Second Quarter 2021 Highlights
- Net sales of
$168.1 million - Net loss of
$19.5 million - Adjusted EBITDA loss of
$3.5 million
Multi-Year Transformation Update
As it relates to expanding customer reach, we began selling Armstrong® Flooring Pro™ products to customers in the builder and multifamily channel and we continue to see positive customer reactions from our Armstrong® Flooring Signature™ products. We also made our initial sales into the hospitality channel in the second quarter, and our sales force is actively pursuing future growth opportunities in this new vertical.
With regard to simplifying product offerings and operations, we continued to experience strong momentum from our Quick Ship program, which just under one-year into its existence, experienced its strongest quarter, and the fourth sequential quarter of growth. In addition, we completed the closure of our
Furthermore, we continued to strengthen our portfolio and organization while remaining attentive to the dynamic supply chain environment, adapting our supply chain to increase safety stock to mitigate longer lead times, and also exploring additional suppliers and alternative shipping options to combat global shipping container shortages. Additionally, we opened our new corporate office headquarters. This move, along with the first quarter opening of a first of its kind technical center, gives our teams the ability to work cohesively in a modern and energized space and promotes further collaboration and innovation at
Second Quarter 2021 Results
Three Months Ended | |||||||||||
(Dollars in millions except per share data) | 2021 | 2020 | Change | ||||||||
Net sales | $ | 168.1 | $ | 145.6 | 15.5 | % | |||||
Operating income (loss) | (18.3 | ) | (5.6 | ) | 226.8 | % | |||||
Net income (loss) | (19.5 | ) | (6.3 | ) | 209.5 | % | |||||
Diluted earnings (loss) per share | $ | (0.89 | ) | $ | (0.29 | ) | N/M | ||||
Adjusted EBITDA | (3.5 | ) | 6.9 | N/M | |||||||
Adjusted EBITDA margin | (2.1 | )% | 4.7 | % | N/M | ||||||
Adjusted net (loss) | (17.3 | ) | (5.1 | ) | N/M | ||||||
Adjusted diluted (loss) per share | (0.79 | ) | (0.23 | ) | N/M | ||||||
In the second quarter of 2021, net sales increased 15.5% to
Operating loss in the quarter was
Net loss in the second quarter of 2021 was
Second quarter 2021 adjusted EBITDA was a loss of
Liquidity and Capital Resources Update
At
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
About
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
Contact Information
Investors:
SVP, Chief Financial Officer
ir@armstrongflooring.com
Media:
Director, Corporate Communications
Media@armstrongflooring.com
Condensed Consolidated Statements of Operations (unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
(In millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net sales | $ | 168.1 | $ | 145.6 | $ | 317.0 | $ | 284.3 | ||||||||
Cost of goods sold | 146.9 | 120.9 | 275.9 | 236.3 | ||||||||||||
Gross profit | 21.2 | 24.7 | 41.1 | 48.0 | ||||||||||||
Selling, general and administrative expenses | 39.5 | 30.3 | 77.6 | 66.9 | ||||||||||||
Gain on sale of property | — | — | (46.0 | ) | — | |||||||||||
Operating income (loss) | (18.3 | ) | (5.6 | ) | 9.5 | (18.9 | ) | |||||||||
Interest expense | 2.8 | 1.2 | 6.3 | 1.8 | ||||||||||||
Other expense (income), net | (2.3 | ) | (0.5 | ) | (4.4 | ) | (0.9 | ) | ||||||||
Income (loss) before income taxes | (18.8 | ) | (6.3 | ) | 7.6 | (19.8 | ) | |||||||||
Income tax expense (benefit) | 0.7 | — | (0.1 | ) | (0.3 | ) | ||||||||||
Net income (loss) | $ | (19.5 | ) | $ | (6.3 | ) | $ | 7.7 | $ | (19.5 | ) | |||||
Basic earnings (loss) per share of common stock: | ||||||||||||||||
Basic earnings (loss) per share of common stock | $ | (0.89 | ) | $ | (0.29 | ) | $ | 0.35 | $ | (0.89 | ) | |||||
Diluted earnings (loss) earnings per share of common stock: | ||||||||||||||||
Diluted earnings (loss) per share of common stock | $ | (0.89 | ) | $ | (0.29 | ) | $ | 0.35 | $ | (0.89 | ) | |||||
Condensed Consolidated Balance Sheets (unaudited)
(In millions) | 2021 | 2020 | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 14.6 | $ | 13.7 | ||||
Accounts and notes receivable, net | 58.9 | 43.0 | ||||||
Inventories, net | 123.9 | 122.9 | ||||||
Prepaid expenses and other current assets | 15.0 | 12.9 | ||||||
Assets held-for-sale | — | 17.8 | ||||||
Total current assets | 212.4 | 210.3 | ||||||
Property, plant and equipment, net | 237.5 | 246.9 | ||||||
Operating lease assets | 19.9 | 8.5 | ||||||
Intangible assets, net | 15.7 | 19.0 | ||||||
Deferred income taxes | 4.5 | 4.4 | ||||||
Other noncurrent assets | 9.4 | 4.4 | ||||||
Total assets | $ | 499.4 | $ | 493.5 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 5.8 | $ | 5.5 | ||||
Current installments of long-term debt | 3.9 | 2.9 | ||||||
Trade account payables | 83.2 | 78.5 | ||||||
Accrued payroll and employee costs | 16.5 | 14.8 | ||||||
Current operating lease liabilities | 2.3 | 2.7 | ||||||
Other accrued expenses | 19.2 | 17.7 | ||||||
Total current liabilities | 130.9 | 122.1 | ||||||
Long-term debt, net of unamortized debt issuance costs | 49.6 | 71.4 | ||||||
Noncurrent operating lease liabilities | 17.7 | 5.8 | ||||||
Postretirement benefit liabilities | 54.6 | 55.6 | ||||||
Pension benefit liabilities | 4.6 | 4.6 | ||||||
Deferred income taxes | 1.5 | 2.4 | ||||||
Other long-term liabilities | 7.9 | 9.0 | ||||||
Total liabilities | 266.8 | 270.9 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock | — | — | ||||||
Preferred stock | — | — | ||||||
(86.2 | ) | (87.1 | ) | |||||
Additional paid-in capital | 677.8 | 677.4 | ||||||
Accumulated deficit | (300.7 | ) | (308.4 | ) | ||||
Accumulated other comprehensive (loss) | (58.3 | ) | (59.3 | ) | ||||
Total stockholders' equity | 232.6 | 222.6 | ||||||
Total liabilities and stockholders' equity | $ | 499.4 | $ | 493.5 | ||||
Condensed Consolidated Statements of Cash Flows (unaudited)
Three Month Ended | Six Months Ended | |||||||||||||||
(In millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | (19.5 | ) | $ | (6.3 | ) | $ | 7.7 | $ | (19.5 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | ||||||||||||||||
Depreciation and amortization | 13.1 | 10.3 | 23.0 | 20.9 | ||||||||||||
Inventory write down | 1.2 | — | 1.2 | — | ||||||||||||
Deferred income taxes | (0.2 | ) | (0.1 | ) | (0.7 | ) | (0.6 | ) | ||||||||
Stock-based compensation expense | 0.8 | 0.6 | 1.4 | 1.3 | ||||||||||||
Gain on sale of property | — | — | (46.0 | ) | — | |||||||||||
Gain from long-term disability plan change | — | — | — | (1.1 | ) | |||||||||||
(1.7 | ) | 1.0 | (3.5 | ) | 1.9 | |||||||||||
Other non-cash adjustments, net | 0.2 | (0.9 | ) | 0.3 | 0.5 | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Receivables | (1.2 | ) | (4.4 | ) | (17.4 | ) | (9.2 | ) | ||||||||
Inventories | 0.2 | (2.9 | ) | (2.2 | ) | (11.0 | ) | |||||||||
Accounts payable and accrued expenses | 6.9 | 14.2 | 9.5 | 15.4 | ||||||||||||
Other assets and liabilities | (3.7 | ) | (1.3 | ) | (5.0 | ) | (5.5 | ) | ||||||||
Net cash provided by (used for) operating activities | (3.9 | ) | 10.2 | (31.7 | ) | (6.9 | ) | |||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property, plant and equipment | (4.1 | ) | (3.4 | ) | (11.1 | ) | (10.9 | ) | ||||||||
Proceeds from sale of assets | 0.1 | — | 65.4 | — | ||||||||||||
Net cash provided by (used for) investing activities | (4.0 | ) | (3.4 | ) | 54.3 | (10.9 | ) | |||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from revolving credit facility | 22.7 | 11.2 | 49.3 | 41.2 | ||||||||||||
Payments on revolving credit facility | (16.3 | ) | (79.2 | ) | (50.1 | ) | (79.2 | ) | ||||||||
Issuance of long-term debt | 0.2 | 70.0 | 0.2 | 70.0 | ||||||||||||
Financing costs | — | (6.9 | ) | — | (6.9 | ) | ||||||||||
Payments on long-term debt | (1.0 | ) | — | (21.1 | ) | (0.1 | ) | |||||||||
Value of shares withheld related to employee tax withholding | — | — | (0.1 | ) | — | |||||||||||
Net cash provided by (used for) financing activities | 5.6 | (4.9 | ) | (21.8 | ) | 25.0 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 0.2 | 0.3 | 0.1 | (0.2 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | (2.1 | ) | 2.2 | 0.9 | 7.0 | |||||||||||
Cash and cash equivalents at beginning of year | 16.7 | 31.9 | 13.7 | 27.1 | ||||||||||||
Cash and cash equivalents at end of period | $ | 14.6 | $ | 34.1 | $ | 14.6 | $ | 34.1 | ||||||||
Reconciliation of Free Cash Flow to Net Cash Provided by (Used for) Operating Activities (unaudited)
Three Month Ended | Six Months Ended | |||||||||||||||
(In millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net cash provided by (used for) operating activities | $ | (3.9 | ) | $ | 10.2 | $ | (31.7 | ) | $ | (6.9 | ) | |||||
Less: Capital expenditures | (4.1 | ) | (3.4 | ) | (11.1 | ) | (10.9 | ) | ||||||||
Add: Proceeds from asset sales | 0.1 | — | 65.4 | — | ||||||||||||
Free cash flow | $ | (7.9 | ) | $ | 6.8 | $ | 22.6 | $ | (17.8 | ) | ||||||
Free cash flow is a non-GAAP financial measure and consists of Net cash provided by (used for) operating activities less capital expenditures net of proceeds from asset sales. The Company’s management believes Free cash flow is meaningful to investors because management reviews Free cash flow in assessing and evaluating performance. However, this measure should be considered in addition to, rather than a substitute for Cash flows provided by (used for) operating activities provided in accordance with GAAP. The Company’s method of calculating Free cash flow may differ from methods used by other companies and, as a result, Free cash flow may not be comparable to other similarly titled measures disclosed by other companies.
