Armstrong Flooring, Inc. and its subsidiaries operate as a producer of resilient flooring products for use primarily in the construction and renovation of commercial, residential and institutional buildings worldwide. The company designs, manufactures, sources, and sells flooring products primarily in North America and the Pacific Rim.
As of December 31, 2021, the company operated seven manufacturing plants in three countries, including five manufacturing plants located throughout the U.S. (Ill...
Armstrong Flooring, Inc. and its subsidiaries operate as a producer of resilient flooring products for use primarily in the construction and renovation of commercial, residential and institutional buildings worldwide. The company designs, manufactures, sources, and sells flooring products primarily in North America and the Pacific Rim.
As of December 31, 2021, the company operated seven manufacturing plants in three countries, including five manufacturing plants located throughout the U.S. (Illinois, Mississippi, Oklahoma and two in Pennsylvania) and one plant each in China and Australia.
During early 2020, the company established a multi-year strategic roadmap to transform and modernize its operations to become a leaner, faster-growing and more profitable business.
Markets
The company holds leadership or significant market share positions in the majority of the product categories and markets in which it operates. The majority of the company’s sales are in North America, where it serves both commercial and residential markets. In the Pacific Rim, the company principally focuses on commercial markets.
North American Commercial — The company’s products are used in commercial, institutional buildings and multi-family housing. The company’s revenue opportunities come from new construction, as well as renovation of existing buildings. Industry analysts estimate that renovation work represents the majority of the total North American commercial market opportunity. Most of the company’s revenue comes from three major end markets of commercial building: education, healthcare and retail. During 2020, the company positioned its entry into the Hospitality vertical, which represents an incremental growth opportunity, and recorded its first sales in this vertical towards the end of 2021. The company monitors the U.S. construction starts and follows project activity. The company’s revenue from new construction can lag behind construction starts by as much as twenty-four months given that the installation of flooring typically occurs later in the construction process. The company also monitors architectural activity, Gross domestic product (GDP) and general employment levels, which can indicate movement in renovation and new construction opportunities.
North American Residential — The company sells products for use in single and multi-family housing. Homeowners, contractors, builders, and property management firms can choose from its innovative flooring products.
The company’s products are used in new home construction and existing home renovation work. The company monitors key U.S. statistics, including existing home sales (a key indicator for renovation opportunity), housing starts, housing completions, home prices, interest rates and consumer confidence.
Outside of North America — The company also serves commercial markets in the Pacific Rim region with approximately 90% of the sales in this region coming from China and Australia. The commercial segments the company serves are similar to the North American market (healthcare, education, and retail). However, there is a higher penetration of resilient flooring in the hospitality and infrastructure segments in China than in North America. For the countries where the company has significant revenue, it monitors various national statistics (such as GDP), as well as construction data (starts and project-related information).
The company closely monitors publicly available macroeconomic trend data that provides insight to commercial and residential market activity; this includes GDP growth indices, the Architecture Billings Index and the Consumer Confidence Index, as well as housing starts and existing home sales. In addition, the company’s channel partners raise or lower their inventory levels according to their expectations of market demand and consumer preferences, which directly affects its sales.
Products
Luxury Vinyl Tile (LVT) - LVT represents the fastest growing resilient flooring product category. Through enhanced wear layers and coatings, LVT delivers improved durability and lower maintenance over traditional vinyl tile. In addition, the utilization of advanced printing and embossing technology provides LVT with upgraded visual realism in a wide variety of attractive wood and stone designs. LVT’s modular format offers a wide range of installation options for the professional and do-it-yourself installer, with an enhanced ease of installation when compared to other products, such as wood or ceramic tile; this can be seen with the growing popularity of floating and rigid LVT floors. The largest market for LVT is North America.
VCT - Vinyl composition tile (VCT) is a flooring material composed ofPolyvinyl chloride (PVC) chips formed into solid sheets and cut into modular shapes that offers a classic look and economical value. The company is the largest producer of VCT which is primarily used in commercial environments. The market for VCT is mature and well-structured, but demand has softened due to customer trends that favor alternate products, including LVT.
Vinyl sheet - Vinyl sheet is a resilient flooring product that comes in a roll that is cut to size. Vinyl sheet performs in high-traffic settings and is low maintenance. The company’s product Rejuvenations Restore addresses heath care concerns of both comfort and sound. The company produces and sells vinyl sheet product for both residential and commercial markets. The company continues to experience a decline in demand for its traditional resilient products, particularly residential vinyl sheet products. During 2020, the company introduced the industry's first non-PVC vinyl sheet system, Medinpure, for use in healthcare applications, which was recognized by many trade publications and industry organizations.
Customers
The company uses its reputation, capabilities, service and brand recognition to develop long-standing relationships with its customers. The company sells products through both independent wholesale flooring distributors, who re-sell its products to retailers, builders, contractors, installers and others, as well as direct to specialty retailers. In the commercial sector, the company also has important relationships with subcontractors’ alliances, large architectural firms, large design firms and major facility owners in its focus segments. In the North American retail channel, which sells to end-users in the residential and light commercial segments, the company has important relationships with several national home centers and flooring retailers. Additionally, the company also has important relationships with major home builders and retail buying groups in the North American residential sector.
Approximately 69% of the company’s consolidated net sales in 2021 were to distributors. Sales to large home centers accounted for approximately 11% of the company’s consolidated sales in 2021. The company’s remaining sales were primarily to other retailers, end-use customers and contractors. One customer accounted for 10% or more of the company’s total consolidated net sales in 2021.
Competition
The company’s primary competitors are AHF LLC; Beaulieu International Group N.V.; Creative Flooring Solution; Congoleum Corporation; Engineered Floors, LLC; Forbo Holding AG; Gerflor Group; HMTX Industries (including Metroflor Corporation); Interface, Inc. (including Nora Systems GmbH); LG Floors; Mannington Mills, Inc.; Mohawk Industries, Inc.; Shaw Industries, Inc.; and Tarkett AG.
Seasonality
Generally, the company’s sales in North America tend to be stronger in the second and third quarters of its fiscal year (year ended December 31, 2021) due to more favorable weather conditions, customer business cycles and education renovations typical during the summer months.
Patent and Intellectual Property Rights
The company owns or has a license to use certain trademarks, including but not limited to, without limitation, Armstrong, Alterna, BBT, Diamond 10Technology, Empower, Excelon, Imperial, Initiator, Inspiring Great Spaces, Luxe Plank, Medintech, Empower, Medinpure, Memories, Natural Creations, NexPro, Nexpro XMB, Rest & Refuge, Station Square, StrataMax and Vivero, which are important to its business because of their significant brand name recognition. This includes the new Armstrong Flooring logos developed in 2020 to strengthen and differentiate the Armstrong Flooring brand.
History
Armstrong Flooring, Inc. was founded in 1860. The company, a Delaware corporation, was incorporated in 2015.
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