Slide 1: Interface Investor Presentation March 2009
Interface Investor Presentation March 2009
Slide 2: Forward Looking Statements
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 belie
Slide 3: Presenters
3 Presenters Daniel Hendrix § President and Chief Executive Officer Patrick Lynch § Senior Vice President and Chief Financial Officer
Slide 4: Positioning Interface for the Long-Term
4 Positioning Interface for the Long-Term § Interface is leading the secular shift to modular carpet as it moves from a niche to a category. § Interface is the largest and only global manufacturer of modular carpet with a presence on four continents. § Interface has a segmented sales portfolio with
Slide 5: Current Realities
5 Current Realities § Our operating structure was built for a $1 billion+ revenue base, which has been right- sized to meet current demand through our recent restructuring plans. § A secular shift to carpet tile in the commercial markets coupled with emerging geographic regions represents a partial
Slide 6: Interface Brands - Most Recognized in the Industry
6 Interface Brands - Most Recognized in the Industry
Slide 7: Interface Growth Platforms and Value Drivers
7 Profitability Protection First Mover in Sustainability Rapid Innovation, Leading Brands and Designs Global Make-to-Order Manufacturing and Local Distribution Focus on the Modular Core Invest in the Growth of Emerging Markets Grow a Residential Brand Lead the Secular Shift through Segmentation Grow
Slide 8: Modular Carpet is Becoming the Category for Commercial Flooring
8 4 1 2 3 5 6 7 Modular Carpet is Becoming the Category for Commercial Flooring - Secular Shift Modular Core MODULAR carpet means NO glue, NO pad MODULAR lowers the cost of change MODULAR produces less waste MODULAR means faster and more profitable installations for contractor MODULAR is easier to r
Slide 9: Modular Carpet Now Represents 91% of Interface Sales
9 Modular Carpet Now Represents 91% of Interface Sales by Business Type Modular Core Divested Raised Access Flooring Divested European Fabrics Divested N. American Fabrics Divested European Broadloom Divested Installation & Maintenance Divested Vinyl Matting
Slide 10: Over the Past Five Years, Interface Has Focused on its Core Modular Business
10 Modular Core Over the Past Five Years, Interface Has Focused on its Core Modular Business 98% Commercial 2% Residential 70% Corporate Office 30% Non-Corporate Office 90% Refurbishment 10% New Construction 95% Commercial 5% Residential 60% Corporate Office 40% Non-Corporate Office 90% Refurbishmen
Slide 11: U.S. Modular Carpet Sales: From a Niche to a Category
11 U.S. Modular Carpet Sales Specified Commercial Market ($ in millions) What if modular carpet reached 60% market share of the commercial market by 2020? Modular Core Functionality and Design Create a Secular Shift From a Niche to a Category Source: Invista, Carpet and Rug Institute, Catalina Resea
Slide 12: U.S. Commercial Market Opportunity
12 Source: 2007 Floor Focus Magazine. U.S. Floorcovering Opportunity 2008 Specified Commercial Market 50% 26% U.S. Commercial Market Opportunity 34% ($ in Billions) Floor Focus Top 250 Design Survey 2008: Hot Products Modular Core $1B Carpet Tile Penetration $2B $3B Carpet Tile Penetration Carpet Ti
Slide 13: European Market Opportunity
13 Carpet Tile Penetration of the European Contract Soft Flooring Market European Market Opportunity 36% 9% 34% 33% 22% (millions of square meters) Modular Core There is significant opportunity for growth as Interface continues to penetrate major markets across Europe ~26% Penetration of the Europea
Slide 14: Asia-Pacific Market Opportunity
14 Carpet Tile Penetration of the Asia-Pacific Commercial Carpet Market Asia-Pacific Market Opportunity 25% 40% 25% 39% 70% 26% 24% Modular Core Strong penetration of Chinese and Japanese markets with significant opportunity for growth in other major Asian and Australian markets ~34% Penetration of
Slide 15: Segmented Market Approach
