Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ARMSTRONG WORLD INDUSTRIES INC | d808036d8k.htm |
| EX-99.3 - EX-99.3 - ARMSTRONG WORLD INDUSTRIES INC | d808036dex993.htm |
| EX-99.1 - EX-99.1 - ARMSTRONG WORLD INDUSTRIES INC | d808036dex991.htm |
 Earnings Call
Presentation
3
rd
Quarter 2014
October 27, 2014
Exhibit 99.2 |
 2
Our disclosures in this presentation, including without limitation, those relating
to future financial results guidance,
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
use of words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe," "outlook," "target,"
"predict," "may," "will," "would," "could," "should," "seek," and other words or
phrases of similar meaning in connection with any discussion of future operating or
financial performance. Forward-looking statements, by their
nature, address matters that are uncertain and involve risks because they
relate
to
events
and
depend
on
circumstances
that
may
or
may
not
occur
in
the
future.
As
a
result,
our
actual
results
may
differ
materially
from
our
expected
results
and
from
those
expressed
in
our
forward-looking
statements. A more detailed discussion of the risks and uncertainties that
may affect our ability to achieve the projected
performance
is
included
in
the
“Risk
Factors”
and
“Management’s
Discussion
and
Analysis”
sections
of our reports on Forms 10-K and 10-Q filed with the SEC.
Forward-looking statements speak only as of the date they are
made. We undertake no obligation to update any forward-looking statements beyond what is
required under applicable securities law.
In
addition,
we
will
be
referring
to
non-GAAP
financial
measures
within
the
meaning
of
SEC
Regulation
G.
A
reconciliation of the differences between these measures with the most directly
comparable financial measures calculated in accordance with GAAP are
included within this presentation and available on the Investor Relations
page of our website at The guidance in this presentation is only effective as
of the date given, October 27, 2014, and will not be updated or affirmed
unless and until we publicly announce updated or affirmed guidance. Safe
Harbor Statement www.armstrong.com
. |
 All
figures
throughout
the
presentation
are
in
$
millions
unless
otherwise
noted.
Figures
may
not
add
due
to
rounding.
•
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. As reported results will be
footnoted throughout the presentation. Basis of Presentation
Explanation •
We report in comparable dollars to remove
the effects of currency translation on the
P&L. The budgeted exchange rate for 2014
is used for all currency translations in 2014
and prior years. Guidance is presented using
the 2014 budgeted exchange rate for the
year.
•
We remove the impact of discrete expenses
and income. Examples include plant
closures, restructuring actions, and other
large unusual items.
•
Taxes for normalized Net Income and EPS
are calculated using a constant 39% for 2014
results and guidance, and 2013 results,
which are based on the expected full year
historical tax rate.
What Items Are Adjusted
Comparable
Dollars
Other
Adjustments
Net Sales
Yes
No
Gross Profit
Yes
Yes
SG&A Expense
Yes
Yes
Equity Earnings
Yes
Yes
Operating Income
Yes
Yes
Net Income
Yes
Yes
Cash Flow
No
No
Return on Capital
Yes
Yes
EBITDA
Yes
Yes
3 |
 4
Key Metrics –
Third Quarter 2014
2014
2013
Variance
Net Sales
(1)
$725
$728
(0.5%)
Operating Income
(2)
87
94
