Armstrong World Industries, Inc. (NYSE:AWI), a leader in the
design, innovation and manufacture of commercial and residential
ceiling, wall and suspension system solutions, today reported
financial results for the third quarter.
Third Quarter Results from Continuing
Operations
(Dollar amounts in millions
except per-share data) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales |
|
$ |
277.1 |
|
|
$ |
260.5 |
|
|
|
6.4 |
% |
Operating income |
|
$ |
113.3 |
|
|
$ |
81.3 |
|
|
|
39.4 |
% |
Earnings from continuing
operations |
|
$ |
90.7 |
|
|
$ |
64.2 |
|
|
|
41.3 |
% |
Diluted earnings per share |
|
$ |
1.83 |
|
|
$ |
1.23 |
|
|
|
48.8 |
% |
Consolidated net sales increased compared to the
prior year quarter, driven by higher volumes in the Architectural
Specialties segment, as well as higher Mineral Fiber average unit
value (“AUV”), in which both positive like-for-like pricing and
positive mix contributed.
Operating income increased over the prior year
quarter, driven primarily by positive Mineral Fiber AUV, volume
growth in the Architectural Specialties segment and higher equity
earnings from our WAVE joint venture. Included in equity
earnings is a net $21 million gain on WAVE’s sale of its European
and Pacific Rim businesses. Excluding the net gain, WAVE’s
equity earnings are up 16% compared to prior year.
The company also announced an agreement to
purchase MRK Industries, a manufacturer of specialty metal ceilings
and walls with annual revenues of approximately $14 million.
This transaction is expected to close in the fourth quarter of
2019.
“This was another quarter of strong
Architectural Specialties sales growth and Mineral Fiber
operational performance,” said Vic Grizzle, President and CEO of
AWI. “I’m also pleased to announce another acquisition, which
will be our fifth in the last three years. With our robust
pipeline, we expect our M&A activity to continue as we actively
expand our strategic capabilities. As previously reported,
our Board approved a 14% increase to our regular quarterly
dividend, reflecting a vote of confidence in our significant free
cash flow generation and our ability to continue to grow free cash
flow at double digits.”
Additional (non-GAAP*) Financial Metrics from Continuing
Operations
(Dollar amounts in millions
except per-share data) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Adjusted EBITDA |
|
$ |
114 |
|
|
$ |
100 |
|
|
|
13.4 |
% |
Adjusted net income |
|
$ |
68 |
|
|
$ |
60 |
|
|
|
14.8 |
% |
Adjusted diluted earnings per
share |
|
$ |
1.38 |
|
|
$ |
1.15 |
|
|
|
20.1 |
% |
Adjusted free cash flow |
|
$ |
99 |
|
|
$ |
74 |
|
|
|
34.1 |
% |
* The Company uses the above non-GAAP adjusted
measures in managing the business and believes the adjustments
provide meaningful comparisons of operating performance between
periods. The Company also believes that the adjustments help
users of our financial information understand the effect of those
adjusted items on our selected reported results and provide useful
alternative measurements of performance. See Supplemental
Reconciliations of GAAP to non-GAAP results (below) for a breakdown
of the adjustments and a reconciliation of the selected reported
results to these non-GAAP measures.
(Dollar amounts in
millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
99 |
|
|
$ |
88 |
|
|
|
12.7 |
% |
Architectural Specialties |
|
|
14 |
|
|
|
12 |
|
|
|
18.1 |
% |
Consolidated Adjusted
EBITDA |
|
$ |
114 |
|
|
$ |
100 |
|
|
|
13.4 |
% |
Consolidated adjusted EBITDA improved 13% in the
third quarter when compared to the same prior year period, driven
by favorable AUV fall-through to profit in the Mineral Fiber
segment and volume growth in the Architectural Specialties
segment.
