Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (November 2020)
34 slides from Interface's investor presentation, Nov 6, 2020
Slide 1: Investor Presentation November 6, 2020
Investor Presentation NOVEMBER 6, 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 the leader in commercial flooring. ($ in millions, except EPS) LTM Headquartered in Atlanta, GA Q3 2020 Net Sales $1,166 7 manufacturing locations on 4 continents Adj Operating Income* $126 Adj EPS (Diluted)* $1.34 4,100 global employees Net Debt* $476 Adj EBITDA*
Slide 4: Investment Thesis
Investment Thesis • Strong commercial brands that lead 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: – Selling system tr
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 m
Slide 6: Who We Are
Who We Are Design and Innovation Leader Focused on Solving Customer Problems Across Multiple Segments Engaged Strong brands customer-centric with a history Strong global culture focused on of innovation and a sales & marketing performance and commitment to capabilities galvanized around sustainabili
Slide 7: Interface is a Purpose-Driven Organization
Interface is a Purpose-Driven Organization Our Core Mission is to Lead a World-Changing Sustainability Movement Centered Around Climate Take Back While Also Executing on Four Strategic Pillars to Drive the Business Grow the Grow the Execute Optimize SG&A Carpet Tile Resilient Flooring Supply Chain R
Slide 8: Opportunities for Growth
Opportunities for Growth Broadloom Enhanced Share Continued Consumer Product Services as a Conversion of Dealer Growth in Presence via Innovation Differentiator Across Segments Discretionary Resilient FLOR 8
Slide 9: Interface Positioning
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Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: Diversified Customer Verticals
Diversified Customer Verticals CORPORATE OFFICE • Highest penetration of carpet tile vs broadloom • Global account management • Recurring renovations REVENUE BY SEGMENT • Ongoing opportunity in Emerging Markets Other Hospitality 8% EDUCATION 3% Consumer • K-12 and higher education Residential • Seco
Slide 16: Growth and Value Creation
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Slide 17: Interface is a Purpose-Driven Organization
Interface is a Purpose-Driven Organization Our Core Mission is to Lead a World-Changing Sustainability Movement Centered Around Climate Take Back While Also Executing on Four Strategic Pillars to Drive the Business Grow the Grow the Execute Optimize SG&A Carpet Tile Resilient Flooring Supply Chain R
Slide 18: 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 19: 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 20: 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 21: Radical Reductions in Environmental Impacts
Radical Reductions in Environmental Impacts 96% 89% 46% Fewer greenhouse gas Less water used to Of materials in the flooring emissions* make products* products we sell are from recycled or bio-based sources 74% 92% 75% Smaller product Less waste Renewable energy used at carbon footprint * sent to la
Slide 22: Carpet Tile Carbon Footprint Comparison
Carpet Tile Carbon Footprint Comparison 22
Slide 23: Product Innovation – The First Carbon Negative Carpet Tile
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 led
Slide 24: Financial Performance
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Slide 25: GAAP Financial Results
GAAP Financial Results ($ in millions, except EPS) Third Quarter Year to Date 2020 2019 2020 2019 Net Sales $279 $348 $826 $1,004 Gross Profit 102 138 314 395 % of Net Sales 36.7% 39.5% 38.0% 39.4% SG&A Expense 88 93 256 291 % of Net Sales 31.6% 26.8% 31.0% 29.0% Restructuring Charges (2) 1 (3) 1 Go
Slide 26: Adjusted Financial Results
Adjusted Financial Results* ($ 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 93 233 291 % of Net Sales 27.1% 26.8% 28.2% 29.0% Adjusted Operating
Slide 27: Adjusted EBITDA Growth
Adjusted EBITDA Growth • Adjusted EBITDA of $162 as of LTM Q3 2020 ADJUSTED EBITDA* ($ in millions) $225 $197 $200 $185 $175 $162 $152 $150 $141 $125 $100 $75 $50 $25 $0 2016 2017 2018 2019 LTM Q3 2020 * See Appendix for a reconciliation on Non-GAAP figures 27
Slide 28: Adjusted Earnings Per Share
Adjusted Earnings Per Share • Our value creation strategy is generating solid earnings ADJUSTED EARNINGS PER SHARE (DILUTED)* $1.80 $1.59 $1.60 $1.49 $1.40 $1.34 $1.18 $1.20 $1.03 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 2016 2017 2018 2019 LTM Q3 2020 * See Appendix for a reconciliation on Non-GAAP figu
Slide 29: Capitalization and Liquidity
Capitalization and Liquidity TOTAL DEBT NET DEBT ($ in millions) ($ in millions) $700 $700 $619 $596 $580 $538 $515 $525 $525 $476 $350 $270 $350 $230 $175 $175 $143 $105 $0 $0 2016 2017 2018 2019 Q3 2020 2016 2017 2018 2019 Q3 2020 ADJUSTED EBITDA* NET DEBT / ADJUSTED EBITDA* ($ in millions) $250 3
Slide 30: Financial Policy
Financial Policy • Investing in the business to fuel our growth strategy while upholding a disciplined approach to deleveraging CAPITAL DEPLOYMENT PHILOSOPHY • Utilize excess cash to pay down debt Reduce Debt • Optimize cost of capital and target Net Debt / Adjusted EBITDA < 2.0x Reinvest in the • I
Slide 31: Who We Are
Who We Are Design and Innovation Leader Focused on Solving Customer Problems Across Multiple Segments Engaged Strong brands customer-centric with a history Strong global culture focused on of innovation and a sales & marketing performance and commitment to capabilities galvanized around sustainabili
Slide 32: Interface
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Slide 33: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures ($ 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 Organic Sales $348.4 $273.1 $1,003.5 $828.2 Gross Profit as Reported (GAAP) $137.7 $102.2 $395.0 $313.
Slide 34: Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures YTD LTM ($ in millions) Q1 2020 Q2 2020 Q3 2020 Q3 2020 Q3 2020 Net Income as Reported (GAAP) ($102.2) $4.7 $5.9 ($91.5) ($75.1) Income Tax Expense (Benefit) 1.5 2.6 1.6 5.7 10.7 Interest Expense 5.6 5.0 5.4 16.0 21.5 Depreciation and Amortization (exclud