Armstrong World Industries 8K Reports | AWI 9 May 16

Earnings Call

Presentation

Quarter 2016

May 9, 2016

Exhibit 99.2

Our disclosures in this presentation, including without limitation, those relating to future financial results

guidance and the separation of our flooring business from our building products business, 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 or the

separation of our businesses. 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 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.

The guidance in this presentation is only effective as of the date given, May 9, 2016, and will not be updated

or affirmed unless and until we publicly announce updated or affirmed guidance.

Safe Harbor Statement

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 several adjustments.

Management uses the non-GAAP measures below 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

•

We report in comparable dollars to remove the effects of

currency translation on the P&L. The budgeted

exchange rate for 2016 is used for all currency

translations in 2016 and prior years. Guidance is

presented using the 2016 budgeted exchange rate for

the year.

•

We remove the impact of discrete expenses and income.

Examples include plant closures, restructuring actions,

separation costs and other large unusual items. We also

remove the non-cash impact of our U.S. Pension Plan.

•

Taxes for normalized Net Income and EPS are

calculated using a constant 39% for 2016 guidance, and

2016 and 2015 results, which are based on the expected

full year historical tax rate.

•

Results for the ceilings business on slides 6 and 7 have

been adjusted to reflect the allocation of corporate costs

to the business in preparation of the separation.

Corporate costs of $17M were allocated to the ceilings

business in 2016; 70% to SG&A, 30% to COGS and

held constant in 2015 for comparability purposes

What Items Are Adjusted

Comparable

Dollars

Other

Adjustments

Net Sales

Yes

Gross Profit

Yes

SG&A

Expense

Yes

Equity Earnings

Yes

Operating

Income

Yes

Net Income

Yes

Cash Flow

Yes

Return on Capital

Yes

EBITDA

Yes

Consolidated Company Key Metrics -

First Quarter 2016

2016

2015

Variance

Net Sales

(1)

$577

$545

5.8%

EBITDA

12.5%

% of Sales

14.1%

13.3%

90 bps

Earnings Per Share

(2)

$0.47

$0.35

34.1%

Free Cash Flow

(75)

(42)

(78.4%)

Net Debt

828

903

(75)

(1)

reported

Net

Sales:

$572

million

2016

and

$551

million

2015

(2)

As reported EPS: ($0.21) in 2016 and $0.07 in 2015

(7)

(2)

18%

(20%)

(15%)

(10%)

(5%)

10%

15%

20%

(20)

(15)

(10)

(5)

Resilient Flooring

Wood Flooring

Building Products

Corporate

EBITDA Change (Left-hand scale)

% Change in Sales (Right-hand scale)

Consolidated Free Cash Flow –

First Quarter 2016 vs. Prior Year

($24)

($2)

($10)

($75)

($42)

($100)

($80)

($60)

($40)

($20)

2015

Cash

Earnings

Working

Capital

Capex

Interest

Expense

WAVE

Dividends

Other

2016

Building Products Key Metrics –

First Quarter 2016

2016

2015*

Variance

Net Sales

(1)

$292

$288

1.2%

Operating Income

(2)

18.1%

% of Sales

18.6%

15.9%

270 bps

EBITDA

13.2%

% of Sales

25.1%

22.4%

270 bps

(1)

reported

Net

Sales:

$287

million

2016

and

$292

million

2015

(2)

As reported Operating Income: $51 million in 2016 and $60 million in 2015

* Corporate costs of $17 million were allocated to the ceilings business in 2016 in preparation of the separation; 70% to SG&A, 30% to COGS

including $3

million of depreciation and held constant in 2015 for comparability purposes

2016

2015*

EBITDA

–

Adjusted

$73

$65

Depreciation and Amortization

(19)

Operating

Income

–

Adjusted

$54

$46

Non-cash Impact of U.S.

Pension

Corporate allocations

(17)

Operating

Income

–

Reported

$51

$60

($9)

•

Excluding the unfavorable impact of foreign exchange

of $8 million, net sales increased 1% as volume

declines in EMEA and the Pacific Rim were offset by

mid single digit volume growth in the Americas

and continued improvement in average unit value.

