Armstrong World Industries Reports Record-Setting Fourth-Quarter and Full-Year 2023 Results

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Insights

The reported increase in net sales by Armstrong World Industries, Inc. (AWI) is a positive indicator for investors, reflecting the company's ability to grow revenue despite a challenging market environment. The growth in Average Unit Value (AUV) suggests effective pricing strategies and product mix optimization. However, the decline in operating income due to acquisition-related expenses warrants a closer examination of the company's cost management and the long-term benefits of these acquisitions.

Investors should consider the adjusted EBITDA growth, which provides a clearer picture of the company's operational performance by excluding non-recurring items. The increase in adjusted diluted earnings per share is particularly noteworthy, as it may signal enhanced shareholder value. The company's share repurchase program is another positive aspect, potentially indicating management's confidence in the company's future prospects and a commitment to returning value to shareholders.

The reported results showcase AWI's resilience in the Mineral Fiber and Architectural Specialties segments, with both segments contributing to the company's overall growth. The Mineral Fiber segment showed a modest increase in net sales and adjusted EBITDA, which can be attributed to strategic pricing and volume increases driven by growth initiatives. This indicates a stable demand for traditional building materials.

In contrast, the Architectural Specialties segment experienced a more significant increase in net sales and adjusted EBITDA, driven by recent acquisitions and product diversification. This suggests that AWI's expansion into niche markets and product innovation is paying off. However, the substantial decrease in operating income in this segment due to acquisition-related charges may raise concerns about integration costs and the time required to realize synergies.

AWI's performance and guidance for the upcoming year provide insights into the broader economic landscape of the construction and building materials industry. The company's ability to increase net sales and adjusted EBITDA in a period of soft market conditions is indicative of a strong competitive position and effective cost control measures. The focus on margin expansion and adjusted free cash flow growth suggests a robust financial strategy aimed at sustaining profitability and liquidity.

The company's outlook for 2024, with anticipated growth in net sales and adjusted EBITDA, reflects cautious optimism despite the expectation of softer economic conditions. This guidance will be of interest to stakeholders evaluating the potential impact of economic headwinds on the industry. The emphasis on profitable growth and margin expansion is a positive sign, though it is important to monitor how external economic factors might influence these projections.

02/20/2024 - 06:00 AM

Fourth-Quarter 2023 Results†

Net sales up 3% with better-than-expected Mineral Fiber volumes
Operating income declined 6% primarily due to acquisition-related expenses, while adjusted operating income increased 5%
Diluted earnings per share from continuing operations down 1% primarily due to acquisition-related expenses
Adjusted EBITDA up 7% and adjusted diluted earnings per share up 13%

Full-Year 2023 Results†

Net sales up 5% on strong average unit value ("AUV") performance
Operating income up 16% and adjusted operating income increased 13%
Diluted earnings per share from continuing operations up 16%
Adjusted EBITDA up 12% and adjusted diluted earnings per share up 12%
Cash flow from operating and investing activities up 6% and adjusted free cash flow up 19%
Issuing 2024 Guidance: Net sales growth of 3% to 6% and adjusted EBITDA growth of 5% to 9%

^{† All comparisons versus the prior year period.}

LANCASTER, Pa.--(BUSINESS WIRE)-- Armstrong World Industries, Inc. (NYSE:AWI), a leader in the design, innovation and manufacture of ceiling and wall solutions in the Americas, today reported record-setting fourth-quarter and full-year 2023 financial results with steady sales growth and improved adjusted EBITDA margins across both the Mineral Fiber and Architectural Specialties segments.

“We delivered record fourth quarter net sales and adjusted EBITDA results, highlighted by adjusted EBITDA margin expansion in both our segments while continuing to face soft market conditions. These results contributed to record-setting sales and adjusted EBITDA for the full year that exceeded our guidance expectations,” said Vic Grizzle, President and CEO of Armstrong World Industries. “Our strong position and the momentum we’ve generated is a clear testament to the focused efforts of our teams to execute our strategy and deliver on our key initiatives along with the overall resilience of our business model.”

