Slide 1: Investor Presentation March 2011
Interface’ Investor Presentation March 2011
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: Interface investment highlights
§ Interface’s global sales and marketing capabilities have created significant growth in emerging markets which will experience growth faster than developed countries. § Interface created a consumer brand (FLOR) introducing modular carpet for the home through direct sales channels ( online, catalog
Slide 5: Interface Brands - Most Recognized in the Industry
Interface Brands - Most Recognized in the Industry
Slide 6: Market Outlook: Global Forecast from the Design Community
Global Economic Forecast Source: Design Intelligence Bullish Neutral Bearish Market Outlook: Global Forecast from the Design Community
Slide 7: Market Outlook: Global Leading Indicators
Architecture Billings Index (U.S.) UK Commercial Construction Output* (Index: 50 = no change from previous month) Source: American Institute of Architects § The Architecture Billings Index hits highest mark since December 2007. Positive trend ( ₤ in billions ) New Work Repair & Maintenance Source: O
Slide 8: Interface Strategy: Be the Global Category Leader for Modular Carpet
Category Leader in the Secular Shift of Modular Carpet Maintain Leading Share of Office Market Invest in Growth of Emerging Markets Interface Strategy: Be the Global Category Leader for Modular Carpet
Slide 9: Modular Carpet is Moving from a Niche to a Category
1. 2. 3. 4. 5. 6. 7. 2010 Floor Focus U.S. Top 250 Design Survey: Hot Products Benefits of Modular 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 and REPURPOSE
Slide 10: Easy Repairs
EASY REPAIRS
Slide 11: Global Mature Commercial Carpet Market Opportunity
Carpet Tile Penetration of Global Mature Commercial Carpet Markets 29% 31% 20% 74% 34% Significant Headroom Global Mature Commercial Carpet Market Opportunity ($ in millions) Secular Shift Carpet Tile Broadloom and Other Soft Commercial Flooring Source: Management estimates
Slide 12: Leading Share of the Global Carpet Tile Market
Americas Europe & MEAI Asia Australia Interface has a Leading Share of the Global Carpet Tile Market Secular Shift Competitive Landscape 1. InterfaceFLOR 2. Shaw/Patcraft 3. Mohawk/Lees 4. Tandus 5. All Other Competitive Landscape 1. InterfaceFLOR 2. Desso 3. Domo 4. Forbo 5. All Other Competitive L
Slide 13: Segmented Market Approach
Commercial Residential Corporate Office Non-Office Commercial Consumer New Markets Retail Emerging Transportation Stores Mature Government Education Healthcare Hospitality Main Street Catalog Online Segmented Market Approach Growth Platforms Specified Residential
Slide 14: U.S. Market Segment Forecast by Facility Type
U.S. Market Segment Forecast by Facility Type U.S. Market Segment Expectations from the Design Community Growth Platforms Bullish Neutral Bearish Source: Design Intelligence
Slide 15: Corporate Office
Corporate Office Growth Platforms
Slide 16: Retail
Retail Growth Platforms
Slide 17: Colleges & Universities
Colleges & Universities Growth Platforms
Slide 18: K-12 Education
K-12 Education Growth Platforms
Slide 19: Healthcare
Healthcare Growth Platforms
Slide 20: Government & Public Spaces
Government & Public Spaces Growth Platforms
Slide 21: Hospitality
Hospitality Growth Platforms
Slide 22: Airline Transportation
Airline Transportation Growth Platforms
Slide 23: Majority of Business Driven by Renovation vs. New Construction
Interface Percentage Renovation vs. New Construction* § Commercial renovation typically follows a 7-9 year cycle § There is currently a lot of pent-up demand in commercial renovation, particularly in office space New Construction Renovation Growth Platforms Source: Management estimates Majority of I
Slide 24: Liberation of Design
Liberation of Design Individual Offices Cubicles Why Carpet Tile? Growth Platforms
Slide 25: Secular Shift: Cutting the Computer Cord
Secular Shift Cutting the Computer Cord Open Offices Why Carpet Tile? Growth Platforms
Slide 26: Creative Spaces: The Modern Workplace
Creative Spaces The Modern Workplace Growth Platforms
Slide 27: 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 ($ in Billions) Source: McGraw-Hill 23% 28% 18% 5% 16% Growth in all major
Slide 28: Strong Growth from Non-Corporate Segments
Modular Non-Office Commercial Sales Non-Office Commercial Sales by Segment Strong Growth from Non-Corporate Segments Growth Platforms (FYE 2010) 15% 14% 5% 10% 11% Continues to improve
Slide 29: New Segment Opportunities: Main Street Commercial
Main Street Commercial Market Opportunity Bravo Network New Segment Opportunities: Main Street Commercial U.S. Commercial Carpet Market ($ in billions) Main Street Commercial Contract Commercial $3.0B Growth Platforms § Access to secondary Contract and Main Street commercial markets in smaller rural
