Risk Factors Our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results, including foreign currency fluctuations, restrictive taxation, custom duties, border closings or other adverse government regulations.
A public health emergency in the future could have a material adverse effect on our ability to operate, our results of operations, financial condition, and demand for our products. 16 Table of Contents International Risk Factors Our substantial international operations are subject to various political, economic and other uncertainties that could adversely affect our business results, including foreign currency fluctuations, restrictive taxation, custom duties, tariffs, border closings or other adverse government regulations.
Our earnings could be adversely affected by non-cash adjustments to goodwill, when a test of goodwill assets indicates a material impairment of those assets. As prescribed by accounting standards governing goodwill and other intangible assets, we undertake an annual review of the goodwill asset balance reflected in our financial statements.
In situations such as these, we may be required by accounting rules to recognize a loss for the write-down of the value of our inventory due to its age or obsolescence. Our earnings could be adversely affected by non-cash adjustments to goodwill, when a test of goodwill assets indicates a material impairment of those assets.
The impact of potential changes to environmental laws and regulations and industry standards regarding climate change could lead to unforeseen disruptions to our business operations. Addressing the effects of climate change has taken on increased importance throughout the world.
In addition, as cybercriminals continue to become more sophisticated and numerous, the costs to defend and insure against cyberattacks can be expected to rise. The impact of potential changes to environmental laws and regulations and industry standards regarding climate change and other sustainability matters could lead to unforeseen disruptions to our business operations.
We recorded goodwill and intangible asset impairment charges of $36.2 million in the fourth quarter of 2022 and $121.3 million in the first quarter of 2020.
A future goodwill impairment test may result in a future non-cash adjustment, which could adversely affect our earnings for any such future period. In recent years, we recorded goodwill and intangible asset impairment charges of $36.2 million in the fourth quarter of 2022.
The market price of our common stock has been volatile and the value of your investment may decline. The market price of our common stock has been volatile in the past and may continue to be volatile going forward.
These types of events could also affect our suppliers, installers, and customers, which could have a material adverse impact on our business. The market price of our common stock has been volatile and the value of your investment may decline.
From time to time, we make improvements and changes to our physical facilities, move operations to other sites, and change our manufacturing processes. In the first quarter of 2022, we permanently closed our carpet tile manufacturing facility in Thailand and transferred that production volume to other existing manufacturing operations in China and Australia.
From time to time, we make improvements and changes to our physical facilities, move operations to other sites, and change our manufacturing processes. Large scale changes or moves could disrupt our normal operations, leading to possible loss of productivity, which may adversely affect our results.
Removed
The 2020 impairment charge was primarily a result of the expected duration of the COVID-19 pandemic and its anticipated negative impact to our revenue and operating income.
Added
These initiatives could, for example, increase the cost of obtaining raw materials for production of our products, increase the cost of energy for our manufacturing processes, negatively impact our supply chain and capital expenditures, or increase our administrative costs.
Removed
To the extent our IT systems store sensitive data, including data related to customers, employees or other parties, security breaches may expose us to fines and other liabilities, and reputational harm if such data is misappropriated. In addition, as cybercriminals continue to become more sophisticated and numerous, the costs to defend and insure against cyberattacks can be expected to rise.
Added
In 2021, we established and publicly disclosed targets and other commitments related to certain sustainability matters, including a goal to reduce our CO2 emissions across our Company and supply chain by 2030. We also set a goal to become a carbon negative enterprise by 2040.
Removed
These initiatives could, for example, increase the cost of obtaining raw materials for production of our products, increase the cost of energy for our manufacturing processes, and negatively impact our supply chain and capital expenditures. 15 Ta b le of Contents Risk Factors Related to COVID-19 The COVID-19 pandemic has had and could continue to have (and other public health emergencies could have in the future) a material adverse effect on our ability to operate, our ability to keep employees safe from the pandemic, our results of operations, financial condition, liquidity, capital investments, our near term and long term ability to stay in compliance with debt covenants under our Syndicated Credit Facility and Senior Notes, our ability to refinance our existing indebtedness, and our ability to obtain financing in capital markets.
Added
If we are unable to meet these targets or commitments on our projected timelines or at all, or if they are perceived negatively, including the perception that they are not sufficiently robust or, conversely, are too costly, our reputation as well as our relationships with investors, customers and other stakeholders could be harmed, which could in turn adversely impact our business, results of operations and the trading price of our common stock.
Removed
The COVID-19 pandemic has impacted areas where we operate and sell our products and services.
Added
Health crisis events, such as epidemics or pandemics, have adversely impacted, and may continue to impact, the economy and disrupt our operations and supply chains, which may have an adverse effect on our results of operations.
Removed
The COVID-19 pandemic or a similar public health emergency in the future could have a material adverse effect on: our ability to operate; our ability to keep employees safe from public health risks; our results of operations, financial condition, liquidity and capital investments; our near term and long term ability to stay in compliance with debt covenants under our Syndicated Credit Facility and Senior Notes; our ability to refinance our existing indebtedness; and our ability to gain financing in the capital markets.
Added
Health crisis events, including epidemics or pandemics, such as COVID-19, have impacted areas where we operate and sell our products and could have additional impacts on economic growth, supply chains, and foreign currency exchange rates.
Removed
Public health organizations have recommended, and many governments have implemented, measures from time to time during the COVID-19 pandemic to slow and limit the transmission of the virus, including certain business shutdowns and shelter in place and social distancing requirements.
Added
The conflicts between Russia and Ukraine and in the Middle East could adversely affect our business, results of operations and financial position.
Removed
Such preventive measures, or others we may voluntarily put in place, may have a material adverse effect on our business for an indefinite period of time, such as: the potential shut down of certain locations; decreased employee availability; employee reluctance to receive vaccinations, whether recommended or potentially required; increased overtime and temporary labor costs; potential border closures; and disruptions to the businesses of our selling channel partners, and others.
Removed
We may also experience manufacturing personnel shortages, which may adversely affect our ability to manufacture our products.
Removed
Our suppliers and customers also have faced these and other challenges, which have led to disruption in our supply chain, raw material inflation, the inability to obtain sufficient raw materials necessary to produce our products, increased shipping and transport costs, as well as decreased construction and renovation spending and decreased demand for our products and services.
Removed
These issues may also materially affect our current and future access to sources of liquidity, particularly our cash flows from operations, and access to financing from the capital markets.
Removed
Although these disruptions may continue to occur, the long-term economic impact and near-term financial impacts of the COVID-19 pandemic, including but not limited to, potential near-term or long-term risk of asset impairment, restructuring, and other charges, cannot be reliably quantified or estimated at this time due to the uncertainty of future developments.
Removed
For example, the COVID-19 pandemic has had and may continue to have cyclical and structural impacts on the renovation of commercial and institutional buildings due to reductions in the use of work spaces, increases in office worker job losses and increases in the number of people working from home.
Removed
The COVID-19 pandemic has impacted the corporate office market and what the office of the future might look like and continues to be highly debated by senior executives, commercial real estate firms, architects, designers and other global experts, which could adversely affect the amount of money that customers spend on our products.
Removed
Financial Conduct Authority (the “FCA”), which regulates the London interbank offered rate (“LIBOR”), announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021.
Removed
Specifically, the FCA stopped publishing one week and two-month U.S. dollar LIBOR rates as of December 31, 2021, and the remaining U.S. dollar LIBOR rates will cease to be published on June 30, 2023. The Federal Reserve Bank of New York began publishing the Secured Overnight Financing Rate (“SOFR”) in April 2018 as an alternative for LIBOR.
Removed
SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. On September 29, 2022, the FCA announced its decision to stop publishing the 1-month and 6-month LIBOR rates by the end of March 2023.
Removed
We had exposure to LIBOR-based financial instruments, namely our Syndicated Credit Facility which has variable (or floating) interest rates based on LIBOR. This facility allows for the use of an alternative benchmark rate if LIBOR is no longer available.
Removed
In December 2021 we amended our Syndicated Credit Facility to replace LIBOR with a successor rate for loans denominated in euros or British Pound sterling. In October 2022, we amended our credit facility to replace LIBOR interest rates with the SOFR rate for U.S. denominated loans.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe will continue, however, to consider the desirability of establishing additional facilities and offices in other locations around the world as part of our business strategy to meet global market demands. Substantially all of our owned properties in the United States are subject to mortgages, which secure borrowings under our Syndicated Credit Facility. 21 Ta b le of Contents
Biggest changeMost of our sales and marketing locations are leased. We believe that our manufacturing and distribution facilities and our marketing offices are sufficient for our present operations. We will continue, however, to consider the desirability of establishing additional facilities and offices in other locations around the world as part of our business strategy to meet global market demands.
