Armstrong Flooring Reports Third Quarter 2020 Results
Armstrong Flooring, Inc. (“Armstrong Flooring” or the “Company”), a leader in the design and manufacture of innovative flooring solutions, reported financial results for the third quarter ended September 30, 2020.
Michel Vermette, President and Chief Executive Officer, commented, “Third quarter results were largely in line with our expectations as we further invested in the multi-pronged transformation and modernization of our business. We were pleased to produce sequential top line improvement compared to the second quarter 2020 primarily due to stronger trends in residential end markets outpacing a slower recovery in commercial activity. Feedback from our customers about our service enhancements continues to be positive and leaves us confident that we are on the right path to improve our market positioning and set the stage for growth in the years ahead. Through our customer-centric operating model, we will continue to approach opportunities with a returns oriented mindset while keeping our focus on three core areas that comprise expanding our reach within our addressable flooring market, simplifying our processes, and strengthening our competitive positioning for long-term success.”
Third Quarter 2020 Results Compared with Third Quarter 2019 Results
In the third quarter of 2020, net sales decreased 5.4% to $156.6 million from $165.6 million in the third quarter of 2019. The decrease in net sales was primarily attributable to lower volumes due to COVID-19 pandemic related business disruptions, including the postponement of certain commercial projects and slower activity at many independent customer retail locations, partly offset by increased activity in home centers and other residential channels.
The net loss in the third quarter of 2020 was $11.7 million, or diluted loss per share of $0.53, as compared to net loss of $31.4 million, or diluted loss per share of $1.44, in the prior year quarter. Adjusted net loss was $11.4 million, or adjusted diluted loss per share of $0.52, as compared to adjusted net loss of $11.1 million, or adjusted diluted loss per share of $0.51, in the prior year quarter.
Third quarter 2020 adjusted EBITDA was $2.8 million, as compared to adjusted EBITDA of $8.8 million in the prior year quarter. The decrease in adjusted EBITDA was primarily attributable to lower net sales and to transition service agreement income in the prior year quarter which did not recur, as well as investments to support long-term strategic growth initiatives. These factors were partly offset by improved productivity and reduced input costs.
Liquidity and Capital Resources Update
At September 30, 2020, the Company had total liquidity of approximately $110.0 million including $22.2 million of cash plus availability under its credit facilities. Prior to the onset of the pandemic, the Company began assessing the monetization of non-core assets. As part of this process, the Company’s South Gate, California facility and land portfolio have been classified on the balance sheet as assets held-for-sale. Under the terms of the Company’s credit agreements, beginning in the fourth quarter of 2020 $30.0 million of availability under the credit facilities will be withheld until such time the Company closes on a sale of its South Gate property. The Company believes it has ample financial resources to effectively execute its near- and long-term objectives.
Multi-Year Transformation Update
During early 2020, the Company initiated a multi-year transformation of its operations to become a leaner, faster growing and more profitable business. The transformation encompasses three critical objectives of expanding customer reach, simplifying product offerings and operations, and the strengthening of core capabilities.
To date, the Company has expanded its direct sales teams to service key independent retailers, commercial national accounts, and large flooring contractors. In terms of simplification, progress has been made on executing product portfolio simplification, inventory optimization, and reducing SKU mix of underperforming products. The Company is also consolidating its U.S. manufacturing facilities and improving efficiency. The Company has announced the relocation of its headquarters, effective summer 2021, with estimated cost savings of approximately 60% of current corporate lease expense. Steps to strengthen customer experiences include the introduction of a Quick Ship program to accelerate customer project timelines and investments in product innovation with a focus on U.S. based manufacturing, amongst many other initiatives. The Company will continue to invest in its business with a customer-centric and returns-focused approach to execute on its multi-year transformation.
For the full third quarter results, click here.
About Armstrong Flooring
Armstrong Flooring, Inc. (NYSE: AFI) is a global leader in the design and manufacture of innovative flooring solutions that inspire beauty wherever your life happens. Headquartered in Lancaster, Pennsylvania, Armstrong Flooring is a leading manufacturer of resilient products across North America. The company safely and responsibly operates eight manufacturing facilities globally, working to provide the highest levels of service, quality and innovation to ensure it remains as strong and vital as its 150-year heritage. Learn more www.armstrongflooring.com.
Amy Trojanowski – Senior Vice President & CFO – email@example.com
Source: Armstrong Flooring, Inc.