Slide 1: Investor Presentation May 2009
Investor Presentation May 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: Company Overview
Company Overview
Slide 5: Investment Highlights
5 Investment Highlights § Interface is the largest manufacturer of modular carpet in the world, with 35% market share, and some of the most recognized brands § Interface is the only global manufacturer with a presence on four continents § Interface serves diversified end markets , with the non-offic
Slide 6: Current Realities Facing our Business
6 Current Realities Facing our Business § Our operating structure was built for a $1 billion+ revenue base, which has now been right-sized to meet current demand § A continued secular shift to carpet tile in non-corporate commercial markets represents a partial hedge against the declining office mar
Slide 7: Interface Brands - Most Recognized in the Industry
7 Interface Brands - Most Recognized in the Industry
Slide 8: Interface Strengths and Value Drivers
8 High Margin, Low Capital Requirements and Enhanced Liquidity First Mover in Sustainability Rapid Innovation, Leading Brands and Designs Global Make-to-Order Manufacturing and Local Distribution Leading Position in Modular Carpet Global Capabilities with Expanding Position in Emerging Markets Broad
Slide 9: Modular Carpet is Becoming the Category for Commercial Flooring
9 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 10: Easy Repairs
Easy Repairs
Slide 11: Modular Carpet Represents 91% of Interface Sales
11 Modular Carpet 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 Divested $500M in Revenue Base and Replaced
Slide 12: Over the Past Five Years, Interface Has Focused on its Core Modular Business
12 Modular Core Over the Past Five Years, Interface Has Focused on its Core Modular Business 98% Commercial 2% Residential 70% Corporate Office 30% Non-Corporate Office 90% Refurbishment 10% New Construction 95% Commercial 5% Residential 60% Corporate Office 40% Non-Corporate Office 90% Refurbishmen
Slide 13: U.S. Modular Carpet Sales, Specified Commercial Market
13 U.S. Modular Carpet Sales Specified Commercial Market ($ 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 14: U.S. Commercial Market Opportunity
14 Source: 2007 Floor Focus Magazine. U.S. Floorcovering Opportunity 2008 Specified Commercial Market 50% 26% U.S. Commercial Market Opportunity 34% Floor Focus Top 250 Design Survey 2008: Hot Products Modular Core $1B Carpet Tile Penetration $2B $3B Carpet Tile Penetration Carpet Tile Other Floor C
Slide 15: European Market Opportunity
15 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 16: Asia-Pacific Market Opportunity
16 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 17: Segmented Commercial Market Approach
17 Corporate Office Government Religious Establishments Hospitals Medical Office Buildings Hotels/Resorts Casinos Stores Malls K-12 Colleges & Universities Assisted Living Boutique Turnkey Solutions Segmented Commercial Market Approach Institutional Healthcare Hospitality Retail Education Commercial
Slide 18: Strong Growth from Non-Corporate Segments
18 Strong Growth from Non-Corporate Segments Segmentation Gross Billings from Non-Corporate Office Segments Non-Corporate Office Growth Comparison by Segment Gross Billings from Mature Corporate Office Mature Corporate Office Growth Comparison by Geography Only 50% of the overall business Over 35% o
Slide 19: United States Stimulus Package
19 United States Stimulus Package Reported Stimulus by Markets Segmentation Source: McGraw Hill Construction
Slide 20: Corporate Office Segment
20 Corporate Office Segment Segmentation
Slide 21: Retail Segmentation
21 Retail Segmentation
Slide 22: Education Segmentation
22 Education Segmentation Higher Education K-12 Education
Slide 23: Healthcare Segmentation
23 Healthcare Segmentation
Slide 24: Government Segmentation
24 Government Segmentation Public Spaces Library
Slide 25: Hospitality Segmentation
25 Hospitality Segmentation
Slide 26: Interface Hospitality Installations
26 Hospitality - - Interface Hospitality Installations Segmentation
Slide 27: Successfully Penetrating Emerging Markets
