Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Q4 2022 Earnings Presentation
20 slides from Armstrong World Industries's earnings presentation, Feb 21, 2023
Slide 1: 4th Quarter & Full Year 2022 Earnings Presentation
4th Quarter & Full Year 2022 Earnings Presentation February 21, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement Disclosures in this release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, those relating to future financial and operational results, expected savings from cost management initiatives
Slide 3: Basis of Presentation Explanation
Basis of Presentation Explanation • Results throughout this presentation are presented on a normalized basis. • We remove the impact of certain discrete expenses and income in certain measures including adjusted net sales, adjusted EBITDA, adjusted diluted earnings per share (“EPS”) and adjusted fre
Slide 4: GAAP and non-GAAP Financial Results
GAAP and non-GAAP Financial Results Q4 2022 Q4 2021 Full Year 2022 Full Year 2021 Consolidated Company Results AWI AWI AWI AWI Net Sales $304.5 $282.5 $1,233.1 $1,106.6 Net Earnings $48.8 $41.9 $202.9 $183.2 Operating Income $70.6 $55.5 $278.7 $260.0 Adj. EBITDA* $92 $88 $385 $372 Operating Income M
Slide 5: Solid Sales & Earnings Growth in a Challenging Market
Solid Sales & Earnings Growth in a Challenging Market Q4 2022 Summary 1 Net Sales increased 8% from prior year driven by strong AWI Net Sales up 8% Architectural Specialties growth and modest Mineral Fiber growth $283 +18% $305 +4% Mineral Fiber Average Unit Value (“AUV”) growth of 15% in Q4, 2 driv
Slide 6: Improved AUV Ahead of Inflation Offset by Lower Volumes
Improved AUV Ahead of Inflation Offset by Lower Volumes Q4 2022 Consolidated Company Key Metrics Q4 2021 Q4 2022 Variance Net Sales $283 $305 8% Adj. EBITDA* $88 $92 5% Adj. EBITDA Margin*(%) 31.0% 30.1% (90bps) Adj. Diluted Earnings Per Share* $1.09 $1.08 (1%) $21 Adj. EBITDA* Bridge VPY $100 $2 $9
Slide 7: Favorable AUV Offset Lower Volumes and Input Cost Inflation
Favorable AUV Offset Lower Volumes and Input Cost Inflation Mineral Fiber Q4 2022 Results Net Sales Mineral Fiber Key Highlights $216 $207 +4% • AUV up 15% to strongest level of 2022 with improved mix benefit • Market demand weakened from 3Q levels • Continued to deliver price-over-inflation dollars
Slide 8: Double-Digit AS Sales and Adjusted EBITDA Growth
Double-Digit AS Sales and Adjusted EBITDA* Growth Architectural Specialties Q4 2022 Results Net Sales Key Highlights $89 • 9th consecutive quarter of double-digit sales growth $75 +18% • 5th consecutive quarter of Adjusted EBITDA Margin* expansion • Adjusted EBITDA* up 22% with continued year-over-
Slide 9: Double-Digit Sales Growth Partially Offset by Inflation & Growth Investments
Double-Digit Sales Growth Partially Offset by Inflation & Growth Investments Full Year 2022 Consolidated Company Key Metrics FY 2021 FY 2022 Variance Net Sales $1,107 $1,233 11% Adj. EBITDA* $372 $385 4% Adj. EBITDA Margin*(%) 33.6% 31.2% (230bps) Adj. Diluted Earnings Per Share* $4.36 $4.74 9% Adj.
