Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (May 2020)
31 slides from Interface's investor presentation, May 8, 2020
Slide 1: Investor Presentation May 8, 2020
Investor Presentation MAY 8, 2020
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) FYE FYE % 2018 2019 growth Headquartered in Atlanta, GA Net Sales $1,180 $1,343 14% Adj Operating Income* $134 $150 12%
Slide 4: Investment Thesis
Investment Thesis • Leading commercial brands that are participating in growth areas of the industry • Share leader in a $39 billion global commercial flooring category: – Leading share in carpet tile and rubber – Growing share in LVT • Strong growth execution and positioned for future growth: – Sel
Slide 5: COVID-19 Response
COVID-19 Response Balanced approach to navigating COVID-19 crisis – right-sizing the organization in line with current demand while maintaining customer service and commitment to strategic agenda HEALTH & SAFETY COST REDUCTIONS SUPPLY CHAIN LIQUIDITY • Remote working • Right-sizing organization to •
Slide 6: Who We Are
Who We Are Established brand Global with a history manufacturing of innovation and a footprint with commitment to industry-leading sustainability gross margins Engaged customer- Leading centric culture global provider Strongest global focused on of commercial sales & marketing performance and floori
Slide 7: 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 Grow the Core Build Execute Optimize SG&A Carpet Tile a Resilient Supply Chain Resources Business Flooring Business Productivity Lead a World-Changing Sustainability Move
Slide 8: Interface Positioning
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Slide 9: 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 10: Leading Global Provider of Commercial Flooring Solutions
Leading Global Provider of Commercial 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 now exceeds the value of Broadloom globally • We entered the high growth $3.3 Billion
Slide 11: 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 12: Brand Leader in the Specified Channel
Brand Leader 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 Architect
Slide 13: Global Sales and Manufacturing Platform
Global Sales and Manufacturing Platform • Sales in over 110 countries • Seven manufacturing locations on four continents • Over 1,100 sales & marketing professionals • Global supply chain management • Global account management • Unique blend of efficiency and customization AMERICAS EMEA ASIA-PACIFC
Slide 14: 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 15: Growth and Value Creation
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Slide 16: 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 Grow the Core Build Execute Optimize SG&A Carpet Tile a Resilient Supply Chain Resources Business Flooring Business Productivity Lead a World-Changing Sustainability Move
Slide 17: Grow the Core Carpet Tile Business
Grow the Core Carpet Tile Business • Enhance salesforce productivity – Capitalize on selling system transformation • Elevate and grow segments – Drive growth in priority segments including Corporate Office, Hospitality, Living and Education • Optimize product portfolio – Expand our portfolio to incr
Slide 18: Build a Resilient Flooring Business
Build a Resilient Flooring Business • Continue taking share in the high growth commercial LVT segment • Maximize cross-selling opportunities between nora® rubber flooring, LVT and carpet tile • Expand LVT offering in education and healthcare market with specialized 3mm product • Expand global partic
Slide 19: Purpose-Driven Culture Galvanized Around a Common Sustainability Mission
Purpose-Driven Culture Galvanized Around a Common Sustainability Mission 2019 Recognition Our sustainability journey began in GlobeScan SustainAbility Leaders Report 1994, led by our founder, Ray Anderson. Floor Covering Weekly’s GreenStep Awards Over the last 25 years, we’ve changed Pinnacle Award
Slide 20: Radical Reductions in Environmental Impacts
Radical Reductions in Environmental Impacts 96% 89% 54% Reduction in Greenhouse Gas Reduction in Water Of total raw materials used emissions intensity intake intensity are bio-based or made since 1996 since 1996 of recycled materials 89% 69% 92% Energy use from Reduction in Carbon footprint Reductio
Slide 21: Carpet Tile Carbon Footprint Comparison
Carpet Tile Carbon Footprint Comparison CRADLE-TO-GATE CARBON FOOTPRINT, FROM RAW MATERIAL EXTRACTION THROUGH MANUFACTURING 21
Slide 22: Financial Performance
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Slide 23: GAAP Financial Results
GAAP Financial Results ($ in millions, except EPS) First Quarter 2020 2019 Change Net Sales $288 $298 (3%) Gross Profit 114 117 (2%) % of Net Sales 39.7% 39.1% SG&A Expense 88 100 (12%) % of Net Sales 30.4% 33.6% Goodwill and Intangible Asset Impairment Charge 121 - NM Restructuring Charges (1) - NM
Slide 24: Adjusted Financial Results
Adjusted Financial Results* ($ in millions, except EPS) First Quarter 2020 2019 Change Net Sales $288 $298 (3%) Adjusted Gross Profit 116 118 (2%) % of Net Sales 40.1% 39.8% SG&A Expense 86 100 (14%) % of Net Sales 29.9% 33.6% Adjusted Operating Income 29 18 60% % of Net Sales 10.2% 6.1% Adjusted Ne
Slide 25: Adjusted EBITDA Growth
Adjusted EBITDA Growth • Adjusted EBITDA of $203 as of LTM Q1 2020 ADJUSTED EBITDA* ($ in millions) 12% CAGR $225 $200 $203 $200 $186 $175 $152 $150 $142 $125 $100 $75 $50 $25 $0 2016 2017 2018 2019 LTM Q1 2020 * See Appendix for a reconciliation on Non-GAAP figures 25
Slide 26: Adjusted Earnings Per Share
Adjusted Earnings Per Share • Our value creation strategy is generating double digit Adjusted EPS growth ADJUSTED EARNINGS PER SHARE (DILUTED)* 18% CAGR $1.80 $1.77 $1.59 $1.60 $1.49 $1.40 $1.18 $1.20 $1.03 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2016 2017 2018 2019 LTM Q1 2020 * See Appendix for a reco
Slide 27: Capitalization and Liquidity
Capitalization and Liquidity TOTAL DEBT NET DEBT ($ in millions) ($ in millions) $700 $700 $627 $619 $596 $555 $538 $515 $525 $525 $350 $350 $270 $230 $175 $175 $143 $105 $0 $0 2016 2017 2018 2019 Q1 2020 2016 2017 2018 2019 Q1 2020 ADJUSTED EBITDA* NET DEBT / ADJUSTED EBITDA* ($ in millions) $250 3
Slide 28: Who We Are
Who We Are Established brand Global with a history manufacturing of innovation and a footprint with commitment to industry-leading sustainability gross margins Engaged customer- Leading centric culture global provider Strongest global focused on of commercial sales & marketing performance and floori
Slide 29: Interface
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Slide 30: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures ($ in millions) Q1 2019 Q1 2020 Net Sales as Reported (GAAP) $297.7 $288.2 Impact of Changes in Currency - 4.9 Organic Sales $297.7 $293.1 Gross Profit as Reported (GAAP) $116.5 $114.3 Purchase Accounting Amortization 1.9 1.3 Adjusted Gross Profit $118.4
Slide 31: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures LTM 2016 2017 2018 2019 Q1 2019 Q1 2020 Q1 2020 Diluted EPS as Reported (GAAP) $0.83 $0.86 $0.84 $1.34 $ 0.12 $ (1.75) ($0.53) Purchase Accounting - - 0.38 0.08 0.02 0.02 0.08 Transaction Related Expenses - - 0.12 - - - - Goodwill and Intangible Asset Imp