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Armstrong World Industries Reports Second Quarter 2013 Results

        Armstrong World Industries Reports Second Quarter 2013 Results

Key Highlights

-- Operating income from continuing operations of $67.6 million, down 13% over
the 2012 period

-- Adjusted EBITDA from continuing operations of $98 million, down 11% over
the 2012 period

-- Management lowers full year 2013 earnings guidance due to timing of wood
recovery and weaker European commercial construction activity

-- Management announces LVT manufacturing investment

PR Newswire

LANCASTER, Pa., July 29, 2013

LANCASTER, Pa., July 29, 2013 /PRNewswire/ --Armstrong World Industries, Inc.
(NYSE: AWI), a global leader in the design and manufacture of floors and
ceilings, today reported second quarter 2013 results.



Second Quarter Results from continuing operations
(Amounts in millions except
                             Three Months Ended June 30,
per share data)
                             2013             2012        Change
Net sales                    $706.6           $675.4      4.6%
Operating income             67.6             77.6        (12.9)%
Net income                   30.6             42.2        (27.5)%
Diluted earnings per share   $0.51            $0.71       (28.2)%



Consolidated net sales increased approximately $31 million, or 5%, compared to
the prior year period. The increase in sales was driven by higher volumes in
Wood Flooring and in Building Products across all geographies. On a
consolidated level, price and mix were both positive. Sales were also
negatively impacted by approximately $10 million due to the sale of the
Patriot wood flooring distribution business in the third quarter of 2012.

Despite the increase in sales, operating income and net income both declined
due to increases in manufacturing and input costs driven by rising lumber
costs, and higher labor costs associated with added crews at several solid
wood plants to respond to increased demand.

"Our second quarter consolidated results met our expectations, as sales and
adjusted EBITDA were in the middle of our guidance range," said Matt Espe,
CEO. "We continue to make strategic investments in the business to support
organic growth and I'm pleased to announce that our Board of Directors has
approved an investment that will allow us to domestically manufacture luxury
vinyl tile, an important growth category that we currently source overseas."



Additional (non-GAAP*) Financial Metrics from continuing operations
(Amounts in millions except
                                  Three Months Ended June 30,
per share data)
                                  2013                 2012            Change
Adjusted operating income         $71                  $86             (17)%
Adjusted net income               37                   43              (14)%
Adjusted diluted earnings per     $0.62                $0.73           (15)%
share
Free cash flow                    $32                  $36             (11)%
        (Amounts in millions
        except                    Three Months Ended June 30,

        per share data)
                                  2013                 2012            Change
Adjusted EBITDA
         Building Products     $81                  $74             9%
         Resilient Flooring    27                   29              (7)%
         Wood Flooring         5                    16              (68)%
         Unallocated           (15)                 (9)             (59)%
        Corporate
Consolidated Adjusted EBITDA      $98                  $110            (11)%
*The Company uses the above non-GAAP adjusted measures, as well as other
non-GAAP measures mentioned below, in managing the business and believes the
adjustments provide meaningful comparisons of operating performance between
periods. Adjusted operating income, adjusted EBITDA, adjusted net income, and
adjusted EPS exclude the impact of foreign exchange, restructuring charges and
related costs, impairments, and certain other nonrecurring gains and losses.
Free cash flow is defined as cash from operations and dividends received from
the WAVE joint venture, less expenditures for property and equipment, less
restricted cash, and is adjusted to remove the impact of cash used or proceeds
received for acquisitions and divestitures. The company believes 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/divestitures. Adjusted figures
are reported in comparable dollars using the budgeted exchange rate for 2013,
and are reconciled to the most comparable GAAP measures in tables at the end
of this release.



Adjusted operating income and adjusted EBITDA declined by 17% and 11%,
respectively, in the second quarter of 2013 when compared to the prior year
period. This decline was primarily due to increases in manufacturing and
input costs, which were only partially offset by the margin impact from higher
volumes. Adjusted net income and earnings per share benefited from a
reduction in the adjusted effective tax rate from 40% to 39%. The decrease in
free cash flow was due to lower cash earnings and timing of environmental
charges related to the closure of the Mobile, AL facility in 2012, which were
only partially offset by improvements in working capital and lower capital
expenditures and interest expense when compared to the prior year.



Second Quarter Segment Highlights
Building Products
                           Three Months Ended June 30,
                           2013              2012       Change
Total segment net sales    $316.3            $297.1     6.5%
Operating income           $64.7             $53.5      20.9%



Net sales improved driven by higher volumes across all geographies and aided
by positive price and mix performance in the Americas. Operating income
improved as result of higher volumes and reduced manufacturing costs due to
increases in productivity, despite additional start up costs associated with
the China plant opened earlier this year. Results for the second quarter of
2012 were negatively impacted by approximately $4 million of charges
associated with the closure of the Mobile, AL facility.



Resilient Flooring
                         Three Months Ended June 30,
                         2013              2012       Change
Total segment net sales  $252.1            $253.5     (0.6)%
Operating income         $17.7             $21.9      (19.2)%



Net sales declined slightly due to lower price and mix. Volume growth in the
Americas was more than offset by lower volumes in Australia. Operating income
declined driven by unfavorable manufacturing and input costs as additional
start up costs associated with the two China plants more than offset
productivity improvements in the Americas. Price was also unfavorable when
compared to the prior year.



Wood Flooring
                         Three Months Ended June 30,
                         2013              2012       Change
Total segment net sales  $138.2            $124.8     10.7%
Operating income         $ 2.5             $13.8      (81.9)%



Net sales improved driven by strong volume growth, which was aided by
favorable price realization from pricing actions taken earlier in the year.
The higher volumes were driven by strong demand from independent distributors
as gains in new residential construction drove increased demand from builders
which negatively impacted mix. Volumes also improved as a result of share
gains with independent distributors and in the home center channel from new
product introductions. Sales were also negatively impacted by approximately
$10 million due to the sale of the Patriot wood flooring distribution business
in the third quarter of 2012.

Despite the increase in sales, operating income declined due to increases in
manufacturing and input costs driven by rising lumber costs, and higher labor
costs as crews were added at several solid wood plants to respond to increased
demand.

Corporate

Unallocated corporate expense of $17.3 million increased from $11.6 million in
the prior year due to higher foreign and domestic pension expense, increased
spending on outside consulting services and higher expense associated with
employee benefits when compared to the same period of 2012.

Year to Date Results from continuing operations

(Amounts in millions except
                               Six Months Ended June 30,
per share data)
                               2013           2012        Change
Net sales (as reported)        $ 1,328.9      $ 1,311.4   1.3%
Operating income (as reported) 114.6          120.3       (4.7)%
Adjusted EBITDA                177            194         (9)%
Free cash flow                 (19)           (14)        (37)%



Consolidated net sales increased approximately $18 million, or 1%, compared to
the prior year period. The increase in sales was driven by higher volumes in
Wood Flooring and positive price and mix. Sales were also negatively impacted
by approximately $20 million due to the sale of the Patriot wood flooring
distribution business in the third quarter of 2012.

Despite the increase in sales, operating income and adjusted EBITDA both
declined due to increases in manufacturing and input costs, higher SG&A
expenses and the margin impact from lower volumes. The comparison was also
impacted by a $5 million lower pension credit when compared to the same period
of 2012 and by approximately $19 million of costs associated with the closure
of our Mobile, AL facility in 2012.

The reduction in free cash flow was attributable to lower cash earnings,
higher capital expenditures and lower dividends from the WAVE joint venture,
which were only partially offset by improvements in working capital when
compared to the prior year.

Market Outlook and 2013 Guidance ^(1)

"We were encouraged to see volume growth in most of our businesses and
geographies in the second quarter, including our domestic commercial and
residential businesses," said Tom Mangas, Senior Vice President and CFO.
"However, we continue to face manufacturing and lumber inflation headwinds in
the wood business and now expect a lower commercial market opportunity in
Europe for the remainder of the year. As a result, we are lowering our full
year earnings guidance."

