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 fourth quarter and full year 2019.
Fourth Quarter Results from Continuing
Operations
(Dollar amounts in millions
except per-share data) |
|
For the Three Months Ended December 31, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales |
|
$ |
246.9 |
|
|
$ |
238.9 |
|
|
|
3.3 |
% |
Operating income |
|
$ |
62.2 |
|
|
$ |
52.5 |
|
|
|
18.5 |
% |
Earnings from continuing
operations |
|
$ |
51.5 |
|
|
$ |
36.6 |
|
|
|
40.7 |
% |
Diluted earnings per
share |
|
$ |
1.04 |
|
|
$ |
0.74 |
|
|
|
40.5 |
% |
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 mix
contributed.
Operating income increased over the prior year
quarter, driven primarily by positive Mineral Fiber AUV, volume
growth in the Architectural Specialties segment, manufacturing
productivity and lower SG&A expenses.
In November, the Company completed its
previously announced acquisition of MRK Industries, a manufacturer
of specialty metal ceilings and walls with annual revenues of
approximately $14 million, consisting primarily of sales to
AWI.
“2019 was another strong year for AWI,” said Vic
Grizzle, President and CEO of AWI. “Sales growth of 6%,
adjusted EBITDA growth of 14% and $244 million of adjusted free
cash flow were financial highlights. We also delivered on the
2019 sales and EBITDA targets we set back in 2017 in connection
with the announced sale of our EMEA and Asia-Pacific
businesses. This reflects terrific execution by our teams to
right-size to a leading America’s-focused business and change our
trajectory of growth.”
Additional (non-GAAP*) Financial Metrics
from Continuing Operations
(Dollar amounts in millions
except per-share data) |
|
For the Three Months Ended December 31, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Adjusted EBITDA |
|
$ |
90 |
|
|
$ |
79 |
|
|
|
13.5 |
% |
Adjusted net income |
|
$ |
55 |
|
|
$ |
40 |
|
|
|
37 |
% |
Adjusted diluted earnings per
share |
|
$ |
1.11 |
|
|
$ |
0.8 |
|
|
|
40 |
% |
Adjusted free cash flow |
|
$ |
71 |
|
|
$ |
88 |
|
|
|
(19.1 |
)% |
* 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 December 31, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
81 |
|
|
$ |
71 |
|
|
|
14.8 |
% |
Architectural Specialties |
|
|
8 |
|
|
|
8 |
|
|
|
2.2 |
% |
Consolidated Adjusted
EBITDA |
|
$ |
90 |
|
|
$ |
79 |
|
|
|
13.5 |
% |
Consolidated adjusted EBITDA improved 14% in the
fourth quarter when compared to the same prior year period, driven
by favorable AUV fall-through to profit in the Mineral Fiber
segment, manufacturing productivity, higher equity earnings from
our WAVE joint venture, and volume growth in the Architectural
Specialties segment.
Fourth Quarter Segment
Highlights
Mineral Fiber
(Dollar amounts in
millions) |
|
For the Three Months Ended December 31, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
197.2 |
|
|
$ |
191.3 |
|
|
|
3.1 |
% |
Operating income (as
reported) |
|
$ |
59.1 |
|
|
$ |
48.9 |
|
|
|
20.9 |
% |
Adjusted EBITDA |
|
$ |
81 |
|
|
$ |
71 |
|
|
|
14.8 |
% |
Mineral Fiber net sales increased due to
favorable AUV, partially offset by lower volume.
Operating income increased driven by the margin
impact of higher sales, manufacturing productivity, and lower
SG&A expenses.
Architectural Specialties
(Dollar amounts in
millions) |
|
For the Three Months Ended December 31, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
49.7 |
|
|
$ |
47.6 |
|
|
|
4.4 |
% |
Operating income (as
reported) |
|
$ |
5.6 |
|
|
$ |
6.1 |
|
|
|
(8.2 |
)% |
Adjusted EBITDA |
|
$ |
8 |
|
|
$ |
8 |
|
|
|
2.2 |
% |
Net sales in Architectural Specialties grew
primarily from higher sales volume from the recent acquisitions of
ACGI, Plasterform and Steel Ceilings, partially offset by
unfavorable project timing and extended lead times from a third
party supplier.
Operating income decreased due to additional
investments in selling and design capacities and the integration of
acquisitions, partially offset by the positive impact of higher
sales volume.
