UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 30, 2015
ARMSTRONG WORLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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Pennsylvania |
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1-2116 |
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23-0366390 |
(State or other jurisdiction of
incorporation or organization) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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2500 Columbia Avenue P.O. Box 3001
Lancaster, Pennsylvania |
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17603 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (717) 397-0611
NA
(Former name or
former address if changed since last report.)
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 - Financial Information
Item 2.02 |
Results of Operations and Financial Condition. |
On April 30, 2015, Armstrong World Industries, Inc.
(the Company) issued a press release announcing its first quarter 2015 consolidated financial results. The full text of the press release is attached hereto as Exhibit 99.1.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed
filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into
any filing under the Securities Act of 1933, as amended (the Act), or the Exchange Act, except as expressly set forth by specific reference in such filing.
Section 7 Regulation FD
Item 7.01 |
Regulation FD Disclosure. |
On April 30, 2015, the Company issued a press release announcing that it
will report its first quarter 2015 consolidated financial results via a webcast and conference call on Thursday, April 30, 2015 at 11:00 a.m. Eastern Time which can be accessed through the For Investors section of the Companys
website, www.armstrong.com. During this report, the Company will reference a slide presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated herein by reference.
The information in Item 7.01 of this Current Report on Form 8-K is being furnished herewith and shall not be deemed filed for the purposes of
Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Act, or the Exchange Act, except as expressly set forth by specific reference in
such filing.
Section 9 Financial Statements and Exhibits
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits
No. 99.1 Press Release of Armstrong World Industries, Inc. dated April 30, 2015
No. 99.2 Earnings Call Presentation First Quarter 2015 dated April 30, 2015
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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ARMSTRONG WORLD INDUSTRIES, INC. |
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By: |
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/s/ Mark A. Hershey |
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Mark A. Hershey |
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Senior Vice President, General Counsel and
Chief Compliance Officer |
Date: April 30, 2015
3
Exhibit 99.1
Armstrong World Industries Reports
First Quarter 2015 Results
Key Highlights
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First quarter operating income from continuing operations of $35.8 million, down 34% over the 2014 period impacted by higher non-cash U.S. Pension expense and separation costs |
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First quarter adjusted EBITDA from continuing operations of $75 million, down 10% over the 2014 period |
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Larry McWilliams designated Chairman of Armstrong Flooring; Jim OConnor to remain as Chairman of Armstrong World Industries |
LANCASTER, Pa., April 30, 2015 Armstrong World Industries, Inc. (NYSE: AWI), a global leader in the design and manufacture of floors and ceiling
systems, today reported first quarter 2015 results.
First Quarter Results from continuing operations
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(Amounts in millions except per share data) |
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Three Months Ended March 31, |
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2015 |
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2014 |
|
|
Change |
|
Net sales |
|
$ |
551.4 |
|
|
$ |
590.0 |
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|
|
(6.5 |
)% |
Operating income |
|
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35.8 |
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53.8 |
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(33.5 |
)% |
Net income |
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3.8 |
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18.1 |
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(79.0 |
)% |
Diluted earnings per share |
|
$ |
0.07 |
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|
$ |
0.33 |
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|
|
(78.8 |
)% |
Excluding the unfavorable impact from foreign exchange of $20 million, consolidated net sales decreased 3.3% compared to the
prior year period driven by lower volumes across all businesses which more than offset the impact from favorable price and mix.
The decline in operating
income and net income compared to the prior year period was impacted by higher non-cash U.S. Pension expense and separation costs related to the previously announced spin-off of the Flooring business. The declines in operating income and net income
were also driven by the margin impact of lower volumes, increased SG&A expense and lower earnings from WAVE, which were only partially offset by favorable price and mix. The decline in net income was also impacted by state net operating loss
write-offs as a result of a change in ownership under section 382 of the Internal Revenue Code in conjunction with the sale of stock by the Asbestos Trust in the first quarter of 2015.
While the year started slowly we saw activity accelerate throughout the quarter and our sales and
adjusted EBITDA guidance for the year remain unchanged, said Matt Espe, CEO. We continue to make progress on the separation and Im pleased to announce the Board has designated Larry McWilliams to serve as the Chairman of Armstrong
Flooring upon completion of the separation, and Jim O Connor will remain Chairman of Armstrong World Industries. Larry and Jim have each been tremendous assets to Armstrong over the past several years and will provide both companies with a
steady hand through the separation and excellent strategic leadership moving forward.
