Armstrong Flooring Inc. faces growing strain to promote or make one other “strategic transaction” as monetary deadlines loom, leaving the way forward for 500 native jobs and the 160-year-old firm in query.
The East Lampeter Township-headquartered firm’s skill to proceed is dependent upon finishing a sale or refinance no later than June 30, it mentioned in a current report filed with the Securities and Change Fee.
“The failure to finish a sale of the Firm or to acquire adequate financing might adversely have an effect on our skill to realize our enterprise aims and proceed as a going concern,” the corporate informed buyers in its annual report.
For the 12 months ended Dec. 31, Armstrong Flooring reported a web lack of $53 million, regardless of a 11% improve in gross sales income. As of Dec. 31, the corporate had an amassed deficit of $356.2 million and a complete debt of $111.3 million, with $110 million due June.
The announcement follows 4 straight years of losses for the producer, which shed its hardwood flooring division in December 2018.
In January, the corporate introduced it had amended its time period mortgage with personal credit score funding administration agency Pathlight Capital LP to offer an further $35 million to offer it “monetary flexibility to pursue its operational and strategic targets.”
Armstrong additionally mentioned it had employed funding financial institution Houlihan Lokey Capital Inc. to help with a course of for the sale of the corporate and with the consideration of different strategic options.
Armstrong mentioned it’s required to refinance credit score agreements no later than June 30, even when a sale of the corporate or different strategic transaction has not been consummated previous to it.
It mentioned it could not be making any additional disclosures or holding calls with buyers till the sale or different “strategic various” is accomplished. It didn’t situation an earnings launch. The corporate additionally mentioned it could not reply any inquiries relating to Armstrong Flooring’s monetary or operational efficiency, the method of the sale or different strategic options.
The corporate faces a $250,000 improve in gross sales course of charges to its lenders if it doesn’t full a sale earlier than March 31, it mentioned in its SEC report.
Scenario seems bleak
Auditors and the corporate expressed “substantial doubt” that Armstrong is financially steady sufficient to satisfy its obligations and proceed its enterprise for the foreseeable future due to the potential sale and doubt that its credit score agreements may be prolonged past June 30.
“Moreover, primarily based on present projections, because of persevering with provide chain disruptions and continued inflationary pressures associated to transportation, labor and uncooked supplies that are anticipated to proceed by means of 2022, the forecasts don’t present the Firm with affordable certainty it would have the mandatory liquidity to fund operations past June 30, 2022,” the corporate mentioned within the SEC submitting.
Armstrong reported it had 1,568 workers globally as of Dec. 31, with 1,172 in the USA. In December 2020, it had round 1,500 workers, together with 500 in Lancaster. The rest are in Canada, Australia, China, the Philippines, Singapore and Vietnam.
Armstrong Flooring debuted with round 3,700 workers, together with 750 between its Dillerville Street ground plant and its former Columbia Avenue headquarters.
The corporate operates seven manufacturing vegetation in three international locations. Two vegetation are in Pennsylvania, one in Lancaster metropolis and one in Beech Creek Township, Clinton County. There are vegetation in Illinois, Mississippi, Oklahoma and one plant every in China and Australia.
Final 12 months, it offered its Los Angeles-area plant for almost $77 million and moved its headquarters and technical heart, one other cost-saving transfer. It relocated its headquarters and technical heart from a leased workplace on Columbia Avenue to Greenfield in East Lampeter Township, a transfer projected to cut back lease by greater than 60%. It was paying $5.62 million a 12 months to lease its Columbia Avenue location, in keeping with public filings from 2016, when it signed the five-year lease.
Armstrong Flooring was spun off from Armstrong World Industries in 2016, a transfer that left Armstrong Industries with the much more worthwhile ceilings enterprise.