Interface, Inc. · NASDAQ:TILE
Interface — Q3 2018 Earnings Presentation
41 slides from Interface's earnings presentation, Nov 5, 2018
Slide 1: Investor Presentation 2018
Investor Presentation2018
Slide 2: Forward Looking Statements
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.Although Interface believes that the expectations refl
Slide 3: Investment Highlights: Who We Are
Investment Highlights: Who We Are leadingglobal provider of commercial flooring solutions most valuable brand in the flooring category strongest global sales & marketing capabilities global manufacturing footprint and industry-leading gross margins engaged, customer-centric culture, focused on perfo
Slide 4: Growth and Value Creation Strategy
Grow the CoreCarpet Tile Business Build a Resilient Flooring Business ExecuteSupply ChainProductivity Optimize SG&AResources Growth and Value Creation Strategy Lead a World-Changing Sustainability MovementCentered Around Mission Zero and Climate Take Back. Interface’s vision is to become the world’s
Slide 5: Interface Positioning
Interface Positioning InterfacePositioning
Slide 6: Leading Global Provider of Flooring Solutions
GLOBAL COMMERCIAL FLOORING SEGMENT (in billions) Source: Management estimates Leading Global Provider of Flooring Solutions Interface participates in the $34 Billion Global Commercial Flooring segment We are the global share leader in the $4.4 Billion Carpet Tile segment which continues to take shar
Slide 7: Participating in Attractive Commercial Flooring Segments
GLOBAL COMMERCIAL FLOORING: SEGMENT SIZE vs FORECAST GROWTH and GROSS MARGIN Participating in Attractive Commercial Flooring Segments Interface serves growing segments of hard and soft surface with the highest margins Source: Management estimates
Slide 8: Premium Player in the Specified Channel
GLOBAL CARPET TILE SEGMENT BY CHANNEL Premium Player in the Specified Channel Interface competes on design, sustainability and innovation, commanding a premium price point and industry leading marginsInterface is the share leader in the specified and end user channels of commercial carpet tile which
Slide 9: Attractive Product Portfolio
Carpet TileBiomimicry-inspired random design (i2)High recycled content No glue installation (TacTiles®)Carbon neutral (Carbon Neutral Floors™)Faster, more profitable installation for contractorsEasily recycled (ReEntry® program)Luxury Vinyl Tile (LVT)Creative design freedomComplements and enhances o
Slide 10: Modular Product Offering
Benefits of ModularCreative design freedomNo glue, no padLower cost to changeProduces less wasteFaster, more profitable installation for contractorsEasier to reconfigure and maintainSelective replacement Modular Product Offering
Slide 11: Global Sales and Manufacturing Platform
Global Sales and Manufacturing Platform Sales in over 110 countries1,100 sales & marketing professionalsGlobal account management Seven manufacturing locations on four continentsGlobal supply chain managementUnique blend of efficiency and customization Note: Figures represent proforma FYE 2017 for I
Slide 12: Diversified Customer Verticals
Diversified Customer Verticals CORPORATE OFFICEHighest penetration of carpet tile vs broadloomGlobal Account managementEmerging market penetration EDUCATIONK-12 and higher educationSecond highest penetration of carpet tile vs broadloom Second largest market for rubber HOSPITALITYGuest rooms, corrido
Slide 13: Growth and Value Creation
Growth andValue Creation
Slide 14: Growth and Value Creation Strategy
Grow the CoreCarpet Tile Business Build a Resilient Flooring Business ExecuteSupply ChainProductivity Optimize SG&AResources Growth and Value Creation Strategy Lead a World-Changing Sustainability MovementCentered Around Mission Zero and Climate Take Back. Interface’s vision is to become the world’s
Slide 15: 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 toolsElevate and grow segments – Drive growth in priority segments including Corporate Office, Hospitality, Living and EducationOptimize pro
Slide 16: Build a Resilient Flooring Business
Build a Resilient Flooring Business Continue penetrating the high growth LVT segment, building on successful global LVT launchIntegrate nora® rubber flooring into our product portfolioLeverage innovation pipelineExpand global participationStrategically expand product portfolio
Slide 17: 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
Slide 18: nora is a Global Leader in Performance Flooring
GLOBAL COMMERCIAL FLOORING: SEGMENT SIZE vs FORECAST GROWTH and GROSS MARGIN Source: Management estimates nora is a Global Leader in Performance Flooring nora is the leader in the nearly $1B rubber flooring category of the $34B global commercial flooring industryRubber flooring is ideal for applicat
Slide 19: Who is nora
Sales of €229M in 2017Founded in 1938 Headquartered in Weinheim, Germany with 15 offices worldwide One manufacturing facility in Weinheim with capacity for growthWarehouses in Weinheim, Salem, NH and Shanghai, China1,100 employees worldwideExperienced, direct sales force focused on specified market
Slide 20: Interface and nora Together
Interface and nora Together * * * * * * + * * * Americas EMEA APAC Americas EMEA APAC * * * Note: Figures represent proforma FYE 2017 for Interface and nora combined Geographic Reach Segmentation
Slide 21: Execute Supply Chain Productivity
Execute Supply Chain Productivity Execute Troup Co. Optimization plan which we expect to yield annualized savings of $30MImplement a dynamic yarn strategyContinue to deliver on productivity pipeline initiativesFinalize global ERP system execution down to the factory floor
Slide 22: Optimize SG&A Resources
Optimize SG&A Resources Repurpose spend toward growth initiatives and the highest ROIStage gating of key investments Leverage Interface’s purpose-driven culture
Slide 23: Purpose-Driven Culture Galvanized Around a Common Sustainability Mission
Purpose-DrivenCultureGalvanizedAround aCommonSustainability Mission GLOBESCAN SUSTAINABILITY SURVEY – 20 YEAR HISTORY Unilever Patagonia Interface IKEA Tesla Natura M&S Nestle
Slide 24: Climate Take Back
We commit to running our business in a way that creates a climate fit for life – and we call on others to do the same.We expect to demonstrate that industry can operate with carbon negative business models. As a first step, we are the first global flooring manufacturer to offer carbon neutral carpet
Slide 25: Moving Toward a Carbon Negative Business Model
7 k g 2 k g UNITED STATES MANUFACTURED CARPET TILE CARBON FOOTPRINTCradle-to-Gate, from raw material extraction through manufacturing Moving Toward a Carbon Negative Business Model It is possible to make a product with the potential to reverse global warming. Proof Positive Carpet Tile Prototype CO2
Slide 26: Financial Performance
wn Financial~ ———— ~Performance.
