Armstrong World Industries Reports Record-Setting First-Quarter 2024 Results
- Net sales up 5% with mid-single digit growth in both Mineral Fiber and Architectural Specialties segments versus the prior-year period
- Operating income increased 23% and diluted net earnings per share increased 31% versus the prior-year period
- Adjusted EBITDA up 16% and adjusted diluted net earnings per share up 23% versus the prior-year period
-
Recently announced acquisition of
3form, LLC to expand Architectural Specialties portfolio - Raising full-year 2024 guidance
“The record results we delivered this quarter reflect the resilience of our business model and the momentum we carried into the year. The ability to drive sales and earnings growth with margin expansion while facing choppy, uncertain market conditions is an ongoing testament to the strong commercial and operational execution of our teams,” said
First-Quarter Results
(Dollar amounts in millions except per-share data) |
|
For the Three Months Ended |
|
|
|
|||||
|
|
2024 |
|
|
2023 |
|
|
Change |
||
Net sales |
|
$ |
326.3 |
|
|
$ |
310.2 |
|
|
5.2% |
Operating income |
|
$ |
86.1 |
|
|
$ |
70.2 |
|
|
22.6% |
Operating income margin (Operating income as a % of net sales) |
|
|
26.4 |
% |
|
|
22.6 |
% |
|
380bps |
Net earnings |
|
$ |
59.9 |
|
|
$ |
47.3 |
|
|
26.6% |
Diluted net earnings per share |
|
$ |
1.36 |
|
|
$ |
1.04 |
|
|
30.8% |
|
|
|
|
|
|
|
|
|
||
Additional Non-GAAP* Measures |
|
|
|
|
|
|
|
|
||
Adjusted EBITDA |
|
$ |
111 |
|
|
$ |
96 |
|
|
16.0% |
Adjusted EBITDA margin (Adjusted EBITDA as a % of net sales) |
|
|
33.9 |
% |
|
|
30.9 |
% |
|
300bps |
Adjusted net earnings |
|
$ |
61 |
|
|
$ |
51 |
|
|
19.8% |
Adjusted diluted net earnings per share |
|
$ |
1.38 |
|
|
$ |
1.12 |
|
|
23.2% |
* |
The Company uses non-GAAP adjusted measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods and are useful alternative measures of performance. Reconciliations of the most comparable generally accepted accounting principles in |
First-quarter 2024 consolidated net sales increased 5.2% from prior-year results, driven by favorable Average Unit Value (dollars per unit sold, or "AUV") of
Consolidated operating income increased 22.6% in the first quarter of 2024 primarily due to a benefit from favorable AUV, an increase in equity earnings from the Worthington Armstrong Joint Venture ("WAVE"), and severance costs recorded in the prior-year period. These benefits were partially offset by an increase in selling, general and administrative expenses ("SG&A") and lower sales volumes.
First-Quarter Segment Results
Mineral Fiber
(Dollar amounts in millions) |
|
For the Three Months Ended |
|
|
|
|||||
|
|
2024 |
|
|
2023 |
|
|
Change |
||
Net sales |
|
$ |
239.6 |
|
|
$ |
228.4 |
|
|
4.9% |
Operating income |
|
$ |
79.2 |
|
|
$ |
63.8 |
|
|
24.1% |
Adjusted EBITDA* |
|
$ |
99 |
|
|
$ |
84 |
|
|
17.6% |
Operating income margin |
|
|
33.1 |
% |
|
|
27.9 |
% |
|
520bps |
Adjusted EBITDA margin* |
|
|
41.2 |
% |
|
|
36.8 |
% |
|
450bps |
Mineral Fiber net sales increased 4.9% in the first quarter of 2024 due to
Mineral Fiber operating income increased in the first quarter of 2024 primarily due to a
Architectural Specialties
(Dollar amounts in millions) |
|
For the Three Months Ended |
|
|
|
|||||
|
|
2024 |
|
|
2023 |
|
|
Change |
||
Net sales |
|
$ |
86.7 |
|
|
$ |
81.8 |
|
|
6.0% |
