Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (June 2007)
39 slides from Interface's investor presentation, Jun 27, 2007
Slide 1: Interface, Inc. Investor Presentation June 2007
Interface, Inc. Investor Presentation June 2007
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: Management Team
Daniel Hendrix•President and Chief Executive Officer Patrick Lynch•Senior Vice President and Chief Financial Officer Management Team
Slide 4: Investment Thesis, Why Interface?
Investment Thesis, Why Interface …?Carpet Tile has reached the “tipping point” in the commercial market as acceptance has increased in ALL segments and Interface is the largest modular player globally …A secular shift is happening. The U.S. and Europe office market has begun to rebound-Indications a
Slide 5: The Office Market Rebound Continues
The Office Market Rebound Continues … 5in ppt 0 2000 4000 6000 8000 10000 12000 14000 16000 80 82 84 86 88 90 92 94 96 98 00 02 04 06 Corporate Office(1990 - 2006) 0 300 600 900 1200 1500 1800 90 92 94 96 98 00 02 04 06 - 20%-10% 0% 10% 20% 30% Offices 50 125 200 275 350 425 80 82 84 86 88 90 92 94
Slide 6: Interface Brands
Interface Brands •To be divested; we expect closing of sale in Q3 2007•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 carpe
Slide 7: Interface Strategic Platforms
Interface Strategic Platforms MODULAR CentricSEGMENTED Market Approach•74% of sales are Modular•Modular is becoming the flooring of choice (secular shift)•Strong U.S. and European corporate office market•Becoming the standard in Asia•Modular carpet is expanding into other non-office segments•Strong
Slide 8: Over the Past Three Years, Interface Has Focused on its Core Modular Businesses
8 Over the Past Three Years, Interface Has Focused on its Core Modular Businesses …2007(f) Portfolio Mix(1)Core Focused2002 Portfolio MixModular Floorcoverin Other (Fabrics, Broadloom, Service, Specialty) 99% Commercial 1% Residential68% Corporate Office 32% Non-Corporate Office 90% Refurbishment 10
Slide 9: Why Modular?
Modular Centric Why MODULAR …? “Becoming the Flooring of Choice…” MODULAR Carpet means NO Glue, NO Pad1 MODULAR Lowers the Cost of Change2 MODULAR Produces Less Waste3MODULAR Means faster Installations4 MODULAR is Easier to Reconfigure and Maintain5 MODULAR Means Creative Freedom6
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Slide 11: Functionality and Design Create a Secular Move to Modular Carpet
11Functionality and Design Create a Secular Move to Modular CarpetModular Centric1970200520001995199019851980197501,000250500100U.S. Modular Carpet Sales Specified Commercial MarketSource: Invista, Carpet and Rug Institute, Catalina Research, Inc., and management estimates.•Preferred interior design
Slide 12: Modular Centric Corporate Office Segment
Modular Centric Corporate Office Segment
Slide 13: Interface Changed The Game
Interface Changed “The Game”Driving the Acceptance of Modular Carpet into ALL SegmentsMARKET SIZECURRENT MODULAR PENETRATION50%0%$2BSpecified Corporate Office SegmentSpecified Non-Corporate Office Market$ 800M$ 25BSpecified Commercial Soft Floorcovering Market -ALL Segments Total Residential Floorco
Slide 14: Modular Carpet is the Hot Product for the Commercial Market
Corporate Office Non-Corporate Office Modular Carpet is The “Hot Product”for the Commercial Market For The 8thYear in a Row !Modular carpet is at the Tipping Point -Becoming the flooring of choice Source: 2006 Floor Focus Magazine.2006 2005 2004 2003 2002 1 Carpet Tiles 74% 67% 58% 56% 55% 2 Cork 55
Slide 15: Segmentation Has Lessened Our Dependence on the Commercial Office Market
64% 58% 54% 49% 49% 47% 36% 42% 46% 51% 51% 53% 0% 25% 50% 75% 100% 2001 2002 2003 2004 2005 2006 Segmentation Has Lessened Our Dependence on the Commercial Office MarketAmericas Modular Corporate Office vs. Non-Corporate Office Sales Mix Percentage(2001 -2006)2001-2005 U.S. Modular -Corporate Offic
Slide 16: Education Segment - $400M+ U.S. Opportunity
Education Segment -$400M+ U.S. Opportunity Dorm RoomK-12 Education Segmented Approach
Slide 17: Hospitality - $400M+ U.S. Opportunity
Segmented Approach Hospitality -$400+ U.S. Opportunity
Slide 18: Hospitality - $400M+ U.S. Opportunity
Segmented Approach Hospitality -$400M+ U.S. Opportunity
Slide 19: Entertainment: Movie Theatre
Segmented Approach Entertainment Movie Theatre
Slide 20: Entertainment: Casino
Segmented Approach Entertainment Casino
Slide 21: Healthcare - $450M+ U.S. Opportunity
Segmented Approach Healthcare -$450M+ U.S. OpportunityParker Adventist Hospital and Clarian Healthcare
