false 0000007431 0000007431 2020-07-28 2020-07-28

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 28, 2020

 

 

ARMSTRONG WORLD INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

 

 

Pennsylvania

 

1-2116

 

23-0366390

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

 

 

 

 

2500 Columbia Avenue P.O. Box 3001

Lancaster, Pennsylvania

 

17603

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (717) 397-0611

NA

(Former name or former address if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

AWI

 

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

 


 

Section 2 - Financial Information

Item 2.02 Results of Operations and Financial Condition.

On July 28, 2020, Armstrong World Industries, Inc. (the Company) issued a press release announcing its second quarter 2020 consolidated financial results and earnings outlook for fiscal year 2020. The full text of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the Act), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Section 7 – Regulation FD

Item 7.01 Regulation FD Disclosure.

On July 22, 2020, the Company’s Board of Directors approved an additional $500.0 million authorization to repurchase shares under the Company’s existing share repurchase program, increasing the total authorized amount under the program to $1.2 billion, and extended the program through December 31, 2023. Pursuant to the program, the Company may purchase shares of its common stock at times and in such amounts as management deems appropriate, subject to market and business conditions, regulatory requirements and other factors. Repurchases under the program may be made through open market, block and privately-negotiated transactions, including Rule 10b5-1 plans. The expanded program, unless otherwise determined by the Board of Directors, does not obligate the Company to purchase any particular amounts of common stock and may be suspended or discontinued at any time without notice.

On July 28, 2020, the Company issued a press release announcing that it will report its second quarter 2020 consolidated financial results via a webcast and conference call on Tuesday, July 28, 2020 at 11:00 a.m. Eastern Time which can be accessed through the Investors section of the Companys website, www.armstrongceilings.com. During this report, the Company will reference a slide presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated herein by reference.

The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, is being furnished herewith and shall not be deemed filed for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Caution Concerning Forward-Looking Statements

This Current Report on Form 8-K includes certain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Such forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations and intentions of the Company, including the consummation of the Sale, and other statements that are not historical facts. These statements are based on the current expectations and beliefs of the Company’s management, and are subject to uncertainty and changes in circumstances. The Company cautions readers that any forward-looking information is not a guarantee of future performance and that actual results may vary materially from those expressed or implied by the statements herein, due to changes in economic, business, competitive, technological, strategic or other regulatory factors, as well as factors affecting the operation of the business of the Company. More detailed information about certain of these and other factors may be found in filings by the Company with the U.S. Securities and Exchange Commission, including its most recent Annual Report on Form 10-K in the sections entitled “Caution Concerning Forward-Looking Statements” and “Risk Factors”, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Various factors could cause actual results to differ from those set forth in the forward-looking statements including, without limitation, the risk that the anticipated benefits from the Sale may not be fully realized or may take longer to realize than expected. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter the

2


 

forward-looking statements contained in this document, whether as a result of new information, future events or otherwise.

Section 8 – Other Events

Item 8.01 Other Events.

On July 28, 2020, the Company issued a press release announcing that it has acquired Turf Design, Inc., a Chicago-based commercial interiors design house and maker of custom felt ceilings and wall solutions. A copy of the press release is attached hereto as Exhibit 99.3 and is hereby incorporated by reference herein.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

 

No. 99.1

 

Press Release of Armstrong World Industries, Inc. dated July 28, 2020

 

 

No. 99.2

 

Earnings Call Presentation Second Quarter 2020 dated July 28, 2020

 

 

 

No. 99.3

 

Press Release of Armstrong World Industries, Inc. dated July 28, 2020

 

 

 

No. 104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

3


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ARMSTRONG WORLD INDUSTRIES, INC.

 

 

By:

 

/s/ Mark A. Hershey

 

 

Mark A. Hershey

 

 

Senior Vice President, General Counsel, Secretary and Chief Compliance Officer

Date: July 28, 2020

 

 

4

Exhibit 99.1

Armstrong World Industries Reports

Second Quarter 2020 Results

Key Highlights

 

Net sales of $203.2 million, down 25% versus the prior year quarter

 

Operating income of $62.4 million, down 28% versus the prior year quarter

 

Adjusted EBITDA down 36% versus the prior year quarter

 

FY 2020 Outlook: Revenue down 10%-18% and adjusted Free Cash Flow margin 22%-25%

 

Acquired Turf Design, the leading manufacturer of felt ceilings, walls, and barrier solutions

LANCASTER, Pa., July 28, 2020 -- Armstrong World Industries, Inc. (NYSE:AWI), a leader in the design, innovation and manufacture of commercial and residential ceiling, wall and suspension system solutions, today reported financial results for the second quarter of 2020.

Second Quarter Results from Continuing Operations

 

(Dollar amounts in millions except per-share data)

 

For the Three Months Ended June 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

Net sales

 

$

203.2

 

 

$

272.0

 

 

 

(25.3

)%

Operating income

 

$

62.4

 

 

$

87.2

 

 

 

(28.4

)%

Earnings from continuing operations

 

$

49.5

 

 

$

63.7

 

 

 

(22.3

)%

Diluted earnings per share

 

$

1.03

 

 

$

1.28

 

 

 

(19.5

)%

 

Net sales decreased compared to the prior year quarter, driven by lower volumes in both the Mineral Fiber and Architectural Specialties segments as a result of lower market demand due to COVID-19, as well as unfavorable Mineral Fiber AUV. The unfavorable AUV was driven by mix primarily due to regional weakness in major metropolitan areas impacted by COVID-19. Like for like price was positive in the quarter.