Management continues to expect sales in the $2.7 to $2.8 billion range, but
now expects full year adjusted EBITDA to be in the range of $370 to $400
million. 2013 adjusted EPS is expected to be $2.00 to $2.30 per diluted share
and free cash flow is anticipated to be between $50 and $100 million.

For the third quarter of 2013, sales are expected to be in the range of $740
to $780 million and adjusted EBITDA to be in the range of $110 to $130
million.

^(1) Sales guidance includes the impact of foreign exchange. Guidance
metrics, other than sales, are presented using 2013 budgeted foreign exchange
rates. Adjusted EPS guidance for 2013 is calculated based on an adjusted
effective tax rate of 39%.

Earnings Webcast

Management will host a live Internet broadcast beginning at 1:00 p.m. Eastern
Time today, to discuss second quarter results. This event will be broadcast
live on the Company's Web site. To access the call and accompanying slide
presentation, go to www.armstrong.comand click "For Investors." The replay
of this event will also be available on the Company's Web site 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 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" 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.

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, 2013 that will be filed with the
SEC today.

Armstrong World Industries, Inc. is a global leader in the design and
manufacture of floors and ceilings. In 2012, Armstrong's consolidated net
sales from continuing operations totaled approximately $2.6 billion. As of
June 30, 2013, Armstrong operated 34 plants in eight countries and had
approximately 8,800 employees worldwide.

Additional forward looking non-GAAP metrics are available on the Company's web
site at http://www.armstrong.com/under the Investor Relations 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.



As Reported Financial
Highlights
FINANCIAL HIGHLIGHTS
Armstrong World Industries, Inc. and Subsidiaries
(amounts in millions, except for per-share amounts)
(Unaudited)
                            Three Months Ended June  Six Months Ended June 30,
                            30,
                            2013          2012       2013           2012
Net Sales                   $706.6        $675.4     $1,328.9       $1,311.4
Costs of goods sold         542.3         504.8      1,020.1        1,000.8
Selling general and         111.2         107.9      223.9          218.6
administrative expenses
Restructuring charges, net  (0.1)         -          (0.1)          0.2
Equity (earnings) from      (14.4)        (14.9)     (29.6)         (28.5)
joint venture
    Operating income        67.6          77.6       114.6          120.3
Interest expense            11.8          14.4       45.0           25.6
Other non-operating expense 0.7           0.3        0.7            0.3
Other non-operating         (1.4)         (0.7)      (2.7)          (1.5)
(income)
    Earnings from
    continuing operations   56.5          63.6       71.6           95.9

    before income taxes
Income tax expense          25.9          21.4       37.8           34.7
    Earnings from           $30.6         $42.2      $33.8          $61.2
    continuing operations
Net loss from discontinued
operations, net of
                            -             (0.4)      -              (1.2)
tax benefit of $-, ($0.3),
$-, and ($0.6)
Loss on sale of
discontinued business, net
of                          (0.7)         -          (0.9)          -

tax benefit of ($0.4), $-,
(0.5) and $-
    Net loss from           (0.7)         (0.4)      (0.9)          (1.2)
    discontinued operations
    Net earnings            $29.9         $41.8      $32.9          $60.0
Other comprehensive income
(loss), net of tax:
    Foreign currency        (8.7)         (8.6)      (14.9)         (3.3)
    translation adjustments
    Derivative gain (loss)  12.2          (2.0)      16.5           (4.3)
    Pension and
    postretirement          6.0           2.5        14.9           4.9
    adjustments
    Total other
    comprehensive (loss)    9.5           (8.1)      16.5           (2.7)
    income
Total comprehensive income  $39.4         $33.7      $49.4          $57.3
Earnings per share of
common stock,

continuing operations
    Basic                   $0.51         $0.72      $0.57          $1.04
    Diluted                 $0.51         $0.71      $0.56          $1.03
Loss per share of common
stock,

discontinued operations
    Basic                   ($0.01)       ($0.01)    ($0.02)        ($0.02)
    Diluted                 ($0.01)       ($0.01)    ($0.02)        ($0.02)
Net earnings per share of
common stock:
    Basic                   $0.50         $0.71      $0.55          $1.02
    Diluted                 $0.50         $0.70      $0.54          $1.01
Average number of common
shares

outstanding
    Basic                   59.3          58.8       59.2           58.7
    Diluted                 59.9          59.4       59.8           59.3
Dividends declared per      $-            $-         $-             $8.55
common share



SEGMENT RESULTS
Armstrong World Industries, Inc. and Subsidiaries
(amounts in millions)
(Unaudited)
                       Three Months Ended June 30,   Six Months Ended June 30,
Net Sales              2013               2012       2013            2012
Building Products      $316.3             $297.1     $609.1          $600.2
Resilient Flooring     252.1              253.5      466.9           480.8
Wood Flooring          138.2              124.8      252.9           230.4
     Total net sales   $706.6             $675.4     $1,328.9        $1,311.4
Operating Income
(loss)
Building Products      $64.7              $53.5      $124.0          $96.8
Resilient Flooring     17.7               21.9       24.1            32.6
Wood Flooring          2.5                13.8       3.0             16.3
Unallocated Corporate  (17.3)             (11.6)     (36.5)          (25.4)
(expense)
     Total Operating   $67.6              $77.6      $114.6          $120.3
     Income



Selected Balance Sheet Information
(amounts in millions)
                                               (Unaudited)     December 31,
Assets                                                         2012
                                               June 30, 2013
Current assets                                 $1,084.3        $1,019.9
Property, plant and equipment, net             1,036.0         1,005.0
Other noncurrent assets                        841.5           829.4
         Total assets                          $2,961.8        $2,854.3
Liabilities and shareholders' equity
Current liabilities                           $399.8          $384.7
Noncurrent liabilities                        1,783.1         1,750.5
Equity                                        778.9           719.1
         Total liabilities and shareholders'   $2,961.8        $2,854.3
         equity



Selected Cash Flow Information
(amounts in millions)
(Unaudited)
                                   Six Months Ended June 30,
                                   2013                          2012
Net income                         $32.9                         $60.0
Other adjustments to
reconcile net income to net        60.4                          59.7
cash provided by operating
activities
Changes in operating assets        (50.1)                        (89.7)
and liabilities, net
Net cash provided by               43.2                          30.0
operating activities
Net cash (used for)                (62.5)                        (42.6)
investing activities
Net cash (used for)                (6.3)                         (249.1)
financing activities
Effect of exchange rate
changes on cash and cash           (6.1)                         (1.6)
equivalents
Net (decrease) in cash and         (31.7)                        (263.3)
cash equivalents
Cash and cash equivalents,         336.4                         480.6
beginning of period
Cash and cash equivalents,         $304.7                        $217.3
end of period
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 foreign exchange, restructuring charges and related costs,
impairments, and certain other gains and losses. Adjusted figures are reported
in comparable dollars using the budgeted exchange rate for 2013. 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 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.



