Slide 1: Interface, Inc. Investor Presentation February 2006
I N T E R F A C E Interface, Inc. Investor Presentation February 2006
Slide 2: Forward Looking Statements
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 believe
Slide 3: Who is Interface?
Who is Interface? Global Inventor First Mover in Sustainability Design Leader Modular Centric Segmented Approach Made to Order Philosophy Manufacturing Capabilities on Four Continents Industry Leader in Design and Fashion Desires to Become “The Flooring of Choice” Unique “Make-to-Order” Model Histor
Slide 4: Focus on Core Modular Markets
66% 12% 2% 20% Over the Past Three Years, Interface Has Focused on its Core Modular Markets …99% Commercial 1% Residential68% Corporate Office 32% Non-Corporate90% Refurbishment 10% New Construction Interface Portfolio (2002) 90% Commercial 10% Residential50% Corporate Office 50% Non-Corporate Offic
Slide 5: Segmented Approach: Lessened Dependence on Commercial Office Market
Segmented Approach …Through Segmentation We Have Lessened Our Dependence on the Commercial Office Market 64% 58% 54% 49% 49% 36% 42% 46% 51% 51% 0% 25% 50% 75% 100% 2001 2002 2003 2004 2005Americas Modular Office vs. Non-Office Sales Mix Percentage (2001 -2005)2001-2004 U.S. Modular -Office Segment
Slide 6: Interface Continues to be the First in Innovation
Interface Continues to be the FIRST in Innovation …1.INVENTED carpet tile In Europe -1950’s 2. PIONEERED The modular concept In the U.S.-1970’s 3. FIRST To move away from the monolithic broadloom look 4. FIRST In the industry to recognize the importance of sustainability 5. FIRST to introduce PLA (b
Slide 7: Interface Ranked Against Competitors on Service, Quality, Design, Performance, Value
SERVICE QUALITY DESIGN PERFORMANCE VALUE 1. INTERFACE 1. INTERFACE 1. INTERFACE 1. INTERFACE 1. INTERFACE SHAW CONTRACT 2. BPS 2. BPS 2. LEES SHAW 2. BENTLEY PRINCE 3. SHAW CONTRACT SHAW 3. BPS 2. LEES STREET (BPS) 4. LEES ATLAS SHAW PATCRAFT 3. J&J5. KARASTAN 3. INVISION 4. MANNINGTON 3. BPS PATCRA
Slide 8: Make-to-Order Philosophy
Make-to-Order Philosophy Interface Maintains a Strong Competitive Advantage Through its Made to Order Philosophy Interface Operational Model INVENTORY TURNS % MADE TO ORDER Americas Modular 1 120% 100% Asia Pacific Modular Europe Modular Fabrics Americas Broadloom1.Increases speed to market 2.Offers
Slide 9: Global Manufacturing Capabilities
Global …and Global Manufacturing Capabilities Guilford, ME (Panel & Upholstery) LaGrange, GA (Modular)18 Manufacturing Facilities Worldwide Yorkshire, England (Fabrics & Modular) Picton, Australia (Modular) Belleville, Canada (Modular) Chonburi, Thailand (Modular) City of Industry, CA (Broadloom) Ho
Slide 10: Leader in Sustainability
IMPACT to Interface •Galvanized a culture of higher purpose • Creates goodwill in the marketplace • 91% of designers prefer recycled products • Breakthrough product innovation and design based on sustainability pursuits • Terratex (100% recycled) is now 66% of U.S. fabric sales • $8M contract solidi
Slide 11: The Turnaround Story: Where Have We Been?
…The Turnaround Story Where Have We Been?
Slide 12: 2001 Was the Start of an Unprecedented Downturn in the Office Market
70008000900010000110001200013000140002001 Was the Start of an Unprecedented Downturn in the Industry …The Office Market Rebound has Now Begun !!! US Office Furniture Market TTM Shipments 36% decline from Peak to Trough (2000 -2003)01/9509/05Source: Raymond James, BIFMAPEAK January 2001 (13,350)LOW N
Slide 13: How Did We Do? Strategy of Survival
How Did We Do …?…As a Result, Interface was Forced Into a Strategy of Survival, In Order to Build a Foundation for Long Term Growth Invest and exploit the global modular opportunity Return broadloom and fabrics to profitability Execute non-strategic divestitures Capitalize on our position in sustain
Slide 14: Interface Weathered the Storm: Turnaround Timeline
US and Asia Pacific modular businesses have RECORD year!!! Interface “Weathered the Storm” and is Poised for Long Term Growth Divested Re:Source Americas (15 Owned dealers)Refinanced $135M Senior-Subs Developed and launched I²campaign (random products)Launched Interface residential businesses Began
Slide 15: Poised for Growth
Poised for Growth In The Survival Period, Interface Built a Foundation for Future Growth …Improved liquidity Increased share in the corporate office market Executed market segmentation Accelerated the acceptance Of modular carpet Established positive sales and profitability trends in Europe Establis
Slide 16: The Strategy Has Changed: From Survival to Growth
GROWTH (2006-2008 )Long-term focused Drive modular acceptance Create brand awareness Market expansion Capitalize on synergies Invest in capacity Reduce overall debt Drive shareholder value The Strategy has Changed, Interface is Now on the Offensive …SURVIVAL (2002-2005) Short term focused Protect th
Slide 17: Marketplace Momentum and Opportunities for Growth
How are We Positioned …?Where are Our Opportunities …?The Marketplace Has Momentum and Interface is Positioned to Capture the Opportunities for GROWTH …Modular Carpet -accelerates acceptance in ALL flooring segments Segmentation -Hospitality, Healthcare, Retail and Education Emerging Markets -China,
