Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Q3 2015 Earnings Presentation
23 slides from Armstrong World Industries's earnings presentation, Oct 29, 2015
Slide 1: Earnings Call Presentation 3rd Quarter 2015
Exhibit 99.2 Earnings Call Presentation 3 rd Quarter 2015 October 29, 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 – Third Quarter 2015
Key Metrics – Third Quarter 2015 2015 2014 Variance Net Sales (1) $679 $670 1.3% Operating Income (2) 98 93 5.3% % of Sales 14.5% 13.9% 60 bps EBITDA 128 122 5.2% % of Sales 18.9% 18.2% 70 bps Earnings Per Share (3) $0.80 $0.88 (8.8%) Free Cash Flow 64 60 7.6% Net Debt 764 902 (138) ROIC(4) 5.8% 8.4
Slide 5: Third Quarter 2015 vs. PY – Adjusted EBITDA to Reported Net Income
Third Quarter 2015 vs. PY– Adjusted EBITDA to Reported Net Income 2015 2014 V EBITDA– Adjusted $128 $122 $6 Depreciation and Amortization (30) (29) (1) Operating Income – Adjusted $98 $93 $5 Non-cash Impact of U.S. Pension 6 - 6 Separation Expenses 7 - 7 Cost Reduction Initiatives 1 6 (5) Foreign Ex
Slide 6: Third Quarter Sales and EBITDA by Segment – 2015 vs. Prior Year
Third Quarter Sales and EBITDA by Segment – 2015 vs. Prior Year EBITDA Change (Left-hand scale) % Change in Sales (Right-hand scale) 10 10% 5 6 5% 3% 5 2% - 0% (1) (4) (4%) (5) (5%) (10) (10%) Resilient Flooring Wood Flooring Building Products Corporate 6
Slide 7: Building Products Third Quarter Results
Building Products Third Quarter Results $351 Net Sales Key Highlights $343 $39 $37 • On a comparable foreign exchange basis sales increased 2% as favorable price and mix performance $87 $87 offset volume declines primarily in emerging markets • Continued sales growth momentum in Architectural Specia
Slide 8: Resilient Third Quarter Results
Resilient Third Quarter Results Net Sales Key Highlights $196 $190 • On a comparable foreign exchange basis sales $25 $22 increased 3% driven by volume growth in the Americas residential and commercial businesses as well as double digit improvement in the Pacific Rim; more than offsetting unfavorabl
Slide 9: Wood Third Quarter Results
Wood Third Quarter Results Net Sales Key Highlights $137 • Despite improvements in mix sales declined driven by $132 unfavorable price performance and lower volumes • Lower volumes were the result of engineered wood $137 product availability challenges $132 Q3 2015 Q3 2014 Americas Q3 2014 Adjusted
Slide 10: EBITDA Bridge – Third Quarter 2015 vs. Prior Year
EBITDA Bridge – Third Quarter 2015 vs. Prior Year $160 $27 $140 ($6) $1 $128 $1 $122 $120 ($12) $1 ($6) $100 $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 – Third Quarter 2015 vs. Prior Year
Free Cash Flow – Third Quarter 2015 vs. Prior Year $100 $80 $8 $0 $0 $16 $64 $60 $60 ($14) ($6) $40 $20 $0 2014 Cash Working Capex Interest WAVE Other 2015 Earnings Capital Expense Dividends 11
Slide 12: Key Metrics – September YTD 2015
Key Metrics – September YTD 2015 2015 2014 Variance Net Sales (1) $1,892 $1,905 (0.7%) Operating Income (2) 226 221 2.1% % of Sales 11.9% 11.6% 30 bps EBITDA 315 309 1.9% % of Sales 16.6% 16.2% 40 bps Earnings Per Share (3) $1.99 $1.97 0.7% Free Cash Flow 99 14 Favorable (1) As reported Net Sales: $