Third Quarter Segment Highlights
Mineral Fiber
(Dollar amounts in
millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
218.6 |
|
|
$ |
212.8 |
|
|
|
2.7 |
% |
Operating income (as
reported) |
|
$ |
103.5 |
|
|
$ |
71.8 |
|
|
|
44.2 |
% |
Adjusted EBITDA |
|
$ |
99 |
|
|
$ |
88 |
|
|
|
12.7 |
% |
Mineral Fiber net sales increased due to
favorable AUV and higher volume.
Operating income increased driven by higher
equity earnings from WAVE due to WAVE’s gain on the sale of its
European and Pacific Rim businesses, the margin impact of higher
sales and lower SG&A expenses.
Architectural Specialties
(Dollar amounts in
millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
58.5 |
|
|
$ |
47.7 |
|
|
|
22.6 |
% |
Operating income (as
reported) |
|
$ |
11.6 |
|
|
$ |
11.3 |
|
|
|
2.7 |
% |
Adjusted EBITDA |
|
$ |
14 |
|
|
$ |
12 |
|
|
|
18.1 |
% |
Net sales in Architectural Specialties grew
primarily from higher sales volume through increased market
penetration, as well as the recent acquisitions of ACGI,
Plasterform and Steel Ceilings.
Operating income increased due to the positive impact of higher
sales volume, partially offset by additional investments in selling
and design capacities.
Unallocated Corporate
Unallocated corporate expense of $1.8 million
was flat with the prior year quarter.
Year to Date Results from Continuing
Operations
(Dollar amounts in
millions) |
|
For the Nine Months Ended September 30, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
791.2 |
|
|
$ |
736.4 |
|
|
|
7.5 |
% |
Operating income (as
reported) |
|
$ |
255.2 |
|
|
$ |
196.9 |
|
|
|
29.6 |
% |
Adjusted EBITDA |
|
$ |
314 |
|
|
$ |
274 |
|
|
|
14.5 |
% |
Net sales increased driven mainly by volume
growth in the Architectural Specialties segment and higher AUV in
the Mineral Fiber segment, in which both positive mix and positive
like-for-like pricing contributed.
Operating income increased over the prior year
period, primarily through increased sales, lower manufacturing
expenses and higher equity earnings from WAVE, which included a
gain on the sale of its European and Pacific Rim businesses.
Market Outlook and 2019
Guidance“We are tightening our guidance ranges as we enter
the fourth quarter. Our updated sales expectation is now
$1.04 to $1.05 billion, an annual growth of 7% to 8%, and our
adjusted EBITDA expectation is now $400 to $405 million, an annual
growth of 13% to 15%” said Brian MacNeal, CFO of AWI.
Earnings WebcastManagement will
host a live Internet broadcast beginning at 11:00 a.m. Eastern time
today, to discuss third quarter results. This event will be
broadcast live on the Company's website. To access the call and
accompanying slide presentation, go to www.armstrongceilings.com
and click Investors. The replay of this event will also be
available on the Company's website for up to one year after the
date of the call.
Uncertainties Affecting Forward-Looking
StatementsDisclosures in this release, including without
limitation, those relating to future financial results, market
conditions and guidance, 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 “Management’s Discussion and Analysis”
section of our report 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
InformationMore details on the Company’s performance can
be found in its quarterly report on Form 10-Q for the quarter ended
September 30, 2019 that the Company expects to file with the
SEC today.
Armstrong World Industries, Inc. (AWI) is a
leader in the design and manufacture of innovative commercial and
residential ceiling, wall and suspension system solutions in the
Americas. With approximately $1 billion in revenue, AWI has
approximately 2,500 employees and a manufacturing network of 11
facilities. For more information, visit
www.armstrongceilings.com.
