AWI Intrinsic Value

AWI

Armstrong World Industries Inc. – Flooring Contractors

armstrong world industries, inc. (awi) is a global leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions. with over 3,700 employees and fiscal 2015 revenues from ceiling operations in excess of $1.2 billion, awi operates from a global manufacturing network of 24 facilities, including nine plants dedicated to its wave joint venture. through the years, our penchant for collaboration and innovation has led us to develop ceiling solutions that work harder than many people realize. we make a substantive difference where people live, work, learn, heal and play by providing interior solutions that help to enhance comfort, save time, improve building efficiency and overall performance, and create beautiful spaces. it’s easy to see how our ceilings finish a room beautifully, adding drama, character and dynamism to any space. but did you know our ceilings have acoustical properties that can help control sound and noise within

Analysis Results

Intrinsic Value	$165.87
Latest Price	$71.12
Relative Value	57% undervalued

Share results:

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Cash Flow (Millions)

Analysis Parameters

New Ticker

Analysis Details

Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 13.7%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 7.9%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 13.7%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year	Future flow (million)	Present value (million)
2023	316	293
2024	360	309
2025	409	325
2026	465	343
2027	528	361

Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 9130 million. This corresponds to a present value of 5790 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 1630 million. Adding in the terminal value gives a total present value of 7420 million.

There are presently 44.7 million outstanding shares, so the intrinsic value per share is 165.87.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	356,500,000
Current Cash	106,000,000
Current Liabilities	182,700,000
Current Debt	2,200,000
Non-Cash Working Capital (NCWC)	70,000,000
Change in NCWC	28,600,000
EBIT	289,700,000
Tax Provision	57,700,000
Depreciation and Amortization	83,700,000
Capital Expenditure	-74,800,000
Unlevered Free Cash Flow	262,309,899

Current Assets	321,900,000
Current Cash	98,100,000
Current Liabilities	209,600,000
Current Debt	27,200,000
Non-Cash Working Capital (NCWC)	41,400,000
Change in NCWC	11,800,000
EBIT	255,900,000
Tax Provision	57,400,000
Depreciation and Amortization	96,500,000
Capital Expenditure	-79,800,000
Unlevered Free Cash Flow	223,878,121

Current Assets	311,800,000
Current Cash	136,900,000
Current Liabilities	172,300,000
Current Debt	27,000,000
Non-Cash Working Capital (NCWC)	29,600,000
Change in NCWC	-20,600,000
EBIT	233,800,000
Tax Provision	-42,600,000
Depreciation and Amortization	84,000,000
Capital Expenditure	-55,400,000
Unlevered Free Cash Flow	241,800,000

Current Assets	244,400,000
Current Cash	45,300,000
Current Liabilities	155,200,000
Current Debt	6,300,000
Non-Cash Working Capital (NCWC)	50,200,000
Change in NCWC	117,600,000
EBIT	317,400,000
Tax Provision	57,100,000
Depreciation and Amortization	72,100,000
Capital Expenditure	-71,300,000
Unlevered Free Cash Flow	375,267,134

Current Assets	752,800,000
Current Cash	325,700,000
Current Liabilities	549,500,000
Current Debt	55,000,000
Non-Cash Working Capital (NCWC)	-67,400,000
Change in NCWC	-319,300,000
EBIT	249,400,000
Tax Provision	53,100,000
Depreciation and Amortization	79,400,000
Capital Expenditure	-71,900,000
Unlevered Free Cash Flow	-116,965,883

Current Assets	648,900,000
Current Cash	159,600,000
Current Liabilities	269,900,000
Current Debt	32,500,000
Non-Cash Working Capital (NCWC)	251,900,000
Change in NCWC	186,700,000
EBIT	255,100,000
Tax Provision	1,500,000
Depreciation and Amortization	89,200,000
Capital Expenditure	-89,700,000
Unlevered Free Cash Flow	439,577,127

Current Assets	406,200,000
Current Cash	141,900,000
Current Liabilities	224,100,000
Current Debt	25,000,000
Non-Cash Working Capital (NCWC)	65,200,000
Change in NCWC	-186,600,000
EBIT	219,100,000
Tax Provision	50,400,000
Depreciation and Amortization	89,200,000
Capital Expenditure	-104,200,000
Unlevered Free Cash Flow	-59,025,571

Current Assets	880,800,000
Current Cash	244,800,000
Current Liabilities	436,300,000
Current Debt	52,100,000
Non-Cash Working Capital (NCWC)	251,800,000
Change in NCWC	-25,900,000
EBIT	221,700,000
Tax Provision	71,300,000
Depreciation and Amortization	118,300,000
Capital Expenditure	-170,700,000
Unlevered Free Cash Flow	15,819,612

Current Assets	811,500,000
Current Cash	185,300,000
Current Liabilities	388,100,000
Current Debt	39,600,000
Non-Cash Working Capital (NCWC)	277,700,000
Change in NCWC	-84,100,000
EBIT	249,900,000
Tax Provision	83,200,000
Depreciation and Amortization	129,400,000
Capital Expenditure	-222,900,000
Unlevered Free Cash Flow	-39,966,090

Current Assets	884,000,000
Current Cash	135,200,000
Current Liabilities	410,900,000
Current Debt	23,900,000
Non-Cash Working Capital (NCWC)	361,800,000
Change in NCWC	30,000,000
EBIT	238,400,000
Tax Provision	71,400,000
Depreciation and Amortization	109,000,000
Capital Expenditure	-213,700,000
Unlevered Free Cash Flow	64,678,708

Current Assets	1,019,900,000
Current Cash	336,400,000
Current Liabilities	384,700,000
Current Debt	33,000,000
Non-Cash Working Capital (NCWC)	331,800,000
Change in NCWC	-30,900,000
EBIT	270,800,000
Tax Provision	76,100,000
Depreciation and Amortization	112,700,000
Capital Expenditure	-198,800,000
Unlevered Free Cash Flow	60,340,226

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