Company Overview - Armstrong World Industries (NYSE: AWI) specializes in the production and sale of ceiling systems and related offerings, demonstrating strong performance that exceeds expectations [1]. Industry Insights - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and identifying companies with significant value and growth potential [1]. - Subscribers benefit from a comprehensive stock model account, detailed cash flow analyses of exploration and production (E&P) firms, and live discussions about the sector [2].

Armstrong World Industries (AWI) Q1 2025 Earnings Call April 29, 2025 03:10 PM ET Speaker0 Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Q1 twenty twenty five Armstrong World Industries Incorporated Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. It is now my pleasure to turn the call over to Theresa ...

Financial Performance - Q1 2025 - Net sales increased by 17% year-over-year to $382.7 million[9] - Adjusted EBITDA rose by 16% year-over-year to $129 million[9] - Adjusted diluted earnings per share (EPS) increased by 20% year-over-year to $1.66[9] - Adjusted free cash flow increased by 10% year-over-year to $48 million[9] Segment Performance - Q1 2025 - Mineral Fiber (MF) segment adjusted EBITDA increased by 7%[11] - Architectural Specialties (AS) segment adjusted EBITDA increased significantly by 94%[11] - AS organic sales grew by 11%[25] Margin Analysis - Q1 2025 - Total company adjusted EBITDA margin was 33.6%[9] - AWI Organic Adjusted EBITDA margin expanded by 170bps[11] - Mineral Fiber adjusted EBITDA margin expanded by 180bps to 43.0%[11, 20] - Architectural Specialties organic adjusted EBITDA margin expanded by 290bps to 16.9%[11] Full Year 2025 Guidance - The company reaffirmed its full-year 2025 guidance, expecting net sales to grow by 9% to 11%, reaching $1.57 billion to $1.61 billion[12, 33] - Adjusted EBITDA is expected to grow by 8% to 12%, reaching $525 million to $545 million[12, 33] - Adjusted diluted EPS is expected to grow by 9% to 13%, reaching $6.85 to $7.15[12, 33]

Armstrong World Industries (AWI) Q1 2025 Earnings Call April 29, 2025 10:00 AM ET Company Participants Theresa Womble - Vice President of Investor Relations & Corporate CommunicationsVic Grizzle - President & CEOChris Calzaretta - Senior VP & CFOZack Pacheco - Equity Research AssociateKeith Hughes - Managing DirectorPhilip Ng - Managing DirectorAdam Baumgarten - Managing DirectorStephen Kim - Senior Managing Director Conference Call Participants Charles Perron-Piché - AnalystRafe Jadrosich - Managing Direct ...

