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Secondary Offering by Armstrong World

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Producer of flooring products and ceiling systems, Armstrong World Industries, Inc. (AWI - Free Report) has declared a secondary public offering of 3,900,000 shares held by Asbestos Personal Injury Settlement Trust and Armor TPG Holdings, L.P.  

According to the secondary offering, the Trust and TPG will sell 1,845,023 shares and 2,054,977 shares respectively. Morgan Stanley (MS - Free Report) will act as the sole underwriter for the offering. Upon completion of this offering, TPG will no longer hold any shares of Armstrong World.

In Aug 2009, TPG and the Trust entered into agreements following which TPG purchased 7,000,000 shares of Armstrong World from the Trust and acquired an economic interest in an additional 1,039,777 shares subsequent to a forward sales contract.

During the fourth quarter of 2013, the Trust and TPG together sold an additional 6,000,000 shares. At the beginning of 2013, the Trust and TPG owned over 50% of Armstrong World shares, which came down to 25% at the end of the year.

For full-year 2013, Armstrong World reported adjusted earnings per share of $2.04, down 19% from $2.53 in 2012. The results fell short of the Zacks Consensus Estimate of $2.29. A rise in manufacturing and input costs as well as SG&A expenses dragged profits.

However, Armstrong World remains optimistic about residential repair and remodel activity in 2014 with new home starts expected to be about 1.1 million. The company guided its full-year adjusted earnings per share (EPS) in the range of $2.55–$2.80.

The company will benefit from investments in emerging markets and Architectural Specialties. Further, positive price and mix, along with growth in core commercial markets will boost the company’s prospects. However, challenging market conditions in Europe and Australia remain concerns.  

Pennsylvania-based Armstrong World is a leading global producer of flooring products and ceiling systems for use in the construction and renovation of residential, commercial and institutional buildings. The company also designs, manufactures and sells kitchen and bathroom cabinets in the U.S.

Armstrong World currently carries a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include CaesarStone Sdot-Yam Ltd. (CSTE - Free Report) and Quanex Building Products Corp. (NX - Free Report) . While CaesarStone sports a Zacks Rank #1 (Strong Buy), Quanex Building Products has a Zacks Rank #2 (Buy).

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