LANCASTER, PA — Armstrong World Industries, Inc. (NYSE: AWI), a major player in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions, recently reported a record-setting performance for both the fourth quarter and the full year 2023.
The company announced an impressive 3% rise in net sales for Q4 2023, with mineral fiber volumes surpassing expectations. Adjusted EBITDA experienced a healthy 7% surge, while adjusted diluted earnings per share leaped a considerable 13%. However, the company did note a slight drop in operating income by 6% due to acquisition-related expenses. Diluted earnings per share from continued operations also declined by 1% on account of these costs.
Armstrong World Industries followed these record fourth-quarter results with an equally impressive full-year performance for 2023. They posted a 5% net sales growth on the back of a robust average unit value (AUV) performance. Operating income jumped 16%, translating to a 16% increase in diluted earnings per share from continued operations. Cash flow from operating and investing activities also grew by 6%, with an impressive 19% rise in adjusted free cash flow.
According to company President and CEO, Vic Grizzle, the record results were in part due to the adjusted EBITDA margin expansion in both Mineral Fiber and Architectural Specialties segments. He also lauded the company’s management team for their consistent efforts to execute their strategy and deliver on key initiatives despite challenging market conditions.
In their Q4 2023 report, Armstrong World Industries recognized an increase in consolidated net sales by 2.6% compared to prior-year results. This was propelled by favorable Average Unit Value (AUV) and higher sales volumes in their Mineral Fiber and Architectural Specialties segments. The report, however, did note a 6.1% decrease in operating income, attributed to higher incentive compensation, increased selling expenses, higher manufacturing costs and a $7 million rise in acquisition-related charges.
Despite these challenges, the company maintained strong sales in both segments. The Mineral Fiber segment saw a net sales increase of 2.0%, primarily due to favorable AUV and higher volumes. The Architectural Specialties segment also showed a 4.0% rise in net sales, primarily from recent acquisitions.
Reflecting on the full-year 2023 results, net sales experienced a 5.0% boost, largely due to favorable AUV and higher sales volumes. The company also recorded a 16.1% increase in full-year operating income, driven by rising AUV benefit, increased Architectural Specialties sales and a reduction in acquisition-related expenses.
In terms of their share repurchase program, Armstrong World Industries bought back 0.4 million shares of common stock at a total cost of $35 million in Q4 2023. For full-year 2023, they repurchased 1.8 million shares at a total cost of $132 million.
Looking ahead to 2024, the company expects to maintain sales growth between 3% to 6% and achieve adjusted EBITDA growth of 5% to 9%. Despite what they anticipate to be modestly softer economic conditions, Armstrong World Industries remains firm in their commitment to delivering profitable growth, margin expansion and adjusted free cash flow growth.
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