Armstrong Flooring Reports First Quarter 2021 Results
Armstrong Flooring, Inc. (“Armstrong Flooring” or the “Company”) a leader in the design and manufacture of innovative flooring solutions, today reported financial results for the first quarter ended March 31, 2021.
–Net sales increased 7.4% to $148.9 million
–Net income of $27.2 million, including $46.0 million gain on sale of South Gate, California property completed in March for gross proceeds of $76.7 million
–Adjusted EBITDA loss of $7.6 million
Michel Vermette, President and Chief Executive Officer, commented, “The positive momentum in our business continued into the first quarter and I am pleased with the ongoing transformation of Armstrong Flooring. We delivered 7.4% top-line growth compared to the first quarter 2020 and 5.1% growth compared to the first quarter of 2019 led by sales in China and Australia. Stable year-over-year North American net sales in the first quarter resulted from an encouraging recovery in demand that was partly offset by severe weather and macro supply chain disruptions. Looking ahead, our customer orders heading into the second quarter point to further sequential momentum, particularly in residential new and remodel end markets.”
Multi-Year Transformation Update
Mr. Vermette continued, “Our business transformation remains on track. During the first quarter, we completed several initiatives under the three pillars of our transformation plan: expanding customer reach, simplifying product offerings and operations, and strengthening our core capabilities.
As it relates to expanding customer reach, the expansion of our go-to-market strategy continued with the introduction of Armstrong® Flooring Pro™ for the homebuilder and multi-family channels. In addition, we introduced Armstrong® Flooring Signature™, a segmented product portfolio for our distributor partners, and we accomplished several key wins in our Asia healthcare channel.
Pertaining to simplifying product offerings and operations, we executed on the long-standing efforts to monetize our non-core assets and completed the sale of our South Gate facility announced earlier in the quarter.
In terms of strengthening our core capabilities, through several internal initiatives we continued to improve organizational alignment between our supply chain, customer service and procurement organizations. In addition, we officially opened our Technical Center in Lancaster to house our research and development teams in a unique space designed for collaboration and innovation. Notably, this is the first of three buildings we will open in 2021 as part of the headquarters relocation we announced in 2020.
While there is more work to be done, all these key steps among others completed in 2020 and ongoing initiatives, have firmly planted the foundation of our transformation plan.”
First Quarter 2021 Results
|(Dollars in millions except per share data)||Three Months Ended March 31,|
|Operating income (loss)||27.8||(13.3)||N/M|
|Net income (loss)||27.2||(13.2)||N/M|
|Diluted earnings (loss) per share||1.23||(.60)||N/M|
|Adjusted EBITDA margin||(5.1%)||(1.2%)||N/M|
|Adjusted net (loss) 1||$(8.3)||$(12.7)||N/M|
|Adjusted diluted (loss) per share1||$(0.38)||$(0.58)||N/M|
In the first quarter of 2021, net sales increased 7.4% to $148.9 million from $138.7 million in the first quarter of 2020. The increase in net sales reflects growth in China and Australia, partly offset by slightly lower net sales in North America. North America results reflect growth in residential through remodel and new construction, while commercial sales were flat and sales to residential National Accounts were down due to a prior year major program launch that did not repeat in 2021. In North America, overall higher selling prices resulting from the Company’s previously announced price increases were partially offset by the impact of lower volume and product mix in the quarter.
Net income in the first quarter of 2021 was $27.2 million, or diluted income per share of $1.23, as compared to net loss of $13.2 million, or diluted loss per share of $0.60, in the prior year quarter. Net income in the first quarter of 2021 reflected a $46 million gain on the sale of the Company’s South Gate facility. Adjusted net loss was $8.3 million, or adjusted diluted loss per share of $0.38, as compared to adjusted net loss of $12.7 million, or adjusted diluted loss per share of $0.60, in the prior year quarter.
First quarter 2021 adjusted EBITDA was a loss of $7.6 million, as compared to an adjusted EBITDA loss of $1.6 million in the prior year quarter. The decrease in adjusted EBITDA was primarily due to lower production volumes, principally due to the impacts of winter storm Uri which disrupted three of the Company’s key manufacturing plants in the U.S. for several weeks, along with disruptions in the supply of key raw materials. In addition, we continued to see higher raw material and shipping costs which created headwinds compared to the prior year quarter.
Liquidity and Capital Resources Update
At March 31, 2021, the Company had total liquidity of approximately $104 million including $16.7 million of cash plus availability under its credit facilities. During the quarter, following the sale of the South Gate facility, the Company made a required prepayment of $20 million under the Term Loan facility, and repaid amounts borrowed under the revolving credit facility. The Company’s Net Debt on March 31, 2021, was $36.3 million. The Company believes it has ample financial resources to effectively execute its near- and long-term objectives.
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About Armstrong Flooring
Armstrong Flooring, Inc. (NYSE: AFI) is a leading global manufacturer of flooring products and one of the industry’s most trusted and celebrated brands. The company continually builds on its resilient, 150-year legacy by delivering on its mission to create a stronger future for customers through adaptive and inventive solutions. Headquartered in Lancaster, Pennsylvania, Armstrong Flooring safely and responsibly operates eight manufacturing facilities globally. Learn more at www.armstrongflooring.com.
Amy Trojanowski – Senior Vice President & CFO – email@example.com
Source: Armstrong Flooring, Inc.