LANCASTER, Pa., Oct. 27 /PRNewswire-FirstCall/ -- Armstrong World
Industries, Inc. (NYSE:AWI) today reported third quarter 2009 net
sales of $753.0 million, down 19 percent, from $929.6 million in
the same period for 2008. Excluding a $31 million, or 2 percent,
impact of foreign exchange rates, sales decreased 17 percent.
Reported operating income from continuing operations of $44.0
million compared to operating income of $82.2 million in the third
quarter of 2008. Adjusted operating income from continuing
operations of $78.6 million decreased 13 percent compared to $90.5
million on the same basis. The Company uses adjusted income from
operations in managing the business and believes the adjustments
provide meaningful comparisons of operating performance between
periods. Adjusted income excludes the impact of restructuring
charges and related costs, and certain other gains and losses. As
detailed in the attached reconciliation to GAAP, these adjustments
increased operating income by $34.6 million in the third quarter of
2009 and $8.3 million in the third quarter of 2008. 2009 includes a
previously announced $31.6 million non-cash charge from accelerated
vesting of stock compensation due to a transaction between Armor
TPG and the Asbestos Trust. Reported income from continuing
operations was $64.4 million, or $1.12 per diluted share. This
compared to income of $39.1 million, or $0.68 per diluted share, in
the third quarter of 2008. 2009 included a $46 million non-cash tax
benefit for adjustments related to the July 2009 IRS approval of
our 10-year carryback refund. Adjusted income from continuing
operations was $43.2 million, or $0.75 per diluted share, compared
to $48.9 million, or $0.86 per diluted share, on the same basis as
2008. Reduced operating costs partially offset the impact of lower
sales to the 2009 third quarter adjusted operating income. Market
trends experienced in the first half of the year generally
continued through the third quarter. Broad weakness across global
residential and commercial markets caused sales volume to decline
17 percent. However, the margin impact of lower sales volume was
significantly mitigated by a combined benefit from input cost
deflation, reduced manufacturing costs and lower selling, general
and administrative ("SG&A") expenses. 3rd Quarter Segment
Highlights Resilient Flooring net sales were $282.6 million in the
third quarter of 2009 compared to $336.9 million in the same period
of 2008. Excluding the impact of foreign exchange rates, net sales
declined about 13 percent. Lower sales volumes, particularly in the
Americas, contributed to the decline. Reported operating income was
$12.4 million compared to $1.2 million in the third quarter of
2008. European Resilient Flooring contributed income of $0.2
million and a loss of $9.2 million, respectively to those totals.
Adjusted operating income for the segment of $14.2 million
increased significantly from $9.5 million calculated on the same
basis in the prior year, despite lower sales. Operating income
improved as raw material cost deflation, lower freight costs and
reduced SG&A expenses offset the margin impact of lower global
volume and reduced product mix profitability. Wood Flooring net
sales of $140.1 million in the third quarter of 2009 declined 18
percent from $171.0 million in the prior year's quarter due to
continued declines in residential housing markets. Despite lower
sales, reported operating income of $11.2 million in the third
quarter was greater than $8.5 million reported in 2008, primarily
due to the reduced costs including raw materials, freight,
manufacturing and SG&A costs. Building Products net sales of
$292.1 million in the third quarter of 2009 decreased from $374.1
million in the prior year's quarter. Excluding the effects of
foreign exchange rates of $18 million, sales decreased by 19
percent. Global volume declines in weaker commercial markets more
than offset modest product mix improvement and price realization.
Reported operating income decreased to $57.4 million from $75.0
million in the third quarter of 2008. The combination of volume
declines and lower income from our WAVE joint venture offset the
benefits of reduced manufacturing and SG&A expenses, lower
freight and modest price realization. Cabinets 2009 third quarter
net sales of $38.2 million were 20 percent below sales of $47.6
million in 2008 due to less volume. Volume declines resulted from
weaker U.S. housing market demand. Reported operating loss for the
third quarter of $3.0 million was worse than the prior year's $1.1
million loss, primarily due to the margin impact from lower sales,
partially offset by lower manufacturing costs. 2009 adjusted
operating loss was $1.8 million. The $1.2 million adjustment
related primarily to accelerated depreciation associated with the
announced closure of the Auburn manufacturing plant. Unallocated
corporate expense of $34.0 million in the third quarter of 2009
compared to expense of $1.4 million in the third quarter of 2008.