15 Corporate Office Government Religious Establishments Hospitals Medical Office Buildings Hotels/Resorts Casinos Stores Malls K-12 Colleges & Universities Assisted Living Boutique Turnkey Solutions Segmented Market Approach Institutional Healthcare Hospitality Retail Education Commercial Segmentati
Slide 16: Strong Growth from Non-Corporate Segments
16 Sales from Mature Corporate Office Market Strong Growth from Non-Corporate Segments Sales from Non-Corporate Office Market Segmentation 11% Growth (Education, Government, Healthcare, Hospitality, Retail) 16% Growth 12% Growth 15% Growth 20% Growth 6% Decline
Slide 17: Corporate Office Segment
17 Corporate Office Segment Segmentation
Slide 18: Retail Segmentation
18 Retail Segmentation
Slide 19: U.S. Commercial Market Sentiment: Retail
19 U.S. Commercial Market Sentiment Segmentation Retail Bearish Neutral Bullish Architect and Designer Sentiment of the U.S. Commercial Market Source: DesignIntelligence Corporate Office = 46% of Interface Americas Modular Business Non-Corporate Office = 54% of Interface Americas Modular Business Am
Slide 20: Education Segmentation
20 Education Segmentation Higher Education K-12 Education
Slide 21: U.S. Commercial Market Sentiment: K-12 Education
21 U.S. Commercial Market Sentiment Segmentation K-12 Education Architect and Designer Sentiment of the U.S. Commercial Market Source: DesignIntelligence Americas Modular Education: 25% growth year-over-year Bearish Neutral Bullish
Slide 22: Hospitality - Interface Hospitality Installations
22 Hospitality - - Interface Hospitality Installations Segmentation
Slide 23: Hospitality Segmentation
23 Hospitality Segmentation
Slide 24: Healthcare Segmentation
24 Healthcare Segmentation
Slide 25: U.S. Commercial Market Sentiment: Hospitality and Healthcare
25 U.S. Commercial Market Sentiment Segmentation Hospitality Architect and Designer Sentiment of the U.S. Commercial Market Source: DesignIntelligence Americas Modular Healthcare: 9% growth year-over-year Americas Modular Hospitality: 22% growth year-over-year Bearish Neutral Bullish
Slide 26: Government Segmentation
26 Government Segmentation Public Spaces Library
Slide 27: Europe Segmentation Strategy
27 Government Education Hotels Retail Healthcare Total UK 1.7 9.6 11.3 France 1.1 1.6 1.4 4.2 Holland 1.2 0.7 0.6 2.5 Spain .8 0.3 1.3 2.4 Poland 1.5 2.3 0.3 4.1 Ireland 0.1 0.2 0.2 0.4 Total 6.5 14.5 3.1 0.6 24.8 Europe Segmentation Strategy Segmentation (million square meters) A segment potential
Slide 28: Successfully Penetrating Emerging Markets
28 Successfully Penetrating Emerging Markets Sales from Emerging Markets Emerging Market Opportunities Emerging Markets Emerging Markets represent a significant growth opportunity (Latin America, South America, Eastern Europe, China, India, Middle East and Africa) Emerging Markets 31% Growth 38% Gro
Slide 29: FLOR is Creating a Category: Modular Carpet for the Home
29 FLOR Sales by Channel FLOR is Creating a Category “Modular Carpet for the Home” Carpet Tile Penetration of the $11B U.S. Residential Floorcovering Market Residential Opportunity Area Rugs 41% Other Floorcoverings 58% Carpet Tile <1% ↑ 44% ↑ 4% ↑ 39% ↑ 121% ↑ Online Sales Y-o-Y Growth Orders up 15
Slide 30: FLOR is Expanding its Retail Presence
30 FLOR is Expanding its Retail Presence Residential Opportunity
Slide 31: Modular Goes in the Home
31 Modular Goes in the Home Residential Opportunity
Slide 32: Global Manufacturing Capabilities and Local Distribution
32 Global Manufacturing Capabilities and Local Distribution Global Make-to-Order Value Drivers N. Ireland Picton, Australia Manufacturing Facility LaGrange, Georgia Americas 55% of Sales 50% of Production Europe 34% of Sales 34% of Production Asia-Pacific 11% of Sales 16% of Production Note: Figures
Slide 33: The Made-to-Order Advantage
33 The Made-to-Order ADVANTAGE Interface Modular Businesses Percentage Make-to-Order Interface is the ONLY company with a “make-to-order” approach to the market Strong Competitive Advantage Through Make-to- Order Philosophy Global Make-to-Order Value Drivers 1. Increases speed to market 2. Promotes
