Key Highlights
-
As reported sales of $351.9 million, up 5.1%
versus the prior year quarter, with all segments contributing to
growth
-
Operating income from continuing operations of
$69.0 million, down 2.8%. Excluding a settlement accounting charge
for the U.S pension plan, operating income increased 27%.
-
Adjusted EBITDA up 12% to $107 million, a new
quarterly record
-
Increasing full year adjusted EBITDA guidance
due to an environmental insurance settlement in the fourth quarter.
Excluding the net settlement benefit, guidance range remains
unchanged.
-
Share repurchase program authorization
increased by $250 million
LANCASTER, Pa., October 30, 2017
-- Armstrong World Industries, Inc. (NYSE:AWI), a global 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, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Net sales |
|
$ |
351.9 |
|
|
$ |
334.9 |
|
|
|
5.1 |
% |
Operating income |
|
$ |
69.0 |
|
|
$ |
71.0 |
|
|
|
(2.8 |
)% |
Earnings from continuing operations |
|
$ |
43.5 |
|
|
$ |
55.9 |
|
|
|
(22.2 |
)% |
Diluted earnings per share |
|
$ |
0.81 |
|
|
$ |
0.99 |
|
|
|
(18.2 |
)% |
Excluding the favorable impact
from foreign exchange of $5 million, consolidated adjusted net
sales increased 3.7% compared to the prior year quarter, driven by
higher volumes internationally and higher average unit values
("AUV") in which both positive mix and positive like for like
pricing contributed.
As reported operating income
declined over the prior year quarter, driven by a $20.8 million
accounting charge from the partial settlement of the U.S. pension
plan due to lump sum distributions from favorable participant
elections, lower equity earnings from our WAVE joint venture and
higher manufacturing and input costs, partially offset by the
margin impact of better AUV performance, lower SG&A expenses
and the margin impact of higher volumes.
"We delivered a solid quarter with
constant currency sales growth of 4% and adjusted EBITDA growth of
12%, overcoming one less business day and the impact of the
hurricanes," said Vic Grizzle, CEO. "I'm pleased with our
acceleration of AUV achievement over the prior year and with the
continued traction from our growth initiatives."
Additional (non-GAAP*) Financial
Metrics from Continuing Operations
(Dollar amounts in millions except per-share
data) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Adjusted net sales |
|
$ |
346 |
|
|
$ |
334 |
|
|
|
3.7 |
% |
Adjusted operating income |
|
$ |
83 |
|
|
$ |
76 |
|
|
|
9.4 |
% |
Adjusted net income |
|
$ |
46 |
|
|
$ |
42 |
|
|
|
8.5 |
% |
Adjusted diluted earnings per share |
|
$ |
0.86 |
|
|
$ |
0.75 |
|
|
|
13.6 |
% |
Adjusted free cash flow |
|
$ |
62 |
|
|
$ |
55 |
|
|
|
11.9 |
% |
(Dollar amounts in millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
96 |
|
|
$ |
85 |
|
|
|
12.5 |
% |
EMEA |
|
|
8 |
|
|
|
8 |
|
|
|
2.6 |
% |
Pacific Rim |
|
|
3 |
|
|
|
3 |
|
|
|
(7.4 |
)% |
Unallocated Corporate |
|
|
- |
|
|
|
(1 |
) |
|
|
100.0 |
% |
Consolidated Adjusted EBITDA |
|
$ |
107 |
|
|
$ |
95 |
|
|
|
11.9 |
% |
* 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, U.S. pension plan expense, AFI separation costs
and certain other gains and losses. The Company excludes U.S.
pension expense in the non-GAAP results as it represents the
actuarial net periodic benefit cost expected to be recorded as a
component of operating income and 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 2017. Adjusted free cash
flow is defined as cash from operations and dividends received from
the WAVE joint venture, less expenditures for property and
equipment, and is adjusted to remove the impact of cash used or
proceeds received for acquisitions and divestitures. The Company
believes adjusted 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 and divestitures. Adjusted figures are
reported in comparable dollars using the budgeted exchange rate for
2017, and are reconciled to the most comparable GAAP measures in
tables at the end of this release.
