Market Overview

Armstrong Flooring Reports First Quarter 2018 Results


- Net Sales of $257.9 Million

- Net Loss of $10.4 Million

- Adjusted EBITDA of $10.1 Million and Adjusted Net Loss of $6.1 Million

- Reaffirms Outlook for Full Year 2018

Armstrong Flooring, Inc. (NYSE:AFI) ("Armstrong Flooring" or the
"Company"), North America's largest producer of resilient and wood
flooring products, today reported financial results for the first
quarter ended March 31, 2018.

Don Maier, Chief Executive Officer, commented, "Our strategic
investments, product innovation, and distributor relationships generated
significant sales growth in Vinyl Composition Tile ("VCT") and Luxury
Vinyl Tile ("LVT"). While first quarter 2018 net sales were lower due to
continued challenges in certain legacy categories and higher distributor
inventory levels at year-end 2017, we delivered Adjusted EBITDA in line
with our full year plan. Looking to the balance of 2018, we believe our
strategic initiatives are on track to accelerate net sales growth in the
second half of the year. Additionally, we anticipate the combined impact
of pricing, productivity and previously-announced cost saving actions
will offset intensifying inflationary pressures within the industry, and
we reaffirm our full-year 2018 outlook."

First Quarter of 2018 Results Compared with First Quarter of 2017

Consolidated Results

(Dollars in millions except per share data)       Three Months Ended March 31,






Net sales $ 257.9 $ 265.2 (2.7 %)
Operating (loss) ($8.9 ) ($8.5 ) NM
Net (loss) ($10.4 ) ($7.8 ) NM
Diluted (loss) per share ($0.40 ) ($0.28 ) NM
Adjusted EBITDA $ 10.1 $ 9.1 11.0 %
Adjusted EBITDA margin 3.9 % 3.4 % 50 bps
Adjusted net (loss) ($6.1 ) ($3.5 ) NM
Adjusted diluted (loss) per share ($0.24 ) ($0.13 ) NM

In the first quarter of 2018, net sales were $257.9 million as compared
to $265.2 million in the first quarter of 2017 due to a decline in Wood
segment net sales.

First quarter 2018 net loss was $10.4 million, or a diluted loss per
share of $0.40, as compared to a net loss of $7.8 million, or diluted
loss per share of $0.28, in the prior year quarter. In connection with
the previously-announced changes to our residential go-to-market
strategy, during the first quarter 2018 the Company incurred one-time
charges of $3.1 million primarily related to severance, which is
expected to achieve $10 million to $12 million of annualized savings.
Adjusted net loss was $6.1 million, or $0.24 adjusted diluted loss per
share, as compared to an adjusted net loss of $3.5 million, or adjusted
diluted loss per share of $0.13, in the prior year quarter.

First quarter 2018 adjusted EBITDA was $10.1 million, as compared to
$9.1 million in the prior year quarter, with the increase primarily due
to lower SG&A spending, including $4.3 million of customer
reimbursements for prior investments in merchandising as well as the
benefit of strong plant productivity and the previously announced plant
closures, which more than offset the impact of lower sales and higher
input costs.

Resilient Flooring Segment

      Three Months Ended March 31,
(Dollars in millions)





Net sales $ 163.5 $ 160.5 1.9 %
Operating (loss) ($3.8 ) ($4.0 ) NM
Adjusted EBITDA $ 9.7 $ 7.9 23.1 %
Adjusted EBITDA margin 5.9 % 4.9 % 100 bps

Net sales were $163.5 million as compared to $160.5 million in the prior
year period. The increase in net sales was primarily due to double-digit
growth in both VCT, helped by the acquisition of the VCT assets of
Mannington Mills, and LVT. This improvement was partially offset by
declines in legacy product categories.

Operating loss was $3.8 million in the quarter as compared to an
operating loss of $4.0 million in the prior year quarter. Adjusted
EBITDA was $9.7 million as compared to $7.9 million in the prior year
quarter, driven by improved SG&A and manufacturing costs, along with
productivity gains, which more than offset higher input costs.

Wood Flooring Segment

      Three Months Ended March 31,
(Dollars in millions)






Net sales $ 94.4 $ 104.7 (9.8 %)
Operating (loss) ($5.1 ) ($4.5 ) NM
Adjusted EBITDA $ 0.4 $ 1.2 (65.6 %)
Adjusted EBITDA margin 0.5 % 1.2 % (70) bps

Net sales were $94.4 million as compared to $104.7 million in the prior
year quarter, with the decline driven by lower volumes in both solid and
engineered wood. Volume was most impacted in the traditional channel.

Operating loss was $5.1 million, compared to an operating loss of $4.5
million in the prior year quarter. Adjusted EBITDA was $0.4 million as
compared to $1.2 million in the prior year quarter, primarily
attributable to the impact of lower net sales and higher input costs,
which were partially offset by lower manufacturing and SG&A costs.

Share Repurchase Program

Since the inception of the program, the Company has repurchased
approximately 2.5 million shares at an aggregate value of $41.0 million
under its share repurchase program authorized in March 2017.

Full Year 2018 Outlook

For the full year 2018, the Company continues to expect adjusted EBITDA
to be in the range of $70 million to $80 million. The adjusted EBITDA
outlook assumes sales growth in the low single-digits, weighted towards
the second half of full year 2018. The Company continues to expect
capital expenditures to be in the range of $40 million to $45 million
for the full year 2018 while delivering another year of free cash flow
in line with recent years.