Slide 27: Targets
Grow Revenue at 2x the IndustryBuild Industry Leading Gross Margins Manage SG&A Spend While Investing in Our Brand & Growth DriversEPS Growth 2x – 2.5x Revenue Growth Targets
Slide 28: GAAP Financial Results
GAAP Financial Results ($ in milions) Third Quarter 2018 | 2017 Net Sales $318.3 $257.4 24% $842.5 $730.2 15% Gross Profit 99.9 98.5 1% 302.7 284.2 6% % of Net Sales 31.4% 38.3% 35.9% 38.9% SG&A Expense 84.2 67.2 25% 230.2 196.3 17% % of Net Sales 26.4% 26.1% 27.3% 26.9% Operating Income 15.8 31.3 (
Slide 29: Adjusted Financial Results
Adjusted Financial Results* * See Appendix for a reconciliation on Non-GAAP figures
Slide 30: Revenue Growth
Revenue Growth YTD ORGANIC SALES*($ in millions) Q3 ORGANIC SALES*($ in millions) Organic Sales were up 9% in the third quarter and up 9% year-to-date 9% Growth * See Appendix for a reconciliation on Non-GAAP figures 9% Growth
Slide 31: Adjusted EBITDA Growth
Adjusted EBITDA Growth YTD ADJUSTED EBITDA*($ in millions) Q3 ADJUSTED EBITDA*($ in millions) Adjusted EBITDA was up 24% in the third quarter and up 18% year-to-date 18% Growth * See Appendix for a reconciliation on Non-GAAP figures 24% Growth
Slide 32: Adjusted Earnings Per Share
Adjusted Earnings Per Share ADJUSTED EARNINGS PER SHARE*(Adjusted Diluted Earnings Per Share) Our value creation strategy is generating double digit Adjusted EPS growth 16% CAGR * See Appendix for a reconciliation on Non-GAAP figures
Slide 33: Key Figures
ENDING CASH BALANCE($ in millions) TOTAL DEBT($ in millions) ADJUSTED EBITDA*($ in millions) NET DEBT* / ADJUSTED EBITDA* Key Figures * See Appendix for a reconciliation on Non-GAAP figures
Slide 34: Investment Highlights: Who We Are
Investment Highlights: Who We Are leadingglobal provider of commercial flooring solutions most valuable brand in the flooring category strongest global sales & marketing capabilities global manufacturing footprint and industry-leading gross margins engaged, customer-centric culture, focused on perfo
Slide 35: Appendix
Appendix Appendix
Slide 36: Global Commercial Flooring Segment
Commercial Flooring represents an estimated $34 Billion segment with growth aligned to GDP expansion. Approximately 20% of hard surface volume is in the high growth resilient category, which includes LVT.Carpet Tile represents approximately 13% of global commercial flooring with continued growth abo
Slide 37: Global Commercial Flooring Segment
Global Commercial Flooring Segment Carpet tile has captured a large share of soft surface flooring in the office and education segments.Other vertical segments represent growth opportunities for carpet tile, particularly hospitality and “living.”The strongest segments for LVT are multi-residential,
Slide 38: Global Commercial Flooring Segment
Global Commercial Flooring Segment An estimated 70% of the carpet tile segment is highly influenced by A&D and End Users.Dealers influence more commodity portions of demand. Source: Management estimates GLOBAL CARPET TILE Specified Dealer/Trade End User
Slide 39: Global Carpet Tile Segment
New Build Renovation Source: Management estimates An estimated 75% of carpet tile demand is driven by renovation versus new build. Global Carpet Tile Segment GLOBAL CARPET TILE
Slide 40: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures
Slide 41: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures