knoll teletorium presentation

© 2013 Knoll Inc.

Carolyn Barrett, Katie Beattie, Julia Heid, Cara Rubin, Christine TonerD07: M, W 11:15 am

Strategic Plan

Knoll Inc. Modern Always ®

1

© 2013 Knoll Inc.

Agenda

› Company Overview

› Industry & Competitors

› SWOT Analysis

› Strategic Initiatives

› Financial Projections

› Strategic Mapping

2

© 2013 Knoll Inc.

Company Overview

› Design firm producing furniture for

offices, homes, and the government

› Furnishes: Fortune 1000 companies

› Founded: 1938, NYC

› HQ: East Greenville, PA

› Employees: 3,167

› Segments: Office, Studio, Coverings

“Modern furniture should complement architectural space, not compete with it”

Source: Knoll.com, Knoll 10K 3Home

Image captured at Knoll New York Showroom

-Bauhaus Design Philosophy That Knoll Values

© 2013 Knoll Inc.

Industry & Competitors

› Market Share: 24.4%


› Market Share: 12.9%


Source: Steelcase 10K, Herman Miller 10K, Market Share Reporter4

2012 North American Office Furniture Supplier Industry

Industry Value: $9.3B

Knoll Market Share: 8.9%Home

© 2013 Knoll Inc.

SWOT Analysis

5Source: Knoll 10K, Hoovers, First Research, Mergent Online, and Blueport.com

INTERNAL

EXTERNAL

Home

Strengths› Existing partnerships with

well-known designers

› Extensive product portfolio

Weakness› Unproductive marketing activities

› Substantial decrease in net income

Opportunities› Non-furniture retailers expanding

existing home furniture departments

› Consumer demand for textiles

Threats› Increase in furniture product

purchasing cycle

› Fluctuating economic environment

Develop Relationship

With Macy’s, Inc.

Improve Textile Segment Through

HGTV Commercials

Divest Assets Through Selling Toronto Plant

Improve Textile Segment Through

HGTV Commercials

Strategic Initiative 1 Strategic Initiative 2

Strategic Initiative 3Strategic Initiative 2

Home

© 2013 Knoll Inc.

Sell manufacturing plant in Toronto, Canada› 2nd smallest plant› Repeated functions: Manufacturing, Distribution, Warehouses, and Administration

› Within 500 miles of other plants› Canadian sales represent less than 5% of total North American sales

Employee Continuation Covenant

Strategic Initiative 1

Divest Assets

7Home

Location of Toronto Plant

Home

© 2013 Knoll Inc.

Divest Assets Strategic Initiative

1


› 408,000 square foot plant Toronto, Canada

› Value of plant estimated at $35,000,000

› Sell at discounted price of $20,000,000 to HNI

Source: Knoll 10K 8HomeHome

© 2013 Knoll Inc.



Improve Coverings Segment

Source: Knoll 10K, hgtv.com, redbooks.com Home

How will we do this?› Produce textile commercials

and advertisements

› HGTV

› hgtv.com

› HGTV mobile application

› Increase brand awareness

and recognition

9Home

© 2013 Knoll Inc.



Source: Knoll 10K, hgtv.com, redbooks.com 8Home

Why Coverings?

› Growing percentage of sales year over year

› Less expensive alternative for consumers

› Not using all channels to grow business

Why HGTV?

› HGTV viewers are willing and able to

renovate home

› Household income of $83,000

› 78% over 35 years old

› 80% own a home

› 66% female

$400

$110

Home

© 2013 Knoll Inc.




YEAR 2014 2015 2016

SALES $115,580 $122,515 $129,866

OPERATING PROFIT $37,551 $39,804 $42,193

NET INCOME $3,101 $3,228 $3,48411*Numbers expressed in thousands

Source: Knoll 10K

Marketing Communications

Initial Cash Outflow: $5 millionNPV: $3,152,490

Objective: Increase Coverings sales 6% each year for a total increase of 18.27% by 2016

HomeHome

© 2013 Knoll Inc.



10Source: Knoll 10K, Macy’s, Inc. 10K, Hoovers, Blueport

Relationship with Macy’s, Inc.

Five Year Implementation Select Studio

Segment PiecesSell Knoll into Macy’s, Inc.

Sell to Bloomingdale’s Consumers

Home

Sofas, Chairs, Tables Bloomingdale’s specific Consumers: Wealthy & Trendy

HomeHome

© 2013 Knoll Inc.



11Source: Knoll 10K, Macy’s, Inc. 10K, Hoovers, Blueport

› Fulfills consumer design search

› Expanding home department solution

› Category thought leadership

› Differentiating factor: exclusive merchandise

Relationship with Macy’s, Inc.Value Proposition for Bloomingdale’s

HomeHomeHome

© 2013 Knoll Inc.

Marketing Segmentation

Initial Cash Outflow: $15 MillionNPV: $6,323,300

Objective: Increase Studio sales 10% each yearfor a total increase of 61.05% by 2018



Relationship with Macy’s, Inc.

