Investor Presentation2019
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 reflected in these forward-looking statements are reasonable, the Company can give no assurance that these expectations will prove to be correct or that savings or other benefits anticipated in the forward-looking statements will be achieved. Important factors, some of which may be beyond the Company’s control, that could cause actual results to differ materially from management’s expectations include the matters discussed under the heading “Risk Factors” included in the Company’s most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission, which discussions are hereby incorporated by reference. Forward-looking statements speak only as of the date made. Forward-looking statements in this presentation include, without limitation, the information set forth on the slide titled “Growth and Value Creation Strategy”, the section of this presentation titled “Growth and Value Creation” and the slide titled “Targets”. Other forward-looking statements can be identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” “target,” and similar expressions. The Company assumes no responsibility to update or revise forward-looking statements and cautions listeners and meeting attendees not to place undue reliance on any such statements. Forward Looking Statements
Interface at a Glance Interface is a leading global provider of commercial flooring solutions including carpet tile, luxury vinyl tile (LVT) and performance rubber flooring. * * * Corporate* Non-Office Headquartered in Atlanta, GASeven manufacturing locations on four continents4,500 global employeesSales in over 110 countries Note: Geographic breakdown and segment figures represent proforma FYE 2018 sales for Interface and nora combined* See Appendix for a reconciliation of Non-GAAP figures
Investment Highlights: Who We Are leadingglobal provider of commercial flooring solutions most valuable brand in the flooring category strongest global sales & marketing capabilities global manufacturing footprint and industry-leading gross margins engaged, customer-centric culture, focused on performance and galvanized around our sustainability mission
Grow the CoreCarpet Tile Business Build a 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 vision is to become the world’s most valuable interior products & services company
Interface Positioning InterfacePositioning
GLOBAL COMMERCIAL FLOORING SEGMENT (in Billions) Source: Management estimates Leading Global Provider of Flooring Solutions Interface participates in the $35 Billion Global Commercial Flooring segment We are the global share leader in the $4.6 Billion Carpet Tile segment which continues to take share from broadloom We entered the high growth $3.0 Billion LVT segment in 2017 We entered the $0.9 Billion Rubber flooring segment with our acquisition of nora, the category leader $9.8B $10.1 $3.0 $0.9 $2.7 $4.7 $2.9 $5.4 $4.6
GLOBAL COMMERCIAL FLOORING: SEGMENT SIZE vs FORECAST GROWTH and GROSS MARGIN Participating in Attractive Commercial Flooring Segments Interface serves growing segments of hard and soft surface with the highest margins Source: Management estimates
GLOBAL CARPET TILE SEGMENT BY CHANNEL Premium Player in the Specified Channel 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 are highly influenced by Architects & Designers INTERFACE GLOBAL SHARE OF CARPET TILE PRICE CATEGORIES Source: Management estimates Other
Carpet TileBiomimicry-inspired random design (i2)High recycled content No glue installation (TacTiles®)Carbon neutral (Carbon Neutral Floors™)Faster, more profitable installation for contractorsEasily recycled (ReEntry® program)Luxury Vinyl Tile (LVT)Creative design freedomComplements and enhances our carpet tile portfolio No transition strips needed Same sizes as our carpet tilesHigh acoustic value (Sound Choice™ backing) Carbon neutral (Carbon Neutral Floors™)Rubbernorament® - sheet rubbernoraplan® - modular rubber tilesIdeal for hygienic, safe flooring applicationsExtremely durable with strong chemical resistance Carbon neutral (Carbon Neutral Floors™) Attractive Product Portfolio
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 Offering
Global Sales and Manufacturing Platform Sales in over 110 countries1,100 sales & marketing professionalsGlobal account management Seven manufacturing locations on four continentsGlobal supply chain managementUnique blend of efficiency and customization Note: Figures represent proforma FYE 2018 for Interface and nora combined Carpet Tile Manufacturing Facility Showroom Location AMERICAS55%of Net Sales EMEA30%of Net Sales ASIA-PACIFC15% of Net Sales Rubber Manufacturing/Distribution Facility
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 Second largest market for rubber HOSPITALITYGuest rooms, corridors and public spacesNamed the brand standard or alternate at Hilton, Marriott, IGH and Choice Hotels properties RETAILRetail and bank branchesSignificant opportunity for broadloom conversionHigh penetration of LVT Note: Figures represent proforma FYE 2018 sales for Interface and nora combined HEALTHCAREHospitals, MOB, Assisted Living and Senior LivingLargest rubber market based on hygienic properties, chemical resistance and durability
