Tarkett SA · SWB:1T9
Tarkett SA — H1 2016 Earnings Presentation
47 slides from Tarkett SA's earnings presentation, Jul 28, 2016
Slide 1: H1 2016 Financial Results
H1 2016 Financial Results July 2016
Slide 2: Solid profitable growth in H1 2016
Solid profitable growth in H1 2016 Strong improvement in both net sales and profitability Reaping benefits from Previous years restructuring actions Effective ongoing productivity initiatives Still favorable raw material prices Additional sales volumes North America outperformed its profitab
Slide 3: Excellent H1 2016 performance (vs. H1 2015)
Excellent H1 2016 performance (vs. H1 2015) Net Sales of €1,298m, +4.2% organic growth(1) (+1.9% on a reported basis) and +5.1% including CIS price increases Adjusted EBITDA(2) of €151m vs. €128m in H1 2015 and margin up by 160 bps at 11.7% Net profit(3) increased by +49% vs. H1 2015, at €45m €103m
Slide 4: Balanced exposures providing resilience to industry cycles
Balanced exposures providing resilience to industry cycles One of the broadest Attractive end-markets exposure Balanced geographic product portfolios exposure in the flooring industry New CIS, APAC & Residential construction LATAM Sports ~30% ~20% 22% North America 16% Vinyl & 41% Linoleum Rubber &
Slide 5: H1 2016 Activity
@ Tarkett THE ULTIMATE FLOORING EXPERLENCE H1 2016 Activity
Slide 6: Solid +4.2% organic growth in H1 2016 vs. H1 2015
Solid +4.2% organic growth1 in H1 2016 vs. H1 2015 €m 29.2 18.7 27.1 (6.1) (22.0) (22.6) Organic1 Growth +4.2% 1,326.8 1,298.1 1,273.9 H1 2015 EMEA North America CIS, APAC & Sports Sales LfL Currencies Selling price lag H1 2016 LATAM effect in CIS Note: (1) Organic growth: At same perimeter and exch
Slide 7: Record Adjusted EBITDA in three segments
Record Adjusted EBITDA1 in three segments €m 25.6 8.2 (3.1) (12.1) 4.7 151.4 128.1 H1 2015 EMEA North America CIS, APAC & LATAM Sports Central costs H1 2016 Adj. EBITDA1 Margin 10.1% 11.7% Note: (1) Adjusted EBITDA: Adjustments include expenses related to restructuring, acquisitions and certain othe
Slide 8: Strong productivity and volume growth drove adjusted EBITDA improvement
Strong productivity and volume growth drove adjusted EBITDA improvement €m 25.2 (13.2) 12.7 19.5 151.4 (3.1) (5.1) 128.1 (12.6) H1 2015 Currencies Selling price lag Volume/Mix Sales pricing Purchase pricing Productivity SG&A, Wage H1 2016 effect in CIS increase & Other Adj. Adj. EBITDA EBITDA 1 11.7
Slide 9: EMEA: Record sales and adjusted EBITDA margin
EMEA: Record sales and adjusted EBITDA margin Net sales evolution - €m Comments Net sales organic growth1 +5.7% Most countries delivered growth, in particular the Nordic countries, Germany and the UK Organic growth1 by quarter Flat sales volumes in France Q1 2016 +5.5% 471.6 462.6 Q2 2016 +6.0%
Slide 10: North America: Record sales and adjusted EBITDA margin
North America: Record sales and adjusted EBITDA margin Net sales evolution - €m Comments Net sales organic growth1 +7.9% All product ranges contributed to the strong growth Organic growth1 411.1 by quarter Recovering market share in VCT Q1 2016 +11.4% 373.6 Q2 2016 +5.2% H1 2015 H1 2016 Adjusted
Slide 11: CIS, APAC & LATAM: Resilient performance
CIS, APAC & LATAM: Resilient performance Net sales evolution - €m Comments Net sales organic growth1 -7.9% CIS countries Excluding price increases Volumes continued to decrease in Russia Organic growth1 by quarter Product mix stopped deteriorating vs. last year in Russia Q1 2016 -11.0% Negativ
Slide 12: Ruble & Russia vinyl prices evolution
