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): October 29, 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 October 29, 2015, Armstrong World Industries, Inc. (the Company) issued a press release announcing its third 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
October 29, 2015, the Company issued a press release announcing that it will report its third quarter 2015 consolidated financial results via a webcast and conference call on Thursday, October 29, 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
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No. 99.1 |
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Press Release of Armstrong World Industries, Inc. dated October 29, 2015 |
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No. 99.2 |
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Earnings Call Presentation Third Quarter 2015 dated October 29, 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 |
3
Exhibit 99.1
Armstrong World Industries
Reports Third Quarter 2015 Results
Key Highlights
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Third quarter operating income from continuing operations of $79.7 million, down 7% over the 2014 period impacted by separation costs and higher non-cash U.S. Pension expense |
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Third quarter adjusted EBITDA from continuing operations of $128 million, up 5% over the 2014 period as results benefited from favorable input costs |
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Worldwide Building Products delivered a record EBITDA quarter up 6% over the prior year |
LANCASTER, Pa.,
October 29, 2015Armstrong World Industries, Inc. (NYSE: AWI), a global leader in the design and manufacture of floors and ceilings systems, today reported third quarter 2015 results.
Third Quarter Results from continuing operations
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(Amounts in millions except per share data) |
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Three Months Ended September 30, |
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2015 |
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2014 |
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Change |
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Net sales |
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$ |
658.5 |
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$ |
678.9 |
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(3.0 |
%) |
Operating income |
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79.7 |
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85.8 |
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(7.1 |
%) |
Net income |
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30.3 |
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46.7 |
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(35.1 |
%) |
Diluted earnings per share |
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$ |
0.54 |
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$ |
0.84 |
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(35.7 |
%) |
Excluding the unfavorable impact from foreign exchange of $29 million, consolidated net sales increased 1.3% compared to the
prior year period driven by higher volumes and favorable price and mix performance.
Operating income declined compared to the prior year period driven by
increased SG&A expense to support go-to-market initiatives in the Americas Resilient business, costs associated with the previously announced separation project, higher non-cash U.S. pension expense, unfavorable price and mix and higher
manufacturing costs; which were only partially offset by lower input costs and the margin impact of higher volumes. Net income was negatively impacted compared to the prior year by foreign exchange rate losses on the translation of unhedged
cross-currency intercompany loans denominated in Russian Rubles used to fund construction of a mineral fiber ceilings plant that was completed in the first quarter of 2015 and by R&D tax credits that had an outsized benefit in the prior year
that did not repeat.
On a comparable foreign exchange basis sales increased 1% in the third quarter with improvement across
virtually all of our businesses, said Matt Espe, CEO. Im especially pleased to report that our Worldwide Building Products business delivered yet another record adjusted EBITDA quarter despite challenging conditions in emerging
markets. Globally, ceiling sales were up 2% and EBITDA up 6%, as our Americas business continues to benefit from price over inflation, productivity improvements and mix gains.
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 September 30, |
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2015 |
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2014 |
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Change |
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Adjusted operating income |
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$ |
98 |
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$ |
93 |
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5 |
% |
Adjusted net income |
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$ |
45 |
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$ |
49 |
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(8 |
%) |
Adjusted diluted earnings per share |
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$ |
0.80 |
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$ |
0.88 |
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(9 |
%) |
Free cash flow |
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$ |
64 |
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$ |
60 |
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8 |
% |
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(Amounts in millions) |
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Three Months Ended September 30, |
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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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Building Products |
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$ |
109 |
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$ |
103 |
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6 |
% |
Resilient Flooring |
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24 |
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25 |
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(1 |
%) |
Wood Flooring |
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14 |
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9 |
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57 |
% |
Unallocated Corporate |
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(19 |
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(15 |
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(22 |
%) |
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Consolidated Adjusted EBITDA |
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$ |
128 |
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$ |
122 |
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5 |
% |
* |
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 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 both improved by 5% in the third quarter of 2015 when compared to the prior year
period. The improvement in adjusted EBITDA was driven by lower input costs, the margin impact of higher volumes and higher earnings from WAVE which were only partially offset by higher SG&A spending primarily to support go-to-market initiatives
in the Americas Resilient business, unfavorable price and mix performance, and increased manufacturing expenses. Adjusted earnings per share is calculated using a 39% adjusted tax rate in both periods. The increase in free cash flow was driven by
improvements in working capital and lower capital expenditures which were only partially offset by lower cash earnings.
