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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
March 31,
2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number:
1-2116
ARMSTRONG WORLD INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
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Pennsylvania
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23-0366390
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2500 Columbia Avenue,
Lancaster,
Pennsylvania
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17603
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
(717)
397-0611
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.01 par value per share
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AWI
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New York Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes
☒
No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
☒
Number of shares of Armstrong World Industries, Inc.’s common stock
outstanding as of April 21, 2022 –
46,960,247.
TABLE OF CONTENTS
2
When we refer to “AWI,” the “Company,” “we,” “our” or “us,” we are
referring to Armstrong World Industries, Inc. and its
subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q and the
documents incorporated by reference herein may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Those forward-looking
statements are subject to various risks and uncertainties and
include all statements that are not historical statements of fact
and those regarding our intent, belief or expectations, including,
but not limited to, our expectations concerning our markets and
their effect on our operating results; the impacts of COVID-19 on
our business; our expectations regarding the payment of dividends;
and our ability to increase revenues, earnings and earnings before
interest, taxes, depreciation and amortization (as discussed
below). Words such as “anticipate,” “expect,” “intend,” “plan,”
“target,” “project,” “predict,” “believe,” “may,” “will,” “would,”
“could,” “should,” “seek,” “estimate” and similar expressions are
intended to identify such forward-looking statements. These
statements are based on management’s current expectations and
beliefs and are subject to a number of factors that could lead to
actual results materially different from those described in the
forward-looking statements. Although we believe that the
assumptions underlying the forward-looking statements are
reasonable, we can give no assurance that our expectations will be
attained. Factors that could have a material adverse effect on our
financial condition, liquidity, results of operations or future
prospects or which could cause actual results to differ materially
from our expectations include, but are not limited to:
Risks Related to Our Operations
•
availability and costs of manufacturing inputs or sourced
products;
•
Worthington Armstrong Venture (“WAVE”), our joint venture with
Worthington Industries, Inc;
•
costs savings and productivity initiatives;
Risks Related to Our Strategy
•
digitalization initiatives and new technology;
•
strategic transactions;
Risks Related to Financial Matters
•
negative tax consequences;
•
covenants in our debt agreements;
•
defined benefit plan obligations;
•
the tax consequences of the separation of our flooring business
from our ceilings business;
Risks Related to Legal and Regulatory Matters
•
intellectual property rights;
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international operations;
Risks Related to General Economic and Other Factors
•
customer consolidation;
•
information technology disruptions and cybersecurity
breaches;
•
geographic concentration;
3
•
public health epidemics or pandemics (like COVID-19);
and
•
other risks detailed from time to time in our filings with the
Securities and Exchange Commission (the “SEC”), press releases and
other communications, including those set forth under “Risk
Factors” included in our Annual Report on Form 10-K for the year
ended December 31, 2021, and in the documents incorporated by
reference herein and therein.
Such forward-looking statements speak only as of the date they are
made. We expressly disclaim any obligation to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in our expectations with regard thereto or change in
events, conditions or circumstances on which any statement is
based.
4
PART I - FINANCIAL
INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Earnings and Comprehensive
Income
(amounts in millions, except per share data)
Unaudited
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Three Months Ended
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March 31,
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2022
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2021
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Net sales
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$
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282.6
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$
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251.9
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Cost of goods sold
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180.4
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164.4
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Gross profit
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102.2
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87.5
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Selling, general and administrative expenses
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57.1
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54.2
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Loss related to change in fair value of contingent
consideration
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0.1
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0.2
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Equity (earnings) from joint venture
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(18.2
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)
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(21.0
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)
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Operating income
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63.2
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54.1
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Interest expense
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5.1
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5.7
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Other non-operating (income), net
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(1.3
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)
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(1.3
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Earnings from continuing operations before income taxes
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59.4
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49.7
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Income tax expense
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15.0
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12.2
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Earnings from continuing operations
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44.4
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37.5
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Loss from disposal of discontinued businesses, net of tax expense
of $- and
$1.7
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-
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(2.1
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)
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Net loss from discontinued operations
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-
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(2.1
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)
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Net earnings
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$
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44.4
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$
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35.4
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Other comprehensive income, net of tax:
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Foreign currency translation adjustments
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0.7
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0.6
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Derivative gain, net
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10.6
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3.8
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Pension and postretirement adjustments
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0.6
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0.2
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Total other comprehensive income
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11.9
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4.6
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Total comprehensive income
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$
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56.3
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$
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40.0
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Earnings per share of common stock, continuing
operations:
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Basic
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$
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0.94
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$
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0.78
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Diluted
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$
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0.94
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$
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0.78
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Loss per share of common stock, discontinued operations:
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Basic
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$
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-
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$
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(0.04
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)
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Diluted
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$
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-
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$
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(0.04
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)
|
|
Net earnings per share of common stock:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.94
|
|
|
$
|
0.74
|
|
|
Diluted
|
|
$
|
0.94
|
|
|
$
|
0.74
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
47.1
|
|
|
|
47.8
|
|
|
Diluted
|
|
|
47.2
|
|
|
|
48.0
|
|
See accompanying notes to Condensed Consolidated Financial
Statements beginning on page 9.
