LANCASTER, Pa., Feb. 23, 2021 (GLOBE NEWSWIRE) -- Armstrong World Industries, Inc. (NYSE:AWI), a leader in the design, innovation and manufacture of commercial and residential ceiling, wall and suspension system solutions, today reported financial results for the fourth quarter and full year 2020.
Fourth Quarter Results from Continuing Operations| (Dollar amounts in millions except per-share data) | For the Three Months Ended December 31, | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| Net sales | $ | 238.7 | $ | 246.9 | (3.3 | )% | ||||||
| Operating income | $ | 44.1 | $ | 62.2 | (29.1 | )% | ||||||
| Earnings from continuing operations | $ | 34.8 | $ | 51.5 | (32.4 | )% | ||||||
| Diluted earnings per share | $ | 0.72 | $ | 1.04 | (30.8 | )% | ||||||
Net sales decreased compared to the prior year quarter, driven by lower volume in both the Mineral Fiber and Architectural Specialties segments as a result of lower market demand due to COVID-19, as well as unfavorable Mineral Fiber Average Unit Value (“AUV”) primarily due to unfavorable channel mix and regional weakness in major metropolitan areas heavily impacted by COVID-19, partially offset by the positive sales impact of 2020 and 2019 acquisitions.
Operating income decreased from the prior year quarter, driven primarily by lower sales volume in the Mineral Fiber segment and higher SG&A costs related to growth initiatives, partially offset by improved manufacturing productivity.
“2020 was an extraordinary year with social, economic and health crises all contributing to new and unusual operating challenges. I am extremely proud that Armstrong was able to advance our strategic initiatives in the face of those challenges, as our teams quickly adapted to new ways of working in order to continue the pursuit of our strategic priorities. We continued to invest in digital tools and initiatives, we launched over thirty new products, including many with a focus on Healthy Spaces, and we completed three acquisitions, including Arktura in December,” said Vic Grizzle, President and CEO of Armstrong. “Notwithstanding the impacts of COVID-19, we again demonstrated the strength of our business model, as we delivered over $200 million of free cash flow.”
Additional (non-GAAP*) Financial Metrics from Continuing Operations| (Dollar amounts in millions except per-share data) | For the Three Months Ended December 31, | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| Adjusted EBITDA | $ | 73 | $ | 90 | (18.9 | )% | ||||||
| Adjusted net income | $ | 37 | $ | 55 | (32.2 | )% | ||||||
| Adjusted diluted earnings per share | $ | 0.77 | $ | 1.11 | (30.6 | )% | ||||||
| Adjusted free cash flow | $ | 68 | $ | 71 | (4.6 | )% | ||||||
* The Company uses the above non-GAAP adjusted measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. The Company also believes that the adjustments help users of our financial information understand the effect of those adjusted items on our selected reported results and provide useful alternative measurements of performance. See Supplemental Reconciliations of GAAP to non-GAAP results (below) for a breakdown of the adjustments and a reconciliation of the selected reported results to these non-GAAP measures.
| (Dollar amounts in millions) | For the Three Months Ended December 31, | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| Adjusted EBITDA | ||||||||||||
| Mineral Fiber | $ | 66 | $ | 81 | (19.1 | )% | ||||||
| Architectural Specialties | 7 | 8 | (16.0 | )% | ||||||||
| Consolidated Adjusted EBITDA | $ | 73 | $ | 90 | (18.9 | )% | ||||||
Consolidated adjusted EBITDA declined (19)% in the fourth quarter when compared to the same prior year period, driven primarily by unfavorable channel mix and a decrease in WAVE earnings, partially offset by improved manufacturing productivity. Adjusted free cash flow declined primarily due to lower cash earnings driven by volume declines, partially offset by working capital improvements.
