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
year-over-year sales and adjusted EBITDA growth for the third
quarter of 2021 as the company’s ability to manage inflationary and
supply chain challenges helped offset uneven market conditions.
“As the market continued to recover throughout the
third-quarter, we delivered solid sales growth driven by strong
price realization and the sales benefits of the 2020 acquisitions
we made to expand our Architectural Specialties business,” said Vic
Grizzle, President and CEO of Armstrong World Industries. “Our
employees executed well in the face of supply chain challenges and
inflationary pressures to maintain our best-in-class service
levels. Additionally, in the quarter we continued to advance our
Healthy Spaces and digital growth initiatives, which positions us
to deliver further growth as the pace of the non-residential
construction market recovery accelerates in
2022.”
Third-Quarter Results from Continuing
Operations
(Dollar amounts in millions
except per-share data) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Change |
|
Net sales |
|
$ |
292.2 |
|
|
$ |
246.3 |
|
|
|
18.6 |
% |
Operating income |
|
$ |
72.1 |
|
|
$ |
72.3 |
|
|
|
(0.3 |
)% |
Earnings from continuing
operations |
|
$ |
50.8 |
|
|
$ |
54.2 |
|
|
|
(6.3 |
)% |
Diluted earnings per share |
|
$ |
1.06 |
|
|
$ |
1.13 |
|
|
|
(6.2 |
)% |
Net cash provided by operating
and investing activities |
|
$ |
57.4 |
|
|
$ |
7.2 |
|
|
|
697.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Non-GAAP*
Measures |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
99 |
|
|
$ |
92 |
|
|
|
8 |
% |
Adjusted net income |
|
$ |
56 |
|
|
$ |
51 |
|
|
|
9 |
% |
Adjusted diluted earnings per
share |
|
$ |
1.17 |
|
|
$ |
1.07 |
|
|
|
9 |
% |
Adjusted free cash flow |
|
$ |
58 |
|
|
$ |
46 |
|
|
|
28 |
% |
* The Company uses non-GAAP adjusted measures in
managing the business and believes the adjustments provide
meaningful comparisons of operating performance between periods and
are useful alternative measures of performance. Reconciliations of
the most comparable GAAP measure are found in the tables at the end
of this press release. Non-GAAP figures are rounded to the nearest
million and corresponding percentages are rounded to the nearest
percent based on unrounded figures.
Third-quarter 2021 consolidated net sales
increased 18.6% from prior-year results, driven primarily by
favorable Average Unit Value (“AUV”) of $26 million and incremental
sales from the acquisitions of Turf, Moz and Arktura in 2020 (“2020
Acquisitions”) of $16 million. Sales volumes for both segments
continued to recover compared to prior-year results, although the
resurgence of the pandemic in certain markets and supply chain and
labor disruptions have resulted in project delays.
Operating income was essentially unchanged from
third-quarter 2020 results, as positive AUV in the Mineral Fiber
segment, an increase in WAVE equity earnings, the positive margin
impact of incremental net sales from the 2020 Acquisitions and a
2020 CARES Act Employee Retention Credit (“ERC”) provided
favorability. This favorability was offset by higher SG&A costs
attributable to the 2020 Acquisitions, higher manufacturing costs,
increased incentive and deferred compensation expenses, a
resumption of more normalized discretionary spending compared to
cost curtailments in the prior-year due to COVID-19 uncertainty,
and investments for future growth. The prior-year period benefited
from a gain on the sale of an idled, legacy Mineral Fiber plant in
China. Excluding this gain, third-quarter operating income
increased 10% versus prior-year results.
Third-Quarter Segment Highlights
Mineral Fiber
(Dollar amounts in
millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Change |
|
Net sales |
|
$ |
214.5 |
|
|
$ |
187.3 |
|
|
|
14.5 |
% |
Operating income |
|
$ |
68.5 |
|
|
$ |
58.1 |
|
|
|
17.9 |
% |
Adjusted EBITDA* |
|
$ |
86 |
|
|
$ |
79 |
|
|
|
10 |
% |
Third-quarter 2021 Mineral Fiber net sales
increased 14.5% due to a 14% increase in AUV and a 1% increase in
sales volumes. AUV performance was driven primarily by increases in
like-for-like pricing and favorable channel mix compared to the
third quarter of 2020.