 

Operating income decreased from the prior year quarter, driven primarily by lower volume in the Mineral Fiber segment and lower earnings from our WAVE joint venture, partially offset by lower SG&A expenses and improved manufacturing productivity. The second quarter of 2020 also benefitted from a $14 million gain on the sale of our idled mineral fiber plant in China, which was reported as a component of our Unallocated Corporate segment.


“The second quarter of 2020 was unprecedented in many ways, and created numerous challenges for our teams and partners. I am pleased that the Armstrong team found ways to operate safely, prioritize the needs of our customers, and quickly pivot our focus to the products and solutions that will be needed as the economy reopens. We are seeing sequential improvement in the quarter and are focused on a future that will demand safer interior environments in schools, offices, healthcare facilities and other spaces,” said Vic Grizzle, President and CEO of AWI. “I’m also very pleased to announce our acquisition of Chicago-based Turf Design. Turf is the leader in the fast growing specialty category of felt ceilings, walls and screening systems. This is an exciting acquisition for AWI, which further strengthens our leading position in specialty ceiling and wall solutions, and enhances our design and go-to-market capabilities and capacities. Lastly, in a demonstration of confidence in our continued cash flow generation, our Board of Directors has authorized an increase in our share repurchase program from $700 million to $1.2 billion and extended the term until 2023.

 

Additional (non-GAAP*) Financial Metrics from Continuing Operations

 

(Dollar amounts in millions except per-share data)

 

For the Three Months Ended June 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

Adjusted EBITDA

 

$

69

 

 

$

108

 

 

 

(36.3

)%

Adjusted net income

 

$

36

 

 

$

63

 

 

 

(42.7

)%

Adjusted diluted earnings per share

 

$

0.75

 

 

$

1.27

 

 

 

(40.6

)%

Adjusted free cash flow

 

$

63

 

 

$

55

 

 

 

14.6

%

 

* The Company uses the above non-GAAP adjusted measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods.  The Company also believes that the adjustments help users of our financial information understand the effect of those adjusted items on our selected reported results and provide useful alternative measurements of performance.  See Supplemental Reconciliations of GAAP to non-GAAP results (below) for a breakdown of the adjustments and a reconciliation of the selected reported results to these non-GAAP measures.

 

(Dollar amounts in millions)

 

For the Three Months Ended June 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Fiber

 

$

62

 

 

$

96

 

 

 

(34.8

)%

Architectural Specialties

 

 

6

 

 

 

12

 

 

 

(47.9

)%

Consolidated Adjusted EBITDA

 

$

69

 

 

$

108

 

 

 

(36.3

)%

Consolidated adjusted EBITDA declined 36% in the second quarter when compared to the same prior year period, driven primarily by lower volumes, partially offset by lower SG&A expenses and improved manufacturing productivity.

Second Quarter Segment Highlights

 

Mineral Fiber

(Dollar amounts in millions)

 

For the Three Months Ended June 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

Net sales (as reported)

 

$

157.9

 

 

$

214.1

 

 

 

(26.2

)%

Operating income (as reported)

 

$

45.6

 

 

$

79.4

 

 

 

(42.6

)%

Adjusted EBITDA

 

$

62

 

 

$

96

 

 

 

(34.8

)%

2

 


Mineral Fiber net sales decreased due to lower volume and unfavorable AUV. The unfavorable AUV was driven by mix due primarily to regional weakness in major metropolitan areas impacted by COVID-19.  Like for like price was positive in the quarter.

 

Operating income decreased in the second quarter primarily due to the negative impact of lower volumes, lower WAVE earnings and the impact of unfavorable AUV, partially offset by improved manufacturing productivity, higher Transition Service Agreement cost reimbursements, and a reduction in incentive compensation expenses.

 

Architectural Specialties

(Dollar amounts in millions)

 

For the Three Months Ended June 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

Net sales (as reported)

 

$

45.3

 

 

$

57.9

 

 

 

(21.8

)%

Operating income (as reported)

 

$

4.3

 

 

$

9.5

 

 

 

(54.7

)%

Adjusted EBITDA

 

$

6

 

 

$

12

 

 

 

(47.9

)%

 

Net sales in Architectural Specialties declined due to a reduction in demand across almost all product categories and geographies as a result of the COVID-19 pandemic.

 

Operating income decreased due to the negative impact of lower sales volume, as well as additional amortization expense related to acquisitions made in 2019.

 

Unallocated Corporate

 

Unallocated corporate income of $13 million compared to $2 million of expense in the prior year quarter, primarily due to the $14 million gain on the sale of our idled mineral fiber plant in China.

 

Year to Date Results from Continuing Operations

 

(Dollar amounts in millions)

 

For the Six Months Ended June 30,

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Change

 

Net sales (as reported)

 

$

451.9

 

 

$

514.1

 

 

 

(12.1

)%

Operating income (as reported)

 

$

138.4

 

 

$

141.9

 

 

 

(2.5

)%

Adjusted EBITDA

 

$

166

 

 

$

200

 

 

 

(17.3

)%

 

Net sales decreased driven mainly by lower volumes in both the Mineral Fiber and Architectural Specialties segments and unfavorable AUV in the Mineral Fiber segment.

 

Operating income decreased from the prior year period, primarily due to decreased sales as a result of the COVID-19 pandemic, partially offset by the gain on sale of the idled China plant, lower SG&A expenses and improved manufacturing productivity.

 

 

 

3

 


Market and 2020 Outlook

“Market conditions have been improving since April as more cities and states reopen construction sites.  However, we continue to see variability in regional demand and, accordingly, have decided not to reinitiate our customary financial guidance for 2020 at this time.  As we currently outlook the remainder of the year, assuming sequential market improvement and no second wave of market shutdowns, we expect sales for the full year to be down 10%-18% and adjusted EBITDA margins to be greater than 35%.  We also continue to expect to generate a free cash flow margin of 25%,” said Brian MacNeal, CFO of AWI. “Our balance sheet, liquidity, and ability to generate cash remain strong, and we are keeping a close eye on key economic indicators to help gauge the duration and severity of COVID-19’s impact on the economy.”

Earnings Webcast

Management will host a live internet broadcast beginning at 11:00 a.m. eastern time today, to discuss second quarter 2020 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 June 30, 2020 that the Company expects to file with the SEC today.

4

 


Armstrong World Industries, Inc. (AWI) is a leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions in the Americas. With over $1 billion in revenue in 2019, AWI has approximately 2,500 employees and a manufacturing network of 13 facilities, plus five facilities dedicated to its WAVE joint venture.

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.

 

 

 

 

 

 

5

 


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 June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

 

$

203.2

 

 

$

272.0

 

 

$

451.9

 

 

$

514.1

 

Cost of goods sold

 

 

 

135.4

 

 

 

168.6

 

 

 

292.8

 

 

 

319.3

 

Gross profit

 

 

 

67.8

 

 

 

103.4

 

 

 

159.1

 

 

 

194.8

 

Selling, general and administrative expenses

 

 

 

33.0

 

 

 

37.4

 

 

 

67.8

 

 

 

93.0

 

Gain on sale of fixed and intangible assets

 

 

 

(14.1

)

 

 

-

 

 

 

(14.1

)

 

 

-

 

Equity earnings from joint venture

 

 

 

(13.5

)

 

 

(21.2

)

 

 

(33.0

)

 

 

(40.1

)

Operating income

 

 

 

62.4

 

 

 

87.2

 

 

 

138.4

 

 

 

141.9

 

Interest expense

 

 

 

5.9

 

 

 

9.5

 

 

 

12.6

 

 

 

19.9

 

Other non-operating (income) expense, net

 

 

 

(4.4

)

 

 

(5.4

)

 

 

365.0

 

 

 

(10.9

)

Earnings (Loss) from continuing operations before income taxes

 

 

 

60.9

 

 

 

83.1

 

 

 

(239.2

)

 

 

132.9

 

Income tax expense (benefit)

 

 

 

11.4

 

 

 

19.4

 

 

 

(66.1

)

 

 

32.8

 

Earnings (Loss) from continuing operations

 

 

 

49.5

 

 

 

63.7

 

 

 

(173.1

)

 

 

100.1

 

Net gain (loss) from discontinued operations

 

 

 

0.8

 

 

 

(6.9

)

 

 

(2.8

)

 

 

(4.7

)

Net earnings (loss)

 

 

$

50.3

 

 

$

54.5

 

 

$

(175.9

)

 

$

93.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) per diluted share of common stock, continuing operations:

 

 

$

1.03

 

 

$

1.28

 

 

$

(3.61

)

 

$

2.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (Loss) per diluted share of common stock, discontinued operations:

 

 

$

0.02

 

 

$

(0.19

)

 

$

(0.06

)

 

$

(0.13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per diluted share of common stock

 

 

$

1.05

 

 

$

1.09

 

 

$

(3.67

)

 

$

1.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of diluted common shares outstanding:

 

 

 

48.0

 

 

 

49.8

 

 

 

47.9

 

 

 

49.6

 

6

 


 

SEGMENT RESULTS

Armstrong World Industries, Inc. and Subsidiaries

(Amounts in millions)

(Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Fiber

 

$

157.9

 

 

$

214.1

 

 

$

355.6

 

 

$

410.8

 

Architectural Specialties

 

 

45.3

 

 

 

57.9

 

 

 

96.3

 

 

 

103.3

 

Total net sales

 

$

203.2

 

 

$

272.0

 

 

$

451.9

 

 

$

514.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Segment operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mineral Fiber

 

$

45.6

 

 

$

79.4

 

 

$

115.6

 

 

$

127.0

 

Architectural Specialties

 

 

4.3

 

 

 

9.5

 

 

 

11.8

 

 

 

18.7

 

Unallocated Corporate

 

 

12.5

 

 

 

(1.7

)

 

 

11.0

 

 

 

(3.8

)

Total consolidated operating income

 

$

62.4

 

 

$

87.2

 

 

$

138.4

 

 

$

141.9

 

 

 

 

Selected Balance Sheet Information

(Amounts in millions)

 

  

 

June 30, 2020

 

 

December 31, 2019

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

$

320.0

 

 

$

244.4

 

Property, plant and equipment, net

 

 

514.9

 

 

 

524.6

 

Other noncurrent assets

 

 

709.4

 

 

 

724.3

 

Total assets

 

$

1,544.3

 

 

$

1,493.3

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

Current liabilities

 

$

156.9

 

 

$

155.2

 

Noncurrent liabilities

 

 

984.5

 

 

 

973.2

 

Equity

 

 

402.9

 

 

 

364.9

 

Total liabilities and shareholders’ equity

 

$

1,544.3

 

 

$

1,493.3

 

7

 


Selected Cash Flow Information

(Amounts in millions)

(Unaudited)

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

Net (loss) earnings

 

$

(175.9

)

 

$

93.6

 

Other adjustments to reconcile net (loss) earnings to net cash provided by operating activities

 

 

278.7

 

 

 

11.8

 

Changes in operating assets and liabilities, net

 

 

(24.1

)

 

 

(58.4

)

Net cash provided by operating activities

 

 

78.7

 

 

 

47.0

 

Net cash provided by(used for) investing activities

 

 

10.3

 

 

 

(31.6

)

Net cash (used for) financing activities

 

 

(16.7

)

 

 

(102.6

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(0.5

)

 

 

1.8

 

Net increase (decrease) in cash and cash equivalents

 

 

71.8

 

 

 

(85.4

)

Cash and cash equivalents at beginning of year

 

 

45.3

 

 

 

335.7

 

Cash and cash equivalents at end of period

 

$

117.1

 

 

$

250.3

 

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.  Investors should not consider non-GAAP measures as a substitute for GAAP measures.  Examples of excluded items include plant closures, restructuring charges and related costs, impairments, separation costs, environmental site expenses and related insurance recoveries, and certain other gains and losses. The Company also excludes 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 as a component of operating income. 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 2020. Adjusted free cash flow is defined as cash from operating and investing activities, adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures, legacy environmental matters and litigation. The Company believes adjusted free cash flow is useful because it provides insight into the amount of cash that the Company generates for discretionary uses, after expenditures for capital 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.

 

9

 


Consolidated Results From Continuing Operations – Adjusted EBITDA

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Earnings (Loss) from continuing operations, Reported

 

$

50

 

 

$

64

 

 

$

(173

)

 

$

100

 

Add: Income tax expense (benefit), as reported

 

 

11

 

 

 

19

 

 

 

(66

)

 

 

33

 

Earnings (Loss) before tax, Reported

 

$

61

 

 

$

83

 

 

$

(239

)

 

$

133

 

Add: Interest/other income and expense, net

 

 

2

 

 

 

4

 

 

 

378

 

 

 

9

 

Operating Income, Reported

 

$

62

 

 

$

87

 

 

$

138

 

 

$

142

 

Add: RIP Cost (1)

 

 

1

 

 

 

1

 

 

 

3

 

 

 

2

 

Add: WAVE Pension Settlement (2)

 

 

-

 

 

 

1

 

 

 

-

 

 

 

1

 

Add: Litigation Expense (3)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20

 

Add: Net Environmental Expenses

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

Less: Gain on Sale of Idled China Plant Facility

 

 

(14

)

 

 

-

 

 

 

(14

)

 

 

-

 

Operating Income, Adjusted

 

$

49

 

 

$

89

 

 

$

128

 

 

$

165

 

Add: D&A

 

 

20

 

 

 

19

 

 

 

38

 

 

 

35

 

Adjusted EBITDA

 

$

69

 

 

$

108

 

 

$

166

 

 

$

200

 

 

(1) U.S. pension expense represents only the service cost related to the RIP that is recorded within Operating Income. For all periods presented, we were not required and did not make cash contributions to our RIP.

(2) WAVE settled a portion of their pension plan, resulting in a non-cash accounting charge.

(3) Represents Rockfon litigation costs and settlement.

 

 

Mineral Fiber

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating Income, Reported

 

$

46

 

 

$

79

 

 

$

116

 

 

$

127

 

Add: WAVE Pension Settlement (1)

 

 

-

 

 

 

1

 

 

 

-

 

 

 

1

 

Add: Litigation Expense (2)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20

 

Add: Net Environmental Expenses

 

 

-

 

 

 

-

 

 

 

1

 

 

 

-

 

Operating Income, Adjusted

 

$

45

 

 

$

80

 

 

$

116

 

 

$

148

 

Add: D&A

 

 

17

 

 

 

15

 

 

 

33

 

 

 

30

 

Adjusted EBITDA

 

$

62

 

 

$

96

 

 

$

149

 

 

$

178

 

 

(1) WAVE settled a portion of their pension plan, resulting in a non-cash accounting charge.

(2) Represents Rockfon litigation costs and settlement.

