Tarkett SA · SWB:1T9
Tarkett SA — FY2015 Earnings Presentation
58 slides from Tarkett SA's earnings presentation, Feb 19, 2016
Slide 1: 2015 Financial Results
2015 Financial Results February 2016
Slide 2: FY 2015 Highlights vs. FY 2014
FY 2015 Highlights vs. FY 2014 Net Sales of €2,715m, +12.4% vs. 2014, of which -0.3% organic growth(1) Adjusted EBITDA(2) of €285m vs. €275m in 2014 (+3.7%) Net profit (3) increases by 36% vs. 2014, at €83m Excellent cash flow generation reducing net/adjusted EBITDA ratio to 1.7x vs. 2.0x end of 201
Slide 3: 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 4: 2013-2015: a different company profile
2013-2015: a different company profile Sales breakdown by segment 2013 2015 Sports Sports 11% 16% EMEA 27% EMEA 34% €2.5bn €2.7bn North North America America 27% 28% CIS, APAC, CIS, APAC, LATAM LATAM 35% 22% 2015 Financial Results - Feb 19, 2016 3
Slide 5: CIS now represent less than 20% of adjusted EBITDA
CIS now represent less than 20% of adjusted EBITDA 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% 2015 Financial Results - Feb 19, 2016 4
Slide 6: Activity
2015 Activity @ Tarkett THE ULTIMATE FLOORING EXPERIENCE
Slide 7: Net sales 2015 vs. 2014
Net sales 2015 vs. 2014 €m 218.6 172.7 (82.9) 52.3 45.6 Gross impact before price increases: -€113m (4.6) (101.3) 2,714.8 Organic1 2,414.4 Growth 2,406.3 -0.3% 2014 CIS, APAC & EMEA NA Sports Sales LfL Currencies Selling price Perimeter 2015 LATAM lag effect in CIS Note: (1) Organic growth: At same
Slide 8: Adjusted EBITDA 2015 vs. 2014 – by segment
Adjusted EBITDA1 2015 vs. 2014 – by segment €m 39.2 12.0 20.2 (5.9) 22.5 FX+€14.7m (77.7) 285.3 275.0 2014 CIS, APAC & EMEA NA Sports Central Perimeter 2015 LATAM Note: (1) Adjusted EBITDA: Adjustments include expenses related to restructuring, acquisitions and certain other non-recurring items. 201
Slide 9: Adjusted EBITDA 2015 vs. 2014
Adjusted EBITDA1 2015 vs. 2014 €m Includes 16.1 positive Volume/Mix one-off in 39.2 2.7 2014 EMEA & TSP 41.0 +€29.7m Florence (AL) (48.8) industrial (27.0) 1.1 variances -€17m (14.0) 285.3 275.0 2014 Currencies Selling price Volume/Mix Sales pricing Purchase Net SG&A, Wage Perimeter 2015 lag effect
Slide 10: EMEA FY 2015
EMEA FY 2015 Net sales evolution - €m Comments Net sales organic growth1 +6.7% Most countries contributed to the organic growth: Nordic countries, Germany and Central Europe as well Spain and Italy 917.6 Still difficult context in France, leading to another year of sales decline 681.3 LVT cate
Slide 11: North America FY 2015
North America FY 2015 Net sales evolution - €m Comments Net sales organic growth1 -0.7% Positive organic growth in H2, after a weak H1 771.2 Commercial activity helped by a good performance in 658.0 commercial carpet and in the LVT category VCT: production on new line in Alabama now normalized
Slide 12: North America profitability evolution
North America profitability evolution Adjusted EBITDA margin as % of net sales 12.7% 11.0% 11.0% 10.6% 8.8% 9.0% H1-13 H2-13 H1-14 H2-14 H1-15 H2-15 Start of the new production line in Florence, AL took place in July 2014. Difficult ramp-up penalized the results during H2 2014 and H1 2015 Acti
Slide 13: CIS, APAC & LATAM FY 2015
CIS, APAC & LATAM FY 2015 Net sales evolution - €m Comments Net sales organic growth1 -13.1% CIS countries Slowdown of Russian economy and decline of purchasing power of consumers heavily impacted sales volumes Sales mix affected, with a shift towards entry-level products, 771.1 as is often the
Slide 14: Continued adaptation to the strong volatility of the ruble
Continued adaptation to the strong volatility of the ruble EUR-RUB (inverted scale) Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 45 50 Average 2014: 51.0 55 60 -25% Q2’15: 58.3 EUR/RUB average 65 rate Average 2015: 70 67.9 Q3’15: 70.3 75 Q1’15: 70.7 Q4’15: 72.3 March 2016 80 85 Selling prices +1