ITEM 2. PROPERTIES We maintain our corporate headquarters in Atlanta, Georgia in approximately 42,000 square feet of leased space. The following table lists our principal manufacturing facilities and other material physical locations (some locations are comprised of multiple buildings) by reportable segment, all of which we own except as otherwise noted: Location Floor Space (Sq.
ITEM 2. PROPERTIES We maintain our corporate headquarters in Atlanta, Georgia in approximately 42,000 square feet of leased space. The following table lists our principal manufacturing and distribution facilities and other material physical locations (some locations are comprised of multiple buildings) by reportable segment, all of which we own except as otherwise noted: Location Floor Space (Sq.
Ft.) AMS LaGrange, Georgia 669,145 LaGrange, Georgia (1) 352,205 Union City, Georgia (1) 370,000 West Point, Georgia 250,000 Salem, New Hampshire (1) 126,766 EAAA Craigavon, N. Ireland (1) 72,200 Minto, Australia 240,000 Scherpenzeel, Netherlands 1,250,960 Weinheim, Germany (1) 831,113 Taicang, China (1) 142,500 (1) Leased.
Ft.) AMS LaGrange, Georgia 669,145 LaGrange, Georgia (1) 250,000 Union City, Georgia (1) 370,000 West Point, Georgia 250,000 Salem, New Hampshire (1) 126,766 EAAA Craigavon, N. Ireland (1) 72,200 Minto, Australia 240,000 Scherpenzeel, Netherlands 1,250,960 Weinheim, Germany (1) 873,243 Taicang, China (1) 142,500 (1) Leased. We maintain sales or marketing offices in over 40 locations in 19 countries.
Removed
We maintain sales or marketing offices in over 45 locations in more than 20 countries and a number of other distribution facilities in several countries. Most of our sales and marketing locations and many of our distribution facilities are leased. We believe that our manufacturing and distribution facilities and our marketing offices are sufficient for our present operations.
Added
Substantially all of our owned properties in the United States are subject to mortgages, which secure borrowings under our Syndicated Credit Facility. 22 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are a party to legal proceedings, whether arising in the ordinary course of business or otherwise. The disclosure set forth in Note 18 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K is incorporated by reference herein.
Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are a party to legal proceedings, whether arising in the ordinary course of business or otherwise. See Note 18 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+2 added−1 removed4 unchanged
Biggest changeGlatfelter Company); Steelcase Inc.; Unifi, Inc.; and Welbilt, Inc. Welbilt, Inc. is included as a peer for periods prior to its acquisition in 2022. (5) The following companies are included in the New Self-Determined Peer Group depicted above: Acuity Brands, Inc.; Albany International Corp.; Apogee Enterprises, Inc.; Armstrong World Industries, Inc.; Caesarstone Ltd.; Gentherm Incorporated; H. B.
Biggest change(5) The following companies are included in the New Self-Determined Peer Group depicted above: ACCO Brands Corporation; American Woodmark Corporation; Apogee Enterprises, Inc.; Armstrong World Industries, Inc.; Enviri Corporation; Gibraltar Industries, Inc.; HNI Corporation; MillerKnoll, Inc.; Quanex Building Products Corporation; Steelcase Inc.; Tredegar Corporation; and VSE Corporation.
(2) The index level was set to $100 as of December 31, 2017 (the last day of fiscal year 2017). (3) The Company’s fiscal year ends on the Sunday nearest December 31.
(2) The index level was set to $100 as of December 29, 2019 (the last day of fiscal year 2019). (3) The Company’s fiscal year ends on the Sunday nearest December 31.
Stock Performance The following graph and table compare, for the period comprised of the Company’s five preceding fiscal years ended January 1, 2023, the Company’s total returns to shareholders (assuming all dividends were reinvested) with that of (i) all companies listed on the Nasdaq Composite Index, (ii) our previous self-determined peer group, and (iii) our new self-determined peer group, assuming an initial investment of $100 in each on December 31, 2017 (the last day of the fiscal year 2017).
Stock Performance The following graph and table compare, for the period comprised of the Company’s five preceding fiscal years ended December 29, 2024, the Company’s total returns to shareholders (assuming all dividends were reinvested) with that of (i) all companies listed on the Nasdaq Composite Index, and (ii) our previous self-determined peer group, and (iii) our new self-determined peer group, assuming an initial investment of $100 in each on December 29, 2019 (the last day of the fiscal year 2019).
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Common Stock is traded on the Nasdaq Global Select Market under the symbol TILE. As of February 17, 2023, we had 620 holders of record of our Common Stock.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Select Market under the symbol TILE. As of February 14, 2025, we had 537 holders of record of our common stock.
Future declaration and payment of dividends is at the discretion of our Board, and depends upon, among other things, our investment policy and opportunities, results of operations, financial condition, cash requirements, future prospects, and other factors that may be considered relevant by our Board at the time of its determination.
Although we have a history of paying quarterly cash dividends on our common stock, future declaration and payment of dividends is at the discretion of our Board, and depends upon, among other things, our investment policy and opportunities, results of operations, financial condition, cash requirements, future prospects, and other factors that may be considered relevant by our Board at the time of its determination.
Issuer Purchases of Equity Securities The following table contains information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during our fourth quarter ended January 1, 2023: Period (1) Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 3, 2022 – October 30, 2022 (3) 163,539 $ 10.40 163,204 $ 83,853,300 October 31, 2022 – December 4, 2022 94,302 10.87 94,302 82,828,595 December 5, 2022 – January 1, 2023 — — — 82,828,595 Total 257,841 $ 10.57 257,506 (1) The monthly periods identified above correspond to the Company’s fiscal fourth quarter of 2022, which commenced October 3, 2022 and ended January 1, 2023.
Issuer Purchases of Equity Securities The following table contains information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of our common stock during our fourth quarter ended December 29, 2024: Period (1) Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) September 30, 2024 – October 27, 2024 — $ — — $ 82,828,595 October 28, 2024 – December 1, 2024 — — — 82,828,595 December 2, 2024 – December 29, 2024 — — — 82,828,595 Total — $ — — (1) The monthly periods identified above correspond to the Company’s fiscal fourth quarter of 2024, which commenced September 30, 2024 and ended December 29, 2024.
(2) On May 17, 2022, the Company announced a new share repurchase program authorizing the repurchase of up to $100 million of common stock. The program has no specific expiration date.
(2) On May 17, 2022, the Company announced a share repurchase program authorizing the repurchase of up to $100 million of common stock. The program has no specific expiration date. There were no shares repurchased pursuant to this program during the Company’s fiscal fourth quarter of 2024. 25 Table of Contents
The Company chose a peer group that it believes provides a robust sample size with minimal revenue dispersion, with companies in similar industries or lines of business or subject to similar economic and business cycles, including companies with a significant international presence that are also focused on sustainability. 23 Ta b le of Contents December 31, 2017 December 30, 2018 December 29, 2019 January 3, 2021 January 2, 2022 January 1, 2023 Interface, Inc. $100 $58 $68 $44 $66 $41 NASDAQ Composite Index $100 $97 $133 $192 $235 $159 Previous Self-Determined Peer Group (18 Stocks) $100 $78 $102 $94 $130 $89 New Self-Determined Peer Group (16 Stocks) $100 $81 $107 $99 $135 $100 Notes to Performance Graph (1) If the annual interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
The Company chose a peer group that is a better representation of the Company’s size and market capitalization with minimal revenue dispersion, and with companies in similar industries or lines of business or subject to similar economic and business cycles, including companies with a significant international presence that are also focused on sustainability. 24 Table of Contents December 29, 2019 January 3, 2021 January 2, 2022 January 1, 2023 December 31, 2023 December 29, 2024 Interface, Inc. $100 $64 $98 $61 $78 $154 NASDAQ Composite Index $100 $144 $176 $119 $172 $228 Previous Self-Determined Peer Group (12 Stocks) $100 $82 $104 $65 $93 $114 New Self-Determined Peer Group (12 Stocks) $100 $90 $103 $69 $100 $112 Notes to Performance Graph (1) If the annual interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used.
Fuller Company; Harsco Corporation; MillerKnoll, Inc. (formerly Herman Miller, Inc.); HNI Corporation; Kimball International, Inc.; Masonite International Corporation; Materion Corporation; Glatfelter Corporation (formerly P.H. Glatfelter Company); Steelcase Inc.; and Unifi, Inc. Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K.
Securities Authorized for Issuance Under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K.
(4) The following companies are included in the Previous Self-Determined Peer Group depicted above: Acuity Brands, Inc.; Albany International Corp.; Apogee Enterprises, Inc.; Armstrong Flooring, Inc.; Armstrong World Industries, Inc.; Caesarstone Ltd.; Gentherm Incorporated; H. B. Fuller Company; Harsco Corporation; MillerKnoll, Inc. (formerly Herman Miller, Inc.); HNI Corporation; Kimball International, Inc.; Masonite International Corporation; Materion Corporation; Glatfelter Corporation (formerly P.H.
(4) The following companies are included in the Previous Self-Determined Peer Group depicted above: ACCO Brands Corporation; Apogee Enterprises, Inc.; Armstrong World Industries, Inc.; Enviri Corporation; HNI Corporation; MillerKnoll, Inc.; Steelcase Inc.; Unifi, Inc.; and VSE Corporation.
In 2022, the Company updated its self-determined peer group to exclude Armstrong Flooring, Inc. and Welbilt, Inc. Armstrong Flooring, Inc. was delisted and most of its assets were acquired in 2022, and Welbilt, Inc. was acquired in 2022 and no longer trades publicly.
In 2024, the Company updated its self-determined peer group to exclude PGT Innovations, Inc., SP Plus Corporation, and Glatfelter Corporation, which were acquired in 2024 and no longer trade publicly and also to incorporate other peer group changes to align with the peer group used to measure executive compensation.
Removed
(3) Includes 335 shares received by the Company from employees to satisfy income tax withholding obligations in connection with the vesting of equity awards. 24 Ta b le of Contents
Added
Unifi, Inc. was removed because its smaller size no longer aligned with the peer group profile. American Woodmark Corporation, Gibraltar Industries, Inc., Quanex Building Products Corporation, and Tredegar Corporation were appropriate additions in terms of size and industry, while also enhancing the group’s sample size and placing the Company near the median of the peer group.
Added
Glatfelter Corporation, PGT Innovations, Inc., and SP Plus Corporation were acquired in 2024 and no longer trade publicly, and therefore are excluded from the Previous Self-Determined Peer Group.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

108 edited+56 added−72 removed37 unchanged
Biggest changeOur average borrowing rate under the Syndicated Credit Facility as of January 1, 2023 was 5.78% compared to 1.91% at January 2, 2022. 30 Ta b le of Contents For 2021, our interest expense increased $0.5 million to $29.7 million, versus $29.2 million in 2020, primarily due to (1) higher fixed-rate interest expense on the Senior Notes debt, which replaced variable-rate debt under the Syndicated Credit Facility, and (2) $4.9 million of deferred losses recognized on terminated interest rate swaps that were reclassified from accumulated other comprehensive loss into interest expense during the year.
Biggest changeOur average borrowing rate under the Syndicated Credit Facility as of December 31, 2023, was 6.61% compared to 5.78% at January 1, 2023. 31 Table of Contents Other Income Expense, net During 2024, other (income) expense, net, was $(2.4) million versus $9.1 million in 2023.
For information regarding the current variable interest rates of these borrowings, the potential impact on our interest expense from hypothetical increases in short term interest rates, and the interest rate swap transaction, please see the discussion in Item 7A of this Report. We are not a party to any material off-balance sheet arrangements.
For information regarding the current variable interest rates of these borrowings, the potential impact on our interest expense from hypothetical increases in short term interest rates, and the former interest rate swap transaction, please see the discussion in Item 7A of this Report. We are not a party to any material off-balance sheet arrangements.
The discount rate used for each reporting unit ranged from 13.5% to 14.0%, which primarily fluctuated based on a country risk premium assigned to the geographical region of the reporting unit. For fiscal 2022, we determined that the carrying value of our EMEA reporting unit exceeded its fair value and that the associated goodwill was impaired.
The discount rate used for each reporting unit ranged from 13.5% to 14.0%, which primarily fluctuated based on a country risk premium assigned to the geographical region of the reporting unit. For fiscal year 2022, we determined that the carrying value of our EMEA reporting unit exceeded its fair value and that the associated goodwill was impaired.
Certain of these state net operating loss carryforwards are reserved with a valuation allowance because, based on the available evidence, we believe it is more likely than not that we would not be able to utilize those deferred tax assets in the future. The remaining year-end 2022 amounts are expected to be fully recoverable within the applicable statutory expiration periods.
Certain of these state net operating loss carryforwards are reserved with a valuation allowance because, based on the available evidence, we believe it is more likely than not that we would not be able to utilize those deferred tax assets in the future. The remaining year-end 2024 amounts are expected to be fully recoverable within the applicable statutory expiration periods.
We review the carrying values of our goodwill annually at the beginning of the fourth quarter of each fiscal year, or more often if events or changes in circumstances indicate that the carrying value of each reporting may exceed its fair value as set forth in Accounting Standards Codification 350 “ Intangibles — Goodwill and Other ”, as amended by Accounting Standards Update (“ASU”) 2017-04 .
We review the carrying values of our goodwill annually at the beginning of the fourth quarter of each fiscal year, or more often if events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value as set forth in Accounting Standards Codification 350 “ Intangibles — Goodwill and Other ”, as amended by Accounting Standards Update (“ASU”) 2017-04 .
Management’s judgement in estimating the undiscounted cash flows based on market conditions and trends, and other industry specific metrics used in determining the fair value is subject to uncertainty. If actual market value is less favorable than that estimated by management, additional write-downs may be required. Deferred Income Tax Assets and Liabilities.
Management’s judgment in estimating the undiscounted cash flows based on market conditions and trends, and other industry specific metrics used in determining the fair value is subject to uncertainty. If actual market value is less favorable than that estimated by management, additional write-downs may be required. Deferred Income Tax Assets and Liabilities.
If actual market conditions are less favorable than those projected by management, additional write-downs may be required. Management’s judgement in estimating our reserves for inventory obsolescence is based on continuous examination of our inventories to determine if there are indicators that carrying values exceed net realizable values.
If actual market conditions are less favorable than those projected by management, additional write-downs may be required. Management’s judgment in estimating our reserves for inventory obsolescence is based on continuous examination of our inventories to determine if there are indicators that carrying values exceed net realizable values.
The present value model requires management to estimate future cash flows, the timing of these cash flows, and a discount rate based on a weighted average cost of capital. The assumptions we use to estimate future cash flows and the development of any forecasts to be used in the fair value determination are subject to inherent risk and judgement.
The present value model requires management to estimate future cash flows, the timing of these cash flows, and a discount rate based on a weighted average cost of capital. The assumptions we use to estimate future cash flows and the development of any forecasts to be used in the fair value determination are subject to inherent risk and judgment.
Collateral Pursuant to a Second Amended and Restated Security and Pledge Agreement, the Facility is secured by substantially all of the assets of Interface, Inc. and our domestic subsidiaries (subject to exceptions for certain immaterial subsidiaries), including all of the stock of our domestic subsidiaries and up to 65% of the stock of our first-tier material foreign subsidiaries.
Collateral Pursuant to a Second Amended and Restated Security and Pledge Agreement, the Facility is secured by substantially all of the assets of Interface, Inc. and our domestic subsidiaries (subject to exceptions for certain immaterial subsidiaries), including all of the stock of our domestic subsidiaries and up to 65% of the stock of certain material foreign subsidiaries.
Excludes goodwill and intangible asset impairment charges, purchase accounting amortization, Thailand plant closure inventory write-down, Cyber Event costs, and restructuring, asset impairment, severance and other costs. See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information.
Excludes goodwill and intangible asset impairment charges, purchase accounting amortization, Cyber Event impact, Thailand plant closure inventory write-down, and restructuring, asset impairment, severance, and other, net. See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information.
The AMS operating segment continues to include the United States, Canada and Latin America geographic areas. See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information . The results of operations discussion below also includes segment information.
The AMS operating segment includes the United States, Canada and Latin America geographic areas. See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information . The results of operations discussion below also includes segment information.
Specifically, higher inventories as a result of higher raw material costs and input costs contributed to the greater use of cash for working capital compared to last year. Higher variable compensation payouts in the first quarter of 2022 (related to 2021 performance) also contributed to the increased use of cash for 2022.
Specifically, higher inventories as a result of higher raw material costs and input costs contributed to the greater use of cash for working capital in 2022. Higher variable compensation payouts in the first quarter of 2022 (related to 2021 performance) also contributed to the increased use of cash for 2022.
To the extent the actual collectability of our accounts receivable differs from our estimates by 10%, our 2022 net income would be higher or lower by approximately $0.2 million, on an after-tax basis, depending on whether the actual collectability was better or worse, respectively, than the estimated allowance. Product Warranties.
To the extent the actual collectability of our accounts receivable differs from our estimates by 10%, our 2024 net income would be higher or lower by approximately $0.3 million, on an after-tax basis, depending on whether the actual collectability was better or worse, respectively, than the estimated allowance. Product Warranties.
We estimate the Cyber Event adversely affected our fiscal 2022 revenues by approximately $8 million in lost sales. We incurred approximately $5 million of costs related to the Cyber Event in 2022 for idle plant costs, direct labor costs during the period our manufacturing facilities were idle and third party remediation costs.