Additional (non-GAAP*) Financial Metrics from continuing
operations
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(Amounts in millions except per share data) |
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Three Months Ended March 31, |
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2015 |
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2014 |
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Change |
|
Adjusted operating income |
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$ |
46 |
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|
$ |
55 |
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|
(17 |
%) |
Adjusted net income |
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$ |
21 |
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$ |
24 |
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(13 |
%) |
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Adjusted diluted earnings per share |
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$ |
0.37 |
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$ |
0.43 |
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(14 |
%) |
Free cash flow |
|
($ |
42 |
) |
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($ |
56 |
) |
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25 |
% |
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(Amounts in millions) |
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Three Months Ended March 31, |
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2015 |
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2014 |
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Change |
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Adjusted EBITDA |
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|
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Building Products |
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$ |
77 |
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$ |
74 |
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4 |
% |
Resilient Flooring |
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11 |
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17 |
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(37 |
%) |
Wood Flooring |
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2 |
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8 |
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(78 |
%) |
Unallocated Corporate |
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(15 |
) |
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(16 |
) |
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7 |
% |
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Consolidated Adjusted EBITDA |
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$ |
75 |
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$ |
83 |
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(10 |
%) |
* |
The Company uses the above non-GAAP adjusted measures, as well as other non-GAAP measures mentioned below, in managing the business and believes the adjustments provide meaningful comparisons of operating performance
between periods. Adjusted operating income, adjusted EBITDA, adjusted net income, and adjusted EPS exclude the impact of foreign exchange, restructuring charges and related costs, impairments, the non-cash impact of the U.S. pension plan, separation
costs and certain other nonrecurring gains and losses. Free cash flow is defined as cash from operations and dividends received from the WAVE joint venture, less expenditures for property and equipment, less restricted cash, and is adjusted to
remove the impact of cash used or proceeds received for acquisitions and divestitures. The Company believes free cash flow is useful because it provides insight into the amount of cash that the Company has available for discretionary uses, after
expenditures for capital commitments and adjustments for acquisitions/divestitures. Adjusted figures are reported in comparable dollars using the budgeted exchange rate for 2015, and are reconciled to the most comparable GAAP measures in tables at
the end of this release. |
Adjusted operating income and adjusted EBITDA declined by 17% and 10%, respectively, in the first quarter of
2015 when compared to the prior year period. The decline in adjusted EBITDA was driven primarily by the margin impact of lower volumes and increased SG&A expenses which were only partially offset by favorable price and mix. Adjusted earnings per
share is calculated using a 39% adjusted tax rate in both periods. The improvement in free cash flow was driven by lower capital expenditures and improvements in working capital, and aided by the utilization of VAT credits associated with our
emerging market investments which more than offset lower cash earnings and decreased dividends from WAVE.
First Quarter Segment Highlights
Building Products
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Three Months Ended March 31, |
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2015 |
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2014 |
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Change |
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Total segment net sales |
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$ |
292.0 |
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$ |
308.2 |
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(5.3 |
)% |
Operating income |
|
$ |
59.8 |
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$ |
57.8 |
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|
3.5 |
% |
Excluding the unfavorable impact of foreign exchange of approximately $17 million, net sales were flat over a strong base
period as sales in the first quarter of 2014 were up over 5%. When looking at the net sales comparison for the first quarter of 2015 versus the first quarter of 2014, favorable price and mix offset the impact of lower volumes in the Americas and in
EMEA markets. Operating income increased 3.5% in the first quarter of 2015, driven by favorable price and mix and lower manufacturing and input costs which were partially offset by the margin impact of lower volumes and higher SG&A expenses.
Resilient Flooring
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Three Months Ended March 31, |
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2015 |
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2014 |
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Change |
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Total segment net sales |
|
$ |
156.8 |
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$ |
163.7 |
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|
(4.2 |
)% |
Operating income |
|
$ |
5.9 |
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|
$ |
10.4 |
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|
(43.3 |
)% |
Excluding the unfavorable impact of foreign exchange of approximately $2 million, net sales decreased driven by lower volumes
primarily in the Americas and unfavorable price and mix. Operating income declined driven by unfavorable price and mix, increased SG&A expenses and the margin impact of lower volumes which were partially offset by lower manufacturing input
costs.
