Slide 1: Investor Presentation February 2008
Investor Presentation February 2008
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 Presenters
Slide 4: Investment Thesis…Why Interface?
4 Investment Thesis…Why Interface? § Interface is the largest manufacturer of modular carpet in the world , with the most recognized brand . § Interface is the only global manufacturer of modular carpet with a presence on four continents. 50% of sales are generated outside the U.S. § The secular shi
Slide 5: Consolidated Financial Results: Net Sales and Operating Income
5 Net Sales and Operating Income (Continuing Operations) 1 1 Excludes restructuring charges of $6.2m in 2003 and loss on disposal of $1.9m in 2007 Consolidated Financial Results ($ in millions) 4% 17% 13% 16% 18% Net Sales Growth (Y-o-Y) Consolidated Financial Results
Slide 6: Diluted Earnings Per Share (Continuing Operations)
6 Diluted Earnings Per Share (Continuing Operations) Consolidated Financial Results Consolidated Financial Results
Slide 7: Modular Carpet is Becoming the Category for Commercial Flooring
7 4 1 2 3 5 6 7 Modular Carpet is Becoming the Category for Commercial Flooring 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 reconfigure and maintain MODUL
Slide 8: Global Commercial Markets - Key Indicators Remain Positive
8 U.S. Nonresidential Construction Spending (SAAR) ($ in Billions) Architecture Billings Index (Index: 50 = no change from previous month) Sources: AIA, US Census Bureau, and REIS U.S. Office Vacancy Rates (Available Office Space/Total Office Inventory) Global Commercial Markets - Key Indicators Rem
Slide 9: Global Commercial Markets - Key Indicators Remain Positive
9 Sources: CB Richard Ellis and Freedonia Group Western Europe Nonresidential Construction Expenditures (US$ in Billions) Asia-Pacific Nonresidential Construction Expenditures (US$ in Billions) Global Commercial Markets - Key Indicators Remain Positive § EU Vacancy Rate Index decreased for the 9th c
Slide 10: Interface Brands - Most Recognized in the Industry
10 Interface Brands - Most Recognized in the Industry § Largest commercial carpet manufacturer located on the West Coast - full-service floorcovering provider § Leading brand at the high end of the commercial specified broadloom and modular markets § Fastest growth area is in modular carpet § The mo
Slide 11: Interface Strategic Platforms and Growth Drivers
11 Continue to Focus on the Core Modular Business Invest in the Growth of the Emerging Markets Create a Significant Residential Business Exploit Secular Shift into Commercial Segments Sustainability as a Growth Platform Focus on Productivity and Innovation Interface Strategic Platforms and Growth Dr
Slide 12: Core Focused Interface Portfolio - Modular Centric
12 2002 Portfolio Mix Core Focused Interface Portfolio - 2002 Modular Centric 1 Excludes FABRIC Overall TARGET Portfolio 2007 Portfolio Mix 1 97% Commercial 3% Residential 67% Corporate Office 33% Non-Corporate Office 90% Refurbishment 10% New Construction 90% Commercial 10% Residential 50% Corporat
Slide 13: Secular Shift From a Niche to a Category
13 Source: Invista, Carpet and Rug Institute, Catalina Research, Inc., and management estimates. Pioneering Stage What if modular carpet reached 60% market share of the commercial market in 10 years? U.S. Modular Carpet Sales Specified Commercial Market ($ in millions) Modular Centric Functionality
Slide 14: Corporate Office Segment Modular Centric
14 Corporate Office Segment Modular Centric Corporate Office Segment
Slide 15: Interface Leads with INNOVATION
15 Interface Innovation Interface Leads with INNOVATION Modular Centric 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 offering 4. FIRST in
Slide 16: Market Leader in Product DESIGN and FASHION
16 Market Leader in Product DESIGN and FASHION Modular Centric Market Leader in Product DESIGN and FASHION
