Slide 1: Interface, Inc. Investor Presentation - Raymond James Conference
I N T E R F A C E Interface, Inc. Investor Presentation Raymond James Conference March 2005
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: Business Overview
Business Overview
Slide 4: Interface is a Leader in the Commercial Interiors Market
Core Focused Interface Consolidated 2004 - Portfolio Mix Interface is a Leader in the Commercial Interiors Market 12% 47% 21% 1% 19% 2002 Portfolio Mix TARGET Portfolio Mix 95% Commercial 5% Residential 55% Corporate Office 45% Non-Corporate 90% Refurbishment 10% New Construction Interface Portfolio
Slide 5: Interface Strengths
Interface Strengths Top designers picked Interface brands as #1 in four of the six categories Market Leader in Attractive Modular Segments Preeminent Brands – Quality, Reliability and Leadership Innovative Design and Development Capabilities Leader in Sustainability Made to Order / Low Cost Global M
Slide 6: Preeminent Brands – Quality, Reliability, Design
Preeminent Brands – Quality, Reliability, Design
Slide 7: Innovative Design and Development Through Made to Order Approach
Innovative Design and Development Capabilities Through Our Differentiated Made to Order Business Approach The Migration to a Make to Order Model Inventory Turns INVENTORY TURNS Americas Modular 0% 100% Asia Pacific Modular Europe Modular Fabrics Americas Broadloom Operations 1. Increase speed to mar
Slide 8: Leader in Sustainability
Leader in Sustainability Industrial Model of a Sustainable Enterprise 1. Eliminate Waste 2. Benign Emissions 3. Renewable Energy 4. Closed Loop Material Supply 5. Resource Efficient Transportation 6. Sensitivity Hook Up (Social Responsibility) 7. Redesign Commerce Interface’s Seven Fronts of Sustain
Slide 9: The Path Forward
The Path Forward
Slide 10: The Industry is Off from Historical Highs, but Shows Signs of Recovery
The Industry is Off from Historical Highs, but Shows Signs of a Recovery Source: BIFMA, Raymond James Research $(Mil) Forecasts are pointing to a recovery in the office furniture markets, due primarily to strong non-residential construction growth and an improved employment report. Furniture consump
Slide 11: In 2004 Interface Established the Foundation for Future Growth
In 2004 Interface Established the Foundation for Future Growth EXECUTE SUSTAINABLE GROWTH Liquidity Significantly Improved Increased Market Share Executed Market Segmentation Consolidated Fixed Asset Footprint Improved Brand Strength in ALL Businesses Set the Foundation for Residential Growth Simpli
Slide 12: Interface Showed Considerable Gains over 2004
Interface Showed Considerable Gains over 2004 … Despite a Sluggish Corporate Office Market $1,017 $876 $745 $767 $881 $0 $200 $400 $600 $800 $1,000 $1,200 Note: * Platform percentage (%) growth figures are Year over Year, 2003 versus 2004 ** All numbers exclude discontinued operations Baseline $ 881
Slide 13: More Growth Opportunity Still Exists
… More Growth Opportunity Still Exists $318 $262 $223 $223 $265 31% 30% 30% 29% 30% $0 $100 $200 $300 $400 20% 25% 30% 35% 40% 45% 50% … There still remains substantial growth opportunity 28% off of 5 year High Mark (000’s) $ 94.8 $ 70.9 $ 80.0 $ 99.9 $ 133.0 Restructuring Charges Depreciation and A
Slide 14: In the Face of a Significant Industry Downturn, Interface Grew Stronger
In the Face of a Significant Industry Downturn, Interface Grew Stronger Market GROWTH 1983 IPO $3.5 Developed Platforms for Growth Our Challenge is to Execute and Perform on Our Platforms for Growth Interface, Inc. (IFSIA) Stock Price History
Slide 15: Continue to Capitalize on Interface's Platforms for Growth
The Path Forward will be to Continue to Capitalize on Interface’s Platforms for Growth … Execute Market Segmentation Residential Growth Capture Emerging Markets Advance Sustainability Grow Corporate Share The Interface Opportunity Strategic Objective Significant economic growth forecasted for emergi
Slide 16: Focus on Continued Operational Excellence
… As Well as Focus on Continued Operational Excellence Tighten the Supply Chain Focus on Productivity De-Lever the Balance Sheet The Interface Opportunity Strategic Objective High potential for operating leverage and strong cash flows Capitalize on global sourcing opportunities Continually push supp
Slide 17: 2005 Tenets for Success
2005 Tenets for Success Continue to lead and shape the modular market expansion. Execute segmentation in Europe – see our way to a 10% operating income business. Complete the service exit strategy with minimal impact on the mills. Continue to build out the sales and marketing infrastructure in China
Slide 18: Execution Drivers: Maintain or Grow Corporate Share
Execution Drivers Interface Growth Platform Maintain or Grow Corporate Share 2004 demonstrated great progress in the growth of the corporate platform Continued maintenance of Interface’s share in the corporate office market, combined with modest 5% growth in the corporate office market itself, will
Slide 19: Maintain or Grow Corporate Share: Commercial Office Applications
Maintain or Grow Corporate Share Commercial Office Applications
