Armstrong World Industries Inc · NYSE:AWI
Armstrong World Industries — Investor Presentation (February 2011)
32 slides from Armstrong World Industries's investor presentation, Feb 28, 2011
Slide 1: Armstrong World Industries Investor Presentation
Armstrong World Industries Investor Presentation February 28, 2011 Exhibit 99.2
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains “forward-looking statements” related to Armstrong World Industries, Inc.’s, future financial performance. Our results could differ materially from the results discussed in these forward-looking statements due to known and unknown risks and uncertainti
Slide 3: Company Overview
Company Overview
Slide 4: Armstrong at a Glance
Armstrong at a Glance Leading manufacturer of floors and ceilings for use in renovation and new construction. Significant U.S. cabinets’ business. $2.8 billion in sales in 2010 #1 in businesses representing 80% of sales Serving global customers from eight countries 34 manufacturing locations Approxi
Slide 5: Managing for Profitability
Managing for Profitability History 1998 Sales Mix: Residential/Commercial was 65/35 Significant geographic and product line expansion: • Hardwood floors • Cabinets • DLW ( European flooring) Asbestos-related bankruptcy Manufacturing and overhead restructuring Significant growth in Commercial product
Slide 6: AWI Key Strategies
1 Enhance the Core 2 Expand the Core 3 Drive Lower Costs 4 Innovation Leadership 5 Organization Vitality 6 Efficient Balance Sheet AWI Key Strategies Company Overview Maximize profits in global Floors and Ceilings Increase share and mix selectively Drive growth in China and India Build ceilings and
Slide 7: 2010 Business Segment and End-Use Profile
65% 65% 40% 40% 55% 10% 30% 40% 45 2010 Business Segment and End-Use Profile Majority of business is renovation – dampens cycles. Cabinets Resilient Flooring (Int'l) Resilient Flooring (N.A.) Hardwood Flooring Building Products (Ceilings) Consolidated Commercial renovation Commercial new Residential
Slide 8: Business Segment Profile
Resilient Flooring 19% Wood Flooring 2% Building Products (Ceilings) 79% Cabinets 0% Business Segment Profile Building Products delivers the bulk of worldwide income and has remained profitable through the economic cycle. 2010 EBITDA Adjusted – Excludes unallocated corporate expense Company Overview
Slide 9: Industry Structure/Competitive Position
Industry Structure/Competitive Position U.S. Resilient European Resilient Hardwood Building Products Cabinets Market Leadership Competitor Concentration Industry Capacity Utilization Low-Cost Manufacturer Armstrong continuously focused on competitive dynamics. Key Favorable Neutral Unfavorable Compa
Slide 10: Business Segment Overview
Business Segment Overview
Slide 11: Worldwide Business Overview – Building Products
Worldwide Business Overview – Building Products Worldwide market leader in suspended ceilings. Business Segment Overview - Building Products North America Mkt Size (B ft ) AWI Rank Commercial 1.4 Residential 0.4 Europe, Africa, Middle- East Mkt Size (B ft ) AWI Rank Western 1.2 Eastern 0.5 Africa /
Slide 12: ABP Key Strategies
1 Broadest Product Portfolio 2 Emerging Market Growth 4 Best-in-Class Service/Quality 3 Innovation Leadership ABP Key Strategies Complete product offering New product pipeline (Metal, Wood) Win versus soft fiber in Europe Plant #2 in China Distribution in Russia, Middle East Grid plant in India Busi
Slide 13: Building Products (ABP) Sales by Geography
Building Products (ABP) Sales by Geography $115 Americas Europe Asia ($-Millions) Contribution of WAVE JV Profit to Operating Margin 4% Worldwide EBITDA Margin 25% New product development and manufacturing technology managed globally. Business Segment Overview - Building Products Global market leade
Slide 14: Worldwide Business Overview – Floor Products
Worldwide Business Overview – Floor Products * Business Segment Overview - Worldwide Floor Products Global presence with market leadership in most regions. Asia, Australia Mkt Size (B ft ) AWI Rank China 0.4 Australia 0.1 India 0.01 SE Asia 0.1 Europe, Africa, Middle-East Mkt Size (B ft ) AWI Rank C
Slide 15: AFP Key Strategies
1 Best Product Portfolio 2 Complete Market Coverage 3 Low-Cost Manufacturing 4 Innovation Leadership 5 Drive China Growth 6 Restructure Europe AFP Key Strategies Business Segment Overview - Worldwide Floor Products Offer broadest assortment Drive mix Quality leadership Brand leadership Merchandising
Slide 16: Floor Products (AFP) Sales by Geography
Floor Products (AFP) Sales by Geography Americas Americas Europe Asia ($-Millions) Worldwide Adjusted EBITDA Margin excluding Europe 5% 7% Continued profitability through bottom of residential downturn. Business Segment Overview - Worldwide Floor Products Resilient & Wood Wood Worldwide Resilient