Fourth-Quarter Results
(Dollar amounts in millions except per-share data)	For the Three Months Ended December 31,
	2023			2022			Change
Net sales	$	312.3		$	304.5		2.6%
Operating income	$	66.3		$	70.6		(6.1)%
Operating income margin (Operating income as a % of net sales)		21.2	%		23.2	%	(200)bps
Earnings from continuing operations	$	46.8		$	48.8		(4.1)%
Diluted earnings per share from continuing operations	$	1.06		$	1.07		(0.9)%

*Additional Non-GAAP Measures**
Adjusted EBITDA	$	98		$	92		6.9%
Adjusted EBITDA margin (Adjusted EBITDA as a % of net sales)		31.4	%		30.1	%	130bps
Adjusted earnings from continuing operations	$	54		$	49		9.1%
Adjusted diluted earnings per share from continuing operations	$	1.22		$	1.08		13.0%

The Company uses non-GAAP adjusted measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods and are useful alternative measures of performance. Reconciliations of the most comparable generally accepted accounting principles in the United States ("GAAP") measure are found in the tables at the end of this press release. Excluding per share data, non-GAAP figures are rounded to the nearest million and corresponding percentages are rounded to the nearest decimal.

Fourth-quarter 2023 consolidated net sales increased 2.6% from prior-year results, driven by favorable Average Unit Value (dollars per unit sold, or "AUV") of $4 million and higher sales volumes of $4 million. Mineral Fiber net sales increased $4 million and Architectural Specialties net sales increased $4 million.

Fourth-quarter 2023 operating income was positively impacted by improved Architectural Specialties project margins, a benefit from favorable AUV and increased equity earnings from the Worthington Armstrong Joint Venture ("WAVE"), partially offset by higher incentive compensation, an increase in selling expenses and higher manufacturing costs. Operating income was also negatively impacted by a $7 million increase in acquisition-related charges, resulting in a 6.1% decrease versus the prior-year period.

Fourth-Quarter Segment Results
Mineral Fiber
(Dollar amounts in millions)	For the Three Months Ended December 31,
	2023			2022			Change
Net sales	$	220.3		$	216.0		2.0%
Operating income	$	60.9		$	61.1		(0.3)%
Adjusted EBITDA*	$	81		$	78		3.5%
Operating income margin		27.6	%		28.3	%	(70)bps
Adjusted EBITDA margin*		36.8	%		36.3	%	50bps

Mineral Fiber net sales increased 2.0% in the fourth quarter of 2023 primarily due to $4 million of favorable AUV and $1 million of higher volumes. The increase in AUV was driven by favorable price, partially offset by unfavorable mix. The change in sales volumes resulted from the benefit from our growth initiatives partially offset by softer market demand.

Fourth-quarter 2023 operating income was substantially unchanged from the prior year. A $6 million increase in incentive compensation and a $2 million increase in selling expense in the fourth quarter of 2023 were partially offset by a $4 million benefit from favorable AUV and a $4 million increase in WAVE equity earnings.

Architectural Specialties
(Dollar amounts in millions)	For the Three Months Ended December 31,
	2023			2022			Change
Net sales	$	92.0		$	88.5		4.0%
Operating income	$	6.0		$	10.7		(43.9)%
Adjusted EBITDA*	$	17		$	13		26.9%
Operating income margin		6.5	%		12.1	%	(560)bps
Adjusted EBITDA margin*		18.4	%		15.0	%	330bps

Fourth-quarter 2023 Architectural Specialties net sales increased 4.0% from prior-year results, driven primarily by contributions from recent acquisitions, partially offset by the impact of unfavorable custom project timing.

Operating income was positively impacted by a $6 million margin benefit from increased sales and improved custom project margins, partially offset by a $2 million increase in selling expenses and higher manufacturing costs. Operating income was also negatively impacted by a $7 million increase in acquisition-related charges, resulting in a 43.9% decrease versus the prior-year period.

