Slide 1: Interface Investor Presentation 2010
Interface’ Investor Presentation 2010
Slide 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 believes that the expectations ref
Slide 3: Presenters
Daniel Hendrix § President and Chief Executive Officer Patrick Lynch § Senior Vice President and Chief Financial Officer Presenters
Slide 4: Investment Highlights
§ Interface is leading the secular shift to modular carpet as it moves from a niche to a category with the leading global market share. § Interface is the largest global manufacturer of modular carpet with a presence on four continents (United States, England, Holland, Ireland, Thailand, China, Aust
Slide 5: Brands - Most Recognized in the Industry
Interface Brands - Most Recognized in the Industry
Slide 6: Strategic priorities and growth platforms
Leadership Position in Sustainability Global Make-to-Order Manufacturing and Local Distribution Rapid Innovation and Designs Invest in the Growth of Emerging Markets Grow a Consumer Brand Diversify End Use Markets Maintain Dominant Share in the Office Market Lead the Secular Shift of Modular Carpet
Slide 7: Modular Carpet is Moving from a Niche to a Category
1. 2. 3. 4. 5. 6. 7. 2009 Floor Focus U.S. Top 250 Design Survey: Hot Products Benefits of Modular Secular Shift Creative DESIGN freedom NO glue, NO pad LOWER COST to change Produces LESS WASTE FASTER and more PROFITABLE INSTALLATION for contractors Easier to RECONFIGURE and MAINTAIN Easily RECYCLED
Slide 8: Easy Repairs
Easy Repairs
Slide 9: Long-Term Strategy Focus on Organic Growth of Modular Carpet
Sales by Business Type 40% 92% Long-Term Strategy Has Been to Focus on Organic Growth of Modular Carpet Divested Raised Access Flooring Divested European Fabrics Divested N. American Fabrics Divested European Broadloom Divested Installation & Maintenance Divested Vinyl Matting Divested $500M in Reve
Slide 10: Functionality and Design Create a Secular Shift in Modular Carpet
Carpet Tile Share of U.S. Commercial Carpet Market ($ in millions) What if modular carpet reached 65% market share of the commercial market by 2020? Functionality and Design Create a Secular Shift in Modular Carpet From a Niche to a Category § Preferred interior design element § “Becoming the Floori
Slide 11: European Market Opportunity
Carpet Tile Penetration of European Contract Soft Flooring Market (millions of square meters) Significant Opportunity 8% 44% 24% 42% 24% 30% 23% 23% European Market Opportunity (Billions of square meters) 65% Penetration Carpet Tile Broadloom and Other Soft Flooring Source: BMW Associates and manage
Slide 12: Asia-Pacific Market Opportunity
Carpet Tile Penetration of the Asia-Pacific Contract Soft Flooring Market (millions of square meters) 28% 25% Asia-Pacific Market Opportunity ($ in millions) Carpet Tile Broadloom and Other Soft Flooring Source: BMW Associates and management estimates Secular Shift 65% Penetration
Slide 13: Significant Share of the Global Carpet Tile Market
Americas Europe & MEAI Australia/NZ Interface has a Significant Share of the Global Carpet Tile Market Secular Shift Source: BMW Associates and management estimates § Interface has significant market presence in key major markets § Interface has manufacturing, sales & marketing support on four conti
Slide 14: Diversified End Use Markets
Diversified End Use Markets Segmented Market Approach Growth Platforms
Slide 15: Current Portfolio and Target Portfolio
Current Portfolio Target Portfolio Diversify End Use Markets Growth Platforms Mature Office Market Non-Office Commercial Segments Emerging Markets Consumer
Slide 16: Capture the Rebound in the Corporate Office Segment
Modular Mature Corporate Office Sales U.S. Office Construction Starts Capture the Rebound in the Corporate Office Segment Growth Platforms Excludes Latin America, Eastern Europe, Russia, Middle East, Africa, India and NE Asia 23% 28% 18% 5% § U.S. office construction is expected to remain flat in 20
Slide 17: Strong Growth from Non-Corporate Segments
Modular Non-Office Commercial Sales Non-Office Commercial Sales by Segment Strong Growth from Non-Corporate Segments 15% 14% 4% 10% Growth Platforms
Slide 18: New Segment Opportunities - Main Street Commercial
Opportunity Main Street Commercial Market New Segment Opportunities - Main Street Commercial § Access to secondary Contract and Main Street commercial markets in smaller rural and suburban areas § Broadened reach in primary markets beyond specified market § Exploring several strategies to expand rea
Slide 19: New Segment Opportunities - Transportation
Benefits of Modular for Transportation $200M Airline Opportunity Southwest Airlines Green Plane New Segment Opportunities - Transportation § Single tile replace-ability § Longer Life construction § Highest standards of Smoke Toxicity with Nylon § Lighter weight than current carpet options § Quick re
Slide 20: Invest in Emerging Markets
Interface Target Emerging Markets Emerging Market Sales Invest in Emerging Markets Growth Platforms § Central America § South America § Eastern Europe § Russia § Middle East § Africa § India § China § Vietnam § Cambodia § Singapore § Indonesia § Philippines 38% 10% 31% 31%
Slide 21: Establishing Local Manufacturing in High Growth China Market