Third-quarter Mineral Fiber operating income
increased 17.9% from prior-year results primarily due to a $20
million benefit from favorable AUV, an $8 million increase in WAVE
equity earnings and a $4 million benefit related to the ERC, which
was partially offset by a $10 million increase in manufacturing
costs, a $4 million increase in incentive and deferred compensation
expenses, higher SG&A expenses attributable to more normalized
discretionary spending and investments in growth initiatives.
Architectural Specialties
(Dollar amounts in
millions) |
|
For the Three Months Ended September 30, |
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Change |
|
Net sales |
|
$ |
77.7 |
|
|
$ |
59.0 |
|
|
|
31.7 |
% |
Operating income |
|
$ |
5.0 |
|
|
$ |
9.1 |
|
|
|
(45.1 |
)% |
Adjusted EBITDA* |
|
$ |
13 |
|
|
$ |
13 |
|
|
|
1 |
% |
Third-quarter 2021 net sales in Architectural
Specialties increased 31.7% from prior-year results, driven by a
$16 million increase from the 2020 Acquisitions and higher organic
sales volumes due to recovering economic activity as COVID-19
impacts decline.
The year-over-year decline in operating income was primarily
driven by an $8 million increase in SG&A expenses related to
the 2020 Acquisitions and the negative margin impact from custom
project delays in an inflationary environment, which were partially
offset by the positive impact of increased sales.
Unallocated Corporate
The Company reported an Unallocated Corporate
operating loss of $1.4 million in the third quarter of 2021
compared to income of $5.1 million in the third quarter of 2020,
driven primarily by the $7 million gain reported in the prior-year
period from the sale of an idled, legacy Mineral Fiber plant in
China.
Current 2021 Outlook
“Although the recovery in our markets was uneven
throughout the quarter, it is improving, and we see many strong
indicators of future growth. We remain focused on our long-term
strategic growth priorities by investing in our Healthy Spaces and
digital initiatives that are driving higher SG&A and capital
investments. In addition, with our robust cash flow generation, we
remain confident in our ability to execute against all our capital
allocation priorities,” said Brian MacNeal, AWI CFO. “In light of
third-quarter results, we are narrowing our full year guidance and
maintaining our prior mid-point guidance. We now expect increased
net sales of 17% to 18% and adjusted EBITDA of 13% to 15% versus
the prior year.”
|
|
For the year ending December 31, 2021 |
|
(Dollar amounts in millions
except per-share data) |
|
Prior Guidance |
|
|
Current Guidance |
|
Net Sales |
|
$ |
1,085 |
|
|
to |
|
$ |
1,105 |
|
|
$ |
1,095 |
|
|
to |
|
$ |
1,105 |
|
Adjusted EBITDA* |
|
$ |
370 |
|
|
to |
|
$ |
380 |
|
|
$ |
372 |
|
|
to |
|
$ |
378 |
|
Adjusted diluted earnings per
share* |
|
$ |
4.20 |
|
|
to |
|
$ |
4.40 |
|
|
$ |
4.25 |
|
|
to |
|
$ |
4.35 |
|
Adjusted free cash flow* |
|
$ |
195 |
|
|
to |
|
$ |
210 |
|
|
$ |
198 |
|
|
to |
|
$ |
208 |
|
Earnings Webcast
Management will host a live internet broadcast
beginning at 10:00 a.m. E.T. today, to discuss third-quarter 2021
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 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, the impacts of COVID-19 on our business,
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” sections of our reports on
Form 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.