Slide 15: Sports FY 2015
Sports FY 2015 Net sales evolution - €m Comments Net sales organic growth1 +17.2% 439.3 Excellent year for all product categories Success of our turn-key offering in Turf NA 304.0 Well-received product innovation Landscape business was upbeat Addition of Desso Sports, notably GrassMaster h
Slide 16: Sports
Sports Adjusted EBITDA and margin $m 46 35 20 9.4% 8.8% 13 5.2% 3.9% 2012 2013 2014 2015 Adj EBITDA Margin 2015 Financial Results - Feb 19, 2016 15
Slide 17: Strong EBIT thanks to lower restructuring costs and sale of Houston plant
Strong EBIT thanks to lower restructuring costs and sale of Houston plant €m 2015 2014 Net sales 2,714.8 2,414.4 Adjusted EBITDA1 285.3 275.0 % of net sales 10.5% 11.4% Depreciation increase driven by: Depreciation (123.9) (99.5) Desso acquisition: €13m Currency translation (mainly USD) €7m Adju
Slide 18: Net Income evolution
Net Income evolution €m 2015 2014 EBIT 164.6 136.6 % of net sales 6.1% 5.7% Net financial expenses (31.9) (31.0) Net interest expenses (12.2) (12.6) Other financial income & expenses (19.7) (18.4) Share of profit of associates (0.3) (1.6) Effective tax rate Net profit before tax 132.4 103.9 2014 39.
Slide 19: Solid Free Cash Flow generation
Solid Free Cash Flow generation Net cash flow from Operations €m 2015 2014 Operating cash flow before working 262.7 239.7 capital changes Changes in working capital 8.7 10.3 Cash generated from Operations 271.4 250.0 On-going Capital Expenditure (79.2) (77.6) % of net sales 2.9% 3.2% Net cash flow f
Slide 20: Well invested and managed industrial assets
Well invested and managed industrial assets Investments Productivity gains Ongoing capex (€m) Ongoing capex as % of net sales % of productivity as a % of COGS 88 3.0% 84 78 79 77 2.5% 3.7% 3.6% 3.5% 3.2% 2.0% 2.9% 1.5% 1.0% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Key highlights World Class
Slide 21: A solid balance sheet allowing Tarkett to self finance its expansion
A solid balance sheet allowing Tarkett to self finance its expansion through external growth Net financial debt and leverage ratio evolution €154m Desso acquisition 595 Leverage Ratios 482 452 Net debt/LTM Adjusted EBITDA = 1.7x 429 Net debt / Equity = 58% 332 2.0x Refinancing of €650m increas
Slide 22: Key Initiatives
@ Tarkett THE ULTIMATE FLOORING EXPERIENCE Key Initiatives
Slide 23: Innovation Strategy: From product-driven innovation to innovative solutions and services
Innovation Strategy: From product-driven innovation to innovative solutions and services ECO-INNOVATION CIRCULAR DESIGNS MODULARITY & DESIGN UNIQUE SPACES TECHNOLOGY & PERFORMANCE INTERACTIVE SURFACES 22
Slide 24: Innovation: Circular eco-design to create responsible use of PVC
Innovation: Circular eco-design to create responsible use of PVC Indoor Air Quality and Healthy Spaces Reuse and Recycling New generation of vinyl flooring Phthalate-free plasticizers technology ReStart programs to collect and recycle post- With extremely low VOC installation and post-use floo
Slide 25: Innovation: Modularity and customization to create unique spaces
Innovation: Modularity and customization to create unique spaces Digital printing The floor is the new playground Create spaces transitions Wood LVT Carpet tiles Customization of spaces, with Customized floor to create unique Combination of tiles in different unique and innovative designs spac
Slide 26: Innovation: Technology to create innovative concept and interactive experience
Innovation: Technology to create innovative concept and interactive experience Touch & feel Immersive space Internet of things Synchronization of the embossing Turn floor into interactive and FloorInMotion Care to detect fall technology and the pattern “wood marketing spaces, delivering and pr
Slide 27: Solutions Provider: Bring added value expertise in each market segment (Sports)
