Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Investor Presentation (August 2021)
57 slides from Armstrong World Industries's investor presentation, Aug 3, 2021
Slide 1: Armstrong World Industries Investor Presentation August 2021
Armstrong World Industries Investor Presentation August 2021 Exhibit 99.2
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 m
Slide 3: Basis of Presentation Explanation
Basis of Presentation Explanation All figures throughout the presentation are in $ millions and all comparisons are versus prior year unless otherwise noted. Figures may not sum due to rounding. When reporting our financial results within this presentation, we make several adjustments. Management us
Slide 4: The Armstrong Purpose: Healthy Spaces
The Armstrong Purpose…more relevant than ever…Healthy Spaces It matters to us, and it matters to our customers
Slide 5: One of the Most Unique Companies in Building Products
One of the Most Unique Companies in Building Products
Slide 6: Ceiling Category Is Unique Within Building Products
Ceilings are an integral part of creating healthy spaces Ceiling Category Is Unique Within Building Products Uniquely positioned in an attractive & stable category
Slide 7: Ceilings Leader with Stable Demand Drivers and Diversified Sectors
Ceilings Leader with Stable Demand Drivers and Diversified Sectors 35 – 40B sq. ft. installed base provides an annuity from R&R activity Revenue Mix* By Sector By Project Office 30% Education 20% Retail 20% Sales are weighted towards repair & remodel (R&R) activity New vs. R&R split and diversified
Slide 8: Setting Our Sights on a Larger Opportunity
Setting Our Sights on a Larger Opportunity Source: Internal company estimates of North American opportunities and positions; estimated AWI position includes 50% of sales by WAVE JV. AWI ~50% Driving growth in broader ceiling & wall solutions space AWI ~25%
Slide 9: Our Business Segments & Joint Venture
Our Business Segments & Joint Venture Mineral Fiber (MF) Driving AUV Architectural Specialties (AS) Expand Into Adjacencies Deliver profitable top line growth by growing our core MF business and expanding into adjacencies through AS Leader in on-trend solutions Design through construction solutions
Slide 10: Clear Strategy Driving Value Creation
Clear Strategy Driving Value Creation Consistent strategic priorities enabling shareholder value creation Strategic Overview Healthy Spaces to drive renovation “renaissance” Product innovation to meet new customer needs and improve product mix kanopi e-commerce platform for new demand Continued inte
Slide 11: Sustainability / ESG: Bringing Our WHY to Life
Sustainability / ESG…Bringing our WHY to life Lead a transformation in the design and building of spaces fit for today and tomorrow
Slide 12: Our Winning Formula
Our Winning Formula Unique Position Our Winning Formula Winning through key elements of differentiation
Slide 13: Revitalize the Mineral Fiber Category
Revitalize the Mineral Fiber Category
Slide 14: Industry Trends: What the Market Is Looking for
Industry Trends… What the Market Is Looking for Solutions to address current and future market needs Simple, centralized, easy to access information Digital Platforms offering end to end solutions Higher end interior finishes with less design constraints Product Transparency Inspirational Flexible D
Slide 15: Healthy Spaces a Catalyst for Renovation Opportunity
Suite of products to contain, clean, and protect spaces Healthy Spaces a catalyst for sizable renovation opportunity Digital transformation underway to address frictions and drive volume Revitalizing Mineral Fiber Category Driving growth in AUV & volume Total Accoustics DESIGN Flex Digital Sustain B
Slide 16: Where We Are Going: Revitalizing Mineral Fiber
Where We Are Going…Revitalizing Mineral Fiber Our new solutions get us into more space more of the time Total Acoustics & Sustain DesignFlex Ceilings Systems Digital Journey “AcoustiBuilt” Seamless Mineral Fiber Healthy Spaces – 24/7 Defend 8,000+ SKU portfolio New Solutions Custom design w/ standar