CONSOLIDATED RESULTS FROM

CONTINUING OPERATIONS
                            Three Months Ended June 30,  Six Months Ended June
                                                         30,
                            2013              2012       2013         2012
Adjusted EBITDA             $98               $110       $177         $194
D&A/Fx*                     (27)              (24)       (52)         (49)
Operating Income,           $71               $86        $125         $145
Adjusted
Cost reduction              3                 8          9            19
initiatives expenses
Impairment                  -                 -          -            5
Foreign exchange impact     -                 -          1            1
        Operating
        Income,             $68               $78        $115         $120
        Reported
*Excludes accelerated depreciation associated with cost reduction initiatives
reflected below. Actual D&A as reported is; $26.4 million for the three
months ended June 30, 2013, $26.1 million for the three months ended June 30,
2012, $51.8 million for the six months ended June 30, 2013, and $60.3 million
for the six months ended June 30, 2012.
BUILDING PRODUCTS
                            Three Months Ended June 30,  Six Months Ended June
                                                         30,
                            2013              2012       2013         2012
Adjusted EBITDA             $81               $74        $154         $145
D&A/Fx                      (14)              (12)       (27)         (25)
Operating Income,           $67               $62        $127         $120
Adjusted
Cost reduction              2                 8          2            18
initiatives expenses
Impairment                  -                 -          -            5
Foreign exchange impact     -                 -          1            -
        Operating
        Income,             $65               $54        $124         $97
        Reported
RESILIENT FLOORING
                            Three Months Ended June 30,  Six Months Ended June
                                                         30,
                            2013              2012       2013         2012
Adjusted EBITDA             $27               $29        $46          $49
D&A/Fx                      (9)               (7)        (15)         (15)
Operating Income,           $18               $22        $31          $34
Adjusted
Cost reduction              1                 -          7            1
initiatives expenses
Foreign exchange impact     -                 -          -            1
        Operating
        Income,             $17               $22        $24          $32
        Reported
WOOD FLOORING
                            Three Months Ended June     Six Months Ended June
                            30,                          30,
                            2013              2012       2013         2012
Adjusted EBITDA             $5                $16        $9           $21
D&A/Fx                      (2)               (2)        (6)          (5)
Operating Income,           $3                $14        $3           $16
Adjusted
Foreign exchange impact     -                 -          -            -
        Operating
        Income,             $3                $14        $3           $16
        Reported
UNALLOCATED CORPORATE
                            Three Months Ended June 30,  Six Months Ended June
                                                         30,
                            2013              2012       2013         2012
Adjusted EBITDA             ($15)             ($9)       ($32)        ($21)
D&A/Fx                      (2)               (3)        (4)          (4)
Operating (Loss),           ($17)             ($12)      ($36)        ($25)
Adjusted
Foreign exchange impact     -                 -          -            -
        Operating
        (Loss),             ($17)             ($12)      ($36)        ($25)
        Reported



CONSOLIDATED RESULTS FROM CONTINUING OPERATIONS
                        Three Months Ended June     Six Months Ended June 30,
                        30,
                        2013          2012          2013          2012
                        Total  Per    Total  Per    Total  Per    Total  Per
                               Share         Share         Share         Share
Adjusted EBITDA         $98           $110          $177          $194
D&A as reported         (26)          (26)          (52)          (60)
Accelerated
                        (1)           2             -             11
Deprecation/Fx
Operating Income,
                        $71           $86           $125          $145
Adjusted
Other non-operating
                        (10)          (14)          (43)          (25)
(expense)
Earnings Before
                        61            72            82            120
Taxes, Adjusted
Adjusted tax (expense)

@ 39% for 2013 and      (24)          (29)          (32)          (48)

40% for 2012
Net Earnings,
                        $37    $0.62  $43    $0.73  $50    $0.84  $72    $1.22
Adjusted
Pre-tax adjustment
                        (3)           (8)           (10)          (25)
items
Reversal of adjusted
tax

expense @ 39%           24            29            32            48

for 2013 and 40% for
2012
Ordinary tax            (18)          (21)          (23)          (31)
Unbenefitted foreign
                        (8)           (2)           (15)          (6)
losses
Foreign tax credits     -             2             -             2
Tax adjustment items    (1)           (1)           -             1
Net Earnings,
                        $31    $0.51  $42    $0.71  $34    $0.56  $61    $1.03
Reported



CASH FLOW ^(1)          Three Months Ended June 30,  Six Months Ended June 30,
                        2013               2012      2013            2012
Net Cash From           $57                $63       $43             $30
Operations
Less: net cash (used    (25)               (27)      (62)            (42)
for) investing
Add back (subtract)
adjustments

to reconcile to free
cash flow
Restricted Cash         -                  -         -               (2)
Free Cash Flow          $32                $36       ($19)           ($14)
(1) Cash flow includes cash flows attributable to Cabinets





SOURCE Armstrong World Industries, Inc.

Website: http://www.armstrong.com
Contact: Investors: Tom Waters, 717-396-6354; Media: Jennifer Johnson,
jenniferjohnson@armstrong.com, 866-321-6677
 
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