Exhibit 99.1
ARMSTRONG FLOORING ANNOUNCES AGREEMENT TO SELL ITS
WOOD FLOORING SEGMENT AND COST OPTIMIZATION PLAN
- Sale Price of $100 million Valued at Approximately 7.2 Times the Wood Flooring Segment’s Trailing Twelve Month Adjusted EBITDA
- Cost Optimization Plan to Simplify Operations Following Divestiture
- Divestiture and Cost Optimization Plan Immediately Accretive to Adjusted EBITDA Margin from Continuing Operations
- Strengthens Focus on Growing Resilient Flooring Segment
Lancaster, PA, November 15, 2018. Armstrong Flooring, Inc. (NYSE: AFI) (“Armstrong Flooring” or the “Company”) has entered into a definitive agreement to sell its Wood Flooring segment to an affiliate of American Industrial Partners (“AIP”) for a purchase price of $100 million, subject to customary adjustments for working capital, debt, and other matters. The transaction is valued at approximately 7.2 times the Wood Flooring segment’s trailing twelve month Adjusted EBITDA. As of October 31, 2018 Armstrong Flooring’s Wood Flooring segment comprised six U.S. manufacturing facilities primarily serving the North American region and approximately 1,700 employees. The transaction, which is subject to customary closing conditions, is expected to be completed at the end of the fourth quarter of 2018. The net proceeds to the Company from the transaction after purchase price adjustments arenon-taxable and expected to be $85 to $90 million, which should increase the Company’s flexibility to further invest in its growth strategies and other value-enhancing opportunities.
Upon closing of the sale, Armstrong Flooring will intensify its focus on the fastest-growing parts of the flooring industry, including Luxury Vinyl Tile (“LVT”) and rigid core, as well as its wide range of resilient products including Vinyl Composition Tile and resilient sheet. AIP will gain Armstrong Flooring’s high-quality wood flooring product portfolio and existing network of wood floor manufacturing facilities, staffed by an experienced wood flooring team. AIP will own the Bruce brand and all other Wood Flooring segment brands. To ensure a seamless transition for customers, AIP will have full access to the Armstrong Flooring brand for the sale of wood products for two years after closing.
Don Maier, Chief Executive Officer, commented, “Today’s announcement demonstrates our commitment to maximizing shareholder value and focusing our portfolio on profitable growth strategies. The wood flooring industry has been impacted by changing market dynamics and now is the right time to deepen our focus on LVT and other resilient flooring categories, where we are confident fundamentals remain strong for future growth.”
Rick Hoffman, Partner at AIP, said, “Don and I believe this strategic decision empowers both the resilient and wood flooring businesses to better realize their core strengths and pursue strategies for growth, product innovation and quality, and exceptional service to customers. Our companies look forward to working closely with each other to ensure a seamless transition for employees, customers and suppliers.”
Additional Details on 2018 Outlook
The Company previously provided its Adjusted EBITDA outlook for the full year 2018 in the range of $72 million to $78 million. The segment level contribution to the full year Adjusted EBITDA outlook is unchanged. On the current basis of presentation, Adjusted EBITDA for the Resilient Flooring segment is expected to be $59 million to $63 million for the full year 2018. Starting in the fourth quarter 2018, the Wood Flooring segment is expected to be classified as a Discontinued Operation.