•

Driven by unfavorable country mix in EMEA, volume

strength at the low end of the product portfolio in the

Americas and the one-time impact from the release of

merchandising funds associated with a large retail

customer

•

Strong volume growth in the Americas was offset by

lower volumes in EMEA and the Pacific Rim

•

Driven by lower input costs and productivity

•

Prudent SG&A spending and prior cost reduction

actions in international regions aided margins

•

WAVE delivered a record earnings quarter

Building Products First Quarter Results

Margins improved 270 bps driven by continued expansion in Americas margins

Key Highlights

Q1 2015 Adjusted EBITDA*

$ 65M

AUV

(6)

Volume

Manufacturing & Input Costs

SG&A

WAVE

Q1 2016 Adjusted EBITDA

$ 73M

* Corporate costs of $17M were allocated to the ceilings business in 2016 in preparation of the separation; 70% to SG&A, 30% to COGS

including $3M of depreciation and held constant in 2015 for comparability purposes

$201

$190

$63

$69

$28

$29

Q1 2016

Q1 2015

Net Sales

Americas

EMEA

Pacific Rim

$292

$288

2016E Guidance -

Reaffirmed

$2.15

–

$2.32

6% –

15% YoY Growth

$2.09

$2.02

Adjusted

EBITDA

(2)

Adjusted

EPS

(3)

Free Cash

Flow

Revenue

(1)

1% –

3% North America volume growth

2% –

4% International volume growth

1% –

3% average unit value increase

$42 million of standalone corporate costs

1% –

2% cost savings over inflation

Increased sales and marketing

investments to expand total solutions

selling capabilities

$30 –

$35 million of interest expense

Normalized 39% effective tax rate

57 million average diluted shares

outstanding

Cash tax rate 35% –

39%

$190 million cash flow from operations

$100 million of total capital expenditures

2015

Normalized at

2015 FX

$1,285

$303

2015

Normalized at

2016 FX

$1,224

$296

$1,260

–

$1,310

3% –

7% YoY Growth

$310

–

$330

5% –

12% YoY Growth

$80

–

$100

2016E

Normalized at

2016 FX

$86

(4)

$86

(4)

(1)

As-reported revenue of $1,231 million in 2015. 2016 As-reported will have (3%) - (5%) FX headwind

(2)

Includes pro forma standalone corporate expense of $42 million; excludes pension, separation costs and other extraordinary expenses

(3)

Excludes pension, separation costs and other extraordinary expenses. As reported earnings per share of $1.15 - $1.30 impacted by $34 million

of separation expenses and an as reported effective tax rate of ~60%

(4)

No FX adjustment. Pro forma standalone free cash flow for AWI in 2015, excludes separation costs and other extraordinary expenses

Note: Dollars in millions except per share values

Appendix

First

Quarter

2016

vs.

–

Adjusted

EBITDA

Reported

Net

Income

2016

2015

EBITDA

–

Adjusted

$81

$72

Depreciation and Amortization

(30)

(28)

(2)

Operating

Income

–

Adjusted

$51

$44

Non-cash Impact of U.S. Pension

(1)

Separation Expenses

Cost Reduction Initiatives

(2)

Foreign Exchange Movements

Operating

Income

–

Reported

$18

$36

($18)

Interest/Other (Expense)

(18)

(12)

(6)

EBT

($0)

$24

($24)

Tax (Expense)

(12)

(20)

Net (Loss) Income

($12)

($16)

Consolidated Results

First Quarter

2016

Reported

Comparability

(1)

Adjustments

(2)

Adj

2016

Adjusted

2015

Reported

Comparability

(1)

Adjustments

(2)

Adj

2015

Adjusted

Net Sales

572

577

551

(6)

545

Operating

Income

EPS

($0.21)

$0.67

$0.01

$0.47

$0.07

$0.28

$0.35

(1)

See earnings press release and 10-Q for additional detail on comparability adjustments

(2)

Eliminates impact of foreign exchange movements

Segment Operating Income (Loss)

First Quarter

2016

Reported

Comparability

(1)

Adjustments

2016

Adjusted

2015

Reported

Comparability

(1)

Adjustments

2015

Adjusted

Building Products

(1)

Resilient Flooring

(5)

(4)

(2)

Wood Flooring

(1)

(2)

Unallocated Corporate

(Expense) Income

(28)

(1)

(29)

(17)

(1)

Eliminates impact of foreign exchange movements and non-recurring items; see earnings press release and 10-Q for additional detail.

Cash Flow

First Quarter

($ millions)

2016

2015

Net cash (used for) operations

($65)

($34)

Net cash (used for) investing

(10)

(8)

Free Cash Flow

($75)

($42)

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