Slide 17: Brands that Deliver Our Promise of High End Functionality, Quality and Design
17 U.S Market - 2007 Floor Focus Magazine Rated the “Best Overall Business Experience” for the 4 th Year in a Row Brands that Deliver Our Promise of High End Functionality, Quality and Design Favorite Carpet Manufacturers Modular Centric Brands that Deliver Our Promise of High End Functionality, Qua
Slide 18: The Made-to-Order ADVANTAGE
18 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 Modular Centric 1. Increases speed to ma rket 2. Promotes innovation 3. Offe
Slide 19: Global Manufacturing Capabilities and Local Distribution
19 Global Manufacturing Capabilities and Local Distribution China India Modular Centric Global Manufacturing Capabilities and Local Distribution N. Ireland Picton, Australia Existing Manufacturing Facility Future Manufacturing Facility LaGrange, Georgia Americas 59% of Sales 50% of Production Europe
Slide 20: European Market Opportunity
20 2006 European Contract Carpet Tile Penetration Note: WEUR = BEN and UK/Ireland; CEUR includes Germany; SEUR includes France Source: BMW Associates and management estimates European Market Opportunity 33% 9% 31% 26% 17% Segmented Approach (millions of square meters) § There is significant opportun
Slide 21: U.S. Commercial Market Opportunity
21 Source: 2007 Floor Focus Magazine. U.S. Floorcovering Opportunity 2006 Specified Commercial Market Source: Invista, Carpet and Rug Institute, Catalina Research, Inc., BMW Associates and Management estimates. 50% 20% U.S. Commercial Market Opportunity 30% ($ in Billions) Hot Products Segmented App
Slide 22: Segmentation Has Lessened Our Dependence on the Commercial Office Market
22 Americas Modular Corporate Office vs. Non-Corporate Office Sales Mix Percentage Segmentation Has Lessened Our Dependence on the Commercial Office Market Segmented Approach 2002-2006 U.S. Modular Corporate Office Segment % of Sales 2007 U.S. Modular Corporate Office Segment % of Sales 2002-2007 U.
Slide 23: Strong Growth from Segmentation
23 Government Religious Establishments Hospitals Medical Office Buildings Hotels/Resorts Casinos Stores Malls K-12 Higher Education Assisted Living Boutique Turnkey Solutions Segmentation Corporate Office Institutional Healthcare Hospitality Retail Education Residential Strong Growth from Segmentati
Slide 24: Hospitality Installations
24 Hospitality Interface Hospitality Installations Segmented Approach Hilton Four Seasons Hard Rock Marriott Choice Hotels International Trump Taj Mahal Hotel Le Cirque The Powell Hotel The Island House Hotel Hyatt The Clarendon W Hotels Westin Atton Crowne Plaza Hospitality Interface Hospitality In
Slide 25: Hard Rock Hotel and Casino Las Vegas
25 Hospitality Hard Rock Hotel and Casino Las Vegas Segmented Approach Hospitality Hard Rock Hotel and Casino Las Vegas
Slide 26: Hospitality
26 Hospitality Segmented Approach Hospitality
Slide 27: Entertainment Casino
27 Entertainment Casino Segmented Approach Entertainment Casino
Slide 28: Healthcare
28 Healthcare Segmented Approach Healthcare
Slide 29: Retail
29 Retail Segmented Approach Retail
Slide 30: Dorm Room K-12 Education Institutional Education
30 Dorm Room K-12 Education Institutional Education Segmented Approach Dorm Room K-12 Education Institutional Education
Slide 31: Government and Religious Establishments
31 Government Religious Establishments Institutional Government and Religious Establishments Segmented Approach Government Religious Establishments Institutional Government and Religious Establishments
Slide 32: Successfully Penetrating Emerging Markets
32 Successfully Penetrating Emerging Markets Sales from Emerging Markets Emerging Market Opportunities Emerging Markets (Latin America, South America, Eastern Europe, China, India, Middle East and Africa) Emerging Markets represent a significant growth opportunity Successfully Penetrating Emerging M