Full Year Results
(Dollar amounts in millions)	For the Year Ended December 31,
	2023			2022			Change
Net sales	$	1,295.2		$	1,233.1		5.0%
Operating income	$	323.7		$	278.7		16.1%
Operating income margin		25.0	%		22.6	%	240bps
Earnings from continuing operations	$	223.8		$	199.9		12.0%
Diluted net earnings per share from continuing operations	$	4.99		$	4.30		16.0%
Net cash provided by operating and investing activities	$	223.1		$	210.6		5.9%

*Additional Non-GAAP Measures**
Adjusted EBITDA	$	430		$	385		11.6%
Adjusted EBITDA margin		33.2	%		31.2	%	200bps
Adjusted earnings from continuing operations	$	238		$	220		8.3%
Adjusted diluted net earnings per share from continuing operations	$	5.32		$	4.74		12.2%
Adjusted free cash flow	$	263		$	221		19.0%

Full-year net sales increased 5.0% from prior-year results, primarily due to favorable AUV of $43 million and higher sales volumes of $19 million. Mineral Fiber net sales increased $45 million, while Architectural Specialties net sales increased $17 million. The increase in Mineral Fiber net sales was primarily driven by favorable AUV as a result of increased like-for-like pricing, partially offset by unfavorable mix. Architectural Specialties net sales improved primarily due to contributions from recent acquisitions, as well as growth in metal and felt product sales, partially offset by lower wood product sales.

Full-year operating income increased 16.1% from prior-year results, driven by favorable AUV benefit of $33 million, a $23 million margin benefit from increased Architectural Specialties sales, a $12 million increase in WAVE equity earnings, and an $8 million reduction in acquisition-related expenses. These benefits were partially offset by a $15 million increase in selling expense, primarily related to investments in selling capabilities within our Architectural Specialties segment, investments in support of our digital initiatives and higher marketing expenses, a $10 million increase in manufacturing and input costs, net of productivity, and an $8 million increase in incentive compensation.

Cash Flow

Cash flows from operating activities in 2023 increased $51 million versus the prior-year period, while cash flows from investing activities decreased $39 million versus the prior-year period. The net $13 million, or 5.9%, increase in operating and investing cash flows was primarily due to favorable working capital changes in inventories, accounts receivable and accounts payable and accrued expenses. These benefits were partially offset by an increase in cash paid for acquisitions, an increase in purchases of property, plant and equipment, and lower dividends from WAVE.

Share Repurchase Program

During the fourth quarter of 2023, we repurchased 0.4 million shares of common stock for a total cost of $35 million, excluding the cost of commissions and taxes. For the full-year 2023, we repurchased 1.8 million shares of common stock for a total cost of $132 million, excluding the cost of commissions and taxes. As of December 31, 2023, there was $717 million remaining under the 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 authorization 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, 2023, we have repurchased 14.2 million shares under the Program for a total cost of $983 million, excluding commissions and taxes.

2024 Outlook

“Solid contributions from Mineral Fiber AUV, operating leverage in the Architectural Specialties segment, WAVE equity earnings and manufacturing productivity were key to driving margin expansion for the company in 2023. These strong financial results enabled full year adjusted free cash flow growth of nearly 20% and fueled our ability to execute on all of our capital allocation priorities in 2023,” said Chris Calzaretta, AWI Senior Vice President and CFO. “Our 2024 outlook reflects a laser-focused approach to delivering profitable growth, margin expansion and adjusted free cash flow growth despite modestly softer economic conditions. Our capital allocation priorities remain unchanged as we continue to execute our strategy and create value for shareholders.”

			For the Year Ended December 31, 2024
(Dollar amounts in millions except per-share data)	2023 Actual		Current Guidance					VPY Growth %
Net sales	$	1,295	$	1,335	to	$	1,375	3%	to	6%
Adjusted EBITDA*	$	430	$	450	to	$	470	5%	to	9%
Adjusted diluted net earnings per share*	$	5.32	$	5.60	to	$	5.90	5%	to	11%
Adjusted free cash flow*	$	263	$	275	to	$	290	5%	to	10%

Earnings Webcast

Management will host a live webcast conference call at 10:00 a.m. ET today, to discuss fourth-quarter and full-year 2023 results. This event will be available on the Company's website. The call and accompanying slide presentation can be found on the investor relations section of the Company's website at www.armstrongworldindustries.com. The replay of this event will be available on the website for up to one year after the date of the call.