Wood Flooring
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Three Months Ended March 31, |
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2015 |
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2014 |
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Change |
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Total segment net sales |
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$ |
102.6 |
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|
$ |
118.1 |
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|
(13.1 |
%) |
Operating (loss) income |
|
($ |
1.2 |
) |
|
$ |
5.1 |
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|
Unfavorable |
|
Net sales declined as improvements in price and mix were more than offset by volume declines. The 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. Operating income declined primarily due the margin impact of lower volumes and increased manufacturing and input costs,
which were only partially offset by positive price and mix.
Corporate
Unallocated corporate expense of $28.7 million increased from $19.5 million in the prior year due to higher non-cash U.S. Pension expense and separation costs.
Earnings Webcast
Management will host a live
Internet broadcast beginning at 11:00 a.m. Eastern time today, to discuss first quarter 2015 results. This event will be broadcast live on the Companys Web site. To access the call and accompanying slide presentation, go to www.armstrong.com
and click For Investors. The replay of this event will also be available on the Companys Web site for up to one year after the date of the call.
Uncertainties Affecting Forward-Looking Statements
Disclosures in this release, including without limitation, those relating to future financial results guidance and our plan to separate our Flooring business
from our Ceilings (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 of 1995. 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 could cause our actual results to differ materially from those
projected, anticipated or implied is included in the Risk Factors and Managements Discussion and Analysis sections of our reports on Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission
(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.
About Armstrong and Additional Information
More details
on the Companys performance can be found in its quarterly report on Form 10-Q for the quarter ended March 31, 2015 that the Company expects to file with the SEC today.
Armstrong World Industries, Inc. is a global leader in the design and manufacture of floors and ceiling systems. In 2014, Armstrongs consolidated net
sales from continuing operations totaled approximately $2.5 billion. As of March 31, 2015, Armstrong operated 32 plants in nine countries and had approximately 7,500 employees worldwide.
Additional forward looking non-GAAP metrics are available on the Companys web site at http://www.armstrong.com/ under the Investor Relations tab. The
website is not part of this release and references to our website address in this release are intended to be inactive textual references only.
As Reported Financial Highlights
FINANCIAL HIGHLIGHTS
Armstrong
World Industries, Inc. and Subsidiaries
(amounts in millions, except for per-share amounts, quarterly data is unaudited)
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Three Months Ended March 31, |
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2015 |
|
|
2014 |
|
Net Sales |
|
$ |
551.4 |
|
|
$ |
590.0 |
|
Costs of goods sold |
|
|
421.9 |
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|
447.9 |
|
Selling general and administrative expenses |
|
|
103.0 |
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|
103.1 |
|
Separation costs |
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|
4.3 |
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Equity (earnings) from joint venture |
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|
(13.6 |
) |
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|
(14.8 |
) |
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Operating income |
|
|
35.8 |
|
|
|
53.8 |
|
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|
|
Interest expense |
|
|
11.2 |
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11.6 |
|
Other non-operating expense |
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|
1.3 |
|
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|
5.4 |
|
Other non-operating (income) |
|
|
(0.6 |
) |
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(0.6 |
) |
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|
Earnings from continuing operations before income taxes |
|
|
23.9 |
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|
37.4 |
|
Income tax expense |
|
|
20.1 |
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|
|
19.3 |
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|
|
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|
Earnings from continuing operations |
|
$ |
3.8 |
|
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$ |
18.1 |
|
Net (loss) from discontinued operations, net of tax (benefit) of $- and $- |
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(1.2 |
) |
Net earnings from disposal of discontinued business, net of tax (benefit) of ($43.4) and $- |
|
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42.8 |
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Net earnings (loss) from discontinued operations |
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|
42.8 |
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(1.2 |
) |
Net earnings |
|
$ |
46.6 |
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|
$ |
16.9 |
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|
|
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|
|
Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustments |
|
|
(15.3 |
) |
|
|
(0.4 |
) |
Derivative (loss) |
|
|
(0.5 |
) |
|
|
(0.6 |
) |
Pension and postretirement adjustments |
|
|
11.9 |
|
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|
7.1 |
|
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|
Total other comprehensive (loss) income |
|
|
(3.9 |
) |
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|
6.1 |
|
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|
|
|
|
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|
|
|
Total comprehensive income |
|
$ |
42.7 |
|
|
$ |
23.0 |
|
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|
Earnings per share of common stock, continuing operations |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.07 |
|
|
$ |
0.33 |
|
Diluted |
|
$ |
0.07 |
|
|
$ |
0.33 |
|
|
|
|
Earnings (loss) per share of common stock, discontinued operations |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.77 |
|
|
($ |
0.02 |
) |
Diluted |
|
$ |
0.76 |
|
|
($ |
0.02 |
) |
|
|
|
Net earnings per share of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.84 |
|
|
$ |
0.31 |
|
Diluted |
|
$ |
0.83 |
|
|
$ |
0.30 |
|
|
|
|
Average number of common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
55.3 |
|
|
|
54.8 |
|
Diluted |
|
|
55.7 |
|
|
|
55.3 |
|
SEGMENT RESULTS
Armstrong World Industries, Inc. and Subsidiaries
(amounts in millions, quarterly data is unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Net Sales |
|
|
|
|
|
|
|
|
Building Products |
|
$ |
292.0 |
|
|
$ |
308.2 |
|
Resilient Flooring |
|
|
156.8 |
|
|
|
163.7 |
|
Wood Flooring |
|
|
102.6 |
|
|
|
118.1 |
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
551.4 |
|
|
$ |
590.0 |
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
|
|
|
|
|
|
|
Building Products |
|
$ |
59.8 |
|
|
$ |
57.8 |
|
Resilient Flooring |
|
|
5.9 |
|
|
|
10.4 |
|
Wood Flooring |
|
|
(1.2 |
) |
|
|
5.1 |
|
Unallocated Corporate (expense) |
|
|
(28.7 |
) |
|
|
(19.5 |
) |
|
|
|
|
|
|
|
|
|
Total Operating Income |
|
$ |
35.8 |
|
|
$ |
53.8 |
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Information
(amounts in millions, quarterly data is unaudited)
|
|
|
|
|
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|
March 31, 2015 |
|
|
December 31, 2014 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
$ |
791.8 |
|
|
$ |
811.5 |
|
Property, plant and equipment, net |
|
|
1,053.3 |
|
|
|
1,062.4 |
|
Other noncurrent assets |
|
|
728.7 |
|
|
|
732.3 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,573.8 |
|
|
$ |
2,606.2 |
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
370.8 |
|
|
$ |
388.1 |
|
Noncurrent liabilities |
|
|
1,505.8 |
|
|
|
1,569.0 |
|
Equity |
|
|
697.2 |
|
|
|
649.1 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
2,573.8 |
|
|
$ |
2,606.2 |
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow Information
(amounts in millions, quarterly data is unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Net earnings |
|
$ |
46.6 |
|
|
$ |
16.9 |
|
Other adjustments to reconcile net income to net cash used for operating activities |
|
|
(8.3 |
) |
|
|
38.9 |
|
Changes in operating assets and liabilities, net |
|
|
(72.4 |
) |
|
|
(88.7 |
) |
|
|
|
|
|
|
|
|
|
Net cash (used for) operating activities |
|
|
(34.1 |
) |
|
|
(32.9 |
) |
Net cash (used for) investing activities |
|
|
(8.1 |
) |
|
|
(22.0 |
) |
Net cash (used for) provided by financing activities |
|
|
(5.5 |
) |
|
|
51.9 |
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(5.6 |
) |
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
Net (decrease) in cash and cash equivalents |
|
|
(53.3 |
) |
|
|
(4.2 |
) |
Cash and cash equivalents, beginning of period |
|
|
185.3 |
|
|
|
135.2 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
132.0 |
|
|
$ |
131.0 |
|
Cash and cash equivalents at end of year from discontinued operations |
|
|
|
|
|
$ |
2.7 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year of continuing operations |
|
$ |
132.0 |
|
|
$ |
128.3 |
|
|
|
|
|
|
|
|
|
|
Supplemental Reconciliations of GAAP to non-GAAP Results (unaudited)
(Amounts in millions, except per share data)
To supplement its
consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (GAAP), the Company provides additional measures of performance adjusted to exclude the impact of foreign exchange,
restructuring charges and related costs, impairments, the non-cash impact of the U.S. pension plan, separation costs and certain other gains and losses. Adjusted figures are reported in comparable dollars using the budgeted exchange rate for 2015.
The Company uses these adjusted performance measures in managing the business, including communications with its Board of Directors and employees, and believes that they provide users of this financial information with meaningful comparisons of
operating performance between current results and results in prior periods. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as prospects for its future
performance. A reconciliation of these adjustments to the most directly comparable GAAP measures is included in this release and on the Companys website. These non-GAAP measures should not be considered in isolation or as a substitute for the
most comparable GAAP measures. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies.