 

Architectural Specialties

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating Income, Reported

 

$

4

 

 

$

10

 

 

$

12

 

 

$

19

 

Add: D&A

 

 

2

 

 

 

3

 

 

 

4

 

 

 

4

 

Adjusted EBITDA

 

$

6

 

 

$

12

 

 

$

16

 

 

$

22

 

 

 

 

 

 

10

 


Unallocated Corporate

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating Income (Loss), Reported

 

$

13

 

 

$

(2

)

 

$

11

 

 

$

(4

)

Add: RIP Cost (1)

 

 

1

 

 

 

1

 

 

 

3

 

 

 

2

 

Less: Gain on Sale of Idled China Plant Facility

 

 

(14

)

 

 

-

 

 

 

(14

)

 

 

-

 

Operating (Loss), Adjusted

 

$

(0

)

 

$

(1

)

 

$

(0

)

 

$

(1

)

Add: D&A

 

 

-

 

 

 

1

 

 

 

0

 

 

 

1

 

Adjusted EBITDA

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

(1) U.S. pension expense represents only the service cost related to the U.S. pension plan that is recorded within Operating Income. For all periods presented, we were not required and did not make cash contributions to our U.S. Retirement Income Plan.

 

Adjusted Free Cash Flow

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net cash provided by operations

 

$

53

 

 

$

32

 

 

$

79

 

 

$

47

 

Net cash provided by (used for) investing activities

 

$

-

 

 

 

6

 

 

$

10

 

 

 

(32

)

Add/(Less): Acquisitions, net

 

 

-

 

 

 

-

 

 

 

-

 

 

 

43

 

Add: Litigation, net

 

 

-

 

 

 

17

 

 

 

-

 

 

 

20

 

Add/(Less): Environmental Payments (Recoveries), net

 

 

-

 

 

 

-

 

 

 

1

 

 

 

(5

)

Add: Net Payments to WAVE for Portion of Proceeds from Sale of International Businesses

 

 

10

 

 

 

-

 

 

 

10

 

 

 

-

 

Adjusted Free Cash Flow

 

$

63

 

 

$

55

 

 

$

100

 

 

$

74

 

11

 


Consolidated Results From Continuing Operations – Adjusted Diluted Earnings Per Share

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

Total

 

 

Per Diluted

Share

 

 

Total

 

 

Per Diluted

Share

 

 

Total

 

 

Per Diluted

Share

 

 

Total

 

 

Per Diluted

Share

 

Earnings (Loss) from continuing operations, As Reported

 

$

50

 

 

$

1.03

 

 

$

64

 

 

$

1.28

 

 

$

(173

)

 

$

(3.61

)

 

$

100

 

 

$

2.01

 

Add/(Less): Income tax expense (benefit), as reported

 

 

11

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

(66

)

 

 

 

 

 

 

33

 

 

 

 

 

Earnings (Loss) from continuing operations before income taxes, As Reported

 

$

61

 

 

 

 

 

 

$

83

 

 

 

 

 

 

$

(239

)

 

 

 

 

 

$

133

 

 

 

 

 

Add/(Less): RIP Expense (Credit) (1)

 

 

(2

)

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

370

 

 

 

 

 

 

 

(4

)

 

 

 

 

Add: WAVE Pension Settlement (2)

 

 

-

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

1

 

 

 

 

 

Add: Litigation Expense (3)

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

20

 

 

 

 

 

Add: Net Environmental Expenses

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

-

 

 

 

 

 

Less: Gain on Sale of Qing Pu Facility

 

 

(14

)

 

 

 

 

 

 

-

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

 

-

 

 

 

 

 

Adjusted earnings from continuing operations before income  taxes

 

$

45

 

 

 

 

 

 

$

82

 

 

 

 

 

 

$

117

 

 

 

 

 

 

$

150

 

 

 

 

 

(Less): Adjusted Income tax expense (4)

 

 

(8

)

 

 

 

 

 

 

(19

)

 

 

 

 

 

 

(32

)

 

 

 

 

 

 

(37

)

 

 

 

 

Adjusted net income

 

$

36

 

 

$

0.75

 

 

$

63

 

 

$

1.27

 

 

$

85

 

 

$

1.76

 

 

$

113

 

 

$

2.28

 

Adjusted EPS Change versus Prior Year

 

-41%

 

 

 

 

 

 

 

 

 

 

-23%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding (5)

 

48.0

 

 

49.8

 

 

48.4

 

 

49.6

 

As Reported Tax Rate

 

19%

 

 

23%

 

 

28%

 

 

25%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) RIP expense (credit) 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 and did not make cash contributions to our RIP.

(2) WAVE settled a portion of their pension plan, resulting in a non-cash accounting charge.

(3) Represents Rockfon litigation costs and settlement.

(4) Adjusted income tax expense is calculated using the as reported tax rate multiplied by the adjusted earnings from continuing operations before income taxes.

(5) 2020 Dilutive shares outstanding for the six months ended June 30, 2020 include anti-dilutive common stock equivalents which are excluded from U.S. GAAP accounting. Dilutive shares outstanding for the three months ended June 30, 2020 and for the three and six months ended June 30, 2019 are as-reported.

