Tarkett Sa · SWB:1T9
Tarkett Sa — Q3 2017 Earnings Presentation
37 slides from Tarkett Sa's earnings presentation, Oct 25, 2017
Slide 1: Q3 2017 Financial Results
Q3 2017 FINANCIAL RESULTS October 25, 2017
Slide 2: Agenda
> Q3 2017 Key Highlights AGENDA > Q3 2017 Activity > Key Initiatives > Conclusion > Appendices
Slide 3: Q3 2017 Key Highlights
Q3 2017 KEY HIGHLIGHTS Glen Morrison CEO
Slide 4: Tarkett benefits from balanced exposures providing resilience to industry cycles
Tarkett benefits from balanced exposures providing resilience to industry cycles BALANCED GEOGRAPHIC ONE OF THE BROADEST PRODUCT ATTRACTIVE END-MARKETS EXPOSURE PORTFOLIOS IN THE FLOORING INDUSTRY EXPOSURE Sales in more than 100 countries Sports NORTH AMERICA EMEA 17% Vinyl incl. Sports incl. Sports
Slide 5: Strong organic growth in Q3 2017
Strong organic growth in Q3 2017 > Net sales up 3.7% year-on-year at €824m, including organic growth of 6.1%(1) > Very strong organic growth in CIS, APAC & Latin America (+15.5%)(1) and Sports (+13.6%)(1) > EMEA (+2.9%)(1) remained well oriented > North America (-4.2%)(1) lower than expected, mainly
Slide 6: Q3 2017 Activity
Q3 2017 ACTIVITY Raphaël Bauer CFO
Slide 7: Solid organic growth of +6.1%
Solid organic growth of +6.1% in €m > Remarkable momentum in CIS, APAC & Latam 26.9 842.9 0.8 823.5 > Good growth in EMEA and 24.4 (16.8) (3.4) Sports 6.4 794.3 (9.1) > North America fell short of expectations Organic growth of 6.1% > Negative impact from currencies (1) Q3 2016 EMEA North CIS, APAC
Slide 8: Raw materials and currencies penalizing Q3 2017 adjusted EBITDA
Raw materials and currencies penalizing Q3 2017 adjusted EBITDA in €m 119.2 4.3 (3.7) > As expected, significant (0.9) 3.1 0.1 headwinds from raw (5.2) material prices (8.3) 101.2 (7.2) > Negative impact from currencies Q3 2016 Currencies Selling price Volume/Mix Sales pricing Purchase Net Perimeter
Slide 9: EMEA Q3 2017
EMEA Q3 2017 NET SALES EVOLUTION in €m > Strong growth in Germany and +1.9% Q3 2017 Poland 222.9 reported 227.2 Net sales organic growth(1) +2.9% > Better growth than expected in the UK > France remained on the good 9M 2017 momentum initiated in H1 Net sales organic growth(1) +3.8% > Spain continued
Slide 10: North America Q3 2017
North America Q3 2017 NET SALES EVOLUTION in €m -8.6% > Resilient & accessories 216.6 reported Q3 2017 197.9 Net sales organic growth(1) -4.2% growing > Commercial carpet 9M 2017 • Softer market Net sales organic growth(1) -2.5% • Sales lower than expected Q3 2016 Q3 2017 • Actions underway (1) Orga
Slide 11: CIS, APAC & LATAM Q3 2017
CIS, APAC & LATAM Q3 2017 NET SALES EVOLUTION in €m CIS countries +12.9% 178.0 reported Q3 2017 > Full benefit from the recovery 157.7 Net sales organic growth(1) +15.5% > Further volume expansion > Continued improvement in 9M 2017 product mix Net sales organic growth(1) +10.5% Q3 2016 Q3 2017 APAC
Slide 12: Sports Q3 2017
Sports Q3 2017 NET SALES EVOLUTION in €m +11.8% Q3 2017 > Dynamism in both 197.2 reported 220.4 Net sales organic growth(1) +13.6% artificial turf and running tracks 9M 2017 > Still high portion of Net sales organic growth(1) +9.6% turnkey projects Q3 2016 Q3 2017 > High-profile projects in (1) Orga
Slide 13: Major References
MAJOR REFERENCES Glen Morrison CEO
Slide 14: Solutions partner for Sports Surfaces: AFC Ajax (NL)
Solutions partner for Sports Surfaces: AFC Ajax (NL) > PlayMaster at the Amsterdam Arena – Installation end of July - Ready-to-play turf rolls combining natural and artificial turf (hybrid grass system grown in sods) - Fast installation (“Lay & Play”) - For multi-purpose facilities (sports competiti
Slide 15: Tarkett artificial turf at U Arena (France – Paris Nanterre)
Tarkett artificial turf at U Arena (France – Paris Nanterre) > FieldTurf, partner of rugby club Racing 92, equipped the new multi-purpose stadium U Arena with artificial turf > Installation in September 2017 > Inauguration in October 2017 for a concert > First rugby match end of November (France – J
Slide 16: Prestigious design headquarters in Chicago (USA)
Prestigious design headquarters in Chicago (USA) > Tarkett selected as only flooring solutions provider at new International Interior Design Association headquarters > Combined and customized flooring solutions - Modular carpet - Digital design LVT (Collection Infinies™) Tarkett – Q3 2017 Financial
Slide 17: Conclusion
CONCLUSION Glen Morrison CEO
Slide 18: Key Take-aways
Key Take-aways > Solid organic growth of 6.1% Q3 2017 Take-aways > Headwinds from raw material prices and currencies > EMEA, Sports and CIS region should remain well oriented > North America should progressively improve > Raw material prices impact: -€30m to -€35m on 2017 adjusted EBITDA Outlook > A
Slide 19: Q&A Session
Q&A SESSION
Slide 20: Appendix
APPENDIX
Slide 21: Sales and adjusted EBITDA performance by quarter (Q1 & Q2)
Sales and adjusted EBITDA performance by quarter (Q1 & Q2) Sales performance by quarter Organic Organic €m Q1 2017 Q1 2016 % growth Q2 2017 Q2 2016 % growth growth1 growth1 EMEA 243.4 232.4 +4.7% +7.0% 237.9 239.3 -0.5% +1.5% North 190.3 187.2 +1.6% -2.1% 222.4 223.9 -0.7% -1.3% America CIS, APAC 12
Slide 22: Sales and adjusted EBITDA performance in H1
Sales and adjusted EBITDA performance in H1 Net Sales Adjusted EBITDA2 Organic H1 2017 H1 2016 €m H1 2017 H1 2016 % growth H1 2017 H1 2016 growth1 Margin Margin EMEA 481.3 471.6 +2.1% +4.2% 68.5 74.8 14.2% 15.9% North 412.7 411.1 +0.4% -1.6% 51.7 59.3 12.5% 14.4% America CIS, APAC 275.7 234.9 +17.4%
Slide 23: Sales and adjusted EBITDA performance in Q3
Sales and adjusted EBITDA performance in Q3 Sales performance by quarter Organic €m Q3 2017 Q3 2016 % growth growth1 EMEA 227.2 222.9 +1.9% +2.9% North America 197.9 216.6 -8.6% -4.2% CIS, APAC & LATAM 178.0 157.7 +12.9% +15.5% Sports 220.4 197.2 +11.8% +13.6% TOTAL 823.5 794.3 +3.7% +6.1% Q3 2017 Q
Slide 24: Sales and adjusted EBITDA performance over the first 9 months
Sales and adjusted EBITDA performance over the first 9 months Sales performance by quarter Organic €m 9M 2017 9M 2016 % growth growth1 EMEA 708.5 694.5 +2.0% +3.8% North America 610.6 627.7 -2.7% -2.5% CIS, APAC & LATAM 453.7 392.6 +15.6% +10.5% Sports 414.7 377.6 +9.8% +9.6% TOTAL 2 187.5 2 092.4 +
Slide 25: Net sales YTD
Net sales YTD in €m 2,180.3 1.7 16.6 2,187.5 36.4 41.3 (11.1) 26.2 2,092.4 (16.0) YTD EMEA North America CIS, APAC and Sports Sales LfL Perimeter Currencies Selling price lag YTD September LATAM effect in CIS September 2016 2017 Tarkett – Q3 2017 Financial Results – October 25, 2017 25
Slide 26: Adjusted EBITDA YTD
Adjusted EBITDA YTD in €m 270.6 5.3 2.3 20.7 0.2 261.4 (4.1) (6.7) (5.4) (21.6) YTD Currencies Selling price Volume/Mix Sales pricing Purchase Net Perimeter Other YTD September lag effect in pricing Productivity September 2016 CIS 2017 Note: Adjusted EBITDA: Adjustments include expenses related to r
Slide 27: Russia: Selling price strategy to adapt to the exchange rate evolution
Russia: Selling price strategy to adapt to the exchange rate evolution Evolution of Tarkett Vinyl prices in Russia and EUR/RUB exchange rate 60% 50% Rate and price change, % 40% 30% 20% 10% 0% Jan'14 Jul'14 Jan'15 Jul'15 Jan'16 Jul'16 Jan'17 Jul'17 RUB devaluation (inverted scale) 2/3 of Devaluation
Slide 28: Russia: consumer confidence, real retail sales and real wages
Russia: consumer confidence, real retail sales and real wages 25% 50 20% 40 15% 30 10% 20 Real wages, retail sales YoY, % Consumer confidence YoY 5% 10 0% 0 Jan'08 Jan'09 Jan'10 Jan'11 Jan'12 Jan'13 Jan'14 Jan'15 Jan'16 Jan'17 -5% -10 -10% -20 -15% -30 -20% -40 -25% -50 Consumer confidence YoY Real
Slide 29: Long term profitable growth
Long term profitable growth NET SALES ADJUSTED EBITDA(1) in €m in €m 334 2,739 310 2,715 285 2,516 275 2,414 262 2,292 2,088 222 1,919 208 1,708 191 12.2% 11.6% 11.4% 12.3% 11.4% 10.5% 12.2% 9.1% 2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016 +7.0% CAGR 2009-2016 +7.
Slide 30: 2017-2020 financial objectives
2017-2020 financial objectives Unless transforming acquisition Revenue growth > 2020 net sales ~€3.5bn(1) > Adjusted EBITDA margin > 12% Profitability & return > ROIC > 9% Acquisitions strategy > Additional sales by 2020 of ~€500m Leverage > Net debt / adjusted EBITDA < 2.5x Dividend > At least €0.6
Slide 31: >12% adjusted EBITDA margin objective
All segments to contribute to 2020 financial objectives Based on relatively stable raw material prices ADJ. EBITDA MARGIN SEGMENT CAGR(1) OBJECTIVE MAIN FOCUS EMEA +0% / +2% Remain above 15% Organic growth North America +2% / +4% Reach 15% Cost efficiency CIS, APAC & LATAM +0% / +3% Back to 15% Prog
Slide 32: Material consumption in 2016
Material consumption in 2016 As of December 2016 COGS BREAKDOWN MATERIAL CONSUMPTION DETAIL Traded goods Others Raw materials 22% 18% 55% Transport Oil derivatives Total COGS and logistics €1,996m 53% 10% Payroll Other raw materials 17% 25% Tarkett – Q3 2017 Financial Results – October 25, 2017 32
Slide 33: Shareholder composition
Shareholder composition As of October 2017 Société d’Investissement Deconinck 50.2% Treasury shares 0.6% Free float 49.2% Tarkett – Q3 2017 Financial Results – October 25, 2017 33
Slide 34: International and entrepreneurial teams
International and entrepreneurial teams Executive Management Committee Operational leaders Functional leaders Glen Morrison Raphaël Bauer Fabrice Barthélemy CFO CEO President EMEA & Chairman of the Member of the Management Board Management Board Sharon MacBeath Human Resources Member of the Manageme
Slide 35: Global flooring market
Global flooring market World flooring market = 12.9bn sqm(1) > Flooring market is growing more or less in line with GDP growth, with specificities by region and product Ceramics 60% Wood & Laminate > Flooring market (excluding 11% ceramics) is ~80% exposed to renovation Vinyl, Linoleum 27% & Rubber
Slide 36: Flooring preferred categories vary greatly across the world
Flooring preferred categories vary greatly across the world North America: 1.8bn sqm Europe(1): 1.6bn sqm CIS: 0.6bn sqm 17% 29% 30% 51% 27% 14% 18% 19% 28% 13% 21% 26% 1% 4% 3% Ceramics Carpet 14% 12% 5% Vinyl, Linoleum & Rubber Wood & Laminate Other (non-resilient) 8% 11% 50% Latin America: 1.1bn
Slide 37: Disclaimer
Disclaimer This document may contain estimates and/or forward-looking statements. Such statements do not constitute forecasts regarding Tarkett’s results or any other performance indicator, but rather trends or targets, as the case may be. These statements are by their nature subject to risks and un