In 2022, we estimated that the Cyber Event adversely affected our fiscal year 2022 revenues by approximately $8 million in lost sales. We incurred approximately $5 million of costs related to the Cyber Event in 2022 for idle plant costs, direct labor costs during the period our manufacturing facilities were idle and third-party remediation costs.
As outlined in the table above, we have approximately $86.4 million in material contractual cash obligations due within the next year, which includes, among other things, scheduled debt repayments under the Facility, pension contributions, interest payments on our debt, and lease commitments.
As outlined in the table above, we have approximately $68.8 million in material contractual cash obligations due within the next year, which includes, among other things, scheduled debt repayments under the Facility, pension contributions, interest payments on our debt, and lease commitments.
In 2022, the weakening of the Euro, Australian dollar, British Pound sterling and Chinese Renminbi against the U.S. dollar had a negative impact on our net sales and operating income. In 2021, the strengthening of the Euro, Australian dollar, Chinese Renminbi and British Pound sterling against the U.S. dollar had a positive impact on our net sales and operating income.
In 2022, the weakening of the Euro, Australian dollar, British Pound sterling and Chinese Renminbi against the U.S. dollar had a negative impact on our net sales and operating income.
To the extent the actual warranty expense differs from our estimates by 10%, our 2022 net income would be higher or lower by approximately $0.1 million, on an after-tax basis, depending on whether the actual expense is lower or higher, respectively, than the estimated provision.
To the extent the actual warranty expense differs from our estimates by 10%, our 2024 net income would be higher or lower by approximately $0.4 million, on an after-tax basis, depending on whether the actual expense is lower or higher, respectively, than the estimated provision.
Of the $92.1 million of cash in foreign jurisdictions, approximately $43.4 million represents earnings which we have determined are not permanently reinvested, and as such we have provided for foreign withholding and U.S. state income taxes on these amounts in accordance with applicable accounting standards.
Of the $96.1 million of cash in foreign jurisdictions, approximately $8.8 million represents earnings which we have determined are not permanently reinvested, and as such we have provided for foreign withholding and U.S. state income taxes on these amounts in accordance with applicable accounting standards.
The decrease from the comparable period was primarily due to a decrease in capital expenditures due to reduced capital investment. • Cash used in financing activities was $19.5 million for 2022, which represents a decrease of $41.4 million compared to 2021.
The decrease was primarily due to reduced capital expenditures. • Cash used in financing activities was $19.5 million for 2022, which represents a decrease of $41.4 million compared to 2021.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Our revenues are derived from sales of floorcovering products, primarily modular carpet, luxury vinyl tile (“LVT”) and rubber flooring products.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Our revenues are derived from sales of floorcovering products, primarily modular carpet, resilient flooring, including luxury vinyl tile (“LVT”), rubber flooring products, and installation services and accessories.
See Note 12 entitled “Goodwill and Intangible Assets” of Part II, Item 8 of this Annual Report for additional information. Inventories. We determine the value of inventories using the lower of cost or net realizable value. We write down inventories for the difference between the carrying value of the inventories and their net realizable value.
See Note 12 entitled “ Goodwill and Other Intangible Assets ” of Part II, Item 8 of this Annual Report for additional information. Inventories. We determine the value of inventories using the lower of cost or net realizable value. We write down inventories for the difference between the carrying value of the inventories and their net realizable value.
Fluctuations in currency exchange rates had a positive impact on our year-over-year consolidated net sales comparison of approximately $23.9 million, meaning that if currency levels had remained constant year over year, our 2021 sales would have been lower by this amount.
Fluctuations in currency exchange rates had a positive impact on our year-over-year consolidated net sales comparison of approximately $1.4 million, meaning that if currency levels had remained constant year-over-year, our 2023 net sales would have been lower by this amount.
The following table presents the amounts (in U.S. dollars) by which the exchange rates for translating Euros, British Pounds sterling, Australian dollars, Chinese Renminbi and Canadian dollars into U.S. dollars have affected our consolidated net sales and operating income or loss during the past three years: 2022 2021 2020 (in millions) Impact of changes in foreign currency on consolidated net sales $ (58.8) $ 23.9 $ 7.1 Impact of changes in foreign currency on consolidated operating income (loss) (8.3) 3.2 0.9 The following table presents, as a percentage of net sales, certain items included in our consolidated statements of operations during the past three years: Fiscal Year 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 66.3 64.0 62.8 Gross profit 33.7 36.0 37.2 Selling, general and administrative expenses 25.0 27.0 30.2 Restructuring, asset impairment and other charges 0.2 0.3 (0.4) Goodwill and intangible asset impairment charge 2.8 — 11.0 Operating income (loss) 5.7 8.7 (3.6) Interest/Other expense, net 2.6 2.7 3.6 Income (loss) before income tax expense 3.1 6.0 (7.2) Income tax expense (benefit) 1.7 1.4 (0.7) Net income (loss) 1.4 % 4.6 % (6.5) % Consolidated Net Sales Below we provide information regarding our consolidated net sales and analyze those results for each of the last three fiscal years.
The following table presents the amounts (in U.S. dollars) by which the exchange rates for translating Euros, British Pounds sterling, Australian dollars, Chinese Renminbi, Canadian dollars, and other currencies into U.S. dollars have affected our consolidated net sales and operating income during the past three years: 2024 2023 2022 (in millions) Impact of changes in foreign currency on consolidated net sales $ (1.8) $ 1.4 $ (58.8) Impact of changes in foreign currency on consolidated operating income (0.1) (0.6) (8.3) The following table presents, as a percentage of net sales, certain items included in our consolidated statements of operations during the past three years: Fiscal Year 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales 63.3 65.0 66.3 Gross profit 36.7 35.0 33.7 Selling, general and administrative expenses 26.5 26.9 25.0 Restructuring, asset impairment, other (gains) and charges — (0.2) 0.2 Goodwill and intangible asset impairment charge — — 2.8 Operating income 10.2 8.3 5.7 Interest/Other expense, net 1.6 3.2 2.6 Income before income tax expense 8.6 5.1 3.1 Income tax expense 2.0 1.5 1.7 Net income 6.6 % 3.6 % 1.4 % Consolidated Net Sales Below we provide information regarding our consolidated net sales and analyze those results for each of the last three fiscal years.
The table below represents the changes to the projected benefit obligation as a result of changes in discount rate assumptions: Foreign Defined Benefit Plans Increase (Decrease) in Projected Benefit Obligation (in millions) 1% increase in actuarial assumption for discount rate $ (22.5) 1% decrease in actuarial assumption for discount rate 26.7 Domestic Salary Continuation Plan Increase (Decrease) in Projected Benefit Obligation (in millions) 1% increase in actuarial assumption for discount rate $ (1.9) 1% decrease in actuarial assumption for discount rate 2.2 Allowances for Expected Credit Losses.
The table below represents the changes to the projected benefit obligation as a result of changes in discount rate assumptions: Foreign Defined Benefit Plans Increase (Decrease) in Projected Benefit Obligation (in millions) 1% increase in actuarial assumption for discount rate $ (19.7) 1% decrease in actuarial assumption for discount rate 25.3 Domestic Salary Continuation Plan Increase (Decrease) in Projected Benefit Obligation (in millions) 1% increase in actuarial assumption for discount rate $ (1.6) 1% decrease in actuarial assumption for discount rate 1.9 Allowances for Expected Credit Losses.
Our pension obligations include contributions and expected benefit payments to be paid by the Company related to certain defined benefit pension plans and excludes the expected benefit payments for two of our funded foreign defined benefit plans as these obligations will be paid by the plans over the next ten years.
Our pension obligations include contributions and expected benefit payments to be paid by the Company related to certain defined benefit pension plans and exclude the expected benefit payments for two of our funded foreign defined benefit plans as these obligations will be paid by the plans.
Consolidated net sales denominated in currencies other than the U.S. dollar were approximately 47% in 2022, 50% in 2021, and 51% in 2020. Because we have substantial international operations, we are impacted, from time to time, by international developments that affect foreign currency transactions.
Consolidated net sales denominated in currencies other than the U.S. dollar were approximately 43% in 2024, 46% in 2023, and 47% in 2022. Because we have substantial international operations, we are impacted, from time to time, by international developments that affect foreign currency transactions.
We considered factors such as, but not limited to, our expectations for the short-term and long-term impacts of macroeconomic factors, including ongoing inflation, foreign currency exchange rates, and our expected financial performance, including planned revenue and operating income of each reporting unit.
During the fourth quarter of 2022, we performed our annual goodwill quantitative testing for each reporting unit. We considered factors such as, but not limited to, our expectations for the short-term and long-term impacts of macroeconomic factors, including ongoing inflation, foreign currency exchange rates, and our expected financial performance, including planned revenue and operating income of each reporting unit.
More than half of our consolidated net sales were in non-corporate office markets in fiscal year 2022 and fiscal year 2021, primarily in education, healthcare, retail, public buildings, hospitality and residential/living market segments.