Slide 33: FLOR is Creating a Category: Modular Carpet for the Home
33 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% FLOR is Creating a Category “Modular Carpet for the Home” ↑ 98%
Slide 34: Modular Goes in the Home
34 Modular Goes in the Home Residential Opportunity Modular Goes in the Home
Slide 35: FLOR is Expanding its Retail Presence
35 FLOR is Expanding its Retail Presence Residential Opportunity FLOR is Expanding its Retail Presence 2008 Marketing Activity § Press Relations : Invitation only PR and Designer event § Product Launch : Full collection available on FLOR.COM and through the FLOR Martha Stewart Catalog § Internet Sup
Slide 36: Interface Recognized as the Leader in Sustainability
36 2007 Globescan Survey Interface Continues to be Recognized as the Leader in Sustainability Impact to Interface Sustainability § Product/Process Innovation: – Random Carpet Tile Patent – TacTiles – Cool Blue (100% Recycled Backing) – ReEntry Process – Cool Carpet (Climate Neutral) – Landfill Gas P
Slide 37: Net Greenhouse Gas Emissions
37 Interface Global Carpet Facilities Net Greenhouse Gas Emissions (Continuing Operations) Sustainability The Graphic above represents the Baseline and Net impact of GHG emissions from purchased electricity and on-site combustion of fuels used at the global carpet manufacturing facilities only. The
Slide 38: Interface, Inc. Financials
Interface, Inc. Financials
Slide 39: Record Quarter Shows Continued Business Momentum
39 NOTE: Financials from continuing operations above are as reported in Interface, Inc. financial statements Record Quarter Shows Continued Business Momentum Q4 2007 Results Record Quarter Shows Continued Business Momentum
Slide 40: Net Sales and Gross Profit
40 Net Sales Gross Profit and Gross Profit % of Net Sales Interface Financial Results From Continuing Operations U.S. Corporate Office Market Exposure ↑ 4% ↑ 17% ↑ 13% ↑ 16% ↑ 18% Gross Profit Gross Profit % of Net Sales Net Sales Growth (Y-o-Y) ↑ Interface Financial Results From Continuing Operatio
Slide 41: SG&A Expense and Operating Income
41 SG&A Expense and SG&A % of Net Sales Operating Income and Operating Income % of Net Sales Interface Financial Results From Continuing Operations Reported Operating Income Restructuring Charges Loss on Disposal ($1.9m) Operating Income % of Net Sales SG&A Expense SG&A % of Net Sales Interface Fina
Slide 42: Diluted Earnings Per Share (Continuing Operations)
42 Diluted Earnings Per Share (Continuing Operations) Interface Financial Results From Continuing Operations Interface Financial Results From Continuing Operations
Slide 43: Segment Financial Performance
43 Segment Financial Performance Worldwide Modular Bentley Prince Street ($ in mms) ($ in mms) Net Sales Operating Income % of Net Sales Net Sales Operating Income % of Net Sales Segment Financial Performance
Slide 44: Key Credit Statistics
44 Key Credit Statistics (2007 data excludes the Fabrics Division) NOTE: Net Debt Excludes Securitization of $30M to $50M Net Debt/Total Capital Net Debt/ EBITDA Ending Cash Balance Net Debt Key Credit Statistics (2007 data excludes the Fabrics Division)
Slide 45: Appendix: Reconciliation of Non-GAAP Financial Measures
45 Appendix: Reconciliation of Non-GAAP Financial Measures Net Debt (pg. 44) Operating Income (continuing operations) (pg. 5, 41) EBITDA (pg. 44) EBITDA (pg. 39) Appendix: Reconciliation of Non-GAAP Financial Measures
Slide 46: Investment Thesis…Why Interface?
46 Investment Thesis…Why Interface? § Interface is the largest manufacturer of modular carpet in the world , with the most recognized brand . § Interface is the only global manufacturer of modular carpet with a presence on four continents. 50% of sales are generated outside the U.S. § The secular sh