Slide 13: September YTD Sales and EBITDA by Segment – 2015 vs. Prior Year
September YTD Sales and EBITDA by Segment – 2015 vs. Prior Year EBITDA Change (Left-hand scale) % Change in Sales (Right-hand scale) 10 10% 5 7 5% 2% 1% 2 - 1 0% (4) (5) (5%) (8%) (10) (10%) (15) (15%) Resilient Flooring Wood Flooring Building Products Corporate 13
Slide 14: EBITDA Bridge – September YTD 2015 vs. Prior Year
EBITDA Bridge – September YTD 2015 vs. Prior Year $400 $380 $360 $42 $340 ($3) $320 $10 $315 $1 $309 ($22) ($2) $300 ($20) $280 $260 $240 $220 $200 2014 Price/Mix Volume Input Costs Mfg Cost SG&A WAVE Change in 2015 D&A 14
Slide 15: Free Cash Flow – September YTD 2015 vs. Prior Year
Free Cash Flow – September YTD 2015 vs. Prior Year $120 $54 $1 $2 $99 $100 ($3) $80 $60 $58 $40 $20 $14 $0 ($20) ($27) ($40) 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 2,450 2,515 (5%) to (3%) Operating Income (4) 250 to 270 271 (8%) to 0% EBITDA 370 to 390 389 (5%) to 0% Earnings Per Share (5) $2.15 to $2.35 $2.38 (10%) to (1%) (1) Guidance is presented using 2015 budgeted
Slide 17: 2015 Financial Outlook
2015 Financial Outlook ABP Segment* Sales(1) $1,220-$1,250 million; EBITDA $335-$350 million AFP Segment* Sales(1) $1,180-$1,200 million; EBITDA $100-$110 million Corporate Segment EBITDA ($65) – ($70) Cash Taxes/ETR $35 - $45 million; Adjusted long-term ETR of ~39%(2) Capital Spending* $155 - $165
Slide 18: Form 10 Historical Earnings Bridge – Full Year 2014
Form 10 Historical Earnings Bridge – Full Year 2014 $100 $93 Resilient Flooring $80 $62 $60 ($27) ($4) $39 $40 ($21) ($2) $20 $0 2014 Adjusted D&A/Fx Adjustments to 2014 As Corporate Other* 2014 As EBITDA Operating Reported Allocations Reported Income Operating Operating Income - 10K Income - Form 1
Slide 19: Appendix
Appendix Inspiring Great Spaces™
Slide 20: September YTD 2015 vs. PY – Adjusted EBITDA to Reported Net Income
September YTD 2015 vs. PY– Adjusted EBITDA to Reported Net Income 2015 2014 V EBITDA– Adjusted $315 $309 $6 Depreciation and Amortization (89) (88) (1) Operating Income – Adjusted $226 $221 $5 Non-cash Impact of U.S. Pension 19 1 18 Separation Expenses 17 - 17 Multilayered Wood Flooring Duty 4 - 4 C
Slide 21: Consolidated Results
Consolidated Results Third Quarter 2015 Comparability (1) 2015 2014 Comparability (1) 2014 Fx(2) Adj Fx(2) Adj Reported Adjustments Adjusted Reported Adjustments Adjusted Net Sales 659 - 20 679 679 - (9) 670 Operating 80 14 4 98 86 6 1 93 Income EPS $0.54 $0.21 $0.05 $0.80 $0.84 $0.02 $0.02 $0.88 Se
Slide 22: Segment Operating Income (Loss)
Segment Operating Income (Loss) Third Quarter 2015 Comparability (1) 2015 2014 Comparability (1) 2014 Reported Adjustments Adjusted Reported Adjustments Adjusted Building Products 90 1 91 87 - 87 Resilient Flooring 14 3 17 15 2 17 Wood Flooring 10 1 11 2 4 6 Unallocated Corporate (35) 14 (21) (18) 1
Slide 23: Cash Flow
Cash Flow Third Quarter September YTD ($ millions) 2015 2014 2015 2014 Net cash from operations $85 $89 $144 $111 Net cash (used for) investing (21) (29) (45) (97) Free Cash Flow $64 $60 $99 $14 23 Cash flow includes cash flows attributableto the European flooring business
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