Slide 34: Interface Leads with Innovation
34 Interface Innovation Interface Leads with INNOVATION Value Drivers Innovation & Design 1. INVENTED carpet tile in Europe (1950s) and PIONEERED the modular concept In the U.S. (1970s) 2. FIRST to move away from the monolithic broadloom look for carpet tile 3. FIRST to introduce a make-to-order off
Slide 35: TacTiles Sales Exceed $2 Million
35 TacTiles Sales Exceed $2 Million as We Drive “Glueless” Installation Value Drivers Innovation & Design Sales of TacTiles * ($ in mms) * Includes TacTiles and TacTiles dispensers $0.2 $1.2 $2.1 TacTiles have led to the development of Moisture Guard 2.0 moisture vapor barrier
Slide 36: Market Leader in Product Design and Fashion
36 Market Leader in Product DESIGN and FASHION Value Drivers Innovation & Design
Slide 37: Brands that Deliver High End Functionality, Quality and Design
37 Brands that Deliver Our Promise of High End Functionality, Quality and Design Favorite Carpet Manufacturers Service Quality Design Performance Value Value Drivers Innovation & Design Source: 2008 Floor Focus Magazine (U.S. Market) Interface Rated the “Best Overall Business Experience” for the 5 t
Slide 38: Interface Recognized as the Leader in Sustainability
38 Interface Continues to be Recognized as the Leader in Sustainability Sustainability 2007 Globescan Survey Floor Focus Green Leaders 2008 Interface received “Green Kudos” for closed loop processes and recycled content Value Drivers Stakeholder Engagement MissonZero.org Source: 2008 Floor Focus Mag
Slide 39: Leader in Sustainability: Energy Use and Innovation
39 Interface Continues to be Recognized as the Leader in Sustainability Sustainability Value Drivers Total Energy Use at Carpet Manufacturing Facilities (Btus per square yard) Energy from Renewable Resources at Carpet Manufacturing Facilities (percent of total energy use) Sustainability-Focused Inno
Slide 40: ReEntry and Cool Blue
40 ReEntry and Cool Blue Sustainability Value Drivers ReEntry Cool Blue
Slide 41: Right-sizing our Business
41 Right-sizing our Business Profitability Value Drivers Interface Headcount Cost Savings Initiatives ↓ Employees ↓ Employees ↓ 35% ↓ 10%
Slide 42: Interface, Inc. Financials
Interface, Inc. Financials
Slide 43: Net Sales and Operating Income (Continuing Operations)
43 Net Sales and Operating Income (Continuing Operations) * Consolidated Financial Results * See page 49 for a reconciliation of Operating Income from Continuing Operations ($ in millions) Operating Income Net Sales
Slide 44: Fiscal Year Performance
44 Fiscal Year Performance FYE Results * See page 49 for a reconciliation of EBITDA and EBIT and Diluted EPS from Continuing Operations
Slide 45: Net Sales, Gross Profit and Gross Profit %
45 Net Sales Gross Profit and Gross Profit % of Net Sales Interface Financial Results From Continuing Operations Net Sales Gross Profit Gross Profit % of Net Sales
Slide 46: SG&A Expense and Operating Income
46 SG&A Expense and SG&A % of Net Sales Operating Income and Operating Income % of Net Sales * Interface Financial Results From Continuing Operations SG&A Expense SG&A % of Net Sales Reported Operating Income Restructuring Charges Loss on Disposal ($1.9m) Operating Income % of Net Sales Goodwill Imp
Slide 47: Diluted Earnings Per Share (Continuing Operations)
47 Diluted Earnings Per Share (Continuing Operations) Interface Financial Results From Continuing Operations * See page 49 for a reconciliation of Diluted EPS from Continuing Operations
Slide 48: Key Credit Statistics
48 Key Credit Statistics (2007 data excludes the Fabrics Division) Net Debt/ EBITDA * Ending Cash Balance Net Debt * NOTE: Net Debt Excludes Securitization of $30M to $50M in 2003 * See page 49 for a reconciliation of Net Debt and EBITDA
Slide 49: Appendix: Reconciliation of Non-GAAP Financial Measures
49 Appendix: Reconciliation of Non-GAAP Financial Measures Net Debt (pg. 48) Operating Income from continuing operations (EBIT) (pg. 43, 44 and 46) EBITDA (pg. 44 and 48) EPS (pg.44 & 47)