Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Investor Presentation (November 2010)
28 slides from Armstrong World Industries's investor presentation, Nov 17, 2010
Slide 1: Armstrong World Industries Investor Overview
Armstrong World Industries Investor Overview November 17, 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains “forward-looking statements” related to Armstrong World Industries, Inc.’s, future financial performance. Our results could differ materially from the results discussed in these forward-looking statements due to known and unknown risks and uncertainti
Slide 3: Armstrong at a Glance
Armstrong at a Glance Leading manufacturer of floors and ceilings for use in renovation and new construction. Significant U.S. cabinets’ business. $2.8 billion in sales in 2009 #1 in businesses representing 80% of sales Serving global customers from nine countries 35 manufacturing locations Approxim
Slide 4: History
History 1998 Sales Mix: 2009 Sales Mix: Residential/Commercial Residential/Commercial was 65/35 was 40/60 Managing for Profitability 1998 2001 — 2006 2007 2008 — 2009 Significant geographic Asbestos-related Strategic review and sale Strategic focus in soft and product line bankruptcy process in decl
Slide 5: AWI Key Strategies
AWI Key Strategies 1 Profitable Growth in Americas 2 Expand the Core Increase share and mix Drive growth in China and India selectively Build vinyl plant in China Leverage Lancaster glass Expand presence in Eastern investment Europe and Middle East 3 Restructure Floor Europe 4 Innovation Leadership
Slide 6: Business Segment and End-Use Profile
Business Segment and End-Use Profile $2,800 Commercial renovation N.A. >70% renovation Commercial new $1,100 Residential renovation Residential new 40% 50% $700 20% 35% $500 5% $350 15% 55% 40% 30% $150 60% 45% 45% 30% 40% 55% 10% 10% 10% 5% Cabinets Resilient Flooring Resilient Flooring Hardwood Bu
Slide 7: Business Segment Profile
Business Segment Profile 2010 Sep YTD Operating Income Adjusted Cabinets Resilient (3%) Flooring 16% Wood Flooring (2%) Building Products Ceilings 89% — Excludes unallocated corporate expense Building Products delivers the bulk of worldwide income and has remained profitable through the economic cyc
Slide 8: Industry Structure/Competitive Position
Industry Structure/Competitive Position European Building U.S. Resilient Resilient Hardwood Products Cabinets Market Leadership Competitor Concentration Industry Capacity Utilization Low-Cost Manufacturer Key Favorable Neutral Unfavorable Armstrong continuously focused on competitive dynamics Compan
Slide 9: Business Segment Overview
Business Segment Overview
Slide 10: Worldwide Business Overview — Building Products
Worldwide Business Overview — Building Products North America Mkt AWI Europe, Africa, Middle- East Asia, Australia Size Rank (B ft 2 ) Mkt AWI Mkt AWI Commercial 1.4 1 Size Rank Size Rank (B ft 2 ) (B ft 2 ) Residential 0.4 1 Western 1.2 1 China 0.2 1 Eastern 0.5 1 Australia 0.04 1 Africa / Mid- 0.3
Slide 11: ABP Key Strategies
ABP Key Strategies 1 Best Product Portfolio 2 Complete Market Coverage Complete product offering Specialties business in Europe Metal ceilings Distribution in Russia Win versus soft fiber in Europe Acoustical ceilings in China 3 Low-Cost Manufacturing 4 Innovation Leadership Capacity management Envi
Slide 12: Building Products (ABP) Sales by Geography
Building Products (ABP) Sales by Geography Ceilings & Grid ($ -Millions) Global market leader 600 Brand 532 Innovation Go-to-Market Low cost 400 >90% sales commercial 246 Grid — 50/50 joint venture 200 84 0 Americas Europe Asia Contribution of WAVE JV Profit to Operating Margin 4% Worldwide Adjusted
Slide 13: Worldwide Business Overview — Floor Products
Worldwide Business Overview — Floor Products * Europe, Africa, Middle-East North America Mkt AWI Mkt AWI Asia, Australia Size Rank Size Rank (B ft 2 ) Mkt AWI (B ft 2 ) Size Rank Central 0.3 1 Commercial 1.0 1 (B ft 2 ) Eastern / 0.3 5 China 0.4 2 Residential 2.0 1 Africa / Mid-East Australia 0.1 2
Slide 14: Floor Products (AFP) Sales by Geography
Floor Products (AFP) Sales by Geography Resilient & Wood Worldwide Resilient ($ -Millions) Wood 600 511 400 371 211 200 62 0 Americas Americas Europe Asia Worldwide Adjusted Operating Profit Margin 2% excluding Europe 4% Note: 2010 Sep YTD Continued profitability through bottom of residential downtu