5
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Balance Sheets
(amounts in millions, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
|
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
76.1
|
|
|
$
|
98.1
|
|
|
Accounts and notes receivable, net
|
|
|
114.1
|
|
|
|
109.1
|
|
|
Inventories, net
|
|
|
103.9
|
|
|
|
90.2
|
|
|
Income taxes receivable
|
|
|
0.4
|
|
|
|
1.4
|
|
|
Other current assets
|
|
|
23.6
|
|
|
|
23.1
|
|
|
Total current assets
|
|
|
318.1
|
|
|
|
321.9
|
|
|
Property, plant, and equipment, less accumulated depreciation and
amortization of
$504.7 and
$494.0,
respectively
|
|
|
539.2
|
|
|
|
542.8
|
|
|
Operating lease assets
|
|
|
21.6
|
|
|
|
21.0
|
|
|
Finance lease assets
|
|
|
17.8
|
|
|
|
18.4
|
|
|
Prepaid pension costs
|
|
|
110.3
|
|
|
|
109.0
|
|
|
Investment in joint venture
|
|
|
57.5
|
|
|
|
50.0
|
|
|
Goodwill
|
|
|
167.1
|
|
|
|
167.0
|
|
|
Intangible assets, net
|
|
|
416.9
|
|
|
|
421.4
|
|
|
Income taxes receivable
|
|
|
-
|
|
|
|
0.6
|
|
|
Other non-current assets
|
|
|
59.6
|
|
|
|
57.9
|
|
|
Total assets
|
|
$
|
1,708.1
|
|
|
$
|
1,710.0
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
|
|
25.0
|
|
|
|
25.0
|
|
|
Accounts payable and accrued expenses
|
|
|
145.4
|
|
|
|
174.9
|
|
|
Operating lease liabilities
|
|
|
6.1
|
|
|
|
5.6
|
|
|
Finance lease liabilities
|
|
|
2.3
|
|
|
|
2.2
|
|
|
Income taxes payable
|
|
|
14.0
|
|
|
|
1.9
|
|
|
Total current liabilities
|
|
|
192.8
|
|
|
|
209.6
|
|
|
Long-term debt, less current installments
|
|
|
615.3
|
|
|
|
606.4
|
|
|
Operating lease liabilities
|
|
|
15.7
|
|
|
|
15.6
|
|
|
Finance lease liabilities
|
|
|
16.2
|
|
|
|
16.8
|
|
|
Postretirement benefit liabilities
|
|
|
70.7
|
|
|
|
71.1
|
|
|
Pension benefit liabilities
|
|
|
36.4
|
|
|
|
36.9
|
|
|
Other long-term liabilities
|
|
|
32.0
|
|
|
|
46.7
|
|
|
Income taxes payable
|
|
|
19.6
|
|
|
|
20.3
|
|
|
Deferred income taxes
|
|
|
171.8
|
|
|
|
166.9
|
|
|
Total non-current liabilities
|
|
|
977.7
|
|
|
|
980.7
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
|
Common stock, $0.01 par
value per share,
200 million
shares authorized,
62,792,506
shares issued and
47,018,645 shares
outstanding as of March 31, 2022 and
62,775,155 shares
issued and
47,302,299 shares
outstanding as of December 31, 2021
|
|
|
0.6
|
|
|
|
0.6
|
|
|
Capital in excess of par value
|
|
|
563.9
|
|
|
|
561.3
|
|
|
Retained earnings
|
|
|
1,044.8
|
|
|
|
1,011.4
|
|
|
Treasury stock, at cost,
15,773,861 shares
as of March 31, 2022 and
15,472,856
shares as of December 31, 2021
|
|
|
(974.0
|
)
|
|
|
(944.0
|
)
|
|
Accumulated other comprehensive loss
|
|
|
(97.7
|
)
|
|
|
(109.6
|
)
|
|
Total shareholders' equity
|
|
|
537.6
|
|
|
|
519.7
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
1,708.1
|
|
|
$
|
1,710.0
|
|
See accompanying notes to Condensed Consolidated Financial
Statements beginning on page 9.
6
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Shareholders’
Equity
(amounts in millions, except share data)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Retained
|
|
|
Treasury Stock
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Shares
|
|
|
Amount
|
|
|
(Loss)
|
|
|
Total
|
|
|
December 31, 2021
|
|
|
47,302,299
|
|
|
$
|
0.6
|
|
|
$
|
561.3
|
|
|
$
|
1,011.4
|
|
|
|
15,472,856
|
|
|
$
|
(944.0
|
)
|
|
$
|
(109.6
|
)
|
|
$
|
519.7
|
|
|
Stock issuance, net
|
|
|
17,351
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Cash dividends - $0.231 per
common share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11.0
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11.0
|
)
|
|
Share-based employee compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
2.6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2.6
|
|
|
Net earnings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44.4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44.4
|
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11.9
|
|
|
|
11.9
|
|
|
Acquisition of treasury stock
|
|
|
(301,005
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
301,005
|
|
|
|
(30.0
|
)
|
|
|
-
|
|
|
|
(30.0
|
)
|
|
March 31, 2022
|
|
|
47,018,645
|
|
|
$
|
0.6
|
|
|
$
|
563.9
|
|
|
$
|
1,044.8
|
|
|
|
15,773,861
|
|
|
$
|
(974.0
|
)
|
|
$
|
(97.7
|
)
|
|
$
|
537.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Retained
|
|
|
Treasury Stock
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Shares
|
|
|
Amount
|
|
|
(Loss)
|
|
|
Total
|
|
|
December 31, 2020
|
|
|
47,913,821
|
|
|
$
|
0.6
|
|
|
$
|
553.7
|
|
|
$
|
869.8
|
|
|
|
14,685,510
|
|
|
$
|
(863.9
|
)
|
|
$
|
(109.3
|
)
|
|
$
|
450.9
|
|
|
Stock issuance, net
|
|
|
40,278
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Cash dividends - $0.21 per
common share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10.2
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(10.2
|
)
|
|
Share-based employee compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
2.9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2.9
|
|
|
Net earnings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35.4
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35.4
|
|
|
Other comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.6
|
|
|
|
4.6
|
|
|
Acquisition of treasury stock
|
|
|
(125,635
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
125,635
|
|
|
|
(10.0
|
)
|
|
|
-
|
|
|
|
(10.0
|
)
|
|
March 31, 2021
|
|
|
47,828,464
|
|
|
$
|
0.6
|
|
|
$
|
556.6
|
|
|
$
|
895.0
|
|
|
|
14,811,145
|
|
|
$
|
(873.9
|
)
|
|
$
|
(104.7
|
)
|
|
$
|
473.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to Condensed Consolidated Financial
Statements beginning on page 9.