Additional forward looking non-GAAP metrics are
available on the Company’s website at www.armstrongceilings.com
under the Investors 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 HIGHLIGHTSArmstrong World Industries,
Inc. and Subsidiaries(Amounts in millions, except for per-share
amounts, quarterly data is unaudited)
|
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net sales |
|
|
$ |
277.1 |
|
|
$ |
260.5 |
|
|
$ |
791.2 |
|
|
$ |
736.4 |
|
Cost of goods
sold |
|
|
|
165.4 |
|
|
|
162.6 |
|
|
|
484.7 |
|
|
|
485.0 |
|
Gross profit |
|
|
|
111.7 |
|
|
|
97.9 |
|
|
|
306.5 |
|
|
|
251.4 |
|
Selling, general
and administrative expenses |
|
|
|
41.3 |
|
|
|
35.3 |
|
|
|
134.3 |
|
|
|
113.7 |
|
Equity earnings from
joint venture |
|
|
|
(42.9 |
) |
|
|
(18.7 |
) |
|
|
(83.0 |
) |
|
|
(59.2 |
) |
Operating income |
|
|
|
113.3 |
|
|
|
81.3 |
|
|
|
255.2 |
|
|
|
196.9 |
|
Interest
expense |
|
|
|
11.7 |
|
|
|
9.9 |
|
|
|
31.6 |
|
|
|
28.9 |
|
Other non-operating
(income), net |
|
|
|
(5.1 |
) |
|
|
(9.2 |
) |
|
|
(16.0 |
) |
|
|
(27.3 |
) |
Earnings from
continuing operations before income taxes |
|
|
|
106.7 |
|
|
|
80.6 |
|
|
|
239.6 |
|
|
|
195.3 |
|
Income tax
expense |
|
|
|
16.0 |
|
|
|
16.4 |
|
|
|
48.8 |
|
|
|
42.3 |
|
Earnings from
continuing operations |
|
|
|
90.7 |
|
|
|
64.2 |
|
|
|
190.8 |
|
|
|
153.0 |
|
Net earnings from
discontinued operations, net of tax expense of $2.5, ($0.5), $7.2
and $1.2 |
|
|
|
4.8 |
|
|
|
5.0 |
|
|
|
3.0 |
|
|
|
14.4 |
|
(Loss) from disposal
of discontinued businesses, net of tax expense (benefit) of ($5.0),
($4.6), ($4.9) and ($4.9) |
|
|
|
(22.3 |
) |
|
|
7.0 |
|
|
|
(27.0 |
) |
|
|
(16.1 |
) |
Net (loss) gain from
discontinued operations |
|
|
|
(17.5 |
) |
|
|
12.0 |
|
|
|
(24.0 |
) |
|
|
(1.7 |
) |
Net earnings |
|
|
$ |
73.2 |
|
|
$ |
76.2 |
|
|
$ |
166.8 |
|
|
$ |
151.3 |
|
Other comprehensive
income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments |
|
|
|
78.6 |
|
|
|
(7.0 |
) |
|
|
84.6 |
|
|
|
(21.9 |
) |
Derivative (loss)
gain, net |
|
|
|
(2.7 |
) |
|
|
(0.5 |
) |
|
|
(15.9 |
) |
|
|
5.3 |
|
Pension and
postretirement adjustments |
|
|
|
5.5 |
|
|
|
2.7 |
|
|
|
11.2 |
|
|
|
7.6 |
|
Total other
comprehensive income (loss) |
|
|
$ |
81.4 |
|
|
$ |
(4.8 |
) |
|
$ |
79.9 |
|
|
$ |
(9.0 |
) |
Total comprehensive
income |
|
|
$ |
154.6 |
|
|
$ |
71.4 |
|
|
$ |
246.7 |
|
|
$ |
142.3 |
|
Earnings per share
of common stock, continuing operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
1.86 |
|
|
$ |
1.26 |
|
|
$ |
3.90 |
|
|
$ |
2.94 |
|
Diluted |
|
|
$ |
1.83 |
|
|
$ |
1.23 |
|
|
$ |
3.84 |
|
|
$ |
2.89 |
|
(Loss) earnings per
share of common stock, discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
(0.36 |
) |
|
$ |
0.24 |
|
|
$ |
(0.49 |
) |
|
$ |
(0.03 |
) |
Diluted |
|
|
$ |
(0.35 |
) |
|
$ |
0.23 |
|
|
$ |
(0.48 |
) |
|
$ |
(0.03 |
) |
Net earnings per
share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
$ |
1.50 |
|
|
$ |
1.50 |
|
|
$ |
3.41 |
|
|
$ |
2.91 |
|
Diluted |
|
|
$ |
1.48 |
|
|
$ |
1.46 |
|
|
$ |
3.36 |
|
|
$ |
2.86 |
|
Average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
48.7 |
|
|
|
50.7 |
|
|
|
48.8 |
|
|
|
51.9 |
|
Diluted |
|
|
|
49.5 |
|
|
|
51.9 |
|
|
|
49.6 |
|
|
|
52.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT RESULTSArmstrong World Industries, Inc.
and Subsidiaries(Amounts in millions)(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net sales to external customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
218.6 |
|
|
$ |
212.8 |
|
|
$ |
629.4 |
|
|
$ |
610.2 |
|
Architectural Specialties |
|
|
58.5 |
|
|
|
47.7 |
|
|
|
161.8 |
|
|
|
126.2 |
|
Total net sales to external
customers |
|
$ |
277.1 |
|
|
$ |
260.5 |
|
|
$ |
791.2 |
|
|
$ |
736.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Segment operating income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
103.5 |
|
|
$ |
71.8 |
|
|
$ |
230.5 |
|
|
$ |
175.0 |
|
Architectural Specialties |
|
|
11.6 |
|
|
|
11.3 |
|
|
|
30.3 |
|
|
|
28.2 |
|
Unallocated Corporate |
|
|
(1.8 |
) |
|
|
(1.8 |
) |
|
|
(5.6 |
) |
|
|
(6.3 |
) |
Total consolidated operating
income |
|
$ |
113.3 |
|
|
$ |
81.3 |
|
|
$ |
255.2 |
|
|
$ |
196.9 |
|
|
Selected Balance Sheet Information(Amounts in
millions)
|
|
Unaudited September 30, 2019 |
|
|
December 31, 2018 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
$ |
296.7 |
|
|
$ |
717.6 |
|
Property, plant and equipment,
net |
|
|
508.8 |
|
|
|
501.0 |
|
Other noncurrent assets |
|
|
704.2 |
|
|
|
619.7 |
|
Total assets |
|
$ |
1,509.7 |
|
|
$ |
1,838.3 |
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
142.2 |
|
|
$ |
549.5 |
|
Noncurrent liabilities |
|
|
1,000.2 |
|
|
|
1,062.8 |
|
Equity |
|
|
367.3 |
|
|
|
226.0 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,509.7 |
|
|
$ |
1,838.3 |
|
|
|
Selected Cash Flow Information(Amounts in
millions)(Unaudited)
|
|
For the Three Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
Net earnings |
|
$ |
166.8 |
|
|
$ |
151.3 |
|
Other adjustments to reconcile
net earnings to net cash provided by operating activities |
|
|
45.6 |
|
|
|
22.6 |
|
Changes in operating assets and
liabilities, net |
|
|
(91.0 |
) |
|
|
(14.9 |
) |
Net cash provided by operating
activities |
|
|
121.4 |
|
|
|
159.0 |
|
Net cash (used for) provided by
investing activities |
|
|
(70.9 |
) |
|
|
285.9 |
|
Net cash (used for) financing
activities |
|
|
(289.0 |
) |
|
|
(262.5 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
|
0.8 |
|
|
|
(5.0 |
) |
Net (decrease) increase in cash
and cash equivalents |
|
|
(237.7 |
) |
|
|
177.4 |
|
Cash and cash equivalents at
beginning of year |
|
|
335.7 |
|
|
|
159.6 |
|
Cash and cash equivalents at end
of period |
|
$ |
98.0 |
|
|
$ |
337.0 |
|
|
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 certain discrete expenses and income. Examples
include plant closures, restructuring charges and related costs,
impairments, separation costs, environmental site expenses and
related insurance recoveries, and certain other gains and losses.