COVID-19
The impact of the COVID-19 pandemic on our
future consolidated results of operations remains uncertain. In
2020, we experienced a significant decrease in customer demand
throughout our business during the second through fourth quarters
due to COVID-19. Specifically, we noted delays in construction
driven by temporary closures of non-essential businesses, with the
most significant impacts in the major metropolitan areas impacted
by COVID-19. In response to COVID-19, we temporarily reduced
capital expenditures and discretionary spending including
compensation, travel and marketing expenses in 2020. Customer
demand continued to improve in the first nine months of 2021 but
remained lower than pre-pandemic levels. We continue to monitor and
manage the impact of COVID-19 and its potential impacts to our
business, most notably global supply chain and labor disruptions,
which have contributed to raw material and transportation cost
inflation, in addition to construction activity delays.
About Armstrong and Additional
Information
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 $937 million in revenue in 2020, AWI has
approximately 2,800 employees and a manufacturing network of 15
facilities, plus six facilities dedicated to its WAVE joint
venture.
More details on the Company’s performance can be
found in its report on Form 10-Q for the quarter ended
September 30, 2021 that the Company expects to file with the
SEC today.
Reported Financial Highlights
FINANCIAL HIGHLIGHTSArmstrong World Industries,
Inc. and Subsidiaries(Amounts in millions, except for per-share
amounts)(Unaudited)
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net sales |
|
$ |
292.2 |
|
|
$ |
246.3 |
|
|
$ |
824.1 |
|
|
$ |
698.2 |
|
Cost of goods sold |
|
|
181.5 |
|
|
|
155.1 |
|
|
|
521.0 |
|
|
|
447.9 |
|
Gross profit |
|
|
110.7 |
|
|
|
91.2 |
|
|
|
303.1 |
|
|
|
250.3 |
|
Selling, general and
administrative expenses |
|
|
62.3 |
|
|
|
41.0 |
|
|
|
176.5 |
|
|
|
108.8 |
|
Change in fair value of
contingent consideration |
|
|
(0.3 |
) |
|
|
- |
|
|
|
(9.8 |
) |
|
|
- |
|
(Gain) related to sale of fixed
and intangible assets |
|
|
- |
|
|
|
(6.9 |
) |
|
|
- |
|
|
|
(21.0 |
) |
Equity (earnings) from joint
venture |
|
|
(23.4 |
) |
|
|
(15.2 |
) |
|
|
(68.1 |
) |
|
|
(48.2 |
) |
Operating income |
|
|
72.1 |
|
|
|
72.3 |
|
|
|
204.5 |
|
|
|
210.7 |
|
Interest expense |
|
|
6.1 |
|
|
|
6.1 |
|
|
|
17.4 |
|
|
|
18.7 |
|
Other non-operating (income)
expense, net |
|
|
(1.4 |
) |
|
|
(3.2 |
) |
|
|
(4.3 |
) |
|
|
361.8 |
|
Earnings (loss) from continuing
operations before income taxes |
|
|
67.4 |
|
|
|
69.4 |
|
|
|
191.4 |
|
|
|
(169.8 |
) |
Income tax expense (benefit) |
|
|
16.6 |
|
|
|
15.2 |
|
|
|
48.0 |
|
|
|
(50.9 |
) |
Earnings (loss) from continuing
operations |
|
|
50.8 |
|
|
|
54.2 |
|
|
|
143.4 |
|
|
|
(118.9 |
) |
Net gain (loss) from discontinued
operations |
|
|
- |
|
|
|
(0.2 |
) |
|
|
(2.1 |
) |
|
|
(3.0 |
) |
Net earnings (loss) |
|
$ |
50.8 |
|
|
$ |
54.0 |
|
|
$ |
141.3 |
|
|
$ |
(121.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
of common stock, continuing operations |
|
$ |
1.06 |
|
|
$ |
1.13 |
|
|
$ |
2.98 |
|
|
$ |
(2.48 |
) |
Diluted (loss) per share of
common stock, discontinued operations |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
(0.04 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share of
common stock |
|
$ |
1.06 |
|
|
$ |
1.13 |
|
|
$ |
2.94 |
|
|
$ |
(2.54 |
) |
Average number of diluted common
shares outstanding |
|
|
47.8 |
|
|
|
48.0 |
|
|
|
48.0 |
|
|
|
47.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT RESULTSArmstrong World Industries, Inc.