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
75 |
|
|
$ |
83 |
|
D&A/Fx* |
|
|
(29 |
) |
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
46 |
|
|
$ |
55 |
|
Non-cash impact of U.S. Pension |
|
|
6 |
|
|
|
|
|
Cost reduction initiatives (income) expenses |
|
|
(2 |
) |
|
|
|
|
Separation expenses |
|
|
4 |
|
|
|
|
|
Foreign exchange impact |
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported |
|
$ |
36 |
|
|
$ |
54 |
|
|
|
|
|
|
|
|
|
|
* |
Excludes accelerated depreciation associated with cost reduction initiatives reflected below. Actual D&A as reported is; $28.5 million for the three months ended March 31, 2015, and $30.0 million for the three
months ended March 31, 2014. |
BUILDING PRODUCTS
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
77 |
|
|
$ |
74 |
|
D&A/Fx |
|
|
(17 |
) |
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
60 |
|
|
$ |
59 |
|
Foreign exchange impact |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported |
|
$ |
60 |
|
|
$ |
58 |
|
|
|
|
|
|
|
|
|
|
RESILIENT FLOORING
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
11 |
|
|
$ |
17 |
|
D&A/Fx |
|
|
(6 |
) |
|
|
(7 |
) |
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
5 |
|
|
$ |
10 |
|
Cost reduction initiatives (income) expenses |
|
|
(2 |
) |
|
|
|
|
Foreign exchange impact |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported |
|
$ |
6 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
|
|
WOOD FLOORING
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
2 |
|
|
$ |
8 |
|
D&A/Fx |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
Operating (Loss) Income, Adjusted |
|
($ |
1 |
) |
|
$ |
5 |
|
Foreign exchange impact |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss) Income, Reported |
|
($ |
1 |
) |
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
UNALLOCATED CORPORATE
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
($ |
15 |
) |
|
($ |
16 |
) |
D&A/Fx |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
Operating (Loss), Adjusted |
|
($ |
18 |
) |
|
($ |
19 |
) |
Non-cash impact of U.S. Pension |
|
|
6 |
|
|
|
|
|
Separation expenses |
|
|
4 |
|
|
|
|
|
Foreign exchange impact |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss), Reported |
|
($ |
29 |
) |
|
($ |
19 |
) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW(1) |
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
Net cash (used for) operations |
|
($ |
34 |
) |
|
($ |
33 |
) |
Less: net cash (used for) investing |
|
|
(8 |
) |
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
Add back (subtract) adjustments to reconcile to free cash flow |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
($ |
42 |
) |
|
($ |
56 |
) |
|
|
|
|
|
|
|
|
|
(1) |
Cash flow includes cash flows attributable to European flooring business |
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2015 |
|
|
2014 |
|
|
|
Total |
|
|
Per Share |
|
|
Total |
|
|
Per Share |
|
Adjusted EBITDA |
|
$ |
75 |
|
|
|
|
|
|
$ |
83 |
|
|
|
|
|
D&A as reported |
|
|
(29 |
) |
|
|
|
|
|
|
(30 |
) |
|
|
|
|
Fx/Accelerated Deprecation |
|
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
46 |
|
|
|
|
|
|
$ |
55 |
|
|
|
|
|
Other non-operating (expense) |
|
|
(12 |
) |
|
|
|
|
|
|
(16 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before Taxes, Adjusted |
|
|
34 |
|
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
Adjusted tax (expense) @ 39% for 2015 and 2014 |
|
|
(13 |
) |
|
|
|
|
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings, Adjusted |
|
$ |
21 |
|
|
$ |
0.37 |
|
|
$ |
24 |
|
|
$ |
0.43 |
|
|
|
|
|
|
Pre-tax adjustment items |
|
|
(4 |
) |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
Non-cash impact of U.S. Pension |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Reversal of adjusted tax expense @ 39% for 2015 and 2014 |
|
|
13 |
|
|
|
|
|
|
|
15 |
|
|
|
|
|
Ordinary tax |
|
|
(7 |
) |
|
|
|
|
|
|
(12 |
) |
|
|
|
|
Unbenefitted foreign losses |
|
|
(9 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|
|
Tax adjustment items |
|
|
(4 |
) |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings, Reported |
|
$ |
4 |
|
|
$ |
0.07 |
|
|
$ |
18 |
|
|
$ |
0.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source: Armstrong World Industries
|
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
Managements
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 |
|
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
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Armstrong World Industries (NYSE:AWI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Armstrong World Industries (NYSE:AWI)
Historical Stock Chart
From Apr 2023 to Apr 2024