LANCASTER, Pa., April 30 /PRNewswire-FirstCall/ -- Armstrong World
Industries, Inc. (NYSE: AWI) today reported first quarter 2009 net sales of
$668.3 million, down 19 percent, from $828.2 million in the same period for
2008. Excluding a $42.3 million, or 4 percent, impact of foreign exchange
rates, sales decreased 15 percent. Reported operating income from continuing
operations of $1.1 million compared to operating income of $38.5 million in
the first quarter of 2008. Adjusted operating income from continuing
operations of $3.2 million decreased 93 percent compared to $43.8 million on
the same basis. Earnings are usually lowest in the first and fourth quarters
because of seasonal impacts.
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 $2.1 million in the first quarter of 2009 and by
$5.3 million in the first quarter of 2008.
Reported loss from continuing operations was $11.2 million, or $(0.20) per
diluted share, including income tax expense, primarily non-cash, of $8.8
million. This compared to income of $15.1 million, or $0.26 per diluted
share, in the first quarter of 2008. Adjusted loss from continuing operations
was $(0.2) million, or $0.00 per diluted share, compared to $22.9 million, or
$0.41 per diluted share, on the same basis as 2008.
First quarter adjusted operating income decreased significantly
year-over-year due to double-digit volume declines across most businesses and
geographies. Volume in global commercial markets dropped at an accelerated
pace over the quarter, and U.S. residential market continued to fall. The
impact of 19 percent lower volume was only partially offset by SG&A expense
reductions of 14 percent.
1st Quarter Segment Highlights
Resilient Flooring net sales were $241.2 million in the first quarter of
2009 compared to $292.7 million in the same period of 2008. Excluding the
impact of foreign exchange rates, net sales declined about 12 percent. Lower
volumes in all markets accounted for the decline. Reported operating loss was
$12.9 million compared to a loss of $7.2 million in the first quarter of 2008.
Adjusted operating loss of $10.8 million deteriorated from a reported $7.2
million loss calculated on the same basis in the prior year. The impact of
lower volume was only partially offset by reduced manufacturing and SG&A
expenses. There were no adjustments to operating income in 2008.
Wood Flooring net sales of $121.8 million in the first quarter of 2009
declined 24 percent from $160.3 million in the prior year's quarter due to
continued declines in residential housing markets. Reported operating loss
was $7.8 million in the first quarter compared to income of $2.5 million
reported in 2008. Reduced raw material and SG&A costs partially offset lower
sales.
Building Products net sales of $266.9 million in the first quarter of 2009
decreased from $331.1 million in the prior year's quarter. Excluding the
effects of foreign exchange rates of $24 million, sales decreased by 13
percent. Global volume declines more than offset improved price realization
and product mix. Reported operating income decreased to $31.8 million from
$55.0 million in the first quarter of 2008. Sales volume declines, lower
income from WAVE and input cost inflation offset the benefits of price
realization and lower SG&A costs.
Cabinets 2009 first quarter net sales of $38.4 million were 13 percent
below sales of $44.1 million in 2008 due to lower volume. Volume declines
resulted from lower U.S. housing market demand. Reported operating loss for
the first quarter of $4.5 million was worse than the prior year's $3.7 million
loss, primarily due to the decline in sales, partially offset by lower
manufacturing costs.
Unallocated corporate expense of $5.5 million in the first quarter of 2009
compared to expense of $8.1 million in the first quarter of 2008. Reported
expense of $5.5 million compared to adjusted expense of $2.8 million on the
same basis in the prior year. 2009 included $3.4 million of employee
separation costs.
Free cash flow was a use of $45 million in the first quarter of 2009
compared to a use of $93 million in 2008. The impact of lower earnings was
offset by reductions in working capital.
Outlook
Global macroeconomic forecasts indicate a very difficult outlook for all
key markets in 2009. There have been unprecedented declines in Building
Products' North American commercial markets. These are expected to approach
20 percent in the year 2009. Declines in European markets are anticipated to
be at least 25 percent. North American commercial floor markets are expected
to decline 15 percent to 20 percent. Declines in North American residential
floor markets are estimated to be at least 20 percent, with an anticipated
decline in U.S. housing starts in excess of 40% and mid-double-digit declines
in renovation.
