We are a leading global producer of flooring products for use primarily in
the construction and renovation of residential, commercial and institutional
buildings. We design, manufacture, source and sell resilient and wood flooring
products in North America and the Pacific Rim.
On April 1, 2016, we became an independent company as a result of the separation
by Armstrong World Industries, Inc. ("AWI"), a Pennsylvania corporation,
of its Resilient Flooring and Wood Flooring segments from its Building Products
("Ceiling") segment (the "Separation"). The Separation was
effected by allocating the assets and liabilities related primarily to the Resilient
Flooring and Wood Flooring segments to AFI and then distributing the common
stock of AFI to AWI’s shareholders (the "Distribution"). The
Separation and Distribution (together, the "Spin-off") resulted in
AFI and AWI becoming two independent, publicly traded companies, with AFI owning
and operating the Resilient Flooring and Wood Flooring segments and AWI continuing
to own and operate a ceilings business.
We hold leadership or significant market share positions in the product categories
and markets in which we operate. We compete in the wood and resilient flooring
market in North America and the Pacific Rim. The majority of our sales are in
North America, where we serve both commercial and residential markets. In the
Pacific Rim, we are principally focused on commercial markets. Virtually all
of our Wood Flooring segment sales are in North America, as these products predominantly
serve the residential market.
The major markets in which we compete are:
North American Residential — Our Resilient Flooring and Wood Flooring
segments sell products for use in single and multi-family housing. Homeowners,
contractors, builders, and property management firms can choose from our innovative
resilient and wood flooring products. We compete directly with other domestic
and international suppliers of these products. Our flooring products also compete
with carpet, stone and ceramic products, which we do not offer.
Our products are used in new home construction and existing home renovation
work. Industry analysts estimate that existing home renovation (also known as
replacement/remodel) work represents a majority of the total North American
residential market opportunity. We monitor 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. We believe
there is some longer-term correlation between these statistics and our revenue
after reflecting a lag period of several months between a change in these indicators
and our operating results. However, we believe that consumers’ preferences
for product type, style, color, availability and affordability also significantly
affect our revenue. Further, changes in inventory levels and/or product focus
at national home centers and independent wholesale flooring distributors can
significantly affect our revenue.
North American Commercial — Our products, primarily resilient flooring,
are used in commercial and institutional buildings. Our 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 our revenue comes from
four major segments of commercial building – education, healthcare, retail
and office. We monitor U.S. construction starts and follow project activity.
Our 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. We also monitor office vacancy rates, architectural
activity, GDP and general employment levels, which can indicate movement in
renovation and new construction opportunities. We believe that these statistics,
taking into account the time-lag effect, provide a reasonable indication of
our future revenue opportunity from commercial renovation and new construction.
We also believe that consumer preferences for product type, style, color, availability
and affordability also significantly affect our revenue.
Outside of North America — We also serve commercial markets in the Pacific
Rim region with over 80% of the sales in this region coming from China and Australia.
The commercial segments we serve are similar to the North American market (office,
education, retail, and healthcare). However there is a higher penetration of
resilient flooring in the hospitality (retail) and office segments in China
than we see in North America. For the countries where we have significant revenue,
we monitor various national statistics (such as GDP) as well as construction
data (starts and project-related information).
LVT Investment — LVT represents the fastest growing resilient flooring
product category. Through the utilization of advanced printing and embossing
technology, LVT enables attractive designs emulating wood and stone visuals
combined with the durability associated with vinyl tile products. In addition,
LVT offers a wide variety 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, and this can be seen with the growing popularity
of floating LVT floors. The largest market for LVT is North America. Historically,
this market has been largely served by imported product manufactured in the
Pacific Rim. We completed construction of an expansion to our Lancaster, Pennsylvania
plant to add LVT manufacturing capacity.
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