Slide 30: 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 § Indonesia § Philippines 38% 10% 31% 31% 26% Significant Rebound
Slide 31: Local Manufacturing in High Growth China Market
China Manufacturing Local Manufacturing in High Growth China Market Growth Platforms § Manufacturing for China consumption § Access to local customers - reduced exposure to multinational corporations § Capitalize on popularity of leading U.S. brand § Custom design capabilities § Improved service spe
Slide 32: Grow a Consumer Lifestyle Brand: Modular Goes in the Home
FLOR is… § A new way to think about floorcovering § A new kind of customer experience § A new way to design for your life § A new standard in environmentally responsible residential design Grow a Consumer Lifestyle Brand: Modular Goes in the Home Growth Platforms
Slide 33: FLOR Connects Directly with Consumers
Catalog Web Stores Grow a Consumer Brand: FLOR Connects Directly with Consumers 2011 catalog, online and in-store experiences bring the proposition to life for consumers Growth Platforms 94% of FLOR Sales are through Direct Sales Channels
Slide 34: FLOR Store Opened
FLOR Store Highlights FLOR Store Roll-Out Grow a Consumer Brand: FLOR Store Opened § First store opened in Chicago in June 2009; Second store opened in Santa Monica in October 2010 § NYC and Atlanta opening in March & April 2011 respectively, with 7 stores total to be open in 1 st half of § Opportun
Slide 35: Our Community of Design-Interested Consumers
Grow a Consumer Brand: Our Community of Design-Interested Consumers Tile Designer Event Chicago Store Growth Platforms
Slide 36: Global Manufacturing Capabilities
Value Drivers Global Manufacturing Capabilities City of California N. Ireland Yorkshire , England Current Manufacturing Facility Note: Sales and Production figures represent FYE 2010. Shanghai, China Future Manufacturing Facility (commissioned ) India LaGrange, Georgia Americas Sales 57% Production
Slide 37: 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 Increases speed to market Promotes innovation Offers unique custom product capabilities Supports a constant flow of new products Offers sales force the opportunity to visit the customer with new products Decr
Slide 38: Interface is a Recognized Leader in Sustainability
Who Do You View As World-Class in Sustainability? GlobeScan Corporate Sustainability Leaders 2009 11. Interface Global Interface is a Recognized Leader in Sustainability 2010 Sustainability & Innovation Global Executive Study & Research Project MIT Sloan Management Review and The Boston Consulting G
Slide 39: Innovation is Inspired by Sustainability
Sustainability-Focused Innovation Benefits of TacTiles Innovation is Inspired by Sustainability 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 § R
Slide 40: ReEntry and Recycled Content
Recycled Content ReEntry Program Cumulative Carpet Diverted from Landfill Recycled and Biobased Raw Materials Used in Carpet Manufacturing ReEntry and Recycled Content Value Drivers § Reclaiming both Interface and competitor carpet tile and broadloom, sorting & separating § Access to recycled N6 and
Slide 41: EcoMetrics Highlights
Waste Sent to Landfills from Carpet Factories Total Energy Use at Carpet Factories EcoMetrics Highlights Value Drivers (millions of lbs) (BTUs per square yard)
Slide 42: Interface, Inc. Financials
Interface, Inc. Financials
Slide 43: Consolidated Financial Results
Net Sales and Adjusted Operating Income* (Continuing Operations) Consolidated Financial Results * See the Appendix for a reconciliation of Adjusted Operating Income ($ in millions)
Slide 44: Quarterly and Fiscal Year End Results
Quarterly and Fiscal Year End Results ($ in millions)
Slide 45: Net Sales and Gross Profit
Net Sales Gross Profit Interface Financial Results from Continuing Operations ($ in millions)
Slide 46: SG&A Expense and Adjusted Operating Income
SG&A Expense Adjusted Operating Income* Interface Financial Results from Continuing Operations (1) Reported Operating Income of $57.1M in 2009 excludes Income from Litigation Settlements of $5.9M * See the Appendix for a reconciliation of Adjusted Operating Income Reported Operating Income Restructu
Slide 47: Modular Carpet, Bentley Prince Street Results
Modular Carpet Bentley Prince Street Interface Financial Results from Continuing Operations ($ in millions) ($ in millions) * See the Appendix for a reconciliation of Adjusted Operating Income
Slide 48: 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 49: Key Leverage Statistics
Ending Cash Balance Net Debt* Key Leverage Statistics * See the Appendix for a reconciliation of Net Debt and Adjusted EBITDA
Slide 50: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures
Slide 51: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures