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Armstrong World Industries (AWI) Up 0.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Armstrong World Industries (AWI - Free Report) . Shares have added about 0.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Armstrong World Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Armstrong World Q1 Earnings & Net Sales Top, '24 View Up
Armstrong World Industries, Inc. splendid results for first-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. The growth was attributable to the increase in AUV, driven by favorable pricing and mix. Also, contributions from recent acquisitions aided the uptrend. This was reflected in record-setting sales and adjusted EBITDA growth along with adjusted EBITDA margin expansion.
Furthermore, the company is optimistic about its recently announced acquisition of 3form, LLC, which is expected to expand the portfolio of its Architectural Specialties segment and enhance its relationships with architects and designers. Thanks to its consistent operational excellence and the improving business trend, Armstrong World updated its 2024 outlook despite an uncertain economic backdrop.
Inside the Headlines
Armstrong World reported adjusted earnings of $1.38 per share, which topped the Zacks Consensus Estimate of $1.21 by 14.1%. The metric also grew 23.2% year over year from earnings of $1.12 per share.
Net sales of $326.3 million also surpassed the consensus mark of $317.8 million by 2.7% and grew 5.2% year over year. The upside was driven by a favorable AUV of $20 million partially offset by a lower sales volume of $4 million.
During the quarter, Armstrong World’s operating income of $86.1 million grew 22.6% from the year-ago quarter’s level of $70.2 million, primarily driven by a benefit from favorable AUV, an increase in equity earnings from the Worthington Armstrong Joint Venture and severance costs recorded in the year-ago period. Operating margin expanded 380 bps from the year-ago quarter to 26.4%.
Adjusted EBITDA increased 16% from the year-ago quarter’s figure to $111 million. Adjusted EBITDA margin rose 300 bps from the year-ago quarter to 33.9%.
Segmental Performance
Mineral Fiber: The segment’s net sales grew 4.9% on a year-over-year basis to $239.6 million on the back of $19 million of favorable AUV, partially offset by $8 million of lower sales volumes. The segment reported an operating income of $79.2 million, up 24.1% from $63.8 million reported in the year-ago quarter. Operating margin expanded 520 bps from the year-ago quarter’s levels to 33.1%. Adjusted EBITDA increased 17.6% from the year-ago quarter’s figure to $99 million. Adjusted EBITDA margin also rose 450 bps during the quarter to 41.2%.
Architectural Specialties: Net sales in the segment increased 6% year over year to $86.7 million, driven primarily by contributions from recent acquisitions and increased custom metal project sales. The segment reported an operating income of $7.7 million, portraying a 6.9% year-over-year decline. Adjusted EBITDA for the quarter was $12 million, indicating a flat growth rate year over year. On a year-over-year basis, the operating margin expanded 10 bps while the adjusted EBITDA margin contracted 20 bps.
Financials
As of Mar 31, 2024, Armstrong World had cash and cash equivalents of $69.6 million compared with $70.8 million in 2023 end. Net cash provided by operations was $26.4 million compared with $26.2 million in the year-ago period. Adjusted free cash flow was $43 million, up from $30 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 taxes. As of Mar 31, 2024, $702 million shares were remaining under the current authorized share repurchase program.
Updated 2024 Guidance
The company maintains a positive outlook on its growth strategy and cash flow generation for the year, backed by solid first-quarter results and strong execution at the plants, operational efficiencies and cost-saving initiatives.
Armstrong World now anticipates net sales to be within $1.395-$1.435 billion (priorly expected $1.335-$1.375 billion), indicating an 8-11% increase from the year-ago figure of $1,295 million. Adjusted EBITDA is now projected to be between $465 million and $485 million, up from the previously expected range of $450-$470 million, suggesting a rise of 8-13% year over year from the reported figure of $430 million.
The company currently expects its adjusted earnings per share to be between $5.80 and $6.05 (priorly expected between $5.60 and $5.90), suggesting growth of 9-14% from the 2023 reported figure of $5.32. Adjusted free cash flow is now anticipated to be between $285 million and $300 million (previously expected between $275 million and $290 million), indicating an 8-14% increase year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Armstrong World Industries has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Armstrong World Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Armstrong World Industries belongs to the Zacks Building Products - Miscellaneous industry. Another stock from the same industry, Otis Worldwide (OTIS - Free Report) , has gained 3.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Otis Worldwide reported revenues of $3.44 billion in the last reported quarter, representing a year-over-year change of +2.7%. EPS of $0.88 for the same period compares with $0.80 a year ago.
Otis Worldwide is expected to post earnings of $1.03 per share for the current quarter, representing a year-over-year change of +12%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Otis Worldwide. Also, the stock has a VGM Score of C.