InterfaceFLOR Taicang Facility Benefits of China Manufacturing Plant Invest in Emerging Markets: Establishing Local Manufacturing in High Growth China Market Growth Platforms § Targeting LEED Silver certification for Office and Customer spaces § Expect to begin production by third quarter 2010 § Gre
Slide 22: Grow a Consumer Brand: Modular Goes in the Home
FLOR is… § A new way to think about floor covering § A new kind of customer experience § A new way to design for your life § A new standard in sustainable residential design Grow a Consumer Brand: Modular Goes in the Home Growth Platforms
Slide 23: FLOR Connects Directly with Consumers
catalog, online and in-store experiences bring the proposition to life for consumers Grow a Consumer Brand: FLOR Connects Directly with Consumers Growth Platforms
Slide 24: FLOR is Creating a Category: Modular Carpet for the Home
FLOR Sales by Channel 75% 77% 88% 90% of FLOR sales are generated Online and via Catalog 90% Grow a Consumer Brand: FLOR is Creating a Category: “Modular Carpet for the Home” % Direct Sales Percent of Total Growth Platforms
Slide 25: FLOR Store Opened
FLOR Store Highlights Grow a Consumer Brand: FLOR Store Opened § First store opened in Chicago in June 2009 § Opportunity to interact with the customer about the modular concept, design and sustainability § 8x10 grid allowing visitors to bring design ideas to life § Exceeded budget in 2009 § Explori
Slide 26: Global Manufacturing Capabilities and Local Distribution
Americas Europe & MEAI Asia-Pacific Global Manufacturing Capabilities and Local Distribution City of Industry, California Bangkok, Thailand Picton, Australia Current Manufacturing Facility LaGrange, Georgia 58% of Sales 51% of Production 30% of Sales 34% of Production 12% of Sales 15% of Production
Slide 27: Strong Competitive Advantage Through Make-to-Order Philosophy
1. 2. 3. 4. 5. 6. 7. The Made-to-Order Advantage Interface Modular Percentage Make-to-Order Interface is the ONLY company with a “make-to-order” approach to the market Increases speed to market Promotes innovation Offers unique custom product capabilities Supports a constant flow of new products Off
Slide 28: Market Leader in Product Design and Fashion
Contract Magazine 2009 Brand Report Top Modular Carpet Brands Value Drivers 1. InterfaceFLOR 2. Shaw Contract Group 3. Lees Carpets 4. Milliken 5. Bentley Prince Street 5. Tandus 7. Patcraft Designweave 8. C&A 8. Mannington 10. J&J/Invision Top-ranked Modular Carpet brands for 2009 Source: Contract
Slide 29: Corporate Office
Corporate Office Value Drivers
Slide 30: Retail
Retail Value Drivers
Slide 31: Colleges & Universities
Colleges & Universities Value Drivers
Slide 32: K-12 Education
K-12 Education Value Drivers
Slide 33: Healthcare
Healthcare Value Drivers
Slide 34: Government & Public Spaces
Government & Public Spaces Value Drivers
Slide 35: Hospitality
Hospitality Value Drivers
Slide 36: Interface is the Recognized Leader in Sustainability
GlobeScan Corporate Sustainability Leaders 2009 Floor Focus Green Leaders 2009 Interface received “Green Kudos” for Sustainable Products with good Design options and Closed Loop Processes Interface is the Recognized Leader in Sustainability Unprompted, Combined Mentions 2009 Value Drivers Source: 20
Slide 37: Sustainability Inspires Innovation
Sustainability-Focused Innovation Sustainability Inspires Innovation Value Drivers § i2 Design Platform - biomimicry inspired random carpet tile patent § TacTiles - - no glue installation § Cool Blue - 100% recycled backing process § Cool Carpet - climate neutral product § ReEntry 2.0 - carpet recla
Slide 38: ReEntry 2.0 Brings Convert Product Platform
ReEntry - - Cumulative Carpet Diverted from Landfill Benefits of TacTiles ReEntry 2.0 Brings Convert Product Platform Value Drivers § Reclaiming both Interface and competitor carpet tile and broadloom, sorting & separating § Access to recycled N6 and N6,6 face fiber, boosting post consumer recycled
Slide 39: Interface, Inc. Financials
Interface, Inc. Financials
Slide 40: Consolidated Financial Results
Net Sales and Adjusted Operating Income (Continuing Operations)* Consolidated Financial Results * See the Appendix for a reconciliation of Adjusted Operating Income from Continuing Operations ($ in millions)
Slide 41: Quarterly Results: Q4 Comparison
Q4 Comparison* Quarterly Results * See the Appendix for a reconciliation of adjusted figures ($ in millions)
Slide 42: Financial Results: Net Sales and Gross Profit
Net Sales Gross Profit Interface Financial Results from Continuing Operations ($ in millions) ($ in millions)
Slide 43: Financial Results: SG&A and Adjusted Operating Income
SG&A Expense Adjusted Operating Income* (1) Interface Financial Results from Continuing Operations ($ in millions) ($ in millions) (1) Reported Operating Income of $57.1M in 2009 excludes Income from Litigation Settlements of $5.9M * See the Appendix for a reconciliation of Adjusted Operating Income
Slide 44: Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings Per Share (Continuing Operations)* Interface Financial Results from Continuing Operations * See the Appendix for a reconciliation of Adjusted Diluted Earnings Per Share from Continuing Operations
Slide 45: Key Leverage Statistics
Ending Cash Balance Net Debt* Key Leverage Statistics * See the Appendix for a reconciliation of Net Debt and Adjusted EBITDA
Slide 46: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures