We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Armstrong World's (AWI) Q3 Earnings & Revenues Top, Up Y/Y
Read MoreHide Full Article
Armstrong World Industries, Inc. (AWI - Free Report) reported better-than-expected results for third-quarter 2023, wherein earnings and net sales topped the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.
The company’s growth trend was backed by a solid increase in operating income and adjusted EBITDA, accompanied by expanded margins. This was fueled by positive contributions from the Mineral Fiber as well as Architectural Specialties segments. Despite the challenging macroeconomic conditions, the company delivered strong results attributable to its diversified end markets, consistent Mineral Fiber average unit value (AUV) growth and appealing growth initiatives.
The company states to continue investing in its growth initiatives and support its advancement along with pursuing attractive, bolt-on acquisitions.
Following the results, shares of this international designer and manufacturer of wall and ceiling building materials notably gained 7.1% on Oct 24.
Inside the Headlines
Armstrong World reported adjusted earnings of $1.60 per share, which topped the Zacks Consensus Estimate of adjusted earnings of $1.30 per share by 23.1%. The metric also grew 17.6% year over year from $1.36 per share.
Net sales of $347.3 million surpassed the consensus mark of $331.2 million by 4.9% and grew 6.9% year over year. The upside was driven by strong AUV and high sales volume.
Armstrong World Industries, Inc. Price, Consensus and EPS Surprise
During the quarter, the company’s operating income of $100.2 million rose 36.7% from the prior-year quarter’s level of $73.3 million, primarily driven by favorable AUV performance, the marginal benefit from increased Architectural Specialties sales and lower input costs. The reported value can be compared with our model’s projection of $80.1 million, or 9.3% year-over-year growth, which is comparatively on the lower side. Operating margin expanded 630 basis points (bps) from the prior-year quarter to 28.9%. We expected the metric to be 24.3% compared with 22.6% reported in the prior year.
Adjusted EBITDA rose 19.4% from the prior-year quarter’s figure to $125 million. Adjusted EBITDA margin rose 380 bps from the prior-year quarter to 36%. Our estimate for adjusted EBITDA and adjusted EBITDA margin was $106.4 million and 32.3%, respectively.
Segmental Performance
Mineral Fiber: The segment’s net sales grew 6.8% on a year-over-year basis to $249.7 million, backed by solid AUV driven by favorable price and mix. For this segment, we expected net sales to be $229.9 million, which is a 1.6% year-over-year decline.
The segment reported an operating income of $85.5 million compared with $70.8 million reported in the prior-year quarter. Operating margin rose 390 bps from the prior-year quarter’s levels to 34.2%. Adjusted EBITDA increased 17.5% from the prior-year quarter’s figure to $105 million. Adjusted EBITDA margin also rose 380 bps during the quarter to 41.9%.
Architectural Specialties: Net sales in the segment increased 6.9% year over year to $97.6 million, owing to notable growth in metal product sales and contributions from the acquisitions of GC Products, Inc. and BOK Modern, LLC. Our estimate for this segment’s net sales was pegged at $99.5 million, which is 9% year-over-year growth.
The segment reported an operating income of $15.5 million, portraying a whopping 355.9% year-over-year growth. Adjusted EBITDA increased 30.1% to $20 million from the prior-year quarter’s reported value of $16 million. Operating margin and adjusted EBITDA margin expanded 1,220 and 370 bps, respectively.
Financials
As of Sep 30, 2023, Armstrong World had cash and cash equivalents of $96.6 million compared with $106 million at 2022 end. Net cash provided by operations was $176.4 million in the first nine months of 2023 compared with $119.2 million in the year-ago period.
Adjusted free cash flow was $92 million in third-quarter 2023, up from $66 million reported in the year-ago quarter.
During the reported quarter, AWI repurchased 0.5 million shares of common stock for $40 million, excluding commissions and taxes. As of Sep 30, $752 million shares were remaining under the current authorized share repurchase program.