Slide 17: Healthy Spaces Ecosystem / Ceiling Focus Areas
Healthy Spaces – Ecosystem / Ceiling Focus Areas Healthy Spaces must support the planet and well being of people Healthy Spaces Ecosystem Air … just as important as outdoor air quality. We have gained a whole new appreciation for proper air circulation, ventilation, filtration and cleaning to elimin
Slide 18: Ceilings Matter in Creating Healthy Spaces
Ceilings Matter in Creating Healthy Spaces Ceilings help contain, clean, and protect Objective: Inhibit airflow through the ceiling plane resulting in pathogen containment from room to room Contain: ceilings can help prevent pathogens from spreading room to room Clean: ceilings can direct more air t
Slide 19: Latest Launch: 24/7 Defend
Latest Launch – 24/7 Defend Making a difference for healthier, safer spaces CleanAssure™ Portfolio Cleanable and disinfectable ceiling, wall and suspension systems based on CDC-recommendations, with foggable, sprayable, and wipeable options VidaShield UV24™ System Unobtrusive system draws air into a
Slide 20: Converting Market Knowledge Into Value Creation
Converting Market Knowledge Into Value Creation Mineral Fiber AUV* New Product Vitality Index Note: New product sales as % of total sales Differentiated innovation driving our results Note: AUV growth 50/50 split between price & mix 5% CAGR Note: AUV data is for US and Canada commercial channels - m
Slide 21: Accelerate Architectural Specialties
Accelerate Architectural Specialties
Slide 22: Growing through Share Gains and Acquisitions
Growing through Share Gains and Acquisitions Acquisitions are growth accelerators for Architectural Specialties *Acquisitions represent reportable AWI sales $ in the year acquired + next calendar year sales. Double digit organic growth (excl. 2020 acquisitions) Leveraging new designs & technologies
Slide 23: Expanding AS Capabilities with the Right Acquisitions
Expanding AS Capabilities with the Right Acquisitions 2017 2018 2019 2020 Tectum High impact wood fiber ceilings, walls & roofdeck $25M Revenue Plasterform Glass reinforced gypsum…ultra expressive $10M Revenue Steel Ceilings Architectural, radiant, security $10M Revenue ACGI Custom wood ceilings and
Slide 24: Accelerate Digital Transformation
Accelerate Digital Transformation
Slide 25: Digitalization to Support Growth and Productivity
Digitalization to Support Growth and Productivity Focus on Step Change, continue to work optimization Level of Impact Level of Disruption Optimization Opportunities ~ 3 Step Change Outcomes ~1 Industry Disruption ~10 kanopi ProjectWorks A continuous & collaborative approach across all levels through
Slide 26: kanopi - A New Digital Platform to Accelerate Renovation
kanopi - A New Digital Platform to Accelerate Renovation Addressing key customer friction – What to buy & where to buy it To inspire & enable healthy spaces via ceiling remodel and renovation www.kanopibyarmstrong.com Check it out! @
Slide 27: Cash Flow & Capital Allocation
Cash Flow & Capital Allocation
Slide 28: Consistent Ability To Grow AUV & Expand Margins
Consistent Ability To Grow AUV & Expand Margins Note: AUV data is for US and Canada commercial channels - mineral fiber only. EBITDA Margin data is for total AWI. Increases in Average Unit Value (AUV) Over Time ... …Yielding Significant Adjusted EBITDA Margin Expansion 35% 19% Millions Continuous pr
Slide 29: Stability Through the Cycle: Indexed Adjusted Cash Conversion
Historical Indexed Adj. Cash Conversion (2006 = 100) Stability Through the Cycle *Peer index includes ALLE, AOS, APOG, AYI, DOOR, FBHS, JHX, LII, MAS, MHK, NCS, OC, SHW, SSD, & TILE. Represents growth in Adjusted Cash Conversion (Adjusted EBITDA – Capex) of peers applied to index value from previous
Slide 30: 2021 Guidance – July Update
2021 Guidance – July Update ⁽¹⁾ $3.74 Adjusted EBITDA* Adjusted EPS* Adjusted Free Cash Flow* Revenue $937 $330 MF AUV 6%-9%, positive like-for-like pricing & mix Growth Initiatives, primarily kanopi & Healthy Spaces, drive MF volume up 2% - 4% 2020 acquisitions benefit AS 20% - 25% AUV and volume g