Third Quarter Segment Highlights
Building Products
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Three Months Ended September 30, |
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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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$ |
335.9 |
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$ |
351.7 |
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(4.5 |
%) |
Operating income |
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$ |
89.8 |
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$ |
86.6 |
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3.7 |
% |
Excluding the unfavorable impact of foreign exchange of approximately $23 million, net sales increased as favorable price and
mix offset the impact of lower volumes, primarily in EMEA and the Pacific Rim. Operating income increased in the third quarter of 2015 as the margin impact of lower volumes was more than offset by favorable price and mix performance, lower
manufacturing and input costs and higher earnings from WAVE.
Resilient Flooring
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Three Months Ended September 30, |
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2015 |
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2014 |
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Change |
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Total segment net sales |
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$ |
192.1 |
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$ |
190.2 |
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1.0 |
% |
Operating income |
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$ |
14.3 |
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$ |
14.9 |
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(4.0 |
%) |
Net sales increased driven by volume growth in both the Americas and Pacific Rim, which was only partially offset by
unfavorable price and mix. Volume improvement in the Americas commercial business was partially aided by favorable market share shifts as a result of competitive product availability issues and our service proposition relative to competition.
Operating income declined driven by unfavorable price and mix performance, increased SG&A expenses to support go-to-market initiatives in the Americas and higher manufacturing costs, primarily due to LVT plant construction expenses, which were
only partially offset by lower input costs and the margin impact of higher volumes. The comparison was also impacted by approximately $3 million of charges related to the closure of our Thomastown, Australia facility that was closed during the third
quarter of 2014.
Wood Flooring
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Three Months Ended September 30, |
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2015 |
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2014 |
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Change |
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Total segment net sales |
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$ |
130.5 |
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$ |
137.0 |
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(4.7 |
%) |
Operating income |
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$ |
10.4 |
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$ |
2.0 |
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Favorable |
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Net sales decreased as positive mix performance was unable to offset unfavorable price and volume declines as a result of
engineered wood product availability challenges. Operating income improved driven by lower input costs which more than offset the margin impact of unfavorable price and mix, lower volumes, higher manufacturing expense and an increase in SG&A
expense. The comparison was also impacted by $4 million of severance and other charges associated with the closure of our engineered wood flooring plant in Kunshan China that was closed during the third quarter of 2014.
Corporate
Unallocated corporate expense of $34.8
million increased from $17.7 million in the prior year due to increased U.S. pension costs of $7 million and separation costs of $7 million.
Year
to Date Results from continuing operations
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(Amounts in millions) |
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Nine Months Ended September 30, |
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2015 |
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2014 |
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Change |
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Net sales (as reported) |
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$ |
1,842.6 |
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$ |
1,928.0 |
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(4.4 |
%) |
Operating income (as reported) |
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178.6 |
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203.2 |
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(12.1 |
%) |
Adjusted EBITDA |
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315 |
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309 |
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2 |
% |
Free cash flow |
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99 |
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14 |
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Favorable |
|
Excluding the unfavorable impact from foreign exchange of $72 million, consolidated net sales decreased compared to the prior
year period as volume declines were only partially offset by favorable price and mix.
Operating income declined by 12% driven primarily by higher
non-cash U.S. pension costs and costs associated with the previously announced separation project. Adjusted EBITDA improved slightly over the prior year period as lower input costs and favorable price and mix offset higher SG&A expenses, the
margin impact of lower volumes, increased manufacturing expenses and lower earnings from WAVE. The increase in free cash flow was driven by improvements in working capital and lower capital expenditures, which were only partially offset by lower
cash earnings and dividends from the WAVE joint venture.
Market Outlook and 2015 Guidance (1)
Were updating our full year sales guidance to reflect third quarter results and the pressure were experiencing due to continued volatility in
foreign exchange rates, said Dave Schulz, CFO. Despite pressure from foreign exchange headwinds, we continue to expect to benefit from lower input costs, primarily in our flooring businesses, and are increasing our full year adjusted
EBITDA and adjusted EPS guidance at the midpoint.
The Company now expects full year sales to be in the $2.4 to $2.45 billion range, adjusted EBITDA
to be in the $370 to $390 million range and adjusted EPS to be in the range of $2.15 to $2.35 per diluted share.
(1) |
Sales guidance includes the impact of foreign exchange. Guidance metrics, other than sales, are presented using 2015 budgeted foreign exchange rates. Adjusted EPS guidance for 2015 is calculated based on an adjusted
effective tax rate of 39%. |
Earnings Webcast
Management will host a live Internet broadcast beginning at 11:00 a.m. Eastern time today, to discuss third quarter 2015 results, market outlook and 2015
guidance. 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 September 30, 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 ceilings. In 2014, Armstrongs consolidated net sales
from continuing operations totaled approximately $2.5 billion. As of September 30, 2015, Armstrong operated 32 plants in nine countries and had approximately 7,600 employees worldwide.