More than half of our consolidated net sales were in non-corporate office markets in fiscal years 2024, 2023, and 2022, primarily in education, healthcare, public buildings, retail, residential/living, hospitality, transportation, and consumer residential market segments.
Interest on Eurocurrency-based loans (or SOFR-based and alternative currency loans following the fifth amendment to the Facility as discussed below) and fees for letters of credit are charged at varying rates computed by applying a margin ranging from 1.25% to 3.00% over the applicable Eurocurrency rate (or SOFR rate or alternative currency rate following the fifth amendment to the Facility as discussed below), depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter.
Interest on SOFR-based and alternative currency loans are charged at varying rates computed by applying a margin ranging from 1.25% to 3.00% over the applicable SOFR rate or alternative currency rate, depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter.
Share Repurchases In the second quarter of 2022, the Company adopted a new share repurchase program in which the Company is authorized to repurchase up to $100 million of its outstanding shares of common stock. The program has no specific expiration date.
Share Repurchases In the second quarter of 2022, the Company adopted a new share repurchase program in which the Company is authorized to repurchase up to $100 million of its outstanding shares of common stock. The program has no specific expiration date. No shares of common stock were repurchased during 2024 and 2023 pursuant to this program.
In addition, the Company pays a commitment fee ranging from 0.20% to 0.40% per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility. 36 Ta b le of Contents LIBOR Transition The U.K.
In addition, the Company pays a commitment fee ranging from 0.20% to 0.40% per annum (depending on the Company’s consolidated net leverage ratio as of the most recently completed fiscal quarter) on the unused portion of the Facility.
Recent Accounting Pronouncements Please see Note 2 entitled “Recent Accounting Pronouncements” in Item 8 of this Report for discussion of these items. 41 Ta b le of Contents
Recent Accounting Pronouncements Please see Note 2 entitled “Recent Accounting Pronouncements” in Item 8 of this Report for discussion of these items. 43 Table of Contents
By its nature, such an estimate is highly subjective, and it is possible that the amount of accounts receivable that we are unable to collect may be different than the amount initially estimated. Our allowance for expected credit losses on January 1, 2023 and January 2, 2022, was $4.0 million and $5.0 million, respectively.
By its nature, such an estimate is highly subjective, and it is possible that the amount of accounts receivable that we are unable to collect may be different than the amount initially estimated. Our allowance for expected credit losses on December 29, 2024 and December 31, 2023, was $3.8 million and $3.0 million, respectively.
In conjunction with the closure of its Thailand facility, the Company recorded a write-down of inventory of $2.5 million in fiscal year 2022 within cost of sales in the consolidated statements of operations. See Note 16 entitled “ Restructuring and Other Charges” of Part II, Item 8 of this Annual Report for additional information.
During 2022, in conjunction with the closure of its Thailand facility, the Company recorded a write-down of inventory of $2.5 million within cost of sales in the consolidated statements of operations. See Note 16 entitled “Restructuring and Other” and Note 7 entitled “Property, Plant and Equipment” of Part II, Item 8 of this Annual Report for additional information.
If an event of default occurs under the Facility, the lenders’ Administrative Agent may, upon the request of a specified percentage of lenders, exercise remedies with respect to the collateral, including, in some instances, foreclosing mortgages on real estate assets, taking possession of or selling personal property assets, collecting accounts receivable, or exercising proxies to take control of the pledged stock of domestic and first-tier material foreign subsidiaries. 37 Ta b le of Contents Under the Facility, we are required to make quarterly amortization payments of the term loan borrowings.
If an event of default occurs under the Facility, the lenders’ Administrative Agent may, upon the request of a specified percentage of lenders, exercise remedies with respect to the collateral, including, in some instances, foreclosing mortgages on real estate assets, taking possession of or selling personal property assets, collecting accounts receivable, or exercising proxies to take control of the pledged stock of domestic and certain material foreign subsidiaries.
Financial Condition, Liquidity and Capital Resources General In our business, we require cash and other liquid assets primarily to purchase raw materials and to pay other manufacturing costs, in addition to funding normal course SG&A expenses, anticipated capital expenditures, interest expense and potential special projects.
As a percentage of net sales, AOI was 5.5% in both 2023 and 2022. 34 Table of Contents Financial Condition, Liquidity and Capital Resources General In our business, we require cash and other liquid assets primarily to purchase raw materials and to pay other manufacturing costs, in addition to funding normal course SG&A expenses, anticipated capital expenditures, interest expense and potential special projects.
As of January 1, 2023, we had additional borrowing capacity of $274.1 million under the Facility. As of January 1, 2023, the weighted average interest rate on borrowings outstanding under the Facility was 5.78%. As of January 1, 2023, there were no other lines of credit available to the Company.
As of December 29, 2024, we had additional borrowing capacity of $299.3 million under the Facility. As of December 29, 2024, the weighted average interest rate on borrowings outstanding under the Facility was 5.62%. As of December 29, 2024, there were no other lines of credit available to the Company.
The goodwill balance allocated to our Asia-Pacific reporting unit was previously written off in connection with the 2020 goodwill impairment, as described below. We have not made any material changes to our goodwill impairment loss assessment methodology during the past three fiscal years.
The Americas reporting unit had a goodwill balance of $102.4 million at the end of fiscal 2022. The goodwill balance allocated to our Asia-Pacific reporting unit was previously written off in connection with the 2020 goodwill impairment. We have not made any material changes to our goodwill impairment loss assessment methodology during the past three fiscal years.
To the extent that actual obsolescence of our inventory differs from our estimate by 10%, our 2022 net income would be higher or lower by approximately $1.3 million, on an after-tax basis. 40 Ta b le of Contents Pension Benefits.
To the extent that actual obsolescence of our inventory differs from our estimate by 10%, our 2024 net income would be higher or lower by approximately $2.9 million, on an after-tax basis. 42 Table of Contents Pension Benefits.
While we believe that adequate write-downs for inventory obsolescence have been made in the consolidated financial statements, consumer tastes and preferences may continue to change, and we could experience additional inventory write-downs in the future. Our inventory reserve on January 1, 2023 and January 2, 2022, was $28.5 million and $27.1 million, respectively.
While we believe that adequate write-downs for inventory obsolescence have been made in the consolidated financial statements, consumer tastes and preferences may continue to change, and we could experience additional inventory write-downs in the future. Our inventory reserve on December 29, 2024 and December 31, 2023, was $38.3 million and $34.0 million, respectively.
As a percentage of net sales, SG&A expenses decreased to 25.0% in 2022 versus 27.0% in 2021. For 2021, our consolidated SG&A expenses decreased $8.9 million (2.7%) versus 2020. Currency translation had a $5.3 million (1.6%) negative impact on the year-over-year comparison.
As a percentage of net sales, SG&A expenses decreased to 26.5% in 2024 versus 26.9% in 2023. For 2023, our consolidated SG&A expenses were $339.0 million versus $324.2 million in 2022. Currency translation had a $1.5 million (0.5%) negative impact on the year-over-year comparison.
On a market segment basis, the sales increase was most significant in non-corporate office market segments including retail, education and healthcare. See the segment results discussion below for additional information on market segments.
On a market segment basis, the sales increase was most significant in the retail, education, residential living, and public buildings market segments partially offset by decreases in the hospitality, corporate office, and consumer residential market segments. See the segment results discussion below for additional information on market segments.
Fiscal year 2021 also includes higher repayments of approximately $60 million of term loan borrowings which contributed to a greater use of cash in that period. We ended 2021 with $97.3 million in cash, a decrease of $5.8 million during the year.
Fiscal year 2021 also included higher repayments of approximately $60 million of term loan borrowings which contributed to a greater use of cash in that period.
The cash located outside of the U.S. is indefinitely reinvested in the respective jurisdictions (except as identified below).
Approximately $3.1 million of this cash was located in the U.S., and the remaining $96.1 million was located outside of the U.S. The cash located outside of the U.S. is indefinitely reinvested in the respective jurisdictions (except as identified below).
As a result, macroeconomic factors such as employment rates, office vacancy rates, work from home policies, capital spending, productivity and efficiency gains that impact corporate profitability in general, also affect our business.
As a result, macroeconomic factors such as employment rates, office vacancy rates, work from home policies, capital spending, productivity and efficiency gains that impact corporate profitability in general, also affect our business. The Company has two operating and reportable segments – namely Americas (“AMS”) and Europe, Africa, Asia and Australia (collectively “EAAA”).
Restructuring Plans On September 8, 2021, the Company committed to a restructuring plan that continues to focus on efforts to improve efficiencies and decrease costs across its worldwide operations. The plan involves a reduction of approximately 188 employees and the closure of the Company’s carpet tile manufacturing facility in Thailand at the end of the first quarter of 2022.