Operating income |
|
$ |
7.7 |
|
|
$ |
7.2 |
|
|
6.9% |
Adjusted EBITDA* |
|
$ |
12 |
|
|
$ |
12 |
|
|
4.3% |
Operating income margin |
|
|
8.9 |
% |
|
|
8.8 |
% |
|
10bps |
Adjusted EBITDA margin* |
|
|
14.0 |
% |
|
|
14.3 |
% |
|
(20)bps |
First-quarter 2024 Architectural Specialties net sales increased 6.0% from prior-year results, driven primarily by contributions from our
Architectural Specialties operating income increased in the first quarter of 2024 primarily due to a
Unallocated Corporate
Unallocated Corporate operating loss was
Cash Flow
Cash flows from operating activities in 2024 increased slightly in comparison to the prior-year period, while cash flows from investing activities increased
Share Repurchase Program
During the first quarter of 2024, we repurchased 0.1 million shares of common stock for a total cost of
** |
In |
Updating 2024 Outlook
“With strong first-quarter results and our recently announced acquisition of 3form, we are raising our full-year 2024 guidance,” said
|
|
|
For the Year Ended |
||||||||||
(Dollar amounts in millions except per-share data) |
2023 Actual |
|
Current Guidance |
|
VPY Growth % |
||||||||
Net sales |
$ |
1,295 |
|
$ |
1,395 |
|
to |
$ |
1,435 |
|
8% |
to |
11% |
Adjusted EBITDA* |
$ |
430 |
|
$ |
465 |
|
to |
$ |
485 |
|
8% |
to |
13% |
Adjusted diluted net earnings per share* |
$ |
5.32 |
|
$ |
5.80 |
|
to |
$ |
6.05 |
|
9% |
to |
14% |
Adjusted free cash flow* |
$ |
263 |
|
$ |
285 |
|
to |
$ |
300 |
|
8% |
to |
14% |
|
|
|
|
|
|
|
|
|
|
|
Earnings Webcast
Management will host a live webcast conference call at
Uncertainties Affecting Forward-Looking Statements
Disclosures in this release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, those relating to future financial and operational results, expected savings from cost management initiatives, the performance of our WAVE joint venture, market and broader economic conditions and guidance. Those statements provide our future expectations or forecasts and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. This includes annual guidance. Forward-looking statements, by their nature, address matters that are uncertain and involve risks because they relate to events and depend on circumstances that may or may not occur in the future. As a result, our actual results may differ materially from our expected results and from those expressed in our forward-looking statements. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections of our reports on Form 10-K and Form 10-Q filed with the
About Armstrong and Additional Information
More details on the Company’s performance can be found in its report on Form 10-Q for the quarter ended
Reported Financial Results
(Amounts in millions, except per share data)
SELECTED FINANCIAL RESULTS |
||||||||
|
||||||||
(Unaudited) |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
326.3 |
|
|
$ |
310.2 |
|
Cost of goods sold |
|
|
202.0 |
|
|
|
198.1 |
|
Gross profit |
|
|
124.3 |
|
|
|
112.1 |
|
Selling, general and administrative expenses |
|
|
65.7 |
|
|
|
62.7 |
|
(Gain) related to change in fair value of contingent consideration |
|
|
(0.3 |
) |
|
|
- |
|
Equity (earnings) from unconsolidated affiliates, net |
|
|
(27.2 |
) |
|
|
(20.8 |
) |
Operating income |
|
|
86.1 |
|
|
|
70.2 |
|
Interest expense |
|
|
9.0 |
|
|
|
8.7 |
|
Other non-operating (income), net |
|
|
(3.1 |
) |
|
|
(2.4 |
) |