Additional forward looking non-GAAP metrics are available on the Companys web site at http://www.armstrong.com/ under the Investor Relations tab. The
website is not part of this release and references to our website address in this release are intended to be inactive textual references only.
As Reported Financial Highlights
FINANCIAL HIGHLIGHTS
Armstrong
World Industries, Inc. and Subsidiaries
(amounts in millions, except for per-share amounts, quarterly and year to date data is unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2015 |
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2014 |
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2015 |
|
|
2014 |
|
Net sales |
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$ |
658.5 |
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$ |
678.9 |
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$ |
1,842.6 |
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$ |
1,928.0 |
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Costs of goods sold |
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480.6 |
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510.9 |
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1,377.3 |
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1,470.9 |
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Selling general and administrative expenses |
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110.4 |
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101.0 |
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319.5 |
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|
304.3 |
|
Separation costs |
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7.4 |
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16.8 |
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Goodwill impairment |
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0.8 |
|
Equity (earnings) from joint venture |
|
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(19.6 |
) |
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(18.8 |
) |
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(49.6 |
) |
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(51.2 |
) |
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Operating income |
|
|
79.7 |
|
|
|
85.8 |
|
|
|
178.6 |
|
|
|
203.2 |
|
Interest expense |
|
|
11.3 |
|
|
|
10.9 |
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|
|
33.9 |
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|
34.3 |
|
Other non-operating expense |
|
|
14.0 |
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|
2.6 |
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|
15.5 |
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|
|
9.2 |
|
Other non-operating (income) |
|
|
(0.8 |
) |
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|
(0.7 |
) |
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(5.0 |
) |
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|
(1.9 |
) |
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Earnings from continuing operations before income taxes |
|
|
55.2 |
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|
73.0 |
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|
134.2 |
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|
|
161.6 |
|
Income tax expense |
|
|
24.9 |
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|
26.3 |
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|
70.2 |
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|
70.2 |
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|
|
Earnings from continuing operations |
|
$ |
30.3 |
|
|
$ |
46.7 |
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|
$ |
64.0 |
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$ |
91.4 |
|
Net (loss) from discontinued operations, net of tax (benefit) of $-, $-, $- and $- |
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(14.9 |
) |
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(21.7 |
) |
Gain (loss) from disposal of discontinued business, net of tax (benefit) of ($0.7), ($-), ($44.1) and ($1.2) |
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1.5 |
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(0.2 |
) |
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|
44.0 |
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|
(2.3 |
) |
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|
|
|
|
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|
