$FBN FBN Furniture Brands Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF

7/29/2019 $FBN FBN Furniture Brands Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF

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Investor Presentation


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Matters discussed in this document and in our public disclosures, whether written or oral, relating to future events or ourfuture performance, including any discussion, express or implied, of our anticipated growth, operating results, future earningsper share, or plans and objectives, contain forward-looking statements within the meaning of Section 27A of the Securities Actof 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are often identified by the words will,

believe, positioned, estimate, project, target, continue, intend, expect, future, anticipates, and similarexpressions that are not statements of historical fact. These statements are not guarantees of future performance and involvecertain risks, uncertainties and assumptions that are difficult to predict. Our actual results and timing of certain events coulddiffer materially from those anticipated in these forward-looking statements as a result of certain factors, including, but notlimited to, those set forth under ``Risk Factors'' in our Annual Report on Form 10-K for the year ended December 31, 2011,

and in our other subsequent public filings with the Securities and Exchange Commission. Such factors include, but are notlimited to: risks associated with the execution of our strategic plan; changes in economic conditions; loss of market share dueto competition; changes in our pension funding obligations; failure to forecast demand or anticipate or respond to changes inconsumer tastes and fashion trends; failure to achieve projected mix of product sales; business failures of large customers;distribution realignments; manufacturing realignments and cost savings programs; increased reliance on offshore (import)sourcing of various products; fluctuations in the cost, availability and quality of raw materials; product liability uncertainty;environmental regulations; future acquisitions; loss of key personnel; impairment of intangible assets; anti-takeover provisionswhich could result in a decreased valuation of our common stock; loss of funding sources or our inability to secure additionalfinancing to meet our operating and capital needs; and our ability to open and operate new retail stores successfully. It isroutine for internal projections and expectations to change as the year or each quarter in the year progresses, and therefore itshould be clearly understood that all forward-looking statements and the internal projections and beliefs upon which we baseour expectations included in this report or other periodic reports are made only as of the date made and may change. Whilewe may elect to update forward-looking statements at some point in the future, we do not undertake any obligation to updateany forward-looking statements whether as a result of new information, future events or otherwise.

Caution Regarding Forward-Looking Statements

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Industrys Top Portfolio of Brands

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Four Major Business Groups

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DedicatedRetail

WholesaleBrands

DesignerBrands

SpecialMarkets

FBN

Components: ThomasvilleCompany-OwnedStores

Dealer Owned Stores Galleries Designer Showrooms

Lane Wholesale Broyhill Wholesale

Drexel Heritage Hickory Chair Henredon Maitland-Smith Lane Venture Pearson

Contract Homebuilders Licensing RTA

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Our Focus

Maximize free cash flow through:

Profitable sales growth

Manufacturing efficiencies

Aggressive cost reductions and controls

Improving inventory and working capital management

Disciplined capital investment

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Business Strategy and Plan

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Focus on driving distribution for wholesale brands

Develop great product at competitive prices Aggressively pursue lower price point/high volume segments Leverage brands, service and prudent advertising to break the tie

Develop and execute integrated Thomasville retail model Refine prototype store model Balance media mix to optimize advertising to drive traffic Pursue multi-channel model

Transform business to simplify structure and significantly reduce costs Restructure organization into leaner operating company Focus on four business groups: Dedicated Retail, Wholesale, Designer Brands

and Special Markets Combine non-commercial functions where possible and drive efficiencies Optimize supply chain network (plants, warehouses, freight)

Value engineer product offerings Optimize inventory

Vertically integrate business across value chain Forward integratepursue disciplined retail expansion Backward integrateown more off-shore manufacturing and mixing facilities

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Investment Considerations

Well positioned in a large fragmented industry

Opportunistic programs to drive profitable sales

Continued vertical integration opportunities

Optimizing manufacturing

Cost reduction opportunities

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Price Tier Defined as: Average retail prices paid by consumers

Niche vs. mass appeal based on: Breadth of the brands product portfolio; Number of stylesbrand represents; and Diversification of brand across distribution channels.

NicheAppeal

Price Tier 4

MassAppeal

$6 B retail

$30 B retail

$13 B retail$4 B retail

$3 B retail

$10 B retail Price Tier 3

Price Tier 2

Price Tier 1

Broadest Portfolio In $60+ Billion Industry

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FBN Has 4 of the 11 Most Recognized Brands

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(Unaided + Aided)

Note: Survey completed in 2010


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Dedicated Retail Sales Programs

New Thomasville retail store format andenhancements

Multi-channel Thomasville model

Migration to updated and transitionalfurniture styles at retail

Targeted marketing initiatives

Designer showrooms with multi-brandproduct

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Thomasville New Retail Store Appearance and Better Layout

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Then Now

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Designer Showrooms

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Leverage strong Lane and Broyhill brands and service to

drive distribution

Target all key product category, style, and price segmentsfor mass market

Migration to updated and transitional furniture styles

Improved Broyhill upholstery product and sales

Broyhill case goods mixing program

Enhanced Lane express quick-ship program

Innovative Lane product offerings (theatre seating,technology, IRest)

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Wholesale Sales Programs

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Lane Portfolio of Product Style and Price Points

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factory

factory

RetailCustomer

AsiaMixingCenter

Containersto

Customers

Broyhill Offshore Case Goods Mixing Program

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AsiaFactories

RetailCustomer

RetailCustomer


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Broyhill Medici Transitional Introduction