Uncertainties Affecting Forward-Looking Statements

Disclosures in this release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, those relating to future financial and operational results, expected savings from cost management initiatives, the performance of our WAVE joint venture, market and broader economic conditions and guidance. Those statements provide our future expectations or forecasts and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. This includes annual guidance. Forward-looking statements, by their nature, address matters that are uncertain and involve risks because they relate to events and depend on circumstances that may or may not occur in the future. As a result, our actual results may differ materially from our expected results and from those expressed in our forward-looking statements. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections of our reports on Form 10-K and Form 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”), including our annual report on Form 10-K for the year ended December 31, 2023, that the Company expects to file today. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements beyond what is required under applicable securities law.

About Armstrong and Additional Information

Armstrong World Industries, Inc. is a leader in the design, innovation and manufacture of innovative ceiling and wall system solutions in the Americas. With $1.3 billion in revenue in 2023, AWI has approximately 3,100 employees and a manufacturing network of 16 facilities, plus seven facilities dedicated to its WAVE joint venture.

More details on the Company’s performance can be found in its report on Form 10-K for the year ended December 31, 2023, that the Company expects to file with the SEC today.

Reported Financial Results
(Amounts in millions, except per share data)

SELECTED FINANCIAL RESULTS Armstrong World Industries, Inc. and Subsidiaries (Quarterly data is unaudited)
	For the Three Months Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022
Net sales	$	312.3		$	304.5		$	1,295.2		$	1,233.1
Cost of goods sold		192.8			193.0			798.2			784.0
Gross profit		119.5			111.5			497.0			449.1
Selling, general and administrative expenses		73.3			59.1			262.5			237.0
Loss (gain) related to change in fair value of contingent consideration		0.1			(2.3	)		0.1			11.0
Equity (earnings) from joint venture		(20.2	)		(15.9	)		(89.3	)		(77.6	)
Operating income		66.3			70.6			323.7			278.7
Interest expense		8.6			9.2			35.3			27.1
Other non-operating (income), net		(3.0	)		(1.9	)		(9.9	)		(6.0	)
Earnings from continuing operations before income taxes		60.7			63.3			298.3			257.6
Income tax expense		13.9			14.5			74.5			57.7
Earnings from continuing operations		46.8			48.8			223.8			199.9
Net earnings from discontinued operations		-			-			-			3.0
Net earnings	$	46.8		$	48.8		$	223.8		$	202.9

Diluted earnings per share of common stock, continuing operations	$	1.06		$	1.07		$	4.99		$	4.30
Diluted earnings per share of common stock, discontinued operations	$	-		$	-		$	-		$	0.07

Diluted net earnings per share of common stock	$	1.06		$	1.07		$	4.99		$	4.37
Average number of diluted common shares outstanding		44.2			45.6			44.8			46.4

SEGMENT RESULTS Armstrong World Industries, Inc. and Subsidiaries (Quarterly data is unaudited)
	For the Three Months Ended December 31,				For the Year Ended December 31,
	2023		2022		2023		2022
Net Sales
Mineral Fiber	$	220.3	$	216.0	$	932.4	$	887.4
Architectural Specialties		92.0		88.5		362.8		345.7
Total net sales	$	312.3	$	304.5	$	1,295.2	$	1,233.1

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022
Segment operating income (loss)
Mineral Fiber	$	60.9		$	61.1		$	285.7		$	260.9
Architectural Specialties		6.0			10.7			40.9			21.7
Unallocated Corporate		(0.6	)		(1.2	)		(2.9	)		(3.9	)
Total consolidated operating income	$	66.3		$	70.6		$	323.7		$	278.7

