What changed in this filing

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Item 1. Business

2023-03-01 compared with 2022-03-02 · 63 added, 43 removed, 222 unchanged (32% of the section changed)

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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®.

On August 7, 2018, the Company acquired nora Holding GmbH (“nora”), a worldwide leader in the rubber flooring category under the established nora brands norament ® and noraplan ®.

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 ®.

Reportable Segments

In the first quarter of 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”).

The AMS operating segment is unchanged from prior year and continues to include the United States, Canada and Latin America geographic areas.

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”).

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.

Prior year amounts have been restated to reflect the current reportable segment structure:

Percentages for fiscal year 2020 have been recast to reflect the current reportable segment structure:

2022 2021 2020

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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 resulted in lower corporate reinvestment and impacted sales in the corporate office market segment.

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.

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.

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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:

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Our modular carpet systems are marketed under the established brands Interface and FLOR .

We manufacture carpet tiles cut in precise, dimensionally stable squares (usually 50 cm x 50 cm) or rectangles (such as planks and Skinny Planks ) to produce a floorcovering that combines the appearance and texture of traditional soft floorcovering with the advantages of a modular carpet system.

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, 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 post-consumer nylon, depending on the style and color.

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.

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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 new CQuest backings are:

The CQuest backings are:

• CQuest™GB - The next evolution of our GlasBacRE backing.

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In addition, we have created modular carpet products specifically designed for each of the education, hospitality and retail market segments.

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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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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.

Our rigid core resilient flooring products are designed for hard-working spaces and commercial markets.

Rubber Flooring

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We also continue to provide “turnkey” project management services for a number of global accounts and other large customers through our InterfaceSERVICES™ business.

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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 have manufactured carpet tile at a location in Thailand for many years, but in 2021 we announced that we are closing the Thailand plant (anticipated closure at the end of the first quarter of 2022).

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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For rubber flooring, the key polymer raw materials are available from multiple sources, and we can source both synthetic and natural rubber depending on product specification and material availability.

We also have technology that more cleanly separates the face fiber and backing of reclaimed and waste carpet, thus making it easier to recycle some of its components and providing a purer supply of inputs for our CQuestGB carpet backing.

We also have technology that separates the face fiber and backing of reclaimed and waste carpet, thus making it easier to recycle some of its components and providing a purer supply of inputs for our CQuestGB carpet backing.

This technology, which is part of our ReEntry ® 2.0 carpet reclamation program, allows us to send some of the reclaimed face fiber back to our fiber supplier to be blended with virgin or other post-industrial materials and extruded into new fiber.

The environmental management systems of our floorcovering manufacturing facilities in LaGrange, Georgia, West Point, Georgia, Northern Ireland, the Netherlands, Thailand (anticipated closure at the end of the first quarter of 2022), China and Australia are certified under International Standards Organization (ISO) Standard No.

The environmental management systems of our floorcovering manufacturing facilities in LaGrange, Georgia, West Point, Georgia, Northern Ireland, the Netherlands, China and Australia are certified under International Standards Organization (ISO) Standard No.

Nora’s manufacturing facility, which is located in Weinheim, Germany, is ISO14001 certified as well and sells the majority of its products with the Blauer Engel label.

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and (2) indirect sales through independent contractors, installers and distributors.

We use an exclusive third-party distributor to sell our products in the Latin American region.

We have traditionally focused our carpet marketing strategy on major accounts, seeking to build lasting relationships with national and multinational end-users, and on architects, interior designers, engineers, contracting firms, and other specifiers who often make or significantly influence purchasing decisions.

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An important part of our marketing and sales efforts involves the preparation of custom-made samples of requested carpet designs, in conjunction with the development of innovative product designs and styles to meet the customer’s particular needs.

In most cases, we can produce samples to customer specifications in less than five days, which significantly enhances our marketing and sales efforts and has increased our volume of higher margin made-to-order or custom sales.

In most cases, we can produce samples to customer specifications in less than five days, which significantly enhances our marketing and sales efforts.

In addition, through our websites, we have made it easy to view and request samples of our products.

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We primarily use our internal marketing and sales force teams to market our flooring products.