Consolidated adjusted operating
income improved 9% and adjusted EBITDA improved 12% in the third
quarter, when compared to the prior year quarter. Adjusted
operating income and adjusted EBITDA both grew driven by solid AUV
fall-through to profit, lower SG&A expenses, an environmental
insurance settlement in the quarter net of legal expenses and other
consulting fees and higher volumes internationally, which offset
lower equity earnings from WAVE. Adjusted earnings per share
reflects a 39% adjusted tax rate in both the current and prior year
periods. Adjusted free cash flow improvement was driven primarily
by higher cash earnings and lower capital expenditures.
Third Quarter Segment
Highlights
Effective April 1, 2016, the
former Building Products operating segment was disaggregated
into the following three distinct geographical segments: Americas;
Europe (including Russia), Middle East and Africa ("EMEA"); and
Pacific Rim. The Unallocated Corporate segment historically
included assets, liabilities, income and expenses that had not been
allocated to the geographical segments, including AFI separation
costs.
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Total segment net sales (as reported) |
|
$ |
233.8 |
|
|
$ |
226.0 |
|
|
|
3.5 |
% |
Operating income (as reported) |
|
$ |
67.6 |
|
|
$ |
68.6 |
|
|
|
(1.5 |
)% |
Adjusted net sales |
|
$ |
233 |
|
|
$ |
226 |
|
|
|
3.2 |
% |
Adjusted EBITDA |
|
$ |
96 |
|
|
$ |
85 |
|
|
|
12.5 |
% |
Excluding the favorable impact of
foreign exchange of approximately $1 million, adjusted net sales in
the Americas increased 3.2%, driven by mid-single digit AUV
expansion with contributions from both positive mix and positive
like for like pricing offsetting lower core volumes versus the
prior year quarter. The U.S. Commercial channel saw positive volume
growth, driven primarily by the Tectum acquisition. Continued
double digit growth in Architectural Specialties partially offset
volume declines in the overall segment.
On an as reported basis, operating
income decreased $1 million, driven by an approximately $11 million
increase in U.S. pension plan expense as a result of the partial
settlement, lower equity earnings and the margin impact of lower
volumes, which were partially offset by the margin impact of
favorable AUV, an environmental insurance settlement in the quarter
net of legal expenses and other consulting fees and an increase in
certain selling, promotional and administrative processing expense
reimbursements from WAVE. Equity earnings from WAVE decreased
versus the prior year quarter resulting from the expense
reimbursements, along with higher input costs mainly related to
steel pricing. Adjusted EBITDA margins expanded 340 bps driven
primarily by the environmental insurance settlement, WAVE expense
reimbursements and solid AUV fall-through to profit.
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Total segment net sales (as reported) |
|
$ |
76.5 |
|
|
$ |
74.2 |
|
|
|
3.1 |
% |
Operating income (as reported) |
|
$ |
3.8 |
|
|
$ |
4.1 |
|
|
|
(7.3 |
)% |
Adjusted net sales |
|
$ |
73 |
|
|
$ |
74 |
|
|
|
(1.0 |
)% |
Adjusted EBITDA |
|
$ |
8 |
|
|
$ |
8 |
|
|
|
2.6 |
% |
Excluding the favorable impact of
foreign exchange of approximately $3 million, adjusted net sales in
EMEA decreased 1.0%, driven by lower sales in predominantly the UK
and unfavorable AUV. On an as reported basis, operating income
decreased driven by lower equity earnings partially offset by the
margin impact of higher volumes.
Pacific Rim |
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Total segment net sales (as reported) |
|
$ |
41.6 |
|
|
$ |
34.7 |
|
|
|
19.9 |
% |
Operating (loss) income (as reported) |
|
$ |
(2.4 |
) |
|
$ |
1.0 |
|
|
Unfavorable |
|
Adjusted net sales |
|
$ |
40 |
|
|
$ |
34 |
|
|
|
17.5 |
% |
Adjusted EBITDA |
|
$ |
3 |
|
|
$ |
3 |
|
|
|
(7.4 |
)% |
Excluding the favorable impact of
foreign exchange of approximately $1 million, adjusted net sales in
the Pacific Rim increased 17.5%, driven by higher sales across the
region particularly in China. On an as reported basis, operating
loss increased, driven by an accelerated depreciation charge
related to the closure of the previously idled QingPu, China plant
and the margin impact of unfavorable AUV, which was partially
offset by the margin impact of higher volumes.
Unallocated Corporate
As a result of the AFI separation
on April 1, 2016, the majority of corporate support functions were
incorporated into the Americas segment, resulting in the
discontinuation of the Unallocated Corporate reportable segment
from a P&L perspective in 2017.
