Armstrong Q1 2020 Earnings Report
Key Takeaways
Armstrong World Industries reported a 3% increase in net sales and a 39% increase in operating income for the first quarter of 2020. However, the company recorded a significant non-cash charge related to a pension risk transfer and withdrew its 2020 financial guidance due to the uncertainty surrounding the COVID-19 pandemic.
Net sales increased by 3% compared to the prior year quarter, driven by higher volumes in Architectural Specialties and Mineral Fiber segments.
Operating income rose by 39% year-over-year, primarily due to lower SG&A expenses and volume growth in Architectural Specialties.
A $1 billion pension risk transfer resulted in a $374.4 million non-cash charge to non-operating income.
The company withdrew and suspended its 2020 financial guidance due to the impact of COVID-19.
Armstrong
Armstrong
Armstrong Revenue by Segment
Forward Guidance
AWI withdrew its financial guidance for 2020 due to external uncertainty, but they anticipate generating a free cash flow margin of 22-25% this fiscal year.
Positive Outlook
- Strong balance sheet
- Ample liquidity
- No meaningful debt maturities until 2024
- Well positioned to navigate through the impact of COVID-19
- Expect to generate a free cash flow margin of 22-25% this fiscal year
Challenges Ahead
- External uncertainty
- High levels of variability in financial scenario modeling
- Withdrew financial guidance for 2020
- Impact of COVID-19
- Demand slowed in April
Revenue & Expenses
Visualization of income flow from segment revenue to net income