27 Successfully Penetrating Emerging Markets Emerging Markets Gross Billings from Emerging Markets Emerging Market Growth Comparison by Geography Emerging Markets 38% Growth 10% Growth 9% Decline Represents 10% of our business
Slide 28: FLOR is Creating a Category: Modular Carpet for the Home
28 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% ↑ Online Sales Y-o-Y Growth ↑ 2% Online Sales
Slide 29: FLOR is Expanding its Online and Retail Presence
29 FLOR is Expanding its Online and Retail Presence Residential Opportunity FLOR Catalog and Online Sales FLOR Retail Presence
Slide 30: Modular Goes in the Home
30 Modular Goes in the Home Residential Opportunity
Slide 31: Global Manufacturing Capabilities and Local Distribution
31 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 32: The Made-to-Order Advantage
32 The Made-to-Order ADVANTAGE Interface Modular Businesses 2008 Make-to-Order % and Inventory Turns 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 mark
Slide 33: Interface Leads with Innovation
33 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 34: TacTiles Sales Exceed $2 Million
34 TacTiles Sales Exceed $2 Million as We Drive “Glueless” Installation Exclusive to Interface Value Drivers Sales of TacTiles Benefits of TacTiles Innovation & Design ($ in mms) * Includes TacTiles and TacTiles dispensers $0.2 $1.2 $2.1 § Patented No Glue / No VOCs installation system § 25% of curr
Slide 35: Market Leader in Product Design and Fashion
35 Market Leader in Product DESIGN and FASHION Value Drivers Innovation & Design
Slide 36: Brands that Deliver High End Functionality, Quality and Design
36 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 37: Interface Continues to be Recognized as the Leader in Sustainability
37 Interface Continues to be Recognized as the Leader in Sustainability Sustainability 2008 GlobeScan Survey of Sustainability Experts Floor Focus Green Leaders 2008 Interface received “Green Kudos” for closed loop processes and recycled content Value Drivers Stakeholder Engagement MissonZero.org In
Slide 38: Sustainability-Focused Innovation and Emissions
38 Interface Continues to be Recognized as the Leader in Sustainability Sustainability Value Drivers Sustainability-Focused Innovation Greenhouse Gas Emissions (metric tons of CO 2 equivalent in thousands) Energy from Renewable Resources at Carpet Manufacturing Facilities (percent of total energy us
Slide 39: ReEntry and Cool Blue
39 ReEntry and Cool Blue Sustainability Value Drivers ReEntry Cool Blue
Slide 40: Right-sizing our Business
40 Right-sizing our Business Profitability Value Drivers Interface Headcount Cost Savings Initiatives ↓ Employees ↓ Employees ↓ 35% ↓ 10%
Slide 41: Downsizing Bentley Prince Street to Breakeven Profitability
41 Downsizing Bentley Prince Street to Breakeven Profitability Value Drivers Net Sales and Operating Income Current Realities Profitability Protection Net Sales Operating Income % of Net Sales § Contracting broadloom market - particularly high-end § Non-cash goodwill charge of $61.2 million in 2008
Slide 42: Financial Overview
Financial Overview
Slide 43: Net Sales and Adjusted EBITDA
43 Net Sales and Adjusted EBITDA* (Continuing Operations) Consolidated Financial Results ($ in millions) Adjusted EBITDA Net Sales * See page 48 for a reconciliation of Adjusted EBITDA
Slide 44: Net Sales, Gross Profit and Gross Profit %
44 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 45: SG&A Expense and Adjusted Operating Income
45 SG&A Expense and SG&A % of Net Sales Adjusted Operating Income* and Adjusted 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 S
Slide 46: Interface Liquidity Strategy
46 Interface Liquidity Strategy Capital Expenditures Working Capital Ratios Interface Liquidity Strategy Liquidity Position § Protect profitability - expect to generate $35-$50 million of cash from operating activities in 2009 § Reduce capital spending to $10 million - maintenance capital expenditur
Slide 47: Key Credit Statistics
47 Key Credit Statistics * (All data excludes the Fabrics Division sold in 2007) Ending Cash Balance * See page 48 for a reconciliation of Net Debt and Adjusted EBITDA
Slide 48: Appendix: Reconciliation of Non-GAAP Financial Measures
48 Appendix: Reconciliation of Non-GAAP Financial Measures Net Debt (pg. 47) Adjusted Operating Income (pg. 45) Adjusted EBITDA (pg. 43 and 47)