Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Q2 2015 Earnings Presentation
22 slides from Armstrong World Industries's earnings presentation, Jul 30, 2015
Slide 1: Earnings Call Presentation Q2 2015
Exhibit 99.2 Earnings Call Presentation nd 2 Quarter 2015 July 30, 2015
Slide 2: Safe Harbor Statement
Safe Harbor Statement Our disclosures in this presentation, including without limitation, those relating to future financial results guidance and the possible separation of our flooring business from our building products business, and in our other public documents and comments contain forward-looki
Slide 3: Basis of Presentation Explanation
Basis of Presentation Explanation • When reporting our financial results within this presentation, we make several adjustments. Management uses the non-GAAP measures below in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. A
Slide 4: Key Metrics – Second Quarter 2015
Key Metrics – Second Quarter 2015 2015 2014 Variance Net Sales (1) $649 $652 (0.4%) Operating Income (2) 82 73 13.1% % of Sales 12.7% 11.2% 150 bps EBITDA 112 104 7.7% % of Sales 17.2% 15.9% 130 bps Earnings Per Share (3) $0.81 $0.66 22.5% Free Cash Flow 77 9 Favorable Net Debt 823 963 (140) ROIC(4)
Slide 5: Second Quarter 2015 vs. PY – Adjusted EBITDA to Reported Net Income
Second Quarter 2015 vs. PY– Adjusted EBITDA to Reported Net Income 2015 2014 V EBITDA– Adjusted $112 $104 $8 Depreciation and Amortization (30) (31) 1 Operating Income – Adjusted $82 $73 $9 Non-cash Impact of U.S. Pension 6 - 6 Separation Expenses 5 - 5 Multilayered Wood Flooring Duty 4 - 4 Cost Red
Slide 6: Second Quarter Sales and EBITDA by Segment – 2015 vs. Prior Year
Second Quarter Sales and EBITDA by Segment – 2015 vs. Prior Year EBITDA Change (Left -hand scale) % Change in Sales (Right-hand scale) 10 10% 5 4% 5% 4 3 3 1% - 0% (2) (5) (5%) (8%) (10) (10%) Resilient Flooring Wood Flooring Building Products Corporate 6
Slide 7: Building Products Second Quarter Results
Building Products Second Quarter Results Net Sales Key Highlights $318 $316 • On a comparable foreign exchange basis sales $36 $35 increased slightly as favorable price and mix $77 $83 performance offset volume declines predominantly in EMEA markets $205 $198 Q2 2015 Q2 2014 Americas EMEA Pacific Ri
Slide 8: Resilient Second Quarter Results
Resilient Second Quarter Results Net Sales Key Highlights $203 $196 • Sales increased driven by strong volume growth in the $26 $24 Americas commercial business that was partially aided by favorable market share shifts as a result of competitive product availability issues and our service propositio
Slide 9: Wood Second Quarter Results
Wood Second Quarter Results Net Sales Key Highlights $140 • Despite improvements in mix sales declined driven $128 primarily by lower volumes • Volume declines were caused by market share shifts $140 as a result of prior year price and mix optimization $128 actions, inventory adjustments at home cen
Slide 10: EBITDA Bridge – Second Quarter 2015 vs. Prior Year
EBITDA Bridge – Second Quarter 2015 vs. Prior Year $140 $3 $17 $120 $112 $3 ($8) ($1) $104 ($1) $100 ($5) $80 $60 $40 $20 $0 2014 Price/Mix Volume Input Costs Mfg Cost SG&A WAVE Change in 2015 D&A 10
Slide 11: Free Cash Flow – Second Quarter 2015 vs. Prior Year
Free Cash Flow – Second Quarter 2015 vs. Prior Year $100 $32 $80 $77 $0 ($1) ($3) $60 $33 $40 $20 $7 $9 $0 2014 Cash Working Capex Interest WAVE Other 2015 Earnings Capital Expense Dividends 11