Restructuring Plan On September 8, 2021, the Company committed to a restructuring plan that continued to focus on efforts to improve efficiencies and decrease costs across its worldwide operations, involving the closure of the Company’s manufacturing facility in Thailand.
As a percentage of net sales, AOI increased to 13.6% in 2022 versus 13.1% in 2021.
As a percentage of net sales, AOI decreased to 11.9% in 2023 versus 13.6% in 2022.
Our warranty and sales allowance reserve on January 1, 2023 and January 2, 2022, was $2.1 million and $2.7 million, respectively. Actual warranty expense incurred could vary significantly from amounts that we estimate.
Our warranty and sales allowance reserve on December 29, 2024 and December 31, 2023, was $5.3 million and $4.3 million, respectively. Actual warranty expense incurred could vary significantly from amounts that we estimate.
Material terms under the Facility are discussed below. For additional information please see Note 9 entitled “Long-Term Debt” in Item 8 of this Report.
On October 14, 2022, in connection with the fifth amendment to the Facility, the maturity date was extended to October 2027. Material terms under the Facility are discussed below. For additional information please see Note 9 entitled “Long-Term Debt” in Item 8 of this Report.
The effective tax rate for the year ended January 1, 2023 was significantly impacted by a non-deductible goodwill impairment charge. Excluding the impact of the non-deductible goodwill impairment charge, the effective tax rate was 31.4% for the year ended January 1, 2023.
Excluding the impact of the non-deductible goodwill impairment charge, the effective tax rate was 31.4% for fiscal year 2022.
Fluctuations in currency exchange rates had a negative impact on our year-over-year consolidated net sales comparison of approximately $58.8 million, meaning that if currency levels had remained constant year-over-year, our 2022 net sales would have been higher by this amount. On a market segment basis, the sales increase was most significant in the corporate office, retail and education market segments.
Fluctuations in currency exchange rates had a negative impact on our year-over-year consolidated net sales comparison of approximately $1.8 million, indicating that if currency levels had remained constant year-over-year, our 2024 net sales would have been higher by this amount.
If we determine that the carrying value of the reporting unit exceeds its estimated fair value, we measure the goodwill impairment charge based on the excess of the reporting unit’s carrying value over its fair value consistent with ASU 2017-04, “ Simplifying the Test for Goodwill Impairment ”, which we adopted on December 30, 2019. 39 Ta b le of Contents During the fourth quarter of 2022, we performed our annual goodwill quantitative testing.
If we determine that the carrying value of the reporting unit exceeds its estimated fair value, we measure the goodwill impairment charge based on the excess of the reporting unit’s carrying value over its fair value consistent with ASU 2017-04, “ Simplifying the Test for Goodwill Impairment”.
On November 17, 2020, we issued $300 million aggregate principal amount of 5.50% Senior Notes due 2028 (the “Senior Notes”), which are discussed further below. As of January 1, 2023, we had $300.0 million of Senior Notes outstanding. It is important for you to consider that we have a significant amount of indebtedness.
In addition, as of December 29, 2024, we had $300.0 million of 5.50% Senior Notes due 2028 (the “Senior Notes”) outstanding, which are discussed further below. It is important for you to consider that we have a significant amount of indebtedness. Our Facility matures in October of 2027, and the Senior Notes, as discussed below, mature in December 2028.
A detailed discussion of our 2022 and 2021 consolidated and segment performance appears below under “Analysis of Results of Operations”. Cybersecurity Event As previously disclosed in our current report on Form 8-K filed with the SEC on November 23, 2022, we discovered a cybersecurity attack, perpetrated by unauthorized third parties, affecting our IT systems on November 20, 2022.
Cybersecurity Event As previously disclosed in our current report on Form 8-K filed with the Commission on November 23, 2022, we discovered a cybersecurity attack on November 20, 2022, perpetrated by unauthorized third parties, affecting our IT systems. The investigation of the Cyber Event was completed in fiscal year 2023.
We recorded a goodwill impairment charge of $29.4 million to write off all the goodwill allocated to our EMEA reporting unit as the excess of carrying value over fair value was higher than the recorded amount of goodwill for the reporting unit.
We recorded a goodwill impairment charge of $29.4 million to write off all the goodwill allocated to our EMEA reporting unit. As of the 2022 measurement date, the fair value of our Americas reporting unit exceeded its carrying value by 71%, and the Americas reporting unit was not impaired.
Our Facility matures in October of 2027, and the Senior Notes, as discussed below, mature in December 2028. We cannot assure you that we will be able to renegotiate or refinance any of our debt on commercially reasonable terms, or at all.
We cannot assure you that we will be able to renegotiate or refinance any of our debt on commercially reasonable terms, or at all.
The increase was primarily due to the following: • Cash provided by operating activities was $119.1 million for 2020, which represents a decrease of $22.7 million compared to 2019.
The decrease was primarily due to the following: • Cash provided by operating activities was $148.4 million for 2024, which represents an increase of $6.4 million compared to 2023.
In 2020, the strengthening of the Euro, British Pound sterling, and Chinese Renminbi against the U.S. dollar had a positive impact on our net sales and operating loss.
In 2024, the weakening of the Euro, Canadian dollar, and Chinese Renminbi against the U.S. dollar had a negative impact on our net sales, partially offset by the strengthening of the British Pound sterling against the U.S. dollar. Currency fluctuations had no material impact to operating income in 2024.
We generate our cash and other liquidity requirements primarily from our operations and from borrowings under our Syndicated Credit Facility (the “Facility”) discussed below. We anticipate that our liquidity is sufficient to meet our obligations for the next 12 months, and we expect to generate sufficient cash to meet our long-term obligations.
We anticipate that our liquidity, cash flows from operations, cash and cash equivalents, and other sources of liquidity are sufficient to meet our obligations for the next 12 months, and we expect to generate sufficient cash to meet our long-term obligations.
The amortization payments are due on the last day of the calendar quarter. We are in compliance with all covenants under the Facility and anticipate that we will remain in compliance with the covenants for the foreseeable future. In the fourth quarter of 2020, we terminated our interest rate swaps and paid approximately $13 million to terminate the swap agreements.
Under the Facility, we are required to make quarterly amortization payments of the term loan borrowings. The amortization payments are due on the last day of the calendar quarter. We are in compliance with all covenants under the Facility and anticipate that we will remain in compliance with the covenants for the foreseeable future.
Consolidated operating income for 2022 was $75.4 million compared to consolidated operating income of $104.8 million in 2021 primarily due to continuing inflationary pressures on raw materials and freight costs in the current year and a $36.2 million goodwill and intangible asset impairment charge in 2022.
Consolidated operating income for 2023 was $104.5 million compared to consolidated operating income of $75.4 million in 2022, primarily due to a non-recurring goodwill and intangible asset impairment charge of $36.2 million recognized in 2022.
As of January 1, 2023, we had $226.3 million of borrowings outstanding under our Facility, of which $202.1 million were term loan borrowings and $24.2 million were revolving loan borrowings. Additionally, $1.6 million in letters of credit were outstanding under the Facility at the end of fiscal year 2022.
As of December 29, 2024, we had $5.6 million of borrowings outstanding under our Facility, all of which were term loan borrowings. There were no revolving loan borrowings outstanding as of December 29, 2024. Additionally, $0.7 million in letters of credit were outstanding under the Facility at the end of fiscal year 2024.
Currency fluctuations had an approximately $21.5 million (4.2%) positive impact on EAAA’s 2021 sales compared to 2020 due to the strengthening of the Euro, British Pound sterling, Australian dollar and the Chinese Renminbi against the U.S. dollar.
Currency fluctuations had a negative impact of approximately $0.8 million (0.2%) on EAAA net sales for 2024 compared to 2023 due to the weakening of the Euro, Chinese Renminbi, and Australian dollar against the U.S dollar, partially offset by the strengthening of the British Pound sterling against the U.S. dollar.
Consolidated Cost and Expenses The following table presents our consolidated cost of sales and selling, general and administrative (“SG&A”) expenses during the past three years: Fiscal Year Percentage Change 2022 2021 2020 2022 compared with 2021 2021 compared with 2020 (in thousands) Consolidated cost of sales $ 860,186 $ 767,665 $ 692,688 12.1 % 10.8 % Consolidated selling, general and administrative expenses 324,190 324,315 333,229 0.0 % (2.7) % Consolidated Cost of Sales For 2022, our consolidated cost of sales increased $92.5 million (12.1%) compared to 2021, primarily due to higher sales and continuing inflationary pressures on raw materials and freight costs.
Consolidated Cost and Expenses The following table presents our consolidated cost of sales and selling, general and administrative (“SG&A”) expenses during the past three years: Fiscal Year Percentage Change 2024 2023 2022 2024 compared with 2023 2023 compared with 2022 (in thousands) Consolidated cost of sales $ 832,710 $ 820,429 $ 860,186 1.5 % (4.6) % Consolidated selling, general and administrative expenses 348,542 339,049 324,190 2.8 % 4.6 % Consolidated Cost of Sales For 2024, our consolidated cost of sales increased $12.3 million (1.5%) compared to 2023, primarily due to higher sales partially offset by lower raw material costs.