Slide 31: Value Creation Model
Value Creation Model Significant value creation through free cash flow generation Revenue 5% – 10% annual growth Adjusted EBITDA and Margins >10% annual growth 35% – 40% margin Adjusted EPS 15% – 20% annual growth Adjusted Free Cash Flow 10-15% annual growth >50% of Adjusted EBITDA 0% – 2% Mineral F
Slide 32: Strongest Position & Margins of Any Public Building Products Business
Strongest Position & Margins of Any Public Building Products Business A unique position versus the best businesses in building products Note: Figures estimates only and based on externally sourced available data. Companies shown represent the following industries (position within industry): Acuity –
Slide 33: Unique Cash Flow Generation Capabilities
Unique Cash Flow Generation Capabilities Valuation upside based on best-in-class free cash flow Note: Valuation multiples and FCF margins reflect parent company values, not the individual segments plotted on the previous page. *FCF margin defined as (EBITDA – capex) / sales.
Slide 34: Appendix
Appendix Management Biographies Balance Sheet Data Reconciliations to GAAP Other
Slide 35: Management Biographies
Management Biographies Brian MacNeal Senior Vice President and Chief Financial Officer, Armstrong World Industries Vic Grizzle is the chief executive officer and a member of the board of directors of Armstrong World Industries (AWI). He joined the company in January 2011. Vic brings 23 years of expe
Slide 36: Capital Structure & Liquidity
Capital Structure & Liquidity Strong balance sheet and liquidity position to support growth and capital allocation priorities Liquidity $419 million Retirement income plan (RIP) fully funded as of year-end 2020 No cash contributions in over 30 years *As defined in credit agreement
Slide 37: Market Drivers
Market Drivers Broad array of sector drivers that impact demand; Recovery underway
Slide 38: Non-Residential Activity Timeline
Non-Residential Activity Timeline (New and Major Reno) Extended nature of projects reduce variation in demand Design Development Plans and Specs Start 60 days to break-ground Design Architect selected 30 GC Bidding Bids accepted AWI budget #s 24 21 AWI Shipments 18 0 Months Subcontractor bidding ABI
Slide 39: Performance Through the Downturn (2008-2011)
Performance Through the Downturn (2008-2011) Resilience through poor economic conditions Volume declined 20% in 2009 AUV increased every year Price exceeded inflation every year Manufacturing footprint restructured SG&A was right-sized Capital spending was tightened Margins were restored by 2010 201
Slide 40: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation RIP expense represents only the plan service cost that is recorded within Operating Income. For all periods presented, we were not required to and did not make cash contributions to our RIP. Represents the impact of acquisition-related adjustments for the fair value of
Slide 41: Adjusted Diluted Earnings Per Share Reconciliation
Adjusted Diluted Earnings Per Share Reconciliation (1) RIP expense (credit) represents the entire actuarial net periodic pension expense (credit) recorded as a component of earnings from continuing operations. For all periods presented, we were not required to and did not make cash contributions to
Slide 42: Adjusted Free Cash Flow Reconciliation
Adjusted Free Cash⁽¹⁾ 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 divestitu
Slide 43: Segment Reported Operating Income (Loss) to Adjusted EBITDA
Segment Reported Operating Income (Loss) to Adjusted EBITDA RIP expense represents only the plan service cost related to the RIP that is recorded within Operating Income. For all periods presented, we were not required to and did not make cash contributions to our RIP. Represents the impact of acqui
Slide 44: Adjusted Net Sales Reconciliation
Adjusted Net Sales Reconciliation Represents the impact of acquisition-related deferred revenue adjustments to fair value.
