Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ARMSTRONG WORLD INDUSTRIES INC | d916802d8k.htm |
| EX-99.1 - EX-99.1 - ARMSTRONG WORLD INDUSTRIES INC | d916802dex991.htm |
 Earnings Call
Presentation
1
st
Quarter 2015
April 30, 2015
Exhibit 99.2 |
 2
Our disclosures in this presentation, including without limitation, those relating
to future financial results guidance and the possible separation of our
flooring business from our building products business, 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 or the separation of our businesses. 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
www.armstrong.com.
The guidance in this presentation is only effective as of the date given, April 30,
2015, and will not be updated or affirmed unless and until we publicly
announce updated or affirmed guidance. Safe Harbor Statement
|
 3
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 2015 is used for all
currency translations in 2015 and prior years.
Guidance is presented using the 2015 budgeted
exchange rate for the year.
•
We remove the impact of discrete expenses and
income. Examples include plant closures,
restructuring actions, separation costs and other
large
unusual
items.
We
also
remove
the
non-
cash
impact
of
our
U.S.
Pension
Plan.
•
Taxes for normalized Net Income and EPS are
calculated using a constant 39% for 2015
guidance, and 2015 and 2014 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 |
 4
Key Metrics –
First Quarter 2015
2015
2014
Variance
Net Sales
(1)
$565
$584
(3.3%)
Operating Income
(2)
46
55
(17.5%)
% of Sales
8.1%
9.5%
(140 bps)
EBITDA
75
83
(10.2%)
% of Sales
13.2%
14.3%
(110 bps)
Earnings Per Share
(3)
$0.37
$0.43
(13.9%)
Free Cash Flow
(42)
(56)
24.9%
Net Debt
903
977
(74)
ROIC
(4)
6.6%
9.2%
(260 bps)
(1)
As reported Net Sales: $551 million in 2015 and $590 million in 2014
(2)
As reported Operating Income: $36 million in 2015 and $54 million in 2014
(3)
As reported EPS: $0.07 in 2015 and $0.33 in 2014
(4)
Unadjusted |
 5
First Quarter 2015 vs. PY–
Adjusted EBITDA to Reported Net Income
2015
2014
V
EBITDA
–
Adjusted
$75
$83
($8)
Depreciation and Amortization
(29)
(28)
(1)
Operating Income
–
Adjusted
$46
$55
($9)
Non-cash Impact of U.S. Pension
6
-
6
Foreign Exchange Movements
2
1
1
Separation Expenses
4
-
4
Cost Reduction Initiatives
(2)
-
(2)
Operating Income
–
As Reported
$36
$54
($18)
Interest/Other (Expense)
(12)
(17)
5
EBT
$24
$37
($13)
Tax (Expense)
(20)
(19)
(1)
Net Income
$4
$18
($14) |
 6
First Quarter Sales and EBITDA by Segment –
2015 vs. Prior Year
(6)
(6)
3
1
(3%)
(12%)
0%
(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) |
 Building Products First Quarter Results
Margin improvement demonstrates consistent ability to improve earnings despite
volume declines and higher plant construction expenses
Key Highlights
Q1 2014 Adjusted EBITDA
$ 74M
Price & Mix
11
Volume
(9)
Manufacturing & Input Costs
2
SG&A
(2)
WAVE
(1)
D&A/Other
2
Q1 2015 Adjusted EBITDA
$ 77M
7
$193
$194
$78
$78
$31
$30
Q1 2015
Q1 2014
Net Sales
Americas
EMEA
Pacific Rim
$302
$302
•
On a comparable foreign exchange basis sales were
flat over a strong base period (sales were up over 5%
in the first quarter of 2014). Price and mix both
improved offsetting volume declines in the Americas
and in EMEA markets
•
Softer year-on-year activity in regions of the U.S.