On an as reported basis,
Unallocated Corporate had zero expenses in the third quarter,
representing a decrease of $2.7 million from the prior year
quarter.
Year to Date Results from
Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in millions) |
|
For the Nine Months Ended September 30, |
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Net sales (as reported) |
|
$ |
998.1 |
|
|
$ |
936.6 |
|
|
|
6.6 |
% |
Operating income (as reported) |
|
$ |
210.4 |
|
|
$ |
144.3 |
|
|
|
45.8 |
% |
Adjusted net sales |
|
$ |
993 |
|
|
$ |
932 |
|
|
|
6.6 |
% |
Adjusted EBITDA |
|
$ |
274 |
|
|
$ |
247 |
|
|
|
11.0 |
% |
Excluding the impact from foreign
exchange, consolidated adjusted net sales increased 6.6% compared
to the prior year period, driven by higher volumes globally and
higher AUV in which both positive mix and positive like for like
pricing contributed.
As reported operating income
improved over the prior year period, driven by lower separation
costs, the margin impact of higher volume, AUV improvement and a
decrease in U.S. pension plan expense due to a longer amortization
period for actuarial losses as a result of the separation of AFI,
which partially offset higher input costs and lower WAVE equity
earnings.
Share Repurchase
Program
The AWI Board of Directors
authorized an expansion of the Company's existing stock repurchase
program under which it may repurchase up to an additional $250
million of its outstanding common stock. This additional
repurchase authorization extends through October of 2020.
Repurchases under the program may
be made through open market, block and privately-negotiated
transactions, including Rule 10b5-1 plans, at times and in such
amounts as management deems appropriate, subject to market and
business conditions, regulatory requirements and other
factors. The share repurchase program does not obligate the
Company to repurchase any particular amount of common stock and may
be suspended or discontinued at any time without notice. The
Company had approximately 52.8 million shares of common stock
outstanding as of September 30, 2017.
Market Outlook and 2017 Guidance
(1)
"We are increasing our 2017
adjusted EBITDA guidance due solely to the subsequent event
disclosed in our 10-Q relating to an environmental insurance
settlement in October of $20 million," said Brian MacNeal, CFO.
"Net of the additional costs associated with this settlement, we
now expect our adjusted EBITDA to grow 15% to 18% and range between
$365 million and $375 million. Excluding the net impact of this
settlement, our guidance range remains unchanged."
Adjusted earnings per share
guidance is increasing to $2.80 to $2.90 per diluted share, also
reflecting the net benefit of the environmental insurance
settlement in October.
(1)
Guidance metrics are presented using 2017 budgeted foreign exchange
rates. Adjusted EPS guidance for 2017 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 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 quarterly report on Form 10-Q for
the quarter ended September 30, 2017 that the Company expects
to file with the SEC today.
Armstrong World Industries, Inc.
(AWI) is a global leader in the design, innovation and manufacture
of commercial and residential ceiling, wall and suspension system
solutions. With over 3,900 employees and fiscal 2016 revenues
from continuing operations in excess of $1.2 billion, AWI has a
global manufacturing network of 26 facilities, including 9 plants
dedicated to its WAVE joint venture. On April 1, 2016, AWI
completed the separation of its legacy flooring business that now
operates as Armstrong Flooring, Inc., an independent,
publicly-traded company. 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 HIGHLIGHTS
Armstrong 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, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net sales |