and Subsidiaries(Amounts in millions)(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2021 |
|
|
|
|
2020 |
|
|
2021 |
|
|
|
|
2020 |
|
Net Sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
214.5 |
|
|
|
|
$ |
187.3 |
|
|
$ |
611.3 |
|
|
|
|
$ |
542.9 |
|
Architectural Specialties |
|
|
77.7 |
|
|
|
|
|
59.0 |
|
|
|
212.8 |
|
|
|
|
|
155.3 |
|
Total net sales |
|
$ |
292.2 |
|
|
|
|
$ |
246.3 |
|
|
$ |
824.1 |
|
|
|
|
$ |
698.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2021 |
|
|
|
|
2020 |
|
|
2021 |
|
|
|
|
2020 |
|
Segment operating income
(loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mineral Fiber |
|
$ |
68.5 |
|
|
|
|
$ |
58.1 |
|
|
$ |
201.2 |
|
|
|
|
$ |
173.7 |
|
Architectural Specialties |
|
|
5.0 |
|
|
|
|
|
9.1 |
|
|
|
7.5 |
|
|
|
|
|
20.9 |
|
Unallocated Corporate |
|
|
(1.4 |
) |
|
|
|
|
5.1 |
|
|
|
(4.2 |
) |
|
|
|
|
16.1 |
|
Total consolidated operating
income |
|
$ |
72.1 |
|
|
|
|
$ |
72.3 |
|
|
$ |
204.5 |
|
|
|
|
$ |
210.7 |
|
Selected Balance Sheet Information(Amounts in
millions)
|
|
(Unaudited)September 30, 2021 |
|
|
December 31, 2020 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
$ |
310.3 |
|
|
$ |
311.8 |
|
Property, plant and equipment,
net |
|
|
527.3 |
|
|
|
529.9 |
|
Other noncurrent assets |
|
|
867.3 |
|
|
|
876.8 |
|
Total assets |
|
$ |
1,704.9 |
|
|
$ |
1,718.5 |
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
$ |
194.3 |
|
|
$ |
172.3 |
|
Noncurrent liabilities |
|
|
988.4 |
|
|
|
1,095.3 |
|
Equity |
|
|
522.2 |
|
|
|
450.9 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,704.9 |
|
|
$ |
1,718.5 |
|
Selected Cash Flow Information(Amounts in
millions)(Unaudited)
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
Net earnings (loss) |
|
$ |
141.3 |
|
|
$ |
(121.9 |
) |
Other adjustments to reconcile
net earnings (loss) to net cash provided by operating
activities |
|
|
12.9 |
|
|
|
284.9 |
|
Changes in operating assets and
liabilities, net |
|
|
(16.3 |
) |
|
|
(14.6 |
) |
Net cash provided by operating
activities |
|
|
137.9 |
|
|
|
148.4 |
|
Net cash (used for) investing
activities |
|
|
(5.4 |
) |
|
|
(52.2 |
) |
Net cash (used for) financing
activities |
|
|
(175.1 |
) |
|
|
(2.5 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
|
— |
|
|
|
(0.2 |
) |
Net (decrease) increase in cash
and cash equivalents |
|
|
(42.6 |
) |
|
|
93.5 |
|
Cash and cash equivalents at
beginning of year |
|
|
136.9 |
|
|
|
45.3 |
|
Cash and cash equivalents at end
of period |
|
$ |
94.3 |
|
|
$ |
138.8 |
|
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 including adjusted
net sales, adjusted EBITDA, adjusted diluted earnings per share
(EPS) and adjusted free cash flow. Investors should not consider
non-GAAP measures as a substitute for GAAP measures. The Company
excludes certain acquisition related expenses (i.e. – changes in
the fair value of contingent consideration, deferred compensation
accruals, impact of adjustments related to the fair value of
inventory and deferred revenue) for recent acquisitions. The
deferred compensation accruals are for cash and stock awards that
will be recorded over the vesting period, as such payments are
