Interface, Inc. · NASDAQ:TILE
Interface — Non-Deal Roadshow (December 2020)
35 slides from Interface's roadshow presentation, Dec 14, 2020
Slide 1: Sustainability – More Than a Commitment: ESG NDR Presentation
SUSTAINABILITY – MORE THAN A COMMITMENT ESG NDR PRESENTATION DECEMBER 14, 2020 DAN HENDRIX, CHIEF EXECUTIVE OFFICER BRUCE HAUSMANN, CHIEF FINANCIAL OFFICER
Slide 2: Forward Looking Statements and Non-GAAP Measures
2 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. Al
Slide 3: Investment Thesis
.99R}19}U] Investment Thesis
Slide 4: Interface at a Glance
4 Interface at a Glance Global Sustainability Leader All products are Carbon Neutral Only Company with Carbon Negative Products 7 manufacturing locations on 4 continents 4,100 global employees Sales in over 110 countries Over 1,100 Sales & Marketing professionals Americas EMEA APAC Corporate Office
Slide 5: Who We Are
5 Who We Are Leading global provider of commercial flooring: Carpet Tile, Modular Area Rugs, LVT, Rubber Strong brands with a history of innovation and a commitment to sustainability Engaged customer-centric culture focused on performance and galvanized around our sustainability mission Strong globa
Slide 6: Progress & Moving Forward
6 Progress & Moving Forward Note: Data as of 2018 1994 2010 2040 Carbon Negative Enterprise Our sustainability journey began in 1994, led by our founder, Ray Anderson. Mission Zero goal accomplished, as first flooring manufacturer to sell all carbon neutral products Prototype Proof Positive to view
Slide 7: Company Overview
7 Company Overview COMPANY • Best-in-Class ESG Company Initiatives ‒ First-ever carbon-negative carpet tile product, which is third party verified under EPD ‒ All products are carbon neutral • Strong commercial brands that lead in growth areas of the industry ‒ Recognized design leader in commercial
Slide 8: Participating in Attractive Commercial Flooring Categories
8 Wood Laminate LVT Other Resilient Ceramic Tile Carpet Tile Rubber Broadloom (4%) (2%) 0% 2% 4% 6% 8% 10% 12% 14% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% E s ti m a te d C A G R t h ro u g h 2 0 2 4 Gross Margin Bubble size = Global commercial value of category, 2019 Global Commercial Flooring Ca
Slide 9: Strong Cash Flow Profile
9 Strong Cash Flow Profile Historic Free Cash Flow / Free Cash Flow Conversion (1) Reduce Debt Reinvest in the Business Explore M&A Opportunities Return Excess Cash to Shareowners • Utilize excess cash to pay down debt • Optimize cost of capital and target Net Debt / Adjusted EBITDA < 2.0x • Invest
Slide 10: Expected Introduction of First Carbon Negative Carpet Tile in Q4 2020
10 Expected Introduction of First Carbon Negative Carpet Tile in Q4 2020 Recognized Global Leadership in Environmental Sustainability
Slide 11: Environmental, Social, and Governance (ESG)
Environmental, Social, and Governance (ESG)
Slide 12: 2019 Company Footprint
2019 Company Footprint 635,735 metric tons CO,e Total company emissions resulting Vig from Scopes 1, 2&3 15,115 metric tons CO,e Company emissions resulting from Scopes 1 & 2 (2.4%) 2019 Carbon Impact ~ 635,735 mtCO,e aves! Lr 9% Capt oot 4 Ente tenant sed pct Hi os rromedsoncee I Deen reesoen (6 Al
Slide 13: Continued Reductions in Environmental Impacts
13 Continued Reductions in Environmental Impacts 46% of materials in products sold are from recycled or bio-based sources 75% of energy used at manufacturing sites is from renewable sources tonnes of verified emission reduction credits retired through Carbon Neutral Floors 5.3M *At global carpet man
Slide 14: Programs and Partnerships
14 Note: Data as of 2019 pounds of post- consumer carpet collected and diverted into the most sustainable option 13.5M ReEntry program prompts reclamation process for recycling of carpet and other products. Net-Works program turns discarded fishing nets into supplemental income for communities and 1
Slide 15: Climate Take Back Mission
15 Climate Take Back Mission Short-term Goal: Launch first-ever carbon negative carpet tile by YE2020 Long-term Goal: Become a carbon negative enterprise by 2040 Offer the industry’s lowest carbon footprint products Path to Success: Invest in product innovation Seek new opportunities launched Q4 202
Slide 16: Product Innovation – The First Carbon Negative Carpet Tile
16 Product Innovation – The First Carbon Negative Carpet Tile Our goal is to make products with the lowest carbon footprint possible – products that go beyond neutral to help restore the health of the planet We’ve innovated ways to work with recycled content and bio-based materials – which has l
Slide 17: Purpose-Driven Culture Recognition
17 Purpose-Driven Culture Recognition 2020 UN Global Climate Action Awards 2020 GlobeScan/SustainAbility Leaders Survey Report Fast Company’s Most Innovative Companies of 2020 Corporate Knights' Green 50: Top Business Moves that Helped the Planet (2020) Sustainability Initiative of The Year 2020 (UK
Slide 18: Management Oversight
18 Management Oversight "At Interface, purpose and profits do not compete for resources. We believe in a purpose driven approach that creates value for all of our stakeholder groups equally, our employees, our customers, our shareholders, and the environment. While we have come a long way in my 37 y