 

12

 

SLIDE 1

Earnings Call Presentation 2nd Quarter 2020 July 28, 2020 Exhibit 99.2

SLIDE 2

Our disclosures in this presentation, 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. 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 may affect our ability to achieve the projected performance is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections of our reports 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. 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 are included within this presentation and available on the Investor Relations page of our website at www.armstrongceilings.com. Our forward-looking 2020 outlook projections assume sequential market improvement and no second wave of market shutdowns Safe Harbor Statement

SLIDE 3

All figures throughout the presentation are in $ millions unless otherwise noted. Figures may not add due to rounding. When reporting our financial results within this presentation, we make adjustments to normalize the results. Management uses these non-GAAP measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. As reported results will be footnoted throughout the presentation. Basis of Presentation Explanation Results throughout this presentation are presented on a normalized basis with the exception of cash flow. We remove the impact of certain discrete expenses and income. Examples include plant closures, restructuring actions, separation costs, environmental site expenses and related insurance recoveries, and other large unusual items. We also adjust for our U.S. pension plan (credit) expense(1). We are using actual tax rates to report 2020 and 2019 EPS results. Prior to 2019 we used a normalized book tax rate when reporting EPS. Investors should not consider non-GAAP measures as a substitute for GAAP measures. U.S. pension (credit) expense represents the actuarial net periodic benefit cost expected to be recorded as a component of earnings from continuing operations. For all periods presented, we were not required and did not make cash contributions to our U.S. Retirement Income Plan based on guidelines established by the Pension Benefit Guaranty Corporation.

SLIDE 4

Consolidated Company Key Metrics-Second Quarter 2020 As reported EPS: $1.03 in 2020 and $1.28 in 2019. Leverage as calculated for compliance under our credit agreement May not sum due to rounding Normalized(3) 2020 2019 Variance Net Sales $203.2 $0 $272 -0.25294117647058822 Adj. EBITDA $68.942626000000004 $0 $108.3 $0 -0.36341065558633423 % of Sales 0.33928457677165358 0.39816176470588233 -590 bps hardcode watchout Adj. Earnings Per Share (1) $0.75246899572934012 $1.2678063749220712 -0.40647956137971586 Adj. Free Cash Flow $63.4 $55.299999999999969 0.14647377938517242 Cash $117 $240 $-,123 Revolver Availability $370 $200 $170 Liquidity $487 $440 $47 Net Debt $539 $557 $-18 Leverage(2) 1.5x 1.6x Favorable

SLIDE 5

Adjusted EBITDA Bridge – Second Quarter 2020 vs. PY ($38) ($5) $5 $4 $3 ($9) Lower volumes due to COVID-19… Sequential improvement within quarter Normalized(1) May not sum due to rounding

SLIDE 6

Adjusted Free Cash Flow Bridge - Second Quarter 2020 vs. PY $6 Cash flow remains strong despite COVID-19 pandemic $11 $3 $3 (2) NOTE: Adjustments include cash used or proceeds received for acquisitions and divestures, legacy environmental matters and litigation May not sum due to rounding Includes cash earnings, working capital and other current assets and liabilities Normalized(1) $63 ($15)

SLIDE 7

COVID-19 disruptions impacting market demand Manufacturing gains driven by productivity Sales improved sequentially in the quarter Mineral Fiber Second Quarter Results Sales improving as major metropolitan areas open back up Key Highlights Q1 Q2 2019 Adjusted EBITDA $82 $96 Current Quarter Comments AUV (5) (5) Regional weakness in major metropolitan areas Volume 0 (36) COVID-19 market disruption Manufacturing 5 7 Continued productivity gains Input costs 0 4 Lower input costs and inventory valuations SG&A 4 5 Cost controls enacted WAVE 1 (9) Volume impacted by COVID-19 2020 Adjusted EBITDA $87 $63 Margins contracted 520 bps % Change 6% (35%)

SLIDE 8

Sales down 22% due to a reduction in demand across almost all product categories and geographies as a result of COVID-19 Architectural Specialties Second Quarter Results Impacted by lockdown of new construction job sites Key Highlights Q1 Q2 2019 Adjusted EBITDA $10 $12 Current Quarter Comments Sales 4 (2) Sales impact of COVID-19 Period Expense (2) (3) Manufacturing expenses relating to acquisitions SG&A (2) (1) SG&A expenses relating to acquisitions 2020 Adjusted EBITDA $10 $6 Margins contracted 720 bps % Change (2%) (48%)

SLIDE 9

Consolidated Company Key Metrics – 1st Half 2020 As reported EPS: ($3.61) in 2020 and $2.01 in 2019. 2020 2019 Variance Net Sales $451.9 $0 $514.1 -0.12098813460416269 Adj. EBITDA $166 $0 $200.1 $0 -0.17041479260369807 % of Sales 0.36733790661650811 0.38922388640342342 -220 Adj. Earnings Per Share (1) $1.76 $2.2799999999999998 -0.22807017543859642 Adj. Free Cash Flow $100 $73.699999999999974 0.35685210312076032

SLIDE 10

Adjusted EBITDA Bridge – 1st Half 2020 vs. PY ($34) ($9) $5 $6 $6 ($8) Balancing short-term cost containment with long-term growth drivers

SLIDE 11

Adjusted Free Cash Flow Bridge – 1st Half 2020 vs. PY $21 Strong cash earnings offset by weaker WAVE performance $9 $7 ($16) $6