The Company also excludes U.S. pension income/expense in the
non-GAAP results as it represents the actuarial net periodic
benefit credit/cost recorded as a component of operating income.
For all periods presented, the Company was not required and
did not make cash contributions to the U.S. Retirement Income Plan
based on guidelines established by the Pension Benefit Guaranty
Corporation, nor does the Company expect to make cash contributions
to the plan in 2019. Adjusted free cash flow is defined as cash
from operating and investing activities, adjusted to remove the
impact of cash used or proceeds received for acquisitions and
divestitures, legacy environmental matters and litigation. The
Company believes adjusted free cash flow is useful because it
provides insight into the amount of cash that the Company generates
for discretionary uses, after expenditures for capital commitments
and adjustments for acquisitions and divestitures. 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 Company’s 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.
In the following charts, numbers may not sum due
to rounding.
Consolidated Results From Continuing
Operations – Adjusted EBITDA
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Earnings from continuing operations, Reported |
|
$ |
91 |
|
|
$ |
64 |
|
|
$ |
191 |
|
|
$ |
153 |
|
Add: Income tax expense, as reported |
|
|
16 |
|
|
|
16 |
|
|
|
49 |
|
|
|
42 |
|
Earnings before tax,
Reported |
|
$ |
107 |
|
|
$ |
81 |
|
|
$ |
240 |
|
|
$ |
195 |
|
Add: Interest/other income and expense, net |
|
|
7 |
|
|
|
1 |
|
|
|
16 |
|
|
|
2 |
|
Operating Income,
Reported |
|
$ |
113 |
|
|
$ |
81 |
|
|
$ |
255 |
|
|
$ |
197 |
|
Add: U.S. Pension Cost (1) |
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
Add: WAVE Pension Settlement (2) |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Add: Litigation Expense |
|
|
- |
|
|
|
3 |
|
|
|
20 |
|
|
|
3 |
|
Add: Cost Reduction Initiatives |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
7 |
|
Add: Net Proforma International Allocations, Other |
|
|
1 |
|
|
|
1 |
|
|
|
- |
|
|
|
5 |
|
Add/(Less): Net Environmental Expenses (Recoveries) |
|
|
1 |
|
|
|
(5 |
) |
|
|
1 |
|
|
|
(3 |
) |
Add: WAVE FSA (3) |
|
|
4 |
|
|
|
- |
|
|
|
4 |
|
|
|
- |
|
(Less): AWI Portion of WAVE's Gain on Sale to Knauf |
|
|
(25 |
) |
|
|
- |
|
|
|
(25 |
) |
|
|
- |
|
Operating Income,
Adjusted |
|
$ |
95 |
|
|
$ |
84 |
|
|
$ |
260 |
|
|
$ |
214 |
|
Add: D&A |
|
|
19 |
|
|
|
17 |
|
|
|
53 |
|
|
|
60 |
|
Adjusted
EBITDA |
|
$ |
114 |
|
|
$ |
100 |
|
|
$ |
314 |
|
|
$ |
274 |
|
(1) U.S. pension expense represents only the
service cost related to the U.S. pension plan that is recorded
within Operating Income. For all periods presented, we were not
required and did not make cash contributions to our U.S. Retirement
Income Plan.(2) WAVE settled a portion of their pension plan that
resulted in a non-cash accounting charge.(3) WAVE Fresh Start
Accounting asset amortization.