Reconciliation of Net Debt to Total Debt Outstanding (unaudited)
(In millions) | 2021 | 2020 | ||||||
Total debt outstanding: | ||||||||
Short-term debt | $ | 5.8 | $ | 5.5 | ||||
Current installments of long-term debt | 3.9 | 2.9 | ||||||
Long-term debt, net of unamortized debt issuance costs | 49.6 | 71.4 | ||||||
Total debt outstanding | 59.3 | 79.8 | ||||||
Less: Cash and cash equivalents | 14.6 | 13.7 | ||||||
Net debt | $ | 44.7 | $ | 66.1 | ||||
Net debt is a non-GAAP financial measure and consists of total debt outstanding reduced by cash and cash equivalents. The Company‘s management believes Net debt is meaningful to investors because management reviews Net debt in assessing and evaluating performance. However, this measure should be considered in addition to, rather than as a substitute for total debt outstanding in accordance with GAAP. The Company's method of calculating Net debt may differ from methods used by other companies and, as a result, Net debt may not be comparable to other similarly titled measures disclosed by other companies.
Reconciliation of Adjusted Net Income (Loss) to Net Income (Loss) (unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
(In millions, except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net income (loss) | $ | (19.5 | ) | $ | (6.3 | ) | $ | 7.7 | $ | (19.5 | ) | |||||
Add-back (deduct) business transformation items: | ||||||||||||||||
Site exit costs | 0.3 | — | 0.8 | — | ||||||||||||
Additional costs related to business transformation initiatives | 4.5 | 1.5 | 4.5 | 1.9 | ||||||||||||
Gain on sale of | — | — | (46.0 | ) | — | |||||||||||
Canadian Pension Settlement Charge | 0.2 | — | 0.2 | — | ||||||||||||
0.2 | 0.6 | 0.5 | 1.3 | |||||||||||||
Other (income) expense,net | (2.3 | ) | (0.5 | ) | (4.4 | ) | (0.9 | ) | ||||||||
Tax impact of adjustments (at statutory rate) | (0.7 | ) | (0.4 | ) | 11.1 | (0.6 | ) | |||||||||
Adjusted net income (loss) | $ | (17.3 | ) | $ | (5.1 | ) | $ | (25.6 | ) | $ | (17.8 | ) | ||||
Adjusted diluted earnings (loss) per share | $ | (0.79 | ) | $ | (0.23 | ) | $ | (1.17 | ) | $ | (0.81 | ) | ||||
(a) Does not total due to rounding.
Adjusted net income (loss) is a non-GAAP financial measures and consists of Net income (loss) adjusted to remove the impact of business transformation items,
Reconciliation of Adjusted EBITDA to Net Income (Loss) (unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||
(In millions) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net income (loss) | $ | (19.5 | ) | $ | (6.3 | ) | $ | 7.7 | $ | (19.5 | ) | |||||
Add-back (deduct): | ||||||||||||||||
Income tax expense (benefit) | 0.7 | — | (0.1 | ) | (0.3 | ) | ||||||||||
Other (income) expense, net | (2.3 | ) | (0.5 | ) | (4.4 | ) | (0.9 | ) | ||||||||
Interest expense | 2.8 | 1.2 | 6.3 | 1.8 | ||||||||||||
Operating (loss) | (18.3 | ) | (5.6 | ) | 9.5 | (18.9 | ) | |||||||||
Add-back: Depreciation and amortization expense | 13.1 | 10.3 | 23.0 | 20.9 | ||||||||||||
Add-back: | 0.2 | 0.6 | 0.5 | 1.3 | ||||||||||||
Add-back (deduct) Business transformation items: | ||||||||||||||||
Site exit costs | 0.3 | — | 0.8 | — | ||||||||||||
Additional costs related to business transformation initiatives | 1.2 | 1.5 | 1.2 | 1.9 | ||||||||||||
Gain on sale of | — | — | (46.0 | ) | — | |||||||||||
Adjusted EBITDA | $ | (3.5 | ) | $ | 6.9 | (a) | $ | (11.0 | ) | $ | 5.2 | |||||
(a) Does not total due to rounding
Adjusted EBITDA is a non-GAAP financial measure and consists of Net income (loss) adjusted to remove the impact of income tax expense (benefit), other (income) expense, interest expense, depreciation and amortization expense,
Source:
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