QUOTE AND NEWS
Mondo Visione  Dec 16  Comment 
Metamako, the supplier of ultra low-latency devices to exchanges and the trading community, was named in the 50 Best Fintech Innovators Report, compiled by KPMG in conjunction with Australasian Wealth Investments (AWI) and Financial Services...
Benzinga  Oct 28  Comment 
Analysts at Nomura downgraded Twitter (NYSE: TWTR) from Buy to Neutral. The price target for Twitter has been lowered from $55.00 to $45.00. Twitter's shares closed at $48.56 yesterday. Analysts at JP Morgan downgraded Bunge (NYSE: BG) from...
Benzinga  Oct 28  Comment 
Analysts at Barclays downgraded Armstrong World Industries (NYSE: AWI) from Overweight to Equal-weight. The price target for Armstrong World Industries has been lowered from $62.00 to $50.00. Armstrong World Industries shares have dropped...
Benzinga  Oct 27  Comment 
Armstrong World Industries (NYSE: AWI) reported upbeat earnings for the third quarter. The Lancaster, Pennsylvania-based company posted quarterly net income of $31.6 million, or $0.57 per share, compared to $50.4 million, or $0.95 per share, in...
TheStreet.com  Oct 14  Comment 
NEW YORK (TheStreet) -- Shares ofaArmstrong World Industries, Inc. aare down 5.07% to $46.31 in midday trading after the maker of flooring and ceiling materials lowered its third quarter and full year revenue guidance due to price pressures in...
Benzinga  Oct 13  Comment 
Armstrong World Industries, Inc. (NYSE: AWI) cut its third-quarter outlook citing price pressures in Europe and a market shift in North America. In Monday's extended session, Armstrong traded recently at $46.49 per share, down 4.6...
MarketWatch  Oct 13  Comment 
Armstrong World Industries said Monday its full-year sales and EBITDA -- earnings before interest, taxes, depreciation and amortization -- will come in below previous guidance. The flooring manufacturing company said it's facing "intensifying...
Forbes  Sep 2  Comment 
Looking back to 181 days ago, Armstrong World Industries Inc (NYSE: AWI) priced a 3,900,000 share secondary stock offering at $54.25 per share. Buyers in that offering made a considerable investment into the company, expecting that their...




 
TOP CONTRIBUTORS

Armstrong World Industries (NYSE: AWI) manufactures resilient and wood flooring products as well as cabinets and other building products. The company earned $3.6 billion in 2007 total revenues. The company's resilient flooring products include vinyl flooring and ceramic tile while the wood flooring segment produces pre-finished solid and engineered hardwood floors. As a result of absestos liability lawsuits, Armstrong filed for bankruptcy in 2000.[1] In quarter 4 2006, after reorganization, Armstrong emerged from bankruptcy and and issued 56.4 million shares of public stock.[2]

In 2007, spending on new home construction fell 20%.[3] As a result, Armstrong's revenue growth slowed from 2.2% in 2006 to less than 1% in 2007.[4] On the other hand, timber prices fell 13% between 2006 and 2007, resulting in Armstrong's gross margin increasing from 6% in 2006 to 8% in 2007.[5][6] Likewise, the weak dollar gave Armstrong a $78.4 million revenue boost in 2007.[7] Armstrong competes with companies like American Biltrite (ABL), USG (USG) and Mohawk Industries (MHK)

Business Segments

Revenues by Segment
Revenues by Segment[8]

Resilient Flooring (35%)

Resilient Flooring, which contributed 35% of Armstrong's 2007 total revenues, produces vinyl sheet, vinyl tile, laminate and ceramic tile flooring products. Resilient Flooring also manufactures automotive carpeting as wells as adhesives and other products designed to assist in the installation of its flooring products. The segment sells its products to wholesalers, large home centers, resellers, contractors and pre-manufactured housing companies.[9] The segment's products compete with similar products manufactured by companies like American Biltrite (ABL) and Mohawk Industries (MHK).

Wood Flooring (22)%

The Wood Flooring segment accounted for 22% of Armstrong's 2007 total revenues. The segment's products include pre-finished solid and engineered wood floors and related installation products and accessories.[10] Engineered wood floors consist of a plywood backing with a veneer of hardwood on top.[11] Wood Flooring's products come in several colors and species of wood and are sold to wholesale flooring distributors and large home centers under the Bruce, Hartco, Robbins, Timberland, Armstrong, HomerWood and Capella brand names.[12] Armstrong's Wood Flooring products compete with those produced by Mohawk Industries (MHK).

Building Products (36%)

Building Products generated 36% of Armstrong's 2007 total revenues. The segment manufactures mineral fiber, soft fiber and metal ceiling systems. The segment's products can be tailored to maximize certain qualities such as sound absorption, fire resistance and aesthetics. Armstrong manufactures ceiling products for both commercial and residential applications. Commercial products are sold mostly to contractors while residential products are sold to wholesalers, large home centers and resellers.[13] The company's Building Products compete against those manufactured by USG (USG).

