Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (November 2019)
37 slides from Interface's investor presentation, Nov 12, 2019
Slide 1: Investor Presentation
NOVEMBER 12, 2019 Investor Presentation
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures This presentation contains forward-looking statements, including, in particular, statements about Interface’s plans, strategies and prospects. These are based on the Company’s current assumptions, expectations and projections about future events. Alth
Slide 3: Interface at a Glance
Interface at a Glance Interface is a global leader of commercial flooring solutions including carpet tile, luxury vinyl tile (LVT) and rubber flooring. ($ in millions, except EPS) LTM Headquartered in Atlanta, GA Q3 2019 7 manufacturing locations on 4 continents Net Sales $1,341 4,100 global employe
Slide 4: Investment Thesis
Investment Thesis • Strong brands that are participating in growth areas of the industry MID-TERM OBJECTIVES • Share leader in a $39 billion global category: (4-6 years) – Leading share in carpet tile with ~20% of the segment – Leading share in rubber with ~30% of the segment – Growing share in LVT
Slide 5: Investment Highlights: Who We Are
Investment Highlights: Who We Are leading most valuable strongest global global engaged, global provider brand sales & manufacturing customer-centric of commercial in the flooring marketing footprint and culture, focused flooring solutions category capabilities industry-leading on performance gross
Slide 6: Growth and Value Creation Strategy
Growth and Value Creation Strategy Interface’s vision is to become the world’s most valuable interior products & services company Build Grow the Core Execute a Resilient Optimize SG&A Carpet Tile Supply Chain Flooring Resources Business Productivity Business Lead a World-Changing Sustainability Move
Slide 7: Interface Positioning
Interface Positioning
Slide 8: Attractive Product Portfolio
Attractive Product Portfolio Carpet Tile • Biomimicry-inspired random design (i2) • High recycled content • No glue installation (TacTiles®) • Faster, more profitable installation for contractors • Easily recycled (ReEntry® program) • Carbon neutral (Carbon Neutral Floors™) Luxury Vinyl Tile (LVT) •
Slide 9: Leading Global Provider of Flooring Solutions
Leading Global Provider of Flooring Solutions • Interface participates in the $39 Billion Global Commercial Flooring segment • We are the global share leader in the $5.0 Billion Carpet Tile segment which is now exceeds the value of Broadloom globally • We entered the high growth $3.3 Billion LVT seg
Slide 10: Participating in Attractive Commercial Flooring Segments
Participating in Attractive Commercial Flooring Segments • Interface serves growing segments of hard and soft surface with the highest margins GLOBAL COMMERCIAL FLOORING: SEGMENT SIZE vs FORECASTED GROWTH and GROSS MARGIN 14% Bubble size = Global commercial value of category, 2019 12% LVT 10% 8% 6%
Slide 11: Premium Player in the Specified Channel
Premium Player in the Specified Channel • Interface competes on design, sustainability and innovation, commanding a premium price point and industry leading margins • Interface is the share leader in the specified and end user channels of commercial carpet tile which are highly influenced by Archite
Slide 12: Global Sales and Manufacturing Platform
Global Sales and Manufacturing Platform • Sales in over 110 countries • Seven manufacturing locations on four continents • 1,100 sales & marketing professionals • Global supply chain management • Global account management • Unique blend of efficiency and customization AMERICAS EMEA ASIA-PACIFC 55% 3
Slide 13: Diversified Customer Verticals
Diversified Customer Verticals CORPORATE OFFICE • Highest penetration of carpet tile vs broadloom • Global Account management • Emerging market penetration BILLINGS BY SEGMENT EDUCATION • K-12 and higher education • Second highest penetration of carpet tile vs broadloom • Second largest market for r
Slide 14: Growth and Value Creation
Growth and Value Creation
Slide 15: Growth and Value Creation Strategy
Growth and Value Creation Strategy Interface’s vision is to become the world’s most valuable interior products & services company Build Grow the Core Execute a Resilient Optimize SG&A Carpet Tile Supply Chain Flooring Resources Business Productivity Business Lead a World-Changing Sustainability Move
Slide 16: Grow the Core Carpet Tile Business
Grow the Core Carpet Tile Business • Enhance salesforce productivity – Execute on selling system transformation including reorganization, training and technology tools • Elevate and grow segments – Drive growth in priority segments including Corporate Office, Hospitality, Living and Education • Opti
Slide 17: Build a Resilient Flooring Business
Build a Resilient Flooring Business • Continue penetrating the high growth LVT segment, building on successful global LVT launch • Integrate nora® rubber flooring into our product portfolio • Leverage innovation pipeline • Expand global participation • Strategically expand product portfolio page 17
Slide 18: Resilient Flooring: nora Acquisition
Resilient Flooring: nora Acquisition nora is a leading global manufacturer of commercial rubber floorcovering systems for healthcare, education, life sciences, public buildings and other end markets page 18
Slide 19: Interface and nora Together
