Armstrong World Industries Q2 2008 Earnings Call Transcript

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2008-07-30 11:30:31.0

Tags: Armstrong World Industry Inc.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). We will take our first question from John Baugh of Stifel Nicolaus.

John Baugh - Stifel Nicolaus

Good morning. Nice quarter.

Mike Lockhart

Hi, John.

John Baugh - Stifel Nicolaus

I wonder if you could delve into the Building Products segment, both domestically and abroad, and refresh us on sort of the end market exposures you mentioned, such as school versus the office? And give us some color on what you are seeing in the pipeline, as you look forward not just to the second half of this year but may be in '09?

Mike Lockhart

I think we will probably team this one. But when I mentioned schools, the comment about schools was more related to our Flooring business. We don't disclose the breakdown in percentage terms of the various markets, but clearly the biggest outlet for ceilings is the office market and we deep ended again in the US. I mean, we don't expect that. You expect that to decline in sort of mid-single digits.

Now the outlook for Europe is slowing considerably in terms of the outlook for office, particularly in the UK where we would expect to see next year the UK would be down in the office segment by 10%, and that's the current outlook for that. Now it depends on where you are. You are up at the UK, and Spain has fallen down a lot and Germany is a little bit slower, not dramatically, so, and Eastern Europe continues to grow at remarkable rates.

Now the other things we serve would be healthcare, retail, and education, and those are ones we really think about. And in the context of ceilings business, that's really the sequence. Let's make sure it's healthcare, education, and then retail. Whereas when we look at the Floor business, we start with the education, retail, healthcare and office- that would be the relative size of those. We have very little exposure to office and the floor business, which is really the difference between the two markets today. But in the US, we expect to see kind of mid-single digit decline in the markets and then in Europe, we expect in the aggregate to grow but we have a differential exposure to the office market in the UK, should be down double digits.

John Baugh - Stifel Nicolaus

Okay, thank you. And then could you just provide a little color on, I don't know, the decision we made to the fourth quarter? But I think the commentary related to the dividend was that we look to pay a similar amount in the fourth quarter if we more or less hit our earnings and you lower the high end of your range slightly. Does that color you are thinking at all about paying a dividend at all or the similar magnitude or lower? Any color there?

 

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