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Armstrong World Industries (AWI) Up 1.1% 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 1.1% in that time frame, outperforming 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 drivers.
Armstrong World Industries, Inc. recently reported fourth-quarter 2020 results, wherein earnings and revenues beat the Zacks Consensus Estimate. However, the top and bottom lines declined on a year-over-year basis owing to coronavirus-hit market demand.
Earnings & Revenue Discussion
Armstrong World reported adjusted earnings of 77 cents per share, beating the Zacks Consensus Estimate of 70 cents by 10%. However, the bottom line declined 30.6% from $1.11 per share reported in the year-ago quarter.
Net sales of $238.7 million beat the consensus mark of $231.5 million by 3.1%. However, the top line fell 3.3% year over year, mainly due to lower volumes in both Mineral Fiber and Architectural Specialties segments on account of COVID-hit market demand. Also, unfavorable Mineral Fiber AUV due to regional weakness in major metropolitan areas impacted by the pandemic added to the woes. However, this was partially offset by a positive sales impact from acquisitions made in 2019 and 2020.
Operational Update
Gross margin for the fourth quarter came in at 34.7%, which contracted 120 basis points (bps) from the year-ago period. Selling, general and administrative (SG&A) expenses — as a percentage of net sales — increased a whopping 660 bps year over year to 22.8%.
Adjusted EBITDA fell 18.9% from the prior-year quarter to $73 million, primarily attributed to unfavorable channel mix and drop in WAVE earnings. However, this was partially offset by improved manufacturing productivity.
Segmental Performance
Mineral Fiber: The segment’s sales fell 7.2% on a year-over-year basis to $183.1 million due to lower volume and unfavorable AUV.
Operating income also decreased 23.9% from the prior-year quarter to $45 million, attributed to lower volumes and WAVE earnings, as well as unfavorable AUV, partially offset by improved manufacturing productivity along with reduction in incentive compensation expenses. Adjusted EBITDA also declined 19.1% from the prior-year quarter to $66 million.
Architectural Specialties: Net sales in the segment grew 11.9% year over year to $55.6 million owing to sales from the recently-acquired Turf Design, Moz Designs and Arktura, LLC. However, this was offset by the pandemic-induced reduction in demand.
The segment’s operating income and adjusted EBITDA decreased 75% and 16% from the year-ago level, respectively, owing to lower sales volume as well as additional amortization expenses related to acquisitions.
Financials
As of Dec 31, 2020, Armstrong World had cash and cash equivalents of $136.9 million compared with $45.3 million at 2019-end. Net cash provided by operations for the fourth quarter came in at $70 million compared with $62 million in the prior-year period.
The company’s free cash flow (on an adjusted basis) came in at $68 million compared with $71 million in the year-ago quarter.
2020 Highlights
Net sales for 2020 were down 9.7% to $936.9 million from $1,038.1 million in 2019.
Total consolidated operating income for 2020 came in at $254.8 compared with $317.4 million in 2019.
Adjusted EBITDA for 2020 fell 18.1% to $330 million from $403 million in 2019.
Adjusted free cash flow for 2020 fell 13% to $212 from $244 million in 2019.
Adjusted earnings per share for 2020 came in at $3.63 compared with $4.78 in 2019.
2021 Guidance
For 2021, the company expects operating income in the range of $264-$276 million. Meanwhile, adjusted net income is projected in the band of $189-$198 million. Adjusted EBITDA is anticipated in the range of $360-$372 million. Also, it expects net sales growth between 10% and 13% for 2021.
The company expects adjusted earnings per share in the range of $3.8-$4. Adjusted free cash flow is anticipated in the range of $185-$205 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Armstrong World Industries has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Armstrong World Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Armstrong World Industries (AWI) Up 1.1% 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 1.1% in that time frame, outperforming 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 drivers.
Armstrong World (AWI - Free Report) Q4 Earnings & Revenues Beat Estimates
Armstrong World Industries, Inc. recently reported fourth-quarter 2020 results, wherein earnings and revenues beat the Zacks Consensus Estimate. However, the top and bottom lines declined on a year-over-year basis owing to coronavirus-hit market demand.
Earnings & Revenue Discussion
Armstrong World reported adjusted earnings of 77 cents per share, beating the Zacks Consensus Estimate of 70 cents by 10%. However, the bottom line declined 30.6% from $1.11 per share reported in the year-ago quarter.
Net sales of $238.7 million beat the consensus mark of $231.5 million by 3.1%. However, the top line fell 3.3% year over year, mainly due to lower volumes in both Mineral Fiber and Architectural Specialties segments on account of COVID-hit market demand. Also, unfavorable Mineral Fiber AUV due to regional weakness in major metropolitan areas impacted by the pandemic added to the woes. However, this was partially offset by a positive sales impact from acquisitions made in 2019 and 2020.
Operational Update
Gross margin for the fourth quarter came in at 34.7%, which contracted 120 basis points (bps) from the year-ago period. Selling, general and administrative (SG&A) expenses — as a percentage of net sales — increased a whopping 660 bps year over year to 22.8%.
Adjusted EBITDA fell 18.9% from the prior-year quarter to $73 million, primarily attributed to unfavorable channel mix and drop in WAVE earnings. However, this was partially offset by improved manufacturing productivity.
Segmental Performance
Mineral Fiber: The segment’s sales fell 7.2% on a year-over-year basis to $183.1 million due to lower volume and unfavorable AUV.
Operating income also decreased 23.9% from the prior-year quarter to $45 million, attributed to lower volumes and WAVE earnings, as well as unfavorable AUV, partially offset by improved manufacturing productivity along with reduction in incentive compensation expenses. Adjusted EBITDA also declined 19.1% from the prior-year quarter to $66 million.
Architectural Specialties: Net sales in the segment grew 11.9% year over year to $55.6 million owing to sales from the recently-acquired Turf Design, Moz Designs and Arktura, LLC. However, this was offset by the pandemic-induced reduction in demand.
The segment’s operating income and adjusted EBITDA decreased 75% and 16% from the year-ago level, respectively, owing to lower sales volume as well as additional amortization expenses related to acquisitions.
Financials
As of Dec 31, 2020, Armstrong World had cash and cash equivalents of $136.9 million compared with $45.3 million at 2019-end. Net cash provided by operations for the fourth quarter came in at $70 million compared with $62 million in the prior-year period.
The company’s free cash flow (on an adjusted basis) came in at $68 million compared with $71 million in the year-ago quarter.
2020 Highlights
Net sales for 2020 were down 9.7% to $936.9 million from $1,038.1 million in 2019.
Total consolidated operating income for 2020 came in at $254.8 compared with $317.4 million in 2019.
Adjusted EBITDA for 2020 fell 18.1% to $330 million from $403 million in 2019.
Adjusted free cash flow for 2020 fell 13% to $212 from $244 million in 2019.
Adjusted earnings per share for 2020 came in at $3.63 compared with $4.78 in 2019.
2021 Guidance
For 2021, the company expects operating income in the range of $264-$276 million. Meanwhile, adjusted net income is projected in the band of $189-$198 million. Adjusted EBITDA is anticipated in the range of $360-$372 million. Also, it expects net sales growth between 10% and 13% for 2021.
The company expects adjusted earnings per share in the range of $3.8-$4. Adjusted free cash flow is anticipated in the range of $185-$205 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Armstrong World Industries has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Armstrong World Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.