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Armstrong World's (AWI) Stock Down as Q1 Earnings & Sales Miss
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Armstrong World Industries, Inc. (AWI - Free Report) reported unimpressive results for first-quarter 2022. The top and the bottom line missed their respective Zacks Consensus Estimate but increased on a year-over-year basis. The upside can be attributed to solid pricing actions and strong execution of growth opportunities in the Architectural Specialties segment and digital and Healthy Spaces initiatives.
Armstrong World noted that lower Mineral Fiber sales volumes and equity earnings, primarily due to reductions in distributor inventory levels, affected the results. Shares of the company dropped 6.05% on Apr 26.
Vic Grizzle, president and CEO of Armstrong, said, “We remain encouraged by sentiment supporting demand in the commercial construction market, and this, together with our investments for growth, supports our confidence in our outlook for the rest of 2022.”
Earnings & Revenue Discussion
Armstrong World reported adjusted earnings of $1.02 per share, missing the Zacks Consensus Estimate of $1.13 by 9.7%. The bottom line rose 7.4% from 95 cents per share reported in the year-ago quarter.
Armstrong World Industries, Inc. Price, Consensus and EPS Surprise
Net sales of $282.6 million lagged the consensus mark of $288 million by 1.8% but increased 12.2% year over year. Favorable Average Unit Value (“AUV”) and increased volumes from the Architectural Specialties segment were partially offset by lower Mineral Fiber volumes.
Segmental Performance
Mineral Fiber: The segment’s sales increased 7.7% on a year-over-year basis to $203.2 million. It is mainly attributable to favorable AUV, partially offset by lower sales volumes. The decline in volumes was primarily driven by a reduction in inventory levels for certain distributor customers.
Operating income fell 5% from the prior-year quarter’s levels to $57.6 million. Adjusted EBITDA declined 4.7% from the prior-year quarter’s levels to $74 million, thanks to increased manufacturing costs (primarily raw material and energy costs), lower sales volumes, higher selling expenses and lower equity earnings.
Architectural Specialties: Net sales in the segment rose 25.6% year over year to $79.4 million, owing to an increase in custom project sales, benefits from recent acquisitions and positive impacts from price increases.
The segment reported an adjusted operating income of $9 million, significantly up from an operating loss of $1 million in the prior year, mainly driven by net sales growth and reduction in intangible asset amortization. The upside was partially offset by additional investments in selling capabilities and incentive compensation expenses. Adjusted EBITDA came in at $13 million, up 88.4% from the prior-year quarter’s levels.
Operational Update
During the quarter, the company’s adjusted operating income of $67 million rose 13.5% from the prior-year quarter’s levels. The upside was primarily driven by positive AUV in the Mineral Fiber segment, the benefit from higher sales volumes in the Architectural Specialties segment and a decline in intangible asset amortization related to the Architectural Specialties segment.
Adjusted EBITDA also rose 2.8% from the prior-year quarter’s figure to $87 million.
Financials
As of Mar 31, 2022, Armstrong World had cash and cash equivalents of $76.1 million compared with $98.1 million at 2021-end. Net cash provided by operations was $16.7 million during the first three months of 2022 compared with $19.6 million in the prior-year period.
In the first quarter, the company’s free cash flow (adjusted basis) came in at $20 million, down from $23 million in the year-ago period.
2022 Guidance Maintained
AWI anticipates 2022 net sales of $1,215-$1,255 million, indicating a 10-13% increase from a year ago. For 2022, the company expects adjusted EBITDA in the range of $410-$430 million, suggesting a rise of 10-16% year over year. AWI expects adjusted earnings per share in the range of $5-$5.20, indicating growth of 15-19% from 2021. Adjusted free cash flow is anticipated in the range of $215-$235 million (suggesting a 13-24% increase from the prior year’s levels).
Otis’ earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Sales also improved from the year-ago figure but marginally lagged the consensus mark.
Watsco, Inc. (WSO - Free Report) reported stellar results for first-quarter 2022. The company’s earnings and sales topped their respective Zacks Consensus Estimate and increased strongly on a year-over-year basis.
Watsco is benefiting from regular investments in customer-focused technologies and the expansion of its branch network. Also, continued investment in technologies designed to revolutionize customer experience added to the positives.
D.R. Horton, Inc.’s (DHI - Free Report) second-quarter fiscal 2022 earnings and revenues beat the respective Zacks Consensus Estimate and increased on a year-over-year basis.
D.R. Horton increased its revenue guidance for the full year, depicting its industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.