Slide 12: Key Metrics – 1st Half 2015
Key Metrics – 1 st Half 2015 2015 2014 Variance Net Sales (1) $1,214 $1,236 (1.8%) Operating Income (2) 128 128 (0.1%) % of Sales 10.5% 10.4% 10 bps EBITDA 186 187 (0.3%) % of Sales 15.4% 15.1% 30 bps Earnings Per Share (3) $1.18 $1.10 7.9% Free Cash Flow 35 (45) Favorable (1) As reported Net Sales:
Slide 13: 1H Sales and EBITDA by Segment – 2015 vs. Prior Year
1H Sales and EBITDA by Segment – 2015 vs. Prior Year EBITDA Change (Left-hand scale) % Change in Sales (Right-hand scale) 10 10% 5 5% 1% 5 1% - 1 0% (4) (3) (5) (5%) (10) (10%) (10%) (15) (15%) Resilient Flooring Wood Flooring Building Products Corporate 13
Slide 14: EBITDA Bridge – 1H 2015 vs. Prior Year
EBITDA Bridge – 1H 2015 vs. Prior Year $220 $14 $5 $200 $15 $187 $186 ($11) ($3) $0 $180 ($21) $160 $140 $120 $100 2014 Price/Mix Volume Input Costs Mfg Cost SG&A WAVE Change in 2015 D&A 14
Slide 15: Free Cash Flow – 1H 2015 vs. Prior Year
Free Cash Flow – 1H 2015 vs. Prior Year $60 $40 $14 $35 $47 $1 $20 ($4) $0 ($20) $42 ($40) ($45) ($60) ($20) ($80) 2014 Cash Working Capex Interest WAVE Other 2015 Earnings Capital Expense Dividends 15
Slide 16: Key Metrics – Guidance 2015
Key Metrics – Guidance 2015 2015 Estimate Range (1) 2014 (2) Variance Net Sales(3) 2,400 to 2,500 2,515 (5%) to (1%) Operating Income (4) 235 to 265 271 (13%) to (2%) EBITDA 355 to 385 389 (9%) to (1%) Earnings Per Share (5) $2.05 to $2.35 $2.38 (14%) to (1%) (1) Guidance is presented using 2015 bud
Slide 17: 2015 Financial Outlook
2015 Financial Outlook ABP Segment* Sales(1) $1,220-$1,270 million; EBITDA $335-$355 million AFP Segment* Sales(1) $1,180-$1,230 million; EBITDA $85-$100 million Corporate Segment EBITDA ($65) – ($70) Cash Taxes/ETR $35 - $45 million; Adjusted long-term ETR of ~39%(2) Capital Spending* $145 - $165 m
Slide 18: Appendix
@rmstrong Appendix Inspiring Great Spaces
Slide 19: 1H 2015 vs. PY – Adjusted EBITDA to Reported Net Income
1H 2015 vs. PY– Adjusted EBITDA to Reported Net Income 2015 2014 V EBITDA– Adjusted $186 $187 ($1) Depreciation and Amortization (58) (59) 1 Operating Income – Adjusted $128 $128 $- Non-cash Impact of U.S. Pension 13 - 13 Separation Expenses 9 - 9 Multilayered Wood Flooring Duty 4 - 4 Cost Reduction
Slide 20: Consolidated Results
Consolidated Results Second Quarter 2015 Comparability(1) 2015 2014 Comparability(1) 2014 FX(2) Adj FX(2) Adj Reported Adjustments Adjusted Reported Adjustments Adjusted Net Sales 633 - 16 649 659 - (7) 652 Operating 63 15 4 82 64 8 1 73 Income EPS $0.53 $0.23 $0.05 $0.81 $0.48 $0.17 $0.01 $0.66 YTD
Slide 21: Segment Operating Income (Loss)
Segment Operating Income (Loss) Second Quarter 2015 Comparability(1) 2015 2014 Comparability(1) 2014 Reported Adjustments Adjusted Reported Adjustments Adjusted Building Products 64 - 64 65 1 66 Resilient Flooring 23 2 25 21 2 23 Wood Flooring (2) 3 5 8 (3) 6 3 Unallocated Corporate (27) 12 (15) (19
Slide 22: Cash Flow
Cash Flow Second Quarter YTD ($ millions) 2015 2014 2015 2014 Net cash from operations $93 $55 $59 $22 Net cash (used for) investing (16) (46) (24) (68) Add back (subtract) adjustments to reconcile to free cash flow Other - - - 1 Free Cash Flow $77 $9 $35 ($45) 22 Cash flow includes cash flows attri
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