Group 1 - Armstrong World Industries (AWI) reported quarterly earnings of $1.66 per share, exceeding the Zacks Consensus Estimate of $1.55 per share, and showing an increase from $1.38 per share a year ago, representing an earnings surprise of 7.10% [1] - The company achieved revenues of $382.7 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.69%, and up from $326.3 million year-over-year [2] - Armstrong World Industries has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Group 2 - The stock has experienced a decline of approximately 1.7% since the beginning of the year, while the S&P 500 has declined by 6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.74 on revenues of $397.14 million, and for the current fiscal year, it is $6.99 on revenues of $1.59 billion [7] - The Zacks Industry Rank for Building Products - Miscellaneous is currently in the bottom 36% of over 250 Zacks industries, indicating potential challenges for stock performance [8] Group 3 - The estimate revisions trend for Armstrong World Industries is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section outlines risks related to operations, strategy, finance, and economic factors that could affect future results - The company identifies key risk categories that could impact future performance, including **operational risks**, **strategic risks**, **financial risks**, and **general economic conditions**[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) The company reported increased net sales, net earnings, and operating cash flow for the first quarter of 2025 Q1 2025 vs Q1 2024 Consolidated Earnings | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $382.7M | $326.3M | | Gross profit | $149.9M | $124.3M | | Operating income | $98.5M | $86.1M | | Net earnings | $69.1M | $59.9M | | Diluted EPS | $1.58 | $1.36 | Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $371.5M | $348.9M | | Total assets | $1,854.4M | $1,842.7M | | Total current liabilities | $231.6M | $249.7M | | Total liabilities | $1,061.0M | $1,085.6M | | Total shareholders' equity | $793.4M | $757.1M | Q1 2025 vs Q1 2024 Consolidated Cash Flows | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $41.0M | $26.4M | | Net cash provided by investing activities | $6.0M | $5.9M | | Net cash (used for) financing activities | ($43.6M) | ($33.1M) | [Note 1. Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Business%20and%20Basis%20of%20Presentation) This note details the basis of financial statements and highlights recent acquisitions and strategic investments - Acquired A. Zahner Company (exterior metal solutions) in December 2024 and 3form, LLC (architectural resin and glass) in April 2024, with both operations included in the **Architectural Specialties segment**[30](index=30&type=chunk)[31](index=31&type=chunk) - In January 2024, the company invested **$5.5 million for a 19.5% ownership interest** in Overcast Innovations LLC, a company specializing in prefabricated ceiling systems[32](index=32&type=chunk) [Note 2. Segment Results](index=12&type=section&id=Note%202.%20Segment%20Results) Both Mineral Fiber and Architectural Specialties segments reported year-over-year growth in net sales and operating income Segment Performance (Q1 2025 vs Q1 2024) | Segment | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | :--- | | **Mineral Fiber** | Net Sales | $245.1M | $239.6M | | | Operating Income | $84.5M | $79.2M | | **Architectural Specialties** | Net Sales | $137.6M | $86.7M | | | Operating Income | $14.8M | $7.7M | [Note 3. Revenue](index=13&type=section&id=Note%203.%20Revenue) Revenue is disaggregated by segment and channel, with strong distributor sales for Mineral Fiber and direct sales for Architectural Specialties Net Sales by Segment and Channel (Q1 2025 vs Q1 2024) | Segment / Channel | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Mineral Fiber** | | | | Distributors | $180.0M | $169.3M | | Home centers | $27.0M | $31.0M | | **Architectural Specialties** | | | | Distributors | $54.3M | $53.8M | | Direct customers | $77.4M | $30.0M | [Note 4. Acquisitions](index=14&type=section&id=Note%204.%20Acquisitions) Recent acquisitions contributed $41.1 million in net sales and $3.1 million in operating income during the quarter - The acquisitions of Zahner and 3form contributed **$41.1 million in net sales** and **$3.1 million in operating income** for the three months ended March 31, 2025[49](index=49&type=chunk) [Note 8. Investments in Unconsolidated Affiliates](index=15&type=section&id=Note%208.%20Investments%20in%20Unconsolidated%20Affiliates) Equity earnings from the WAVE joint venture were $26.8 million, a slight decrease from the prior-year period WAVE Joint Venture Financial Data | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $124.1M | $125.8M | | Net earnings | $55.3M | $57.0M | - AWI's equity earnings from the WAVE joint venture were **$26.8 million in Q1 2025**, compared to $27.4 million in Q1 2024[55](index=55&type=chunk) [Note 13. Debt](index=17&type=section&id=Note%2013.%20Debt) The company's long-term debt primarily consists of a senior secured credit facility with $521.9 million outstanding - As of March 31, 2025, the principal balance of the Term Loan A was **$421.9 million**, and borrowings outstanding under the revolving credit facility were **$100.0 million**[65](index=65&type=chunk) [Note 17. Shareholders' Equity](index=22&type=section&id=Note%2017.%20Shareholders'%20Equity) The company repurchased $22.0 million of its shares and paid a quarterly dividend of $0.308 per share in Q1 2025 - During Q1 2025, the company repurchased **0.1 million shares for $22.0 million**, with **$639.8 million remaining** available under the share repurchase authorization[87](index=87&type=chunk)[89](index=89&type=chunk) - In February 2025, the Board of Directors declared a quarterly dividend of **$0.308 per share**, which was paid in March 2025[90](index=90&type=chunk) [Note 18. Litigation and Related Matters](index=23&type=section&id=Note%2018.%20Litigation%20and%20Related%20Matters) The company holds a $4.1 million liability for environmental remediation activities at two domestic sites - The company is actively involved in investigation and remediation at two Superfund sites: **Macon, Georgia** and **Elizabeth City, North Carolina**[97](index=97&type=chunk)[102](index=102&type=chunk)[110](index=110&type=chunk) - Total recorded liabilities for environmental matters were **$4.1 million** as of March 31, 2025, a decrease from $4.6 million as of December 31, 2024[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 17.3% increase in net sales, driven by acquisitions and favorable Average Unit Value (AUV) [Overview](index=30&type=section&id=Overview) The company highlights recent acquisitions and its manufacturing footprint of 20 plants plus 7 WAVE JV plants - Recent strategic activities include the acquisitions of **Zahner** (exterior metal solutions) and **3form** (architectural resin/glass), and an investment in **Overcast** (prefabricated ceiling systems)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - As of March 31, 2025, the company operated **20 manufacturing plants** (18 in the U.S, 2 in Canada), and its WAVE joint venture operated an additional **7 plants** for suspension systems[124](index=124&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Consolidated net sales rose 17.3% and operating income grew 14.4%, led by strong performance in the Architectural Specialties segment Consolidated Results Summary (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total consolidated net sales | $382.7M | $326.3M | 17.3% | | Operating income | $98.5M | $86.1M | 14.4% | - The Mineral Fiber segment's net sales increased by $6 million, driven by **$16 million in favorable AUV**, partially offset by a $10 million decrease in sales volumes[150](index=150&type=chunk) - The Architectural Specialties segment's net sales increased by $51 million, primarily driven by a **$41 million contribution from the acquisitions** of Zahner and 3form[154](index=154&type=chunk) [Financial Condition and Liquidity](index=36&type=section&id=Financial%20Condition%20and%20Liquidity) The company maintains a strong liquidity position with increased operating cash flow and $400 million available credit - Net cash provided by operating activities increased to **$41.0 million in Q1 2025** from $26.4 million in Q1 2024, primarily due to higher cash earnings[158](index=158&type=chunk) - Net cash used for financing activities was **$43.6 million in Q1 2025**, an increase from $33.1 million in Q1 2024, mainly due to higher stock repurchases[160](index=160&type=chunk) - As of March 31, 2025, the company had **$82.8 million of cash and cash equivalents** and **$400 million available** under its revolving credit facility[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures have occurred since the last Annual Report on Form 10-K - The company's disclosures about market risk have **not materially changed** from those presented in its Annual Report on Form 10-K for the year ended December 31, 2024[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal control - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[170](index=170&type=chunk) - **No material changes** occurred in the company's internal control over financial reporting during the fiscal quarter ended March 31, 2025[170](index=170&type=chunk) [PART II - OTHER INFORMATION](index=40&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal matters is detailed in Note 18 of the financial statements - Information regarding legal proceedings is provided in **Note 18** to the Condensed Consolidated Financial Statements[172](index=172&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the last Annual Report on Form 10-K - There have been **no material changes** to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased approximately 0.1 million shares for a total cost of $22.0 million during the quarter Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2025 | 75,686 | $146.31 | 73,603 | | Feb 2025 | 32,698 | $151.29 | 27,869 | | Mar 2025 | 48,480 | $144.62 | 48,404 | | **Total** | **156,864** | | **149,876** | - During the three months ended March 31, 2025, the company repurchased **0.1 million shares for a total cost of $22.0 million**, at an average price of $146.79 per share[177](index=177&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter - No director or officer of the Company adopted or terminated a **"Rule 10b5-1 trading arrangement"** or **"non-Rule 10b5-1 trading arrangement"** during the three months ended March 31, 2025[180](index=180&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required certifications and XBRL data