(8.0%)
% of Sales
12.0%
13.0%
(100 bps)
EBITDA
117
122
(4.2%)
% of Sales
16.2%
16.8%
(60 bps)
Earnings Per Share
(3)
$0.83
$0.85
(2.5%)
Free Cash Flow
60
95
(37.0%)
Net Debt
902
930
(28)
ROIC
(4)
6.4%
8.3%
(190 bps)
(1)
As reported Net Sales: $728 million in 2014 and $730 million in 2013
(2)
As reported Operating Income: $69 million in 2014 and $94 million in 2013
(3)
As reported EPS: $0.57 in 2014 and $0.94 in 2013
(4)
Unadjusted |
 5
Third Quarter 2014 vs. PY–
Adjusted EBITDA to Reported Net Income
2014
2013
V
EBITDA
–
Adjusted
$117
$122
($5)
Depreciation and Amortization
(30)
(28)
(2)
Operating
Income
–
Adjusted
$87
$94
($7)
Foreign Exchange Movements
-
(1)
1
Fixed Asset Accelerated Depreciation and
Impairments (not included above)
17
-
17
Cost Reduction Initiatives
1
1
-
Operating
Income
–
As
Reported
$69
$94
($25)
Interest/Other (Expense)
(11)
(12)
1
EBT
$58
$82
($24)
Tax (Expense)
(26)
(26)
-
Net Income
$32
$56
($24) |
 Third
Quarter Sales and EBITDA by Segment – 2014 vs. PY
(11)
4
3
(1)
(3%)
(7%)
4%
(15%)
(10%)
(5%)
0%
5%
10%
(15)
(10)
(5)
-
5
10
Resilient Flooring
Wood Flooring
Building Products
Corporate
EBITDA Change (Left-hand scale)
% Change in Sales (Right-hand scale)
6 |
 EBITDA
Bridge – Third Quarter 2014 vs. PY
($9)
($12)
7
$15
$1
$2
$117
$122
$0
$20
$40
$60
$80
$100
$120
$140
$160
2013
Price/Mix
Volume
Input
Costs
Mfg Cost
SG&A
WAVE
Pension
Expense
Change in
D&A
2014
($3)
($1)
$2 |
 Free
Cash Flow – Third Quarter 2014 vs. Prior Year
($11)
($13)
($1)
($14)
8
$2
$2
$60
$95
$0
$20
$40
$60
$80
$100
2013
Cash
Earnings
Working
Capital
Capex
Interest
Expense
WAVE
Dividends
Other
2014 |
 9
Key Metrics –
September YTD 2014
2014
2013
Variance
Net Sales
(1)
$2,061
$2,045
0.8%
Operating Income
(2)
207
217
(4.5%)
% of Sales
10.1%
10.7%
(60 bps)
EBITDA
300
297
0.9%
% of Sales
14.5%
14.5%
0 bps
Earnings Per Share
(3)
$1.85
$1.66
11.0%
Free Cash Flow
14
75
(81.1%)
(1)
As
reported
Net
Sales:
$2,073
million
in
2014
and
$2,059
million
in
2013
(2)
As reported Operating Income: $179 million in 2014 and $208 million in 2013
(3)
As reported EPS: $1.25 in 2014 and $1.50 in 2013 |
 September YTD Sales and EBITDA by Segment –
2014 vs. PY
10
(10)
11
5
(3)
(3%)
(1%)
4%
(15%)
(10%)
(5%)
0%
5%
10%
15%
(15)
(10)
(5)
-
5
10
15
Resilient Flooring
Wood Flooring
Building Products
Corporate
EBITDA
Change
(Left-hand
scale)
% Change in Sales (Right-hand scale) |
 EBITDA
Bridge
–
September
YTD
2014
vs.
Prior
Year
($17)
($25)
$3
$11
11
$300
$297
$200
$220
$240
$260
$280
$300
$320
$340
$360
2013
Price/Mix
Volume
Input
Costs
Mfg Cost
SG&A
WAVE
Pension
Expense
Change in
D&A
2014
($26)
($2)
$46
$13 |
 Free
Cash
Flow
–
September
YTD
2014
vs.
Prior
Year
($5)
($40)
($11)
($15)
12
$6
$4
$14
$75
$0
$10
$20
$30
$40
$50
$60
$70
$80
2013
Cash
Earnings
Working
Capital
Capex
Interest
Expense
WAVE
Dividends
Other
2014 |
 13
2014 Estimate Range
(1)
2013
(2)
Variance
Net Sales
(3)
2,680
to
2,720
2,700
(1%)
to
1%
Operating Income
(4)
230
to
245
257
(11%)
to
(5%)
EBITDA
355
to
375
366
(3%)
to
2%
Earnings Per Share
(5)
$2.00
to
$2.15
$1.98
1%
to
9%
Free Cash Flow
0
to
40
68
(100%)
to
(41%)
(1)
Guidance is presented using 2014 budgeted foreign exchange rates
(2)
2013 results are presented using 2014 budgeted foreign exchange rates
(3)
2014 and 2013 net sales include the impact of foreign exchange
(4)
As reported Operating Income: $205 -
$220 million in 2014 and $239 million 2013
(5)