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Armstrong World's (AWI) Stock Down as Q1 Earnings & Sales Miss
Armstrong World Industries, Inc. (AWI - Free Report) reported unimpressive results for first-quarter 2022. The top and the bottom line missed their respective Zacks Consensus Estimate but increased on a year-over-year basis. The upside can be attributed to solid pricing actions and strong execution of growth opportunities in the Architectural Specialties segment and digital and Healthy Spaces initiatives.
Armstrong World noted that lower Mineral Fiber sales volumes and equity earnings, primarily due to reductions in distributor inventory levels, affected the results. Shares of the company dropped 6.05% on Apr 26.
Vic Grizzle, president and CEO of Armstrong, said, “We remain encouraged by sentiment supporting demand in the commercial construction market, and this, together with our investments for growth, supports our confidence in our outlook for the rest of 2022.”
Earnings & Revenue Discussion
Armstrong World reported adjusted earnings of $1.02 per share, missing the Zacks Consensus Estimate of $1.13 by 9.7%. The bottom line rose 7.4% from 95 cents per share reported in the year-ago quarter.
Armstrong World Industries, Inc. Price, Consensus and EPS Surprise
Armstrong World Industries, Inc. price-consensus-eps-surprise-chart | Armstrong World Industries, Inc. Quote
Net sales of $282.6 million lagged the consensus mark of $288 million by 1.8% but increased 12.2% year over year. Favorable Average Unit Value (“AUV”) and increased volumes from the Architectural Specialties segment were partially offset by lower Mineral Fiber volumes.
Segmental Performance
Mineral Fiber: The segment’s sales increased 7.7% on a year-over-year basis to $203.2 million. It is mainly attributable to favorable AUV, partially offset by lower sales volumes. The decline in volumes was primarily driven by a reduction in inventory levels for certain distributor customers.
Operating income fell 5% from the prior-year quarter’s levels to $57.6 million. Adjusted EBITDA declined 4.7% from the prior-year quarter’s levels to $74 million, thanks to increased manufacturing costs (primarily raw material and energy costs), lower sales volumes, higher selling expenses and lower equity earnings.
Architectural Specialties: Net sales in the segment rose 25.6% year over year to $79.4 million, owing to an increase in custom project sales, benefits from recent acquisitions and positive impacts from price increases.
The segment reported an adjusted operating income of $9 million, significantly up from an operating loss of $1 million in the prior year, mainly driven by net sales growth and reduction in intangible asset amortization. The upside was partially offset by additional investments in selling capabilities and incentive compensation expenses. Adjusted EBITDA came in at $13 million, up 88.4% from the prior-year quarter’s levels.
Operational Update
During the quarter, the company’s adjusted operating income of $67 million rose 13.5% from the prior-year quarter’s levels. The upside was primarily driven by positive AUV in the Mineral Fiber segment, the benefit from higher sales volumes in the Architectural Specialties segment and a decline in intangible asset amortization related to the Architectural Specialties segment.
Adjusted EBITDA also rose 2.8% from the prior-year quarter’s figure to $87 million.
Financials
As of Mar 31, 2022, Armstrong World had cash and cash equivalents of $76.1 million compared with $98.1 million at 2021-end. Net cash provided by operations was $16.7 million during the first three months of 2022 compared with $19.6 million in the prior-year period.
In the first quarter, the company’s free cash flow (adjusted basis) came in at $20 million, down from $23 million in the year-ago period.
2022 Guidance Maintained
AWI anticipates 2022 net sales of $1,215-$1,255 million, indicating a 10-13% increase from a year ago. For 2022, the company expects adjusted EBITDA in the range of $410-$430 million, suggesting a rise of 10-16% year over year. AWI expects adjusted earnings per share in the range of $5-$5.20, indicating growth of 15-19% from 2021. Adjusted free cash flow is anticipated in the range of $215-$235 million (suggesting a 13-24% increase from the prior year’s levels).
Zacks Rank & Some Recent Construction Releases
Armstrong World currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Otis Worldwide Corporation (OTIS - Free Report) reported strong results in first-quarter 2022.
Otis’ earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. Sales also improved from the year-ago figure but marginally lagged the consensus mark.
Watsco, Inc. (WSO - Free Report) reported stellar results for first-quarter 2022. The company’s earnings and sales topped their respective Zacks Consensus Estimate and increased strongly on a year-over-year basis.
Watsco is benefiting from regular investments in customer-focused technologies and the expansion of its branch network. Also, continued investment in technologies designed to revolutionize customer experience added to the positives.
D.R. Horton, Inc.’s (DHI - Free Report) second-quarter fiscal 2022 earnings and revenues beat the respective Zacks Consensus Estimate and increased on a year-over-year basis.
D.R. Horton increased its revenue guidance for the full year, depicting its industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.