Armstrong Flooring (Lancaster, Pa.) announced it will sell its entire wood flooring segment to an affiliate of American Industrial Partners (AIP), a private equity firm, for $100 million.
Armstrong, once the largest manufacturer of wood flooring, said will “intensify” its focus on growing its resilient flooring business following the divestiture of its wood floor segment.
The sale is expected to be finalized by the end of the fourth quarter of 2018, after which AIP plans to operate Armstrong’s six U.S. wood floor manufacturing plants as a separate wood flooring company. AIP will own the Bruce brand and all other wood flooring segment brands, and it will “have full access to the Armstrong Flooring brand” for two years after the sale. The divestiture of the wood flooring segment will lead to about 50 job cuts at Armstrong's headquarters, according to a report by LancasterOnline.
“Today’s announcement demonstrates our commitment to maximizing shareholder value and focusing our portfolio on profitable growth strategies,” Armstrong Flooring CEO Don Maier said in a statement. “The wood flooring industry has been impacted by changing market dynamics, and now is the right time to deepen our focus on LVT and other resilient flooring categories, where we are confident fundamentals remain strong for future growth.”
The sale comes after years of declining sales in the company’s wood flooring segment. According to a 2017 report by Catalina Research, Armstrong lost considerable market share over the previous decade, with wood flooring sales declining by 42 percent over that period. Most recently, wood flooring sales fell 1.9 percent in 2016 and 11 percent in 2017. Armstrong’s 2018 third quarter sales released Nov. 6 showed an 11 percent decline year-over-year for its wood flooring business.
“With a pure-play resilient flooring company, we will be better positioned than ever to continue growing Adjusted EBITDA and margin from continuing operations,” Maier stated.
Armstrong’s six manufacturing facilities in the U.S. employ approximately 1,700 employees.
AIP Partner Rick Hoffman said he believes the move will empower both the resilient and wood flooring businesses to realize their core strengths and pursue new strategies for growth and product innovation.
“Our companies look forward to working closely with each other to ensure a seamless transition for employees, customers and suppliers,” Hoffman stated.