subject to the sellers’ and employees’ continued employment with
the Company. The Company excludes all acquisition-related
intangible amortization from adjusted earnings from continuing
operations and in calculations of adjusted diluted earnings per
share. Examples of other excluded items include plant closures,
restructuring charges and related costs, impairments, separation
costs, environmental site expenses and related insurance
recoveries, endowment level charitable contributions, and certain
other gains and losses. The Company also excludes income/expense
from its U.S. Retirement Income Plan (“RIP”) in the non-GAAP
results as it represents the actuarial net periodic benefit
credit/cost recorded. For all periods presented, the Company was
not required and did not make cash contributions to the RIP based
on guidelines established by the Pension Benefit Guaranty
Corporation, nor does the Company expect to make cash contributions
to the plan in 2021. 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 investments
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. The Company also uses adjusted EBITDA and
adjusted free cash flow as factors in determining at-risk
compensation for senior management. These non-GAAP measures may not
be defined and calculated the same as similar measures used by
other companies. 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. Non-GAAP figures are rounded to the nearest million
and corresponding percentages are rounded to the nearest percent
based on unrounded figures.
Consolidated Results
from Continuing Operations – Adjusted EBITDA
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Earnings (Loss) from
continuing operations, Reported |
|
$ |
51 |
|
|
$ |
54 |
|
|
$ |
143 |
|
|
$ |
(119 |
) |
Add/(Less): Income tax expense (benefit), reported |
|
|
17 |
|
|
|
15 |
|
|
|
48 |
|
|
|
(51 |
) |
Earnings (Loss) before
tax, Reported |
|
$ |
67 |
|
|
$ |
69 |
|
|
$ |
191 |
|
|
$ |
(170 |
) |
Add: Interest/other income and expense, net |
|
|
5 |
|
|
|
3 |
|
|
|
13 |
|
|
|
381 |
|
Operating Income,
Reported |
|
$ |
72 |
|
|
$ |
72 |
|
|
$ |
205 |
|
|
$ |
211 |
|
Add: RIP expense (1) |
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
Add: Acquisition-related impacts (2) |
|
|
3 |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Add: Net environmental expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
(Less): Gain on sale of idled China plant facility |
|
|
- |
|
|
|
(7 |
) |
|
|
- |
|
|
|
(21 |
) |
Operating Income,
Adjusted |
|
$ |
76 |
|
|
$ |
67 |
|
|
$ |
210 |
|
|
$ |
195 |
|
Add: Depreciation |
|
|
16 |
|
|
|
19 |
|
|
|
46 |
|
|
|
47 |
|
Add: Amortization |
|
|
7 |
|
|
|
6 |
|
|
|
28 |
|
|
|
15 |
|
Adjusted
EBITDA |
|
$ |
99 |
|
|
$ |
92 |
|
|
$ |
284 |
|
|
$ |
257 |
|
(1) RIP expense represents only the plan service
cost that is recorded within Operating Income. For all periods
presented, we were not required to and did not make cash
contributions to our RIP.(2) Represents the impact of
acquisition-related adjustments for the fair value of acquired
inventory and deferred revenue, changes in fair value of contingent
consideration and deferred compensation and restricted stock
expenses.
