Second Quarter 2020 Highlights - Net Sales of $145.6
Million - Net Loss of $6.3 Million and Adjusted Net Loss of $5.1
Million - Adjusted EBITDA of $6.9 Million - Amended the ABL credit
facility and entered into a new $70 million term loan facility to
further strengthen capital resources
Armstrong Flooring, Inc. (NYSE: AFI) (“Armstrong Flooring” or
the “Company”), a leader in the design and manufacture of
innovative flooring solutions, today reported financial results for
the second quarter ended June 30, 2020.
Michel Vermette, President and Chief Executive Officer,
commented, “Our second quarter results reflect the focused
execution of our strategic plan during these challenging times.
Since April, our top line performance improved month-over-month
throughout the quarter as demand for our critical products began to
recover. We are encouraged by improving end market trends and an
overall positive response from our customers as we continue to
streamline new product introductions and strengthen our service
capabilities. As we look to the balance of 2020, our focus remains
on expanding our reach within our addressable flooring market,
simplifying our processes, and strengthening our competitive
position while being mindful that extended shelter-in-place orders
may continue to have an evolving impact on near term flooring
demand. However, I am confident in our ability to continue
improving our operations and with our recently enhanced liquidity
position we are now better situated to execute our business
transformation.”
Second Quarter 2020 Results Compared with Second Quarter 2019
Results
Consolidated Results
(Dollars in millions except per share
data)
Three Months Ended June 30,
2020
2019
Change
Net sales
$145.6
$177.7
(18.1%)
Operating (loss) income
($5.6)
$3.7
N/M
Net (loss) income
($6.3)
$14.7
N/M
Diluted (loss) earnings per share
($0.29)
$0.56
N/M
Adjusted EBITDA
$6.9
$20.0
(65.7%)
Adjusted EBITDA margin
4.7%
11.3%
(660 bps)
Adjusted net (loss) income
($5.1)
$9.4
N/M
Adjusted diluted (loss) earnings per
share
($0.23)
$0.36
N/M
In the second quarter of 2020, net sales decreased 18.1% to
$145.6 million from $177.7 million in the second quarter of 2019,
including an adverse currency impact of 80 basis points. The
decrease in net sales was primarily attributable to lower volumes
due to the COVID-19 pandemic and shelter-in-place related business
disruptions, including the temporary closing of many independent
customer retail locations and the postponement of certain
commercial projects, partially offset by increased activity with
home centers.
The net loss in the second quarter of 2020 was $6.3 million, or
diluted loss per share of $0.29, as compared to net income of $14.7
million, or diluted earnings per share of $0.56, in the prior year
quarter. Adjusted net loss was $5.1 million, or adjusted diluted
loss per share of $0.23, as compared to adjusted net income of $9.4
million, or adjusted diluted earnings per share of $0.36, in the
prior year quarter.
Second quarter 2020 adjusted EBITDA was $6.9 million, as
compared to adjusted EBITDA of $20.0 million in the prior year
quarter. The decrease in adjusted EBITDA was primarily attributable
to lower net sales and higher SG&A expense, partially offset by
reduced input costs.
Liquidity and Capital Resources
Update
In June 2020, the Company amended its senior secured asset-based
revolving credit facility, modifying the facility size to $90
million with a maturity date in 2023. Additionally, in June 2020
the Company entered into a $70 million term loan facility that
matures in 2025 to further strengthen its capital resources for
business transformation and growth initiatives.
At June 30, 2020, the Company had cash of $34.1 million and
total liquidity of approximately $120.7 million including cash plus
availability under its credit facilities. The Company expects the
facilities to provide ample financial resources to effectively
execute its near and long-term objectives.
Webcast and Conference Call
The Company will hold a live webcast and conference call to
review financial results and conduct a question-and-answer session
on Wednesday, July 22, 2020 at 10:00 a.m. ET. The live webcast will
be available in the Investors section of the Company’s website at
www.armstrongflooring.com. Due to potential extended wait times to
access the conference call via dial-in, the Company encourages use
of the webcast.
For those unable to access the webcast, the conference call will
be accessible by dialing 877-407-0789 (domestic) or 201-689-8562
(international). A replay of the conference call will be available
for 90 days, by dialing 844-512-2921 (domestic) or 412-317-6671
(international) and entering the passcode 13706761.
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.
Forward Looking Statements
Disclosures in this release and in our other public documents
and comments contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Those
statements provide our future expectations or forecasts and can be
identified by our use of words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “outlook,”
“target,” “predict,” “may,” “will,” “would,” “could,” “should,”
“seek,” and other words or phrases of similar meaning in connection
with any discussion of future operating or financial performance.
Forward-looking statements, by their nature, address matters that
are uncertain and involve risks because they relate to events and
depend on circumstances that may or may not occur in the future. As
a result, our actual results may differ materially from our
expected results and from those expressed in our forward looking
statements. A more detailed discussion of the risks and
uncertainties that could cause our actual results to differ
materially from those projected, anticipated or implied is included
in our reports filed with the U.S. Securities and Exchange
Commission. Forward-looking statements speak only as of the date
they are made. We undertake no obligation to update any
forward-looking statements beyond what is required under applicable
securities law.
