Armstrong Sells Patriot Business (AWI)

Patriot Flooring became a part of Armstrong in 1998 after the company acquired Triangle Pacific, a leading manufacturer of hardwood flooring and kitchen/bathroom cabinets, for $1.15 billion. Patriot Flooring currently employs 65 people in Wilmington, Massachusetts and Pompton Plains, New Jersey. It mainly serves the New England, metropolitan New York and Northern New Jersey markets.

Lancaster, Pennsylvania-based Armstrong World 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. On the contrary, Patriot is engaged in distribution of hardwood and laminate flooring and thus was not in sync with Armstrong’s business of making and marketing floors. Following the divestment, Armstrong can focus and continue to grow its core business in North America and globally.

In the second quarter of fiscal 2012, Armstrong’s net sales declined 5% to $710 million as improvements in price and mix were unable to offset broad volume declines in all businesses and geographies. Adjusted EPS in the quarter dipped 3% to 71 cents from 69 cents in the year-ago quarter.

The company has thus lowered its fiscal 2012 sales guidance to a range of $2.75 to $2.85 billion range and expects adjusted EBITDA to be in the $400 to $430 million range. 2012 adjusted EPS is expected to be $2.40 to $2.70 per share. The Zacks Consensus Estimate for EPS for the year is pegged at $2.50 and for revenue at $2.79 billion, within the guidance ranges.

For the third quarter of 2012, sales are expected to be between $740 and $780 million and adjusted EBITDA to be in the range of $120 to $140 million. The Zacks Consensus Estimate for EPS for the quarter currently stands at 91 cents and for revenue at $753 million.

Armstrong’s volumes are expected to be affected as global markets continue to struggle, particularly Europe. The company, however, continued to effectively manage its cost structure and adapt to the continued challenging market conditions.

Armstrong World Industries competes with privately held Congoleum Corporation, Pergo AB and Shaw Industries, Inc. Currently, the shares retain a short-term Zacks #4 Rank (Sell).