impacted by weather and Canada, along with a weaker
U.S. commercial market accounted for the majority of
the volume weakness in the Americas
•
Reflects impact of prior price increases and continued
strong mix performance
•
Driven by lower volumes in the Americas and EMEA
•
Strong productivity in the Americas and favorable input
costs more than offset increased expenses associated
with completion of construction for the Russia plant
•
Driven by inflation and higher SG&A to support the
Russia plant |
 •
Sales declined as volume, price and mix were all
unfavorable compared to the prior year
•
On a comparable foreign exchange basis sales in the
Pacific Rim increased slightly as softness in China was
more than offset by strength in India
•
Driven by unfavorable price and mix performance in
residential flooring in the Americas
•
Softer volumes in the Americas in U.S. commercial and
residential
•
Higher SG&A expense to support go-to-market
initiatives
Resilient First Quarter Results
Softness in the Americas drives margin performance
Key Highlights
Q1 2014 Adjusted EBITDA
$ 17M
Price & Mix
(4)
Volume
(1)
Manufacturing & Input Costs
1
SG&A
(2)
Q1 2015 Adjusted EBITDA
$ 11M
8
$142
$148
$17
$16
Q1 2015
Q1 2014
Net Sales
Americas
Pacific Rim
$159
$164 |
 9
•
Sales declined despite improvements in price and mix
•
Volume declines were caused by market share shifts
as a result of prior year price and mix optimization
actions and inventory adjustments at home centers
•
Driven primarily by mix improvement
•
Lower volumes driven by share loss at opening price
points
•
Driven by unfavorable production expense
Wood First Quarter Results
Despite improved price and mix performance, sales and margins decline due to
lower volumes
Key Highlights
Q1 2014 Adjusted EBITDA
$ 8M
Price & Mix
4
Volume
(6)
Manufacturing & Input Costs
(4)
Q1 2015 Adjusted EBITDA
$ 2M
$103
$118
Q1 2015
Q1 2014
Net Sales
Americas
$103
$118 |
 EBITDA Bridge –
First Quarter 2015 vs. Prior Year
($17)
$12
$2
$1
$83
$0
$20
$40
$60
$80
$100
$120
2014
Price/Mix
Volume
Input Costs
Mfg Cost
SG&A
WAVE
Change in
D&A
2015
($2)
$75
($1)
($3) |
 11
Free Cash Flow
–
First Quarter 2015 vs. Prior Year
($27)
$0
($3)
($42)
($56)
($100)
($80)
($60)
($40)
($20)
$0
2014
Cash
Earnings
Working
Capital
Capex
Interest
Expense
WAVE
Dividends
Other
2015
$15
$20
$9 |
 12
2015 Estimate Range
(1)
2014
(2)
Variance
Net Sales
(3)
2,525
to
2,625
2,515
0%
to
4%
Operating Income
(4)
230
to
270
271
(15%)
to
(1%)
EBITDA
350
to
390
389
(10%)
to
0%
Earnings Per Share
(5)
$2.00
to
$2.40
$2.38
(16%)
to
1%
(1)
Guidance is presented using 2015 budgeted foreign exchange rates
(2)
2014 results are presented using 2015 budgeted foreign exchange rates
(3)
2015 and 2014 net sales include the impact of foreign exchange
(4)
As reported Operating Income: $175 -
$215 million in 2015 and $239 million 2014
(5)
As reported earnings per share: $1.00 -
$1.30 in 2015 and $1.83 in 2014
Key Metrics –
Guidance 2015 |
 13
2015 Financial Outlook
Sales
(1)
$1,300-$1,350 million; EBITDA $335-$360 million
Sales
(1)
$1,225-$1,275 million; EBITDA $80-$100 million
EBITDA ($65) –
($70)
$35 -
$45 million; Adjusted long-term ETR of ~39%
(2)
$125 -
$150 million
Non-cash:
$25 million US pension expense
Cash:
$20 -
$40 million transaction costs
ABP Segment
AFP
Segment
Cash Taxes/ETR*
Capital Spending
Exclusions from EBITDA
(1)
Net sales include foreign exchange impact
(2)
As reported ETR of 56% for 2015
* Changed from February Outlook
Corporate Segment |
 14
Appendix |
 15
Consolidated Results
First Quarter
2015
Reported
Comparability
(1)
Adjustments
FX
(2)
Adj
2015
Adjusted
2014
Reported
Comparability
(1)
Adjustments
FX
(2)
Adj
2014
Adjusted
Net Sales
551
-
14
565
590
-
(6)
584
Operating
Income
36
8
2
46
54
-
1
55
EPS
$0.07
$0.28
$0.02
$0.37
$0.33
$0.09
$0.01
$0.43
(1)
See earnings press release and 10-Q for additional detail on comparability
adjustments (2)
Eliminates impact of foreign exchange movements |
 16
Segment Operating Income (Loss)
First Quarter
2015
Reported
Comparability
(1)
Adjustments
2015
Adjusted
2014
Reported
Comparability
(1)
Adjustments
2014
Adjusted
Building Products
60
-
60
58
1
59
Resilient Flooring
6
(1)
5
10
-
10
Wood Flooring
(1)
-
(1)
5
-
5
Unallocated Corporate
(Expense) Income
(29)
11
(18)
(19)
-
(19)
(1)
Eliminates impact of foreign exchange movements and non-recurring items; see
earnings press release and 10-Q for additional detail. |
 17
Cash Flow
First Quarter
($ millions)
2015
2014
Net cash (used for) operations
($34)
($33)
Net cash (used for) investing
(8)
(22)
Add back (subtract) adjustments to reconcile to
free cash flow
Other
-
(1)
Free Cash Flow
($42)
($56)
Cash flow includes cash flows attributable to the European flooring business
|