Mineral Fiber
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Operating Income, Reported |
|
$ |
104 |
|
|
$ |
72 |
|
|
$ |
231 |
|
|
$ |
175 |
|
Add: WAVE Pension Settlement (1) |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Add: Litigation Expense |
|
|
- |
|
|
|
3 |
|
|
|
20 |
|
|
|
3 |
|
Add: Cost Reduction Initiatives |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
7 |
|
Add: Net Proforma International Allocations, Other |
|
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
3 |
|
Add/(Less): Net Environmental Expenses (Recoveries) |
|
|
1 |
|
|
|
(6 |
) |
|
|
1 |
|
|
|
(3 |
) |
Add: WAVE FSA (2) |
|
|
4 |
|
|
|
- |
|
|
|
4 |
|
|
|
- |
|
(Less): AWI Portion of WAVE's Gain on Sale to Knauf |
|
|
(25 |
) |
|
|
- |
|
|
|
(25 |
) |
|
|
- |
|
Operating Income,
Adjusted |
|
$ |
84 |
|
|
$ |
71 |
|
|
$ |
232 |
|
|
$ |
185 |
|
Add: D&A |
|
|
16 |
|
|
|
17 |
|
|
|
45 |
|
|
|
60 |
|
Adjusted
EBITDA |
|
$ |
99 |
|
|
$ |
88 |
|
|
$ |
277 |
|
|
$ |
244 |
|
(1) WAVE settled a portion of their pension plan
that resulted in a non-cash accounting charge.(2) WAVE Fresh Start
Accounting asset amortization.
Architectural Specialties
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Operating Income, Reported |
|
$ |
12 |
|
|
$ |
11 |
|
|
$ |
30 |
|
|
$ |
28 |
|
Add: D&A |
|
|
3 |
|
|
|
1 |
|
|
|
6 |
|
|
|
2 |
|
Adjusted
EBITDA |
|
$ |
14 |
|
|
$ |
12 |
|
|
$ |
36 |
|
|
$ |
30 |
|
Unallocated Corporate
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Operating (Loss), Reported |
|
$ |
(2 |
) |
|
$ |
(2 |
) |
|
$ |
(6 |
) |
|
$ |
(6 |
) |
Add: U.S. Pension Cost (1) |
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
Add: Net Proforma International Allocations, Other |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
2 |
|
Operating (Loss),
Adjusted |
|
$ |
(1 |
) |
|
$ |
- |
|
|
$ |
(2 |
) |
|
$ |
- |
|
Add: D&A |
|
|
1 |
|
|
|
- |
|
|
|
2 |
|
|
|
- |
|
Adjusted
EBITDA |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
(1) U.S. pension expense represents only the
service cost related to the U.S. pension plan that is recorded
within Operating Income. For all periods presented, we were not
required and did not make cash contributions to our U.S. Retirement
Income Plan.
Adjusted Free Cash Flow
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net cash provided by operations |
|
$ |
74 |
|
|
$ |
70 |
|
|
$ |
121 |
|
|
$ |
159 |
|
Net cash provided by (used for) investing activities |
|
|
(39 |
) |
|
|
287 |
|
|
|
(71 |
) |
|
|
286 |
|
Add: Acquisitions, net |
|
|
- |
|
|
|
12 |
|
|
|
43 |
|
|
|
24 |
|
Add: Litigation, net |
|
|
- |
|
|
|
- |
|
|
|
20 |
|
|
|
- |
|
Add/(Less): Environmental Payments (Recoveries), net |
|
|
9 |
|
|
|
1 |
|
|
|
4 |
|
|
|
(26 |
) |
Add/(Less): Proceeds from sale of international, net (1) |
|
|
55 |
|
|
|
(295 |
) |
|
|
55 |
|
|
|
(295 |
) |
(Less): Other |
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
Adjusted Free Cash
Flow |
|
$ |
99 |
|
|
$ |
74 |
|
|
$ |
173 |
|
|
$ |
148 |
|
(1) Includes related income tax payments.