Fourth Quarter Segment Highlights
Mineral Fiber| (Dollar amounts in millions) | For the Three Months Ended December 31, | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| Net sales (as reported) | $ | 183.1 | $ | 197.2 | (7.2 | )% | ||||||
| Operating income (as reported) | $ | 45.0 | $ | 59.1 | (23.9 | )% | ||||||
| Adjusted EBITDA | $ | 66 | $ | 81 | (19.1 | )% | ||||||
Mineral Fiber net sales decreased due to lower volume and unfavorable AUV. Unfavorable AUV was driven primarily by unfavorable channel mix and regional weakness in major metropolitan areas heavily impacted by COVID-19. Like for like price was positive in the quarter.
Operating income decreased in the fourth quarter primarily due to the negative impact of lower sales volume, higher SG&A spend, lower WAVE earnings and the impact of unfavorable AUV, partially offset by improved manufacturing productivity and a reduction in incentive compensation expenses.
Architectural Specialties| (Dollar amounts in millions) | For the Three Months Ended December 31, | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| Net sales (as reported) | $ | 55.6 | $ | 49.7 | 11.9 | % | ||||||
| Operating income (as reported) | $ | 1.4 | $ | 5.6 | (75.0 | )% | ||||||
| Adjusted EBITDA | $ | 7 | $ | 8 | (16.0 | )% | ||||||
Net sales in Architectural Specialties increased by 12% due to sales from the recent acquisitions of Turf Design, Moz Designs and Arktura, LLC mostly offset by a reduction in demand as a result of COVID-19.
Operating income decreased due to the negative impact of lower sales volume, excluding the impact of the 2020 acquisitions, as well as additional amortization expense related to acquisitions.
Unallocated Corporate
Unallocated corporate expense of $2.3 million decreased from $2.5 million of expense in the prior year quarter.
Year to Date Results from Continuing Operations
| (Dollar amounts in millions) | For the Year Ended December 31, | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| Net sales (as reported) | $ | 936.9 | $ | 1,038.1 | (9.7 | )% | ||||||
| Operating income (as reported) | $ | 254.8 | $ | 317.4 | (19.7 | )% | ||||||
| Adjusted EBITDA | $ | 330 | $ | 403 | (18.1 | )% | ||||||
| Adjusted free cash flow | $ | 212 | $ | 244 | (13.0 | )% | ||||||
Net sales decreased driven mainly by lower volumes in both the Mineral Fiber and Architectural Specialties segments as a result of COVID-19 and unfavorable AUV in the Mineral Fiber segment.
Operating income decreased from the prior year period, primarily due to the impact of decreased sales and lower WAVE earnings, which was partially offset by lower SG&A expenses, the gain on sale of the idled China plant, and improved manufacturing productivity.
Adjusted Free Cash Flow (FCF) decreased from the prior year period, driven by lower cash generated from operating activities as a result of COVID-19 and lower equity earnings from WAVE. Adjusted FCF for the year is 23% as a percent of sales, or 121% of adjusted net income.
Market Outlook and 2021 Guidance
“We continue to expect sequential improvements in our end markets as market conditions improve and vaccinations allow businesses to return to more normal operations,” said Brian MacNeal, CFO of Armstrong. “With our growth initiatives, including Healthy Spaces and kanopi, and the year-on-year benefit of our 2020 acquisitions, we expect to grow sales 10% to 13% in 2021. We expect this sales growth, together with continued productivity in our plants, to deliver adjusted EBITDA growth of 9% to 13%, and, after a step up in capital expenditures, to drive a free cash flow margin of 19%.”
About Armstrong and Additional Information
More details on the Company’s performance can be found in its annual report on Form 10-K for the year ended December 31, 2020 that the Company expects to file with the SEC today.
Armstrong World Industries, Inc. (AWI) is a leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions in the Americas. With $937 million in revenue in 2020, AWI has approximately 2,700 employees and a manufacturing network of 16 facilities, plus six facilities dedicated to its WAVE joint venture.
Additional forward looking non-GAAP metrics are available on the Company’s website at www.armstrongceilings.com under the Investors tab. The website is not part of this release and references to our website address in this release are intended to be inactive textual references only.