Slide 17: European Floor Products
European Floor Products Linoleum 37% Vinyl 34% Other 16% Vinyl 13% Commercial 87% Sales $364M Operating Loss (1) $ 19M Business Segment Overview - European Floor Products (1) Excludes restructuring expense Challenges Tough markets … Western Europe Scale disadvantage in manufacturing and SG&A Outdate
Slide 18: Cabinets
Remodel 45% New 55% Cabinets Small player…<5% share Focus on small-/medium-size builder Go-to-Market Current Situation 2010 Sales = $139M Niche player… both new and remodel Restructure costs to reflect market reality Non-core business Strategy % of Sales Company-Owned Service Centers 51% Distributio
Slide 19: Cabinets
Remodel 45% New 55% Cabinets Small player…<5% share Focus on small-/medium-size builder Go-to-Market Current Situation 2010 Sales = $139M Niche player … both new and remodel Restructure costs to reflect market reality Non-core business Strategy % of Sales Company-Owned Service Centers 51% Distributi
Slide 20: Financial Overview
Financial Overview
Slide 21: Financial Summary
Profitable and cash flow positive through downturn Focus on cost control / productivity Strong free cash flow ROIC greater than cost of capital in 2013, with new home starts at one million Continuing to fully invest in businesses Strong balance sheet: leverage, liquidity and maturity profile Positio
Slide 22: Operating Income Bridge (2006-2009)
$270 $160 $170 $85 $55 ($5) ($385) ($30) 2006 Actual Price / Mix Volume Raw Materials / Energy Mfg Costs SG&A WAVE 2009 Actual (Millions) Figures rounded to nearest $5 million Financial Overview Cost reduction and improved price / mix significantly offset dramatic volume declines. Operating Income B
Slide 23: Operating Income Bridge (2009-2010)
$157 $188 $15 $48 $20 $5 ($26) ( $31) Price / Mix Volume Raw Materials / Energy Mfg Costs SG&A WAVE 2010 Mgmt Acct (Millions) Figures rounded to nearest $1 million Financial Overview Cost reduction offsets volume and input cost headwinds. Operating Income Bridge (2009-2010)
Slide 24: Balance Sheet, Liquidity and Maturity Profile
315 225 100 (75) (2%) (14%) ($200) ($100) $0 $100 $200 $300 $400 $500 $600 $700 LCs Securitization Revolver Cash Balance Sheet 12/31/2010 Financial Overview $565 (Millions) Maturity Profile No significant maturities until 2015 Considerable covenant flexibility Liquidity Sufficient liquidity to manag
Slide 25: Financial Overview Appendix
Financial Overview Appendix
Slide 26: Key Metrics
Key Metrics (1) – Guidance 2011 Financial Overview Appendix Estimate Range Variance Net Sales 2,800 to 3,000 2,766 1% to 8% Operating Income (2) to 35% to 62% EBITDA to 19% to 35% Earnings Per Share (3), (4) $2.04 to $2.53 $1.73 18% to 47% Free Cash Flow to (61%) to (33%) (1) Figures exclude non-rec
Slide 27: 2011 Financial Outlook
2011 Financial Outlook Financial Overview Appendix Raw Material & Energy Inflation $35 - $45 million increase Manufacturing Productivity Gross Margin +100 to +200 bps vs. 2010 U.S. Pension Credit ~$25 million, down ~$25 million vs. 2010 60% manufacturing, 40% SG&A Earnings from WAVE $5 - $10 million
Slide 28: Full Year 2010 – Adjusted Operating Income to Reported Net Income
Full Year 2010 – Adjusted Operating Income to Reported Net Income Financial Overview Appendix V Operating Income – Adjusted (1) $188 $157 $31 Foreign Exchange Movements - Laminate Duty Refund - Cost Reduction Initiatives (50) (16) (34) Asset Impairments (31) (18) (13) Restructuring (22) - (22) Execu
Slide 29: Normalized Operating Income to Free Cash Flow
Normalized Operating Income to Free Cash Flow Financial Overview Appendix Estimate Range Adjusted Operating Income to D&A Adjusted EBITDA to Changes in Working Capital to Capex (180) to (200) Pension Credit (25) Interest Expense (50) Cash Taxes (15) Other, including cash payments for restructuring a
Slide 30: Consolidated Results
Consolidated Results Financial Overview Appendix Fourth Quarter Reported Comparability (1) Adjustments FX (2) Adj Adjusted Reported Comparability (1) Adjustments FX (2) Adj Adjusted Net Sales - - Operating Income (30) (1) (2) - EPS ($0.36) $0.48 ($0.01) $0.11 ($0.07) $0.30 $ - $0.23 Full Year 2010 R
Slide 31: Segment Operating Income (Loss)
Segment Operating Income (Loss) Financial Overview Appendix (1) Eliminates impact of foreign exchange movements and non-recurring items; see earnings press release and 10-K for additional detail. Fourth Quarter Reported Comparability (1) Adjustments Adjusted Reported Comparability (1) Adjustments Ad
Slide 32: Cash Flow
Cash Flow Financial Overview Appendix Fourth Quarter Full Year ($-millions) Net Cash From Operations Plus / (Minus) Net Cash from Investing (37) (29) (41) (41) Add back / (subtract): Restricted Cash - - Divestitures - (8) Equals Free Cash Flow
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