Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Q4 2017 Earnings Presentation
22 slides from Armstrong World Industries's earnings presentation, Feb 26, 2018
Slide 1: Earnings Call Presentation 4th Quarter 2017
Earnings Call Presentation 4rd Quarter 2017 February 26, 2018 Exhibit 99.2
Slide 2: Safe Harbor Statement
Our disclosures in this presentation, including without limitation, those relating to future financial results market conditions and guidance, and in our other public documents and comments contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Those s
Slide 3: Basis of Presentation
All figures throughout the presentation are in $ millions unless otherwise noted. Figures may not add due to rounding. When reporting our financial results within this presentation, we make several adjustments. Management uses the non-GAAP measures in managing the business and believes the adjustmen
Slide 4: 2017 Year in Review
2017 Year in Review Sales growth of 7% after five years averaging less than 3% growth Volume gains and improved AUV both contributed to growth Adjusted EBITDA growth of 8% and Free Cash Flow improved 26% Acquired and integrated Tectum, a manufacturer of high-impact wood fiber acoustical panels and r
Slide 5: Consolidated Company Key Metrics - Fourth Quarter 2017
Consolidated Company Key Metrics - Fourth Quarter 2017 As reported Operating Income: $52 million in 2017 and $40 million in 2016 As reported EPS: $1.92 in 2017 and $0.33 in 2016 2017 2016 Variance Net Sales $214.36022199999999 $196.40147899999999 9.1438939724074061E-2 Adj. EBITDA $65 64 $59.4 9.4276
Slide 6: EBITDA Bridge – Fourth Quarter 2017 vs. PY
Adjusted EBITDA Bridge – Fourth Quarter 2017 vs. PY $6 $1 ($2) $2 ($6) ($1) $6 Adjusted EBITDA up 9%
Slide 7: Free Cash Flow Bridge – Fourth Quarter 2017 vs. PY
Adjusted Free Cash Flow Bridge – Fourth Quarter 2017 vs. PY $3 Adjusted Free Cash Flow up 16%
Slide 8: Mineral Fiber Fourth Quarter Results
Mineral fiber sales grew 3.4% boosted by positive price and mix driving AUV and modest year-on-year volume growth. Fall through to adjusted EBITDA was constrained by higher manufacturing costs for the “Flex Line” start-up in Marietta, and as expenses associated with high-end manufacturing were accel
Slide 9: Architectural Specialties Fourth Quarter Results
Sales up almost 50% driven in equal parts by the Tectum acquisition and organic sales growth Profitability up 85% with sales growth more than offsetting increased SG&A investment Architectural Specialties Fourth Quarter Results Strong quarter on both the top and bottom line Key Highlights 2016 Q4 Ad
Slide 10: Consolidated Company Key Metrics – Full Year
Consolidated Company Key Metrics – Full Year As reported Operating Income: $255 million in 2017 and $189 million in 2016 As reported EPS: $4.08 in 2017 and $1.78 in 2016 2017 2016 Variance Net Sales $893.6 $837.3 6.7239937895616955E-2 Adj. EBITDA $317 $295 0.08 % of Sales 0.35474485228290059 0.35232
Slide 11: EBITDA Bridge – 2017 vs. 2016
Adjusted EBITDA Bridge – 2017 vs. 2016 $14 $16 ($6) $6 ($9) ($6) Adjusted EBITDA up 7%
Slide 12: Free Cash Flow Bridge – 2017 vs. 2016
Adjusted Free Cash Flow Bridge – 2017 vs. 2016(1) $66 Excludes payments made for the acquisition of Tectum in the first quarter of 2017. ($12) $3 ($1) $2 Adjusted Free Cash Flow up 26%
Slide 13: Mineral Fiber Full Year Results
Mineral fiber sales were up 2.7% with gains in AUV overcoming a slight volume decline. Sales of higher-end mineral fiber products continued to outpace the overall market Profitability increased driven by AUV gains and SG&A savings, partially from changes to sales and support cost charges to WAVE Min
Slide 14: Architectural Specialties Full Year Results
Architectural Specialties sales grew 36% aided by the Tectum acquisition. Excluding Tectum, sales were up double digits. Adjusted EBITDA grew with the sales increase, but was partially offset by increased SG&A spending primarily from adding Tectum’s expenses. Architectural Specialties Full Year Resu
Slide 15: 2018 Guidance
2018 Guidance $3.53 – $3.75 17% – 24% YoY Growth $3.02 Adjusted EBITDA Adjusted EPS(1) Adjusted Free Cash Flow(2) Revenue $894 $317 $935– $955 5% – 7% YoY Growth $345 – $360 >10% YoY Growth $175 – $190 20% – 30% YoY Growth $147 As reported expected earnings per share in 2018 of $3.87 - $4.06. Cash f
Slide 16: Appendix
Appendix = @mstrong WORLD INDUSTRIES
Slide 17: EBITDA Reconciliation
Adjusted EBITDA Reconciliation Reported results include $10.7 million of interest expense recorded in the first quarter of 2016 related to the settlement of interest rate swaps incurred in connection with the Company’s refinancing of its credit facility. Includes $4 million of Unallocated Corporate
Slide 18: Diluted Earnings Per Share Reconciliation
Adjusted Diluted Earnings Per Share Reconciliation Adjusted results exclude $10.7 million of interest expense recorded in 2016 related to the settlement of interest rate swaps incurred in connection with the Company’s refinancing of its credit facility. Based on ~54 million diluted shares outstandin
Slide 19: Free Cash Flow Reconciliation
Adjusted Free Cash Flow Reconciliation Adjusted free cash flow is defined as cash from operations and dividends received from the WAVE joint venture, less expenditures for property and equipment, and is adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures
Slide 20: Segment Reported Operating Income (Loss) to Adjusted EBITDA
Segment Reported Operating Income (Loss) to Adjusted EBITDA Q4 2017 vs. PY YTD 2017 vs. PY MINERAL FIBER ARCHITECTURAL SPECIALTIES UNALLOCATED CORPORATE rounding factor 2016 V 2017 2016 V 2017 2016 V 2017 2016 V Operating Income (Loss) – As Reported 40.4 41.7 -1.3000000000000043 7.1 4.09999999999999
Slide 21: Net Sales & EBITDA – Guidance Reconciliation
Net Sales & EBITDA – Guidance Reconciliation Net Sales Adjusted EBITDA For the Year Ending December 31, 2018 Low to High Reported Net Sales $935 to $955 For the Year Ending December 31, 2018 Low to High Net income $205 to $215 Add: Interest expense 35 35 Add: Income tax expense 65 70 Operating incom
Slide 22: EPS & Free Cash Flow – Guidance Reconciliation
Adjusted EPS & Free Cash Flow – Guidance Reconciliation Adjusted Diluted Earnings Per Share Adjusted Free Cash Flow Adjusted EPS guidance for 2018 is calculated based on an adjusted effective tax rate of 25% and based on ~53 million of diluted shares outstanding. For the Year Ending December 31, 201
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