Our markets remain highly volatile and hard to predict. Based on the above
assumptions and expected benefits from on-going cost reduction efforts,
management reaffirmed the 2009 estimate for sales to decline at least 15
percent and adjusted operating income to be less than half of the $253 million
earned in 2008. 2009 cash taxes are estimated to be less than $5 million. A
42 percent tax rate will be utilized for adjusted earnings to facilitate
comparability from period to period. The outlook for free cash flow has
improved due to lower working capital needs, and is now anticipated to be 15
percent to 25 percent below 2008.
Earnings Conference Call
Management will conduct a discussion for shareholders during a live
Internet broadcast at 10:00 a.m. Eastern time today. This event will be
broadcast live on the Company's Web site, www.armstrong.com. From the
homepage, click "Investor Relations" to access the call and the accompanying
slide presentation. The replay of this event will be available on the
Company's Web site through May 14, 2009.
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 today. 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 10 countries and has approximately 11,700
employees worldwide. For more information, visit www.armstrong.com.
FINANCIAL HIGHLIGHTS
Armstrong World Industries, Inc., and Subsidiaries
(amounts in millions, except for per-share amounts)
(unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2009 2008
---- ----
Net sales $668.3 $828.2
Cost of goods sold 536.9 642.3
Selling, general and administrative
expenses 137.2 159.8
Restructuring charges, net - 0.8
Equity (earnings) from joint ventures (6.9) (13.2)
---- -----
Operating income 1.1 38.5
Interest expense 4.5 8.4
Other non-operating expense 0.1 0.3
Other non-operating (income) (1.1) (4.3)
---- ----
(Loss) earnings from continuing operations
before income taxes (2.4) 34.1
Income tax expense 8.8 19.0
--- ----
(Loss) earnings from continuing
operations (11.2) 15.1
Gain from discontinued operations, net of
tax of $0.0 and $0.4 - 0.1
----- -----
Net (loss) earnings $(11.2) $15.2
====== =====
(Loss) earnings per share of common
stock, continuing operations:
Basic $(0.20) $0.27
Diluted $(0.20) $0.26
Earnings per share of common stock,
discontinued operations:
Basic $- $0.00
Diluted $- $0.00
Net (loss) earnings per share of common
stock:
Basic $(0.20) $0.27
Diluted $(0.20) $0.27
Average number of common shares
outstanding:
Basic 56.4 56.3
Diluted 56.6 57.0
SEGMENT RESULTS
Armstrong World Industries, Inc., and Subsidiaries
(amounts in millions)
(unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2009 2008
--------- ---------
Net sales:
----------
Resilient Flooring $241.2 $292.7
Wood Flooring 121.8 160.3
Building Products 266.9 331.1
Cabinets 38.4 44.1
---- ----
Total Net Sales $668.3 $828.2
====== ======
Operating income (loss):
Resilient Flooring $(12.9) $(7.2)
Wood Flooring (7.8) 2.5
Building Products 31.8 55.0
Cabinets (4.5) (3.7)
Unallocated Corporate (5.5) (8.1)
---- ----
Total Operating Income $1.1 $38.5
==== =====
Selected Balance Sheet Information
(amounts in millions)
(unaudited)
March 31, December 31,
2009 2008
---- ----
Assets:
-------
Current assets $1,214.3 $1,261.5
Property, plant and equipment, net 927.2 954.2
Other noncurrent assets 1,127.4 1,136.1
------- -------
Total assets $3,268.9 $3,351.8
======== ========
Liabilities and equity:
-----------------------
Current liabilities $371.8 $385.4
Other noncurrent liabilities 1,178.3 1,215.1
Equity 1,718.8 1,751.3
------- -------
Total liabilities and equity $3,268.9 $3,351.8
======== ========
Selected Cash Flow Information
(amounts in millions)
(unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
