Armstrong World Industries Reports Record-Setting Fourth-Quarter and Full-Year 2024 Results

Armstrong World Industries, Inc., an Americas leader in the design and manufacture of innovative interior and exterior architectural applications including ceilings, specialty walls and exterior metal solutions, reported fourth-quarter and full-year 2024 financial results highlighted by robust sales and earnings growth.

Fourth-Quarter 2024

• Net sales of $368 million, an increase of 18%
• Operating income increased 24% and diluted net earnings per share increased 34%
• Adjusted EBITDA up 14% and adjusted diluted net earnings per share up 23%
• Completed acquisition of A. Zahner Company (“Zahner”)

Full-Year 2024

• Record setting net sales of $1.4 billion, an increase of 12%
• Operating income increased 16% and diluted net earnings per share increased 21%
• Adjusted EBITDA up 13% and adjusted diluted net earnings per share up 19%
• Issuing 2025 Guidance with solid growth across all key metrics

^{(Comparisons above are versus the prior-year period unless otherwise stated.)}

“These strong fourth-quarter results capped off another year of significant growth for Armstrong with record-setting sales and earnings, strong free cash flow generation, and two meaningful acquisitions to grow our Architectural Specialties capabilities,” said Vic Grizzle, President and CEO of Armstrong World Industries. “These achievements are a testament to our teams’ ability to execute our consistent and sustainable growth model in challenging market conditions while continuing our investments in industry-leading innovation and digital initiatives. Our proven record of success gives us confidence we can sustain our consistent growth trajectory in 2025.”

Fourth-Quarter Consolidated Results

Consolidated fourth-quarter 2024 net sales increased 17.7% due to higher sales volumes of $36 million and favorable Average Unit Value (“AUV”) of $20 million. Mineral Fiber net sales increased $18 million, while Architectural Specialties net sales increased $38 million. The increase in Mineral Fiber net sales was driven by improved AUV, as a result of favorable mix and increased like-for-like pricing, partially offset by lower sales volumes. Architectural Specialties segment net sales improved primarily due to a $25 million contribution from the recent acquisitions of Zahner, 3form, LLC (“3form”) and BOK Modern, LLC (“BOK”), in addition to increased custom project net sales.

Consolidated fourth-quarter 2024 operating income increased 23.5% primarily due to a $21 million margin benefit from Architectural Specialties sales volume growth, a $10 million margin benefit from AUV, and a $4 million increase in equity earnings from Worthington Armstrong Venture (“WAVE”). These benefits were partially offset by a $12 million increase in selling, general and administrative (“SG&A”) expenses and a $7 million increase in manufacturing and input costs. Higher operating costs were driven primarily by the acquisition of 3form and increased employee costs, partially offset by lower acquisition-related expenses. The acquisitions of Zahner, 3form and BOK drove the 100 basis points of adjusted EBITDA margin compression in the quarter.

Fourth-Quarter Segment Results

Mineral Fiber

Mineral Fiber net sales increased 8.1% in the fourth quarter of 2024 due to $20 million of favorable AUV, partially offset by $2 million of lower sales volumes. The improvement in AUV was driven by both favorable mix and like-for-like pricing.

Mineral Fiber operating income increased by 12.6% in the fourth quarter of 2024 primarily due to a $10 million margin benefit from favorable AUV and a $5 million increase in WAVE equity earnings. These benefits were partially offset by a $5 million increase in SG&A expenses, primarily driven by higher employee costs as well as a decrease in company-owned officer life insurance gains related to deferred compensation plans, and a $2 million increase in manufacturing and input costs.

Architectural Specialties

Architectural Specialties net sales increased 40.8% in the fourth quarter of 2024 driven primarily by a $25 million increase due to the acquisitions of Zahner, 3form and BOK, and partially due to improved custom project net sales.

Architectural Specialties operating income increased by $8 million in the fourth quarter of 2024 primarily due to a $22 million margin benefit from higher sales volumes, partially offset by a $5 million increase in manufacturing costs. In addition, SG&A expenses increased by $8 million in the fourth quarter of 2024, primarily driven by an $11 million increase related to the acquisitions of Zahner, 3form and BOK and a $2 million increase in selling expenses to support sales growth, partially offset by a $6 million decrease in acquisition-related expenses.

