Armstrong World Industries Reports Third Quarter 2020 Results
Armstrong World Industries, Inc. (“AWI”), a leader in the design, innovation and manufacture of commercial and residential ceiling, wall and suspension system solutions, reported financial results for the third quarter of 2020.
Third Quarter Results from Continuing Operations
Net sales decreased compared to the prior year quarter, driven by lower volume in both the Mineral Fiber and Architectural Specialties segments as a result of lower market demand due to COVID-19, as well as unfavorable Mineral Fiber AUV primarily due to regional weakness in major metropolitan areas heavily impacted by COVID-19 and channel mix, partially offset by the positive sales impact of 2020 and 2019 acquisitions.
Operating income decreased from the prior year quarter, driven primarily by lower sales volume in the Mineral Fiber segment and lower earnings from our WAVE joint venture, partially offset by improved manufacturing productivity. Equity earnings in the third quarter of 2019 included a net $21 million gain on WAVE’s sale of its European and Pacific Rim businesses.
“As expected, we saw a sequentially better demand environment in the third quarter, and we expect this improving trend to continue into the fourth quarter. I am pleased that in a quarter impacted by a pandemic we were able to close on two more strategic acquisitions, Turf Design and Moz Designs, our sixth and seventh acquisitions since 2017. Turf gives us the leading position in the growing category of felt ceilings, walls and barriers, and Moz extends our leadership position and capabilities in metal ceilings, walls and column covers,” said Vic Grizzle, President and CEO of Armstrong. “Ceilings play a critical role in the creation of healthy spaces and our recently announced 24/7 Defend line of products represent innovative new solutions to enable everyone to get back to life and work in a healthy and safe way.”
Third Quarter Segment Highlights
Mineral Fiber net sales decreased due to lower volume and unfavorable AUV. Unfavorable AUV was driven by mix due primarily to regional weakness in major metropolitan areas heavily impacted by COVID-19 and channel mix. Like for like price was positive in the quarter.
Operating income decreased in the second quarter primarily due to the negative impact of lower sales volume, lower WAVE earnings and the impact of unfavorable AUV, partially offset by improved manufacturing productivity and a reduction in incentive compensation expenses.
Net sales in Architectural Specialties increased slightly due to sales from the recent acquisitions of Turf Design and Moz Designs, mostly offset by a reduction in demand as a result of the COVID-19 pandemic.
Operating income decreased due the negative impact of lower sales volume, excluding the impact of the 2019 and 2020 acquisitions, as well as additional amortization expense related to acquisitions.
Unallocated corporate income of $5.2 million increased from $1.8 million of expense in the prior year quarter primarily due to gains related to the sale of our idled Mineral Fiber plant in China.
Year to Date Results from Continuing Operations
Net sales decreased driven mainly by lower volumes in both the Mineral Fiber and Architectural Specialties segments as a result of the COVID-19 pandemic and unfavorable AUV in the Mineral Fiber segment.
Operating income decreased from the prior year period, primarily due to impact of decreased sales, partially offset by lower SG&A expense, the gain on sale of the idled China plant, and improved manufacturing productivity.
Market Outlook and 2020 Guidance
“Assuming continued sequential market improvement and no second wave of construction site shutdowns, we expect sales for the full year in the range of $920-$935 million, adjusted EBITDA in the range of $320-$330 million, and adjusted free cash flow of $200-$210 million,” said Brian MacNeal, CFO of Armstrong. “With a strong balance sheet and ample liquidity, we continue to remain confident in our ability to execute on our long-term value creation strategy.”
For the full third quarter results, click here.
About Armstrong World Industries
Armstrong World Industries, Inc. (“AWI”) is a leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions in the Americas. With over $1 billion in revenue in 2019, AWI has approximately 2,500 employees and a manufacturing network of 14 facilities, plus five facilities dedicated to its WAVE joint venture.
Thomas Waters – Investor Relations – email@example.com – (717)396-6354
Source: Armstrong World Industries, Inc.