In order to implement our global marketing efforts, we have product showrooms or design studios in the United States, Mexico, England, France, Germany, Spain, the Netherlands, India, Australia, United Arab Emirates, Russia, Singapore, Hong Kong, Thailand, China and elsewhere.

In order to implement our global marketing efforts, we have product showrooms or design studios in the United States, England, France, Germany, Spain, the Netherlands, India, Australia, United Arab Emirates, Singapore, Hong Kong, China and elsewhere.

We may open offices in other locations around the world as necessary to capitalize on emerging marketing opportunities.

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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 and rubber flooring products across several industry segments.

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 will seek to increase revenues and profitability by pursuing the following key initiatives:

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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.

We began this initiative as part of a market diversification strategy to reduce our exposure to the economic cyclicality of the corporate office segment, and it has become a principal strategy generally for growing our business and enhancing profitability.

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 .

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 rigid core LVT that was launched in early 2022.

We believe our ability to offer and sell our soft and hard surfaces in an integrated flooring design helps meet the needs of our customers by complementing and enhancing our carpet tile portfolio with true modular installation, no transition strips between surfaces, carpet tile and resilient products that are in some cases the same size and shape, and favorable acoustic properties.

Our acquisition of nora, with its rubber flooring products, is also a key component of our strategy in this area.

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.

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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, and our Mission Zero initiative promote our commitment to the pursuit of sustainability.

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.

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.

However, in more recent years up through 2019, as our sales efforts and results in the education and other non-corporate office market segments increased, our second and third quarter sales sometimes were the highest.

In 2020, our first quarter sales were the highest quarter, as the COVID-19 pandemic escalated and more severely impacted the remainder of the year.

However, in more recent years, as our sales efforts and results in the education and other non-corporate office market segments increased, our second and third quarter sales sometimes were the highest.

In 2022, our second quarter sales were the highest quarter.

In 2021, our fourth quarter sales were the highest quarter as certain countries rebounded from the economic impacts of the COVID-19 pandemic over the course of the year.

In 2020, our first quarter sales were the highest quarter, as the COVID-19 pandemic escalated and more severely impacted the remainder of the year.

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.

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In the corporate office market segment, modular carpet competes with various floorcoverings including broadloom carpet, LVT and polished concrete.

We believe the quality, service, design, better and longer average product performance, flexibility (design options, selective rotation or replacement, use in combination with our resilient products), environmental footprint and convenience of our modular carpet are our principal competitive advantages.

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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.

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We believe we have competitive advantages in several other areas as well.

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For our nora rubber flooring products, the innovation focus is on performance and design.

A recent innovation is the fast growing self-adhesive nTx solution for nora tiles and sheet goods.

Recent step 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.

A key innovation is the fast growing self-adhesive nTx solution for nora tiles and sheet goods.

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.

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With our new 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, it will become a determining factor in purchasing and design decisions.

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.

Our targets are to reduce our absolute Scope 1 and 2 greenhouse gas emissions 50% by 2030 from a 2019 base year, and to reduce our absolute Scope 3 greenhouse gas emissions from purchased goods and services 50% and from business travel and employee commuting 30% by 2030 from a 2019 base year.

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We also set a goal to become a carbon negative enterprise by 2040.

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A highlight in our pursuit of sustainability was our creation with the Zoological Society of London of a program called Net-Works® in which we worked with communities in the Philippines to collect discarded fishing nets that are damaging a large coral reef, and divert them to our yarn supplier where they are recycled into new carpet fiber.

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Net-Works is a big step in redesigning our supply chain from a linear take-make-waste process toward a closed loop system, and it advances our ultimate goal of becoming a restorative enterprise.

In 2022, we became the first and only flooring manufacturer to achieve third-party Carbon Neutral Enterprise certification.

Our claim of Carbon Neutral Enterprise status has been third-party certified to meet the PAS 2060 standard, the leading international carbon neutrality standard created by the British Standards Institution (BSI).

We neutralized our carbon impact across our entire business, including all operations and its full value chain.

The Carbon Neutral Enterprise certification builds on our history as a purpose-driven flooring company.

Achieving Carbon Neutral Enterprise status is a continuation of our innovation and efforts that started with the Carbon Neutral Floors program — it brings us one step closer to becoming a carbon negative enterprise by 2040.

