LANCASTER, Pa.--(BUSINESS WIRE)--Armstrong Flooring, Inc. (NYSE: AFI), North America’s largest producer of resilient flooring products, today reported financial results for the second quarter ended June 30, 2019.
Larry McWilliams, Chairman and Interim Chief Executive Officer, commented, “Adjusted EBITDA margin improved in the quarter despite challenging end market demand across our industry, including the winding down of elevated channel inventory levels. We remain committed to investing in our products, people and operations to improve our position with customers. The strength of our balance sheet provides us with the flexibility to continue executing against that objective while capitalizing on value enhancing opportunities.”
Second Quarter 2019 Results Compared with Second Quarter of 2018 Results
| (Dollars in millions except per share data) | Three Months Ended June 30, | ||
| 2019 | 2018 | Change | |
| Net sales | $177.7 | $201.2 | (11.7%) |
| Operating income | $3.7 | $3.7 | 0.0% |
| Net income | $14.7 | $10.5 | 40.0% |
| Diluted income per share | $0.56 | $0.40 | $0.16 |
| Adjusted EBITDA | $20.0 | $20.7 | (3.4%) |
| Adjusted EBITDA margin | 11.3% | 10.3% | 100 bps |
| Adjusted net income | $9.4 | $7.8 | 20.5% |
| Adjusted diluted income per share | $0.36 | $0.30 | $0.06 |
In the second quarter of 2019, net sales decreased 11.7% to $177.7 million from $201.2 million in the second quarter of 2018, including an adverse currency impact of 110 basis points. The decrease in net sales was primarily due to lower volumes and mix, marginally offset by modest price realization in response to tariff related inflationary pressures. Lower volumes in the second quarter of 2019 reflected relative changes in distributor inventory and overall soft end-market demand, particularly in our residential categories. Inventory levels in the distributor channel decreased sequentially compared to the first quarter 2019 but remained moderately elevated at the end of the quarter.
Net income in the second quarter of 2019 was $14.7 million, or diluted income per share of $0.56, as compared to a net income of $10.5 million, or diluted income per share of $0.40, in the prior year quarter. Adjusted net income was $9.4 million, or adjusted diluted income per share of $0.36, as compared to an adjusted net income of $7.8 million, or adjusted diluted income per share of $0.30, in the prior year quarter.
Second quarter 2019 adjusted EBITDA was $20.0 million, as compared to $20.7 million in the prior year quarter. The decrease in adjusted EBITDA was primarily attributable to lower net sales, partially offset by lower selling, general and administrative expenses and improved productivity.
During the second quarter 2019, the company repurchased approximately 4.5 million shares for $50.0 million, excluding fees. At June 30, 2019, the Company had cash, cash equivalents and restricted cash of $45.5 million and long-term debt of $73.0 million. As of June 30, 2019, the Company had $71.1 million of availability under its revolving credit facility.
Full Year 2019 Outlook
For the full year 2019, the Company has moderated its expectation for adjusted EBITDA, which it now anticipates to be in the range of $46 million to $54 million, primarily attributable to a continuation of soft end-market conditions. The Company continues to expect capital expenditures to be approximately $30 million for the full year 2019. The Company expects to build cash from operations over the remaining quarters of 2019.
About Armstrong Flooring
Armstrong Flooring, Inc. (NYSE: AFI) is a global leader in the design and manufacture of innovative flooring solutions. Headquartered in Lancaster, Pennsylvania, Armstrong Flooring is North America’s largest producer of resilient flooring products. The Company safely and responsibly operates 8 manufacturing facilities globally, working 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.