Ruble & Russia vinyl prices evolution H1’16: 1EUR = 78.3RUB Q2’16: 1EUR = 74.3RUB -9.0% vs. H2’15 +10.9% vs. Q1’16 -17.7% vs H1’15 -21.5% vs Q2’15 60% 50% Rate and price change, % 40% 30% 20% 10% 0% 31-Jan-14 30-Jun-14 31-Jul-14 31-Aug-14 31-Jan-15 30-Jun-15 31-Jul-15 31-Aug-15 31-Jan-16 31-Dec-13 2
Slide 13: Sports: Record sales and adjusted EBITDA margin
Sports: Record sales and adjusted EBITDA margin Net sales evolution - €m Comments Net sales organic growth1 +11.7% Solid trends in most product lines and geographies Organic growth1 by quarter 180.5 Remarkable momentum in running tracks Q1 2016 +14.1% 160.0 Successful installation of GrassMast
Slide 14: +36% increase in EBIT
+36% increase in EBIT €m H1 2016 H1 2015 Net sales 1,298.1 1,273.9 Adjusted EBITDA1 151.4 128.1 % of net sales 11.7% 10.1% Depreciation (59.6) (59.5) Adjusted EBIT 91.8 68.6 % of net sales 7.1% 5.4% €m H1 2016 H1 2015 Adjustments to EBIT (11.3) (9.2) Restructuring (2.9) (5.2) EBIT 80.5 59.4 Impairme
Slide 15: +49% increase in net income
+49% increase in net income €m H1 2016 H1 2015 EBIT 80.5 59.4 % of net sales 6.2% 4.7% Net financial expenses (11.3) (11.9) Of which Financial income 0.7 0.8 Of which Financial expenses (12.0) (12.7) Net profit before tax 70.9 47.9 Income tax expenses (25.3) (17.5) Effective tax rate 35.7% 36.5% Net
Slide 16: Net cash flow from operations in line with the activity growth
Net cash flow from operations in line with the activity growth Net cash flow from operations Sustained investments €m H1 2016 H1 2015 Ongoing capex (€m) Ongoing capex as % of net sales Operating cash flow before working 146.1 120.8 46 capital changes 45 42 Changes in working capital (156.7) (110.7)
Slide 17: Solid balance sheet and extended debt maturity
Solid balance sheet and extended debt maturity Net financial debt and leverage ratio evolution Maturity of available credit lines (€m) 671 595 568 651 482 2.3x 2.0x 1.8x 1.7x 174 151 153 126 4 1 0 End of End of End of End of 2016 2017 2018 2019 2020 2021 2022 2023 Dec 2014 June 2015 Dec 2015 June 20
Slide 18: Key Initiatives
@ Tarkett THE ULTIMATE FLOORING EXPERLENCE
Slide 19: Personalization and creativity thanks to digital experience in North America
Personalization and creativity thanks to digital experience in North America Best of Neocon Gold Award Top-notch natural design Breakthrough LVT Collections Infinies co-created with 5 New LVT Collections Indigenous Earth top designers Outstanding decorative film on LVT thanks to digital Onli
Slide 20: GrassMaster, the reference for prestigious stadiums
GrassMaster®, the reference for prestigious stadiums EURO 2016 Reinforced natural grass system Stade de France and Parc des Princes Installation of 600 pitches worldwide since 1989 ©Stade de France® - Macary, Zublena et Regembal, Costantini – Architectes, ADAGP – Paris 2016 - Photographe : FFoucha
Slide 21: Conclusion
Conclusion al @ Tarkett THE ULTIMATE FLOORING EXPERLENCE
Slide 22: Very solid profitable growth in H1 2016
Very solid profitable growth in H1 2016 Strong organic growth of +4.2% and +5.1% including CIS price increases Adjusted EBITDA margin up by +160 bps H1 2016 Reaping the benefits from restructuring and on-going productivity actions Take Aways New record levels in EMEA, North America and Sport
Slide 23: H1 2016 Financial Results Q&A session
H1 2016 Financial Results Q&A session July 2016
Slide 24: Appendices
Appendices i =
Slide 25: 2013-2015: a different company profile
2013-2015: a different company profile Sales breakdown by segment 2013 2015 Sports Sports 11% EMEA 16% 27% EMEA 34% €2.5bn €2.7bn North North America America 27% 28% CIS, APAC, CIS, APAC, LATAM LATAM 35% 22% H1 2016 Financial Results – July 28, 2016 24
Slide 26: CIS now represent less than 20% of adjusted EBITDA