2009 adjusted unallocated corporate expense was $2.4 million, with
the adjustment from reported being the previously discussed $31.6
million non-cash charge for accelerated vesting of stock
compensation. Free cash flow of $117 million in the third quarter
of 2009 compared to $92 million in 2008. Reductions in working
capital and lower cash taxes were primarily responsible for the
improvement. Year-to-Date Results For the nine months ended
September 30, 2009, net sales were $2,127.0 million compared to
$2,684.6 million in 2008. Excluding a $126 million favorable impact
from exchange rates, net sales decreased by 17 percent. Lower
volumes in declining markets accounted for the decline, slightly
offset by modest improvement in price. Reported operating income
for the first nine months was $92.2 million compared to operating
income of $217.4 million for the same period in 2008. Adjusted
operating income of $130.3 million decreased 44 percent compared to
adjusted operating income of $231.0 million in the prior year
period. The margin impact from sales volume declines and lower
earnings from WAVE more than offset input cost deflation, reduced
manufacturing costs and lower selling SG&A expenses. Reported
earnings from continuing operations were $81.5 million, or $1.43
per diluted share, compared to $106.6 million, or $1.87 per diluted
share in the first nine months of 2008. Adjusted earnings from
continuing operations of $68.7 million, or $1.20 per diluted share,
compared to $124.5 million, or $2.19 per diluted share, on the same
basis as 2008. Free cash flow for the first nine months was $158
million compared to a $77 million for 2008. The impact of lower
earnings was more than offset by reductions in working capital.
Outlook Global macroeconomic forecasts continue to indicate a
difficult outlook for all key markets over the remainder of 2009.
Consequently, management reaffirmed the 2009 outlook for sales to
be between $2,750 million and $2,800 million. Based on continued
cost curtailment and a strong performance in the third quarter,
management raised the outlook for adjusted operating income to be
$148 million to $156 million, compared to $253 million earned in
2008. 2009 adjusted EPS is expected to be $1.34 to $1.41 per
diluted share, compared to $2.37 per diluted share in 2008. 2009
cash taxes are estimated to be less than $5 million. A 42 percent
tax rate has been utilized for adjusted earnings to facilitate
comparability from period to period. The outlook for free cash flow
has improved and is now anticipated to be 15 percent to 20 percent
above 2008. Adjusted figures are reconciled to GAAP in tables at
the end of this release. Investor Day Webcast Management will
conduct a discussion for shareholders during a live Internet
broadcast beginning at 5:00 p.m. Eastern time today. This event
will be broadcast live on the Company's Web site,
http://www.armstrong.com/. From the homepage, click "For Investors"
to access the call and the accompanying slide presentation. The
replay of this event will be available on the Company's Web site
for 90 days. Forward Looking Statement These materials contain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act. Such statements provide
expectations or forecasts of future events. Our outcomes could
differ materially due to known and unknown risks and uncertainties,
including: lower construction activity reducing our market
opportunities; availability and costs for raw materials and energy;
risks related to our international trade and business; business
combinations among competitors, suppliers and customers; risks
related to capital investments and restructurings; reduced business
with key customers; and other factors disclosed in our recent
reports on Forms 10-K, 10-Q and 8-K filed with the SEC. We
undertake no obligation to update any forward-looking statement.
About Armstrong and Additional Information More details on the
Company's performance can be found in its Form 10-Q, filed with the
SEC tomorrow. To supplement its consolidated financial statements
presented in accordance with accounting principles generally
accepted in the United States (GAAP), Armstrong provides additional
measures of performance adjusted to exclude foreign exchange and
certain costs, expenses, and gains and losses. 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 our 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. Armstrong World Industries, Inc. is a global leader in
the design and manufacture of floors, ceilings and cabinets. In
2008, Armstrong's consolidated net sales totaled approximately $3.4
billion. Based in Lancaster, Pa., Armstrong operates 37 plants in
nine countries and has approximately 11,000 employees worldwide.
For more information, visit http://www.armstrong.com/. FINANCIAL
HIGHLIGHTS Armstrong World Industries, Inc., and Subsidiaries
(amounts in millions, except for per-share amounts) (unaudited)
Three Three Nine Nine Months Months Months Months Ended Ended Ended
Ended Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2009 2008 2009 2008
---- ---- ---- ---- Net sales $753.0 $929.6 $2,127.0 $2,684.6 Cost
of goods sold 565.0 717.9 1,643.6 2,061.8 Selling, general and
administrative expenses 156.8 145.9 421.3 452.7 Restructuring
charges, net - - - 0.8 Equity (earnings) from joint venture (12.8)
(16.4) (30.1) (48.1) ----- ----- ----- ----- Operating income 44.0
82.2 92.2 217.4 Interest expense 4.9 7.5 13.9 23.7 Other
non-operating expense 0.2 0.8 0.5 1.2 Other non-operating (income)
(0.9) (2.1) (2.6) (8.5) ---- ---- ---- ---- Earnings from
continuing operations before income taxes 39.8 76.0 80.4 201.0
Income tax expense (benefit) (24.6) 36.9 (1.1) 94.4 ----- ---- ----
---- Earnings from continuing operations 64.4 39.1 81.5 106.6
(Loss) from discontinued operations, net of tax of $0.0, $0.0, $0.0
and $0.4 0.0 (0.2) 0.0 (0.1) --- ---- --- ---- Net earnings $64.4
$38.9 $81.5 $106.5 ===== ===== ===== ====== Earnings per share of
common stock, continuing operations: Basic $1.13 $0.69 $1.43 $1.87
Diluted $1.12 $0.68 $1.43 $1.87 (Loss) per share of common stock,
discontinued operations: Basic $- $- $- $- Diluted $- $- $- $- Net
earnings per share of common stock: Basic $1.13 $0.68 $1.43 $1.87
Diluted $1.12 $0.68 $1.43 $1.87 Average number of common shares
outstanding: Basic 56.9 56.4 56.6 56.4 Diluted 57.0 56.5 56.7 56.4
SEGMENT RESULTS Armstrong World Industries, Inc., and Subsidiaries
(amounts in millions) (unaudited) Three Three Nine Nine Months
Months Months Months Ended Ended Ended Ended Sept. 30, Sept. 30,
Sept. 30, Sept. 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net
sales: ---------- Resilient Flooring $282.6 $336.9 $794.1 $973.5
Wood Flooring 140.1 171.0 389.7 500.1 Building Products 292.1 374.1
827.7 1,070.4 Cabinets 38.2 47.6 115.5 140.6 ---- ---- ----- -----
Total Net Sales $753.0 $929.6 $2,127.0 $2,684.6 ====== ======
======== ======== Operating income (loss): ------------------------
Resilient Flooring $12.4 $1.2 $7.0 $8.6 Wood Flooring 11.2 8.5 4.3
23.4 Building Products 57.4 75.0 132.3 200.9 Cabinets (3.0) (1.1)
(10.0) (3.9) Unallocated Corporate (34.0) (1.4) (41.4) (11.6) -----
---- ----- ----- Total Operating Income $44.0 $82.2 $92.2 $217.4
===== ===== ===== ====== Selected Balance Sheet Information
(amounts in millions) (unaudited) September 30, December 31, 2009
2008 ---- ---- Assets: ------- Current assets $1,378.2 $1,261.5
Property, plant and equipment, net 924.8 954.2 Other noncurrent
assets 997.6 1,136.1 ----- ------- Total assets $3,300.6 $3,351.8
======== ======== Liabilities and equity: -----------------------
Current liabilities $390.8 $385.4 Noncurrent liabilities 1,024.5
1,215.1 Equity 1,885.3 1,751.3 ------- ------- Total liabilities
and equity $3,300.6 $3,351.8 ======== ======== Selected Cash Flow
Information (amounts in millions) (unaudited) Nine Months Nine
Months Ended Ended September 30, September 30, 2009 2008 ---- ----
Net earnings $81.5 $106.5 Other adjustments to reconcile net
earnings to net cash provided by operating activities 227.8 131.0
Changes in operating assets and liabilities, net (131.1) (109.3)
------ ------ Net cash provided by operating activities 178.2 128.2
Net cash used for investing activities (11.9) (55.7) Net cash used
for financing activities (15.5) (266.1) Effect of exchange rate
changes on cash and cash equivalents 16.2 (5.7) ---- ---- Net
increase (decrease) in cash and cash equivalents 167.0 (199.3) Cash
and cash equivalents, beginning of period 355.0 514.3 ----- -----
Cash and cash equivalents, end of period $522.0 $315.0 ======
====== Reconciliation to GAAP (unaudited) Three Three Nine Nine
CONSOLIDATED Months Months Months Months Ended Ended Ended Ended
(amounts in millions) Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2009
2008 2009 2008 ----------------- ---- ---- ---- ---- Operating
Income (Loss), Adjusted $78.6 $90.5 $130.3 $231.0 Cost reduction
initiatives expenses 3.0 8.3 6.5 13.7 Chapter 11 related
post-emergence income - - - (1.3) Review of strategic alternatives
- - - 1.2 Accelerated vesting related to change in control 31.6 -
31.6 - ----------------- ----- ----- ----- ------ Operating Income
(Loss), Reported $44.0 $82.2 $92.2 $217.4 ================= =====
===== ===== ====== Three Three Nine Nine RESILIENT FLOORING Months
Months Months Months Ended Ended Ended Ended (amounts in millions)
Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2009 2008 2009 2008
----------------- ---- ---- ---- ---- Operating Income (Loss),
Adjusted $14.2 $9.5 $12.3 $16.9 Cost reduction initiatives expenses
1.8 8.3 5.3 8.3 ----------------- ----- ---- ---- ---- Operating
Income (Loss), Reported $12.4 $1.2 $7.0 $8.6 =================
===== ==== ==== ==== Three Three Nine Nine CABINETS Months Months
Months Months Ended Ended Ended Ended (amounts in millions) Sept.