|
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Net earnings (loss) from discontinued operations |
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|
1.5 |
|
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|
(15.1 |
) |
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|
44.0 |
|
|
|
(24.0 |
) |
Net earnings |
|
$ |
31.8 |
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|
$ |
31.6 |
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|
$ |
108.0 |
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|
$ |
67.4 |
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Other comprehensive income (loss), net of tax: |
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|
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|
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Foreign currency translation adjustments |
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|
(13.4 |
) |
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(14.1 |
) |
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(21.3 |
) |
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|
(10.0 |
) |
Derivative gain (loss) |
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|
0.9 |
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|
4.9 |
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(0.2 |
) |
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|
(1.3 |
) |
Pension and postretirement adjustments |
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|
11.1 |
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|
8.5 |
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|
32.2 |
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21.3 |
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Total other comprehensive (loss) income |
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|
(1.4 |
) |
|
|
(0.7 |
) |
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|
10.7 |
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|
10.0 |
|
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|
|
|
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|
|
|
|
|
|
|
|
Total comprehensive income |
|
$ |
30.4 |
|
|
$ |
30.9 |
|
|
$ |
118.7 |
|
|
$ |
77.4 |
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Earnings per share of common stock, continuing operations |
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.54 |
|
|
$ |
0.84 |
|
|
$ |
1.14 |
|
|
$ |
1.66 |
|
Diluted |
|
$ |
0.54 |
|
|
$ |
0.84 |
|
|
$ |
1.14 |
|
|
$ |
1.64 |
|
Earnings (loss) per share of common stock, discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.03 |
|
|
($ |
0.27 |
) |
|
$ |
0.79 |
|
|
($ |
0.44 |
) |
Diluted |
|
$ |
0.03 |
|
|
($ |
0.27 |
) |
|
$ |
0.78 |
|
|
($ |
0.43 |
) |
Net earnings per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.57 |
|
|
$ |
0.57 |
|
|
$ |
1.93 |
|
|
$ |
1.22 |
|
Diluted |
|
$ |
0.57 |
|
|
$ |
0.57 |
|
|
$ |
1.92 |
|
|
$ |
1.21 |
|
Average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
55.5 |
|
|
|
55.0 |
|
|
|
55.4 |
|
|
|
54.9 |
|
Diluted |
|
|
55.9 |
|
|
|
55.5 |
|
|
|
55.8 |
|
|
|
55.4 |
|
SEGMENT RESULTS
Armstrong World Industries, Inc. and Subsidiaries
(amounts in millions)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Products |
|
$ |
335.9 |
|
|
$ |
351.7 |
|
|
$ |
934.0 |
|
|
$ |
983.4 |
|
Resilient Flooring |
|
|
192.1 |
|
|
|
190.2 |
|
|
|
548.8 |
|
|
|
550.1 |
|
Wood Flooring |
|
|
130.5 |
|
|
|
137.0 |
|
|
|
359.8 |
|
|
|
394.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
658.5 |
|
|
$ |
678.9 |
|
|
$ |
1,842.6 |
|
|
$ |
1,928.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Products |
|
$ |
89.8 |
|
|
$ |
86.6 |
|
|
$ |
213.8 |
|
|
$ |
209.3 |
|
Resilient Flooring |
|
|
14.3 |
|
|
|
14.9 |
|
|
|
43.4 |
|
|
|
46.0 |
|
Wood Flooring |
|
|
10.4 |
|
|
|
2.0 |
|
|
|
11.7 |
|
|
|
4.5 |
|
Unallocated Corporate (expense) |
|
|
(34.8 |
) |
|
|
(17.7 |
) |
|
|
(90.3 |
) |
|
|
(56.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Income |
|
$ |
79.7 |
|
|
$ |
85.8 |
|
|
$ |
178.6 |
|
|
$ |
203.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Information
(amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015 |
|
|
December 31, 2014 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
$ |
887.7 |
|
|
$ |
811.5 |
|
Property, plant and equipment, net |
|
|
1,067.1 |
|
|
|
1,062.4 |
|
Other noncurrent assets |
|
|
739.6 |
|
|
|
