Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (February 2018)
40 slides from Interface's investor presentation, Feb 28, 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 a leadingglobal provider of commercial modular flooring solutions the most valuable brand in the flooring category strongest global sales & marketing capabilities global manufacturing footprint and industry-leading gross margins an engaged, customer-centric culture,
Slide 4: Growth and Value Creation Strategy
Grow the CoreCarpet Tile Business Develop a Modular 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 goal is to become the
Slide 5: Interface Positioning
Interface Positioning InterfacePositioning
Slide 6: Leading Global Provider of Modular Flooring Solutions
GLOBAL COMMERCIAL FLOORING SEGMENT (in billions) Source: Management estimates Leading Global Provider of Modular 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 t
Slide 7: Participating in Attractive Commercial Flooring Segments
U.S. COMMERCIAL FLOORING: SEGMENT SIZE vs HISTORICAL GROWTH and GROSS MARGIN Source: USFLOOReport, Catalina Research and Management estimates Participating in Attractive Commercial Flooring Segments Interface serves the fastest growing segments of hard and soft surface with the highest margins
Slide 8: Premium Player in the Specified Market
GLOBAL CARPET TILE SEGMENT BY CHANNEL Premium Player in the Specified Market 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: Benefits of Modular
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 Portfolio
Slide 10: Modular Product Portfolio
Carpet TileBiomimicry-inspired random design (i2)High recycled content No glue installation (TacTiles®)Climate neutral offering (Cool Floor™)Faster, more profitable installation for contractorsEasily recycled (ReEntry® program)Luxury Vinyl Tile (LVT)Creative design freedomComplements and enhances ou
Slide 11: Global Sales and Manufacturing Platform
Global Sales and Manufacturing Platform Sales in over 110 countries600+ Interface sales & marketing professionalsGlobal account management Note: Figures represent FYE 2017 Six manufacturing locations on four continentsGlobal supply chain managementUnique blend of efficiency and customization Manufac
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 HOSPITALITYGuest rooms, corridors and public spacesNamed the bra
Slide 13: Growth and Value Creation
Growth andValue Creation
Slide 14: Growth and Value Creation Strategy
Grow the CoreCarpet Tile Business Develop a Modular 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 goal is to become the
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: Develop a Modular Resilient Flooring Business
Develop a Modular Resilient Flooring Business Continue penetrating the high growth LVT segment – Build on successful global LVT launchExpand product portfolioIntroduce innovative new productsExpand global participation
Slide 17: Execute Supply Chain Productivity
Execute Supply Chain Productivity Execute Troup Co. Optimization plan which we expect to yield $30M of annual savingsImplement a dynamic yarn strategyContinue to deliver on productivity pipeline initiativesFinalize global execution of ERP system down to the factory floor
Slide 18: Optimize SG&A Resources
Optimize SG&A Resources Repurpose spend toward growth initiatives and the highest ROIStage gating of key investments Leverage Interface’s purpose-driven culture
Slide 19: Purpose-Driven Culture Galvanized Around a Common Sustainability Mission
Purpose-DrivenCultureGalvanizedAround aCommonSustainability Mission GLOBESCAN SUSTAINABILITY SURVEY – 20 YEAR HISTORY Unilever Patagonia Interface IKEA Tesla Natura M&S Nestle
Slide 20: Climate Take Back
We commit to running our business in a way that creates a climate fit for life – and we call on others to do the same.We are the only company that sells all of our flooring as carbon neutral and we expect to demonstrate that industry can operate with carbon negative business models. Purpose-Driven C
Slide 21: Moving Toward a Carbon Negative Business Model
7 k g 2 k g UNITED STATES MANUFACTURED CARPET TILE CARBON FOOTPRINTCradle-to-Gate, from raw material extraction through manufacturing Moving Toward a Carbon Negative Business Model It is possible to make a product with the potential to reverse global warming. Proof Positive Carpet Tile Prototype CO2
Slide 22: Financial Performance
wn Financial~ ———— ~Performance.
Slide 23: Targets
Grow Revenue at 2x the IndustryBuild Industry Leading Gross Margins Manage SG&A Spend While Investing in Our Brand & Growth DriversEPS Growth 2x – 2.5x Revenue Growth Targets
Slide 24: GAAP Financial Results
page 24 GAAP Financial Results ($ in millions) Net Sales Gross Profit % of Net Sales SG&A Expense % of Net Sales Operating Income % of Net Sales Net Income % of Net Sales EPS (Diluted) 2016 $266.2 $239.5 11.1% 101.8 90.0 13.1% 38.2% 37.6% | 67 bps 71.2 63.8 11.6% 26.8% 26.6% 11 bps 30.6 6.4 379.8% 1
Slide 25: Adjusted Financial Results
* See Appendix for a reconciliation on Non-GAAP figures Adjusted Financial Results*
Slide 26: Revenue Growth
Revenue Growth Q4 ORGANIC SALES*($ in millions) 11% Growth FYE ORGANIC SALES*($ in millions) 5% Growth 5% Growth * See Appendix for a reconciliation on Non-GAAP figures Organic Sales were up 11% in the fourth quarter and were up 5% for the yearCarpet tile and LVT sales contributed relatively equally
Slide 27: Gross Margin Expansion
Gross Margin Expansion GROSS MARGIN(Gross Profit as a % of Net Sales) Gross margin continues to improve as we implement productivity initiatives and effectively manage input cost inflation
Slide 28: SG&A Management
SG&A Management SG&A % of NET SALES(SG&A Expense as a % of Net Sales) Effective SG&A management has started to generate margin expansion
Slide 29: Profitability
Profitability OPERATING MARGIN*(Operating Income and Adjusted Operating Income as a % of Net Sales) * See Appendix for a reconciliation on Non-GAAP figures Our value creation strategy is yielding results on the P&L Solid sales growth, productivity initiatives and SG&A control are generating operatin
Slide 30: GAAP Earnings Per Share
GAAP Earnings Per Share EARNINGS PER SHARE(Diluted Earnings Per Share)
Slide 31: Adjusted Earnings Per Share
Adjusted Earnings Per Share ADJUSTED EARNINGS PER SHARE*(Adjusted Diluted Earnings Per Share) * See Appendix for a reconciliation on Non-GAAP figures Our value creation strategy is generating double digit Adjusted EPS growth 14% CAGR
Slide 32: Creating Value for Shareowners
Creating Value for Shareowners 1-YEAR STOCK PRICE PERFORMANCE Based on stock prices from 12/30/2016 through 12/29/2017 19% 28% 36% 25%
Slide 33: Capital Structure
ENDING CASH BALANCE($ in millions) TOTAL DEBT($ in millions) NET DEBT*($ in millions) NET DEBT* / TOTAL CAPITAL * See Appendix for a reconciliation on Non-GAAP figures Capital Structure
Slide 34: Investment Highlights: Who We Are
Investment Highlights: Who We Are a leadingglobal provider of commercial modular flooring solutions the most valuable brand in the flooring category strongest global sales & marketing capabilities global manufacturing footprint and industry-leading gross margins an engaged, customer-centric culture,
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 vs Renovation
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