Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (November 2019)
37 slides from Interface's investor presentation, Nov 4, 2019
Slide 1: Interface Investor Presentation, November 4, 2019
i NOVEMBER 4, 2019
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. 92e1
Slide 3: Presenters: Jay Gould and Bruce Hausmann
page 3 Interface’ Jay Gould President and Chief Executive Officer Bruce Hausmann Vice President and Chief Financial Officer .29e)19}U]
Slide 4: 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. Headquartered in Atlanta, GA 7 manufacturing locations on 4 continents 4,100 global employees Sales in over 110 countries New Product Vitality Index
Slide 5: Investment Thesis
Investment Thesis » Strong brands that are participating in growth areas of the industry » Share leader in a $39 billion global category: — Leading share in carpet tile with ~20% of the segment — Leading share in rubber with ~30% of the segment — Growing share in LVT with ~2% of the segment + Strong
Slide 6: Investment Highlights
Investment Highlights: Ey ao o =. t-*) (<] o leading most valuable strongest global engaged, global provider brand sales & customer-centric of commercial in the flooring marketing culture, focused flooring solutions category capabilities on performance and galvanized around our sustainability missio
Slide 7: Growth and Value Creation Strategy
Growth and Value Creation Strategy .BIEJIIU] Interface’s vision is to become the world’s most valuable interior products & services company Build CLO GIG a Resilient EACCUIE Optimize SG&A Carpet Tile ; SUpPh coal Resources Business Aleta Productivity Business Lead a World-Changing Sustainability Mov
Slide 8: Interface Positioning
Slide 9: Attractive Product Portfolio
Attractive Product Portfo + 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™) + Creative design freedom + Complements
Slide 10: 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 segment i
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 GLOBALCOMMERCIAL FLOORING: SEGMENT SIZE vs FORECASTED GROWTH and GROSS MARGIN 14% Bubble size = Global commercial value of category, 2019 12% LT 10% a S 8% &
Slide 12: 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 13: 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%
Slide 14: Diversified
Diversified .29e)19}U] = BILLINGS BY SEGMENT EDUCATION + K-12.and higher education + Second highest penetration of carpet tile vs broadloom + Second largest market for rubber HOSPITALITY + Guestrooms, corridors and public spaces + Named the brand standard or alternate at Hilton, Marriott, IHG and Ch
Slide 15: Growth and Value Creation
Slide 16: Growth and Value Creation Strategy
Growth and Value Creation Strategy .BIEJIIU] Interface’s vision is to become the world’s most valuable interior products & services company Build CLO GIG a Resilient EACCUIE Optimize SG&A Carpet Tile ; SUpPh coal Resources Business Aleta Productivity Business Lead a World-Changing Sustainability Mov
Slide 17: Grow the Core Carpet Tile Business
Grow the Core Carpet Tile Business Ey ao o =. t-*) (<] o + 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, Livin
Slide 18: Build
Build .29e)19}U] + 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 18
Slide 19: Resilient Flooring: nora
Resilient Flooring: aoejiajUu] nora nora is a leading global manufacturer of commercial rubber floorcovering systems for healthcare, education, life sciences, public buildings and other end markets page 19
Slide 20: Interface and nora Together
Interface and nora Together Interface: Interface’ + nora’ excluding nora APAC a rs} 9 {5} a 2 a ‘Americas g a EMEA EMEA 1) c Non-office g Non-office gi rai o 5 Offi i) Office ice oI EMEA page 20 Note: Figures represent proforma FYE 2018 sales for Interface and nora combined 92e19}U]
Slide 21: Purpose-Driven Culture
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 ri Patagonia IKEA Tesla a y, 4 Natura PK M&S Nestle page 21
Slide 22: Radical Reductions in Environmental Impacts
=) Radical Reductions in Environmental Impacts '%) 92e19}U] vbe -@- 89% of energy used at manufacturing sites is from renewable sources 1 ty 54% of materials in products we sell are from recycled or bio-based sources ry GHG emissions intensity at manufacturing sites is down 96% since 1996 é Water in
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. + Weare the first global flooring
Slide 24: Moving Toward a Carbon Negative Business Model
Moving Toward a Carbon Negative Business Model .9IPj9}U] All our products. Carbon neutral. The next step is up to you. Proof Positive Carpet Tile Prototype Itis possible to make*ayproductwith the potential-to reverse gidbal warming.