CIS now represent less than 20% of adjusted EBITDA Adjusted EBITDA breakdown by segment 2013 2015 Sports 4% Sports EMEA 13% 21% North America 21% EMEA 42% North €310m America €285m 25% CIS, APAC, LATAM CIS, APAC, 54% 54% LATAM 20% 20% H1 2016 Financial Results – July 28, 2016 25
Slide 27: Negative impact from currencies coming from EMEA, Brazil and CIS countries
Negative impact from currencies coming from EMEA, Brazil and CIS countries Currency variation impacts (Y-o-Y) €m Q2 2016 H1 2016 Q2 2015 In the CIS countries (net of selling price increases) Impact on Net Sales (13.6) (22.6) (9.9) Comments Impact on Adjusted EBITDA(1) (8.3) (12.6) (2.3) In the CIS
Slide 28: Strong improvement in North America profitability
Strong improvement in North America profitability Adjusted EBITDA margin as % of net sales 14.4% 12.7% 11.0% 11.0% 10.6% 8.8% 9.0% H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 H1-16 H1 2016 Financial Results – July 28, 2016 27
Slide 29: Strong liquidity and debt maturity
Strong liquidity and debt maturity Utilization Credit Lines €m End of June 2016 End of June 2016 Syndicated Facility (RCF) 120 650 Schuldschein 301 301 2013 Term Loan 150 150 Asset-backed financing 33 50 Other 21 110 Total Borrowings 625 1,261 Cash and cash equivalent (57) Net debt 568 H1 2016 Finan
Slide 30: Sales and Adjusted EBITDA performance by quarter
Sales and Adjusted EBITDA performance by quarter (Q1/Q2) Q1 Q2 Organic Organic €m 2016 2015 % growth 2016 2015 % growth Growth1 Growth1 EMEA 232.4 226.5 +2.6% +5.5% 239.3 236.0 +1.4% +6.0% North 187.2 162.8 +15.0% +11.4% 223.9 210.8 +6.2% +5.2% America Net sales CIS, APAC & 103.5 126.4 -18.1% -11.0%
Slide 31: Sales and Adjusted EBITDA performance by semester
Sales and Adjusted EBITDA performance by semester Sales Adjusted EBITDA2 Organic H1 2016 H1 2015 €m H1 2016 H1 2015 % growth H1 2016 H1 2015 Growth1 Margin Margin EMEA 471.6 462.6 +2.0% +5.7% 74.8 70.1 15.9% 15.1% North 411.1 373.6 +10.0% +7.9% 59.3 33.6 14.4% 9.0% America CIS, APAC & Net sales 234.
Slide 32: A market with very specific regional segmentation
A market with very specific regional segmentation… Total flooring market: 12.5bn sqm 2015 breakdown of volume demand by product Commercial Carpet 6% Vinyl, Residential Linoleum & Carpet Rubber Ceramics 10% 8% Residential Carpet Wood & ADDRESSED Laminate Commercial Carpet 11% SEGMENTS Vinyl, Linoleum
Slide 33: A global leader with one of the broadest product offerings
A global leader with one of the broadest product offerings Vinyl & Wood & Turf & #Product Ranking based on latest sales data (in m€) Ceramics Linoleum Carpet Laminate Rubber Tracks categories 5 4 5 2 3 1 1 1 2 5 1 Source: Company information
Slide 34: Improving outlook for Russia, Brazil and France
Improving outlook for Russia, Brazil and France IMF’s GDP latest growth forecasts - July 2016 Forecast evolutions since April 2016 2016 2017 2018** 2016 2017 2018 United States 2.2% 2.5% 2.4% United States ‐0.2 0.0 Euro Area 1.6% 1.4% Euro Area 0.1 ‐0.2 Germany 1.6% 1.2% 1.4% Germany 0.1 ‐0.4 Above
Slide 35: Material Consumption in 2015
Material Consumption in 2015 COGS 2015 breakdown Material Consumption in 2015 Others, 16% Traded Goods 22% Transport Raw and materials, Logistics, Raw Materials - Oil 58% 10% derivatives 53% Payroll, Other Raw 16% Materials 25% Total 2015 COGS: €2,045m Note: Excluding Desso. H1 2016 Financial Result
Slide 36: Shareholder composition - As at June 30, 2016
Shareholder composition - As at June 30, 2016 Treasury Shares 0.3% Free Float 33.8% Société d’Investissement Deconinck 50.2% KKR international Flooring 15.7% H1 2016 Financial Results – July 28, 2016 35
Slide 37: Governance