|
$ |
351.9 |
|
|
$ |
334.9 |
|
|
$ |
998.1 |
|
|
$ |
936.6 |
|
Cost of goods sold |
|
|
241.0 |
|
|
|
225.2 |
|
|
|
676.8 |
|
|
|
651.1 |
|
Selling, general and administrative expenses |
|
|
55.8 |
|
|
|
55.7 |
|
|
|
162.8 |
|
|
|
165.2 |
|
Separation costs |
|
|
- |
|
|
|
2.0 |
|
|
|
- |
|
|
|
33.0 |
|
Equity earnings from joint venture |
|
|
(13.9 |
) |
|
|
(19.0 |
) |
|
|
(51.9 |
) |
|
|
(57.0 |
) |
Operating income |
|
|
69.0 |
|
|
|
71.0 |
|
|
|
210.4 |
|
|
|
144.3 |
|
Interest expense |
|
|
9.1 |
|
|
|
9.0 |
|
|
|
27.5 |
|
|
|
43.4 |
|
Other non-operating expense |
|
|
1.7 |
|
|
|
- |
|
|
|
3.6 |
|
|
|
- |
|
Other non-operating (income) |
|
|
(3.0 |
) |
|
|
(1.6 |
) |
|
|
(7.4 |
) |
|
|
(8.9 |
) |
Earnings from continuing operations before income
taxes |
|
|
61.2 |
|
|
|
63.6 |
|
|
|
186.7 |
|
|
|
109.8 |
|
Income tax expense |
|
|
17.7 |
|
|
|
7.7 |
|
|
|
70.9 |
|
|
|
44.4 |
|
Earnings from continuing operations |
|
$ |
43.5 |
|
|
$ |
55.9 |
|
|
$ |
115.8 |
|
|
$ |
65.4 |
|
Net (loss) from discontinued operations, net of tax
expense
of $ -, $-, $- and $ 0.1 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(4.5 |
) |
Gain from disposal of discontinued business, net of
tax
(benefit) of ($5.9), ($14.7), ($5.4) and ($16.6) |
|
|
5.9 |
|
|
|
14.7 |
|
|
|
5.3 |
|
|
|
16.7 |
|
Net gain from discontinued operations |
|
|
5.9 |
|
|
|
14.7 |
|
|
|
5.3 |
|
|
|
12.2 |
|
Net earnings |
|
$ |
49.4 |
|
|
$ |
70.6 |
|
|
$ |
121.1 |
|
|
$ |
77.6 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
7.0 |
|
|
|
(2.0 |
) |
|
|
20.9 |
|
|
|
(13.8 |
) |
Derivative (loss) gain |
|
|
(0.3 |
) |
|
|
1.7 |
|
|
|
(2.0 |
) |
|
|
1.2 |
|
Pension and postretirement adjustments |
|
|
14.3 |
|
|
|
6.9 |
|
|
|
18.8 |
|
|
|
23.9 |
|
Total other comprehensive income |
|
|
21.0 |
|
|
|
6.6 |
|
|
|
37.7 |
|
|
|
11.3 |
|
Total comprehensive income |
|
$ |
70.4 |
|
|
$ |
77.2 |
|
|
$ |
158.8 |
|
|
$ |
88.9 |
|
Earnings per share of common stock, continuing
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.82 |
|
|
$ |
1.00 |
|
|
$ |
2.16 |
|
|
$ |
1.17 |
|
Diluted |
|
$ |
0.81 |
|
|
$ |
0.99 |
|
|
$ |
2.14 |
|
|
$ |
1.16 |
|
Earnings per share of common stock, discontinued
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.11 |
|
|
$ |
0.26 |
|
|
$ |
0.10 |
|
|
$ |
0.22 |
|
Diluted |
|
$ |
0.11 |
|
|
$ |
0.26 |
|
|
$ |
0.10 |
|
|
$ |
0.22 |
|
Net earnings per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.93 |
|
|
$ |
1.27 |
|
|
$ |
2.26 |
|
|
$ |
1.39 |
|
Diluted |
|
$ |
0.92 |
|
|
$ |
1.26 |
|
|
$ |
2.24 |
|
|
$ |
1.38 |
|
Average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
53.0 |
|
|
|
55.5 |
|
|
|
53.5 |
|
|
|
55.6 |
|
Diluted |
|
|
53.5 |
|
|
|
56.0 |
|
|
|
53.9 |
|
|
|
56.0 |
|
SEGMENT RESULTS
Armstrong World Industries, Inc. and Subsidiaries
(Amounts in millions)
(Unaudited)
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
233.8 |
|
|
$ |
226.0 |
|
|
$ |
679.2 |
|
|
$ |
640.9 |
|
EMEA |
|
|
76.5 |
|
|
|
74.2 |
|
|
|
211.8 |
|
|
|
199.4 |
|
Pacific Rim |
|
|
41.6 |
|
|
|
34.7 |
|
|
|
107.1 |
|
|
|
96.3 |
|
Total net sales |
|
$ |
351.9 |
|
|
$ |
334.9 |
|
|
$ |
998.1 |
|
|
$ |
936.6 |
|
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
67.6 |
|
|
$ |
68.6 |
|
|
$ |
214.7 |
|
|
$ |
189.0 |
|
EMEA |
|
|
3.8 |
|
|
|
4.1 |
|
|
|
(1.1 |
) |
|
|
(5.2 |
) |
Pacific Rim |
|
|
(2.4 |
) |
|
|
1.0 |
|
|
|
(3.2 |
) |
|
|
(2.4 |
) |
Unallocated Corporate (expense) |
|
|
- |
|
|
|
(2.7 |
) |
|
|
- |
|
|
|
(37.1 |
) |
Total operating income |
|
$ |
69.0 |
|
|
$ |
71.0 |
|
|
$ |
210.4 |
|
|
$ |
144.3 |
|
Selected Balance Sheet
Information
(Amounts in millions)
(Unaudited)
|
|
September 30, 2017 |
|
|
December 31, 2016 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
$ |
407.8 |
|
|
$ |
406.2 |
|
Property, plant and equipment, net |
|
|
699.0 |
|
|
|
669.6 |