Armstrong Flooring, Inc. and Subsidiaries
Consolidated Statements of Operations (Dollars in millions except
per share data) (Unaudited)
Three months ended June
30,
2020
2019
Net sales
$
145.6
$
177.7
Cost of goods sold
120.9
141.5
Gross profit
24.7
36.2
Selling, general, and administrative
expense
30.3
32.5
Operating (loss) income
(5.6
)
3.7
Interest expense
1.2
0.9
Other (income) expense
(0.5
)
0.2
(Loss) income from continuing operations
before income taxes
(6.3
)
2.6
Income tax (benefit)
--
(2.7
)
(Loss) income from continuing
operations
(6.3
)
5.3
Gain on disposal of discontinued
operations
--
9.4
Net income from discontinued
operations
--
9.4
Net (loss) income
$
(6.3
)
$
14.7
Weighted average number of common shares
outstanding - Basic
21.9
26.1
Basic (loss) earnings per share of common
stock
$
(0.29
)
$
0.56
Weighted average number of common shares
outstanding - Diluted
21.9
26.1
Diluted (loss) earnings per share of
common stock
$
(0.29
)
$
0.56
Consolidated Balance Sheet (Dollars in
millions)
Assets
June 30,
2020
December 31, 2019
Current Assets:
Cash
$
34.1
$
27.1
Accounts and notes receivable, net
45.0
36.1
Inventories, net
122.3
111.6
Other current assets
12.7
10.7
Total current assets
214.1
185.5
Property, plant, and equipment, net
266.6
277.2
Other non-current assets
35.0
39.5
Total assets
$
515.7
$
502.2
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued expenses
$
114.9
$
104.4
Short-term debt and current installments
of long-term debt
5.3
0.2
Total current liabilities
120.2
104.6
Long-term debt
62.7
42.5
Postretirement benefit liabilities
57.5
59.7
Pension benefit liabilities
12.6
16.0
Other long-term liabilities
10.9
11.1
Total liabilities
263.9
233.9
Total stockholders’ equity
251.8
268.3
Total liabilities and stockholders’
equity
$
515.7
$
502.2
Supplemental Reconciliations of GAAP to
non-GAAP Results (unaudited)
To supplement its consolidated financial statements presented in
accordance with accounting principles generally accepted in the
United States (GAAP), the Company provides additional measures of
performance adjusted to exclude the impact of restructuring charges
and related costs, impairments, the non-cash impact of the
Company’s U.S. pension plan, and certain other gains and losses.
Free cash flow is defined as net cash from operating activities
less purchases of property, plant and equipment. The Company uses
these adjusted performance measures in managing the business,
including in communications with its Board of Directors and
employees, and believes that they can provide users of this
financial information with meaningful comparisons of operating
performance between current and prior periods. The Company believes
that these non-GAAP financial measures are appropriate to enhance
understanding of its past performance, as well as its prospects for
future performance. A reconciliation of these non-GAAP financial
measures to the most directly comparable GAAP measures is included
in this release and on the Company’s website. These non-GAAP
measures should not be considered in isolation or as a substitute
for the most comparable GAAP measures. Non-GAAP financial measures
utilized by the Company may not be comparable to non-GAAP financial
measures used by other companies.
(Dollars in millions except per share
data)
Three Months Ended June
30,
2020
2019
Net (loss) income
($6.3)
$14.7
Net income from discontinued
operations
--
(9.4)
Interest expense
1.2
0.9
Other (income) expense
(0.5)
0.2
Income taxes
--
(2.7)
Operating (loss) income
(5.6)
3.7
Depreciation and amortization
10.3
11.0
Expenses related to cost reduction
initiatives, special projects, and plant closures
1.5
4.7
U.S. pension expense
0.6
0.6
Adjusted EBITDA
$6.9
$20.0
Three Months Ended June
30,
2020
2019
$
million
Per
diluted share
$
million
Per
diluted share
Net (loss) income
($6.3)
($0.29)
$14.7
$0.56
Expenses related to cost reduction
initiatives, special projects, and plant closures, including
accelerated depreciation
1.5
4.7
U.S. pension expense
0.6
0.6
Other (income) expense
(0.5)
0.2
Tax impact of adjustments at statutory
rate
(0.4)
(1.4)
Net income from discontinued
operations
--
(9.4)
Adjusted net (loss) income
($5.1)
($0.23)
$9.4
$0.36
Rows and columns may not foot due to rounding.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200722005120/en/
Investors: Gregory D. Waina Interim Chief Financial Officer
ir@armstrongflooring.com
Media: Alison van Harskamp Director, Corporate Communications
aficorporatecommunications@armstrongflooring.com
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