Slide 18: Becoming the Flooring of Choice: An Introduction to Carpet Tile
…Becoming the Flooring of Choice An Introduction to Carpet Tile
Slide 19: Driving Acceptance of Modular Carpet Across All Categories
Interface is Changing “The Game”-Driving the Acceptance of Modular Carpet Through Segmentation into ALL Categories MARKET SIZE CURRENT MODULAR PENETRATION 50% 0% $2B Specified Corporate Office Segment Non-Corporate Specified Market $ 800M $ 25BSpecified Commercial Soft Floorcovering Market -ALL Segm
Slide 20: Modular Carpet a Hot Product for Architects and Designers
Modular Carpet Continues to be a “Hot Product” for Architects and Designers Because of its Design and Functional Benefits 2005 2004 2003 Corporate 81% 63% 75%Tenant Improvement 67% N/AN/A Healthcare 64% 46% 25% Education 60% 54% 28% Retail 43% 35% 16% Hospitality 43% 26% 5% Public Spaces 47% 6% 7% D
Slide 21: Introduction to Carpet Tile: Fusion Bonded Cut Pile
21•Fusion bonded •Open office plan emerges • Cut pile only • Pricing premium Introduction to Carpet Tile Fusion Bonded -Cut Pile Products are Introduced in the 1970’s U S$ (000’s)* Total Sales from Carpet Tile manufacturers in the United States
Slide 22: Raised Floor Demonstrates Functionality of Modular Carpet
•Open office • Raised floor function of modular •Flat wire cable • Printed • Limited competitors Introduction to Carpet Tile Raised Floor Demonstrates the Functionality of Modular Carpet US$ (000’s)* Total Sales from Carpet Tile manufacturers in the United States
Slide 23: Tufted Products Enter the Market
•Tufted tiles enter market • New competitors •Lower price • Interface late to change Introduction to Carpet Tile Tufted Products Enter the Market as Competition Stiffens US $ (000’s)* Total Sales from Carpet Tile manufacturers in the United States
Slide 24: New Market Segments Introduced to Carpet Tile
•Solution dyed tufted pattern • Mass customization •Speed to market • New market segments • Sustainability-Ray Anderson’s vision Introduction to Carpet Tile New Market Segments are Introduced to Carpet Tile US$ (000’s)* Total Sales from Carpet Tile manufacturers in the United States
Slide 25: Design Elements of Modular Carpet Celebrated
•Celebrating the square • Quarter turn •Embracing seams •Mixing patterns Introduction to Carpet Tile The Design Elements of Modular Carpet Begin to be Celebrated US$ (000’s)* Total Sales from Carpet Tile manufacturers in the United States
Slide 26: Interface Launches Entropy
•Entropy • Inspired by nature •Entropy patent • Modular takes share of commercial market U.S. Patent 6,908,656 Introduction to Carpet Tile Functionality and Design Come Together as Interface Launches Entropy US$ (000’s)* Total Sales from Carpet Tile manufacturers in the United States
Slide 27: Poised for Growth: Where Are We Going?
…Poised for Growth Where Are We Going …?
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Slide 35: Significant Top-Line Growth Despite Sluggish Office Market
$1,017 $876 $745 $767 $881 $986 $0 $200 $400 $600 $800 $1,000 $1,200 2000 2001 2002 2003 2004 2005 Interface Achieved Significant Top-Line Growth, Despite a Sluggish Corporate Office Market …US$ (000’s)Growth occurred through the execution of Interface’s strategic platforms Interface Net Sales Reven
Slide 36: Double Digit Operating Income Growth
4.52 4.9 31.4 60.78 240.8 32.7 33.3 34.1 31.5 54.6 22.4 6.2-$0 $40 $80 $120 $160 2001 2002 2003 2004 2005…That resulted in DOUBLE DIGIT Operating Income Growth !!! Interface Gross Profit and Gross Profit % of Net Sales Interface SG&A Totals and SG&A % of Net Sales Restructuring Charges Interface EBI
Slide 37: Interface Modular Net Sales and Operating Profit Margin
TARGET Operating Income Percentage at 14%…Interface is shaping the modular carpet category Interface Worldwide Modular Net Sales and Operating Profit Margin (2001 -2005) Interface is the Worldwide Leader in the Design and Manufacture of Carpet Tiles …$ in Millions % Operating Profit Margin Modular O
Slide 38: Bentley Prince Street Returned to Profitability
$141 $115 $110 $119 $125 0 20 40 60 80 1001 20 14 01 60 2001 2002 2003 2004 2005-15%-10%-5% 0% 5% 10% 15% 20% Bentley Prince Street has Returned to Profitability …Poised to Take Advantage of the Corporate Office Rebound Bentley Prince Street Net Sales and Operating Profit Margin 2001 -2005 $ in Mill
Slide 39: Bentley Prince Street Returned to Profitability
$141 $115 $110 $119 $125 0 20 40 60 80 1001 20 14 01 60 2001 2002 2003 2004 2005-15%-10%-5% 0% 5% 10% 15% 20% Bentley Prince Street has Returned to Profitability …Poised to Take Advantage of the Corporate Office Rebound Bentley Prince Street Net Sales and Operating Profit Margin 2001 -2005 $ in Mill
Slide 40: Investment Thesis: Why Interface?
Investment Thesis, Why Interface …?The U.S. office market is beginning to rebound-Indications are that we are in the early days (second year) of the recovery with tremendous pent-up demand, which should create a robust office market Carpet Tile is reaching the “tipping point” in the commercial marke
Slide 41: We Don't Know How Far Modular Can Go
…We Don’t Know How Far Modular Can Go