AMS Segment – Net Sales and Adjusted Operating Income (“AOI”) The following table presents AMS segment net sales and AOI for the last three fiscal years: Fiscal Year Percentage Change 2022 2021 2020 2022 compared with 2021 2021 compared with 2020 (in thousands) AMS segment net sales $ 753,740 $ 651,216 $ 593,418 15.7 % 9.7 % AMS segment AOI (1) 102,370 85,014 89,097 20.4 % (4.6) % (1) Includes allocation of corporate SG&A expenses.
AMS Segment – Net Sales and Adjusted Operating Income (“AOI”) The following table presents AMS segment net sales and AOI for the last three fiscal years: Fiscal Year Percentage Change 2024 2023 2022 2024 compared with 2023 2023 compared with 2022 (in thousands) AMS segment net sales $ 800,811 $ 736,955 $ 753,740 8.7 % (2.2) % AMS segment AOI (1) 106,594 87,789 102,370 21.4 % (14.2) % (1) Includes allocation of corporate SG&A expenses and allocation of global support SG&A expenses as discussed above.
On a market segment basis, the AMS sales increase was most significant in the retail (up 54.2%), education (up 18.9%), public buildings (up 18.0%), corporate office (up 11.7%) and healthcare (up 5.8%) market segments.
On a market segment basis, the AMS sales increase was most significant in the retail (up 81.5%), education (up 13.5%), public buildings (up 27.9%), and residential living (up 23.3%) market segments partially offset by decreases in the corporate office (down 1.7%), hospitality (down 18.0%), and consumer residential (down 10.4%) market segments.
EAAA Segment – Net Sales and AOI The following table presents EAAA segment net sales and AOI for the last three fiscal years: Fiscal Year Percentage Change 2022 2021 2020 2022 compared with 2021 2021 compared with 2020 (in thousands) EAAA segment net sales $ 544,179 $ 549,182 $ 509,844 (0.9) % 7.7 % EAAA segment AOI (1) 30,058 37,268 21,403 (19.3) % 74.1 % (1) Includes allocation of corporate SG&A expenses.
EAAA Segment – Net Sales and AOI The following table presents EAAA segment net sales and AOI for the last three fiscal years: Fiscal Year Percentage Change 2024 2023 2022 2024 compared with 2023 2023 compared with 2022 (in thousands) EAAA segment net sales $ 514,847 $ 524,543 $ 544,179 (1.8) % (3.6) % EAAA segment AOI (1) 34,803 28,608 30,058 21.7 % (4.8) % (1) Includes allocation of corporate SG&A expenses and allocation of global support SG&A expenses as discussed above.
Executive Summary During 2022, we had consolidated net sales of $1,297.9 million, up 8.1% compared to $1,200.4 million in 2021, primarily due to higher sales in the corporate office, education and retail market segments.
Executive Summary During 2024, we had consolidated net sales of $1,315.7 million, up 4.3% compared to $1,261.5 million in 2023, primarily due to increased customer demand – particularly in the retail and education market segments.
Approximately $4.8 million of the Cyber Event costs were included in cost of sales in the consolidated statement of operations and approximately $0.3 million in selling, general and administrative expenses. We have insurance and anticipate that a portion of our financial losses related to the Cyber Event will ultimately be covered by insurance.
Approximately $4.8 million of the Cyber Event costs in 2022 were included in cost of sales in the consolidated statements of operations and approximately $0.3 million were included in selling, general and administrative expenses.
Fiscal Year Percentage Change 2022 2021 2020 2022 compared with 2021 2021 compared with 2020 (in thousands) Consolidated net sales $ 1,297,919 $ 1,200,398 $ 1,103,262 8.1 % 8.8 % 28 Ta b le of Contents Consolidated net sales for 2022 compared with 2021 For 2022, our consolidated net sales increased $97.5 million (8.1%) compared to 2021, comprised of higher sales volumes (approximately 5.4%) and higher prices (approximately 2.7%, including the impact of currency fluctuations).
Fiscal Year Percentage Change 2024 2023 2022 2024 compared with 2023 2023 compared with 2022 (in thousands) Consolidated net sales $ 1,315,658 $ 1,261,498 $ 1,297,919 4.3 % (2.8) % 29 Table of Contents Consolidated net sales for 2024 compared with 2023 For 2024, our consolidated net sales increased $54.2 million (4.3%) compared to 2023, comprised of higher sales volumes (approximately 2.7%) and higher average sales prices (approximately 1.6%).
As of January 1, 2023, and January 2, 2022, we had state net operating loss carryforwards of $162.8 million and $153.0 million, respectively.
As of December 29, 2024, and December 31, 2023, we had state net operating loss carryforwards of $190.1 million and $192.1 million, respectively.
These charges are included in selling, general and administrative expenses in the consolidated statements of operations. Interest Expense For 2022, our interest expense was $29.9 million, versus $29.7 million in 2021. Higher interest rates in 2022 were offset by lower outstanding term loan borrowings under the Syndicated Credit Facility.
For 2023, our interest expense was $31.8 million, versus $29.9 million in 2022, primarily due to higher interest rates on outstanding term loan borrowings under the Syndicated Credit Facility, partially offset by lower outstanding term loan borrowings under the Facility.
See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information .
See Note 20 entitled “Segment Information” included in Item 8 of this Annual Report on Form 10-K for additional information. 32 Table of Contents AMS Segment Net Sales for 2024 compared with 2023 During 2024, net sales in AMS increased 8.7% versus 2023, comprised of higher sales volume and higher average sales prices.
AMS segment net sales for 2022 compared with 2021 During 2022, net sales in AMS increased 15.7% versus 2021, comprised of higher sales volumes and higher prices.
AMS Segment Net Sales for 2023 compared with 2022 During 2023, net sales in AMS decreased 2.2% versus 2022, comprised of lower sales volume partially offset by higher average sales prices.
Higher selling prices and volume were offset by the impact of negative currency fluctuations of approximately $56.7 million (10.3%) for 2022 compared to 2021 due to the weakening of the Euro, Australian dollar, British Pound sterling and Chinese Renminbi against the U.S. dollar.
Currency fluctuations had a positive impact of approximately $3.5 million (0.6%) on EAAA net sales for 2023 compared to 2022 due to the strengthening of the Euro, partially offset by the weakening of the Australian dollar and Chinese Renminbi against the U.S. dollar.
However, the Company’s cash flows from operations can be affected by numerous factors including the uncertainty of COVID-19 and its impact on global operations, raw material availability and cost, demand for our products, and other factors described in “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. 38 Ta b le of Contents Critical Accounting Policies and Estimates The policies and estimates discussed below are considered by management to be critical to an understanding of our consolidated financial statements because their application places the most significant demands on management’s judgment, with financial reporting results relying on estimations about the effects of matters that are inherently uncertain.
However, the Company’s cash flows from operations can be affected by numerous factors including raw material availability and cost, demand for our products, and other factors described in “Risk Factors” included in Part I, Item 1A of this Annual Report on Form 10-K. Below are estimates of our material cash requirements for future periods.
The increase of $41.2 million was primarily due to higher raw material costs and freight costs due to continuing inflationary pressures and inventory build driven by higher customer demand. 34 Ta b le of Contents Analysis of Cash Flows The following table presents a summary of cash flows for fiscal years 2022, 2021 and 2020: Fiscal Year 2022 2021 2020 (in thousands) Net cash provided by (used in): Operating activities $ 43,061 $ 86,689 $ 119,070 Investing activities (18,437) (28,071) (61,689) Financing activities (19,490) (60,858) (42,715) Effect of exchange rate changes on cash (4,822) (3,561) 7,086 Net change in cash and cash equivalents 312 (5,801) 21,752 Cash and cash equivalents at beginning of period 97,252 103,053 81,301 Cash and cash equivalents at end of period $ 97,564 $ 97,252 $ 103,053 We ended 2022 with $97.6 million in cash, an increase of $0.3 million during the year.
The decrease of $18.5 million was primarily due to higher sales, stronger working capital management, and lower raw material costs during the current year. 36 Table of Contents Analysis of Cash Flows The following table presents a summary of cash flows for fiscal years 2024, 2023 and 2022: Fiscal Year 2024 2023 2022 (in thousands) Net cash provided by (used in): Operating activities $ 148,430 $ 142,034 $ 43,061 Investing activities (30,374) (19,514) (18,437) Financing activities (125,234) (111,564) (19,490) Effect of exchange rate changes on cash (4,094) 1,978 (4,822) Net change in cash and cash equivalents (11,272) 12,934 312 Cash and cash equivalents at beginning of period 110,498 97,564 97,252 Cash and cash equivalents at end of period $ 99,226 $ 110,498 $ 97,564 We ended 2024 with $99.2 million in cash, a decrease of $11.3 million during the year.