|
Other noncurrent assets |
|
|
722.9 |
|
|
|
682.2 |
|
Total assets |
|
$ |
1,829.7 |
|
|
$ |
1,758.0 |
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
205.9 |
|
|
$ |
224.1 |
|
Noncurrent liabilities |
|
|
1,257.6 |
|
|
|
1,267.5 |
|
Equity |
|
|
366.2 |
|
|
|
266.4 |
|
Total liabilities and shareholders' equity |
|
$ |
1,829.7 |
|
|
$ |
1,758.0 |
|
Selected Cash Flow
Information
(Amounts in millions)
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
Net earnings |
|
$ |
121.1 |
|
|
$ |
77.6 |
|
Other adjustments to reconcile net earnings to net
cash provided by operating activities |
|
|
73.6 |
|
|
|
97.3 |
|
Changes in operating assets and liabilities, net |
|
|
(89.8 |
) |
|
|
(177.5 |
) |
Net cash provided by (used for) operating
activities |
|
|
104.9 |
|
|
|
(2.6 |
) |
Net cash (used for) investing activities |
|
|
(41.3 |
) |
|
|
(6.9 |
) |
Net cash (used for) financing activities |
|
|
(92.2 |
) |
|
|
(88.2 |
) |
Effect of exchange rate changes on cash and cash
equivalents |
|
|
3.2 |
|
|
|
(4.6 |
) |
Net (decrease) in cash and cash equivalents |
|
|
(25.4 |
) |
|
|
(102.3 |
) |
Cash and cash equivalents at beginning of year |
|
|
141.9 |
|
|
|
244.8 |
|
Cash and cash equivalents at end of period |
|
$ |
116.5 |
|
|
$ |
142.5 |
|
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, U.S. pension plan expense, separation
costs and certain other gains and losses. The Company excludes U.S.
pension expense in the non-GAAP results as it represents the
actuarial net periodic benefit cost recorded as a component of
operating income and 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 2017. Adjusted free cash flow is
defined as cash from operations and dividends received from the
WAVE joint venture, less expenditures for property and equipment,
and is adjusted to remove the impact of cash used or proceeds
received for acquisitions and divestitures. The Company believes
adjusted 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 and divestitures. Adjusted figures are reported in
comparable dollars using the budgeted exchange rate for 2017. 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.
Consolidated Net Sales
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Reported net sales |
|
$ |
352 |
|
|
$ |
335 |
|
|
$ |
998 |
|
|
$ |
937 |
|
Add: Foreign exchange impact |
|
|
(6 |
) |
|
|
(1 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
Adjusted net sales |
|
$ |
346 |
|
|
$ |
334 |
|
|
$ |
993 |
|
|
$ |
932 |
|
Consolidated Results from
Continuing Operations
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Earnings from continuing operations,
Reported |
|
$ |
44 |
|
|
$ |
56 |
|
|
$ |
116 |
|
|
$ |
65 |
|
Less: Tax expense |
|
|
(17 |
) |
|
|
(8 |
) |
|
|
(71 |
) |
|
|
(45 |
) |
Earnings before tax,
Reported |
|
$ |
61 |
|
|
$ |
64 |
|
|
$ |
187 |
|
|
$ |
110 |
|
Less: Interest/other income and expense,
net(1) |
|
|
(8 |
) |
|
|
(7 |
) |
|
|
(23 |
) |
|
|
(34 |
) |
Operating Income, Reported |
|
$ |
69 |
|
|
$ |
71 |
|
|
$ |
210 |
|
|
$ |
144 |
|
Add: U.S. pension expense(2) |
|
|
14 |
|
|
|
3 |
|
|
|
2 |
|
|
|
9 |
|
Add: Separation expenses |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
33 |
|
Add: China plant cost reduction initiatives |
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
|
|
3 |
|
Add: Foreign exchange impact |
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Operating Income, Adjusted |
|
$ |
83 |
|
|
$ |
76 |
|
|
$ |
212 |
|
|
$ |
189 |
|
Less: D&A |
|
|
(24 |
) |
|
|
(19 |
) |
|
|
(62 |
) |
|
|
(58 |
) |
Adjusted EBITDA(3) |
|
$ |
107 |
|
|
$ |
95 |
|
|
$ |
274 |
|
|
$ |
247 |
|
(1) Reported results include $10.7
million of interest expense recorded in the first quarter of 2016
related to the settlement of interest rate swaps incurred in
connection with the Company's refinancing of its credit
facility.