732.3 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,694.4 |
|
|
$ |
2,606.2 |
|
|
|
|
|
|
|
|
|
|
Liabilities and shareholders equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
421.6 |
|
|
$ |
388.1 |
|
Noncurrent liabilities |
|
|
1,489.6 |
|
|
|
1,569.0 |
|
Equity |
|
|
783.2 |
|
|
|
649.1 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
2,694.4 |
|
|
$ |
2,606.2 |
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow Information
(amounts in millions)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
Net income |
|
$ |
108.0 |
|
|
$ |
67.4 |
|
Other adjustments to reconcile net income to net cash provided by operating activities |
|
|
39.5 |
|
|
|
123.1 |
|
Changes in operating assets and liabilities, net |
|
|
(3.5 |
) |
|
|
(79.4 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
144.0 |
|
|
|
111.1 |
|
Net cash (used for) investing activities |
|
|
(45.3 |
) |
|
|
(96.9 |
) |
Net cash (used for) provided by financing activities |
|
|
(23.6 |
) |
|
|
1.3 |
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(10.4 |
) |
|
|
(2.3 |
) |
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
64.7 |
|
|
|
13.2 |
|
Cash and cash equivalents, beginning of period |
|
|
185.3 |
|
|
|
135.2 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
250.0 |
|
|
$ |
148.4 |
|
Cash and cash equivalents at end of period of discontinued operations |
|
|
|
|
|
($ |
2.4 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period of continuing operations |
|
$ |
250.0 |
|
|
$ |
150.8 |
|
|
|
|
|
|
|
|
|
|
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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
128 |
|
|
$ |
122 |
|
|
$ |
315 |
|
|
$ |
309 |
|
D&A/Fx* |
|
|
(30 |
) |
|
|
(29 |
) |
|
|
(89 |
) |
|
|
(88 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
98 |
|
|
$ |
93 |
|
|
$ |
226 |
|
|
$ |
221 |
|
Non-cash impact of U.S. Pension |
|
|
6 |
|
|
|
|
|
|
|
19 |
|
|
|
1 |
|
Separation costs |
|
|
7 |
|
|
|
|
|
|
|
17 |
|
|
|
|
|
Cost reduction expenses (income) |
|
|
1 |
|
|
|
6 |
|
|
|
(1 |
) |
|
|
10 |
|
Multilayered Wood flooring duties |
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
Foreign exchange impact |
|
|
4 |
|
|
|
1 |
|
|
|
8 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported |
|
$ |
80 |
|
|
$ |
86 |
|
|
$ |
179 |
|
|
$ |
203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Excludes accelerated depreciation associated with cost reduction initiatives reflected below. Actual D&A as reported is; $29.5 million for the three months ended September 30, 2015, $35.4 million for the three
months ended September 30, 2014, $86.9 million for the nine months ended September 30, 2015, and $98.1 million for the nine months ended September 30, 2014. |
BUILDING PRODUCTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
109 |
|
|
$ |
103 |
|
|
$ |
267 |
|
|
$ |
260 |
|
D&A/Fx |
|
|
(18 |
) |
|
|
(16 |
) |
|
|
(52 |
) |
|
|
(48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
91 |
|
|
$ |
87 |
|
|
$ |
215 |
|
|
$ |
212 |
|
Foreign exchange impact |
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported |
|
$ |
90 |
|
|
$ |
87 |
|
|
$ |
214 |
|
|
$ |
209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESILIENT FLOORING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
$ |
24 |
|
|
$ |
25 |
|
|
$ |
67 |
|
|
$ |
71 |
|
D&A/Fx |
|
|
(7 |
) |
|
|
(8 |
) |
|
|
(20 |
) |
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
17 |
|
|
$ |
17 |
|
|
$ |
47 |
|
|
$ |
51 |
|
Cost reduction expenses (income) |
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
4 |
|
Foreign exchange impact |
|
|
2 |
|
|
|
|
|
|
|
5 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported |
|
$ |
14 |
|
|
$ |
15 |
|
|
$ |
43 |
|
|
$ |
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WOOD FLOORING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA (1) |
|
$ |
14 |
|
|
$ |
9 |
|
|
$ |
27 |
|
|
$ |
25 |
|
D&A/Fx |
|
|
(3 |
) |
|
|
(3 |
) |
|
|
(9 |
) |
|
|
(11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted (1) |
|
$ |
11 |
|
|
$ |
6 |
|
|
$ |
18 |
|
|
$ |
14 |
|
Cost reduction expenses |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
6 |
|
Multilayered Wood flooring duties |
|
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
Impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4 |
|
Foreign exchange impact |
|
|
1 |
|
|
|
|
|
|
|
2 |
|
|
|
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Reported(1) |