Unallocated Corporate
Unallocated corporate expense of $2.5 million
was flat with the prior year quarter.
Year to Date Results from Continuing
Operations
(Dollar amounts in
millions) |
|
For the Year Ended December 31, |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
1,038.1 |
|
|
$ |
975.3 |
|
|
|
6.4 |
% |
Operating income (as
reported) |
|
$ |
317.4 |
|
|
$ |
249.4 |
|
|
|
27.3 |
% |
Adjusted EBITDA |
|
$ |
403 |
|
|
$ |
353 |
|
|
|
14.2 |
% |
Net sales increased driven mainly by higher AUV
in the Mineral Fiber segment, in which both positive mix and
positive like-for-like pricing contributed, and volume growth in
the Architectural Specialties segment.
Operating income increased primarily through
increased sales, manufacturing productivity, and higher equity
earnings from WAVE, which included a gain on the sale of its
European and Pacific Rim businesses.
Pension Plan Annuitization
The Company also entered into an agreement on
February 20, 2020 to transfer approximately $1 billion of
outstanding retiree pension benefit obligations and
administration related to approximately 10,000 retirees and
beneficiaries under its Retirement Income Plan (“RIP”) to Athene
Annuity and Life Company and Athene Annuity & Life Assurance
Company of New York. Athene was selected by State Street
Global Advisors Trust Company acting solely in its capacity as
independent fiduciary of the RIP following a competitive bidding
process. As a result of the transaction, the Company expects
to record a non-cash expense in the range of $350 million to $400
million in the first quarter of 2020 as a component of
non-operating expense to reflect a partial plan settlement charge.
The Company will not need to make any cash contributions to the RIP
as a result of the transaction.
Market Outlook and 2020
Guidance
“I’m pleased that we were once again able to
deliver results consistent with our value creation model,” said
Brian MacNeal, CFO of AWI. “As we look ahead to 2020, we
expect a continuation of the market conditions we saw in 2019. We
again expect to grow sales in the high-single digit range, expand
adjusted EBITDA margins and generate sector leading adjusted free
cash flow of more than 25% of sales.”
Earnings Webcast
Management will host a live Internet broadcast
beginning at 11:00 a.m. Eastern time today, to discuss fourth
quarter and full year 2019 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
Statements
Disclosures 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
Information
More details on the Company’s performance can be
found in its annual report on Form 10-K for the year ended
December 31, 2019 that the Company expects to file with the
SEC shortly.
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 over $1 billion in revenue, AWI has approximately
2,500 employees and a manufacturing network of 12 active
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 December 31, |
|
|
For the Year Ended December 31, |
|
|
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net sales |
|
|
$ |
246.9 |
|
|
$ |
238.9 |
|
|
$ |
1,038.1 |
|
|
$ |
975.3 |
|
Cost of goods
sold |
|
|
|
158.3 |
|
|
|
156.8 |
|
|
|
643 |
|
|
|
641.8 |
|
Gross profit |
|
|
|
88.6 |
|
|
|
82.1 |
|
|
|
395.1 |
|
|
|
333.5 |
|
Selling, general
and administrative expenses |
|
|
|
40 |
|
|
|
45.3 |
|
|
|
174.3 |
|
|
|
159 |
|
Equity earnings
from joint venture |
|
|
|
(13.6 |
) |
|
|
(15.7 |
) |
|
|
(96.6 |
) |
|
|
(74.9 |
) |
Operating
income |
|
|
|
62.2 |
|
|
|
52.5 |
|
|
|
317.4 |
|
|
|
249.4 |
|
Interest
expense |
|
|
|
6.8 |
|
|
|
10.3 |
|
|
|
38.4 |
|
|
|
39.2 |
|
Other
non-operating (income), net |
|
|
|
(4.4 |
) |
|
|
(5.2 |
) |
|
|
(20.4 |
) |
|
|
(32.5 |
) |
Earnings from
continuing operations before income taxes |
|
|
|
59.8 |
|
|
|
47.4 |
|
|
|
299.4 |
|
|
|
242.7 |
|
Income tax
expense |
|
|
|
8.3 |
|
|
|
10.8 |
|
|
|
57.1 |
|
|
|
53.1 |
|
Earnings from
continuing operations |
|
|
|
51.5 |
|
|
|
36.6 |
|
|
|
242.3 |
|
|
|
189.6 |
|
Net (loss) from
discontinued operations |
|
|
|
(3.8 |
) |
|
|
(2.0 |
) |
|
|
(27.8 |
) |
|
|
(3.7 |
) |
Net earnings |
|
|
$ |
47.7 |
|
|
$ |
34.6 |
|
|
$ |
214.5 |
|
|
$ |
185.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
diluted share of common stock, continuing operations |
|
|
$ |
1.04 |
|
|
$ |
0.74 |
|
|
$ |
4.88 |
|
|
$ |
3.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) per diluted
share of common stock, discontinued operations |
|
|
$ |
(0.08 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.56 |
) |
|
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
diluted share of common stock |
|
|
$ |
0.96 |
|
|
$ |
0.7 |
|
|
$ |
4.32 |
|
|
$ |
3.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of
diluted common shares outstanding |
|
|
|
49.2 |
|
|
|
50.3 |
|
|
|
49.5 |
|
|
|
52.1 |
|
SEGMENT RESULTSArmstrong World Industries, Inc.
