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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 6, 2018

 

 

ARMSTRONG FLOORING, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-37589   47-4303305

(State or other jurisdiction

of incorporation )

  (Commission File No.)  

(IRS Employer

Identification No.)

2500 Columbia Avenue P.O. Box 3025

Lancaster, Pennsylvania

  17603
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code: (717) 672-9611

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Section 2 - Financial Information

 

Item 2.02

Results of Operations and Financial Condition.

On November 6, 2018, Armstrong Flooring, Inc. (the “Company”) issued a press release announcing its third quarter 2018 financial results. The full text of the press release is attached hereto as Exhibit 99.1.

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.

Section 7 – Regulation FD

 

Item 7.01

Regulation FD Disclosure.

On November 6, 2018, the Company issued a press release announcing that it will report its third quarter 2018 financial results via a live webcast and conference call on November 6, 2018 at 11:00 a.m. Eastern Time. The live webcast and accompanying slide presentation will be available in the Investors section of the Company’s website at www.armstrongflooring.com. To participate in the call, please dial 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 13683720. The full text of the press release is attached hereto as Exhibit 99.1.

The information in Item 7.01 of this Current Report on Form 8-K is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01

Financial Statements and Exhibits.

 

Exhibit No.

  

Description

99.1    Press Release of Armstrong Flooring, Inc. dated November 6, 2018


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ARMSTRONG FLOORING, INC.
By:  

/s/ Christopher S. Parisi

  Christopher S. Parisi
  Senior Vice President, General Counsel & Secretary

Date: November 6, 2018

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

LOGO

ARMSTRONG FLOORING REPORTS THIRD QUARTER 2018 RESULTS

Third Quarter 2018 Highlights Compared to Prior Year

 

   

Net Sales Increased 0.4% to $309.7 Million; Resilient Segment Net Sales Up 7.0%

 

   

Net Income Improved to $7.9 Million; EPS Expanded to $0.30 from ($0.70)

 

   

Adjusted EBITDA Increased 17.1% to $29.9 Million; Adjusted EPS Grew 129.4% to $0.46 from $0.20

 

   

Narrows Outlook for Full Year 2018

Lancaster, PA, November 6, 2018. Armstrong Flooring, Inc. (NYSE: AFI) (“Armstrong Flooring” or the “Company”), North America’s largest producer of resilient and wood flooring products, today reported financial results for the third quarter ended September 30, 2018.

Don Maier, Chief Executive Officer, commented, “Third quarter net sales improved led by 7% growth in our Resilient segment, which more than offset lower Wood segment sales. We generated significant volume growth in Luxury Vinyl Tile (“LVT”) as well as higher selling prices across many product categories, reflecting our 2018 pricing actions in response to inflationary pressure. On this momentum, Adjusted EBITDA improved by 17% and margin by 140 basis points year-over-year, augmented by productivity gains and cost saving actions. These results are a reflection of continued execution of our strategic priorities. We are seeing more consistent progress in our top and bottom line performance. We plan to continue investing in growth categories, pricing in line with inflation and targeting cost efficiencies to further improve our margin and returns in 2018 and beyond.”

Third Quarter of 2018 Results Compared with Third Quarter of 2017 Results

Consolidated Results

 

(Dollars in millions except per share data)    Three Months Ended September 30,  
     2018     2017     Change  

Net sales

   $ 309.7     $ 308.5       0.4

Operating income (loss)

   $ 11.1     ($ 29.2     NM  

Net income (loss)

   $ 7.9     ($ 18.7     NM  

Diluted earnings (loss) per share

   $ 0.30     ($ 0.70     NM  

Adjusted EBITDA

   $ 29.9     $ 25.6       17.1

Adjusted EBITDA margin

     9.7     8.3     140 bps  

Adjusted net income

   $ 12.0     $ 5.4       124.1

Adjusted diluted earnings per share

   $ 0.46     $ 0.20       129.4

In the third quarter of 2018, net sales increased 0.4% to $309.7 million as compared to $308.5 million in the third quarter of 2017 due to higher Resilient segment net sales.

Third quarter 2018 net income was $7.9 million, or diluted earnings per share of $0.30, as compared to net loss of $18.7 million, or diluted loss per share of $0.70, in the prior year quarter. Prior year loss included pre-tax expenses of $23.7 million related to plant closures and $12.5 million due to intangible


asset impairment. Adjusted net income was $12.0 million, or adjusted diluted earnings per share of $0.46, as compared to an adjusted net income of $5.4 million, or adjusted diluted earnings per share of $0.20, in the prior year quarter.

