Armstrong Flooring Reports Third Quarter 2019 Results
Lancaster, Pa. -- Armstrong Flooring, Inc. reported financial results for the third quarter ended September 30, 2019.
Michel Vermette, president and CEO, said, “Since joining the company in September, I have spent time assessing the business, and it is clear that the current performance does not reflect the company’s potential. I have begun working with the teams to initiate a comprehensive review of all aspects of the business to allow us to address operational challenges, optimize our product portfolio, expand our customer reach, streamline processes and implement numerous best practices to better capitalize on market opportunities. As we begin the effort needed to overhaul and modernize the business, I am confident that the long-term upside for our company will be significant.”
In the third quarter of 2019, net sales decreased 20.7% to $165.6 million from $208.9 million in the third quarter of 2018, including an adverse currency impact of 90 basis points. The decrease in net sales was primarily due to unfavorable volumes and mix. Lower volumes in the third quarter of 2019 primarily reflected an unfavorable comparison in 2018 due to significant customer purchases in the distribution channel in anticipation of U.S. tariffs along with what the company believes to be weaker performance by several distributors in 2019. Volume was below expectations due to further inventory reductions combined with share loss in some categories within the distribution channel, and mix was driven by lower relative LVT sales as a result of distributor stocking activity in the prior year quarter.
The net loss in the third quarter of 2019 was $31.4 million, or diluted loss per share of $1.44, as compared to a net income of $7.9 million, or diluted income per share of $0.30, in the prior year quarter. The third quarter 2019 included pre-tax charges of $23.3 million primarily related to inventory write-down, merchandizing write-off, executive transition, and business optimization costs. Adjusted net loss was $11.1 million, or adjusted diluted loss per share of $0.51, as compared to an adjusted net income of $10.5 million, or adjusted diluted income per share of $0.40, in the prior year quarter.
Third quarter 2019 adjusted EBITDA was $8.8 million, as compared to $24.4 million in the prior year quarter. The decrease in adjusted EBITDA was primarily attributable to lower net sales and increased input cost inflation pressure, partially offset by improved productivity and lower SG&A spending. At September 30, 2019, the company had cash and cash equivalents $66.6 million and long-term debt of $72.1 million.
For the full year 2019, the company has revised its expectation for adjusted EBITDA, which it now anticipates to be in the $20 - $25 million range. This adjustment is primarily attributable to recent sales trends and cost pressures. The company continues to expect capital expenditures to be approximately $30 million for the full year 2019, and expects to experience a typical seasonal cash draw in the fourth quarter of 2019.
“While the team is disappointed in the persistent top-line challenges and acknowledges that it will take some time to improve results, we are committed to taking decisive actions to achieve the company’s potential,” Vermette added.
For more information, visit www.armstrongflooring.com.