Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Q3 2023 Earnings Presentation
17 slides from Armstrong World Industries's earnings presentation, Oct 24, 2023
Slide 1: 3rd Quarter 2023 Earnings Presentation
3rd Quarter 2023 Earnings Presentation October 24, 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement Disclosures in this presentation contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, those relating to future financial and operational results, expected savings from cost management initia
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 Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), adjusted diluted
Slide 4: GAAP and non-GAAP Financial Results
GAAP and non-GAAP Financial Results AWI Consolidated Results Q3 2023 Q3 2022 YTD 2023 YTD 2022 Net sales $347.3 $325.0 $982.9 $928.6 Earnings from continuing operations $69.5 $54.5 $177.0 $151.1 Operating income $100.2 $73.3 $257.4 $208.1 Adj. EBITDA* $125 $105 $332 $294 Operating income margin (ope
Slide 5: Record-Setting Earnings on Solid Execution
Record-Setting Earnings on Solid Execution 3rd Quarter 2023 Key Takeaways $347M (+7% VPY) Net Sales Net Sales up 7% and Adj. EBITDA* up 19% Total company Adjusted EBITDA margin* expanded 380bps Mineral Fiber segment Adj. EBITDA* up 18% $125M (+19% VPY) Driven by AUV1 improvement and lower input cost
Slide 6: Strong AUV and Lower Input Costs Drive Margin Expansion
Strong AUV and Lower Input Costs Drive Margin Expansion Mineral Fiber Q3 2023 Results $250 $234 Q3 Mineral Fiber Key Highlights Net Sales Growth VPY +7% ● Record-setting sales and earnings Adj. EBITDA margin* expanded 380bps Q3 '22 Q3 '23 ● to 41.9% Adj. EBITDA* Comparison VPY Q1 Q2 Q3 2022 Adjusted
Slide 7: Steady Sales Growth and Operating Leverage Improvement
Steady Sales Growth and Operating Leverage Improvement Architectural Specialties Q3 2023 Results $98 Q3 Architectural Specialties $91 Key Highlights Net Sales Growth VPY +7% ● Record-setting sales and earnings ● Adj. EBITDA margin* of 20.8% with Q3 '22 Q3 '23 370bps of expansion on improved operatin
Slide 8: Strong Margin Expansion and Solid Sales Growth
Strong Margin Expansion and Solid Sales Growth Q3 2023 Consolidated Company Key Metrics Q3 2022 Q3 2023 Variance Net Sales $325 $347 7% Adj. EBITDA* $105 $125 19% Adj. EBITDA Margin* (Adj. EBITDA % of Net Sales) 32.2% 36.0% 380bps Adj. Diluted Earnings Per Share* $1.36 $1.60 18% Adj. Free Cash Flow*
Slide 9: Double-Digit Adj. EBITDA Growth & Robust Adj. Free Cash Flow Growth
Double-Digit Adj. EBITDA* Growth & Robust Adj. Free Cash Flow* Growth Year-to-Date 2023 Consolidated Company Key Metrics YTD 2022 YTD 2023 Variance Net Sales $929 $983 6% Adj. EBITDA* $294 $332 13% Adj. EBITDA Margin* (Adj. EBITDA % of Net Sales) 31.6% 33.8% 220bps Adj. Diluted Earnings Per Share* $
Slide 10: Adjusted Free Cash Flow Enables Balanced Capital Allocation Strategy
Adjusted Free Cash Flow* Enables Balanced Capital Allocation Strategy 2023 Year-to-Date Adj. Free Cash Flow* 2023 Year-to-Date Up 50% vs PY Capital Deployment CapEx Dividends Share Repurchases Acquisitions 2023 $60 $34 $97 $14 2022 $47 $33 $145 *Non-GAAP measure. See slide 4 and appendix for reconci
Slide 11: Updating Full Year 2023 Guidance
Updating Full Year 2023 Guidance Driving Growth in a Challenging Macroeconomic Environment Commentary1 Challenging environment remains, but better-than- expected market supports improved outlook Net Sales Adjusted EBITDA* $1,280M to $1,295M $418M to $426M Expect lower market demand, partially offset
Slide 12: Appendix
Appendix
Slide 13: Full Year 2023 Assumptions
Full Year 2023 Assumptions Segment Net Sales Adjusted EBITDA Margin* Mineral Fiber 4% to 5% growth YoY (prior: 1% to 5%) ~39% (prior: >37.5%) Architectural Specialties1 4% to 5% growth YoY (prior: >6%) 17% to 18% (prior: >18%) Consolidated Metrics Full Year 2023 Shipping Days 2022 2023 20242 vs Prio
Slide 14: Q3 2023 Adjusted EBITDA and Adjusted Diluted EPS Reconciliation
Q3 2023 Adjusted For the Three Months For the Nine Months Q3 2023 Adjusted Diluted For the Three Months Ended Sept. 30, For the Nine Months Ended Sept. 30, EPS Reconciliation Ended Sept. 30, Ended Sept. 30, EBITDA Reconciliation 2023 2022 2023 2022 2023 2022 2023 2022 Net earnings $70 $58 $177 $154
Slide 15: Q3 2023 Adjusted Free Cash Flow Reconciliation
Q3 2023 Adjusted Free Cash Flow For the Three Months Ended Sept. 30, For the Nine Months Ended Sept. 30, Reconciliation 2023 2022 2023 2022 Net cash provided by operating activities $83 $56 $176 $119 Net cash (used for) provided by investing activities ($5) $10 ($11) $8 Net cash provided by operatin
Slide 16: 2023 Adj. EBITDA Guidance Reconciliation
2023 Adj. EBITDA Guidance Reconciliation 2023 Segment Adj. EBITDA Margin Guidance Full Year 2023 Reconciliation Full Year 20233 Low High (Supports low-end Adj. EBITDA Margin % assumption) Net earnings $218 $220 MF AS UC Add: Income tax expense 73 75 Net sales $921 $359 $- Earnings before income taxe
Slide 17: 2023 Adj. Diluted EPS and Free Cash Flow Guidance Reconciliation
2023 Adj. Diluted EPS Guidance Reconciliation 2023 Adj. Free Cash Flow Guidance Reconciliation Full Year 2023 Full Year 2023 Low High Low High Net earnings $218 $220 Net cash provided by operating activities $235 $245 Add: Income tax expense 73 75 Add: Return of investment from joint venture 90 95 E
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