Compliance with Government Regulations

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The costs of complying with these laws and regulations have not had a material adverse impact on our financial condition or results of operations in the past and are not expected to have a material adverse impact in the future.

The environmental management systems of our floorcovering manufacturing facilities in LaGrange, Georgia, West Point, Georgia, Northern Ireland, the Netherlands, Thailand (anticipated closure at the end of the first quarter of 2022), China, Germany and Australia are certified under ISO Standard No.

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.

Our backlog of unshipped orders was approximately $197.4 million at February 5, 2023, compared with approximately $215.6 million at February 6, 2022.

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 shelter in place 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.

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.

Patents and Trademarks

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We also own many trademarks in the United States and abroad.

In addition to the United States, the primary jurisdictions in which we have registered our trademarks are the European Union, Canada, Australia, New Zealand, Japan, and various countries in Central America, South America and Asia.

In addition to the United States, the primary jurisdictions in which we have registered our trademarks are the European Union, United Kingdom, Canada, Australia, New Zealand, Japan, and various countries in Central America, South America and Asia.

Some of our more prominent registered trademarks include:

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The duration of trademarks registered in other jurisdictions varies.

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Human Capital

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• Embrace tomorrow, today.

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At January 1, 2023, we employed a total of 3,671 employees worldwide.

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Name Age Principal Position(s)

Hendrix 67 President and Chief Executive Officer

Hurd 53 President and Chief Executive Officer

Foshee 52 Vice President, General Counsel and Secretary

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Nigel Stansfield 55 Vice President (President - Europe, Africa, Australia and Asia) (1)

Hendrix joined us in 1983 after having worked previously for a national accounting firm.

He was promoted to Treasurer in 1984, Chief Financial Officer in 1985, Vice President-Finance in 1986, Senior Vice President in October 1995, Executive Vice President in October 2000, and President and Chief Executive Officer in July 2001.

He was elected to the Board in October 1996 and has served on the Executive Committee of the Board since July 2001.

In October 2011, Mr.

Hendrix was elected as Chairman of the Board of Directors.

Hendrix retired from the positions of President and Chief Executive Officer in March 2017 (while remaining Chairman of the Board), and subsequently was re-elected as President and Chief Executive Officer in January 2020.

(1) See below for changes effective February 2023

Hurd joined us in April 2022 after having worked previously for global consumer goods company Newell Brands, Inc.

Hurd served as Segment President, Learning and Development at Newell Brands Inc.

starting in February 2019, leading its Baby and Writing businesses.

Previously, Ms.

Hurd was the Division Chief Executive Officer for Newell Brands’ Writing division starting in February 2018.

From 2016 to February 2018, she served as Chief Executive Officer of Newell Brands’ Baby division.

From May 2014 until 2016, Ms.

Hurd was President of the Baby and Parenting division at Newell Brands, where she oversaw the Calphalon, Goody, and Rubbermaid consumer brands.

From 2012 to 2014, Ms.

Hurd was Vice President, Global Development for Newell Brands, leading both Marketing and Research & Development for the Graco, Aprica, and Teutonia brands globally.

Foshee , who previously practiced with an Atlanta-based international law firm, joined us in October 1999 as Associate Counsel.

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.

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Hausmann joined us in April 2017 as Vice President and Chief Financial Officer.

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Poppens held leadership roles at Newell Rubbermaid, Kellogg Company, REI, and Coca-Cola.

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Effective February 1, 2023, Mr.

Poppens was named Chief Commercial Officer, and his former role as President of Americas was eliminated.

Stansfield was the Operations Manager for Firth Carpets (our former European broadloom operations) at the time it was acquired by us in 1997.

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In December 2016, he became President of our business serving Europe, the Middle East and Africa, and in January 2019 he assumed responsibility for the Asia-Pacific region as well.

Effective February 1, 2023, Mr.

Stansfield was named Chief Innovation and Sustainability Officer, and his former role as President of Europe, Africa, Australia and Asia was eliminated.

Available Information

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Interface, Inc.

was incorporated in 1973 as a Georgia corporation.

was incorporated in Georgia in 1973.

Forward-Looking Statements

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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.”

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business