LANCASTER, PA — Armstrong World Industries, Inc. (NYSE: AWI) reported record financial results for the second quarter of 2024, showcasing strong sales and earnings growth. The company attributes its success to robust performance in its Mineral Fiber and Architectural Specialties segments.
Net sales rose by 12.2%, driven by solid growth in Mineral Fiber Average Unit Value (AUV) and strategic acquisitions in the Architectural Specialties segment. Operating income increased by 9.2%, while diluted net earnings per share climbed 12%. Adjusted EBITDA saw a 13% rise, and adjusted diluted net earnings per share jumped 17%. The company has subsequently raised its full-year 2024 guidance.
“With double-digit net sales growth and record earnings, our second-quarter results further demonstrate the resilience of our business model and the strength of our growth initiatives,” said Vic Grizzle, President and CEO of Armstrong World Industries.
Segment Performance Breakdown
Mineral Fiber net sales increased by 6.9%, driven by a $13 million favorable AUV and a $3 million boost in sales volumes. Operating income in this segment benefitted from a $9 million AUV uplift, a $3 million decrease in manufacturing costs, and higher sales volumes.
Architectural Specialties net sales surged 25.7%, bolstered by a $20 million contribution from recent acquisitions of 3form, LLC and BOK Modern, LLC. Operating income in this segment also grew, propelled by increased sales and improved project margins.
Cash Flow and Share Repurchase
Year-to-date cash flows from operating activities decreased by $10 million compared to the prior year, mainly due to unfavorable changes in working capital and higher cash paid for income taxes. The company’s investing cash flows declined by $75 million, primarily due to the acquisition of 3form.
Armstrong repurchased 0.1 million shares of common stock for $10 million during the second quarter. As of June 30, 2024, $692 million remains under the current authorized share repurchase program.
Updated Outlook
Given the robust performance in the first half of the year, Armstrong has increased its guidance for all key metrics for 2024. “We now expect operating conditions in the second half of the year to be similar to the first half. With this backdrop, we expect to expand Adjusted EBITDA margin at the total company level and will continue our disciplined deployment of capital to create value for shareholders,” said Chris Calzaretta, AWI Senior Vice President and CFO.
Is Armstrong World Industries a Buy, Sell, or Hold?
For current shareholders, Armstrong’s strong financial performance and raised full-year guidance are positive indicators. The company’s focus on innovation, operational excellence, and strategic acquisitions bodes well for sustained growth.
For potential investors, Armstrong’s solid market position and aggressive repurchase program make it an attractive buy. However, cautious investors might see this as a hold until more clarity on market stabilization is observed in the second half of the year.
In conclusion, Armstrong World Industries is showing strong financial health and growth potential, making it a compelling option for both existing and prospective investors.
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