As reported earnings per share: $1.40 -
$1.55 in 2014 and $1.71 in 2013
Key Metrics –
Guidance 2014 |
 14
2014 Financial Outlook
$30 -
$40 million vs. 2013
Adjusted Gross Margin 0 to 30 bps vs. 2013
Raw Material & Energy Inflation
Manufacturing
Productivity* Earnings
from WAVE Cash Taxes/ETR*
Q4
Capital Spending
Exclusions from EBITDA*
(1)
Net sales include foreign exchange impact
(2)
As reported ETR of 49% for 2014
* Changed from July Outlook
SG&A
16.5% to 17.0% of sales
$0 -
$5 million vs. 2013
$15 -
$25 million; Adjusted long-term ETR of ~39%
(2)
Sales
(1)
$610–
$650 million; EBITDA $55 –
$75 million
$195 -
$215 million
$25 -
$30 million |
 15
Appendix |
 16
September YTD 2014 vs. PY–
Adjusted EBITDA to Reported Net Income
2014
2013
V
EBITDA–
Adjusted
$300
$297
$3
Depreciation and Amortization
(93)
(80)
(13)
Operating
Income
–
Adjusted
$207
$217
($10)
Foreign Exchange Movements
1
(1)
2
Fixed Asset Accelerated Depreciation and
Impairments (not included above)
21
-
21
Cost Reduction Initiatives
6
10
(4)
Operating
Income
–
As
Reported
$179
$208
($29)
Interest/Other (Expense)
(39)
(54)
15
EBT
$140
$154
($14)
Tax (Expense)
(70)
(64)
(6)
Net Income
$70
$90
($20) |
 17
Adjusted Operating Income to Free Cash Flow
2014 Estimate Range
Adjusted Operating Income
230
to
245
Depreciation and Amortization
125
to
130
Adjusted EBITDA
355
to
375
Changes in Working Capital
(50)
to
(60)
Capex
(195)
to
(215)
Interest Expense
(45)
to
(50)
Cash Taxes
(15)
to
(25)
Other, including cash payments for restructuring and
one-time items
(25)
to
(30)
Free Cash Flow
0
to
40 |
 18
Consolidated Results
Third Quarter
2014
Reported
Comparability
(1)
Adjustments
FX
(2)
Adj
2014
Adjusted
2013
Reported
Comparability
(1)
Adjustments
FX
(2)
Adj
2013
Adjusted
Net Sales
728
-
(3)
725
730
-
(2)
728
Operating
Income
69
18
-
87
94
1
(1)
94
EPS
$0.57
$0.26
-
$0.83
$0.94
($0.08)
($0.01)
$0.85
September YTD
2014
Reported
Comparability
(1)
Adjustments
FX
(2)
Adj
2014
Adjusted
2013
Reported
Comparability
(1)
Adjustments
FX
(2)
Adj
2013
Adjusted
Net Sales
2,073
-
(12)
2,061
2,059
-
(14)
2,045
Operating
Income
179
27
1
207
208
10
(1)
217
EPS
$1.25
$0.59
$0.01
$1.85
$1.50
$0.17
($0.01)
$1.66
(1)
See earnings press release and 10-Q for additional detail on comparability
adjustments (2)
Eliminates impact of foreign exchange movements |
 19
Segment Operating Income (Loss)
Third Quarter
2014
Reported
Comparability
(1)
Adjustments
2014
Adjusted
2013
Reported
Comparability
(1)
Adjustments
2013
Adjusted
Building Products
87
(1)
86
87
(2)
85
Resilient Flooring
(2)
15
13
22
1
23
Wood Flooring
2
4
6
3
(1)
2
Unallocated Corporate
(Expense) Income
(18)
-
(18)
(18)
2
(16)
September YTD
2014
Reported
Comparability
(1)
Adjustments
2014
Adjusted
2013
Reported
Comparability
(1)
Adjustments
2013
Adjusted
Building Products
209
-
209
211
(1)
210
Resilient Flooring
23
18
41
47
6
53
Wood Flooring
(2)
4
10
14
6
-
6
Unallocated Corporate
(Expense) Income
(57)
-
(57)
(55)
3
(52)
(1)
Eliminates impact of foreign exchange movements and non-recurring items; see
earnings press release and 10-Q for additional detail. (2)
Includes
a
$1
million
gain
in
the
second
quarter
of
2014
related
to
a
refund
of
previously
paid
duties
on
imports
of
engineered
wood
flooring |
 20
Cash Flow
Third Quarter
YTD
($ millions)
2014
2013
2014
2013
Net cash from operations
$89
$119
$111
$162
Net cash (used for) investing
(29)
(24)
(97)
(87)
Free Cash Flow
$60
$95
$14
$75 |