30, Sept. 30, Sept. 30, Sept. 30, 2009 2008 2009 2008
----------------- ---- ---- ---- ---- Operating Income (Loss),
Adjusted $(1.8) $(1.1) $(8.8) $(3.9) Cost reduction initiatives
expenses 1.2 - 1.2 - ----------------- ----- ----- ------ -----
Operating Income (Loss), Reported $(3.0) $(1.1) $(10.0) $(3.9)
================= ===== ===== ====== ===== UNALLOCATED Three Three
Nine Nine CORPORATE EXPENSE Months Months Months Months Ended Ended
Ended Ended (amounts in millions) Sept. 30, Sept. 30, Sept. 30,
Sept. 30, 2009 2008 2009 2008 ----------------- ---- ---- ---- ----
Operating Income (Loss), Adjusted $(2.4) $(1.4) $(9.8) $(6.3) Cost
reduction initiatives expenses - - - 5.4 Chapter 11 related
post-emergence income - - - (1.3) Review of strategic alternatives
- - - 1.2 Accelerated vesting related to change in control 31.6 -
31.6 - ----------------- ------ ----- ------ ------ Operating
Income (Loss), Reported $(34.0) $(1.4) $(41.4) $(11.6)
================= ====== ===== ====== ====== CONSOLIDATED Three
Months Ended Three Months Ended September 30, 2009 September 30,
2008 Total Per Share Total Per Share ----------------- -----
--------- ----- --------- Operating Income, Adjusted $78.6 $90.5
Other (Expense) Income (4.2) (6.2) ---------------------- ---- ----
Earnings (Loss) Before Taxes, Adjusted 74.4 84.3 Adjusted Tax
(Expense) Benefit @ 42% (31.2) (35.4) -------------------- -----
----- ----- ----- Net Earnings (Loss), Adjusted $43.2 $0.75 $48.9
$0.86 Adjustment Items (34.6) (8.3) Reversal of Adjusted Tax @ 42%
31.2 35.4 Ordinary Tax (15.2) (32.6) Unbenefitted Foreign Losses
(1.1) (3.0) Tax Adjustments (4.9) - IRS Audit on Tax Refund 45.8
(1.3) ----------------------- ----- ----- ----- ----- Earnings
(Loss) from continuing operations, Reported $64.4 $1.12 $39.1 $0.68
======================= ===== ===== ===== ===== Nine Months Ended
Nine Months Ended September 30, 2009 September 30, 2008 Total Per
Share Total Per Share ---------------------- ----- --------- -----
--------- Operating Income, Adjusted $130.3 $231.0 Other (Expense)
Income (11.8) (16.4) ---------------------- ----- ----- Earnings
(Loss) Before Taxes, Adjusted 118.5 214.6 Adjusted Tax (Expense)
Benefit @ 42% (49.8) (90.1) -------------------- ----- ----- -----
----- Net Earnings (Loss), Adjusted $68.7 $1.20 $124.5 $2.19
Adjustment Items (38.1) (13.6) Reversal of Adjusted Tax @ 42% 49.8
90.1 Ordinary Tax (33.9) (81.4) Unbenefitted Foreign Losses (11.2)
(8.6) Tax Adjustments 2.7 - IRS Audit on Tax Refund 43.5 (4.4)
----------------------- ----- ----- ------ ----- Earnings (Loss)
from continuing operations, Reported $81.5 $1.43 $106.6 $1.87
======================= ===== ===== ====== ===== Note: No
adjustments necessary for Wood Flooring or Building Products. Three
Three Nine Nine CASH FLOW Months Months Months Months Ended Ended
Ended Ended (millions) Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2009
2008 2009 2008 -------------- ---- ---- ---- ---- Free Cash Flow
Net Cash From Operations $128 $114 $178 $128 Plus / (minus): Net
Cash from Investing (11) (23) (12) (56) Add back / (subtract):
Emergence related payments - 1 - 4 Divestiture - - (8) -
Acquisitions - - - 1 ------------ ---- --- ---- --- Free Cash Flow
$117 $92 $158 $77 ============== ==== === ==== === DATASOURCE:
Armstrong World Industries, Inc. CONTACT: Beth Riley, , Investors,
+1-717-396-6354, News media, +1-866-321-6677, all of Armstrong
World Industries, Inc. Web Site: http://www.armstrong.com/
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