Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Q3 2022 Earnings Presentation
19 slides from Armstrong World Industries's earnings presentation, Oct 25, 2022
Slide 1: 3rd Quarter 2022 Earnings Presentation
3rd Quarter 2022 Earnings Presentation October 25, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement Our disclosures in this presentation, including without limitation, those relating to future financial results, market conditions and guidance, the impacts of COVID-19 on our business, and in our other public documents and comments contain, forward-looking statements within the
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 free
Slide 4: Sales Up Double-Digits While EBITDA Results Pressured
Sales Up Double-Digits While EBITDA Results Pressured Q3 2022 Summary Net Sales Net Sales increased 11% from prior year driven by both Mineral 1 Fiber (“MF”) and Architectural Specialties (“AS”) $292 +11% $325 +18% +9% Third consecutive quarter of record-setting AS sales; solid AS 2 EBITDA growth wi
Slide 5: Adj. EBITDA* Bridge VPY
Positive AUV & Volumes Partially Offset by Inflation Q3 2022 Consolidated Company Key Metrics Q3 2021 Q3 2022 Variance Net Sales $292 $325 11% Adj. EBITDA* $99 $105 5% Adj. EBITDA Margin*(%) 34.0% 32.2% (180bps) Adj. Diluted Earnings Per Share* $1.17 $1.36 16% $15 $125 Adj. EBITDA* Bridge VPY $10 ($
Slide 6: Favorable AUV and Modest Volume Growth Offset by Inflation
Favorable AUV and Modest Volume Growth Offset by Inflation Mineral Fiber Q3 2022 Results Net Sales Mineral Fiber Key Highlights $234 • AUV up 8% vs. Q3 2021 on positive like-for-like pricing $215 +9% partially offset by negative channel mix • Sales volume growth muted by market deceleration • Contin
Slide 7: A Record Sales Performance Quarter with Solid EBITDA Growth
A Record Sales Performance Quarter with Solid EBITDA Growth Architectural Specialties Q3 2022 Results Net Sales Key Highlights $91 $78 +18% • Net Sales up 18% on recent acquisition performance and increased custom project sales • Adjusted EBITDA* up 20% on sales fall-through, with adjusted EBITDA* m
Slide 8: Adjusted Free Cash Flow Pressured by Working Capital Timing Impacts
Adjusted Free Cash Flow Pressured by Working Capital Timing Impacts Adj. Free Cash Flow* YTD Third Quarter 2022 vs. PY $175 $150 $145 ($16) $1 $1 $0 $130 $125 ($1) $100 Q3 2021 Adj. Operating Capex Interest WAVE Other Q3 2022 Cash Flow(1) Paid Dividends 8 *Non-GAAP measure. See appendix for reconcil
Slide 9: Sales Growth Pressured by Inflation and Investments
Sales Growth Pressured by Inflation and Investments Q3 YTD 2022 Consolidated Company Key Metrics YTD 2021 YTD 2022 Variance Adj. Net Sales* $825 $929 13% Adj. EBITDA* $294 $284 3% Adj. EBITDA Margin*(%) 34.4% 31.6% (280bps) Adj. Diluted Earnings Per Share* $3.28 $3.65 11% Adj. Free Cash Flow* $145 $
Slide 10: Updating 2022 Guidance
Updating 2022 Guidance (Changes in assumptions) 2021 Actual 2022 Guidance Key Assumptions • MF AUV +11% to +12% on positive like-for-like pricing $1,220 – $1,235 • MF volume of approximately -2% reflecting 1H distributor inventory Net Sales $1,107 10% – 12% YoY destock and 2H market deceleration (Pr
Slide 11: Appendix
Appendix
Slide 12: Q3 2022 Adjusted EBITDA Reconciliation
Q3 2022 Adjusted EBITDA Reconciliation For the Three Months Ended September 30th, For the Nine Months Ended September 30th, 2022 2021 V 2022 2021 V Earnings from continuing operations, Reported $55 $51 $4 $151 $143 $8 Add: Income tax expense, as reported 13 17 (3) 43 48 (5) Earnings before tax, Repo
Slide 13: Q3 2022 Adjusted Diluted Earnings per Share Reconciliation
Q3 2022 Adjusted Diluted Earnings per Share Reconciliation For the Three Months Ended September 30, For the Nine Months Ended September 30, Per Per Per Per 2022 Diluted 2021 Diluted V 2022 Diluted 2021 Diluted V Share Share Share Share Earnings from continuing operations, Reported $55 $1.18 $51 $1.0
Slide 14: 2022 Adjusted Free Cash Flow Reconciliation
2022 Adjusted Free Cash Flow Reconciliation . For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 V 2022 2021 V Net cash provided by operating activities $56 $56 $— $119 $138 ($19) Net cash provided by (used for) investing $10 $1 $8 $8 ($5) $14 activities Net c
Slide 15: 2022 Segment Reported Operating Income (Loss) to Adj. EBITDA
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 September 30, For the Nine Months Ended September 30, 2022 2021 V 2022 2021 V 2022 2021
Slide 16: 2022 Adjusted Net Sales Reconciliation
2022 Adjusted Net Sales Reconciliation For the Three Months Ended September 30, For the Nine Months Ended September 30, 2022 2021 V 2022 2021 V Reported Net Sales $325 $292 $33 $929 $824 $105 Add: Deferred revenue adjustment(1) - - - - 1 (1) Adjusted Net Sales $325 $292 $33 $929 $825 $104 (1) Repres
Slide 17: 2022 Adjusted EBITDA Guidance Reconciliation
2022 Adjusted EBITDA Guidance Reconciliation For the Year Ending December 31, 2022 Low to High Net Income $198 to $203 Add: Interest expense 25 26 (Less): RIP credit(1) (4) (4) Add: Income tax expense 61 63 Operating Income $280 to $288 Add: RIP expense(2) 4 4 Add: Acquisition-related expense(3) 20
Slide 18: 2022 Adjusted Diluted EPS Guidance Reconciliation
2022 Adjusted Diluted EPS Guidance Reconciliation For the Year Ending December 31, 2022 Per Diluted Per Diluted Low to High Share(1) Share(1) Net Income $198 $4.26 to $203 $4.37 Add: Interest expense 25 26 (Less): RIP credit(2) (4) (4) Add: Income tax expense 61 63 Operating Income $280 to $288 Add:
Slide 19: 2022 Adjusted Free Cash Flow Guidance Reconciliation
2022 Adjusted Free Cash Flow Guidance Reconciliation For the Year Ending December 31, 2022 Low to High Net cash provided by operating activities $190 to $205 Add: Return of investment from joint venture 95 100 Adjusted net cash provided by operating activities $285 to $305 (Less): Capital expenditur
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