and Subsidiaries(Amounts in millions)(Unaudited)
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net sales to external customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
197.2 |
|
|
$ |
191.3 |
|
|
$ |
826.6 |
|
|
$ |
801.6 |
|
Architectural Specialties |
|
|
49.7 |
|
|
|
47.6 |
|
|
|
211.5 |
|
|
|
173.7 |
|
Total net sales to external
customers |
|
$ |
246.9 |
|
|
$ |
238.9 |
|
|
$ |
1,038.1 |
|
|
$ |
975.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Segment operating income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
59.1 |
|
|
$ |
48.9 |
|
|
$ |
289.6 |
|
|
$ |
223.8 |
|
Architectural Specialties |
|
|
5.6 |
|
|
|
6.1 |
|
|
|
35.9 |
|
|
|
34.3 |
|
Unallocated Corporate |
|
|
(2.5 |
) |
|
|
(2.5 |
) |
|
|
(8.1 |
) |
|
|
(8.7 |
) |
Total consolidated operating
income |
|
$ |
62.2 |
|
|
$ |
52.5 |
|
|
$ |
317.4 |
|
|
$ |
249.4 |
|
Selected Balance Sheet Information(Amounts in
millions)
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
$ |
244.4 |
|
|
$ |
717.6 |
|
Property, plant and equipment,
net |
|
|
524.6 |
|
|
|
501 |
|
Other noncurrent assets |
|
|
724.3 |
|
|
|
619.7 |
|
Total assets |
|
$ |
1,493.3 |
|
|
$ |
1,838.3 |
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
155.2 |
|
|
$ |
549.5 |
|
Noncurrent liabilities |
|
|
973.2 |
|
|
|
1,062.80 |
|
Equity |
|
|
364.9 |
|
|
|
226 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,493.3 |
|
|
$ |
1,838.3 |
|
Selected Cash Flow Information(Amounts in
millions)(Unaudited)
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
Net earnings |
|
$ |
214.5 |
|
|
$ |
185.9 |
|
Other adjustments to reconcile
net earnings to net cash provided by operating activities |
|
|
27.9 |
|
|
|
10.6 |
|
Changes in operating assets
and liabilities, net |
|
|
(59.7 |
) |
|
|
6.7 |
|
Net cash provided by operating
activities |
|
|
182.7 |
|
|
|
203.2 |
|
Net cash (used for) provided
by investing activities |
|
|
(89.1 |
) |
|
|
309.6 |
|
Net cash (used for) financing
activities |
|
|
(384.9 |
) |
|
|
(329.3 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
|
0.9 |
|
|
|
(7.4 |
) |
Net (decrease) increase in
cash and cash equivalents |
|
|
(290.4 |
) |
|
|
176.1 |
|
Cash and cash equivalents at
beginning of year |
|
|
335.7 |
|
|
|
159.6 |
|
Cash and cash equivalents at
end of period |
|
$ |
45.3 |
|
|
$ |
335.7 |
|
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 2020. 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 December 31, |
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Earnings from continuing operations, Reported |
|
$ |
51 |
|
|
$ |
37 |
|
|
$ |