Earnings before income taxes |
|
|
80.2 |
|
|
|
63.9 |
|
Income tax expense |
|
|
20.3 |
|
|
|
16.6 |
|
Net earnings |
|
$ |
59.9 |
|
|
$ |
47.3 |
|
|
|
|
|
|
|
|
||
Diluted net earnings per share of common stock |
|
$ |
1.36 |
|
|
$ |
1.04 |
|
Average number of diluted common shares outstanding |
|
|
44.1 |
|
|
|
45.5 |
|
SEGMENT RESULTS |
||||||||
|
||||||||
(Unaudited) |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Mineral Fiber |
|
$ |
239.6 |
|
|
$ |
228.4 |
|
Architectural Specialties |
|
|
86.7 |
|
|
|
81.8 |
|
Total net sales |
|
$ |
326.3 |
|
|
$ |
310.2 |
|
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Segment operating income (loss) |
|
|
|
|
|
|
||
Mineral Fiber |
|
$ |
79.2 |
|
|
$ |
63.8 |
|
Architectural Specialties |
|
|
7.7 |
|
|
|
7.2 |
|
Unallocated Corporate |
|
|
(0.8 |
) |
|
|
(0.8 |
) |
Total consolidated operating income |
|
$ |
86.1 |
|
|
$ |
70.2 |
|
SELECTED BALANCE SHEET INFORMATION |
||||||||
|
||||||||
|
|
Unaudited |
|
|
|
|
||
|
|
|
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Current assets |
|
$ |
330.7 |
|
|
$ |
313.0 |
|
Property, plant and equipment, net |
|
|
559.9 |
|
|
|
566.4 |
|
Other non-current assets |
|
|
800.9 |
|
|
|
793.0 |
|
Total assets |
|
$ |
1,691.5 |
|
|
$ |
1,672.4 |
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
||
Current liabilities |
|
$ |
184.4 |
|
|
$ |
194.5 |
|
Non-current liabilities |
|
|
880.3 |
|
|
|
886.1 |
|
Shareholders' equity |
|
|
626.8 |
|
|
|
591.8 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,691.5 |
|
|
$ |
1,672.4 |
|
SELECTED CASH FLOW INFORMATION |
||||||||
|
||||||||
(Unaudited) |
||||||||
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net earnings |
|
$ |
59.9 |
|
|
$ |
47.3 |
|
Other adjustments to reconcile net earnings to net cash provided by operating activities |
|
|
(0.1 |
) |
|
|
(1.4 |
) |
Changes in operating assets and liabilities, net |
|
|
(33.4 |
) |
|
|
(19.7 |
) |
Net cash provided by operating activities |
|
|
26.4 |
|
|
|
26.2 |
|
Net cash provided by (used for) investing activities |
|
|
5.9 |
|
|
|
(1.5 |
) |
Net cash (used for) financing activities |
|
|
(33.1 |
) |
|
|
(34.7 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(0.4 |
) |
|
|
— |
|
Net (decrease) in cash and cash equivalents |
|
|
(1.2 |
) |
|
|
(10.0 |
) |
Cash and cash equivalents at beginning of year |
|
|
70.8 |
|
|
|
106.0 |
|
Cash and cash equivalents at end of period |
|
$ |
69.6 |
|
|
$ |
96.0 |
|
Supplemental Reconciliations of GAAP to non-GAAP Results (unaudited)
(Amounts in millions, except per share data)
To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in
In the following charts, numbers may not sum due to rounding. Excluding adjusted diluted EPS, non-GAAP figures are rounded to the nearest million and corresponding percentages are rounded to the nearest percent based on unrounded figures.
Consolidated Results – Adjusted EBITDA
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
326 |
|
|
$ |
310 |
|
|
|
|
|
|
|
|
||
Net earnings |
|
$ |
60 |
|
|
$ |
47 |
|
Add: Income tax expense |
|
|
20 |
|
|
|
17 |
|
Earnings before income taxes |
|
$ |
80 |
|
|
$ |
64 |
|
Add: Interest/other income and expense, net |
|
|
6 |
|
|
|
6 |
|
Operating income |
|
$ |
86 |
|
|
$ |
70 |
|
Add: RIP expense (1) |
|
|
1 |
|
|
|
1 |
|
Add: Acquisition-related impacts (2) |
|
|
- |
|
|
|
1 |
|
Add: Cost reduction initiatives |
|
|
- |
|
|
|
3 |
|
Adjusted operating income |
|
$ |
86 |
|
|
$ |
75 |
|
Add: Depreciation and amortization |
|
|
24 |
|
|
|
21 |
|
Adjusted EBITDA |
|
$ |
111 |
|
|
$ |
96 |
|
|
|
|
|
|
|
|
||
Operating income margin |
|
|
26.4 |
% |
|
|
22.6 |
% |
Adjusted EBITDA margin |
|
|
33.9 |
% |
|
|
30.9 |
% |
(1) |
RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP. |
|
(2) |
Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration, deferred compensation and restricted stock expenses. |
Mineral Fiber
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
240 |
|
|
$ |
228 |
|
|
|
|
|
|
|
|
||
Operating income |
|
$ |
79 |
|
|
$ |
64 |
|
Add: Cost reduction initiatives |
|
|
- |
|
|
|
3 |
|
Adjusted operating income |
|
$ |
79 |
|
|
$ |
66 |
|
Add: Depreciation and amortization |
|
|
20 |
|
|
|
18 |
|
Adjusted EBITDA |
|
$ |
99 |
|
|
$ |
84 |
|
|
|
|
|
|
|
|
||
Operating income margin |
|
|
33.1 |
% |
|
|
27.9 |
% |
Adjusted EBITDA margin |
|
|
41.2 |
% |
|
|
36.8 |
% |
Architectural Specialties
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
87 |
|
|
$ |
82 |
|
|
|
|
|
|
|
|
||
Operating income |
|
$ |
8 |
|
|
$ |
7 |
|
Add: Acquisition-related impacts (1) |
|
|
- |
|
|
|
1 |
|
Adjusted operating income |
|
$ |
8 |
|
|
$ |
8 |
|
Add: Depreciation and amortization |
|
|
4 |
|
|
|
3 |
|
Adjusted EBITDA |
|
$ |
12 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
||
Operating income margin |
|
|
8.9 |
% |
|
|
8.8 |
% |
Adjusted EBITDA margin |
|
|
14.0 |
% |
|
|
14.3 |
% |
(1) |
Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration, deferred compensation and restricted stock expenses. |
Unallocated Corporate
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating (loss) |
|
$ |
(1 |
) |
|
$ |
(1 |
) |
Add: RIP expense (1) |
|
|
1 |
|
|
|
1 |
|
Adjusted operating (loss) |
|
$ |
- |
|
|
$ |
- |
|
Add: Depreciation and amortization |
|
|
- |
|
|
|
- |
|
Adjusted EBITDA |
|
$ |
- |
|
|
$ |
- |
|
(1) |
RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP. |
Consolidated Results – Adjusted Free Cash Flow
|
|
For the Three Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net cash provided by operating activities |
|
$ |
26 |
|
|
$ |
26 |
|
Net cash provided by (used for) investing activities |
|
$ |
6 |
|
|
|
(2 |
) |
Net cash provided by operating and investing activities |
|
$ |
32 |
|
|
$ |
25 |
|
Add: Acquisitions, net |
|
|
6 |
|
|
- |
|
|
Add: Arktura deferred compensation (1) |
|
|
6 |
|
|
- |
|
|
Add: Contingent consideration in excess of acquisition-date fair value (2) |
|
- |
|
|
|
5 |
|
|
Adjusted Free Cash Flow |
|
$ |
43 |
|
|
$ |
30 |
|
(1) |
Contingent consideration payments related to 2020 acquisition recorded as a component of net cash provided by operating activities. |
|
(2) |
Contingent compensation payments related to the acquisition. |
Consolidated Results – Adjusted Diluted Earnings Per Share (EPS)
|
For the Three Months Ended |
|
||||||||||
|
2024 |
|
2023 |
|
||||||||
|
Total |
|
Per Diluted
|
|
Total |
|
Per Diluted
|
|
||||
Net earnings |
$ |
60 |
|
$ |
1.36 |
|
$ |
47 |
|
$ |
1.04 |
|
Add: Income tax expense |
|
20 |
|
|
|
|
17 |
|
|
|
||
Earnings before income taxes |
$ |
80 |
|
|
|
$ |
64 |
|
|
|
||
Add: Acquisition-related impacts (1) |
|
- |
|
|
|
|
1 |
|
|
|
||
Add: Acquisition-related amortization (2) |
|
2 |
|
|
|
|
1 |
|
|
|
||
Add: Cost reduction initiatives |
|
- |
|
|
|
|
3 |
|
|
|
||
Adjusted net earnings before income taxes |
$ |
82 |
|
|
|
$ |
69 |
|
|
|
||
(Less): Adjusted income tax expense (3) |
|
(21 |
) |
|
|
|
(18 |
) |
|
|
||
Adjusted net earnings |
$ |
61 |
|
$ |
1.38 |
|
$ |
51 |
|
$ |
1.12 |
|
Adjusted diluted EPS change versus prior year |
|
|
23.2% |
|
|
|
|
|
||||
Diluted shares outstanding |
|
|
|
44.1 |
|
|
|
|
45.5 |
|
||
Effective tax rate |
|
|
25% |
|
|
|
26% |
|
||||
|
|
|
|
|
|
|
|
|
(1) |
Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration, deferred compensation and restricted stock expenses. |
|
(2) |
Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles. |
|
(3) |
Adjusted income tax expense is calculated using the effective tax rate multiplied by the adjusted earnings from continuing operations before income taxes. |
Adjusted EBITDA Guidance
|
|
For the Year Ending |
|
|||||
|
|
Low |
|
|
High |
|
||
Net earnings |
|
$ |
253 |
|
to |
$ |
259 |
|
Add: Income tax expense |
|
|
84 |
|
|
|
86 |
|
Earnings before income taxes |
|
$ |
337 |
|
to |
$ |
345 |
|
Add: Interest expense |
|
|
40 |
|
|
|
42 |
|
Add: Other non-operating (income), net |
|
|
(10 |
) |
|
|
(8 |
) |
Operating income |
|
$ |
367 |
|
to |
$ |
379 |
|
Add: RIP expense (1) |
|
|
2 |
|
|
|
2 |
|
Adjusted operating income |
|
$ |
369 |
|
to |
$ |
381 |
|
Add: Depreciation and amortization |
|
|
96 |
|
|
|
104 |
|
Adjusted EBITDA |
|
$ |
465 |
|
to |
$ |
485 |
|
(1) |
RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we do not expect to make cash contributions to our RIP. |
Adjusted Diluted Net Earnings Per Share Guidance
|
|
For the Year Ending |
|
|||||||||||||
|
|
Low |
|
|
Per Diluted
|
|
|
High |
|
|
Per Diluted
|
|
||||
Net earnings |
|
$ |
253 |
|
|
$ |
5.74 |
|
to |
$ |
259 |
|
|
$ |
5.91 |
|
Add: Income tax expense |
|
|
84 |
|
|
|
|
|
|
86 |
|
|
|
|
||
Earnings before income taxes |
|
$ |
337 |
|
|
|
|
to |
$ |
345 |
|
|
|
|
||
Add: RIP (credit) (2) |
|
|
(2 |
) |
|
|
|
|
|
(1 |
) |
|
|
|
||
Add: Acquisition-related amortization (3) |
|
|
7 |
|
|
|
|
|
|
8 |
|
|
|
|
||
Adjusted earnings before income taxes |
|
$ |
342 |
|
|
|
|
to |
$ |
352 |
|
|
|
|
||
(Less): Adjusted income tax expense (4) |
|
|
(86 |
) |
|
|
|
|
|
(88 |
) |
|
|
|
||
Adjusted net earnings |
|
$ |
256 |
|
|
$ |
5.80 |
|
to |
$ |
264 |
|
|
$ |
6.05 |
|
(1) |
Adjusted diluted EPS guidance for 2024 is calculated based on approximately 44 million of diluted shares outstanding. |
|
(2) |
RIP (credit) represents the entire actuarial net periodic pension (credit) recorded as a component of net earnings. We do not expect to make any cash contributions to our RIP. |
|
(3) |
Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles. |
|
(4) |
Income tax expense is based on an adjusted effective tax rate of approximately 25%, multiplied by adjusted earnings before income taxes. |
Adjusted Free Cash Flow Guidance
|
|
For the Year Ending |
|
|||||
|
|
Low |
|
|
High |
|
||
Net cash provided by operating activities |
|
$ |
271 |
|
to |
$ |
286 |
|
Add: Return of investment from joint venture |
|
|
94 |
|
|
|
104 |
|
Adjusted net cash provided by operating activities |
|
$ |
365 |
|
to |
$ |
390 |
|
Less: Capital expenditures |
|
|
(80 |
) |
|
|
(90 |
) |
Adjusted Free Cash Flow |
|
$ |
285 |
|
to |
$ |
300 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240430114520/en/
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