Armstrong World Industries Reports Record-Setting First-Quarter 2025 Results Exhibit 99.1 (Comparisons above are versus the prior-year period unless otherwise stated) LANCASTER, Pa., April 29, 2025 -- Armstrong World Industries, Inc. (NYSE:AWI), an Americas leader in the design and manufacture of innovative interior and exterior architectural applications including ceilings, specialty walls and exterior metal solutions, today reported first-quarter 2025 financial results highlighted by strong net sales and ...

Core Viewpoint - Armstrong World Industries (AWI) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of surpassing expectations [1][6]. Group 1: Earnings Performance - Armstrong World Industries has consistently exceeded earnings estimates, averaging a 6.46% beat over the last two quarters [2]. - In the last reported quarter, the company achieved earnings of $1.50 per share, surpassing the Zacks Consensus Estimate of $1.37 per share by 9.49% [3]. - For the previous quarter, the company reported earnings of $1.81 per share against an expectation of $1.75 per share, resulting in a surprise of 3.43% [3]. Group 2: Earnings Estimates and Predictions - Recent changes in earnings estimates for Armstrong World Industries have been favorable, with a positive Earnings ESP (Expected Surprise Prediction) indicating potential for another earnings beat [6][9]. - The current Earnings ESP for the company stands at +4.04%, reflecting increased analyst optimism regarding its near-term earnings potential [9]. - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings surprise, with historical data indicating that nearly 70% of stocks with this combination beat consensus estimates [7][9].

Group 1 - Investors in Armstrong World Industries, Inc. (AWI) should monitor stock movements due to high implied volatility in the options market, particularly the June 20, 2025 $90 Call option [1] - Implied volatility indicates the market's expectation of future stock movement, suggesting potential significant price changes or upcoming events that could impact the stock [2] - Armstrong World Industries currently holds a Zacks Rank 3 (Hold) in the Building Products – Miscellaneous industry, which is in the bottom 33% of the Zacks Industry Rank [3] Group 2 - Recent analyst activity shows mixed earnings estimates for Armstrong World Industries, with one analyst increasing estimates and two decreasing them, resulting in a consensus estimate drop from $1.57 to $1.55 per share [3] - The high implied volatility may indicate a developing trade opportunity, as options traders often seek to sell premium on options with high implied volatility, hoping the stock does not move as much as expected at expiration [4]

Core Insights - Armstrong World Industries, Inc. (AWI) is experiencing positive prospects due to strategic inorganic efforts, digital initiatives, and new product innovation [1] - The company maintains a balanced capital allocation approach, effectively using free cash to reward shareholders while investing in business growth [1][8] Inorganic Growth Strategy - AWI follows a systematic inorganic strategy that includes buyouts and profitable partnerships to enhance its portfolio [3] - In December 2024, AWI acquired A. Zahner Company, a designer and manufacturer of exterior metal architectural solutions, and in April 2024, it acquired 3form, LLC, a designer and manufacturer of architectural resin and glass products [4][5] Digital Advancements - Continuous investments in digital initiatives, such as Healthy Spaces and Project Works, are enhancing AWI's project win growth, with nearly double the number of projects received in 2024 [6][7] - The focus on digital advancements aims to support average unit volume (AUV) and volume growth by reaching markets not served by traditional channels [7] Capital Allocation and Shareholder Returns - AWI employs efficient capital allocation strategies to deliver shareholder returns while investing in growth initiatives [8] - On October 23, 2024, the company announced a 10% increase in its quarterly cash dividend to 30.8 cents per share, marking its sixth consecutive year of dividend increments [9]