2009 2008
-------- --------
Net (loss) earnings $(11.2) $15.2
Other adjustments to reconcile net (loss)
earnings to net cash used for operating
activities 18.8 27.4
Changes in operating assets and
liabilities, net (48.2) (124.7)
----- ------
Net cash used for operating activities (40.6) (82.1)
Net cash provided by (used for) investing
activities 3.4 (14.1)
Net cash used for financing activities (2.4) (261.2)
Effect of exchange rate changes on
cash and cash equivalents (5.7) 3.1
---- ---
Net decrease in cash and cash
equivalents (45.3) (354.3)
Cash and cash equivalents, beginning
of period 355.0 514.3
----- -----
Cash and cash equivalents, end of period $309.7 $160.0
====== ======
Reconciliation to GAAP (unaudited)
CONSOLIDATED Three Months Three Months
Ended Ended
(amounts in millions) March 31, March 31,
2009 2008
------------------------- ------------ ------------
Operating Income (Loss), Adjusted $3.2 $43.8
Cost reduction initiatives expenses 2.1 5.4
Chapter 11 related post-emergence income - (1.3)
Review of strategic alternatives - 1.2
--------------------------------------- ---- -----
Operating Income (Loss), Reported $1.1 $38.5
======================================= ==== =====
RESILIENT FLOORING Three Months Three Months
Ended Ended
(amounts in millions) March 31, March 31,
2009 2008
------------------------- ---- ----
Operating Income (Loss), Adjusted $(10.8) $(7.2)
Cost reduction initiatives expenses 2.1 -
----------------------------------- ------ -----
Operating Income (Loss), Reported $(12.9) $(7.2)
==================================== ====== =====
UNALLOCATED CORPORATE EXPENSE Three Months Three Months
Ended Ended
(amounts in millions) March 31, March 31,
2009 2008
------------------------- ---- ----
Operating Income (Loss), Adjusted $(5.5) $(2.8)
Cost reduction initiatives expenses - 5.4
Chapter 11 related post-emergence
income - (1.3)
Review of strategic alternatives - 1.2
---------------------------------- ----- -----
Operating Income (Loss), Reported $(5.5) $(8.1)
================================== ===== =====
Three Months Three Months
CONSOLIDATED Ended Ended
March 31, 2009 March, 31, 2008
Per Per
Total Share Total Share
----------------- ----- ------ ----- ------
Operating Income, Adjusted $3.2 $43.8
Other Income / Expense (3.5) (4.4)
---------------------- ---- ----
(Loss) Earnings Before
Taxes, Adjusted (0.3) 39.4
Adjusted Tax Benefit
(Expense) @ 42% 0.1 (16.5)
-------------------- --- ------ ----- ------
Net (Loss) Income, Adjusted $(0.2) $(0.00) $22.9 $0.41
Adjustment Items (2.1) (5.3)
Reversal of Adjusted
Tax @ 42% (0.1) 16.5
Ordinary Tax (1.1) (12.5)
IRS Audit (1.3) (1.7)
Unbenefitted Foreign Losses (6.4) (4.8)
---------------- ------ ------ ----- -----
(Loss) Earnings from
continuing operations,
Reported $(11.2) $(0.20) $15.1 $0.27
===================== ====== ====== ===== =====
Note: No adjustments necessary for Wood Flooring, Building Products, or
Cabinets.
CASH FLOW Three Months Three Months
Ended Ended
(millions) March 31, March 31,
2009 2008
-------------- ------------ ------------
Free Cash Flow
Net Cash From Operations $(40) $(82)
Plus / (minus): Net Cash from Investing 3 (14)
Add back / (subtract):
Emergence related payments - 3
Divestiture - -
Acquisitions (8) -
------------ -- --
Free Cash Flow $(45) $(93)
============== ==== ====
SOURCE Armstrong World Industries, Inc.
-0- 04/30/2009
/CONTACT: Beth Riley, of Armstrong World Industries, Inc., Investors:
+1-717-396-6354, or News media: +1-866-321-6677, bariley@armstrong.com/
/Web Site: www.armstrong.com /
( AWI)
CO: Armstrong World Industries, Inc.
ST: Pennsylvania
IN: CST HMI
SU: ERN CCA
PR
-- PH07768 --
1568 04/30/2009 07:30 EDT http://www.prnewswire.com