Full-Year Consolidated Results

Consolidated net sales for 2024 increased 11.6% due to higher sales volumes of $89 million and favorable AUV of $62 million. Mineral Fiber net sales increased $54 million, while Architectural Specialties net sales increased $97 million. The increase in Mineral Fiber net sales was primarily driven by improved AUV, as a result of increased like-for-like pricing and favorable mix, partially offset by lower sales volumes. The decrease in volumes for 2024 was driven primarily within our home center customer channel, most notably due to prior-year first quarter inventory level increases that did not repeat in the current-year period, partially offset by two additional shipping days in 2024 and the positive contribution from our growth initiatives compared to the prior-year period. Architectural Specialties net sales improved primarily due to a $73 million contribution from the acquisitions of Zahner, 3form and BOK, in addition to increased custom project net sales.

Consolidated operating income increased 15.6% primarily due to a $53 million margin benefit from higher sales volumes, a $39 million benefit from favorable AUV and a $14 million increase in equity earnings from unconsolidated affiliates. These increases were partially offset by a $46 million increase in SG&A expenses and a $7 million increase in manufacturing and input costs, primarily driven by higher costs from the acquisitions of Zahner, 3form and BOK, partially offset by improved Mineral Fiber manufacturing productivity.

The year-over-year increase in SG&A expenses was primarily driven by a $32 million increase related to the acquisitions of Zahner, 3form and BOK, an $8 million increase in selling expenses, primarily due to higher employee costs, a $7 million increase in incentive compensation and a $6 million decrease in company-owned officer life insurance gains related to deferred compensation plans. These increases were partially offset by a $9 million decrease in acquisition-related expenses.

Cash Flow

Cash flows from operating activities in 2024 increased $33 million in comparison to prior year. The favorable change in operating cash flows was primarily driven by higher cash earnings, partially offset by unfavorable net working capital impacts. Cash flows used for investing activities increased $69 million versus the prior year primarily due to $124 million of cash paid for the Zahner and 3form acquisitions, partially offset by proceeds received from sales of real estate.

Share Repurchase Program

In the fourth quarter of 2024, we repurchased 0.1 million shares of common stock for a total cost of $15 million, excluding the cost of commissions and taxes. For the full year 2024, we repurchased 0.5 million shares of common stock for a total cost of $55 million, excluding the cost of commissions and taxes. As of December 31, 2024, there was $662 million remaining under our Board of Directors’ current authorized share repurchase program**.

^{** In July 2016, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $150 million of our outstanding common stock through July 2018 (the “Program”). Pursuant to additional authorizations and extensions of the Program approved by our Board of Directors, including $500 million authorized on July 18, 2023, we are authorized to purchase up to $1,700 million of our outstanding shares of common stock through December 2026. Since inception and through December 31, 2024, we have repurchased 14.6 million shares under the Program for a total cost of $1,038 million, excluding commissions and taxes.}

2025 Outlook

“We delivered strong results across both segments in 2024, demonstrating the resilience of our growth model, despite challenging market conditions,” said Chris Calzaretta, AWI Senior Vice President and CFO. “Turning to 2025, our focus remains on delivering profitable growth and navigating a choppy operating environment to drive margin expansion in both our Mineral Fiber and Architectural Specialties businesses. We remain focused on adjusted free cash flow growth, which will continue to fuel our balanced approach to capital deployment for value creation.”

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About Armstrong World Industries

Armstrong World Industries, Inc. (AWI) is a leader in the design and manufacture of innovative ceiling and wall system solutions in the Americas. With $1.2 billion in revenue in 2022, AWI has approximately 3,000 employees and a manufacturing network of 16 facilities, plus seven facilities dedicated to its WAVE joint venture.

Contact:

Theresa Womble – Media Contact – tlwomble@armstrongceilings.com – (717) 396-6354

Source: Armstrong World Industries, Inc.