Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Investor Presentation (February 2012)
40 slides from Armstrong World Industries's investor presentation, Feb 27, 2012
Slide 1: Armstrong World Industries Investor Presentation February 2012
Armstrong World Industries Investor Presentation February 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement Our disclosures in this presentation and in our other public documents and comments contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Those statements provide our future expectations or forecasts and can be identified by our
Slide 3: Basis of Presentation
All figures throughout the presentation are in $ millions unless otherwise noted. Figures may not add due to rounding. 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
Slide 4: Investment Highlights
@imstrong: Investment Highlights
Slide 5: Investment Highlights
Investment Highlights Diversified $3 billion global building products company with leading positions in all key markets and productsNew leadership team successfully executing strategy to achieve competitive cost structure and lay foundation for growthSignificant opportunities for investment and grow
Slide 6: Global
@}mstrong: Global
Slide 7: Diversified Global Building Products Company
Diversified Global Building Products Company Leading global manufacturer of floors and ceilings for use in renovation and new construction. $2.9 billion in sales in 2011Market leader in businesses representing 80% of salesSales profile 70% domestic, 30% international70% renovation, 30% new construct
Slide 8: 2011 Business Segment and End-Use Profile
2011 Business Segment and End-Use Profile 8 Diversified earnings profile (CHART) N.A. ~80% renovation $150 $325 $675 $475 $1,225 $2,850 40% 20% 30% 10% 55% 35% 10% 65% 35% 40% 45% 10% 5% 60% 40% 5% 45% 50%
Slide 9: 2010 & 2011 EBITDA
2010 & 2011 EBITDA 9 EBITDA growth in all businesses in 2011 Excludes unallocated corporate expense (CHART) (CHART) 2010 Total EBITDA: $303M 2011 Total EBITDA: $377M
Slide 10: Building Products (ABP) Sales by Geography
Building Products (ABP) Sales by Geography 10 Continued to generate sales growth and earnings progress in down markets. Leverage our winning strategy to accelerate global growth. (CHART) Global market leaderBroadest product portfolioGlobally recognized brandInnovation leaderStrong go-to-market strat
Slide 11: Floor Products (AFP) Sales by Geography
Floor Products (AFP) Sales by Geography 11 Improved profitability through bottom of residential downturn, while continuing to invest in new product development. Poised for significant operational leverage when markets rebound. (CHART) Market leader in North America and AsiaBroadest product portfolio
Slide 12: Global Presence, Worldwide Market Leader
Global Presence, Worldwide Market Leader 12 North America North America North America Ceilings Floors Commercial 1 1 Residential 1 1 Wood NA 1 Europe, Africa, Middle-East Europe, Africa, Middle-East Europe, Africa, Middle-East Ceilings Floors Western 1 NA Central 1 1 Eastern 1 <5 Africa / Mid-East 1
Slide 13: Leadership
@ymstrong: Leadership
Slide 14: New Management Successfully Executing
New Management Successfully Executing Majority of senior leadership team joined Armstrong after January 2010Maintained profitability and positive cash flow through downturnBuilt competitive cost structureEurope turnaroundGrowth through organic investments, tactical acquisitions and product adjacenci
Slide 15: Key Milestones
Key Milestones 15 TPG invests in Armstrong New CEO and CFOLeverage recap. and $800M special dividendAnnounce $150M cost out initiative New CEO of global ceilings businessCost out initiative raised to $165 millionOrganic growth in emerging marketsConstruction of three plants in ChinaFix underperformi
Slide 16: 2011 Accomplishments
2011 Accomplishments Achieved highest worldwide EBITDA margin by ~100bps over previous record (2007) on 20% lower salesLowest worldwide SG&A% (16.7% in 2011), an improvement of ~30 bps over previous record (2008)Improvement in worldwide working capital turns of ~5% over previous record (2007)Highest
Slide 17: Profitable and cash flow positive through downturn
Profitable and cash flow positive through downturn Focus on cost control / productivityAchieve price to cover inflationStrong free cash flowContinuing to fully invest in the businessStrong balance sheet: leverage, liquidity and maturity profileOverfunded US pension plan Positioned for considerable o
Slide 18: Cost Savings Program to Achieve Competitive Cost Structure
(CHART) Cost Savings Program to Achieve Competitive Cost Structure 18 Savings net of inflation and investments, driving bottom line results. Manufacturing savings are the result of plant closures and LEAN. Cumulative Savings $35M $150M Expected TotalSavings of $185M
Slide 19: European Floor Products
European Floor Products 19 Business to be profitable in 2012. (CHART) Transform the Business (CHART) Sales(1) $360M EBITDA(2) ($15M) Sales(1) $270M EBITDA(2) ($3M) (1)Includes intercompany sales. Sales shown on a comparable foreign exchange basis (2)Excludes restructuring expense Commercial - 87% Co
Slide 20: Strategy
Strategy 20 1. Optimize Product Portfolio Broad product offering and availabilityDrive mixNew product pipelineQuality leader 2. Drive Emerging Market Growth Build manufacturing capacity to produce products for local consumptionConstruction of four plants underway, three in China and one in RussiaInc
