Armstrong World Industries, Inc. (“Armstrong”) (NYSE:AWI) today
announced that its Board of Directors has unanimously approved a plan to
separate the Company’s Flooring business from its Ceilings (Building
Products) business, creating two independent industry-leading publicly
traded companies. The separation is intended to be a tax-free spin-off
of the Flooring business to the Company's shareholders, and is expected
to be completed in the first quarter of 2016.
Armstrong believes that separating its Flooring and Ceilings businesses
will create two strong companies that are leaders in their respective
markets and that will benefit from increased strategic focus,
streamlined operating structures and improved capital allocation. Each
public company will offer investors a distinct and compelling investment
opportunity based on different operating and financial models,
end-market business cycles and strategic growth opportunities.
Matthew J. Espe, President and Chief Executive Officer of Armstrong,
commented, "We are committed to taking decisive actions to deliver
shareholder value, and separating our businesses at this time is the
best way to accomplish that goal. We expect both businesses to improve
their industry-leading positions and maximize their strategic
opportunities. There is little existing overlap between the businesses,
and we expect the separation to create minimal incremental operating
expenses and result in no disruption to our customers, distributors, and
suppliers. Both businesses will remain headquartered in Lancaster and we
expect minimal impact on our employees.”
Espe continued, “This separation is a continuation of the Company’s
actions since emergence from bankruptcy to create long-term shareholder
value. Since 2008, we have improved margins by dramatically reducing
SG&A, divesting non-core and under-performing businesses, including the
Cabinets and European flooring businesses, and investing in growth
opportunities around the world. Over the same period, we have returned
over $1.5 billion of capital to our shareholders through dividends and
share repurchases. The time is right for this separation as these two
businesses are well-positioned to deliver value as independent
companies.”
Two Highly Focused Companies
Armstrong World Industries, Inc. (AWI)
Following the separation, AWI will be made up of the Armstrong Building
Products unit which is the global leader in providing suspended ceiling
solutions for use in renovation and new construction, both in commercial
and residential spaces, with diverse end-use applications. In 2014,
Armstrong Building Products generated approximately $1.3 billion of
revenue. The Company will continue to strengthen its leadership position
in key domestic and international end markets by leveraging recently
completed investments in expanded sales and manufacturing capabilities.
It is well-positioned to further consolidate the Ceilings market, with
attractive opportunities for enhanced growth and margins. With 3,400
team members worldwide, the Company will operate 22 manufacturing
facilities in eight countries including the Worthington Armstrong
Venture (WAVE JV). Vic Grizzle, currently CEO of Armstrong Building
Products, will lead AWI as CEO.
Armstrong Flooring
Armstrong Flooring will continue to lead in the design, manufacture and
sales of high-quality flooring products in North American and Asian
markets. In 2014, Armstrong Flooring generated approximately $1.2
billion of revenue. Armstrong Flooring’s North American residential
franchise is an innovation leader in vinyl, laminate and hardwood
products. The North American and international commercial segments
provide high performance resilient flooring products including vinyl
sheet, linoleum, vinyl composition and luxury vinyl tile, with
significant ongoing investments focused on LVT leadership. Armstrong
Flooring will pursue these markets under the same trusted brands – which
include Armstrong and Bruce – with the continued strategy to be
customers’ preferred partner for flooring solutions. With 3,600 team
members worldwide, the Company will operate 17 manufacturing facilities
in three countries. Don Maier, currently CEO of Armstrong Flooring
Products, will serve as the Chief Executive Officer of Armstrong
Flooring.
Transaction Details
The proposed separation is subject to customary conditions, including an
opinion of counsel regarding the tax-free nature of the separation,
execution of intercompany agreements, the effectiveness of a Form 10
registration statement filing with the Securities and Exchange
Commission, and final approval by the Company's Board of Directors. The
Company expects to provide additional information on management,
governance, capital structure and other matters with respect to both
entities on an ongoing basis. The Company may, at any time and for any
reason until the proposed separation is complete, abandon the separation
or modify or change its terms.
The company has retained Evercore Partners as financial adviser and
Skadden, Arps, Slate, Meagher & Flom LLP as legal counsel to advise on
the separation process.
Webcast
Armstrong will discuss the separation on its regularly scheduled fourth
quarter and full year earnings Internet broadcast at 11:00 a.m. Eastern
Time today. This event will be broadcast live on the Company's Web site.
To access the call and accompanying slide presentation, go to www.armstrong.com
and click "For Investors." The replay of this event will also be
available on the Company's Web site for up to one year after the date of
the call.
About Armstrong
Armstrong World Industries, Inc. is a global leader in the design and
manufacture of floors and ceilings. In 2014, Armstrong's consolidated
net sales from continuing operations totaled approximately $2.5 billion.
As of December 31, 2014, Armstrong operated 31 plants in eight countries
and had approximately 7,400 employees worldwide.
Uncertainties Affecting Forward-Looking Statements
Disclosures in this release, including without limitation, those
relating to our plan to separate our Flooring business from our Ceilings
(Building Products) business into two independent, publicly traded
companies and any related financial information, 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 the “Risk
Factors” and “Management’s Discussion and Analysis” sections of our
reports on Forms 10-K and 10-Q 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.
Copyright Business Wire 2015