Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Baird Global Industrial Conference 2023
32 slides from Armstrong World Industries's conference presentation, Nov 7, 2023
Slide 1: Armstrong World Industries Investor Presentation
Armstrong World Industries Investor Presentation November 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement Disclosures in this presentation 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 initia
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 Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), adjusted diluted
Slide 4: GAAP and non-GAAP Financial Results
GAAP and non-GAAP Financial Results AWI Consolidated Results Q3 2023 Q3 2022 YTD 2023 YTD 2022 Net sales $347.3 $325.0 $982.9 $928.6 Earnings from continuing operations $69.5 $54.5 $177.0 $151.1 Operating income $100.2 $73.3 $257.4 $208.1 Adj. EBITDA* $125 $105 $332 $294 Operating income margin (ope
Slide 5: GAAP and non-GAAP Financial Results
GAAP and non-GAAP Financial Results Full Year 5-Year CAGR AWI Consolidated Results 2017 2018 2019 2020 2021 2022 (‘17 – ‘22) Net sales $893.6 $975.3 $1,038.1 $936.9 $1,106.6 $1,233.1 6.7% Net earnings (loss) $119.6 $185.9 $214.5 ($99.1) $183.2 $202.9 11.2% Operating income $243.8 $249.4 $317.4 $254.
Slide 6: Armstrong World Industries, Inc. (NYSE:AWI)
Armstrong World Industries, Inc. (NYSE:AWI) For more than 160 years, we have built Leader in the design & manufacturing of innovative ceiling & wall solutions in our business on the Americas. trust and integrity. FULL YEAR 2022 CONSOLIDATED RESULTS Armstrong Manufacturing NET ADJUSTED ADJUSTED ADJUS
Slide 7: Our Focus on Purpose-Driven Sustainability
Our Focus on Purpose-Driven Sustainability “Through our ambitious sustainability agenda, OUR PURPOSE we are cultivating thriving environments for employees Redefining the environments and communities; more actively meeting demands for where we: healthier, circular products; and doing more with less
Slide 8: Uniquely Positioned to Win in an Attractive Category
Uniquely Positioned to Win in an Attractive Category Attractive Category Why We Win Ceiling & wall solutions is unique AWI is advantageously positioned to within the building products industry. win in this category. Consolidated industry structure with exposure to Strongest and most trusted brand di
Slide 9: Creating a Differentiated, Focused Buildings Products Company
Creating a Differentiated, Focused Buildings Products Company Separated from Armstrong Flooring to Announced sale of non-Americas business. Initiated quarterly cash dividend. focus on ceiling and wall solutions. Completed 1 AS acquisition. Completed 2 AS acquisitions. 2016 2017 2018 OUR MISSION At A
Slide 10: Total Customer Experience Supported by Complementary Segments
Total Customer Experience Supported by Complementary Segments A unique value proposition for our customers differentiates AWI in the industry Net Sales by Total Customer Project Type* 3% Key Attributes Experience Mineral Fiber 5-Year Sales • Consistent AUV improvement 35% 30% CAGR1 • Targeted manufa
Slide 11: Successful Joint Venture Provides Important Competitive Advantage
Successful Joint Venture Provides Important Competitive Advantage • Established in 1992…50/50 joint venture leveraging expertise of both partners Go to market expertise • North American market leader in ceiling suspension system (grid) & integrated solutions • Innovation mindset • $458 million in sa
Slide 12: Innovation Supports Consistent Mineral Fiber AUV Growth
Innovation Supports Consistent Mineral Fiber AUV Growth New products and features rewarded in the market Product Vitality Index(1) of >30% Robust & Consistent AUV(2) Performance 50% Demonstrates the Power of Focus Annual MF AUV (in $) 40% 5% 30% CAGR 20% 10% 0% 2012 2014 2016 2018 2020 2022 2012 201
Slide 13: Comprehensive Range of Innovation Further Differentiates AWI
Comprehensive Range of Innovation Further Differentiates AWI Unrivaled product development to meet customer needs with higher value products WAVE (grid): SIMPLESOFFIT® MF: ACOUSTIBUILT® Seamless Acoustical Ceiling System MF: CALLA® HEALTH ZONE AS: FELTWORKS® Blades AS: METALWORKS™ Linear 13
Slide 14: Growth Initiatives Support Volume and AUV Performance
Growth Initiatives Support Volume and AUV Performance Initiatives strengthen both Mineral Fiber and Architectural Specialties segments Growth Impact Large Installed Base Provides Overview Volume AUV Key stakeholders Sizable Opportunity to Influence Digital platform to deliver end-to- Repair and Faci
Slide 15: Why AWI and Why Now?
