Interface, Inc. · NASDAQ:TILE
Interface — Investor Presentation (February 2007)
35 slides from Interface's investor presentation, Feb 26, 2007
Slide 1: Interface, Inc. Investor Presentation February 2007
Interface, Inc .Investor Presentation February 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 •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
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
6Interface Brands • Largest U.S. commercial contract fabrics manufacturer • Market share leader in the panel fabrics market and upholstery market • Received first automotive adoption in the Ford Expo hybrid • Largest commercial carpet manufacturer located on the West Coast -Full-service floorcoverin
Slide 7: Interface Strategic Platforms
Interface Strategic Platforms MODULAR Centric SEGMENTED 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 segme
Slide 8: Over the Past Three Years, Interface Has Focused on its Core Modular Businesses
Over the Past Three Years, Interface Has Focused on its Core Modular Businesses … 2006 Portfolio Mix Core Focused 2002 Portfolio Mix Modular Centric 54% 26% 74% 46% Modular Floorcovering Other (Fabrics, Broadloom, Service, Specialty) 99% Commercial 1% Residential 68% Corporate Office 32% Non-Corpora
Slide 9: Why Modular?
Modular Centric Why MODULAR … ? “Becoming the Flooring of Choice…” MODULAR Carpet means NO Glue, NO Pad 1 MODULAR Lowers the Cost of Change 2 MODULAR Produces Less Waste 3 MODULAR Means faster Installations 4 MODULAR is Easier to Reconfigure and Maintain 5 MODULAR Means Creative Freedom6
Slide 10: Functionality and Design Create a Secular Move to Modular Carpet
10 Functionality and Design Create a Secular Move to Modular Carpe Modular Centric1970 2005 2000 1995 1990 1985 1980 1975 0 1,000 250 500 100 U.S. Modular Carpet Sales Specified Commercial Market Source: Invista, Carpet and Rug Institute, Catalina Research, Inc., and management estimates. • Preferre
Slide 11: Modular Centric Corporate Office Segment
Modular Centric Corporate Office Segment
Slide 12: Interface Changed the Game: Modular Carpet Acceptance in All Segments
Interface Changed “The Game” Driving the Acceptance of Modular Carpet into ALL Segments MARKET SIZECURRENT MODULAR PENETRATION 50% 0% $2B Specified Corporate Office Segment Specified Non-Corporate Office Market $ 800M $ 25B Specified Commercial Soft Floorcovering Market -ALL Segments Total Residenti
Slide 13: 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 choiceSource: 2006 Floor Focus Magazine. 2006 2005 2004 2003 2002 1Carpet Tiles 74% 67% 58% 56% 55% 2 Cork 55
Slide 14: Segmentation Has Lessened Our Dependence on the Commercial Office Market
64%58%54%49%47%36%42%46%51%53%0%25%50%75%100%20012002200320042006Segmentation Has Lessened Our Dependence on the Commercial Office MarketAmericas Modular Corporate Office vs. Non-Corporate Office Sales Mix Percentage(2001 -2006)2001-2004 U.S. Modular -Corporate Office Segment % of Sales2006 U.S. Mod
Slide 15: Education Segment - $400M+ U.S. Opportunity
Education Segment -$400M+ U.S. OpportunityDorm RoomK-12 EducationSegmented Approach
Slide 16: Hospitality - $250M+ U.S. Opportunity
Segmented Approach Hospitality -$250M+ U.S. OpportunityHotel Monaco -Room and Common Area
Slide 17: Entertainment: Movie Theatre
Segmented Approach Entertainment Movie Theatre
Slide 18: Healthcare - $450M+ U.S. Opportunity
Segmented Approach Healthcare -$450M+ U.S. OpportunityParker Adventist Hospital and Clarian Healthcare
Slide 19: Retail - $400M+ U.S. Opportunity
Segmented Approach Retail -$400M+ U.S. OpportunityIn-Store Retail and Shopping Mall Applications
Slide 20: Institutional Segment - $250M+ U.S. Opportunity
Segmented Approach Institutional Segment -$250M+ U.S. OpportunityGovernment and Religious Establishments Government Religious Establishments
Slide 21: Interface Introduces Modular Into the Home
Specified Commercial"Soft" CommercialOther (Residential)Interface Introduces Modular Into the Home … Segmented ApproachU.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, Interface
Slide 22: FLOR is Creating a Category: Modular Carpet for the Home
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 23: Modular Goes in the Home
Segmented Approach Modular Goes in the Home …
Slide 24: FLOR is Expanding its Retail Presence
Segmented Approach FLOR is Expanding its Retail Presence
Slide 25: 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 26: Innovation and Design Leader
Innovation and Design Leader …and the Market Leader in Product DESIGN and FASHION
Slide 27: Favorite Carpet Manufacturers by Establishing Brands That Deliver
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 28: 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 ofnew products5.Offers sales force the opportunity to visit the cus
Slide 29: Global Make-to-Order Model and Global Manufacturing Capabilities
Global Make-to-Order Model … and Global Manufacturing Capabilities Guilford, ME(Panel & Upholstery)LaGrange, GA(Modular)Picton, Australia(Modular)Belleville, Canada(Modular)Chonburi, Thailand(Modular)City of Industry, CA(Broadloom)Holland(Modular)China(Future Modular)Elkin, NC(Panel & Upholstery)Gra
Slide 30: First Mover 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 Sustainability Zero Footprint by the Year 2020 is the Goal …First Mover in Sustainab
Slide 31: We Are Executing on Our Growth Strategy
We Are Executing on Our GROWTH Strategy Maintain CompetitivePosition 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 w
Slide 32: Interface, Inc. Financials
Interface, Inc. Financials
Slide 33: Interface Financial Results
33 $24.9 $60.7 $82.0 $72.4 $31.4 $6.2 $22.4 $20.7 6.9% 8.3% 9.1% 6.3% 4.9% $0 $20 $40 $60 $80 $100200220032004200520064.0% 6.0% 8.0% 10.0% $223 $223 $265 $305 $340 31.6% 30.9% 30.1% 29.1% 29.9% $0 $100 $200 $300 $4002002200320042005200620.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% $176 $186 $204 $223 $2
Slide 34: Segment Financial Performance
34 $162 $129 $117 $127 $135 $144020406080100120140160180200120022003200420052006-15% -10% -5% 0% 5% 10% 15% $115 $110 $119 $125 $13802040608010012014016020022003200420052006-10% -5% 0% 5% 10% 15% $442 $473 $563 $646 $7640100200300400500600700800900200220032004200520060% 5% 10% 15% 20% Segment Financ
Slide 35: The Interface Opportunity
The Interface OpportunitySecular shift to carpet tileEarly 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 manufactu