Updated 2023 Guidance
The company maintains a positive outlook on its growth strategy and cash flow generation for the year, backed by solid third-quarter results and strong execution at the plants, operational efficiencies and cost-saving initiatives.
An update to the full-year 2023 outlook reflects its confidence in achieving its annual goals. AWI now anticipates net sales to be within $1,280-$1,295 million (compared with $1,265-$1,305 million expected earlier), indicating a 4-5% increase from the year-ago figure.
Adjusted EBITDA is now projected to be within $418-$426 million, suggesting a rise of 9-11% year over year. Earlier, the company expected $400-$420 million of adjusted EBITDA for 2023. AWI increased its adjusted earnings per share expectation to $5.05-$5.15 from the earlier expected $4.85-$5.05, suggesting growth of 7-9% from the 2022 reported figure.
Adjusted free cash flow is anticipated to be between $245 million and $255 million (versus the previous anticipation of $240-$250 million), indicating an 11-15% increase from the prior year’s levels.
PulteGroup Inc. (PHM - Free Report) reported mixed results in third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates but revenues missed the same. Both metrics increased year over year. The company has been banking on a solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid orders in the reported quarter and posted a 12-month return on equity of 30.1%.
Watsco, Inc. (WSO - Free Report) reported better-than-expected third-quarter 2023 results, with earnings and revenues topping the Zacks Consensus Estimate.
Watsco delivered record sales and earnings per share, driven by solid HVAC equipment sales growth, improved residential unit volumes and strong price realization. Also, the commercial end markets remained healthy in the quarter.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row, following six straight quarters of beat.
Despite a decline in sales in the lighting business, AYI reported strong fiscal fourth-quarter performance driven by increased focus on margins and cash generation.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Armstrong World's (AWI) Q3 Earnings & Revenues Top, Up Y/Y
Armstrong World Industries, Inc. (AWI - Free Report) reported better-than-expected results for third-quarter 2023, wherein earnings and net sales topped the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.
The company’s growth trend was backed by a solid increase in operating income and adjusted EBITDA, accompanied by expanded margins. This was fueled by positive contributions from the Mineral Fiber as well as Architectural Specialties segments. Despite the challenging macroeconomic conditions, the company delivered strong results attributable to its diversified end markets, consistent Mineral Fiber average unit value (AUV) growth and appealing growth initiatives.
The company states to continue investing in its growth initiatives and support its advancement along with pursuing attractive, bolt-on acquisitions.
Following the results, shares of this international designer and manufacturer of wall and ceiling building materials notably gained 7.1% on Oct 24.
Inside the Headlines
Armstrong World reported adjusted earnings of $1.60 per share, which topped the Zacks Consensus Estimate of adjusted earnings of $1.30 per share by 23.1%. The metric also grew 17.6% year over year from $1.36 per share.
Net sales of $347.3 million surpassed the consensus mark of $331.2 million by 4.9% and grew 6.9% year over year. The upside was driven by strong AUV and high sales volume.
Armstrong World Industries, Inc. Price, Consensus and EPS Surprise
Armstrong World Industries, Inc. price-consensus-eps-surprise-chart | Armstrong World Industries, Inc. Quote
During the quarter, the company’s operating income of $100.2 million rose 36.7% from the prior-year quarter’s level of $73.3 million, primarily driven by favorable AUV performance, the marginal benefit from increased Architectural Specialties sales and lower input costs. The reported value can be compared with our model’s projection of $80.1 million, or 9.3% year-over-year growth, which is comparatively on the lower side. Operating margin expanded 630 basis points (bps) from the prior-year quarter to 28.9%. We expected the metric to be 24.3% compared with 22.6% reported in the prior year.
Adjusted EBITDA rose 19.4% from the prior-year quarter’s figure to $125 million. Adjusted EBITDA margin rose 380 bps from the prior-year quarter to 36%. Our estimate for adjusted EBITDA and adjusted EBITDA margin was $106.4 million and 32.3%, respectively.