Growth andValue Creation
Grow the CoreCarpet Tile Business Build a 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 vision is to become the world’s most valuable interior products & services company
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 product portfolio – Expand our portfolio to increase the addressable marketLead the market in design and innovation – Continue to introduce innovative new products that energize and inspireContinue to develop brand love, commanding the strongest Net Promoter Score among A&D and End Users
Build a Resilient Flooring Business Continue penetrating the high growth LVT segment, building on successful global LVT launchIntegrate nora® rubber flooring into our product portfolioLeverage innovation pipelineExpand global participationStrategically expand product portfolio
Resilient Flooring: nora Acquisition nora is a leading global manufacturer of commercial rubber floorcovering systems for healthcare, education, life sciences, public buildings and other end markets
Source: Management estimates GLOBAL COMMERCIAL FLOORING: SEGMENT SIZE vs FORECAST GROWTH and GROSS MARGIN nora is a Global Leader in Performance Flooring nora is the leader in the nearly $1B rubber flooring category of the $34B global commercial flooring industryRubber flooring is ideal for applications that require hygienic, safe flooring with strong chemical resistance, and it is extremely durable compared to other flooring alternatives
Interface and nora Together * * * * * * + * * * Americas EMEA APAC Americas EMEA APAC * * * Note: Figures represent proforma FYE 2018 sales for Interface and nora combined Geographic Reach Segmentation excluding nora
Execute Supply Chain Productivity Execute Troup County Optimization plan which we expect to yield annualized savings of $30MImplement a dynamic yarn strategyContinue to deliver on productivity pipeline initiatives
Optimize SG&A Resources Repurpose spend toward growth initiatives and the highest ROIStage gating of key investments Leverage Interface’s purpose-driven culture
Purpose-DrivenCultureGalvanizedAround aCommonSustainability Mission GLOBESCAN SUSTAINABILITY SURVEY – 20+ YEAR HISTORY Unilever Patagonia Interface IKEA Tesla Natura M&S Nestle
We commit to running our business in a way that creates a climate fit for life – and we call on others to do the same.We expect to demonstrate that industry can operate with carbon negative business models. As a first step, we are the first global flooring manufacturer to offer carbon neutral carpet tile and LVT across our entire product range. Purpose-Driven Companies Outperform their Peer Sets ENERGY USE 43% RENEWABLE ENERGY 88% GHG EMISSIONS 96% WASTE TO LANDFILL 91% WATER INTAKE 88% RECYCLED & BIOBASED MATERIALS 58% PRODUCT CARBON FOOTPRINT 66% Reduction versus 1996 Baseline CLIMATE TAKE BACK
7 k g 2 k g Moving Toward a Carbon Negative Business Model It is possible to make a product with the potential to reverse global warming. CO2 Proof Positive Carpet Tile Prototype
FinancialPerformance
Grow Revenue at 2x the IndustryBuild Industry Leading Gross Margins Manage SG&A Spend While Investing in Our Brand & Growth DriversEPS Growth 2x – 2.5x Revenue Growth Targets
GAAP Financial Results
Adjusted Financial Results* * See Appendix for a reconciliation on Non-GAAP figures
Organic Sales Growth FYE ORGANIC SALES*($ in millions) Q4 ORGANIC SALES*($ in millions) Organic Sales were up 7% in 2018 7% Growth * See Appendix for a reconciliation on Non-GAAP figures 2% Growth
Adjusted EBITDA Growth FYE ADJUSTED EBITDA*($ in millions) Q4 ADJUSTED EBITDA*($ in millions) Adjusted EBITDA was up 32% in the fourth quarter and up 22% in 2018 22% Growth * See Appendix for a reconciliation on Non-GAAP figures 32% Growth
Adjusted Earnings Per Share EARNINGS PER SHARE Our value creation strategy is generating double digit Adjusted EPS growth 17% CAGRAdjusted EPS (Diluted) * See Appendix for a reconciliation on Non-GAAP figures
ENDING CASH BALANCE($ in millions) TOTAL DEBT($ in millions) NET DEBT*($ in millions) NET INCOME($ in millions) Key Figures * See Appendix for a reconciliation on Non-GAAP figures
ADJUSTED EBITDA*($ in millions) NET DEBT / ADJUSTED EBITDA* Key Figures (continued) * See Appendix for a reconciliation on Non-GAAP figures Total Debt / Net Income 10.6x 2.9x 5.0x 4.3x 12.3x 11.8x
Capital Allocation for Value Creation Interface is investing in the business to fuel our value creation strategyWe returned $30M to shareholders in 2018 via dividends and stock repurchases Strategic Acquisitions: $401MAcquired nora systems in August 2018 Capital Expenditures: $55MMaintenance capital expendituresTroup County Optimization Dividends: $15MQuarterly dividend of $0.065 per share Stock Repurchases: $14MRepurchased 615,000 shares in Q1 2018
Investment Highlights: Who We Are leadingglobal provider of commercial flooring solutions most valuable brand in the flooring category strongest global sales & marketing capabilities global manufacturing footprint and industry-leading gross margins engaged, customer-centric culture, focused on performance and galvanized around our sustainability mission
Appendix Appendix
Appendix: Reconciliation of Non-GAAP Figures
Appendix: Reconciliation of Non-GAAP Figures