Slide 15: AFP-NA Market Share Trends
AFP-NA Market Share Trends Residential Commercial Sales % Change vs. Prior Yr Sales % Change vs. Prior Yr 2007 2008 2009 2007 2008 2009 Resilient Resilient Market (14) (16) (17) Market 3 (6) (17) Armstrong (9) (9) (8) Armstrong 6 FLAT (16) Share Trend _____ Share Trend _____ Hardwood Market (17) (25
Slide 16: European Floor Products
European Floor Products 2010 Sep YTD Residential Sales $211M 12% Operating Loss (1) $ 13M Vinyl 12% (1) Excludes any restructuring expense Other Linoleum Challenges 18% 37% Scale disadvantage in manufacturing and SG&A Outdated manufacturing processes in all but linoleum Further market deterioration
Slide 17: Cabinets Current Situation
Cabinets Current Situation 2010 YTD Sales = $106M Small player...<5% share Focus on small-/medium-size builder Go-to-Market Remodel % of Sales 45% New Company-Owned 55% 61% Service Centers Distribution 19% Multi-Family 20% Strategy Product/service execution Improve Service Center productivity Reduce
Slide 18: Financial Overview
Financial Overview
Slide 19: Financial Summary
Financial Summary Profitable through downturn and positive net debt balance sheet Focus on cost control / productivity Strong free cash flow Operating margins and return on capital return to >10% in 2012 Continuing to fully invest in businesses _____ Strong liquidity position — allows for return cas
Slide 20: Operating Income Bridge (2006-2009, Adjusted)
Operating Income Bridge (2006-2009, Adjusted) Operating Income Bridge (2006-2009) (Millions) Figures rounded to nearest $5 million $170 $270 $55 ($ 5) $85 $ 160 ($ 385) ($ 30) 2006 Actual Price / Mix Volume Input Costs Mfg Costs SG&A WAVE 2009 Actual Cost reduction and improved price / mix significa
Slide 21: Operating Income Bridge (2009-2010 YTD, Adjusted)
Operating Income Bridge (2009-2010 YTD, Adjusted) Operating Income Bridge (2009-2010 YTD) Figures rounded to nearest $1 million (Millions) $170 $8 $14 $36 $6 $131 ($ 18) ( $ 7) 2009 Sep YTD Price / Mix Volume Input Costs Mfg Costs SG&A WAVE 2010 Sep YTD Cost reduction offsets volume and input cost h
Slide 22: Key Metrics - Guidance 2010
Key Metrics (1) - Guidance 2010 2010 Estimate Range 2009 Actual Variance Net Sales 2,760 to 2,800 2,780 (1%) to 1% Operating Income (2) 185 to 195 157 18% to 24% Earnings Per Share (3),(4),(5) $1.69 to $1.79 $1.44 17% to 24% Cash Flow 110 to 130 211 (50%) to (40%) (1) Figures exclude non-recurring i
Slide 23: Refinancing Transaction Overview
Refinancing Transaction Overview Existing and Pro Forma Capitalization Actual 9/30/2010 As Adjusted 9/30/2010 Capitalization Amount Gross Lev. Adjustments Amount Gross Lev. Cash and Cash Equivalents $682.2 (455.0) $227.2 Revolving Credit Facility ($300) — -Term Loan A 240.0 (240.0) - -Term Loan B 19
Slide 24: Balance Sheet 12/31/2010 — Projected
Balance Sheet 12/31/2010 — Projected (Millions) $400 Maturity Profile $0 No significant maturities until 2015 ($ 400) ($ 800) (2%) (14%) Cash Term Loans Bonds IDBs/Other $700 Liquidity $500 $600 $500 100 Sufficient liquidity to manage $400 LCs operations, and execute capital 250 $300 Securitization
Slide 25: Appendix
Appendix
Slide 26: September YTD 2010 — Adjusted Operating Income to Reported Net Income
September YTD 2010 — Adjusted Operating Income to Reported Net Income 2010 2009 V Operating Income - - Adjusted (1) $170 $131 $39 Foreign Exchange Movements — - 1 Laminate Duty Refund 7 — 7 Cost Reduction Initiatives (44) (7) (37) Fixed Asset Impairments (8) — (8) Executive Transition (14) — (14) Ac
Slide 27: Consolidated Results Third Quarter 2010
Consolidated Results Third Quarter 2010 Comparability (1) FX (2) 2010 2009 Comparability (1) FX (2) 2009 Reported Adjustments Adj Adjusted Reported Adjustments Adj Adjusted Net Sales 740 — 25 765 753 — 14 767 Operating Income 45 37 1 83 44 34 1 79 EPS $0.42 $0.40 $0.01 $0.83 $1.12 ($0.37) $0.01 $0.7
Slide 28: Segment Operating Income (Loss)
Segment Operating Income (Loss) Third Quarter 2010 Comparability (1) 2010 2009 Comparability (1) 2009 Reported Adjustments Adjusted Reported Adjustments Adjusted Resilient Flooring 10 14 24 12 2 14 Wood Flooring (13) 10 (3) 11 — 11 Building Products 59 10 69 57 1 58 Cabinets (1) — (1) (3) 1 (2) Unal
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