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Designer Brands Sales Programs

Leveraging Designer Brands at retail and in designer

showrooms

Major focus on interior designers

Migration to updated and transitional furniture styles

Expanding price bands of good-better-best offerings

International opportunities and mixing program

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Opportunity to Further Leverage

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Leading manufacturer of high-end furniture for over 100 years

Best-in-class custom finishing and quick-ship capabilities

Workshop for designers

Leading high-end outdoor furniture brand

Bringing indoor furniture outdoor

High-end upholstery furniture brand

Unique custom fabrics

Lane Venture

Pearson

Hickory Chair

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Best-In-Class Designer Brands

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Updated and contemporary furniture leader

Products and styles that amaze

Leader in high-end case goods and upholstery

Strong brand reputation

Brand that attracts and product that overwhelms

Leader in unique hand-crafted custom furniture,accessories, and gaming

Henredon

Maitland-Smith

Drexel Heritage

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Special Markets Sales Programs

Dedicated focus on licensing business

Opportunity with mass retailers with Ready-to-Assemble

Increased focus on contract businesses:

HospitalityGovernment

Healthcare

Education

Homebuilders

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Continued Vertical Integration

Back-end integration:

New manufacturing plant in Indonesia

New cut-and-sew facility in Mexico

Front-end integration:Disciplined retail store expansion

Leverage high-end brands in designer showroomformat

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FBNs New Indonesia Plant

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Indonesia Plant Blends Modern Equipment & Craftsmanship

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Modern conveyor system improvesefficiency in operations

Intricate hand carving is a hallmark

of the Indonesian operations


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Plant Production in Indonesia

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Continues to increase


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Mexican Cut-and-Sew Operations

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2 days

2 days1 day

Yucatan is sewing area for many industries (furniture, automotive, clothing) Highly skilled local workforce

Site is 20 miles from modern container port Began operations in March 2011 Modest capital requirement FBN is leasing existing facility with 3-year purchase option Government incentives for training, initial costs


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Beginning of 201145 associates in Mexico

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End of 2012over 500 associates in Mexico

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Optimizing Manufacturing

Continued implementation of lean manufacturing:

Removal of waste and inefficiencies

Increasing first time quality

Less accidents

Lower material costs

Increased facility utilization

Improving manufacturing metrics

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Lean/Cellular Manufacturing Before

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Lean/Cellular Manufacturing After

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Increasing Utilization & Improving Metrics

Increased facility utilization:

Consolidating manufacturing plants

Optimizing space for manufacturing and officepersonnel

Continued improvements in manufacturing metrics:

Safety, quality, service, and cost

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Cost Reduction Opportunities

Move from holding company model to operating company

model

Eliminating dark leases from past retail strategy

Improving retail leases

Strategic sourcing

Relentless focus on discretionary spend

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Siloed Operating Companies With Separate Organizational Structures

Before 2008: Holding Company Model

HumanResources

Finance

InformationTechnology

Supply Chain

Marketing

HumanResources

Finance


Supply Chain

Marketing

HumanResources

Finance


Supply Chain

Marketing

HumanResources

Finance


Supply Chain

Marketing

HumanResources

Finance


Supply Chain

Marketing

Sales Sales Sales Sales Sales

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Current: Operating Company Model

Human Resources

Ensures common processes, streamlined service delivery, and operational

excellence while reducing costs

Finance/IT

Supply Chain

Sales

Brand Brand Brand Brand

FBN

Sales Sales Sales

Brand

Sales

Marketing and Product Research

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Continues to evolve


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New Model Continues to Drive Out Costs

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Reported Selling, General & Administrative Costs ($, millions)

$469.4

$311.9

$278.9

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

FY 2007 FY 2011 3Q 2012 TTMQ3 2012 TTMFY 2011FY 2007


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Past Retail Strategy Added Legacy Costs

In 2002, FBN launched a program to open more single-brand stores

FBN provided either lease guarantees or sub-leases to independentoperators of Lane, Broyhill, Thomasville or Drexel Heritage stores

Beginning in 2007, FBN abandoned the Lane/Broyhill retail concept

FBN remains liable for 21 dark store leases with a remaining netexpense burden of approximately $13.4 million

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Dark Stores

2013 4.9

2014 4.7

2015 2.7

Thereafter 1.1Total Obligation 13.4$

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Note: Dark store expenses are offset by sublease income in some cases


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Thomasville Lease Roll-off Provides Opportunity

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As legacy store leases expire, FBN can: Renew existing lease at lower, market rates

Move to a smaller store in a comparable location Move to a better location within that market Close the store

IncreaseSales

DecreaseCosts

0

10

20

30

40

50

60

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 2015+

Remaining Legacy Store

Leases By Quarter
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Conclusion Transformation begun in 2008 has yielded results and continues to show

progress through YTD Q3 2012 vs. 2007:

200 basis point improvement in reported gross margin

$120 million reduction in reported SG&A

Strong improvement in quality, safety, and delivery metrics

Management continuing to target every aspect of FBN for improvement

Operational focus on product, sales, manufacturing and customer service

Financial focus on cash generation, through profitable sales growth,

working capital improvements, cost reductions, and disciplined capitalinvestment

Increases in sales volume can drive strong operating leverage

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Investor Presentation

Documents

$FBN FBN Furniture Brands Jan 2013 Corporate Investor ICR Presentation Slides Deck PPT PDF