242 |
|
|
$ |
190 |
|
Add: Income tax expense, as reported |
|
|
8 |
|
|
|
11 |
|
|
|
57 |
|
|
|
53 |
|
Earnings before tax,
Reported |
|
$ |
60 |
|
|
$ |
47 |
|
|
$ |
299 |
|
|
$ |
243 |
|
Add: Interest/other income and expense, net |
|
|
2 |
|
|
|
5 |
|
|
|
18 |
|
|
|
7 |
|
Operating Income,
Reported |
|
$ |
62 |
|
|
$ |
53 |
|
|
$ |
317 |
|
|
$ |
249 |
|
Add: U.S. Pension Cost (1) |
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
6 |
|
Add: WAVE Pension Settlement (2) |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Add: Litigation Expense |
|
|
- |
|
|
|
4 |
|
|
|
20 |
|
|
|
7 |
|
Add: Cost Reduction Initiatives |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8 |
|
Add: Net Proforma International Allocations, Other |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
6 |
|
Add/(Less): Net Environmental Expenses (Recoveries) |
|
|
- |
|
|
|
2 |
|
|
|
1 |
|
|
|
(1 |
) |
Add: WAVE FSA (3) |
|
|
- |
|
|
|
- |
|
|
|
4 |
|
|
|
- |
|
Add (Less): AWI Portion of WAVE's (gain)/loss on Sale to Knauf |
|
|
5 |
|
|
|
- |
|
|
|
(21 |
) |
|
|
- |
|
Operating Income,
Adjusted |
|
$ |
68 |
|
|
$ |
61 |
|
|
$ |
328 |
|
|
$ |
275 |
|
Add: D&A |
|
|
21 |
|
|
|
18 |
|
|
|
75 |
|
|
|
78 |
|
Adjusted
EBITDA |
|
$ |
90 |
|
|
$ |
79 |
|
|
$ |
403 |
|
|
$ |
353 |
|
(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 impairment charge due to sale of
international.
Mineral Fiber
|
|
For the Three Months Ended December 31, |
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Operating Income, Reported |
|
$ |
59 |
|
|
$ |
49 |
|
|
$ |
290 |
|
|
$ |
224 |
|
Add: WAVE Pension Settlement (1) |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Add: Litigation Expense |
|
|
- |
|
|
|
4 |
|
|
|
20 |
|
|
|
7 |
|
Add: Cost Reduction Initiatives |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8 |
|
Add: Net Proforma International Allocations, Other |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3 |
|
Add/(Less): Net Environmental Expenses (Recoveries) |
|
|
- |
|
|
|
2 |
|
|
|
1 |
|
|
|
(2 |
) |
Add: WAVE FSA (2) |
|
|
- |
|
|
|
- |
|
|
|
4 |
|
|
|
- |
|
Add (Less): AWI Portion of WAVE's (gain)/loss on Sale to Knauf |
|
|
5 |
|
|
|
- |
|
|
|
(21 |
) |
|
|
- |
|
Operating Income,
Adjusted |
|
$ |
64 |
|
|
$ |
55 |
|
|
$ |
296 |
|
|
$ |
240 |
|
Add: D&A |
|
|
17 |
|
|
|
16 |
|
|
|
63 |
|
|
|
60 |
|
Adjusted
EBITDA |
|
$ |
81 |
|
|
$ |
71 |
|
|
$ |
358 |
|
|
$ |
315 |
|
(1) WAVE settled a portion of their pension plan
that resulted in a non-cash accounting charge.(2) WAVE Fresh Start
Accounting asset impairment charge due to sale of
international.