Why AWI and Why Now? Peer-leading profitability and resilient cash flow differentiate AWI in the building products space 1 Unique industry-leading position with ability to grow Mineral Fiber sales despite market headwinds, supported by strong AUV Strong AS segment organic growth along with strategic
Slide 16: Consistent, Strong Adjusted Free Cash Flow Generation
Consistent, Strong Adjusted Free Cash Flow* Generation Driven by Attractive Business Fundamentals Capital Allocation Priorities Adjusted Free Cash Flow* $236 $244 $212 ($ in millions) $221 1 Reinvesting into the business $190 $195 67% 64% 2 61% 51% 57% 59% Strategic acquisitions & partnerships 2018
Slide 17: Balanced Approach to Capital Deployment Funds All Priorities
Balanced Approach to Capital Deployment Funds All Priorities Capital Deployment by Use Track Record (2018 - Q3 2023 YTD) ($ in millions) $409 $413M in capital $410 expenditures $360 $295 $304 $310 $287 $260 $205 9 AS acquisitions $202 $210 totaling $261M $160 $110 $60 +$1 B of share $10 repurchases
Slide 18: End Market Vertical Outlook
End Market Vertical Outlook* Diverse end market exposure provides portfolio effect on sales performance Percent of AWI Sales by Vertical** Outlook* Market Insights 10% Slightly Continued headwinds from online shopping balanced by Retail population shifts to suburbs and multi-use in urban areas. Nega
Slide 19: Full Year 2023 Guidance
Full Year 2023 Guidance1 Driving growth in a challenging macroeconomic environment Commentary2 Challenging environment remains, but better-than- expected market supports improved outlook Net Sales Adjusted EBITDA* $1,280M to $1,295M $418M to $426M Expect lower market demand, partially offset by init
Slide 20: Appendix
@) Appendix
Slide 21: Full Year 2023 Assumptions
Full Year 2023 Assumptions1 Segment Net Sales Adjusted EBITDA Margin* Mineral Fiber 4% to 5% growth YoY (prior: 1% to 5%) ~39% (prior: >37.5%) Architectural Specialties2 4% to 5% growth YoY (prior: >6%) 17% to 18% (prior: >18%) Consolidated Metrics Full Year 2023 Shipping Days 2022 2023 20243 vs Pri
Slide 22: Top and Bottom-Line Growth Creates Value for Shareholders
Top and Bottom-Line Growth Creates Value for Shareholders A history of consistent growth, with accelerators in place for future growth Net Sales Adjusted EBITDA* $1,233 7% 4% CAGR CAGR $385 $319 $894 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 Adjusted Diluted EPS* Adjusted Free Cash
Slide 23: Architectural Specialties - Growing Through Acquisitions
Architectural Specialties - Growing Through Acquisitions Targeting companies with unique capabilities or competitive advantages 30% $400 Adj. EBITDA* Margin 20% $’s in millions Acquisitions $200 10% $0 0% 2016 2017 2018 2019 2020 2021 2022 Q3 YTD 2023 Net Sales Adj. EBITDA Margin* Business Impacts E
Slide 24: 2017 – 2022 Adjusted EBITDA Reconciliation
2017 – 2022 Adjusted EBITDA Reconciliation For the Twelve Months Ended December 31, 2017 2018 2019 2020 2021 2022 Net earnings (loss) $120 $186 $215 ($99) $183 $203 Less: Net (loss) earnings from discontinued operations (101) (4) (28) (15) (2) 3 Earnings (loss) from continuing operations, Reported $