|
$ |
10 |
|
|
$ |
2 |
|
|
$ |
12 |
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes a $4 million charge recorded in the second quarter of 2015 resulting from new duty rates assigned by the U.S. Department of Commerce on multilayered wood importers and a $1 million gain recorded in the second
quarter of 2014 related to a refund of previously paid duties on imports of engineered wood flooring. |
UNALLOCATED CORPORATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDA |
|
($ |
19 |
) |
|
($ |
15 |
) |
|
($ |
46 |
) |
|
($ |
47 |
) |
D&A/Fx |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(8 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss), Adjusted |
|
($ |
21 |
) |
|
($ |
17 |
) |
|
($ |
54 |
) |
|
($ |
56 |
) |
Non-cash impact of U.S. Pension |
|
|
6 |
|
|
|
|
|
|
|
19 |
|
|
|
1 |
|
Separation costs |
|
|
7 |
|
|
|
|
|
|
|
17 |
|
|
|
|
|
Foreign exchange impact |
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss), Reported |
|
($ |
35 |
) |
|
($ |
18 |
) |
|
($ |
90 |
) |
|
($ |
57 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Net cash from operations |
|
$ |
85 |
|
|
$ |
89 |
|
|
$ |
144 |
|
|
$ |
111 |
|
Less: net cash (used for) investing |
|
|
(21 |
) |
|
|
(29 |
) |
|
|
(45 |
) |
|
|
(97 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow |
|
$ |
64 |
|
|
$ |
60 |
|
|
$ |
99 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Cash flow includes cash flows attributable to European Flooring business |
CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
|
|
Total |
|
|
Per Share |
|
|
Total |
|
|
Per Share |
|
|
Total |
|
|
Per Share |
|
|
Total |
|
|
Per Share |
|
Adjusted EBITDA |
|
$ |
128 |
|
|
|
|
|
|
$ |
122 |
|
|
|
|
|
|
$ |
315 |
|
|
|
|
|
|
$ |
309 |
|
|
|
|
|
D&A as reported |
|
|
(30 |
) |
|
|
|
|
|
|
(35 |
) |
|
|
|
|
|
|
(87 |
) |
|
|
|
|
|
|
(98 |
) |
|
|
|
|
Fx/Accelerated Deprecation |
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
|
|
|
(2 |
) |
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income, Adjusted |
|
$ |
98 |
|
|
|
|
|
|
$ |
93 |
|
|
|
|
|
|
$ |
226 |
|
|
|
|
|
|
$ |
221 |
|
|
|
|
|
Other non-operating (expense) |
|
|
(24 |
) |
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
(44 |
) |
|
|
|
|
|
|
(42 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Before Taxes, Adjusted |
|
|
74 |
|
|
|
|
|
|
|
80 |
|
|
|
|
|
|
|
182 |
|
|
|
|
|
|
|
179 |
|
|
|
|
|
Adjusted tax (expense) @ 39% for 2015 and 2014 |
|
|
(29 |
) |
|
|
|
|
|
|
(31 |
) |
|
|
|
|
|
|
(71 |
) |
|
|
|
|
|
|
(70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings, Adjusted |
|
$ |
45 |
|
|
$ |
0.80 |
|
|
$ |
49 |
|
|
$ |
0.88 |
|
|
$ |
111 |
|
|
$ |
1.99 |
|
|
$ |
109 |
|
|
$ |
1.97 |
|
Pre-tax adjustment items |
|
|
(12 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(28 |
) |
|
|
|
|
|
|
(17 |
) |
|
|
|
|
Non-cash impact of U.S. Pension |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19 |
) |
|
|
|
|
|
|
(1 |
) |
|
|
|
|
Reversal of adjusted tax expense @ 39% for 2015 and 2014 |
|
|
29 |
|
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
71 |
|
|
|
|
|
|
|
70 |
|
|
|
|
|
Ordinary tax |
|
|
(18 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
|
|
|
|
(42 |
) |
|
|
|
|
|
|
(51 |
) |
|
|
|
|
Unbenefitted foreign losses |
|
|
(6 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(22 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
|
|
Tax adjustment items |
|
|
(2 |
) |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings, Reported |
|
$ |
30 |
|
|
$ |
0.54 |
|
|
$ |
47 |
|
|
$ |
0.84 |
|
|
$ |
64 |
|
|
$ |
1.14 |
|
|
$ |
91 |
|
|
$ |
1.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Source: Armstrong World Industries
Earnings Call Presentation 3 rd Quarter 2015 October 29, 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, October 29,
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 Third Quarter 2015 2015 2014 Variance Net Sales (1) $679 $670 1.3% Operating Income (2) 98 93 5.3% % of Sales 14.5% 13.9% 60 bps EBITDA 128 122 5.2% % of Sales 18.9% 18.2% 70 bps Earnings Per Share (3) $0.80 $0.88 (8.8%) Free Cash Flow 64 60 7.6% Net Debt 764 902 (138) ROIC (4) 5.8% 8.4% (260 bps) (1) As reported Net Sales: $659 million in 2015 and $679 million in 2014 (2) As reported Operating Income: $80 million in 2015 and $86 million in 2014 (3) As reported EPS: $0.54 in 2015 and $0.84 in 2014 (4) Unadjusted |