Slide 21: Growth
Growth 21
Slide 22: Emerging Markets Growth
Emerging Markets Growth Manufacturing investments in priority markets to make products designed for local consumptionBuilding four plants; three in China and one in RussiaAdded over 100 sales and marketing resources in these markets during 2011, primarily in China, to cultivate demandSales to emergi
Slide 23: Other Growth Initiatives
Other Growth Initiatives 23 Leverage Architectural Specialties and product adjacency opportunities to accelerate global ceilings growth. (CHART) Redefined Target Market Global AS leadership team in placeSimplex acquisition Broaden solution set with ArchitectsPulls through core products Best in the W
Slide 24: Innovation
@}mstrong: Innovation
Slide 25: Leadership in Innovation
Leadership in Innovation Bridge to future growth"New to the World" productsHigh performance wood (acrylic infused) DC FlexZone ceiling systemsAirGuard ceiling tiles (Removes formaldehyde)Open Innovation and collaborationSustainability and Life Cycle Analysis (LCA)Investment in technology center in S
Slide 26: Investment Highlights
Investment Highlights Diversified $3 billion global building products company with leading positions in all key markets and productsNew leadership team successfully executing strategy to achieve competitive cost structure and lay foundation for growthSignificant opportunities for investment and grow
Slide 27: Financial Overview
@imstrong: Financial Overview
Slide 28: EBITDA Bridge (2006-2010)
EBITDA Bridge (2006-2010) 28 Cost reduction actions and improved price / mix significantly offset dramatic volume declines during the worst of the downturn. Figures rounded to nearest $5 million (CHART) $305
Slide 29: EBITDA Bridge (2010-2011)
EBITDA Bridge (2010-2011) 29 Price more than offset inflation. Cost reductions provided earnings growth in spite of volume declines and pension credit headwinds. Figures rounded to nearest $1 million (CHART) $65 ($25) $67 $48 $10
Slide 30: Balance Sheet
Balance Sheet 12/31/2011 30 Maturity ProfileNo significant maturities until 2015Considerable covenant flexibility LiquiditySufficient liquidity to manage operations, and execute capital spend and restructuring plans (CHART) (CHART) $760
Slide 31: Financial Overview Appendix
Financial Overview Appendix 31
Slide 32: Key Metrics - Guidance 2012
2012 Estimate Range 2012 Estimate Range 2012 Estimate Range 2011 Variance Variance Variance Net Sales(1) 2,900 to 3,000 2,819 3% to 6% Operating Income(2) 310 to 350 272 14% to 29% EBITDA 420 to 460 377 11% to 22% Earnings Per Share(3) $2.75 to $3.15 $2.23 23% to 41% Free Cash Flow 50 to 100 170 (71
Slide 33: 2012 Financial Outlook
2012 Financial Outlook $25 - $35 million increase Adjusted Gross Margin +100 to +150 bps vs. 2011 $15 - $25 million; 60% manufacturing, 40% SG&A $0 - $5 million vs. 2011 $10 - $20 million. Adjusted ETR of ~40% Sales $670 - $710 million EBITDA $75 - $90 million $240 - $270 million $5 - $10 million as
Slide 34: Full 2011 - Adjusted EBITDA to Reported Net Income
2011 2010 V EBITDA- Adjusted $377 $303 $74 Depreciation and Amortization (105) (115) 10 Operating Income - Adjusted $272 $188 $84 Foreign Exchange Movements 3 1 2 Cost Reduction Initiatives (15) (17) 2 Laminate Duty refunds - 7 (7) Accelerated Depreciation (not included above) (9) (31) 22 Executive
Slide 35: Management Team
@imstrong: Management Team
Slide 36: Matthew J. Espe, Chief Executive Officer and President
Matthew J. Espe, Chief Executive Officer and President In July 2010, Matthew J. Espe was appointed CEO of Armstrong World Industries, Inc., in Lancaster, Pennsylvania. He brings 30 years of experience in sales, marketing, distribution and management in global manufacturing businesses to Armstrong fr
Slide 37: Thomas B. Mangas, Senior Vice President and Chief Financial Officer
Thomas B. Mangas, Senior Vice President and Chief Financial Officer Thomas B. Mangas is senior vice president and CFO of Armstrong World Industries, Inc., in Lancaster, Pennsylvania. Mr. Mangas joined Armstrong in February 2010. Prior, he was vice president and CFO of the $28 billion beauty and groo
Slide 38: Victor Grizzle, Executive Vice President, CEO, Armstrong Building Products
Victor Grizzle, Executive Vice President, CEO, Armstrong Building Products Victor "Vic" Grizzle is executive vice president and CEO, Armstrong Building Products, in Lancaster, Pennsylvania. Mr. Grizzle has 23 years of experience in process improvement, sales, marketing and global business leadership
Slide 39: Frank J. Ready, Executive Vice President, CEO, Armstrong Floor Products Worldwide
Frank J. Ready, Executive Vice President, CEO, Armstrong Floor Products Worldwide Frank J. Ready is executive vice president and CEO of Armstrong Floor Products Worldwide, in Lancaster, Pennsylvania. Mr. Ready joined Armstrong in 1983 in Building Products Operations Sales and progressed through posi
Slide 40: Thomas J. Waters, Vice President Treasury & Investor Relations
Thomas J. Waters, Vice President Treasury & Investor Relations Thomas J. Waters is Vice President, Treasury and Investor Relations of Armstrong World Industries, Inc. Mr. Waters joined Armstrong in 1998 as Manager, Capital Markets. Since then he has held the positions of Director of Investor Relatio
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