On a market segment basis, EAAA sales increased in the corporate office (up 6.2%) and hospitality (up 22.3%) market segments. These increases were offset by decreases in the public buildings (down 25.7%), transportation (down 21.3%), retail (down 14.9%) and healthcare (down 8.2%) market segments.
On a market segment basis, the EAAA sales decrease was most significant in the corporate office (down 3.5%), healthcare (down 23.5%), retail (down 22.8%), and education (down 3.9%) market segments, partially offset by an increase in the hospitality (up 11.5%) market segment. EAAA AOI for 2024 compared with 2023 AOI in EAAA increased 21.7% during 2024 versus 2023.
AMS AOI for 2022 compared with 2021 AOI in AMS increased 20.4% during 2022 compared to 2021 primarily due to higher sales. AMS SG&A expenses as a percentage of net sales in 2022 decreased approximately 0.7% compared to 2021, primarily due to lower administrative costs, which contributed to the increase in AOI for the current year.
Higher adjusted gross profit in 2024, driven by higher sales, lower raw material costs, and favorable fixed cost absorption contributed to the increase in AMS AOI for the current year. AMS SG&A expenses as a percentage of net sales decreased approximately 0.8% compared to 2023, also contributed to the increase in AOI.
The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its existing Facility. The Company’s foreign subsidiaries and certain non-material domestic subsidiaries are considered non-guarantors.
Debt issuance costs associated with the Senior Notes are recorded as a reduction of long-term debt in the consolidated balance sheets and are amortized over the life of the outstanding debt. 39 Table of Contents The Senior Notes are unsecured and are guaranteed, jointly and severally, by each of the Company’s material domestic subsidiaries, all of which also guarantee the obligations of the Company under its Facility.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+1 added−1 removed9 unchanged
Biggest changeForeign Currency Exchange Rate Risk As of January 1, 2023, a 10% decrease or increase in the levels of foreign currency exchange rates against the U.S. dollar, with all other variables held constant, would result in a decrease in the fair value of our short-term financial instruments (primarily cash, accounts receivable and accounts payable) of approximately $11.3 million or an increase in the fair value of our financial instruments of approximately $13.8 million, respectively.
Biggest changeForeign Currency Exchange Rate Risk As of December 29, 2024, a 10% decrease or increase in the levels of foreign currency exchange rates against the U.S. dollar, with all other variables held constant, would result in a respective decrease or increase in the fair value of our financial instruments of $12.6 million.
An increase in our effective interest rate of 1% on our variable rate debt would increase annual interest expense by approximately $2.3 million. We will continue to review our exposure to interest rate fluctuations and evaluate whether we should continue to manage such exposures through any future interest rate swap transactions.
An increase in our effective interest rate of 1% on our variable rate debt would increase annual interest expense by approximately $0.1 million. We will continue to review our exposure to interest rate fluctuations and evaluate whether we should manage such exposures through any future interest rate swap transactions.
Based on a hypothetical immediate 100 basis point increase in interest rates, with all other variables held constant, the fair value of our fixed rate long-term debt would be impacted by a net decrease of $11.6 million.
Based on a hypothetical immediate 100 basis point increase in interest rates, with all other variables held constant, the fair value of our fixed rate long-term debt would be impacted by a net decrease of $10.0 million.
Conversely, a 100-basis point decrease in interest rates would result in a net increase in the fair value of our fixed rate long-term debt of $12.3 million.
Conversely, a 100-basis point decrease in interest rates would result in a net increase in the fair value of our fixed rate long-term debt of $6.6 million.
We manage our exposure to market risk through our regular operating and financial activities and, to the extent we deem appropriate, through the use of derivative financial instruments. We have employed derivative financial instruments as risk management tools and not for speculative or trading purposes.
We manage our exposure to market risk through our regular operating and financial activities and, to the extent we deem appropriate, through the use of derivative financial instruments. From time to time, we employ derivative financial instruments as risk management tools and not for speculative or trading purposes.
As a result, we consider the risk of counter-party default to be minimal. There were no active derivative instruments as of January 1, 2023. Interest Rate Market Risk Exposure Changes in interest rates affect the interest paid on our variable rate debt.
As a result, we consider the risk of counter-party default to be minimal. There were no active derivative instruments as of December 29, 2024. Interest Rate Market Risk Exposure Changes in interest rates affect the interest paid on our variable rate debt.
The discount rates used for the present value computations were selected based on market interest and foreign currency exchange rates in effect at January 1, 2023. The values that result from these computations are then compared with the market values of the financial instruments.
The discount rates used for the present value computations were selected based on market interest and foreign currency exchange rates in effect at December 29, 2024. The values that result from these computations are then compared with the market values of the financial instruments.
To mitigate the impact of fluctuations in foreign currency exchange rates, we may enter into derivative transactions from time to time, such as forward contracts and foreign currency options. There were no active foreign currency derivative instruments as of January 1, 2023.
To mitigate the impact of fluctuations in foreign currency exchange rates, we may enter into derivative transactions from time to time, such as forward contracts and foreign currency options. There were no active foreign currency derivative instruments as of December 29, 2024.
The differences are the hypothetical gains or losses associated with each type of risk. 42 Ta b le of Contents Interest Rate Risk As discussed above, our Facility is comprised of a combination of term loan and revolving loan borrowings.
The differences are the hypothetical gains or losses associated with each type of risk. 44 Table of Contents Interest Rate Risk As discussed above, our Facility is comprised of a combination of term loan and revolving loan borrowings.
As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk. 43 Ta b le of Contents
As the impact of offsetting changes in the fair market value of our net foreign investments is not included in the sensitivity model, these results are not indicative of our actual exposure to foreign currency exchange risk. 45 Table of Contents
The following table summarizes our market risks associated with our variable rate debt obligations under the Facility and fixed rate Senior Notes debt as of January 1, 2023. For debt obligations, the table presents principal cash flows by year of maturity.
The following table summarizes our market risks associated with our variable rate debt obligations under the Facility and fixed rate Senior Notes debt as of December 29, 2024. For debt obligations, the table presents principal cash flows by year of maturity.
During 2022, we recognized a $38.3 million increase in our accumulated other comprehensive loss – foreign currency translation adjustment account compared with January 2, 2022, because of the weakening of the Euro, British Pound sterling, Australian dollar, and Chinese Renminbi against the U.S. dollar in 2022.
During 2024, we recognized a $23.7 million increase in our accumulated other comprehensive loss – foreign currency translation adjustment account compared with fiscal year 2023, primarily due to the weakening of the Euro, Chinese Renminbi, and Australian dollar against the U.S dollar, partially offset by the strengthening of the British Pound sterling against the U.S. dollar.
Foreign Currency Exchange Market Risk Exposure A significant portion of our operations consists of manufacturing and sales activities in foreign jurisdictions. We manufacture our products in the United States, Northern Ireland, the Netherlands, Germany, China, and Australia, and we sell our products in more than 100 countries.
We manufacture our products in the United States, Northern Ireland, the Netherlands, Germany, China, and Australia, and we sell our products in more than 100 countries.
Rate-Sensitive Liabilities 2023 2024 2025 2026 Thereafter Total Fair Value (in thousands) Long-term Debt: Variable Rate $ 10,211 $ 10,211 $ 10,211 $ 10,211 $ 185,488 $ 226,332 $ 226,332 Fixed Rate — — — — 300,000 300,000 248,652 Our weighted average interest rate for our outstanding borrowings under the Facility as of January 1, 2023 and January 2, 2022 was 5.78% and 1.91%, respectively.
Rate-Sensitive Liabilities 2025 2026 2027 2028 Total Fair Value (in thousands) Long-term Debt: Variable Rate $ 482 $ 482 $ 4,600 $ — $ 5,564 $ 5,564 Fixed Rate — — — 300,000 300,000 294,738 Our weighted average interest rate for our outstanding borrowings under the Facility as of December 29, 2024 and December 31, 2023 was 5.62% and 6.61%, respectively.
Removed
In 2017 and 2019, the Company entered into interest rate swap transactions with regard to a portion of its term loan debt. The Company’s interest rate swaps were designated and qualified as cash flow hedges of forecasted interest payments. Both of the Company’s interest rate swaps were terminated in the fourth quarter of 2020.
Added
In addition, from time to time, we may enter into derivative transactions, such as interest rate swaps, in order to manage exposure to interest rate fluctuations. There were no active interest rate derivative instruments as of December 29, 2024. Foreign Currency Exchange Market Risk Exposure A significant portion of our operations consists of manufacturing and sales activities in foreign jurisdictions.

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