Third quarter 2018 adjusted EBITDA was $29.9 million, as compared to $25.6 million in the prior year quarter. The increase in adjusted EBITDA was primarily driven by pricing gains in response to inflationary pressure, improved productivity, including the benefit of plant closures, and lower SG&A spending.

Resilient Flooring Segment

 

     Three Months Ended September 30,  
(Dollars in millions)    2018     2017     Change  

Net sales

   $ 208.1     $ 194.4       7.0

Operating income

   $ 10.7     $ 9.3       13.8

Adjusted EBITDA

   $ 24.6     $ 21.3       15.6

Adjusted EBITDA margin

     11.8     11.0    
80
bps
 
 

Net sales were $208.1 million as compared to $194.4 million in the prior year period. The increase in net sales was primarily due to double-digit volume growth in LVT and increases in inventory at distributors, along with improved mix and overall higher selling prices in response to inflationary pressure.

Operating income was $10.7 million as compared to operating income of $9.3 million in the prior year quarter. Adjusted EBITDA was $24.6 million as compared to $21.3 million in the prior year quarter, largely reflecting the benefit of higher net sales, improved productivity and lower SG&A spending, which more than offset higher input and freight costs.

Wood Flooring Segment

 

     Three Months Ended September 30,  
(Dollars in millions)    2018     2017     Change  

Net sales

   $ 101.6     $ 114.1       (11.0 %) 

Operating income (loss)

   $ 0.4     ($ 38.5     NM  

Adjusted EBITDA

   $ 5.3     $ 4.2       25.5

Adjusted EBITDA margin

     5.2     3.7     150 bps  

Net sales were $101.6 million as compared to $114.1 million in the prior year quarter, with the decline due to lower volumes. Lower volumes were partially offset by higher selling prices in response to inflationary pressure and improved mix in both solid and engineered wood.

Operating income was $0.4 million, compared to an operating loss of $38.5 million in the prior year quarter, which included expenses of $23.7 million related to plant closures and $12.5 million of intangible asset impairment charges. Adjusted EBITDA was $5.3 million as compared to $4.2 million in the prior year quarter, driven by improved manufacturing costs and productivity, along with lower SG&A spending, which more than offset lower net sales and higher input costs.

 

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Full Year 2018 Outlook

For the full year 2018, the Company now expects adjusted EBITDA to be in the range of $72 million to $78 million. The adjusted EBITDA outlook assumes sales growth in the low single-digits. The Company now expects capital expenditures to be approximately $40 million for the full year 2018 while delivering another year of free cash flow in line with recent years.

Conference Call and Webcast

The Company will host a live webcast and conference call to review third quarter results on Tuesday, November 6, 2018 at 11:00 a.m. ET. The live webcast and accompanying slide presentation will be available in the Investors section of the Company’s website at www.armstrongflooring.com. To participate in the call, please dial 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 13683720.

About Armstrong Flooring

Armstrong Flooring, Inc. (NYSE: AFI) is a global leader in the design and manufacture of innovative flooring solutions that inspire spaces where people live, work, learn, heal and play SM. Headquartered in Lancaster, Pa., Armstrong Flooring is the #1 manufacturer of resilient and wood flooring products across North America. The Company safely and responsibly operates 15 manufacturing facilities in three countries and employs approximately 3,500 individuals, all working together 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 at 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.

 

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Contact Information

Investors:

Douglas Bingham

VP, Treasury and Investor Relations

717-672-9300

IR@armstrongflooring.com

Media:

Steve Trapnell

Corporate Communications Manager

717-672-7218

aficorporatecommunications@armstrongflooring.com

 

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Armstrong Flooring, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in millions except per share data)

 

     Three months ended
September 30,
 
     2018      2017  

Net sales

   $ 309.7      $ 308.5  

Cost of goods sold

     249.1        276.2  
  

 

 

    

 

 

 

Gross profit

     60.6        32.3  

Selling, general, and administrative expense

     49.5        49.0  

Intangible asset impairment

     —          12.5  
  

 

 

    

 

 

 

Operating income (loss)