YEAR 2014 2015 2016 2017 2018

SALES $169,949 $186,944 $205,638 $226,202 $248,822

OPERATING INCOME $55,215 $60,737 $66,810 $73,491 $80,841

NET INCOME $4,560 $4,925 $5,517 $6,069 $6,67613*Numbers expressed in thousands Source: Knoll 10K

36 department stores

HomeHome

© 2013 Knoll Inc.

Financial ProjectionsYear 2012 (Actual) 2013 (Actual) 2014 2015 2016 2017 2018

Sales 887,499 862,668 879,921 897,520 915,470 933,780 952,455

Financial Projections Without Strategies

Financial Projections With Strategies

Year 2014 2015 2016 2017 2018

Studio Segment 169,949 186,944 205,638 226,202 248,822

Coverings Segment 115,580 122,515 129,866 129,866 129,866

Total Studio and Coverings Sales 285,529 309,459 335,504 356,068 378,680

Total Sales With Strategies

Year 2014 2015 2016 2017 2018

Total Combined Sales 890,651 920,632 952,789 985,699 1,020,912

13*Numbers expressed in thousands Home

Gross Profit Margin: 32.5% Net Profit Margin: 2.68%

Home

© 2013 Knoll Inc.

Strategic Mapping

Strategic Issue 1

Divest Assets By Selling Canada Plant

Improve Textile Segment Develop Relationship With Macy’s, Inc.

Strategic Initiative 1 Strategic Initiative 2 Strategic Initiative 3

Strategic Objective 1

Strategic Objective 2

Increase textiles sales by 6% to a total increase of 18.27% by 2016.

Increase Studio sales 10% each year to a total increase of

61.05% by 2018.

Strategic Issue 2

How to develop Textile Segment Demand and Awareness?

How to introduce and expand products into department stores?

15HomeHome

© 2013 Knoll Inc. 16

Thank You! Questions?

Company Overview

Industry and Competitors

SWOT Analysis

Divest Assets Overview

Divest Assets Financials

Textile Strategy Overview

Textile Strategy Financials

Macy’s, Inc. Overview

Macy’s, Inc. Financials

Financial Projections

Strategic Mapping

© 2013 Knoll Inc.

AppendixIncome Statement - Studio

Income Statement - Coverings

Five Year Forecast

HGTV Best Case Scenario

HGTV Average Scenario

HGTV Worst Case Scenario

Macy’s Best Case Scenario

Vertical Analysis

Horizontal Analysis

Current Ratio

Quick Ratio

Operating/Activity

Profitability Ratio

Debt Ratio

Dupont Analysis

Business Segments

Business Segment Total Sales

Full Vertical Analysis

Manufacturing Plant Locations

Geographic Sales Distribution

Industry Projected Growth

Porter’s Five Forces

Bloomingdales Locations

Market Analysis

Non-Furniture Retailer Sales

Media Spending

Macy’s Worst Case Scenario

Macy’s Average Case Scenario

Toronto Plant Employee Count

© 2013 Knoll Inc.

Income Statement - Studio

Appendix Home

© 2013 Knoll Inc.

Income Statement - Coverings

Appendix HomeAppendix Home

© 2013 Knoll Inc.

Five Year Forecasted Income Statement


© 2013 Knoll Inc.

Best Case Scenario- HGTV Partnership


© 2013 Knoll Inc.

Average Scenario- HGTV Partnership


© 2013 Knoll Inc.

Worst Case Scenario- HGTV Partnership


© 2013 Knoll Inc.

Best Case Scenario- Macy’s Inc. Partnership

Appendix Home

© 2013 Knoll Inc.

Average Scenario- Macy’s Inc. Partnership

Appendix Home

© 2013 Knoll Inc.

Worst Case Scenario- Macy’s Inc. Partnership

Appendix Home

Vertical Analysis2013 2012 2011

Sales 100% 100% 100%

Cost of Goods Sold 67.51% 66.83% 68.08%

Total Operating Expense 27.73% 23.26% 22.58%

Operating Profit 4.76% 9.90% 9.34%

Interest Expense 0.69% 0.72% 1.06%

Other (Income) Expense (0.40%) 0.36% (0.16%)

Net Profit Before Taxes 4.47% 8.83% 8.45%

Taxes 1.79% 3.19% 3.34%

Net Profit After Tax 2.68% 5.63% 5.11%

Source: Knoll 10K Appendix HomeAppendix Home

Horizontal AnalysisIncrease or Decrease

BALANCE SHEET 2013 2012 Amount Percent

Total Current Assets 236.20 258.53 (22.33) (9.45%)

Net Fixed Assets 137.89 124.84 13.05 9.46%

Other Noncurrent Assets 303.24 311.69 (8.45) (2.79%)

Total Assets 677.33 695.06 (17.73) (2.62%)