Mineral Fiber
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Operating Income,
Reported |
|
$ |
69 |
|
|
$ |
58 |
|
|
$ |
201 |
|
|
$ |
174 |
|
Add: Net environmental expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Operating Income,
Adjusted |
|
$ |
69 |
|
|
$ |
58 |
|
|
$ |
201 |
|
|
$ |
175 |
|
Add: D&A |
|
|
18 |
|
|
|
20 |
|
|
|
53 |
|
|
|
54 |
|
Adjusted
EBITDA |
|
$ |
86 |
|
|
$ |
79 |
|
|
$ |
254 |
|
|
$ |
228 |
|
Architectural Specialties
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Operating Income,
Reported |
|
$ |
5 |
|
|
$ |
9 |
|
|
$ |
8 |
|
|
$ |
21 |
|
Add: Acquisition-related impacts (1) |
|
|
3 |
|
|
|
- |
|
|
|
1 |
|
|
|
- |
|
Operating Income,
Adjusted |
|
$ |
8 |
|
|
$ |
9 |
|
|
$ |
9 |
|
|
$ |
21 |
|
Add: D&A |
|
|
5 |
|
|
|
4 |
|
|
|
21 |
|
|
|
8 |
|
Adjusted
EBITDA |
|
$ |
13 |
|
|
$ |
13 |
|
|
$ |
29 |
|
|
$ |
29 |
|
(1) Represents the impact of acquisition-related
adjustments for the fair value of acquired inventory and deferred
revenue, changes in fair value of contingent consideration and
deferred compensation and restricted stock expenses.
Unallocated Corporate
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Operating (Loss) Income,
Reported |
|
$ |
(1 |
) |
|
$ |
5 |
|
|
$ |
(4 |
) |
|
$ |
16 |
|
Add: RIP expense (1) |
|
|
1 |
|
|
|
1 |
|
|
|
4 |
|
|
|
4 |
|
(Less): Gain on sale of idled China plant facility |
|
- |
|
|
|
(7 |
) |
|
- |
|
|
|
(21 |
) |
Operating (Loss), Adjusted |
|
- |
|
|
- |
|
|
|
(1 |
) |
|
|
(1 |
) |
Add: D&A |
|
- |
|
|
- |
|
|
|
1 |
|
|
|
1 |
|
Adjusted
EBITDA |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
(1) RIP expense represents only the plan service
cost that is recorded within Operating Income. For all periods
presented, we were not required to and did not make cash
contributions to our RIP.
Adjusted Free Cash Flow
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Net cash provided by
operating activities |
|
$ |
56 |
|
|
$ |
70 |
|
|
$ |
138 |
|
|
$ |
148 |
|
Net cash provided by
(used for) investing activities |
|
|
1 |
|
|
|
(63 |
) |
|
|
(5 |
) |
|
|
(52 |
) |
Net cash provided by
operating and investing activities |
|
$ |
57 |
|
|
$ |
7 |
|
|
$ |
133 |
|
|
$ |
96 |
|
Add: Acquisitions, net |
|
|
1 |
|
|
|
74 |
|
|
|
1 |
|
|
|
74 |
|
(Less)/Add: Payments related to sale of international, net (1) |
|
|
- |
|
|
|
(20 |
) |
|
|
12 |
|
|
|
(21 |
) |
Add: Environmental payments, net |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
Add: Net Payments to WAVE for Portion of Proceeds from Sale of
International Business |
|
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
13 |
|
(Less): Proceeds from sale of Idled China Plant facility |
|
|
- |
|
|
|
(19 |
) |
|
|
- |
|
|
|
(19 |
) |
Adjusted Free Cash
Flow |
|
$ |
58 |
|
|
$ |
46 |
|
|
$ |
145 |
|
|
$ |
145 |
|
(1) Amounts for the three and nine months ended
September 30, 2020 include related income tax impacts.