Slide 25: 2017 – 2022 Adjusted Diluted Earnings per Share Reconciliation
2017 – 2022 Adjusted Diluted Earnings per Share Reconciliation For the Twelve Months Ended December 31, 2017 2018 2019 2020 2021 2022 Earnings (loss) from continuing operations, Reported $221 $190 $242 ($84) $185 $200 Add/(less): Income tax expense (benefit), reported 1 53 57 (43) 57 58 Earnings (lo
Slide 26: 2017 – 2022 Adjusted Free Cash Flow Reconciliation
. 2017 – 2022 Adjusted Free Cash Flow Reconciliation For the Twelve Months Ended December 31, 2017 2018 2019 2020 2021 2022 Net cash provided by operating activities $170 $203 $183 $219 $187 $182 Net cash (used for) provided by investing activities ($54) $310 ($89) ($141) ($14) $28 Net cash provided
Slide 27: 2016 – 2022 AS Adjusted EBITDA Reconciliation
2016 – 2022 AS Adjusted EBITDA Reconciliation For the Twelve Months Ended December 31, Architectural Specialties Segment 2016 2017 2018 2019 2020 2021 2022 Net Sales $101 $137 $174 $212 $211 $288 $346 Operating Income, Reported $19 $28 $34 $36 $22 $4 $22 Add: Acquisition-related impacts1 - - - - 3 1
Slide 28: 2021 and 2022 Segment Adjusted EBITDA Reconciliation
2021 and 2022 Segment Adjusted EBITDA Reconciliation For the Twelve Months Ended December 31, MF AS UC 2022 2021 2022 2021 2022 2021 Net Sales $887 $818 $346 $288 $— $— Operating income (loss) $261 $261 $22 $4 ($4) ($5) Add: RIP expense1 - - - - 4 5 Add: Acquisition-related impacts2 - - 19 10 - - Ad
Slide 29: Q3 2023 Adj. EBITDA and Adj. Diluted EPS Reconciliation
Q3 2023 Adj. EBITDA For the Three Months For the Nine Months Q3 2023 Adj. Diluted EPS For the Three Months Ended Sept. 30, For the Nine Months Ended Sept. 30, Reconciliation Ended Sept. 30, Ended Sept. 30, Reconciliation 2023 2022 2023 2022 2023 2022 2023 2022 Net earnings $70 $58 $177 $154 Net sale
Slide 30: Q3 2023 Adjusted Free Cash Flow and Segment Adj. EBITDA Reconciliation
Q3 2023 Adjusted Free Cash Flow For the Three Months Ended Sept. 30, For the Nine Months Ended Sept. 30, Reconciliation 2023 2022 2023 2022 Net cash provided by operating activities $83 $56 $176 $119 Net cash (used for) provided by investing activities ($5) $10 ($11) $8 Net cash provided by operatin
Slide 31: 2023 Adj. EBITDA Guidance Reconciliation
2023 Adj. EBITDA Guidance Reconciliation 2023 Segment Adj. EBITDA Margin Guidance Full Year 2023 Reconciliation Full Year 20233 Low High (Supports low-end Adj. EBITDA Margin % assumption) Net earnings $218 $220 MF AS UC Add: Income tax expense 73 75 Net sales $921 $359 $- Earnings before income taxe
Slide 32: 2023 Adj. Diluted EPS and Free Cash Flow Guidance Reconciliation
2023 Adj. Diluted EPS Guidance Reconciliation 2023 Adj. Free Cash Flow Guidance Reconciliation Full Year 2023 Full Year 2023 Low High Low High Net earnings $218 $220 Net cash provided by operating activities $235 $245 Add: Income tax expense 73 75 Add: Return of investment from joint venture 90 95 E
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