(2) U.S. pension expense represents the actuarial net periodic
benefit cost expected to be recorded as a component of operating
income. For all periods presented, we were not required and did not
make cash contributions to our U.S. Retirement Income Plan based on
guidelines established by the Pension Benefit Guaranty Corporation,
nor do we expect to make cash contributions to the plan in
2017.
(3) Includes $1 million and $4 million of Unallocated Corporate
expense related to the separation of AFI in the third quarter and
first nine months of 2016, respectively.
Americas
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Operating Income, Reported |
|
$ |
68 |
|
|
$ |
69 |
|
|
$ |
215 |
|
|
$ |
189 |
|
Add: U.S. pension expense(1) |
|
|
14 |
|
|
|
3 |
|
|
|
2 |
|
|
|
9 |
|
Operating Income, Adjusted |
|
$ |
82 |
|
|
$ |
72 |
|
|
$ |
217 |
|
|
$ |
198 |
|
Less: D&A |
|
|
(14 |
) |
|
|
(13 |
) |
|
|
(41 |
) |
|
|
(40 |
) |
Adjusted EBITDA |
|
$ |
96 |
|
|
$ |
85 |
|
|
$ |
258 |
|
|
$ |
238 |
|
(1) U.S. pension expense
represents the actuarial net periodic benefit cost expected to be
recorded as a component of operating income. For all periods
presented, we were not required and did not make cash contributions
to our U.S. Retirement Income Plan based on guidelines established
by the Pension Benefit Guaranty Corporation, nor do we expect to
make cash contributions to the plan in 2017.
EMEA
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Operating Income (Loss),
Reported |
|
$ |
4 |
|
|
$ |
4 |
|
|
$ |
(1 |
) |
|
$ |
(5 |
) |
Add: Foreign exchange impact |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
Operating Income (Loss),
Adjusted |
|
$ |
4 |
|
|
$ |
4 |
|
|
$ |
(1 |
) |
|
$ |
(6 |
) |
Less: D&A |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(12 |
) |
|
|
(12 |
) |
Adjusted EBITDA |
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
11 |
|
|
$ |
6 |
|
Pacific Rim
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Operating (Loss) Income,
Reported |
|
$ |
(2 |
) |
|
|
1 |
|
|
$ |
(3 |
) |
|
$ |
(2 |
) |
Add: China plant cost reduction initiatives |
|
|
- |
|
|
|
- |
|
|
|
(1 |
) |
|
|
3 |
|
Add: Foreign exchange impact |
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Operating (Loss) Income,
Adjusted |
|
$ |
(3 |
) |
|
$ |
1 |
|
|
$ |
(4 |
) |
|
$ |
1 |
|
Less: D&A |
|
|
(6 |
) |
|
|
(2 |
) |
|
|
(9 |
) |
|
|
(6 |
) |
Adjusted EBITDA |
|
$ |
3 |
|
|
$ |
3 |
|
|
$ |
5 |
|
|
$ |
7 |
|
Unallocated Corporate
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Operating (Loss), Reported |
|
$ |
- |
|
|
$ |
(3 |
) |
|
$ |
- |
|
|
$ |
(37 |
) |
Add: Separation expenses |
|
|
- |
|
|
|
2 |
|
|
|
- |
|
|
|
33 |
|
Operating (Loss), Adjusted |
|
$ |
- |
|
|
$ |
(1 |
) |
|
$ |
- |
|
|
$ |
(4 |
) |
Less: D&A |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
- |
|
|
$ |
(1 |
) |
|
$ |
- |
|
|
$ |
(4 |
) |
Adjusted Free Cash Flow
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net cash provided by (used for)
operations |
|
$ |
63 |
|
|
$ |
52 |
|
|
$ |
105 |
|
|
$ |
(3 |
) |
Less: net cash (used for) investing |
|
|
- |
|
|
|
(3 |
) |
|
|
(41 |
) |
|
|
(7 |
) |
