Armstrong Flooring Reports Third Quarter 2018 Results
Lancaster, Pa.-- Armstrong Flooring recently reported financial results for the third quarter, which ended September 30.
“Third quarter net sales improved led by 7% growth in our resilient segment, which more than offset lower wood segment sales,” said Don Maier, CEO. “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. 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.”
In the third quarter of 2018, net sales increased 0.4% to $309.7 million due to higher resilient segment net sales as compared to $308.5 million in the third quarter of 2017. Third quarter 2018 net income was $7.9 million, as compared to net loss of $18.7 million 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 as compared to an adjusted net income of $5.4 million 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.
Net sales were $208.1 million in the resilient flooring segment 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 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.
For the full year 2018, Armstrong 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. Armstrong 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.
For more information, visit www.armstrongflooring.com.