5 Third Quarter 2015 vs. PY Adjusted EBITDA to Reported Net Income 2015 2014 V EBITDA Adjusted $128 $122 $6 Depreciation and Amortization (30) (29) (1) Operating Income Adjusted $98 $93 $5 Non-cash Impact of U.S. Pension 6 - 6 Separation Expenses 7 - 7 Cost Reduction Initiatives 1 6 (5) Foreign Exchange Movements 4 1 3 Operating Income As Reported $80 $86 ($6) Interest/Other (Expense) (25) (13) (12) EBT $55 $73 ($18) Tax (Expense) (25) (26) 1 Net Income $30 $47 ($17) |
6 Third Quarter Sales and EBITDA by Segment 2015 vs. Prior Year (1) 5 6 (4) 3% (4%) 2% (10%) (5%) 0% 5% 10% (10) (5) - 5 10 EBITDA Change (Left-hand scale) % Change in Sales (Right-hand scale) Resilient Flooring Wood Flooring Building Products Corporate |
7 On a comparable foreign exchange basis sales increased 2% as favorable price and mix performance offset volume declines primarily in emerging markets Continued sales growth momentum in Architectural Specialties Reflects impact of prior price increases Driven by lower volumes, predominantly in EMEA Reflects the benefit of lower freight and energy costs and productivity in the Americas Reflects higher earnings from our WAVE joint venture Building Products Third Quarter Results Favorable price and mix performance and lower manufacturing and input costs drive over 100 bps of margin improvement in the Americas despite lower volumes $225 $219 $87 $87 $39 $37 Q3 2015 Q3 2014 Net Sales Americas EMEA Pacific Rim $351
$343 Key Highlights Q3 2014 Adjusted EBITDA $ 103M Price & Mix 5 Volume (4) Manufacturing & Input Costs 3 WAVE 1 D&A/Other 1 Q3 2015 Adjusted EBITDA $ 109M |
8 On a comparable foreign exchange basis sales increased 3% driven by volume growth in the Americas residential and commercial businesses as well as double digit improvement in the Pacific Rim; more than offsetting unfavorable price and mix. Volume growth in the Americas was partially aided by favorable market share shifts as a result of competitive product availability issues and our service proposition relative to competition. Broad based volume growth in the Americas residential and commercial businesses as well the Pacific Rim Reflects the benefit of favorable input costs Higher SG&A expense to support go-to-market initiatives Resilient Third Quarter Results Broad based volume growth and favorable input costs drive margin performance $171 $168 $25 $22 Q3 2015 Q3 2014 Net Sales Americas Pacific Rim $196
$190 Key Highlights Q3 2014 Adjusted EBITDA $ 25M Price & Mix (7) Volume 7 Manufacturing & Input Costs 7 SG&A (8) Q3 2015 Adjusted EBITDA $ 24M |
9 Despite improvements in mix sales declined driven by unfavorable price performance and lower volumes Lower volumes were the result of engineered wood product availability challenges Driven by unfavorable price, despite mix improvement Due to engineered wood product availability challenges Reflects the benefit of favorable input costs Wood Third Quarter Results Favorable input costs drive margin improvement $132 $137 Q3 2015 Q3 2014 Net Sales Americas $132
$137 Key Highlights Q3 2014 Adjusted EBITDA $ 9M Price & Mix (4) Volume (2) Manufacturing & Input Costs 12 SG&A (1) Q3 2015 Adjusted EBITDA $ 14M |
10 $1 $27 $1 $1 $122 $0 $20 $40 $60 $80 $100 $120 $140 $160 2014 Price/Mix Volume Input Costs Mfg Cost SG&A WAVE Change in D&A 2015 ($6) $128 ($6) ($12) EBITDA Bridge Third Quarter 2015 vs. Prior Year |
11 $16 $8 $0 $0 $64 $60 $0 $20 $40 $60 $80 $100 2014 Cash Earnings Working Capital Capex Interest Expense WAVE Dividends Other 2015 ($14) ($6) Free Cash Flow Third Quarter 2015 vs. Prior Year |
12 Key Metrics September YTD 2015 2015 2014 Variance Net Sales (1) $1,892 $1,905 (0.7%) Operating Income (2) 226 221 2.1% % of Sales 11.9% 11.6% 30 bps EBITDA 315 309 1.9% % of Sales 16.6% 16.2% 40 bps Earnings Per Share (3) $1.99 $1.97 0.7% Free Cash Flow 99 14 Favorable (1) As reported Net Sales: $1,843 million in 2015 and $1,928 million in 2014 (2) As reported Operating Income: $179 million in 2015 and $203 million in 2014 (3) As reported EPS: $1.14 in 2015 and $1.64 in 2014 (4) Unadjusted |
13 September YTD Sales and EBITDA by Segment 2015 vs. Prior Year (4) 2 7 1 2% (8%) 1% (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) |
14 $315 $309 $200 $220 $240 $260 $280 $300 $320 $340 $360 $380 $400 2014 Price/Mix Volume Input Costs Mfg Cost SG&A WAVE Change in D&A 2015 $42 ($2) ($22) EBITDA Bridge September YTD 2015 vs. Prior Year ($20) $10 ($3) $1 |
