Armstrong Flooring (AFI) Posts Wider-than-Expected Q4 Loss

Armstrong Flooring, Inc. (NYSE:AFI) reported fourth-quarter 2018 results, wherein loss of 35 cents per share was nearly two times wider than the Zacks Consensus Estimate of 18 cents. However, the reported loss narrowed from the year-ago level of 68 cents.

Net sales of $153.8 million lagged the consensus mark of $165.8 million by 7.2%. The reported figure also decreased 3.5% from $159.4 million in the prior-year quarter. The dismal top-line performance was mainly due to lower volumes. A decline in volume during the quarter was mainly due to significant customer purchases in the third quarter, in response of a projected price rise in October 2018.

Consequently, shares of the company declined nearly 5% during yesterday’s trading session.

Adjusted EBITDA came in at $1.8 million in the quarter, down 63.3% from $4.9 million in the prior-year period. Adjusted EBITDA margin contracted 190 basis points to 1.2%. The fall was mainly due to lower sales and higher material cost inflation.

Financials

Armstrong Flooring ended the year with cash of $173.8 million compared with $40.1 million in the corresponding period of 2017. As of Dec 31, 2018, long-term debt was $70.6 million, down from $85 million at the end of 2017.

Full-Year 2018 Review

In full-year 2018, the company reported adjusted earnings per share of 22 cents, decreasing 31.3% year over year. Nonetheless, total revenues increased 3.4% from the prior-year level to $728.2 million, owing to a favorable mix, higher selling prices along with volume growth in Luxury Vinyl Tile (“LVT”), offsetting inflationary pressures and lower volumes.

Adjusted EBITDA also grew 3.2% to $57.5 million, while adjusted EBITDA margin was in line with the prior-year figure of 7.9%. The positive performance was backed by productivity gains and cost-saving actions.

2019 View

Backed by attractive growth trajectory, stronger margin profile and solid balance sheet, the company has provided solid view for full-year 2019. The company expects adjusted EBITDA for 2019 in the range of $58-$66 million, higher than the 2018 level, with growth mostly weighted to the second half of 2019. It expects capital expenditure in the $30-$35 million range.

Strategic Update

During the quarter, Armstrong Flooring completed the previously announced sale of wood flooring business for $90.2 million, net of closing costs, transaction fees and taxes.

Zacks Rank & Other Peer Releases

Currently, Armstrong Flooring holds a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United Rentals (NYSE:URI) reported fourth-quarter 2018 earnings of $4.85 per share, surpassing the Zacks Consensus Estimate of $4.77 by 1.7%. The reported earnings also increased 45.2% from the year-ago level of $3.34. Total revenues (Homebuilding, Forestar and Financial Services) came in at $2.31 billion. The figure surpassed the Zacks Consensus Estimate of $2.21 billion and increased 20% year over year.

Meritage Homes Corp. (NYSE:MTH) reported fourth-quarter 2018 earnings of $1.91 per share, surpassing the Zacks Consensus Estimate of $1.51 by 20.5%. The reported earnings also increased 120% from the year-ago level. Moreover, revenues in the Homebuilding segment increased 6.6% from the prior-year quarter to $1,008.8 million.

PulteGroup Inc. (NYSE:PHM) reported fourth-quarter 2018 earnings of $1.11 per share, beating the consensus mark of $1.09 by 1.8%. The bottom line also improved 30.6% on a year-over-year basis. Total revenues of $2.99 billion surpassed the consensus estimate of $2.93 billion and increased 7.3% on a year-over-year basis.

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