Cabinets (7%)

The Cabinets segment generated 7% of Armstrong's total revenues in 2007. The segment manufactures cabinetry and the related hinges and accessories for bathrooms and kitchens. The segment's products are sold to homebuilders, remodelers and retail outlets under the Armstrong and Bruce names.[14]

Business Financials

Revenues by Geography
Revenues by Geography[15]

Armstrong Total Revenues, Operating Income and Net Earnings[16][17] ($ in millions)

Segment 2007 2006 2005
Resilient Flooring 1,231 1,208 1,233
Wood Flooring 792 838 834
Building Products 1,292 1,150 1,048
Cabinets 235 231 213
Total Revenues 3,550 3,426 3,327
Operating Income 297 211 101
Net Earnings 145 1,358 111

Key Trends and Forces

Decreased spending on new home construction results in slowed revenue growth for Armstrong

When spending on new home construction drops, so does spending on construction equipment and supplies resulting in slowed revenue growth for Armstrong. On the other hand, when spending on new home construction increases, spending on construction supplies increases resulting in faster revenue growth for Armstrong. Between April 2007 and April 2008, total construction spending fell 4%, with a 20% decrease in residential construction spending.[18] As a result of the decrease in new home construction spending, Armstrong's revenue growth in the United States decreased from 2.2% in 2006 to less than 1% in 2007.[19]

Decreases in lumber prices increase Armstrong's operating margins

The price of lumber can change for reasons such as a shortage of supply or demand from other industries. When the price of lumber increases, Armstrong's operating margins decrease. On the other hand, when the price of lumber decreases, Armstrong's operating margins increase. Between 2006 and 2007 the average random lengths composite price of lumber fell 13% from $325.63 to $283.29 per 1000 board feet.[20] As a result of the decrease in lumber prices, Armstrong's operating margins increased from 6% in 2006 to 8% in 2007.[21]

Error creating thumbnail
Daily EUR to USD exchange rates, 6/18/07-6/18/08[22]

The weak dollar boosts Armstrong's international revenues

Because Armstrong reports its earnings in USD but 32% of its total revenues outside of the United States in 2007, exchange rates affect its revenues. When the dollar depreciates, any transactions recorded in foreign currencies will convert to more dollars and increased revenues for Armstrong. On the other hand, when the dollar appreciates, the opposite is true, meaning that a strong dollar decreases the value of Armstrong's international sales. Between June 18, 2007 and June 18, 2008 the U.S. dollar depreciated in relation to the euro, the Canadian dollar, and the Mexican peso.[23][24][25] The decrease in the dollar's value boosted Armstrong's revenues by $78.4 million in 2007.[26]

Key Competitors

  • American Biltrite (ABL) manufactures adhesive tapes, protective films and fashion jewelry as well as rubber and tile flooring products. The company's rubber and tile flooring products compete with those produced by Armstrong.[27]
  • Mohawk Industries (MHK) manufactures floor coverings including laminate, tile, carpet and hardwood flooring. The companies flooring products compete directly with those produced by Armstrong.[28]
  • USG (USG) manufactures building products such as drywall and ceiling systems. The company's ceiling systems compete with those manufactured by Armstrong.[29]

Armstrong and Key Competitors 2007 ($ in millions)

Company Total Revenue Net Income Net Profit Margin
Armstrong 3,550 145 4.1%
American Biltrite (ABL) 421 (2)-0.5%
Mohawk Industries (MHK) 7,586 707 9.3%
USG (USG) 5,202 76 1.5%




References

  1. Armstrong World Industries Emerges from Bankruptcy
  2. Armstrong World Industries Emerges from Bankruptcy
  3. Value of Construction Put in Place - Seasonally Adjusted Annual Rate
  4. AWI 2007 10-K: Nature of Operations, pg 80-81
  5. NAHB: FRAMING LUMBER PRICES
  6. AWI 2007 10-K: Selected Financial Data, pg 20
  7. AWI 2007 10-K: Management’s Discussion and Analysis of Financial Condition and Results of Operations, pg 33
  8. AWI 2007 10-K: Nature of Operations, pg 80-81
  9. AWI 2007 10-K: Business, pg 6
  10. AWI 2007 10-K: Business, pg 6
  11. About.com: The Basics of Engineered Wood Flooring
  12. AWI 2007 10-K: Business, pg 6
  13. AWI 2007 10-K: Business, pg 6
  14. AWI 2007 10-K: Business, pg 6
  15. AWI 2007 10-K: Nature of Operations, pg 80-81
  16. AWI 2007 10-K: Nature of Operations, pg 80-81
  17. AWI 2007 10-K: Selected Financial Data, pg 20
  18. Value of Construction Put in Place - Seasonally Adjusted Annual Rate
  19. AWI 2007 10-K: Nature of Operations, pg 80-81
  20. NAHB: FRAMING LUMBER PRICES
  21. AWI 2007 10-K: Selected Financial Data, pg 20
  22. EUR to USD Exchange Rates
  23. EUR-USD Exchange Rates
  24. USD-CAD Exchange Rates
  25. Search for Mexican Peso to US Dollar
  26. AWI 2007 10-K: Management’s Discussion and Analysis of Financial Condition and Results of Operations, pg 33
  27. Google Finance: ABL
  28. Google Finance: MHK
  29. Google Finance: USG
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki