Armstrong World Industries(US:AWI)2025-07-29 11:00PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Armstrong World Industries, Inc.'s unaudited Condensed Consolidated Financial Statements for periods ended June 30, 2025, including earnings, balance sheets, cash flows, and notes Condensed Consolidated Statements of Earnings (Unaudited) | Indicator | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $424.6M | $365.1M | $807.3M | $691.4M | | Gross profit | $175.8M | $149.3M | $325.7M | $273.6M | | Operating income | $123.2M | $95.0M | $221.7M | $181.1M | | Net earnings | $87.8M | $65.9M | $156.9M | $125.8M | | Diluted EPS | $2.01 | $1.50 | $3.59 | $2.86 | Condensed Consolidated Balance Sheet Highlights (Unaudited) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $375.6M | $348.9M | | Total assets | $1,862.0M | $1,842.7M | | Total current liabilities | $232.9M | $249.7M | | Long-term debt, less current installments | $461.8M | $502.6M | | Total shareholders' equity | $837.8M | $757.1M | Condensed Consolidated Statements of Cash Flows (Unaudited) | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $122.6M | $83.7M | | Net cash provided by (used for) investing activities | $13.2M | $(81.4)M | | Net cash (used for) provided by financing activities | $(134.7)M | $1.1M | | Net increase in cash and cash equivalents | $1.8M | $2.8M | Note 2. Segment Results The company's Mineral Fiber and Architectural Specialties segments reported $512.1 million and $295.2 million in net sales respectively for H1 2025, driven by acquisitions Segment Performance for Six Months Ended June 30, 2025 vs 2024 | Segment | Net Sales 2025 | Net Sales 2024 | Operating Income 2025 | Operating Income 2024 | | :--- | :--- | :--- | :--- | :--- | | Mineral Fiber | $512.1M | $489.8M | $182.9M | $160.9M | | Architectural Specialties | $295.2M | $201.6M | $40.4M | $21.9M | | Unallocated Corporate | - | - | $(1.6)M | $(1.7)M | | Total | $807.3M | $691.4M | $221.7M | $181.1M | Note 4. Acquisitions The company acquired A. Zahner Company and 3form, LLC, contributing $86.1 million in net sales and $8.2 million in operating income for H1 2025 - Acquired A. Zahner Company ("Zahner"), a manufacturer of exterior metal architectural solutions, in December 20242945 - Acquired 3form, LLC ("3form"), a designer of architectural resin and glass products, in April 2024 for $93.5 million3046 Contribution from Zahner and 3form Acquisitions (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $86.1M | $16.7M | | Operating income | $8.2M | $0.1M | Note 8. Investments in Unconsolidated Affiliates The company's 50% equity interest in Worthington Armstrong Venture (WAVE) generated $58.9 million in equity earnings for H1 2025, with WAVE's net sales at $264.1 million WAVE Financial Performance (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $264.1M | $251.9M | | Net earnings | $121.7M | $112.2M | | AWI's Equity Earnings from WAVE | $58.9M | $53.9M | Note 17. Shareholders' Equity The company repurchased 0.4 million shares for $52.0 million in H1 2025, with $609.8 million remaining for repurchases, and declared quarterly dividends of $0.308 per share - Repurchased 0.4 million shares for a total cost of $52.0 million during the six months ended June 30, 202587 - As of June 30, 2025, $609.8 million remained available under the share repurchase program, authorized through December 31, 202684 - The Board of Directors declared quarterly dividends of $0.308 per share, paid in March and May 2025, with another declared for August 202588 Note 18. Litigation and Related Matters The company is involved in environmental remediation at two Superfund sites, with total recorded liabilities of $4.1 million as of June 30, 2025 - The company is actively involved in investigation and remediation at two Superfund sites: Macon, Georgia and Elizabeth City, North Carolina95100108 - Total recorded liabilities for environmental matters were $4.1 million as of June 30, 2025, down from $4.6 million at year-end 2024109 - In May 2024, the EPA issued a Proposed Remedial Action Plan for the non-groundwater elements at the Macon site with a total cost estimate of approximately $8 million104 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated net sales increased 16.8% to $807.3 million for H1 2025, driven by higher volumes and AUV, with operating income growing 22.4% to $221.7 million Consolidated Results Consolidated net sales rose 16.8% to $807.3 million and operating income increased 22.4% to $221.7 million for H1 2025, driven by volumes and AUV Consolidated Results Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Total consolidated net sales | $807.3M | $691.4M | 16.8% | | Operating income | $221.7M | $181.1M | 22.4% | - The increase in net sales for the first six months was driven by higher volumes of $87 million and favorable AUV of $29 million140 - Equity earnings from the WAVE joint venture increased to $58.9 million for the first six months of 2025, up from $53.9 million in 2024, driven by favorable AUV144 Reportable Segment Results Mineral Fiber net sales increased 4.6% to $512.1 million due to AUV, while Architectural Specialties sales grew 46.4% to $295.2 million, driven by acquisitions - Mineral Fiber: Net sales for the first six months of 2025 increased by $22 million, driven by $29 million in favorable AUV, partially offset by a $7 million decrease from lower sales volumes150 - Architectural Specialties: Net sales for the first six months of 2025 improved by $94 million, primarily due to a $69 million increase from the Zahner and 3form acquisitions and increased organic sales159 Financial Condition and Liquidity Operating cash flow increased to $122.6 million for H1 2025, with the company maintaining strong liquidity of $81.1 million in cash and $430 million available under its credit facility - Cash from operating activities increased to $122.6 million in the first six months of 2025 from $83.7 million in the same period of 2024, primarily due to higher cash earnings165 - As of June 30, 2025, the company had $81.1 million in cash and cash equivalents and $430 million available under its revolving credit facility173 - The company was in compliance with all financial covenants of its senior credit facility as of June 30, 2025171 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the Annual Report on Form 10-K for market risk disclosures, noting no material changes since December 31, 2024 - There have been no material changes to the market risk disclosures provided in the Annual Report on Form 10-K for the year ended December 31, 2024175 Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting - The principal executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025176 - No material changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025176 PART II - OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings, primarily environmental matters, is incorporated by reference from Note 18 of the Condensed Consolidated Financial Statements - Information regarding legal proceedings is provided in Note 18 to the Condensed Consolidated Financial Statements178 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - 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, 2024179 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company repurchased 0.2 million shares for $30.0 million, with $609.8 million remaining under the share repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | April 2025 | 145,561 | $131.16 | 91,287 | | May 2025 | 112,349 | $153.57 | 112,349 | | June 2025 | 3,236 | $154.76 | 3,193 | | Total | 261,146 | - | 206,829 | - In Q2 2025, the company repurchased 0.2 million shares for $30.0 million at an average price of $145.04 per share183 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the reporting period - None184 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable185 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025 - During the three months ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement186 Item 6. Exhibits This section lists exhibits filed as part of the Quarterly Report on Form 10-Q, including CEO/CFO certifications and XBRL data files