Consolidated Results from Continuing Operations –
Adjusted Diluted Earnings Per Share
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
|
Total |
|
|
Per DilutedShare |
|
|
Total |
|
|
Per DilutedShare |
|
|
Total |
|
|
Per DilutedShare |
|
|
Total |
|
|
Per DilutedShare |
|
Earnings (Loss) from
continuing operations, Reported |
|
$ |
51 |
|
|
$ |
1.06 |
|
|
|
$ |
54 |
|
|
$ |
1.13 |
|
|
|
$ |
143 |
|
|
$ |
2.98 |
|
|
|
$ |
(119 |
) |
|
$ |
(2.48) |
|
|
Add/(Less): Income tax expense
(benefit), reported |
|
|
17 |
|
|
|
|
|
|
$ |
15 |
|
|
|
|
|
|
|
48 |
|
|
|
|
|
|
|
(51 |
) |
|
|
|
|
Earnings (Loss) from
continuing operations before income taxes, Reported |
|
|
67 |
|
|
|
|
|
|
$ |
69 |
|
|
|
|
|
|
$ |
191 |
|
|
|
|
|
|
$ |
(170 |
) |
|
|
|
|
Add: RIP expense (1) |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
370 |
|
|
|
|
|
Add: Acquisition-related impacts
(2) |
|
|
3 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
Add: Acquisition related
amortization (3) |
|
|
4 |
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
18 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
(Less)/Add: Net environmental
expenses |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
1 |
|
|
|
|
|
(Less): Gain on sale of idled
China plant facility |
|
|
- |
|
|
|
|
|
|
|
(7 |
) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
(21 |
) |
|
|
|
|
Add: Accelerated Depreciation
from closed facility |
|
- |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
3 |
|
|
|
|
|
Adjusted earnings from
continuing operations before income taxes |
|
$ |
74 |
|
|
|
|
|
|
$ |
68 |
|
|
|
|
|
|
$ |
210 |
|
|
|
|
|
|
$ |
188 |
|
|
|
|
|
(Less): Adjusted income tax
expense (4) |
|
|
(18 |
) |
|
|
|
|
|
|
(17 |
) |
|
|
|
|
|
|
(53 |
) |
|
|
|
|
|
|
(46 |
) |
|
|
|
|
Adjusted net
income |
|
$ |
56 |
|
|
$ |
1.17 |
|
|
|
$ |
51 |
|
|
$ |
1.07 |
|
|
|
$ |
157 |
|
|
$ |
3.28 |
|
|
|
$ |
142 |
|
|
$ |
2.93 |
|
|
Adjusted EPS change versus Prior
Year |
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares Outstanding
(5) |
|
47.8 |
|
|
|
48.0 |
|
|
|
48.0 |
|
|
|
48.3 |
|
|
Adjusted Tax Rate (6) |
|
25 |
% |
|
|
25 |
% |
|
|
25 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) RIP expense represents the entire actuarial
net periodic pension expense (credit) recorded as a component of
earnings from continuing operations. For all periods presented, we
were not required to and did not make cash contributions to our
RIP.(2) Represents the impact of acquisition-related adjustments
for the fair value of acquired inventory and deferred revenue,
changes in fair value of contingent consideration and deferred
compensation accruals.(3) Represents the intangible amortization
related to acquired entities, including customer relationships,
developed technology, software, trademarks and brand names,
non-compete agreements and other intangibles.(4) Adjusted income
tax expense is calculated using the adjusted tax rate multiplied by
the adjusted earnings from continuing operations before income
taxes.(5) Dilutive shares are as-reported. 2020 dilutive shares
outstanding for the nine months ended September 30, 2020 include
anti-dilutive common stock equivalents which are excluded from U.S.
GAAP Accounting.(6) The tax rate for the three and nine months
ended September 30, 2020 excludes the first quarter 2020 pension
annuitization and the gain on the sale of our idled China
facility.