Architectural Specialties
|
|
For the Three Months Ended December 31, |
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Operating Income, Reported |
|
$ |
6 |
|
|
$ |
6 |
|
|
$ |
36 |
|
|
$ |
34 |
|
Add: D&A |
|
|
3 |
|
|
|
2 |
|
|
|
9 |
|
|
|
2 |
|
Adjusted
EBITDA |
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
45 |
|
|
$ |
38 |
|
Unallocated Corporate
|
|
For the Three Months Ended December 31, |
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Operating (Loss), Reported |
|
$ |
(3 |
) |
|
$ |
(2 |
) |
|
$ |
(8 |
) |
|
$ |
(9 |
) |
Add: U.S. Pension Cost (1) |
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
6 |
|
Add: Net Proforma International Allocations, Other |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
3 |
|
Operating (Loss),
Adjusted |
|
$ |
(1 |
) |
|
$ |
- |
|
|
$ |
(3 |
) |
|
$ |
- |
|
Add: D&A |
|
|
1 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
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 December 31, |
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Net cash provided by operations |
|
$ |
62 |
|
|
$ |
44 |
|
|
$ |
183 |
|
|
$ |
203 |
|
Net cash (used for) provided by investing activities |
|
|
(18 |
) |
|
|
24 |
|
|
|
(89 |
) |
|
|
310 |
|
Add/(Less): Acquisitions, net |
|
|
13 |
|
|
|
(2 |
) |
|
|
56 |
|
|
|
22 |
|
Add: Litigation, net |
|
|
3 |
|
|
|
- |
|
|
|
23 |
|
|
|
- |
|
Add/(Less): Environmental Payments (Recoveries), net |
|
|
1 |
|
|
|
(1 |
) |
|
|
5 |
|
|
|
(27 |
) |
Add/(Less): Payments/(Proceeds) from sale of international, net
(1) |
|
|
11 |
|
|
|
23 |
|
|
|
66 |
|
|
|
(272 |
) |
Adjusted Free Cash
Flow |
|
$ |
71 |
|
|
$ |
88 |
|
|
$ |
244 |
|
|
$ |
236 |
|
(1) Includes related income tax payments.
Consolidated Results From Continuing
Operations – Adjusted Diluted Earnings Per Share
|
|
For the Three Months Ended December 31, |
|
|
For the Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
Total |
|
|
Per Diluted |
|
|
Total |
|
|
Per Diluted |
|
|
Total |
|
|
Per Diluted |
|
|
Total |
|
|
Per Diluted |
|
Share |
Share |
Share |
Share |
Earnings from continuing operations, As
Reported |
|
$ |
51 |
|
|
$ |
1.04 |
|
|
$ |
37 |
|
|
$ |
0.74 |
|
|
$ |
242 |
|
|
$ |
4.88 |
|
|
$ |
190 |
|
|
$ |
3.63 |
|
Add: Income tax expense, as
reported |
|
|
8 |
|
|
|
|
|
|
|
11 |
|
|
|
|
|
|
|
57 |
|
|
|
|
|
|
|
53 |
|
|
|
|
|
Earnings from
continuing operations before income taxes, As
Reported |
|
$ |
60 |
|
|
|
|
|
|
$ |
47 |
|
|
|
|
|
|
$ |
299 |
|
|
|
|
|
|
$ |
243 |
|
|
|
|
|
(Less): U.S. Pension (Credit)
(1) |
|
|
(2 |
) |
|
|
|
|
|
|
(6 |
) |
|
|
|
|
|
|
(8 |
) |
|
|
|
|
|
|
(26 |
) |
|
|
|
|
Add: Non-Cash Hedge
Expense |
|
|
- |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
Add: WAVE Pension Settlement
(2) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Add: Litigation Expense |
|
|
- |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
Add: Cost Reduction
Initiatives |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
22 |
|
|
|
|
|
Add: Net Proforma
International Allocations, Other |
|
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
6 |
|
|
|
|
|
Add/(Less): Net Environmental
Expenses (Recoveries) |
|
|
- |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
Add: WAVE FSA (3) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Add (Less): AWI Portion of
WAVE's loss/(gain) on Sale to Knauf |
|
|
5 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
(21 |
) |
|
|
|
|
|
|
- |
|
|
|
|
|
Adjusted earnings from
continuing operations before income taxes |
|
$ |
63 |
|
|
|
|
|
|
$ |
53 |
|
|
|
|
|
|
$ |
297 |
|
|
|
|
|
|
$ |
255 |
|
|
|
|
|
(Less): Adjusted Income tax
expense (4) |
|
|
(8 |
) |
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
(61 |
) |
|
|
|
|
|
|
(64 |
) |
|
|
|
|
Adjusted net
income |
|
$ |
55 |
|
|
$ |
1.11 |
|
|
$ |
40 |
|
|
$ |
0.8 |
|
|
$ |
237 |
|
|
$ |
4.78 |
|
|
$ |
191 |
|
|
$ |
3.66 |
|
Adjusted EPS Change versus
Prior Year |
|
40% |
|
|
|
|
|
|
|
|
|
|
31% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares
Outstanding |
|
49.2 |
|
|
50.3 |
|
|
49.5 |
|
|
52.1 |
|
Tax Rate (5) |
|
13% |
|
|
23% |
|
|
20% |
|
|
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 impairment charge due to sale of
international.(4) Adjusted tax expense is calculated using the as
reported tax rate multiplied by the adjusted earnings from
continuing operations before income taxes. (5) Tax rate for 2019 is
actual tax rate excluding our portion of WAVE’s gain on sale to
Knauf.
Adjusted EBITDA Guidance
|
|
For the Year Ending December 31, 2020 |
|
|
|
Low |
|
|
High |
|
Net income |
|
$ |
268 |
|
to |
$ |
275 |
|
Add: Interest expense |
|
|
30 |
|
|
|
30 |
|
(Less): U.S. Pension credit(1) |
|
|
(20 |
) |
|
|
(20 |
) |
Add: Income tax expense |
|
|
83 |
|
|
|
85 |
|
Operating
income |
|
$ |
360 |
|
to |
$ |
370 |
|
Add: U.S. Pension expense (2) |
|
|
5 |
|
|
|
5 |
|
Add: D&A/Other |
|
|
70 |
|
|
|
70 |
|
Adjusted
EBITDA |
|
$ |
435 |
|
to |
$ |
445 |
|
(1) U.S. pension (credit) represents the
actuarial net periodic benefit expected to be recorded as a
component of other non-operating income. We do not expect to be and
do not plan to make cash contributions to our U.S. Retirement
Income Plan based on guidelines established by the PensionBenefit
Guaranty Corporation.(2) 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 Diluted Earnings Per Share
(EPS) Guidance
|
|
For the Year Ending December 31, 2020 |
|
|
|
Low |
|
|
Per Diluted |
|
|
High |
|
|
Per Diluted |
|
Share(1) |
Share(1) |
Net income |
|
$ |
268 |
|
|
$ |
5.57 |
|
to |
$ |
275 |
|
|
$ |
5.73 |
|
Add: Interest expense |
|
|
30 |
|
|
|
|
|
|
|
30 |
|
|
|
|
|
(Less): U.S. Pension credit(2) |
|
|
(20 |
) |
|
|
|
|
|
|
(20 |
) |
|
|
|
|
Add: Income tax expense |
|
|
83 |
|
|
|
|
|
|
|
85 |
|
|
|
|
|
Operating
income |
|
$ |
360 |
|
|
|
|
|
to |
$ |
370 |
|
|
|
|
|
Add: U.S. Pension expense(3) |
|
|
5 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
(Less): Interest expense |
|
|
(30 |
) |
|
|
|
|
|
|
(30 |
) |
|
|
|
|
Adjusted earnings
before income taxes |
|
$ |
335 |
|
|
|
|
|
to |
$ |
345 |
|
|
|
|
|
(Less): Income tax expense |
|
|
(84 |
) |
|
|
|
|
|
|
(86 |
) |
|
|
|
|
Adjusted net
income |
|
$ |
251 |
|
|
$ |
5.2 |
|
to |
$ |
259 |
|
|
$ |
5.4 |
|
(1) Adjusted EPS guidance for 2020 is calculated
based on an adjusted effective tax rate of 25% and based on ~48
million of diluted shares outstanding.(2) U.S. pension (credit)
represents the actuarial net periodic benefit expected to be
recorded as a component of other non-operating income. We do not
expect to be required to make, nor do we plan to make cash
contributions to our U.S. Retirement Income Plan based on
guidelines established by the Pension Benefit Guaranty
Corporation.(3) U.S. pension expense represents only the service
cost related to the U.S. pension plan and is recorded as a
component of operating income. We do not expect to be required to
make, nor do we plan to make cash contributions to our U.S.
Retirement Income Plan based on guidelines established by the
Pension Benefit Guaranty Corporation.
Adjusted Free Cash Flow
Guidance
|
|
For the Year Ending December 31, 2020 |
|
|
|
Low |
|
|
High |
|
Net cash provided by operating activities |
|
$ |
260 |
|
to |
$ |
280 |
|
Add: Return of investment from joint venture ($80-$90M) |
|
|
85 |
|
|
|
85 |
|
Adjusted net cash
provided by operating activities |
|
$ |
345 |
|
to |
$ |
365 |
|
Less: Capital expenditures ($70-$80M) |
|
|
(75 |
) |
|
|
(75 |
) |
Adjusted Free Cash
Flow |
|
$ |
270 |
|
to |
$ |
290 |
|
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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