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Armstrong World Industries (AWI) Up 0.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Armstrong World Industries (AWI - Free Report) . Shares have added about 0.6% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Armstrong World Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Armstrong World Q1 Earnings & Net Sales Top, '24 View Up
Armstrong World Industries, Inc. splendid results for first-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. The growth was attributable to the increase in AUV, driven by favorable pricing and mix. Also, contributions from recent acquisitions aided the uptrend. This was reflected in record-setting sales and adjusted EBITDA growth along with adjusted EBITDA margin expansion.
Furthermore, the company is optimistic about its recently announced acquisition of 3form, LLC, which is expected to expand the portfolio of its Architectural Specialties segment and enhance its relationships with architects and designers. Thanks to its consistent operational excellence and the improving business trend, Armstrong World updated its 2024 outlook despite an uncertain economic backdrop.
Inside the Headlines
Armstrong World reported adjusted earnings of $1.38 per share, which topped the Zacks Consensus Estimate of $1.21 by 14.1%. The metric also grew 23.2% year over year from earnings of $1.12 per share.
Net sales of $326.3 million also surpassed the consensus mark of $317.8 million by 2.7% and grew 5.2% year over year. The upside was driven by a favorable AUV of $20 million partially offset by a lower sales volume of $4 million.
During the quarter, Armstrong World’s operating income of $86.1 million grew 22.6% from the year-ago quarter’s level of $70.2 million, primarily driven by a benefit from favorable AUV, an increase in equity earnings from the Worthington Armstrong Joint Venture and severance costs recorded in the year-ago period. Operating margin expanded 380 bps from the year-ago quarter to 26.4%.
Adjusted EBITDA increased 16% from the year-ago quarter’s figure to $111 million. Adjusted EBITDA margin rose 300 bps from the year-ago quarter to 33.9%.
Segmental Performance
Mineral Fiber: The segment’s net sales grew 4.9% on a year-over-year basis to $239.6 million on the back of $19 million of favorable AUV, partially offset by $8 million of lower sales volumes. The segment reported an operating income of $79.2 million, up 24.1% from $63.8 million reported in the year-ago quarter. Operating margin expanded 520 bps from the year-ago quarter’s levels to 33.1%. Adjusted EBITDA increased 17.6% from the year-ago quarter’s figure to $99 million. Adjusted EBITDA margin also rose 450 bps during the quarter to 41.2%.
Architectural Specialties: Net sales in the segment increased 6% year over year to $86.7 million, driven primarily by contributions from recent acquisitions and increased custom metal project sales. The segment reported an operating income of $7.7 million, portraying a 6.9% year-over-year decline. Adjusted EBITDA for the quarter was $12 million, indicating a flat growth rate year over year. On a year-over-year basis, the operating margin expanded 10 bps while the adjusted EBITDA margin contracted 20 bps.
Financials
As of Mar 31, 2024, Armstrong World had cash and cash equivalents of $69.6 million compared with $70.8 million in 2023 end. Net cash provided by operations was $26.4 million compared with $26.2 million in the year-ago period. Adjusted free cash flow was $43 million, up from $30 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 taxes. As of Mar 31, 2024, $702 million shares were remaining under the current authorized share repurchase program.
Updated 2024 Guidance
The company maintains a positive outlook on its growth strategy and cash flow generation for the year, backed by solid first-quarter results and strong execution at the plants, operational efficiencies and cost-saving initiatives.
Armstrong World now anticipates net sales to be within $1.395-$1.435 billion (priorly expected $1.335-$1.375 billion), indicating an 8-11% increase from the year-ago figure of $1,295 million. Adjusted EBITDA is now projected to be between $465 million and $485 million, up from the previously expected range of $450-$470 million, suggesting a rise of 8-13% year over year from the reported figure of $430 million.
The company currently expects its adjusted earnings per share to be between $5.80 and $6.05 (priorly expected between $5.60 and $5.90), suggesting growth of 9-14% from the 2023 reported figure of $5.32. Adjusted free cash flow is now anticipated to be between $285 million and $300 million (previously expected between $275 million and $290 million), indicating an 8-14% increase year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Armstrong World Industries has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Armstrong World Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Armstrong World Industries belongs to the Zacks Building Products - Miscellaneous industry. Another stock from the same industry, Otis Worldwide (OTIS - Free Report) , has gained 3.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Otis Worldwide reported revenues of $3.44 billion in the last reported quarter, representing a year-over-year change of +2.7%. EPS of $0.88 for the same period compares with $0.80 a year ago.
Otis Worldwide is expected to post earnings of $1.03 per share for the current quarter, representing a year-over-year change of +12%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Otis Worldwide. Also, the stock has a VGM Score of C.