Armstrong World Industries, Inc.
) reported first-quarter 2014 adjusted earnings of 42 cents per
share, which surged 99% from 21 cents in the year-ago quarter.
Results benefited from lower interest expense due to the
write-off of deferred financing costs. However, the reported
figure lagged the Zacks Consensus Estimate of 45 cents.
However, including one-time items, earnings increased six times
to 30 cents per share from the prior-year quarter figure of 5
Net sales rose 2% year over year to $634 million but lagged the
Zacks Consensus Estimate of $644 million. Positive price and mix
led to the year-over-year improvement.
Cost of sales inched up 0.3% year over year to $479.4 million.
Gross profit rose to $155 million from $144.6 million in the
year-ago quarter. Gross margin expanded 120 basis points (bps)
year over year to 24.4%.
Selling, general and administrative (SG&A) expenses increased
4% year over year to $117 million, driven by higher spending on
promotional activity. Adjusted operating income increased 2% year
over year to $54 million due to rise in product price and reduced
manufacturing costs driven by productivity improvements.
Operating margin remained flat year over year at 8.5% in the
Net sales at the Building Products segment increased 5.3% to $308
million, aided by higher volumes, strength in architectural
specialties and favorable product price. Adjusted operating
profit for the segment was $58 million compared with $59 million
in the year-ago quarter. Higher volumes, improved price and
reduced manufacturing costs were offset by rise in input costs
owing to adverse weather, unfavorable mix, increased SG&A
expenses and plant start-up costs in Russia.
The Resilient Flooring segment reported a decline in sales to
$208 million, compared with $214.8 in the year-ago quarter due to
lower volumes in the Americas, partially offset by improved mix.
The segment reported adjusted operating profit of $10 million
versus $12 million in the year-ago quarter.
Net sales in the reported quarter grew 3% year over year to $118
million. The improvement was driven by positive price and mix.
The segment posted adjusted operating profit of $5 million, up
fivefold from the prior-year quarter.
Armstrong World Industries reported cash and cash equivalents of
$131 million as of Mar 31, 2014, down from $278 million as of Mar
31, 2013. The company recorded net cash usage in operating
activities of $33 million in the first quarter of fiscal 2014,
compared with $14 million in the year-ago comparable period.
Armstrong World Industries reiterated its adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) in
the band of $400-$430 million for 2014. For the second quarter of
2014, the company expects sales to be between $710 and $750
million and adjusted EBITDA in the range of $90-$110 million.
The company will benefit from investments in emerging markets and
Architectural Specialties. Positive price and mix, and growth in
core commercial markets will also brighten the company's
prospects. However, challenging market conditions in Europe and
Australia remain concerns.
PA-based Armstrong World Industries is a leading global producer
of flooring products and ceiling systems for use in the
construction and renovation of residential, commercial and
institutional buildings. The company also designs, manufactures
and sells kitchen and bathroom cabinets in the U.S.
At present, Armstrong World Industries has a Zacks Rank #4
(Sell). However, some better-ranked stocks in the sector include
Simpson Manufacturing Co., Inc.
United Rentals, Inc.
The GEO Group, Inc.
). All of these sport a Zacks Rank #1 (Strong Buy).
ARMSTRONG WORLD (AWI): Free Stock Analysis
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UTD RENTALS INC (URI): Free Stock Analysis
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