Interface and nora Together + excluding nora APAC APAC 15% 15% Americas Americas 25% 55% 59% 30% EMEA EMEA Geographic Reach Non-office 40% Non-office 47% 53% 60% Office Office Segmentation Americas EMEA APAC Americas EMEA APAC 15% 25% 38% 37% 55% 45% 43% 62% 57% 63% 85% 75% page 19 Note: Figures rep
Slide 20: Execute Supply Chain Productivity
Execute Supply Chain Productivity • Continue to benefit from Troup County Optimization • Implement a dynamic yarn strategy • Continue to deliver on productivity pipeline initiatives page 20
Slide 21: Purpose-Driven Culture Galvanized Around a Common Sustainability Mission
Purpose-Driven Culture Galvanized Around a Common Sustainability Mission GLOBESCAN SUSTAINABILITY SURVEY – 20+ YEAR HISTORY 1997 1998 1999 2000 2001 2002 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Unilever Patagonia Interface IKEA Tesla Natura M&S Nestle page 21
Slide 22: Radical Reductions in Environmental Impacts
Radical Reductions in Environmental Impacts 89% of energy used at manufacturing sites is from renewable sources 54% of materials in products we sell are from recycled or bio-based sources GHG emissions intensity at manufacturing sites is down 96% since 1996 Water intake intensity at manufacturing si
Slide 23: Leading Industry to Love the World: Climate Take Back
Leading Industry to Love the World: Climate Take Back • We commit to running our business in a way that creates a climate fit for life – and we call on others to do the same. • We expect to demonstrate that industry can operate with carbon negative business models. • We are the first global flooring
Slide 24: Moving Toward a Carbon Negative Business Model
Moving Toward a Carbon Negative Business Model Proof Positive 7 k g Carpet Tile Prototype CO2 2 k g It is possible to make a product with the potential to reverse global warming. page 24
Slide 25: Financial Performance
Financial Performance
Slide 26: GAAP Financial Results
GAAP Financial Results ($ in millions, except EPS) Third Quarter Year-to-Date 2019 2018 Change 2019 2018 Change Net Sales $348.4 $318.3 9% $1,003.5 $842.5 19% Gross Profit 135.8 99.9 36% 389.8 302.7 29% % of Net Sales 39.0% 31.4% 38.8% 35.9% SG&A Expense 91.4 84.2 9% 286.1 230.2 24% % of Net Sales 2
Slide 27: Adjusted Financial Results
Adjusted Financial Results* ($ in millions, except EPS) Third Quarter Year-to-Date 2019 2018 Change 2019 2018 Change Net Sales $348.4 $318.3 9% $1,003.5 $842.5 19% Adjusted Gross Profit 137.1 120.2 14% 394.3 322.9 22% % of Net Sales 39.4% 37.8% 39.3% 38.3% SG&A Expense 91.4 83.1 10% 286.1 226.2 26%
Slide 28: Organic Sales Growth
Organic Sales Growth • Organic sales were up 2% in Q3 2019 • Growth driven by resilient products – LVT and Rubber Q3 ORGANIC SALES* YTD ORGANIC SALES* ($ in millions) ($ in millions) $859 $330 $326 $860 $320 $318 $843 $840 $310 $820 $300 $290 $800 $280 $780 $270 $760 $260 $250 $740 Q3 2018 Q3 2019 Y
Slide 29: Adjusted EBITDA Growth
Adjusted EBITDA Growth • Adjusted EBITDA of $200M as of LTM Q3 2019 ADJUSTED EBITDA* ($ in millions) $225 $200 $200 $186 $175 $152 $150 $125 $100 $75 $50 $25 $0 2017 2018 LTM Q3 2019 page 29 * See Appendix for a reconciliation on Non-GAAP figures
Slide 30: Adjusted Earnings Per Share
Adjusted Earnings Per Share • Our value creation strategy is generating double digit Adjusted EPS growth ADJUSTED EARNINGS PER SHARE (DILUTED)* 21% CAGR $1.60 $1.54 $1.49 $1.40 $1.18 $1.20 $1.10 $1.03 $1.00 $0.80 $0.62 $0.60 $0.40 $0.20 $0.00 2014 2015 2016 2017 2018 LTM Q3 2019 page 30 * See Append
Slide 31: Capitalization and Liquidity
Capitalization and Liquidity TOTAL DEBT NET DEBT ($ in millions) ($ in millions) $700 $700 $619 $626 $538 $541 $525 $525 $350 $350 $270 $214 $230 $138 $143 $175 $175 $105 $0 $0 2015 2016 2017 2018 Q3 2019 2015 2016 2017 2018 Q3 2019 ADJUSTED EBITDA* NET DEBT / ADJUSTED EBITDA* ($ in millions) $250 3
Slide 32: Capital Allocation for Value Creation
Capital Allocation for Value Creation • Investing in the business to fuel our value creation strategy while upholding a disciplined approach to capital allocation • Maintaining strong liquidity with $253 million available under our revolving credit facility as of September 2019 • Reduced total debt
Slide 33: Investment Highlights: Who We Are
Investment Highlights: Who We Are leading most valuable strongest global global engaged, global provider brand sales & manufacturing customer-centric of commercial in the flooring marketing footprint and culture, focused flooring solutions category capabilities industry-leading on performance gross
Slide 34: Appendix
AppendixAppendix
Slide 35: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures YTD YTD ($ in millions, except per share amounts) Q3 2018 Q3 2019 Q3 2018 Q3 2019 Net Sales as Reported (GAAP) $318.3 $348.4 $842.5 $1,003.5 Impact of Changes in Currency - 7.0 - 21.1 nora Net Sales adjustment (1) - (29.8) - (165.5) Organic Sales $318.3 $
Slide 36: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures LTM 2014 2015 2016 2017 2018 Q3 2019 Diluted EPS as Reported (GAAP) $0.37 $1.10 $0.83 $0.86 $0.84 $1.16 Purchase Accounting - - - - 0.38 0.20 Transaction Related Expenses - - - - 0.12 0.01 Tax Act Expense (Benefit) - - - 0.25 (0.11) (0.11) Restructuring a
Slide 37: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures YTD YTD LTM ($ in millions) 2018 Q3 2018 Q3 2019 Q3 2019 Operating Income as Reported (GAAP) $76.4 $72.5 $103.0 $106.9 Purchase Accounting 32.1 20.3 4.5 16.3 Transaction Related Expenses 5.3 4.0 - 1.3 Restructuring and Asset Impairment Charges 20.5 - 0.7