Adjustments to reconcile free cash flow: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Acquisitions |
|
|
- |
|
|
|
- |
|
|
|
31 |
|
|
|
- |
|
Add: Separation payments |
|
|
- |
|
|
|
4 |
|
|
|
- |
|
|
|
51 |
|
Add: Cash flows attributable to AFI |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
16 |
|
Add: Interest rate swap settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11 |
|
Add: Other |
|
|
(1 |
) |
|
|
2 |
|
|
|
- |
|
|
|
4 |
|
Adjusted Free Cash Flow |
|
$ |
62 |
|
|
$ |
55 |
|
|
$ |
95 |
|
|
$ |
72 |
|
Consolidated Results From
Continuing Operations - Adjusted Diluted Earnings Per Share
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
Total |
|
|
Per Diluted
Share(3) |
|
|
Total |
|
|
Per Diluted
Share(3) |
|
|
Total |
|
|
Per Diluted
Share(3) |
|
|
Total |
|
|
Per Diluted
Share(3) |
|
Earnings from continuing operations,
As Reported |
|
$ |
44 |
|
|
$ |
0.81 |
|
|
$ |
56 |
|
|
$ |
0.99 |
|
|
$ |
116 |
|
|
$ |
2.14 |
|
|
$ |
65 |
|
|
$ |
1.16 |
|
Add: Income taxes, as reported |
|
|
17 |
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
|
71 |
|
|
|
|
|
|
|
45 |
|
|
|
|
|
Earnings from continuing operations
before income taxes, As Reported |
|
$ |
61 |
|
|
|
|
|
|
$ |
64 |
|
|
|
|
|
|
$ |
187 |
|
|
|
|
|
|
$ |
110 |
|
|
|
|
|
Add: U.S. pension expense(1) |
|
|
14 |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
9 |
|
|
|
|
|
Add: Separation costs |
|
|
- |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
33 |
|
|
|
|
|
Add: China plant cost reduction initiatives |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
(1 |
) |
|
|
|
|
|
|
3 |
|
|
|
|
|
Add: Settlement of interest rate swap(2) |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
11 |
|
|
|
|
|
Add: Foreign exchange impact |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Adjusted earnings from continuing
operations before income taxes |
|
$ |
75 |
|
|
|
|
|
|
$ |
69 |
|
|
|
|
|
|
$ |
189 |
|
|
|
|
|
|
$ |
166 |
|
|
|
|
|
Add: Adjusted tax (expense)
@ 39% for 2017 and 2016 |
|
|
(29 |
) |
|
|
|
|
|
|
(27 |
) |
|
|
|
|
|
|
(74 |
) |
|
|
|
|
|
|
(64 |
) |
|
|
|
|
Adjusted net income |
|
$ |
46 |
|
|
$ |
0.86 |
|
|
$ |
42 |
|
|
$ |
0.75 |
|
|
$ |
115 |
|
|
$ |
2.13 |
|
|
$ |
102 |
|
|
$ |
1.81 |
|
(1) U.S. pension expense
represents the actuarial net periodic benefit cost expected to be
recorded as a component of operating income. For all periods
presented, we were not required and did not make cash contributions
to our U.S. Retirement Income Plan based on guidelines established
by the Pension Benefit Guaranty Corporation, nor do we expect to
make cash contributions to the plan in 2017.
(2) Adjusted results exclude $10.7 million of interest expense
recorded in the first quarter of 2016 related to the settlement of
interest rate swaps incurred in connection with the Company's
refinancing of its credit facility. Cash payments for the
settlement of this swap occurred in the second quarter of
2016.
(3) Based on ~54 million diluted shares outstanding for the three
and nine month periods ended September 30, 2017 and ~56 million
diluted shares outstanding for the three and nine month periods
ended September 30, 2016.