SLIDE 12

2020 Outlook Down 20% to 35% $4.78 Adjusted EBITDA Adjusted EPS* Adjusted Free Cash Flow Revenue $1,038 $403 Down 10% to 18% 35% to 37% margin Positive AUV Negative volume Benefit from recently announced Turf acquisition Ongoing productivity improvements Manufacturing output aligned with demand Executing cost reduction of $45 - $50 (manufacturing and SG&A) $50 - $55 of total capital expenditures Cash tax rate 20% - 25% $25 - $30 of cash interest expense Excludes $50M from international sale tax refund and sale of Qingpu manufacturing plant 2019 Actual Outlook $30 of interest expense 25% book tax rate 48 million average diluted shares 22% to 25% FCF margin** $244 *As reported EPS: $4.88 in 2019 **FCF Margin = Free cash flow as a percentage of Net Sales All projections assume sequential market improvement and no second wave of market shutdowns

SLIDE 13

Our Value Creation Model – Medium to Long Term View Revenue Growth 7% – 9% annual growth Adj. EBITDA Growth > 10% annual growth Adj. EPS Growth 15% – 20% annual growth Adj. Free Cash Flow Conversion 10% – 15% annual growth 0% – 2% Mineral Fiber volume growth >15% Architectural Specialties growth with 1-3 acquisitions per year 3% – 5% average unit value increase ~60% incremental margin in mineral fiber Continue to price over inflation Productivity 3%/year Accelerate renovation and expand A/S market penetration Declining net debt due to significant cash generation 25% effective tax rate Robust Adj. EBITDA growth Stable level of capital expenditures % of Sales Cash Tax Rate 15%-20% due to accelerated depreciation

SLIDE 14

Appendix

SLIDE 15

Adjusted EBITDA Reconciliation U.S. pension expense represents only the service cost related to the RIP that is recorded within Operating Income. For all periods presented, we were not required and did not make cash contributions to our RIP. WAVE settled a portion of their pension plan, resulting in a non-cash accounting charge. Represents Rockfon litigation costs and settlement. CONSOLIDATED For the Three Months Ended June 30, For the Six Months Ended June 30, qtr YTD 2020 2019 V 2020 2019 V Earnings (Loss) from continuing operations, Reported 50 64 -14 -173 100 -273 rounding Add: Income tax expense (benefit), as reported 11 19 -8 -66 33 -99 Earnings (Loss) before tax, Reported 61 83 -22 -239 133 -372 rounding Add: Interest/other income and expense, net 2 4 -2 378 9 369 Operating Income, Reported 62 87 -25 138 142 -4 Add: RIP Cost (1) 1.3660650000000001 1.1902507499999999 0 3 2 1 Add: WAVE Pension Settlement (2) 0 1 -1 0 1 -1 Add: Litigation Expense (3) 0 0 0 0 20 -20 Add: Net Environmental Expenses 0 0 0 1 0 1 Less: Gain on Sale of Idled China Plant Facility -14 0 -14 -14 0 -14 Add: D&A 20 19 1 38 35 3 Adjusted EBITDA 69 108 -39 166 200 -34 rounding -0.36111111111111116 -0.17

SLIDE 16

Adjusted Diluted Earnings Per Share Reconciliation RIP expense (credit) 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 and did not make cash contributions to our RIP. WAVE settled a portion of their pension plan, resulting in a non-cash accounting charge. Represents Rockfon litigation costs and settlement. Adjusted income tax expense is calculated using the as reported tax rate multiplied by the adjusted earnings from continuing operations before income taxes. 2020 Dilutive shares outstanding for the six months ended June 30, 2020 include anti-dilutive common stock equivalents which are excluded from U.S. GAAP accounting. Dilutive shares outstanding for the three months ended June 30, 2020 and for the three and six months ended June 30, 2019 are as-reported. CONSOLIDATED For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 Per Diluted 2019 Per Diluted V 2020 Per Diluted 2019 Per Diluted V Share Share Share Share Earnings (Loss) from continuing operations, As Reported $49.499999999999986 $1.03 $64 $1.28 $-14.500000000000014 $-,173 $-3.61 $100 $2.0099999999999998 $-,273 Add/(Less): Income tax expense (benefit), as reported $11.4 $19 $-7.6 $-66 $33 $-99 Earnings (Loss) from continuing operations before income taxes, As Reported $60.899999999999984 $83 $-22.100000000000016 $-,239 $133 $-,372 Add/(Less): RIP Expense (Credit) (1) $-2 $-1.8847795000000001 - $370 $-4 $374 Add: WAVE Pension Settlement (2) 0 1 $-1 0 $1 $-1 Add: Litigation Expense (3) 0 0 0 - 20 $-20 Add: Net Environmental Expenses 0 - - $1 - $1 Less: Gain on Sale of Idled China Plant Facility $-14.112605 0 $-14.112605 $-14 - $-14 0 Adjusted earnings from continuing operations before income taxes $44.529290999999979 $82 $-37.470709000000021 $117 $150 $-33 (Less): Adjusted Income tax expense (4) $-8.3355323054187167 $-19 $10.664467694581283 $-32 $-37 $5 Adjusted net income $36.193758694581263 $0.75403663947044297 $63 $1.27 $-26.806241305418737 $85 $1.76 $113 $2.2799999999999998 $-28 Adjusted EPS Change versus Prior Year -0.40524306046592351 -0.23 Diluted Shares Outstanding (5) 48 49.8 48.4 49.6 As Reported Tax Rate 0.18719211822660103 0.23345367027677494 0.27633779264214042 0.24680210684725354