Slide 25: Financial Performance
Slide 26: GAAP Financial Results
GAAP Financial Results (S im miions, except EPS) Third Quarter 2019 2018 2019 2018 Net Sales $348.4 $3183 9% $1,003.5 $8425 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 26.2% 26.4% 28.5% 27.3% Operatin
Slide 27: Adjusted Financial Results
Adjusted Financial Results* (Sin milions, except EPS) Third Quarter 2019 2018 2019 2018 Net Sales $348.4 $318.3 9% $1,0035 $8425 19% Adjusted Gross Profit 137.1 1202 14% 304.3 3229 22% % of Net Sales 39.4% 37.8% 39.3% 38.3% SG&A Expense 914 83.1 10% 286.1 2262 26% % of Net Sales 26.2% 26.1% 28.5% 26
Slide 28: Organic Sales Growth
Organic Sales Growth .BIEJIIU] + Organic sales were up 2% in Q3 2019 + Growth driven by resilient products — LVT and Rubber Q3 ORGANIC SALES* YTD ORGANIC SALES* (S in millions) (Sin millions) $859 $330 $326 ‘$860 $318 $843 $320 in $310 $820 $300 $290 $800 $280 $780 $270 $760 $260 $250 $740 Q3 2018 Q
Slide 29: Adjusted EBITDA Growth
Adjusted EBITDA Growth + Adjusted EBITDA of $200M as of LTM Q3 2019 ADJUSTED EBITDA* in millions) 11 $200 $186 $152 2017 2018 L™ Q3 2019 page 29 * See Appendix for @ reconciliation on Non-GAAP figures .BIEJIIU]
Slide 30: Adjusted Earnings Per Share
Adjusted Earnings Per Share .BIEJIIU] + Our value creation strategy is generating double digit Adjusted EPS growth ADJUSTED EARNINGS PER SHARE (DILUTED)* 1% CAGR 1.60 8 $1.49 $1.54 $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 L™ 23 2019 page 30 *
Slide 31: Capitalization and Liquidity
Capitalization and Liquidity .9IPj9}U] TOTALDEBT NET DEBT (Gin millions) (Gin millions) $700 4 61868 $700 sss‘ $525 4 $525 $350 4 $350 $214 pals $230 $175 4 fl [| a $175 4 $138 Sis $143 ‘ » mo 2015 = 2016. = «2017-2018 += 2019 2015 = 2016. = 2017S 2018 = Q3.2019 ADJUSTED EBITDA* NET DEBT/ ADJUSTED E
Slide 32: Capital Allocation for Value Creation
Capital Allocation for Value Creation .BIEJIIU] + 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 t
Slide 33: Investment Highlights
Investment Highlights: Ey ao o =. t-*) (<] o leading most valuable strongest global engaged, global provider brand sales & customer-centric of commercial in the flooring marketing culture, focused flooring solutions category capabilities on performance and galvanized around our sustainability missio
Slide 34: Appendix
Slide 35: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures page 35 {Sin milions, except per share amounts) Net Sales as Reported (GAAP) Impact of Changes in Currency nora Net Sales adjustment Organic Sales Gross Profit as Reported (GAAP) Purchase Accounting Amortization Adjusted Gross Profit Operating Income as R
Slide 36: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures um 4 215 016 ots 3 2019 Diluted EPS as Reported (GAAP) 90.37 $140 $083 $0.86 $0.84 $1.16 Purchase Accounting - - - - 0% © 020 Transaction Related Expenses - - - - 012 = 0.01 Tax Act Expense (Beneft) - - - 025 011) O11) Restructuring and Asset Impairment C
Slide 37: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures ym YTD u™ {Sin mitions) 2018 932018 a3 2019 3 2019 Operating Income as Reported (GAAP) 76.4 $725 $103.0 $1069 Purchase Accounting 321 20.3 45 163 Transaction Related Expenses 53 40 a 13 Restructuring and Asset Impairment Charges 205 - o7 212 Adjusted Oper