Adjusted EBITDA Guidance
|
|
For the Year Ending December 31, 2021 |
|
|
|
Low |
|
|
High |
|
Net income |
|
$ |
189 |
|
to |
$ |
194 |
|
Add: Interest expense |
|
|
23 |
|
|
|
23 |
|
(Less): RIP credit (1) |
|
|
(4 |
) |
|
|
(4 |
) |
Add: Income Tax Expense |
|
|
62 |
|
|
|
63 |
|
Operating
income |
|
$ |
270 |
|
to |
$ |
277 |
|
Add: RIP expense (2) |
|
|
4 |
|
|
|
4 |
|
Add: Depreciation |
|
|
63 |
|
|
|
63 |
|
Add: Amortization |
|
|
35 |
|
|
|
35 |
|
Adjusted
EBITDA |
|
$ |
372 |
|
to |
$ |
378 |
|
(1) RIP credit represents the actuarial net
periodic benefit expected to be recorded as a component of other
non-operating income. We do not expect to and do not plan to make
cash contributions to our RIP in 2021 based on guidelines
established by the Pension Benefit Guaranty Corporation.(2) RIP
expense represents only the plan service cost that is recorded
within Operating Income. For all periods presented, we were not
required and did not make cash contributions to our RIP.
Adjusted Diluted Earnings Per Share
(EPS) Guidance
|
|
For the Year Ending December 31, 2021 |
|
|
|
Low |
|
|
Per DilutedShare(1) |
|
|
High |
|
|
Per DilutedShare(1) |
|
Net income |
|
$ |
189 |
|
|
$ |
3.94 |
|
to |
$ |
194 |
|
|
$ |
4.04 |
|
Add: Interest expense |
|
|
23 |
|
|
|
|
|
|
|
23 |
|
|
|
|
|
(Less): RIP Credit (2) |
|
|
(4 |
) |
|
|
|
|
|
|
(4 |
) |
|
|
|
|
Add: Income tax Expense |
|
|
62 |
|
|
|
|
|
|
|
63 |
|
|
|
|
|
Operating
income |
|
$ |
270 |
|
|
|
|
|
to |
$ |
277 |
|
|
|
|
|
Add: RIP expense (3) |
|
|
4 |
|
|
|
|
|
|
|
4 |
|
|
|
|
|
(Less): Interest expense |
|
|
(23 |
) |
|
|
|
|
|
|
(23 |
) |
|
|
|
|
Add: Acquisition related amortization (4) |
|
|
21 |
|
|
|
|
|
|
|
21 |
|
|
|
|
|
Adjusted earnings before
income taxes |
|
$ |
272 |
|
|
|
|
|
to |
$ |
279 |
|
|
|
|
|
(Less): Income tax expense (5) |
|
|
(68 |
) |
|
|
|
|
|
|
(70 |
) |
|
|
|
|
Adjusted net
income |
|
$ |
204 |
|
|
$ |
4.25 |
|
to |
$ |
209 |
|
|
$ |
4.35 |
|
(1) Adjusted EPS guidance for 2021 is calculated
based on an adjusted effective tax rate of 25% and based on ~48
million of diluted shares outstanding.(2) RIP 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 RIP based on guidelines established by the
Pension Benefit Guaranty Corporation.(3) RIP expense represents
only the plan 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
RIP based on guidelines established by the Pension Benefit Guaranty
Corporation.(4) Represents the intangible amortization related to
acquired entities, including customer relationships, developed
technology, software, trademarks and brand names, non-compete
agreements and other intangibles.(5) Adjusted income tax expense is
based on adjusted earnings before income tax.
Adjusted Free Cash Flow
Guidance
|
|
For the Year Ending December 31, 2021 |
|
|
|
Low |
|
|
High |
|
Net cash provided by
operating activities |
|
$ |
203 |
|
to |
$ |
213 |
|
Add: Return of investment from joint venture |
|
|
75 |
|
|
|
80 |
|
Adjusted net cash
provided by operating activities |
|
$ |
278 |
|
to |
$ |
293 |
|
Less: Capital expenditures |
|
|
(80 |
) |
|
|
(85 |
) |
Adjusted Free Cash
Flow |
|
$ |
198 |
|
to |
$ |
208 |
|
Contacts
Investors: Theresa Womble, tlwomble@armstrongceilings.com or (717) 396-6354
Media: Jennifer Johnson, jenniferjohnson@armstrongceilings.com or (866) 321-6677
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