Solutions Provider Bring added value expertise in each market segment Sports Comprehensive sports solutions for multi- Innovative technology for tracks: Rise N Recognized partner for famous stadium purpose sport center: Blue Spring Fieldhouse Run launched in 2015 (USA) and WW competition: Stad
Slide 28: Solutions Provider: Education, Healthcare, Offices
Solutions Provider: Bring added value expertise in each market segment Education Healthcare Offices Create an inspiring learning Answer challenging and complex Create a positive and productive environment: Color Kids Study environments to create healing working environment: sound spaces: Healt
Slide 29: Solutions provider: Leverage our wide product portfolio with integrated solutions
Solutions provider: Leverage our wide product portfolio with integrated solutions Carpet & Vinyl Carpet & LVT Carpet, LVT, Rubber Aged care facility in Australia Allianz office in La Défense, France Combined flooring solution in North America 28
Slide 30: Conclusion
@ Tarkett THE ULTIMATE FLOORING EXPERIENCE Conclusion al
Slide 31: Follow-up on mid-term guidance
Follow-up on mid-term guidance Net sales from 2012-2016 organic sales CAGR continues to outperform Challenged by organic growth aggregate GDP growth in the regions where we are present CIS macro Additional sales Objective of c. €300m additional sales by 2016 coming from 80% from acquisitions val
Slide 32: Take Aways
Take Aways Record performance in EMEA and Sports 2015 Take North America on the path to recovery Aways Leverage of 1.7x after another year of strong cash-flow generation Dividend1 of €0.52 per share, +37% vs. prior year Continue growth in EMEA and Sports Consolidate NA turnaround Outlook
Slide 33: 2015 Financial Results Q&A session
2015 Financial Results Q&A session February 2016
Slide 34: Appendices
@ Tarkett THE ULTIMATE FLOORING EXPERIENCE
Slide 35: 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 36: A weak and volatile ruble penalized the sales and EBITDA performance of the year
A weak and volatile ruble penalized the sales and EBITDA performance of the year Currency variation impacts (Y-o-Y) €m FY 2015 FY 2014 In the CIS countries (net of selling price increases) Comments In the CIS countries Impact on Net Sales (82.9) (41.5) The volatility and weakening of currencies
Slide 37: New GDP growth forecast downgrades except in the United States
New GDP growth forecast downgrades except in the United States IMF’s GDP latest growth forecasts - January 2016 Forecast evolutions since October 2015 2015 2016 2017 2018* 2015 2016 2017 2018 United States 2.6% 2.5% 2.6% 2.7% United States 0.0 -0.3 -0.2 Euro Area 1.5% 1.7% 1.7% Euro Area 0.0 0.1 Abo
Slide 38: ROCE
ROCE ROCE evolution €m 2015 2014 Tangible Assets 499 435 17.7% Intangible Assets 663 588 16.5% Target of Operating Working capital 277 241 13.9% 15% Capital employed 1,439 1,264 9.9% 11.2% Net Sales 2,715 2,414 Capital employed turns 1.9x 1.9x Adjusted EBIT 161 176 EBIT/Net sales 5.9% 7.3% Pre-tax R
Slide 39: Strong liquidity and debt maturity
Strong liquidity and debt maturity Key highlights Utilization Credit Lines Very strong liquidity with €68m of cash and €710m of undrawn €m credit lines as of December 31, 2015. Dec 2015 Dec 2015 Syndicated Facility (RCF) 82 650 Extended maturity of credit lines thanks to the new syndicated facil
Slide 40: Sales and Adjusted EBITDA performance by quarter (Q1/Q2)
Sales and Adjusted EBITDA performance by quarter (Q1/Q2) Q1 Q2 Organic Organic €m 2015 2014 1 % growth 2015 2014 1 % growth Growth 2 Growth 2 EMEA 226.5 169.4 +33.7% +5.2% 236.0 177.6 +32.9% +6.1% North 210.8 178.0 162.8 140.8 +15.6% -3.4% +18.4% -2.2% America Net sales CIS, APAC & 151.3 187.1 126.4
Slide 41: Sales and Adjusted EBITDA performance by quarter (Q3/Q4)
