EX-99.2 3 exhibit2.htm FIRST QUARTER EARNINGS CALL PRESENTATION exhibit2.htm
Armstrong World Industries
Earnings Call Presentation
First Quarter 2011
May 2, 2011
 
 
 
2
Safe Harbor Statement
 This presentation contains “forward-looking statements” related to Armstrong
 World Industries, Inc.’s, future financial performance. Our results could differ
 materially from the results discussed in these forward-looking statements due to
 known and unknown risks and uncertainties. A more detailed discussion of the
 risks and uncertainties that may affect our ability to achieve the projected
 performance is included in the “Risk Factors” and “Management’s Discussion
 and Analysis” sections of our recent reports on Forms 10-K and 10-Q filed with
 the SEC. We undertake no obligation to update any forward-looking statement
 beyond what is required by 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 is available on the Investor Relations page of our
 website at www.armstrong.com.
 
 
 
3
Key Metrics - First Quarter 2011 Adjusted (1)
Financial Overview
(1) Figures exclude non-recurring items such as charges for cost reduction initiatives, restructuring, etc. Figures also exclude the impact of foreign exchange
 movements.
(2) As reported Net Sales: $685 million in 2011 and $659 million in 2010.
(3) As reported Operating Income: $52 million in 2011 and $13 million in 2010
(4) As reported EPS: $0.23 in 2011 and ($0.34) in 2010.
(5) Earnings per share reflect an adjusted tax rate of 42% for both 2011 and 2010.
(6) Total cash in 2011 of $244 million was comprised of $133 million in domestic cash and $111 million in foreign cash. Total cash in 2010 of $526 million
 was comprised of $308 million in domestic cash and $218 million in foreign cash. Total debt was $849 million in 2011 and $467 million in 2010.
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
 
2011
Actual
2010
Actual
Variance
Net Sales (2)
$681
$659
3.3%
Operating Income (3)
66
27
144.4%
 % of Sales
9.7%
4.1%
560 bps
EBITDA
93
55
69.1%
 % of Sales
13.7%
8.3%
530 bps
Earnings Per Share (4), (5)
 
$0.51
$0.24
$0.27
Free Cash Flow
 
(44)
(30)
(14)
Net (Cash) Debt (6)
 
604
(59)
663
 
 
 
4
Q1 2011 - Adjusted EBITDA to
Reported Net Income
Financial Overview
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
(1) Figures exclude non-recurring items such as charges for cost reduction initiatives, restructuring, etc. Figures also exclude the impact of foreign
 exchange movements.
 
2011
2010
V
EBITDA- Adjusted (1)
 
$93
$55
$38
 Depreciation and Amortization
(27)
(28)
1
Operating Income - Adjusted (1)
 
$66
$27
$39
 Foreign Exchange Movements
1
(1)
2
 Cost Reduction Initiatives
(5)
(2)
(3)
 Accelerated Depreciation (not included above)
(5)
-
(5)
 Restructuring
(5)
-
(5)
 Executive Transition
-
(11)
11
Operating Income - As Reported
$52
$13
$39
 Interest (Expense) Income
(14)
(3)
(11)
EBT
$38
$10
$28
 Healthcare Reform- Medicare Subsidy Elimination
-
(22)
22
 Tax (Expense) Benefit
(24)
(7)
(17)
Net Income
$14
($19)
$33
 
 
 
5
Q1 Sales and Adjusted EBITDA (1) by
Segment - 2011 vs. 2010
Financial Overview
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
(1) Figures exclude non-recurring items such as charges for cost reduction initiatives, restructuring, etc. Figures also exclude the impact of foreign
 exchange movements.
 