Slide 10: Adjusted Free Cash Flow Growth Driven by WAVE Dividends
Adjusted Free Cash Flow* Growth Driven by WAVE Dividends Adj. Free Cash Flow* Full Year 2022 vs. PY $250 $26 $1 $221 $5 $200 $3 $190 ($5) $150 $100 2021 Adj. Operating Capex Interest WAVE Other 2022 Cash Flow (1) Paid Dividends (2) 10 *Non-GAAP measure. See appendix for reconciliation to nearest GAA
Slide 11: Full Year 2023 Guidance
Full Year 2023 Guidance Driving Growth in a Challenging Macroeconomic Environment 2023 Guidance $1,260M to $1,310M Adjusted Diluted $4.80 to $5.05 Net Sales 2% to 6% YoY EPS* 1% to 7% YoY $395M to $420M Adjusted Free $230M to $250M Adjusted EBITDA* 3% to 9% YoY Cash Flow* 4% to 13% YoY Commentary(1)
Slide 12: Appendix
Appendix
Slide 13: Full Year 2023 Assumptions
Full Year 2023 Assumptions Segment Net Sales Adjusted EBITDA Margin* Mineral Fiber +1% to +5% growth YoY >37% Architectural Specialties** >6% growth YoY >18% Consolidated Company Metrics Full Year 2023 Capital expenditures $75M to $85M Depreciation and amortization $83M to $88M Interest expense $35M
Slide 14: Q4 2022 Adjusted EBITDA Reconciliation
Q4 2022 Adjusted EBITDA Reconciliation For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 V 2022 2021 V Net earnings $49 $42 $7 $203 $183 $20 Less: Net earnings (loss) from discontinued operations - - - 3 (2) 5 Earnings from continuing operations, Reported $49
Slide 15: Q4 2022 Adjusted Diluted Earnings per Share Reconciliation
Q4 2022 Adjusted Diluted Earnings per Share Reconciliation For the Three Months Ended December 31, For the Twelve Months Ended December 31, Per Per Per Per 2022 Diluted 2021 Diluted V 2022 Diluted 2021 Diluted V Share Share Share Share Earnings from continuing operations, Reported $49 $1.07 $42 $0.8
Slide 16: Q4 2022 Adjusted Free Cash Flow Reconciliation
Q4 2022 Adjusted Free Cash Flow Reconciliation . For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 V 2022 2021 V Net cash provided by operating activities $63 $49 $14 $182 $187 ($5) Net cash provided by (used for) investing activities $20 ($9) $29 $28 ($14) $
Slide 17: Q4 2022 Segment Reported Operating Income (Loss) to Adj. EBITDA
Q4 2022 Segment Reported Operating Income (Loss) to Adj. EBITDA ARCHITECTURAL UNALLOCATED ARCHITECTURAL UNALLOCATED MINERAL FIBER MINERAL FIBER SPECIALTIES CORPORATE SPECIALTIES CORPORATE For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 V 2022 2021 V 2022 20
Slide 18: 2023 Adjusted EBITDA Guidance Reconciliation
2023 Adjusted EBITDA Guidance Reconciliation For the Year Ending December 31, 2023 Low to High Net Income $208 to $219 Add: Income tax expense 68 73 Earnings before income taxes $276 to $292 Add: Interest expense 35 37 Add: Other non-operating (income) (7) (6) Operating Income $305 to $323 Add: RIP
Slide 19: 2023 Segment Adjusted EBITDA Reconciliation
2023 Segment Adjusted EBITDA Reconciliation Full Year 2023 (Supports low-end Adj. EBITDA Margin % assumption) Architectural Unallocated Mineral Fiber Specialties Corporate Net Sales $892 $366 $- Operating Income $261 $48 ($3) Add: RIP expense(1) - - 3 Add: Acquisition-related impacts(2) - 4 - Adjust
Slide 20: 2023 Adjusted Diluted EPS & Adjusted Free Cash Flow Guidance Reconciliations
2023 Adjusted Diluted EPS & Adjusted Free Cash Flow Guidance Reconciliations For the Year Ending December 31, 2023 For the Year Ending December 31, 2023 Per Per Low Diluted to High Diluted Low to High Share(1) Share(1) Net Income $208 $4.62 to $219 $4.87 Net cash provided by operating activities $22
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