Consolidated Results From Continuing Operations –
Adjusted Diluted Earnings Per Share
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
Total |
|
|
Per DilutedShare |
|
|
Total |
|
|
Per DilutedShare |
|
|
Total |
|
|
Per DilutedShare |
|
|
Total |
|
|
Per DilutedShare |
|
Earnings from continuing operations, As
Reported |
|
$ |
91 |
|
|
$ |
1.83 |
|
|
|
$ |
64 |
|
|
$ |
1.23 |
|
|
|
$ |
191 |
|
|
$ |
3.84 |
|
|
|
$ |
153 |
|
|
$ |
2.89 |
|
|
Add: Income tax expense, as
reported |
|
|
16 |
|
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
49 |
|
|
|
|
|
|
|
42 |
|
|
|
|
|
Earnings from continuing
operations before income taxes, As Reported |
|
$ |
107 |
|
|
|
|
|
|
$ |
81 |
|
|
|
|
|
|
$ |
240 |
|
|
|
|
|
|
$ |
195 |
|
|
|
|
|
(Less): U.S. Pension (Credit)
(1) |
|
|
(2 |
) |
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
(20 |
) |
|
|
|
|
Add: WAVE Pension Settlement
(2) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Add: Litigation Expense |
|
|
- |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
Add: Cost Reduction
Initiatives |
|
|
- |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
21 |
|
|
|
|
|
Add: Net Proforma International
Allocations, Other |
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
Add/(Less): Net Environmental
Expenses (Recoveries) |
|
|
1 |
|
|
|
|
|
|
|
(5 |
) |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
(3 |
) |
|
|
|
|
Add: WAVE FSA (3) |
|
|
4 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
(Less): AWI Portion of WAVE's
Gain on Sale to Knauf |
|
|
(25 |
) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
(25 |
) |
|
|
|
|
|
|
- |
|
|
|
|
|
Adjusted earnings from
continuing operations before income taxes |
|
$ |
85 |
|
|
|
|
|
|
$ |
75 |
|
|
|
|
|
|
$ |
235 |
|
|
|
|
|
|
$ |
201 |
|
|
|
|
|
(Less): Adjusted Income tax
expense (4) |
|
|
(17 |
) |
|
|
|
|
|
|
(15 |
) |
|
|
|
|
|
|
(54 |
) |
|
|
|
|
|
|
(44 |
) |
|
|
|
|
Adjusted net
income |
|
$ |
68 |
|
|
$ |
1.38 |
|
|
|
$ |
60 |
|
|
$ |
1.15 |
|
|
|
$ |
181 |
|
|
$ |
3.66 |
|
|
|
$ |
158 |
|
|
$ |
2.99 |
|
|
Adjusted EPS Change versus Prior
Year |
|
|
|
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares Outstanding |
|
49.6 |
|
|
|
51.9 |
|
|
|
49.6 |
|
|
|
52.8 |
|
|
As Reported Tax Rate (5) |
|
20 |
% |
|
|
20 |
% |
|
|
23 |
% |
|
|
22 |
% |
|
(1) U.S. pension (credit) represents the entire
actuarial net periodic pension (credit) recorded as a component of
earnings from continuing operations. For all periods presented, we
were not required and did not make cash contributions to our U.S.
Retirement Income Plan.(2) WAVE settled a portion of their pension
plan that resulted in a non-cash accounting charge.(3) WAVE Fresh
Start Accounting asset amortization.(4) Adjusted tax expense is
calculated using the as reported tax rate multiplied by the
adjusted earnings from continuing operations before income taxes.
(5) As reported tax rate for 2019 is actual tax rate excluding
WAVE’s gain on sale to Knauf.
Contacts Investors: Thomas
Waters, twaters@armstrongceilings.com or (717) 396-6354
Media: Jennifer
Johnson, jenniferjohnson@armstrongceilings.com or (866)
321-6677
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