Slide 19: Experienced and Diverse Board of Directors
19 Experienced and Diverse Board of Directors Joseph Keogh Chairman and CEO, Wood Partners Sheryl Palmer Chairman and CEO, Taylor Morrison Home Corporation Dwight Gibson Chief Commercial Officer, SPX FLOW K. David Kohler, President and Chief Executive Officer, Kohler Co John P Burke Chief Executive
Slide 20: Sustainability Measures
20 Sustainability Measures Anti-Corruption and Anti-Bribery Policy Corporate Governance Guidelines Majority Voting Director Resignation Policy Diverse Leadership Team and Board Ethics Practices Policy Gender Pay Gap Report Supplier Code of Conduct Code of Business Conduct and Ethics
Slide 21: Alignment and Engagement with ESG-focused Agencies
21 Alignment and Engagement with ESG-focused Agencies Interface is a signatory to the UN Global Compact. Our sustainability goals and activities are aligned with the UN Sustainable Development Goals (SDGs). GLOBESCAN SUSTAINABILITY SURVEY – 20+ YEAR HISTORY Unilever Patagonia IKEA Natura Nestle Dano
Slide 22: Financial Performance
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Slide 23: GAAP Financial Results
23 GAAP Financial Results ($ in millions, except EPS) Third Quarter Year to Date 2020 2019 2020 2019 Net Sales $279 $348 $826 $1,004 Gross Profit 102 138 314 395 % of Net Sales 36.7% 39.5% 38.0% 39.4% SG&A Expense 88 93 256 291 % of Net Sales 31.6% 26.8% 31.0% 29.0% Restructuring Charges (2) 1 (3) 1
Slide 24: Adjusted Financial Results
24 Adjusted Financial Results* * See Appendix for a reconciliation on Non-GAAP figures ($ in millions, except EPS) Third Quarter Year to Date 2020 2019 2020 2019 Net Sales $279 $348 $826 $1,004 Adjusted Gross Profit 104 139 318 400 % of Net Sales 37.2% 39.9% 38.5% 39.8% Adj SG&A Expense 75 93 233 29
Slide 25: Adjusted EBITDA Growth
25 Adjusted EBITDA Growth ADJUSTED EBITDA* ($ in millions) * See Appendix for a reconciliation on Non-GAAP figures $141 $152 $185 $197 $162 $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 2016 2017 2018 2019 LTM Q3 2020 Steady Adjusted EBITDA growth prior to COVID-19 Pandemic
Slide 26: Adjusted Earnings Per Share
26 Adjusted Earnings Per Share ADJUSTED EARNINGS PER SHARE (DILUTED)* Our value creation strategy is generating solid earnings * See Appendix for a reconciliation on Non-GAAP figures $1.03 $1.18 $1.49 $1.59 $1.34 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 $1.80 2016 2017 2018 2019 LTM Q3
Slide 27: Capitalization and Liquidity
27 0.7x 0.9x 2.9x 2.6x 2.9x 0.0x 0.5x 1.0x 1.5x 2.0x 2.5x 3.0x 3.5x 2016 2017 2018 2019 LTM Q3 2020 TOTAL DEBT ($ in millions) NET DEBT ($ in millions) NET DEBT / ADJUSTED EBITDA* Capitalization and Liquidity * See Appendix for a reconciliation on Non-GAAP figures ADJUSTED EBITDA* ($ in millions) $2
Slide 28: Interface’
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Slide 29: Close Alignment with the A&D Community
29 64% 47% 41% 38% 26% 20% 19% 15% 10% 9% 9% 6% 4% 3% 2% 1% Close Alignment with the A&D Community Source: Floor Focus 2020 Top 250 Design Survey – October 2020 Floor Focus’ Annual Survey of the Top 250 Designers Shows Interface is Well Positioned to Compete on Product Characteristics and in the Mos
Slide 30: Carbon Matters – To Us and To Our Customers
30 Carbon Matters – To Us and To Our Customers Sources: Review of annual reports and press releases for our top 30 global customers based on full-year 2019 sales; Natural Capital Partners September 2019 report “Deeds Not Words: The Growth of Climate Action in the Corporate World”; Perkins&Will websi
Slide 31: Management Team
31 Management Team Dan Hendrix President, CEO & Chairman of the Board CEO from 2001 – 2017, 2020; previous roles include executive vice president, CFO, treasurer Experience extends to virtually all aspects of the company’s business, but with a particular emphasis on strategic planning and financ
Slide 32: State of the Office
32 State of the Office 1. As of September YTD 2020 2. Per Gensler Study “Culture beats strategy every time, and we anticipate demand to pick up in the coming quarters and believe there will be a recovering office market in the second half of 2021.” • “Design for Distance” campaign launched to respon
Slide 33: SASB Disclosures
SASB Disclosures Energy Management in Manufacturing Management of Chemicals in Products Product Liteoyele Environmental Impacts Wood Supply chain Management MET (vegectendct Monae lay ‘reed ‘ore ao conratoas coarsi0a2 1 oro emrae conse 5072361 et ray n nance, 5 enketncnatcy sermnonse neh een noah te
Slide 34: Appendix: Reconciliation of Non-GAAP Figures
34 Appendix: Reconciliation of Non-GAAP Figures Note: Sum of reconciling items may differ from total due to rounding of individual components ($ in millions) Q3 2019 Q3 2020 YTD 2019 YTD 2020 Net Sales as Reported (GAAP) $348.4 $278.6 $1,003.5 $826.3 Impact of Changes in Currency - (5.6) - 1.9 Organ
Slide 35: Appendix: Reconciliation of Non-GAAP Figures
35 Appendix: Reconciliation of Non-GAAP Figures Note: Sum of reconciling items may differ from total due to rounding of individual components * Historical AEBITDA figures have been updated to reflect a change in depreciation and amortization values used to calculate AEBITDA. ($ in millions) Q1 2020