Adjusted Net Sales
Guidance
|
|
For the Year Ending December 31, 2017 |
|
|
|
Low |
|
|
High |
|
Reported net sales |
|
$ |
1,292 |
|
to |
$ |
1,327 |
|
Add: Foreign exchange impact |
|
|
13 |
|
|
|
13 |
|
Adjusted net sales |
|
$ |
1,305 |
|
to |
$ |
1,340 |
|
Updated Adjusted EBITDA
Guidance
|
|
For the Year Ending December 31, 2017 |
|
|
|
Low |
|
|
High |
|
Net income |
|
$ |
166 |
|
to |
$ |
172 |
|
Add: Interest expense |
|
|
35 |
|
|
|
35 |
|
Less: Other non-operating (income) |
|
|
(3 |
) |
|
|
(3 |
) |
Add: Income tax expense |
|
|
90 |
|
|
|
94 |
|
Operating income |
|
$ |
288 |
|
to |
$ |
298 |
|
Less: U.S. pension (credit)(1) |
|
|
(3 |
) |
|
|
(3 |
) |
Add: D&A |
|
|
80 |
|
|
|
80 |
|
Adjusted EBITDA |
|
$ |
365 |
|
to |
$ |
375 |
|
(1) U.S. pension (credit)
represents the actuarial net periodic benefit cost expected to be
recorded as a component of operating income. For all periods
presented, we were not required and did not make cash contributions
to our U.S. Retirement Income Plan based on guidelines established
by the Pension Benefit Guaranty Corporation, nor do we expect to
make cash contributions to the plan in 2017.
Updated Adjusted Diluted Earnings
Per Share (EPS) Guidance
|
|
For the Year Ending December 31, 2017 |
|
|
|
Low |
|
|
Per Diluted
Share(1) |
|
|
High |
|
|
Per Diluted
Share(1) |
|
Net income |
|
$ |
166 |
|
|
$ |
3.07 |
|
to |
$ |
172 |
|
|
$ |
3.19 |
|
Add: Interest expense |
|
|
35 |
|
|
|
|
|
|
|
35 |
|
|
|
|
|
Less: Other non-operating (income) |
|
|
(3 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
Add: Income tax expense |
|
|
90 |
|
|
|
|
|
|
|
94 |
|
|
|
|
|
Operating income |
|
$ |
288 |
|
|
|
|
|
to |
$ |
298 |
|
|
|
|
|
Less: U.S. pension (credit)(2) |
|
|
(3 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
|
|
Less: Interest expense |
|
|
(35 |
) |
|
|
|
|
|
|
(35 |
) |
|
|
|
|
Adjusted earnings before income
taxes |
|
$ |
250 |
|
|
|
|
|
to |
$ |
260 |
|
|
|
|
|
Less: Income tax expense |
|
|
(99 |
) |
|
|
|
|
|
|
(103 |
) |
|
|
|
|
Adjusted net income |
|
$ |
151 |
|
|
$ |
2.80 |
|
to |
$ |
157 |
|
|
$ |
2.91 |
|
(1) Adjusted EPS guidance for 2017
is calculated based on an adjusted effective tax rate of 39% and
based on ~54 million of diluted shares outstanding.
(2) U.S. pension (credit) represents the actuarial net periodic
benefit cost expected to be recorded as a component of operating
income. For all periods presented, we were not required and did not
make cash contributions to our U.S. Retirement Income Plan based on
guidelines established by the Pension Benefit Guaranty Corporation,
nor do we expect to make cash contributions to the plan in
2017.
Adjusted Free Cash Flow
Guidance
|
|
For the Year Ending December 31, 2017 |
|
|
|
Low |
|
|
High |
|
Net cash provided by operating
activities |
|
$ |
165 |
|
to |
$ |
180 |
|
Add: Return of investment from joint venture |
|
|
70 |
|
|
|
70 |
|
Adjusted net cash provided by
operating activities |
|
$ |
235 |
|
to |
$ |
250 |
|
Less: Capital expenditures |
|
|
(95 |
) |
|
|
(95 |
) |
Adjusted Free Cash Flow |
|
$ |
140 |
|
to |
$ |
155 |
|
Source: Armstrong World Industries
AWI Reports Third Quarter Results -
FINAL
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Armstrong World Industries, Inc. via
Globenewswire
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