15 ($27) $58 $54 $1 ($3) $2 $99 $14 ($40) ($20) $0 $20 $40 $60 $80 $100 $120 2014 Cash Earnings Working Capital Capex Interest Expense WAVE Dividends Other 2015 Free Cash Flow September YTD 2015 vs. Prior Year |
16 2015 Estimate Range (1) 2014 (2) Variance Net Sales (3) 2,400 to 2,450 2,515 (5%) to (3%) Operating Income (4) 250 to 270 271 (8%) to 0% EBITDA 370 to 390 389 (5%) to 0% Earnings Per Share (5) $2.15 to $2.35 $2.38 (10%) 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: $180 - $200 million in 2015 and $239 million 2014 (5) As reported earnings per share: $0.85 - $1.00 in 2015 and $1.83 in 2014 Key Metrics Guidance 2015 |
17 2015 Financial Outlook Sales (1) $1,220-$1,250 million; EBITDA $335-$350 million Sales (1) $1,180-$1,200 million; EBITDA $100-$110 million EBITDA ($65) ($70) $35 - $45 million; Adjusted long-term ETR of ~39% (2) $155 - $165 million $25 million, US pension expense, non-cash $20 - $35 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 62% for 2015 * Changed from July Outlook Corporate Segment |
18 $62 $39 $93 $0 $20 $40 $60 $80 $100 2014 Adjusted EBITDA D&A/Fx Adjustments to Operating Income 2014 As Reported Operating Income - 10K Corporate Allocations Other* 2014 As Reported Operating Income - Form 10 ($2) ($21) ($4) ($27) Form 10 Historical Earnings Bridge Full Year 2014 Resilient Flooring Wood Flooring * Other consists of charges related to AFI not previously recorded at a consolidated level as they did not meet the prior materiality
threshold ($13)
($23) ($15) ($13) ($28) $21 ($40) ($20) $0 $20 $40 2014 Adjusted EBITDA D&A/Fx Adjustments to Operating Income 2014 As Reported Operating Income - 10K Corporate Allocations 2014 As Reported Operating Income - Form 10 |
20 September YTD 2015 vs. PY Adjusted EBITDA to Reported Net Income 2015 2014 V EBITDA Adjusted $315 $309 $6 Depreciation and Amortization (89) (88) (1) Operating Income Adjusted $226 $221 $5 Non-cash Impact of U.S. Pension 19 1 18 Separation Expenses 17 - 17 Multilayered Wood Flooring Duty 4 - 4 Cost Reduction Initiatives (1) 10 (11) Impairment - 4 (4) Foreign Exchange Movements 8 3 5 Operating Income As Reported $179 $203 ($24) Interest/Other (Expense) (45) (41) (4) EBT $134 $162 ($28) Tax (Expense) (70) (71) 1 Net Income $64 $91 ($27) |
21 Consolidated Results Third Quarter 2015 Reported Comparability (1) Adjustments Fx (2) Adj 2015 Adjusted 2014 Reported Comparability (1) Adjustments Fx (2) Adj 2014 Adjusted Net Sales 659 - 20 679 679 - (9) 670 Operating Income 80 14 4 98 86 6 1 93 EPS $0.54 $0.21 $0.05 $0.80 $0.84 $0.02 $0.02 $0.88 (1) See earnings press release and 10-Q for additional detail on comparability adjustments
(2) Eliminates impact of foreign exchange movements September YTD 2015 Reported Comparability (1) Adjustments Fx (2) Adj 2015 Adjusted 2014 Reported Comparability (1) Adjustments Fx (2) Adj 2014 Adjusted Net Sales 1,843 - 49 1,892 1,928 - (23) 1,905 Operating Income 179 39 8 226 203 15 3 221 EPS $1.14 $0.76 $0.09 $1.99 $1.64 $0.30 $0.03 $1.97 |
22 Segment Operating Income (Loss) Third Quarter 2015 Reported Comparability (1) Adjustments 2015 Adjusted 2014 Reported Comparability (1) Adjustments 2014 Adjusted Building Products 90 1 91 87 - 87 Resilient Flooring 14 3 17 15 2 17 Wood Flooring 10 1 11 2 4 6 Unallocated Corporate (Expense) Income (35) 14 (21) (18) 1 (17) September YTD 2015 Reported Comparability (1) Adjustments 2015 Adjusted 2014 Reported Comparability (1) Adjustments 2014 Adjusted Building Products 214 1 215 209 3 212 Resilient Flooring 43 4 47 46 5 51 Wood Flooring (2) 12 6 18 5 9 14 Unallocated Corporate (Expense) Income (90) 36 (54) (57) 1 (56) (1) Eliminates impact of foreign exchange movements and other discrete items; see earnings press release and 10-Q for additional
detail. (2)
Includes a $4 million charge recorded in the second quarter of 2015 resulting from new
duty rates assigned by the U.S. Department of Commerce on multilayered wood
importers and a $1 million gain recorded in the second quarter of 2014 related to a
refund of previously paid duties on imports of engineered wood flooring. |
23 Cash Flow Third Quarter September YTD ($ millions) 2015 2014 2015 2014 Net cash from operations $85 $89 $144 $111 Net cash (used for) investing (21) (29) (45) (97) Free Cash Flow $64 $60 $99 $14 Cash flow includes cash flows attributable to the European flooring business |
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