Governance Supervisory Board Shareholder agreement President: Didier Deconinck Shareholder agreement between KKR and the Deconinck family to remain in place post-IPO for a term of 4 years Vice President: Jacques Garaїalde (KKR) (or until one party holds less than 5% of the share capital) 9 B
Slide 38: Consolidated income statement
Consolidated income statement Income statement €m H1 2016 H1 2015 Net sales 1,298.1 1,273.9 Cost of sales (936.6) (947.8) Gross profit 361.5 326.1 Other operating income 3.9 5.6 Selling and distribution expenses (159.0) (156.1) Research and development expenses (19.4) (16.4) General and administrati
Slide 39: Consolidated cash flow statement
Consolidated cash flow statement Cash flow statement €m H1 2016 H1 2015 Net profit before tax 70.9 47.9 Depreciation, financial expenses and other 75.1 72.9 Operating profit before working capital changes 146.0 120.8 Effects of changes in assets and liabilities (156.7) (110.7) Cash generated from op
Slide 40: Consolidated balance sheet
Consolidated balance sheet Balance sheet €m 30 June 2016 31 December 2015 Assets Goodwill 532.0 538.4 Intangible assets 113.1 124.2 Property, plant and equipment 487.3 499.4 Financial assets 27.6 28.7 Deferred tax assets 95.7 103.1 Other non-current assets 0.5 0.3 Non-current assets 1,256.2 1,294.1
Slide 41: Detailed overview of Tarkett's product offering
Detailed overview of Tarkett’s product offering Vinyl & Linoleum Carpet Wood & Laminate Rubber & Others Sports 49% 21% 7% 7% 16% Heterogeneous Vinyl Broadloom Multilayer wood floor Rubber Tiles/Sheets Track Homogenous Vinyl Modular Laminate Stair nosing Artificial Turf Linoleum Drain Natural reinfor
Slide 42: Characteristics: Vinyl and Linoleum
Vinyl and Linoleum Linoleum Homogeneous Vinyl Homogeneous Vinyl VCT (modular homogeneous Vinyl) Urethane polymer based surface Surface treatment Solid treatment Pur: Polyurethane Surface treatment Colour pigments Colour pigments Pur: Polyurethane Linoleum Product Jute backing Plain and decorative
Slide 43: Characteristics: Vinyl and Linoleum (cont'd)
Vinyl and Linoleum (cont’d) Heterogeneous Vinyl Heterogeneous commercial Vinyl Heterogeneous residential Vinyl LVT (modular heterogeneous Vinyl) PUR reinforcement Compact Printed Transparent PVC Fibreglass Design (printed PVC for easy PVC design wear-layer non woven reinforcement Compact PVC film or
Slide 44: Characteristics: Wood and Laminate
Wood and Laminate Wood Laminate Lacquer or hardwax oil Core board Overlay surface treatment made of high Middle layer made of density floor board pine or spruce or HDF Decor layer = Product impregnated Wear layer of paper hard wood Bottom layer of Balancing layer spruce veneer Engineered wood comb
Slide 45: Characteristics: Rubber, Accessories and Carpet
Rubber, Accessories and Carpet Rubber Sheets, Tiles and Accessories Carpet Modular Broadloom Rubber Tufted Fibre Sheets/Tiles Stair nosing Drain (nylon) PP woven backing with latex coating Product Primary backing Structured with latex pre- backing coat Loop pile top cloth Rubber sheets and tiles c
Slide 46: Characteristics: Sports
Sports Turf Natural reinforced grass Tracks Coating of Polyethylene the backing fibres tufted in rows Finished into backing Carpet ready Natural to be installed on the pitch grass Product 40 cm Patented long infilling: washed artificial Patented infilling: silica sand turf Final layers of cryogenic
Slide 47: Disclaimer
Disclaimer The Supervisory Board of Tarkett held on July 27, 2016, reviewed the consolidated financial statements of the Group as of June 30, 2016. Limited review has been carried out and the auditors’ report on financial statements is being issued. This document may contain estimates and/or for