SLIDE 17

Adjusted Free Cash(1) Flow Reconciliation 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, 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 has available for discretionary uses, after expenditures for capital commitments and adjustments for acquisitions and divestitures. Free cash flow includes discontinued international operations. For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 V 2020 2019 V As Reported Net cash provided by operating activities $53 $32 $21 $79 $47 $32 As Reported Net cash provided by (used for) investing activities - $6 $-6 $10 $-32 $42 Add/(Less): Acquisitions, net - - - - $43 $-43 Add: Litigation, net - $17 $-17 - $20 $-20 Add/(Less): Environmental Payments (Recoveries), net - - - $1 $-5 $6 Add: Net Payments to WAVE for Portion of Proceeds from Sale of International Businesses $10 - $10 $10 - $10 Adjusted Free Cash Flow $63 $55 $8 $100 $74 $26 0.1454545454545455 0.35135135135135137

SLIDE 18

Segment Reported Operating Income (Loss) to Adjusted EBITDA RIP expense (credit) 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 and did not make cash contributions to our RIP. WAVE settled a portion of their pension plan, resulting in a non-cash accounting charge. MINERAL FIBER ARCHITECTURAL SPECIALTIES UNALLOCATED CORPORATE For the Three Months Ended June 30, 2016 V 2020 2019 V 2020 2019 V 2020 2019 V Operating Income (Loss) – As Reported 46 79 -33 4 10 -6 13 -2.1 15.1 Add: RIP Cost (1) 0 0 0 0 0 0 1.3660650000000001 1.1902507499999999 0 Add: WAVE Pension Settlement (2) 0 1 -1 0 0 0 0 0 0 Less: Gain on Sale of Idled China Plant Facility 0 0 0 0 0 0 -14 0 -14 Add: Depreciation and Amortization 17 15 2 2.1601369999999998 3 -0.83986300000000025 0 0.90974925000000018 -0.90974925000000018 EBITDA – Adjusted 62 96 -34 6.1601369999999998 12 -5.8398630000000002 0 0 0 -0.35416666666666663 -0.48665524999999998

Exhibit 99.3

 

Armstrong World Industries, Inc. Acquires

Turf Design, Inc.

 

LANCASTER, Pa., July 28, 2020 -- Armstrong World Industries, Inc. (NYSE: AWI) today announced it has acquired Turf Design, Inc., a Chicago-based commercial interiors design house and maker of custom felt ceiling and wall solutions with annual revenues of approximately $25 million.  The acquisition strengthens AWI’s design and manufacturing capabilities and broadens its extensive portfolio of architectural specialties ceiling and wall solutions.

 

Turf is the leader in the specialty felt category and operates an 8,000 sq. ft. innovation center and design showroom in downtown Chicago, together with a 75,000 sq. ft. fabrication facility in Elgin, Ill., where it makes a wide range of custom-specified felt ceilings and wall products for a variety of applications.  Turf’s felt products are made primarily of polyethylene terephthalate (PET) -- recycled plastic found in water or soda bottles. Turf felt contains up to 60% recycled content, and it’s 100% recyclable at end of life, further enhancing AWI’s commitment to sustainability. 

 

AWI CEO Vic Grizzle said, “With the increasing demand for acoustical and sustainable interior solutions, expanding our felt offerings has been a top priority. Felt is one of the fastest growing specified products in the architectural specialty product space. Turf is the category leader that architects and designers have come to depend on to bring their creative designs to life.  Turf also has a strong profit profile that will be accretive to our architectural specialties segment.”  

 

AWI Ceiling Solutions SVP Charlie Chiappone added, “We are very excited to have the Turf family and their independent sales representative network join our growing organization. In a relatively short period of time, Turf has rapidly developed the felt category and established itself as the innovative leader in the space. Turf’s success is clearly attributable to a commitment to inspirational design, innovation and customer service by every member of their team. We look forward to growing with them, and to building upon their success by leveraging the brand, scale and market reach of Armstrong.”    

 

Turf will continue to operate from its current facilities and retain its company name, brands and organizational and go-to-market structures. The Turf independent representative network will remain intact and complement AWI’s current go-to-market selling model.  

AWI funded the acquisition with available cash and its revolving credit facility.  Financial terms of the transaction were not disclosed.

For more information, visit www.armstrongceilings.com/turfdesign.

About Armstrong World Industries
Armstrong World Industries, Inc. (AWI) is a leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions in the Americas. With over $1 billion in revenue in 2019, AWI has approximately 2,500 employees and a manufacturing network of 13 facilities, plus five facilities dedicated to its WAVE joint venture. 

 

 

 

Armstrong World Industries
2500 Columbia Avenue, Lancaster, PA 17603

 

717.397.0611 | www.armstrongceilings.com


 

Uncertainties Affecting Forward-Looking Statements
Disclosures in this release and in our other public documents and comments may 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 Forms 10-K and 10-Q filed with the U.S. Securities and Exchange Commission.  Forward-looking statements speak only as of the date they are made.  We do not undertake or assume any obligation to update or revise any forward-looking statements beyond what is required under applicable securities law.

 

 

 

 

Armstrong World Industries
2500 Columbia Avenue, Lancaster, PA 17603

 

717.397.0611 | www.armstrongceilings.com