Segmental Performance
Mineral Fiber: The segment’s net sales grew 6.8% on a year-over-year basis to $249.7 million, backed by solid AUV driven by favorable price and mix. For this segment, we expected net sales to be $229.9 million, which is a 1.6% year-over-year decline.
The segment reported an operating income of $85.5 million compared with $70.8 million reported in the prior-year quarter. Operating margin rose 390 bps from the prior-year quarter’s levels to 34.2%. Adjusted EBITDA increased 17.5% from the prior-year quarter’s figure to $105 million. Adjusted EBITDA margin also rose 380 bps during the quarter to 41.9%.
Architectural Specialties: Net sales in the segment increased 6.9% year over year to $97.6 million, owing to notable growth in metal product sales and contributions from the acquisitions of GC Products, Inc. and BOK Modern, LLC. Our estimate for this segment’s net sales was pegged at $99.5 million, which is 9% year-over-year growth.
The segment reported an operating income of $15.5 million, portraying a whopping 355.9% year-over-year growth. Adjusted EBITDA increased 30.1% to $20 million from the prior-year quarter’s reported value of $16 million. Operating margin and adjusted EBITDA margin expanded 1,220 and 370 bps, respectively.
Financials
As of Sep 30, 2023, Armstrong World had cash and cash equivalents of $96.6 million compared with $106 million at 2022 end. Net cash provided by operations was $176.4 million in the first nine months of 2023 compared with $119.2 million in the year-ago period.
Adjusted free cash flow was $92 million in third-quarter 2023, up from $66 million reported in the year-ago quarter.
During the reported quarter, AWI repurchased 0.5 million shares of common stock for $40 million, excluding commissions and taxes. As of Sep 30, $752 million shares were remaining under the current authorized share repurchase program.
Updated 2023 Guidance
The company maintains a positive outlook on its growth strategy and cash flow generation for the year, backed by solid third-quarter results and strong execution at the plants, operational efficiencies and cost-saving initiatives.
An update to the full-year 2023 outlook reflects its confidence in achieving its annual goals. AWI now anticipates net sales to be within $1,280-$1,295 million (compared with $1,265-$1,305 million expected earlier), indicating a 4-5% increase from the year-ago figure.
Adjusted EBITDA is now projected to be within $418-$426 million, suggesting a rise of 9-11% year over year. Earlier, the company expected $400-$420 million of adjusted EBITDA for 2023. AWI increased its adjusted earnings per share expectation to $5.05-$5.15 from the earlier expected $4.85-$5.05, suggesting growth of 7-9% from the 2022 reported figure.
Adjusted free cash flow is anticipated to be between $245 million and $255 million (versus the previous anticipation of $240-$250 million), indicating an 11-15% increase from the prior year’s levels.
Zacks Rank
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.
Recent Construction Releases
PulteGroup Inc. (PHM - Free Report) reported mixed results in third-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates but revenues missed the same. Both metrics increased year over year. The company has been banking on a solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid orders in the reported quarter and posted a 12-month return on equity of 30.1%.
Watsco, Inc. (WSO - Free Report) reported better-than-expected third-quarter 2023 results, with earnings and revenues topping the Zacks Consensus Estimate.
Watsco delivered record sales and earnings per share, driven by solid HVAC equipment sales growth, improved residential unit volumes and strong price realization. Also, the commercial end markets remained healthy in the quarter.
Acuity Brands, Inc. (AYI - Free Report) reported mixed results for fourth-quarter fiscal 2023 (ended Aug 31, 2023), wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark for the 14th consecutive quarter. Revenues missed the same for four quarters in a row, following six straight quarters of beat.
Despite a decline in sales in the lighting business, AYI reported strong fiscal fourth-quarter performance driven by increased focus on margins and cash generation.