Total Current Liabilities 168.31 175.95 (7.64) (4.54%)

L / T Debt (Inc. Financial Leases) 173.00 193.00 (20.00) (11.56%)

Other Noncurrent Liabilities 107.59 138.01 (30.42) (28.27%)

Total Liabilities 448.90 506.96 (58.06) (12.93%)

Preferred Stock - - - 0.00%

Common Stock 228.44 188.10 1.21 0.53%

Total Stockholders' Equity 228.44 188.10 1.21 0.53%Total Liabilities & Stockholders' Equity 677.34 695.06 (17.72) (2.62%)

Source: Knoll 10K*Amount in millions Appendix HomeAppendix Home

Current Ratio

Source: Hoovers

RatiosLiquidity


Quick Ratio

Source: Hoovers

Furniture Companies


RatiosACTIVITY

Knoll Steelcase Herman Miller Industry Median

Inventory Turnover 5.51 13.51 16.18 4.55

Asset Turnover 1.25 1.86 1.94 0.94

Source: Hoovers Appendix HomeAppendix Home

RatiosPROFITABILITY

Knoll Steelcase Herman Miller Industry Median

Gross Profit Margin 32.49% 31.68% 33.53% 43.94%

Net Profit Margin 2.99% 3.14% (1.17%) 4.77%

Return on Equity 13.26% 14.34% (6.39%) 8.66%

Return on Assets 3.74% 5.83% (2.28%) 4.43%

Source: Hoovers Appendix HomeAppendix Home

Ratios

DEBT

Knoll Steelcase Herman Miller

Total Debt* $448.90 $1,049.60 $618.80

Debt to Equity 0.76 1.55 0.67

Equity Multiplier 2.97 2.55 2.66

Sources: Knoll 10K, Herman Miller 10K, Steelcase 10K, Hoovers*Debt in thousands Appendix HomeAppendix Home

Dupont Analysis

Knoll Steelcase Herman Miller

Net Profit Margin 2.68% 3.14% (1.17%)

Asset Turnover 1.25 1.86 1.94

ROA 3.74% 5.83% (2.28%)

Equity Multiplier 2.97 2.55 2.66

ROE 13.26% 14.34% (6.39%)

Source: HooversAppendix HomeAppendix Home

Business Segments›I) Office

Seating, storage, tables desks

›II) StudioLounge seating, café and dining chairs, barstools

›III) CoveringsTextiles, felt, leather

Source: Knoll 10K Appendix Home

Business Segments/ Total Sales

Total Sales Office Studio Coverings

2013 862,668 599,554 154,417 108,696

2012 887,499 633,674 147,324 106,499

2011 922,200 663,984 147,324 105,130


Full Vertical AnalysisINCOME STATEMENT 2013 2012 2011

Sales Revenue 862.67 100.00% 887.50 100.00% 922.20 100.00%

Less: Cost of Goods Sold 582.39 67.51% 593.15 66.83% 627.80 68.08%

Gross Profits $280.28 32.49% $294.35 33.17% $294.40 31.92%Less: Operating Expenses:

General / Admin. Exp. 224.62 26.04% 206.45 23.26% 202.08 21.91%

Restructing Cost 5.70 0.66% 0.00 0.00% 0.70 0.08%

Intangible Asset Impairment Charge

8.90 1.03% 0.00 0.00% 0.00 0.00%

Curtailment Benefit - - 5.45 0.59%Total Operating Expenses 239.216 27.73% 206.450 23.26% 208.221 22.58%

Operating Profits 41.064 4.76% 87.900 9.90% 86.179 9.34%

Less: Interest Expense 5.941 0.69% 6.350 0.72% 9.753 1.06%

Less: Other (income) Expense (3.430) -0.40% 3.215 0.36% (1.508) -0.16%

Net Profits Before Taxes 38.553 4.47% 78.335 8.83% 77.934 8.45%

Less: Taxes 15.4030 1.79% 28.3350 3.19% 30.8150 3.34%

Net Profit After Taxes $23.150 2.68% $50.000 5.63% $47.119 5.11%


Manufacturing Plant Locations


© 2013 Knoll Inc.

Market Analysis

Source: Business.library.wisc.edu Appendix HomeAppendix Home

http://business.library.wisc.edu/resources/kavajecz/09%20Fall/hermanmiller_rep.pdf

© 2013 Knoll Inc.

Estimated Employee Count of Canada Knoll Manufacturing Plant

•

•Total Employees of Knoll – •3,167 Employees• •Total Manufacturing Plant Square Footage – •2,424,000 Square Feet / 408,000 (Size of Canada Plant) = (16.8%) = 17%• •17% x 3,167 Total Employees = (538) Approximately 500 Employees

Appendix Home Appendix HomeAppendix HomeAppendix Home

knoll teletorium presentation

Documents

strategic plan knoll

assets strategic initiative

knoll values

b knoll market share

home image

coverings segment source

home household income

coverings modern furniture