Slide 22: Retail - $400M+ U.S. Opportunity
Segmented Approach Retail -$400M+ U.S. Opportunity
Slide 23: Institutional Segment - $250M+ U.S. Opportunity
Segmented Approach Institutional Segment -$250M+ U.S. OpportunityGovernment and Religious Establishments Government Religious Establishments
Slide 24: Interface Introduces Modular Into the Home
Specified Commercial "Soft" Commercial Other (Residential)Interface Introduces Modular Into the Home …Segmented Approach U.S. Specified Commercial and Residential MarketsCarpet Tile Penetration33%<1%$3.3B$10BCarpet Tile Penetration % $12 $10 $8 $6 $4 $2 $0 $US B $1B>10% With the introduction of FLOR
Slide 25: FLOR is Creating a Category
Recent AccomplishmentsFLOR is Creating a Category“Modular Carpet for the Home”Segmented Approach•Launched FLOR (residential brand) in Q1 2003•1,100 Lowe’s Stores•5.5 million Catalogs•250+ Target Stores -(2/07)•Martha Stewart Collection (6/07)•Disney Alliance (3/07)•KB Homes -Builder Direct (3/07)•De
Slide 26: Modular Goes in the Home
Segmented Approach Modular Goes in the Home …
Slide 27: FLOR is Expanding its Retail Presence
Segmented Approach FLOR is Expanding its Retail Presence
Slide 28: FLOR is Expanding its Retail Presence
Segmented Approach FLOR is Expanding its Retail Presence
Slide 29: Interface Continues to be the First in Innovation
Interface Continues to be the FIRST in Innovation …1.INVENTEDcarpet tile in Europe -1950s2.PIONEEREDthe modular concept In the U.S. -1970s 3.FIRSTto move away from the monolithic broadloom look for carpet tile4.FIRST to introduce a make-to-order offering 5.FIRST in the industry to recognize the impo
Slide 30: Innovation and Design Leader
Innovation and Design Leader …and the Market Leader in Product DESIGN and FASHION
Slide 31: Favorite Carpet Manufacturers
SERVICEQUALITYDESIGNPERFORMANCEVALUE1. INTERFACEFLOR1. BPS (Interface)1. ATLAS1. LEES1. SHAW SHAW CONTRACT2. INTERFACEFLOR2. INTERFACEFLOR2. C&A2. INTERFACEFLOR2. BPS (Interface) LEES3. BPS (Interface) SHAW3. PATCRAFT LEES3. KARASTAN SHAW CONTRACT BPS (Interface)4. LEES3. MASLAND ATLAS MONTEREY3. KA
Slide 32: Global Make-to-Order Model
Global Make-to-Order Model Interface Maintains a Strong Competitive Advantage Through its Made-to-Order Philosophy 1.Increases speed to market2.Promotes innovation3.Offers unique custom product capabilities4.Supports a constant flow of new products5.Offers sales force the opportunity to visit the cu
Slide 33: Global Manufacturing Capabilities
…and Global Manufacturing Capabilities Global Make-to-Order Model LaGrange, GA(Modular) Picton, Australia(Modular)Belleville, Canada(Modular)Chonburi, Thailand(Modular)City of Industry, CA(Broadloom)Holland(Modular)China(Future Modular)N. Ireland(Modular)63%8%29%AmericasEuropeAsia-PacificInterface S
Slide 34: Interface Continues to be Recognized as the Leader in Sustainability
IMPACT to Interface•Random Carpet Tile Patent•Terratex Products•Cool Blue•ReEntry Process•Landfill Gas Project•Recycled Backing Technology (GlasBacRE)•Cool CarpetInterface Continues to be Recognized as the Leader in SustainabilityZero Footprint by the Year 2020 is the Goal …First Mover in Sustainabi
Slide 35: We Are Executing on Our Growth Strategy
We Are Executing on Our GROWTH Strategy Maintain Competitive Position in Core Markets•Invest in capacity additions to keep up with growth in core markets•Over $30 million spent over last eighteen months to increase capacity Expand Production into Market Segments•Segmentation strategy in Americas is
Slide 36: Interface, Inc. Financials
Interface, Inc. Financials
Slide 37: Interface Financial Results, exclusive of Fabrics
37 $33.5 $40.6 $59.9 $77.7 $99.7 $103.8 $22.4 $6.29.8% 7.9% 8.6% 9.9% 11.0% 11.0% $0 $20 $40 $60 $80 $10020022003200420052006LTM '07 1Q6.0% 8.0% 10.0% 12.0% Interface Operating Income2002-LTM ’07 1Q $137 $148 $166 $182 $212 $22123.8% 23.1% 23.2% 23.1% 25.0% 23.9% $0 $100 $20020022003200420052006LTM
Slide 38: Segment Financial Performance
$115 $110 $119 $125 $138 $14 50 20 40 60 80 100 120 140 160 2002 2003 2004 2005 2006 LTM'07 1Q-10% -5% 0% 5% 10% $442 $473 $563 $646 $764 $80330045060075090020022003200420052006LTM'07 1Q8% 10% 12% 14% 16% 18% Segment Financial PerformanceWorldwide ModularTARGET OperatingIncome Percentage at 8% % Ope
Slide 39: The Interface Opportunity
The Interface OpportunitySecular shift to carpet tile Early stages of cyclical upturn in office market in United States and EuropePositioned to take advantage of emerging markets: China, India, Eastern Europe, Middle East and South AmericaStrong operating leverageUnique global make-to-order manufact