Bruce Zwicker INDUSTRY CONSULTANT

RANK COMPANY LOCATION 2017 SALES (Projected)

1 Haines Glen Burnie, MD $490m 2 BPI Memphis, TN $230m 3 Belknap White Group Mansfield, MA $210m 4 All Tile Elk Grove, IL $200m 5 Galleher Santa Fe Springs, CA $198m 6 Tri-West Santa Fe Springs, CA $168m 7 NRF Distributors Augusta, ME $159.5m 8 William M. Bird Charleston, SC $157m 9 Apollo Dist. Co. Fairfield, NJ $156m 10 FlorStar Sales Romeoville, IL $142.8m

TOP 10 U.S. FLOORING DISTRIBUTORS

AGENDA TOPICS

• Most Important Points

• Wood Flooring Demand

• U.S. Wood Flooring Supply

• Summary NOTES: Information is from various sources Flooring statistics are macro, not indicative of your area Flooring statistics are directional and not precise

MOST IMPORTANT POINTS • U.S. and Europe wood flooring demand growth slowed

– Price and installation expensive relative to alternatives – In U.S., average discretionary income for high ticket items not grown

• Wood flooring remains consumers’ aspirational flooring choice

• U.S. produces less and imports more wood flooring • LVT/MLF/WPC/SPC are taking share from wood flooring • Wood flooring isn’t going away - needs to be sold and

its story told

WOOD FLOORING MARKET • More than 6 Billion square feet

• Increased 5% per year since 2012

• China is 30-35% of the total world market

• North America is 25-30% of total world market

Sources: BAZ, Market Insights & Catalina Research, Other

NORTH AMERICAN FLOORING • Total North American flooring market is

approximately $29 Billion • U.S. Market is approximately $26.5 Billion - 90%

of North America

– U.S. wood flooring is approximately $3.5 Billion – Growth rate slowing – estimates vary – perhaps – 2% to -4% – Wood flooring is approximately 13% of total U.S. flooring – Higher percentage than most countries

CONSUMPTION OF FLOOR COVERING PRODUCTS IN WESTERN EUROPE, 2017

Textile 41%

Stone/Ceramic 23%

Laminate 13%

Vinyl 15%

Wood, 5% Other, 3%

Source: FEP Estimations

Carpet & Rugs 44%

Hardwood 13%

Ceramic 14%

LVT 12%

Vinyl 6%

Stone 6%

Laminate 4%

Other 1%

2018 U.S. MARKET BY PRODUCT TYPE

LVT 25% growth per year. Almost all of total flooring growth.

U.S. WOOD GROWTH TRENDS 2018 $3.5 billion • Approx. $200 – 300 million Industrial Use

(Truck beds, Railcars, etc.) • Approx. $300 – 400 million Unfinished Flooring • Approx. $2.7 billion Prefinished Flooring

Sources: BAZ, Market Insights, NWFA & Catalina Research

U.S. WOOD MARKET BY END USE

Sources: NWFA, BAZ & Catalina Research

Commercial is small Maximum of 10% - 15%

New Residential 20% - 30%

Good but slowing growth

Slowing growth

Residential Remodel 60% - 65%

Also called Retail

U.S. WOOD GROWTH TRENDS 2002 – 2015 7% to 10% per year

2016 – 2017 2% to 5% per year

Wood flooring sales are slowing primarily due to LVT

Wood is still the homeowners top choice But, wood is expensive

Sources: BAZ, Market Insights, NWFA & Catalina Research

12 Sources: BAZ, Market Insights & Catalina Research

Independent Dealers are losing share in retail/remodeling

% of Total Retail Flooring Sales

Independent Dealers 40%

Home Depot 15%

Lowes 10%

Floor & Décor 5%

Lumber Liquidators 2%

Other retailers 28%

Approximately 13,000 Independent Floor Covering Dealers with approximately 17,000 store locations.

TOP U.S. RETAILERS – ALL FLOORING TYPES

TRENDS IN ENGINEERED WOOD FLOORING

Engineered Wood 54%

Solid Wood 46%

% of Wood $ Sales

Engineered Wood 57%

Solid Wood 43%

% of Wood SF Solid wood was over 50% of the market. Engineered wood is increasing.

2018

Sources: BAZ, NWFA & Catalina Research

WOOD FLOORING PRICE TRENDS Solid wood flooring price has increased since 2007

Engineered wood price has decreased since 2007

2007 $2.24/SF 2017 $2.05/SF

Sources: BAZ, NWFA & Catalina Research

0%

20%

40%

60%

80%

100%

Other Imports

China Imports

U.S. Production

U.S. FLOORING IMPORTS & PRODUCTION

Sources: Market Insights & US International Trade Commission

Imports are almost 50% of U.S. consumption. China is at least a third of imports. China is 50% of wood and 85% of LVT/MLF imports.

16

US Wood Flooring ($ Billion)

Year Wood Market % of Total US Flooring

US Production Imports Imports % of Market

1998 $1.4 7% $1.3 $0.1 7%

2006 $2.5 10% $2.2 $0.4 15%

2009 $1.5 9% $1.0 $0.5 30%

2018 $3.1 13% $1.4 $1.6 52%

U.S. production has decreased

U.S. WOOD FLOORING

WOOD FLOORING MAJOR PRODUCERS • Top Three - Armstrong, Shaw and Mohawk = $800+ mil

– Includes OEM imports

• Mullican, Somerset, Lumber Liquidators, Mannington, American OEM and Others = $400 - $500 mil

• Industrial and Other smaller producers = $200 - $300 mil • U.S. Production is not very profitable and there is over

capacity. • Manufacturers reduced production, raised prices, and sold

all or part of their wood divisions

18

U.S. Wood & Bamboo Flooring Imports % of Import $

2008 2014 2015 2018 (est.)

China 50% 72% 70% 55%

Canada 11% 8% 8% 9% Vietnam 0% 1% 2% 7% Cambodia 0% 0% 1% 7% Indonesia 2% 2% 3% 4% Thailand 1% 0% 1% 1% Brazil 20% 3% 3% 3% Other 15% 11% 12% 14%

Southeast Asia imports increased

WOOD & BAMBOO IMPORTS

MOST IMPORTANT POINTS • U.S. and Europe wood flooring demand growth slowed

– Price and installation expensive relative to alternatives – In U.S., average discretionary income for high ticket items not grown

• Wood flooring remains consumers’ aspirational flooring choice

• U.S. produces less and imports more wood flooring • LVT/MLF/WPC/SPC are taking share from wood flooring • Wood flooring isn’t going away - needs to be sold and

its story told

BRUCE ZWICKER

CHRIS ZIZZA

DREW HASH

ISABELLE BROSE

MICHAEL MARTIN

PANEL OF INDUSTRY LEADERS

Chris Zizza PRESIDENT & CEO

C&R FLOORING

Drew Hash VP SHAW INDUSTRIES

Isabelle Brose MANAGING DIRECTOR FEP

PANEL OF INDUSTRY LEADERS

THREE THEMES

Innovation in flooring

Promotion of wood flooring

Labor issues in wood flooring installation

EUROPEAN PARQUET MARKET

EUROPEAN PARQUET MARKET

• Everybody wants parquet • Still its market share remains at 5%+ • 2006 - Real Wood initiative (licenses, website)

EUROPEAN PARQUET MARKET

• 5-2-7 Project – Sensitizing the European consumer to opt for parquet

as THE flooring solution – 2017 - SmartBlogs – Next steps… when & why parquet falls out of the consumers’

decision journey Optimize the sales funnel - focusing efforts on right stages, channels and communication content