Sales and Adjusted EBITDA performance by quarter (Q3/Q4) Q3 Q4 Organic Organic €m 2015 2014 1 % growth 2015 2014 1 % growth Growth 2 Growth 2 EMEA 230.9 174.2 +32.5% +6.2% 224.1 160.1 40.0% +9.6% North 214.1 178.1 183.5 161.1 +20.2% +2.5% +13.9% +0.2% America Net sales CIS, APAC & 164.6 234.6 144.3
Slide 42: Sales performance by semester
Sales performance by semester H1 H2 Organic Organic €m 2015 2014 % growth 2015 2014 % growth Growth 1 Growth 1 EMEA 462.6 347.0 +33.3% +5.7% 455.0 334.4 +36.1% +7.8% North 373.6 318.8 +17.2% -2.8% 397.6 339.2 +17.2% +1.4% America CIS, APAC & 277.7 345.0 308.9 426.1 -19.5% -13.1% -27.5% -13.2% LATAM
Slide 43: Sales performance full year
Sales performance full year FY Organic €m 2015 2014 % growth Growth 1 EMEA 917.6 681.3 +34.7% +6.7% North 771.2 658.0 +17.2% -0.7% America CIS, APAC & 586.7 771.1 -23.9% -13.1% LATAM Sports 439.3 304.0 +44.5% +17.2% TOTAL 2,714.8 2,414.4 +12.4% -0.3% Note: (1) Organic growth: At same perimeter and e
Slide 44: Adjusted EBITDA performance by semester
Adjusted EBITDA1,2 performance by semester H1 H2 FY % of % of % of % of % of % of €m 2015 H1’15 2014 H1’14 2015 H2’15 net 2014 H2’14 net 2015 FY’15 net 2014 FY’14 net net sales net sales sales sales sales sales EMEA 70.1 15.1% 40.8 11.8% 67.4 14.8% 36.2 10.8% 137.5 15.0% 77.1 11.3% North 33.6 33.8 5
Slide 45: Material Consumption in 2015
Material Consumption in 2015 COGS 2015A breakdown Material Consumption in 2015A Others, 16% Traded Goods 22% Transport Raw and materials, Logistics, Raw Materials - Oil 58% 10% derivatives 53% Payroll, Other Raw 16% Materials 25% Total 2015A COGS: €2,045m Note: Excluding Desso. 2015 Financial Result
Slide 46: A market with very specific regional segmentation
A market with very specific regional segmentation… Total flooring market: 13.4bn sqm 2014 Breakdown of volume demand by product Ceramics Commercial Residential Carpet Residential Carpet Carpet 5% 17% Vinyl, Commercial Carpet Linoleum & Rubber ADDRESSED Vinyl, Linoleum & Rubber 8% SEGMENTS Wood & Lam
Slide 47: Shareholder composition - As at December 31, 2015
Shareholder composition - As at December 31, 2015 Treasury Shares 0.3% Free Float 28.0% Société d’Investissement Deconinck 50.2% KKR international Flooring 21.5% 2015 Financial Results - Feb 19, 2016 46
Slide 48: 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 49: Consolidated income statement
Consolidated income statement Income statement €m 2015 2014 Net sales 2,714.8 2,414.4 Cost of sales (2,045.4) (1,842.8) Gross profit 669.4 571.6 Other operating income 39.0 6.9 Selling and distribution expenses (304.4) (249.4) Research and development expenses (34.8) (26.0) General and administrativ
Slide 50: Consolidated cash flow statement
Consolidated cash flow statement Cash flow statement €m 2015 2014 Net profit before tax 132.4 103.9 Depreciation, financial expenses and other 130.2 135.8 Operating profit before working capital changes 262.6 239.7 Effects of changes in assets and liabilities 8.8 10.3 Cash generated from operations
Slide 51: Consolidated balance sheet
Consolidated balance sheet Balance sheet €m December 31, 2015 December 31, 2014 Assets Goodwill 538.4 532.6 Intangible assets 124.2 115.8 Property, plant and equipment 499.4 502.1 Financial assets 28.7 28.8 Deferred tax assets 103.1 109.3 Other non-current assets 0.3 0.5 Non-current assets 1,294.1 1
Slide 52: 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 53: 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 54: 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 55: 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 56: 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 57: 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 58: Disclaimer
Disclaimer The Supervisory Board of Tarkett held on February 18, 2016, reviewed the consolidated financial statements of the Group as of December 31, 2015. Audit procedures have been carried out and auditors’ report on financial statements is being issued. This document may contain estimates and