Armstrong World Industries, Inc. AWI reported solid results for fourth-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
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The company’s growth trend was backed by solid contributions from the Mineral Fiber, as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value (AUV) and volume. Also, contributions from recent acquisitions aided the uptrend.
Following the results, shares of this international designer and manufacturer of wall and ceiling building materials notably gained 5.2% during yesterday’s trading session.
The company delivered a strong performance in both segments in 2024, indicating the strength of its growth model despite market challenges. For 2025, the company aims to drive profitable growth and navigate a volatile operating environment to support margin expansion across the businesses. The company expects adjusted free cash flow growth to support a balanced capital deployment strategy focused on value creation.
AWI’s Earnings & Sales Discussion
Armstrong World reported adjusted EPS of $1.50, which topped the Zacks Consensus Estimate of $1.37 by 9.5%. The metric also grew 23% year over year from $1.22 per share.
Net sales of $367.7 million also surpassed the consensus mark of $350.1 million by 5% and increased 17.7% year over year. This upside was driven by a higher sales volume of $36 million and a favorable AUV of $20 million.
Armstrong World Industries, Inc. Price, Consensus and EPS Surprise
Armstrong World Industries, Inc. price-consensus-eps-surprise-chart | Armstrong World Industries, Inc. Quote
Adjusted EBITDA increased 14% from the year-ago quarter’s figure to $112 million. However, adjusted EBITDA margin contracted 100 basis points (bps) from the year-ago quarter to 30.4%. Our estimate for adjusted EBITDA and adjusted EBITDA margin was $109.8 million and 31.5%, respectively.
AWI’s Segmental Performance
Mineral Fiber: The segment’s net sales grew 8.1% on a year-over-year basis to $238.2 million on the back of $20 million of favorable AUV, driven by positive like-for-like pricing. However, the upside was partially offset by $2 million of lower sales volumes.
The segment reported an operating income of $68.6 million, up 12.6% from $60.9 million in the year-ago quarter. Operating margin expanded 120 bps from the year-ago quarter’s levels to 28.8%. Adjusted EBITDA increased 10.3% from the year-ago quarter’s figure to $89 million. Adjusted EBITDA margin also rose 70 bps in the quarter to 37.5%.
Architectural Specialties: Net sales in the segment increased 40.8% year over year to $129.5 million, driven by a $25 million contribution from Zahner, 3form and BOK, and a moderate increase in custom project net sales.
The segment reported an operating income of $14.2 million, portraying a whopping 136.7% year-over-year increase. Adjusted EBITDA for the quarter was $23 million, indicating 33.3% growth year over year. On a year-over-year basis, the operating margin expanded 450 bps while the adjusted EBITDA margin contracted 100 bps.
2024 Highlights of AWI
In the full year, Armstrong World reported net sales of $1.4 billion, up 11.6% from $1.3 billion reported in 2023. Adjusted earnings during the year were $6.31 per share, up from $5.32 reported in 2023.
Operating income and operating margin increased 15.6% to $374.3 million and 90 bps to 25.9%, respectively, year over year. Adjusted EBITDA was also up 13.1% year over year to $486 million, with adjusted EBITDA margin of 33.6% (up 50 bps).
Armstrong World’s Financials
As of Dec. 31, 2024, Armstrong World had cash and cash equivalents of $79.3 million compared with $70.8 million at 2023-end. Net cash provided by operations was $266.8 million in 2024 compared with $233.5 million in the year-ago period.
Adjusted free cash flow was $86 million in fourth-quarter 2024, up from $68 million reported in the year-ago quarter.
During the reported quarter, the company repurchased 0.1 million shares of common stock for $15 million, excluding commissions and tax costs. As of Dec. 31, 2024, $662 million of shares remained under the current authorized share repurchase program.
AWI’s 2025 Guidance
Armstrong World anticipates net sales to be within $1,570-$1,610 million, indicating a 9-11% increase from the year-ago figure.
Segment-wise, Mineral Fiber sales are expected to grow around 5-6%. Architectural Specialties’ sales are anticipated to grow approximately 20%.
Adjusted EBITDA is estimated to be within $525-$545 million, indicating a rise of 8-12% year over year. The company expects its adjusted earnings per share to be between $6.85 and $7.15, implying growth of 9-13% from the reported figure of 2024.
Adjusted free cash flow is anticipated to be between $315 million and $335 million, indicating a 6-12% increase year over year.
AWI’s Zacks Rank & Recent Construction Releases
Armstrong World currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Masco Corporation’s MAS fourth-quarter 2024 earnings topped the Zacks Consensus Estimate and grew year over year. Earnings topped expectations in six of the trailing seven quarters. On the other hand, net sales missed the consensus mark and tumbled year over year.
Masco’s top-line results reflected lower sales volume for North America’s plumbing products, lower net selling prices of decorative architectural products and an unfavorable sales mix of plumbing products. However, the bottom line was favored by lower selling, general and administrative expenses, favorable net selling prices and strategic cost savings initiatives. Moving into 2025, the company aims to continue maintaining shareholder value through its top-tier repair and remodel-oriented product portfolio, strong balance sheet and disciplined capital allocation.
Gibraltar Industries, Inc.’s ROCK fourth-quarter 2024 adjusted earnings topped the Zacks Consensus Estimate and grew year over year. On the other hand, net sales missed the consensus mark and tumbled year over year.
Gibraltar’s bottom-line performance was backed by a favorable mix shift and continued strong operating execution. Although the timing on a large project last year hampered the net sales growth during the quarter, the company is optimistic about the prospects given the robust public spending trends at the federal and state levels.
Leggett & Platt, Incorporated LEG reported fourth-quarter 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues beating the same. On a year-over-year basis, both metrics declined.
Leggett’s quarterly results indicated weak demand in its residential end markets, due to a challenging macro environment and soft consumer spending. Softening in Automotive and Hydraulic Cylinders further impacted its performance. Although LEG carried out its restructuring and operating efficiency improvement initiatives, the headwinds mentioned above overshadowed the prospects to a great extent.
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This article originally published on Zacks Investment Research (zacks.com).
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