 
 
6
Adjusted EBITDA(1) Bridge -
Q1 2011 versus Prior Year
Financial Overview
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
(1) Figures exclude non-recurring items such as charges for cost reduction initiatives, restructuring, etc. Figures also exclude the impact of foreign
 exchange movements.
($1)
 
 
 
7
Free Cash Flow - First Quarter 2011
versus Prior Year
Financial Overview
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
 
 
 
8
Key Metrics (1) - Guidance
2011
Financial Overview
All figures in $ millions unless otherwise noted.
 
2011
Estimate Range
 
2010
 
Variance
Net Sales
2,800
to
3,000
 
2,766
 
1%
to
8%
Operating Income(2)
 
270
to
310
 
189
 
43%
to
64%
EBITDA
375
to
415
 
303
 
24%
to
37%
Earnings Per Share(3),(4)
$2.17
to
$2.57
 
$1.73
 
25%
to
49%
Free Cash Flow
80
to
120
 
180
 
(56%)
to
(33%)
(1) Figures exclude non-recurring items such as charges for cost reduction initiatives, restructuring, etc.
(2) As reported Operating Income: $240- 280 million in 2011 and $81 million 2010.
(3) Earnings per share reflect an adjusted tax rate of 42% for both 2011 and 2010.
(4) As reported earnings per share: $1.83 - $2.25 in 2011 and $0.19 in 2010.
 
 
 
9
2011 Financial Outlook
Financial Overview
¾ Raw Material & Energy Inflation*  $40 - $50 million increase
¾ Manufacturing Productivity* Gross Margin +125 to +225 bps vs. 2010
¾ U.S. Pension Credit ~$25 million, down ~$25 million vs. 2010
  60% manufacturing, 40% SG&A
¾ Earnings from WAVE $5 - $10 million vs. 2010
¾ Cash Taxes/ETR ~$15 million. Adjusted ETR of 42%
¾ Q2 Sales $740 - $790 million
  EBITDA $105 - $120 million
¾ Capital Spending ~$180-$200 million
¾ Exclusions from EBITDA ~$18 - 27 million associated with already
  announced actions
* Changed from February Outlook
 
 
 
10
Appendix
 
 
 
11
Adjusted Operating Income to Free Cash Flow
Financial Overview Appendix
All figures in $ millions unless otherwise noted.
 
2011
Estimate Range
Adjusted Operating Income
270
to
310
 D&A
105
Adjusted EBITDA
375
to
415
 Changes in Working Capital
5
to
25
 Capex
(180)
to
(200)
 Pension Credit
(25)
 Interest Expense
(50)
 Cash Taxes
(15)
 Other, including cash payments for
 restructuring and one-time items
(30)
Free Cash Flow
80
to
120
 
 
 
12
Consolidated Results
Financial Overview Appendix
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
(1) See earnings press release and 10-Qfor additional detail on comparability adjustments
(2) Eliminates impact of foreign exchange movements
First Quarter
 
2011
Reported
Comparability(1)
 Adjustments
FX(2) Adj
2011
Adjusted
2010
Reported
Comparability(1)
 Adjustments
FX(2) Adj
2010
Adjusted
Net Sales
685
-
(4)
681
659
-
-
659
Operating Income
52
15
(1)
66
13
14
-
27
EPS
$0.23
$0.30
($0.02)
$0.51
($0.34)
$0.58
$ -
$0.24
 
 
 
13
Segment Operating Income (Loss)
Financial Overview Appendix
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
(1) Eliminates impact of foreign exchange movements and non-recurring items; see earnings press release and 10-Q for additional detail.
First Quarter
 
2011
Reported
Comparability(1)
Adjustments
2011 Adjusted
2010
Reported
Comparability(1)
Adjustments
2010 Adjusted
Resilient Flooring
(1)
8
7
(5)
-
(5)
Wood Flooring
3
-
3
(2)
-
(2)
Building Products
61
7
68
43
(1)
42
Cabinets
(1)
-
(1)
(4)
-
(4)
Unallocated Corporate
(Expense) Income
(10)
(1)
(11)
(19)
15
(4)
 
 
 
 
14
Cash Flow
Financial Overview Appendix
All figures in $ millions unless otherwise noted. Figures may not add due to rounding.
 
First Quarter
($-millions)
2011
2010
Net Cash From Operations
(36)
(28)
Plus / (Minus) Net Cash from Investing
(8)
(2)
Equals Free Cash Flow
(44)
(30)