7
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
44.4
|
|
|
$
|
35.4
|
|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
|
|
Depreciation and amortization
|
|
|
21.2
|
|
|
|
25.6
|
|
|
Deferred income taxes
|
|
|
1.1
|
|
|
|
1.2
|
|
|
Share-based compensation
|
|
|
2.9
|
|
|
|
2.3
|
|
|
Loss on disposal of discontinued operations
|
|
|
-
|
|
|
|
0.4
|
|
|
Equity earnings from joint venture
|
|
|
(18.2
|
)
|
|
|
(21.0
|
)
|
|
U.S. pension (credit)
|
|
|
(0.2
|
)
|
|
|
-
|
|
|
Loss from change in fair value of contingent
consideration
|
|
|
0.1
|
|
|
|
0.2
|
|
|
Payments of contingent consideration in excess of acquisition-date
fair value
|
|
|
(1.9
|
)
|
|
|
-
|
|
|
Other non-cash adjustments, net
|
|
|
0.2
|
|
|
|
0.2
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Receivables
|
|
|
(13.1
|
)
|
|
|
(12.9
|
)
|
|
Inventories
|
|
|
(13.6
|
)
|
|
|
(2.1
|
)
|
|
Accounts payable and accrued expenses
|
|
|
(17.5
|
)
|
|
|
(9.2
|
)
|
|
Income taxes receivable and payable, net
|
|
|
13.0
|
|
|
|
5.5
|
|
|
Other assets and liabilities
|
|
|
(1.7
|
)
|
|
|
(6.0
|
)
|
|
Net cash provided by operating activities
|
|
|
16.7
|
|
|
|
19.6
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(12.0
|
)
|
|
|
(13.2
|
)
|
|
Return of investment from joint venture
|
|
|
12.2
|
|
|
|
16.5
|
|
|
Payments to Knauf upon disposal of discontinued
operations
|
|
|
-
|
|
|
|
(11.8
|
)
|
|
Other investing activities
|
|
|
-
|
|
|
|
(0.3
|
)
|
|
Net cash provided by (used for) investing activities
|
|
|
0.2
|
|
|
|
(8.8
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from revolving credit facility
|
|
|
25.0
|
|
|
|
50.0
|
|
|
Payments of revolving credit facility
|
|
|
(10.0
|
)
|
|
|
(50.0
|
)
|
|
Payments of long-term debt
|
|
|
(6.2
|
)
|
|
|
(6.3
|
)
|
|
Dividends paid
|
|
|
(10.9
|
)
|
|
|
(10.1
|
)
|
|
Proceeds from share-based compensation plans, net of tax
|
|
|
0.2
|
|
|
|
0.7
|
|
|
Payments for finance leases
|
|
|
(0.6
|
)
|
|
|
(0.5
|
)
|
|
Payments of acquisition-related contingent consideration
|
|
|
(6.7
|
)
|
|
|
-
|
|
|
Payments for treasury stock acquired
|
|
|
(30.0
|
)
|
|
|
(10.0
|
)
|
|
Net cash (used for) financing activities
|
|
|
(39.2
|
)
|
|
|
(26.2
|
)
|
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
0.3
|
|
|
|
0.1
|
|
|
Net (decrease) in cash and cash equivalents
|
|
|
(22.0
|
)
|
|
|
(15.3
|
)
|
|
Cash and cash equivalents at beginning of year
|
|
|
98.1
|
|
|
|
136.9
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
76.1
|
|
|
$
|
121.6
|
|
|
Supplemental Cash Flow Disclosures:
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
4.9
|
|
|
$
|
5.7
|
|
|
Income tax payments, net
|
|
|
0.9
|
|
|
|
7.2
|
|
|
Amounts in accounts payable for capital expenditures
|
|
|
0.3
|
|
|
|
0.7
|
|
See accompanying notes to Condensed Consolidated Financial
Statements beginning on page 9.
8
Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
(dollar amounts in millions, except share data)
NOTE 1. BUSINESS AND BASIS OF PRESENTATION
Armstrong World Industries, Inc. (“AWI”) is a Pennsylvania
corporation incorporated in 1891. When we refer to “AWI,” the
“Company,” “we,” “our” or “us” in these notes, we are referring to
AWI and its subsidiaries.
Except as disclosed in this note, the accounting policies used in
preparing the Condensed Consolidated Financial Statements in this
Form 10-Q are the same as those used in preparing the Consolidated
Financial Statements for the year ended December 31, 2021. These
statements should therefore be read in conjunction with the
Consolidated Financial Statements and notes that are included in
the Annual Report on Form 10-K for the fiscal year ended December
31, 2021. In the opinion of management, all adjustments of a normal
recurring nature have been included to provide a fair statement of
the results for the reporting periods presented. Operating results
for the first quarter of 2022 and 2021 included in this report are
unaudited. Quarterly results are not necessarily indicative of
annual earnings, primarily due to the different level of sales in
each quarter of the year and the possibility of changes in general
economic conditions.