Slide 20: Modular is Taking Share
Maintain or Grow Corporate Share Modular is Taking Share 2004 2003 2002 1 Carpet Tiles 58% 56% 55% 2 Linoleum 40% 30% 24% 3 Ceramic / Porcelin 31% 33% 41% 4 Stone 31% 29% 47% 5 Vinyl 30% 25% 31% 6 Rubber 30% 27% 30% 7 Hardwood 24% 17% 30% 8 Laminate 21% 10% 17% 9 Area Rugs 20% 28% 34% 10 Cork 19% 14
Slide 21: Bentley Prince Street and Interface Fabrics Returning to Profitability
Maintain or Grow Corporate Share Bentley Prince Street and Interface Fabrics are Returning to Profitability $176 $141 $116 $110 $120 Actual Interface Fabrics Gross Sales $ in Millions Interface Fabrics Gross Sales 2000 - 2004 Actual BPS Gross Sales $ in Millions Bentley Prince Street Gross Sales 200
Slide 22: Execute Market Segmentation Execution Drivers
Interface Growth Platform Execute Market Segmentation Execution Drivers Segmentation is taking hold in the U.S., with promising gains towards our Segmentation Platform goals Positive results are anticipated in Europe and Asia Pacific The Institutional (government and education) and Healthcare segmen
Slide 23: Segmentation is Taking Hold in the US
67% 64% 58% 54% 49% 50% 2004 2003 Corporate 63% 75% Education 54% 28% Healthcare 46% 25% Retail 35% 16% Hospitality 26% 5% Do NOT Specify Carpet Tile 9% N/A Public Spaces 6% 7% Fitness 4% N/A Where are you Specifying Carpet Tile? Although the majority of respondents are specifying Carpet Tile for Co
Slide 24: Healthcare is Ready for Modular
Execute Market Segmentation Healthcare is Ready for Modular US Green Buildings Council LEED certification program will introduce building guidelines in 2004 for healthcare’s special needs. 1. Infection control. 2. Indoor air quality. 3. Low VOC.
Slide 25: Interface Modular Meets Education's Special Needs
Execute Market Segmentation Interface Modular Meets Education’s Special Needs Including 2002 spending, $169 billion will have been spent through 2004 on new, retrofit and addition construction 1. Antimicrobial protects products against mold and mildew. 2. Lasts longer than broadloom (selective repla
Slide 26: Retail and Service Buildings - Largest Commercial Floor Space
Execute Market Segmentation Retail and Service Buildings - Largest Commercial Floor Space 1. Retail and Service floor spaces are generally high traffic areas. 2. Easier to isolate and repair problem spots. 3. Less interruption of business traffic. The tremendous amount of Retail and Service floor sp
Slide 27: Hospitality Industry - Ideal Candidate for Interface Modular
Execute Market Segmentation Hospitality Industry - Ideal Candidate For Interface Modular * HYATT in Atlanta, GA 1. Modular in Hospitality applications makes it easier to isolate and repair any problem spots in floor covering 2. Estimated 7.4 million square feet of Hospitality floor space in the U.S.
Slide 28: Carpet Tile Even Works in Common Areas: The Hyatt Atlanta
Carpet Tile Even Works in Common Areas Execute Market Segmentation Hospitality - The Hyatt Atlanta
Slide 29: Expand the Residential Business Execution Drivers
Interface Growth Platform Expand the Residential Business Execution Drivers With the entrance of InterfaceFLOR, Prince Street House & Home and Heuga Home Flooring, 2004 marked the beginning for Interface in the residential market US residential carpet market is approximately $11B – current tile pene
Slide 30: Interface Flor and Prince Street House & Home Expand Residential Business
Interface Flor and Prince Street House & Home Expand the Residential Business Interface Flor and Prince Street House & Home Show Positive Results Positive sales trend Growing designer registration Interface Flor - Established branded programs with Lowe’s, Design Within Reach, boutique retail and oth
Slide 31: The Residential Opportunity
Expand the Residential Business The Residential Opportunity Lifestyle trends Desire for new applications “Cocooning” trend of investing in the home Purchasing trends DIY -- “Do it yourself” Design it yourself” Internet and catalog sales on rise Design-influenced consumer Marketplace shift toward foc
Slide 32: InterfaceFLOR Roll-out to Lowe's
Lowe’s for Interface Flor Expand the Residential Business InterfaceFLOR Roll-out to Lowe’s InterfaceFLOR is being rolled out to over 1,000 stores nationwide. Atlanta and Los Angeles markets will carry inventory and include advertising campaigns. Homeowners are able to buy Interface Products at a gro
Slide 33: Capture Emerging Markets Execution Drivers
Interface Growth Platform Capture Emerging Markets Execution Drivers Interface took large steps towards achieving the goals set forth in the Emerging Markets Platform in 2004 The Asian markets continue to represent a large sales growth opportunity for Interface in both Fabrics and Modular Base Year
Slide 34: The China Opportunity
The China Opportunity Capturing Emerging Markets The China Opportunity 1. China is the fastest growing carpet tile manufacturing country with over 15 producers in 2004. There is a high possibility of partnerships between USA / European manufacturers and their Chinese counterparts. 2. The China marke
Slide 35: We Don't Know How Far Modular Can Go
We Don’t Know How Far Modular Can Go …