Slide 45: 2021 Adjusted EBITDA Guidance Reconciliation
2021 Adjusted EBITDA Guidance Reconciliation Adjusted EBITDA RIP credit represents the actuarial net periodic benefit expected to be recorded as a component of other non-operating income. We do not expect to be and do not plan to make cash contributions to our U.S. Retirement Income Plan based on gu
Slide 46: 2021 Adjusted EPS Guidance Reconciliation
2021 Adjusted EPS Guidance Reconciliation Adjusted Diluted Earnings Per Share Adjusted EPS guidance for 2021 is calculated based on an adjusted effective tax rate of 25% and based on ~48 million of diluted shares outstanding. RIP credit represents the actuarial net periodic benefit expected to be re
Slide 47: 2021 Adjusted Free Cash Flow Guidance Reconciliation
2021 Adjusted Free Cash Flow Guidance Reconciliation Adjusted Free Cash Flow
Slide 48: Where We Were: Armstrong before the 2000s
Where We Were… Armstrong before the 2000s Products: Fissured Ceilings AUV: $.40 SF (MF AUV) Sales: $500M Key Facts Fissured Ceilings
Slide 49: Where We Are Today: Expanding the Portfolio
Where We Are Today… Expanding the portfolio to align with market trends Mineral Fiber Ceilings Tectum Ceilings & Walls Wood Ceilings & Walls Metal Ceilings & Walls Smooth White Acoustical Tile (SWAT) Note: AUV data is for US and Canada commercial channels - mineral fiber only.
Slide 50: Ultima Health Zone
Ultima Health Zone Ultima Average Unit Value 3X fissured mineral fiber ceilings Project Profile: Penn Presbyterian Type of Space: Hospital Location: Philadelphia, PA Features: Total Acoustics & Sustain MF Ceilings (Scrubbable/Washable)
Slide 51: WOODWORKS Grille Ceilings
WOODWORKS Grille Ceilings WOODWORKS Average Unit Value 15X mineral fiber ceilings Project Profile: Salk Middle School Type of Space: School Location: Spokane, WA Features: Design & Acoustical Wood Ceilings
Slide 52: METALWORKS Torsion Spring
METALWORKS Torsion Spring Our products are now being specified in statement spaces Project Profile: Academy Tower Type of Space: Office Lobby Location: Los Angeles, CA Features: Custom Design Metal Ceilings
Slide 53: Tectum Walls & Ceilings
Tectum Walls & Ceilings More spaces in the same building Project Profile: Boys & Girls Club Type of Space: Gymnasium Location: Lancaster, PA Features: Durability & Acoustics with Tectum Walls & Ceilings
Slide 54: Total Acoustics & Sustain
Total Acoustics & Sustain Total Acoustics & Sustain market penetration continues to grow Project Profile: BrandStar Offices Type of Space: Office Location: Deerfield Beach, FL Features: Great acoustics with no “chemicals of concern”
Slide 55: DESIGNFlex
DESIGNFlex DESIGNFlex adds a never before seen look to mineral fiber ceilings Project Profile: Armstrong Avenue Type of Space: Statement Spaces Location: Lancaster, PA Features: Custom design with standard product lead time
Slide 56: Exposed Structure Portfolio
Exposed Structure Portfolio Our Exposed Structure portfolio allows us to enter new spaces Project Profile: Suburban Beer Type of Space: Exposed Structure Location: Malvern, PA Features: Acoustics & design for Exposed Structure spaces
Slide 57: AcoustiBuilt - Seamless Mineral Fiber
“AcoustiBuilt” - Seamless Mineral Fiber Seamless mineral fiber gains share from drywall ceilings Project Profile: University (confidential) Type of Space: Auditorium Location: United States Features: Drywall look with acoustics
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