Conference Call and Webcast

The Company will host a live webcast and conference call to review first
quarter results on Tuesday, May 8, 2018 at 11:00 a.m. ET. The live
webcast and accompanying slide presentation will be available in the
Investors section of the Company's website at
To participate in the call, please dial 877-407-0789 (domestic) or
201-689-8562 (international). A replay of the conference call will be
available for 90 days, by dialing 844-512-2921 (domestic) or
412-317-6671 (international) and entering the passcode 13678572.

About Armstrong Flooring

Armstrong Flooring, Inc. (NYSE:AFI) is a global leader in the design
and manufacture of innovative flooring solutions that inspire spaces
where people live, work, learn, heal and play
Headquartered in Lancaster, Pa., Armstrong Flooring is the #1
manufacturer of resilient and wood flooring products across North
America. The Company safely and responsibly operates 15 manufacturing
facilities in three countries and employs approximately 3,500
individuals, all working together 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

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 U.S. Securities and Exchange Commission. Forward-looking statements
speak only as of the date they are made. We undertake no obligation to
update any forward-looking statements beyond what is required under
applicable securities law.

Armstrong Flooring, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Dollars in millions except per share data)

Three months ended
March 31,

2018   2017
Net sales $ 257.9   $ 265.2
Cost of goods sold 218.6 217.3
Gross profit 39.3 47.9
Selling, general, and administrative expense 48.2 56.4
Operating (loss) (8.9 ) (8.5 )
Interest expense 0.9 0.5
Other expense 0.6 0.9
(Loss) before income taxes (10.4 ) (9.9 )
Income tax (benefit)   --     (2.1 )
Net (loss) $ (10.4 ) $ (7.8 )
Weighted average number of common shares outstanding - Basic   25.9     28.0  
Basic (loss) per share of common stock $ (0.40 ) $ (0.28 )
Weighted average number of common shares outstanding - Diluted   25.9     28.0  
Diluted (loss) per share of common stock $ (0.40 ) $ (0.28 )
Condensed Consolidated Balance Sheet
(Dollars in millions)

March 31,

December 31,

Assets (unaudited)
Current Assets:
Cash $ 28.9 $ 39.0
Accounts and notes receivable, net 87.0 79.7
Inventories, net 235.6 236.0
Other current assets 35.3 35.6
Total current assets 386.8 390.3
Property, plant, and equipment, net 415.7 418.1
Other non-current assets 70.6   71.1
Total assets $ 873.1   $ 879.5
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 148.9 $ 150.2
Income taxes payable 0.7 0.8
Total current liabilities 149.6 151.0
Long-term debt 91.0 86.0
Postretirement benefit liabilities 71.4 72.7
Pension benefit liabilities 4.7 5.7
Other long-term liabilities   13.4   14.1
Total liabilities 330.1 329.5
Total stockholders' equity   543.0   550.0
Total liabilities and stockholders' equity $ 873.1 $ 879.5

Supplemental Reconciliations of GAAP to
non-GAAP Results (unaudited)

To supplement its consolidated financial statements presented in
accordance with accounting principles generally accepted in the United
States (GAAP), the Company provides additional measures of performance
adjusted to exclude the impact of restructuring charges and related
costs, impairments, the non-cash impact of the U.S. pension plan, and
certain other gains and losses. Free cash flow is defined as net cash
from operating activities less purchases of property, plant and
equipment plus proceeds from the sale of property, plant and equipment.
The Company uses these adjusted performance measures in managing the
business, including in communications with its Board of Directors and
employees, and believes that they can provide users of this financial
information with meaningful comparisons of operating performance between
current and prior periods. The Company believes that these non-GAAP
financial measures are appropriate to enhance understanding of its past
performance, as well as its prospects for future performance. A
reconciliation of these non-GAAP financial measures to the most directly
comparable GAAP measures is included in this release and on the
Company's website. These non-GAAP measures should not be considered in
isolation or as a substitute for the most comparable GAAP measures.
Non-GAAP financial measures utilized by the Company may not be
comparable to non-GAAP financial measures used by other companies. The
Company does not provide financial guidance for forecasted net income
since certain items that impact net income are outside of our control
and cannot be reasonably predicted. Therefore, the Company is unable to
provide a reconciliation of its Adjusted EBITDA guidance to net income,
the most comparable financial measure calculated in accordance with GAAP.

(Dollars in millions except per share data)

      Three Months Ended March 31,
2018   2017
Total   Resilient   Wood Total   Resilient   Wood
Net (loss) ($10.4 ) ($ 7.8 )
Interest Expense 0.9 0.5
Other Expense 0.6 0.9
Taxes   --     (2.1 )
Operating (Loss) (8.9 ) (3.8 ) (5.1 ) (8.5 ) (4.0 ) (4.5 )
Depreciation and amortization 13.8 10.8 3.0 11.6 8.2 3.4
Expense related to plant closures, cost reductions, and multilayered
wood flooring duties
4.2 1.9 2.4 4.7 2.7 2.0
U.S. pension expense 0.9 0.8 0.1 1.4 1.1 0.3
Adjusted EBITDA $ 10.1   $ 9.7   $ 0.4 $ 9.1   $ 7.9   $ 1.2  
Three Months Ended March 31,
2018 2017
$ million Per diluted share $ million Per diluted share
Net (loss) ($10.4 ) ($0.40 ) ($7.8 ) ($0.28 )
Expenses related to plant closures (including accelerated
depreciation), cost reductions, and multilayered wood flooring duties
4.2 4.7
U.S. pension expense 0.9 1.4
Other Expense 0.6 0.9
Tax impact of adjustments at statutory rate (1.4 ) (2.6 )
Adjusted Net Loss   ($6.1 ) ($0.24 )   ($3.5 ) ($0.13 )

Columns may not foot due to rounding.

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