These Condensed Consolidated Financial Statements are prepared in
accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”). The statements include management estimates and
judgments, where appropriate. Management utilizes estimates to
record many items, including certain asset values, contingent
purchase price liabilities, allowances for bad debts, inventory
obsolescence and lower of cost and net realizable value charges,
warranty reserves, workers’ compensation, general liability and
environmental claims, and income taxes. When preparing an estimate,
management determines the amount based upon the consideration of
relevant information and may confer with outside parties, including
external counsel. Actual results may differ from these
estimates.
Certain prior year amounts have been reclassified in the Condensed
Consolidated Financial Statements to conform to the 2022
presentation.
COVID-19 Considerations
The COVID-19 pandemic has created significant volatility and
economic disruption and the impact on our future consolidated
results of operations is uncertain. The extent to which COVID-19
impacts our employees, operations, customers, suppliers and
financial results depends on numerous evolving factors that we may
not be able to accurately predict, including: the duration and
scope of the pandemic (and whether there is a resurgence or
multiple resurgences in the future, including the impact of new
variants); government actions taken in response to the pandemic,
including required shutdowns, vaccine or testing mandates; the
availability, acceptance, distribution and continued effectiveness
of vaccines; the impact on construction activity; supply chain
disruptions; rising inflation; labor shortages; the effect on our
customers demand for our ceiling and wall systems; sustained remote
or hybrid work models; our ability to manufacture and sell our
products; and the ability of our customers to pay for our products.
While many of our products support life sustaining activities and
essential construction, we, and certain of our customers or
suppliers, may be impacted by state actions, orders and policies
regarding the COVID-19 pandemic, including temporary closures of
non-life sustaining businesses, shelter-in-place orders, and
travel, social distancing and quarantine policies, the
implementation and enforcement of which vary by individual U.S.
states and by individual countries in the Americas. We did not
record any asset impairments, inventory charges or material bad
debt reserves related to COVID-19 during the first quarter of 2022
and 2021 but future events may require such charges, which could
have a material adverse effect on our financial condition,
liquidity or results of operations.
NOTE 2. SEGMENT RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Net sales
|
|
|
|
|
|
|
|
Mineral Fiber
|
|
$
|
203.2
|
|
|
$
|
188.7
|
|
|
Architectural Specialties
|
|
|
79.4
|
|
|
|
63.2
|
|
|
Total net sales
|
|
$
|
282.6
|
|
|
$
|
251.9
|
|
9
Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(unaudited)
(dollar amounts in millions, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Segment operating income (loss)
|
|
|
|
|
|
|
|
Mineral Fiber
|
|
$
|
57.6
|
|
|
$
|
60.6
|
|
|
Architectural Specialties
|
|
|
6.5
|
|
|
|
(4.9
|
)
|
|
Unallocated Corporate
|
|
|
(0.9
|
)
|
|
|
(1.6
|
)
|
|
Total consolidated operating income
|
|
$
|
63.2
|
|
|
$
|
54.1
|
|
The Architectural Specialties operating loss for the three months
ended March 31, 2021 was driven by intangible asset amortization
and other acquisition-related expenses related to our acquisitions
of TURF Design, Inc. ("Turf") in July 2020, Moz Designs, Inc.
("Moz") in August 2020, and Arktura LLC ("Arktura") in December
2020.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Total consolidated operating income
|
|
$
|
63.2
|
|
|
$
|
54.1
|
|
|
Interest expense
|
|
|
5.1
|
|
|
|
5.7
|
|
|
Other non-operating (income), net
|
|
|
(1.3
|
)
|
|
|
(1.3
|
)
|
|
Earnings from continuing operations before income taxes
|
|
$
|
59.4
|
|
|
$
|
49.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
|
Segment assets
|
|
|
|
|
|
|
|
Mineral Fiber
|
|
$
|
1,142.7
|
|
|
$
|
1,133.9
|
|
|
|