     11.1        (29.2

Interest expense

     0.9        0.8  

Other expense

     0.9        1.0  
  

 

 

    

 

 

 

Earnings (loss) before income taxes

     9.3        (31.0

Income tax expense (benefit)

     1.4        (12.3
  

 

 

    

 

 

 

Net income (loss)

   $ 7.9      $ (18.7
  

 

 

    

 

 

 

Weighted average number of common shares outstanding - Basic

     26.0        26.8  
  

 

 

    

 

 

 

Basic earnings (loss) per share of common stock

   $ 0.31      $ (0.70
  

 

 

    

 

 

 

Weighted average number of common shares outstanding - Diluted

     26.2        26.8  
  

 

 

    

 

 

 

Diluted earnings (loss) per share of common stock

   $ 0.30      $ (0.70
  

 

 

    

 

 

 

Condensed Consolidated Balance Sheet

(Dollars in millions)

 

     September
30, 2018
     December 31,
2017
 
     (unaudited)         
Assets      

Current Assets:

     

Cash

   $ 39.4      $ 39.0  

Accounts and notes receivable, net

     115.9        79.7  

Inventories, net

     266.6        236.0  

Other current assets

     23.4        35.6  
  

 

 

    

 

 

 

Total current assets

     445.3        390.3  

Property, plant, and equipment, net

     398.9        418.1  

Other non-current assets

     66.5        71.1  
  

 

 

    

 

 

 

Total assets

   $ 910.7      $ 879.5  
  

 

 

    

 

 

 
Liabilities and Stockholders’ Equity      

Current liabilities:

     

Accounts payable and accrued expenses

   $ 169.8      $ 150.2  

Other current liabilities

     1.2        0.8  
  

 

 

    

 

 

 

Total current liabilities

     171.0        151.0  

Long-term debt

     94.6        86.0  

Postretirement benefit liabilities

     68.7        72.7  

Pension benefit liabilities

     2.6        5.7  

Other long-term liabilities

     17.0        14.1  
  

 

 

    

 

 

 

Total liabilities

     353.9        329.5  

Total stockholders’ equity

     556.8        550.0  
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 910.7      $ 879.5  
  

 

 

    

 

 

 

 

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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 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 plus proceeds from the sale 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. The Company does not provide financial guidance for forecasted net income since certain items that impact net income are outside of our control and cannot be reasonably predicted. Therefore, the Company is unable to provide a reconciliation of its Adjusted EBITDA guidance to net income, the most comparable financial measure calculated in accordance with GAAP.

 

(Dollars in millions except per share data)                                         
     Three Months Ended September 30,  
     2018      2017  
     Total      Resilient      Wood      Total     Resilient      Wood  

Net income (loss)

   $ 7.9            ($ 18.7     

Interest expense

     0.9              0.8       

Other expense

     0.9              1.0       

Taxes

     1.4              (12.3     
  

 

 

          

 

 

      

Operating income (loss)

     11.1        10.7        0.4        (29.2     9.3        (38.5

Depreciation and amortization

     14.3        11.4        2.9        35.8       10.7        25.1  

Expenses related to plant closures, multi-layer wood flooring duties, strategic projects, and cost reduction initiatives

     3.6        1.8        1.9        5.1       0.1        5.0  

Intangible asset impairment

     —          —          —          12.5       —          12.5  

U.S. pension expense

     0.9        0.8        0.1        1.4       1.1        0.3  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA

   $ 29.9      $ 24.6      $ 5.3      $ 25.6     $ 21.3      $ 4.2  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

     Three Months Ended September 30,  
     2018      2017  
     $ million      Per diluted share      $ million      Per diluted share  

Net income (loss)

   $ 7.9      $ 0.30      ($ 18.7    ($ 0.70

Expenses related to plant closures, multi-layer wood flooring duties, strategic projects, and cost reduction initiatives

     3.6           5.1     

Intangible asset impairment

     —             12.5     

Accelerated depreciation from plant closures

     —             18.7     

U.S. pension expense

     0.9           1.4     

Other Expense

     0.9           1.0     

Tax impact of adjustments at statutory rate

     (1.4         (14.7   
  

 

 

       

 

 

    

Adjusted Net Income

   $ 12.0      $ 0.46      $ 5.4      $ 0.20  
  

 

 

    

 

 

    

 

 

    

 

 

 

Rows and columns may not foot due to rounding.

 

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