SELECTED BALANCE SHEET INFORMATION Armstrong World Industries, Inc. and Subsidiaries
	December 31, 2023		December 31, 2022
Assets
Current assets	$	313.0	$	356.5
Property, plant and equipment, net		566.4		554.4
Other non-current assets		793.0		776.3
Total assets	$	1,672.4	$	1,687.2
Liabilities and shareholders’ equity
Current liabilities	$	194.5	$	182.7
Non-current liabilities		886.1		969.5
Shareholders' equity		591.8		535.0
Total liabilities and shareholders’ equity	$	1,672.4	$	1,687.2

SELECTED CASH FLOW INFORMATION Armstrong World Industries, Inc. and Subsidiaries
	For the Year Ended December 31,
	2023			2022
Net earnings	$	223.8		$	202.9
Other adjustments to reconcile net earnings to net cash provided by operating activities		12.5			28.8
Changes in operating assets and liabilities, net		(2.8	)		(49.3	)
Net cash provided by operating activities		233.5			182.4
Net cash (used for) provided by investing activities		(10.4	)		28.2
Net cash (used for) financing activities		(258.6	)		(201.9	)
Effect of exchange rate changes on cash and cash equivalents		0.3			(0.8	)
Net (decrease) increase in cash and cash equivalents		(35.2	)		7.9
Cash and cash equivalents at beginning of year		106.0			98.1
Cash and cash equivalents at end of period	$	70.8		$	106.0

Supplemental Reconciliations of GAAP to non-GAAP Results (unaudited)
(Amounts in millions, except per share data)

To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company provides additional measures of performance adjusted to exclude the impact of certain discrete expenses and income including adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), adjusted diluted earnings per share ("EPS") and adjusted free cash flow. Investors should not consider non-GAAP measures as a substitute for GAAP measures. The Company excludes certain acquisition related expenses (i.e. – changes in the fair value of contingent consideration and deferred compensation accruals for acquisitions). The deferred compensation accruals are for cash and stock awards that are recorded over each award's respective vesting period, as such payments are subject to the sellers’ and employees’ continued employment with the Company. The Company excludes all acquisition-related intangible amortization from adjusted earnings from continuing operations and in calculations of adjusted diluted EPS. Examples of other excluded items have included plant closures, restructuring charges and related costs, impairments, separation costs and other cost reduction initiatives, environmental site expenses and environmental insurance recoveries, endowment level charitable contributions, and certain other gains and losses. The Company also excludes income/expense from its U.S. Retirement Income Plan (“RIP”) in the non-GAAP results as it represents the actuarial net periodic benefit credit/cost recorded. For all periods presented, the Company was not required and did not make cash contributions to the RIP based on guidelines established by the Pension Benefit Guaranty Corporation, nor does the Company expect to make cash contributions to the plan in 2024. Adjusted free cash flow is defined as cash from operating and investing activities, adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures, environmental site expenses and environmental insurance recoveries. Management's adjusted free cash flow measure includes returns of investment from WAVE and cash proceeds received from the settlement of company-owned life insurance policies, which are presented within investing activities on our consolidated statement of cash flows. The Company uses these adjusted performance measures in managing the business, including communications with its Board of Directors and employees, and believes that they provide users of this financial information with meaningful comparisons of operating performance between current results and results in prior periods. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as prospects for its future performance. The Company also uses adjusted EBITDA and adjusted free cash flow (with further adjustments, when necessary) as factors in determining at-risk compensation for senior management. These non-GAAP measures may not be defined and calculated the same as similar measures used by other companies. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies. A reconciliation of these adjustments to the most directly comparable GAAP measures is included in this release and on the Company’s website. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures.

In the following charts, numbers may not sum due to rounding. Excluding adjusted diluted EPS, non-GAAP figures are rounded to the nearest million and corresponding percentages are rounded to the nearest percent based on unrounded figures.

Consolidated Results from Continuing Operations – Adjusted EBITDA

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022
Net sales	$	312		$	305		$	1,295		$	1,233

Net earnings	$	47		$	49		$	224		$	203
Less: Net earnings from discontinued operations		-			-			-			3
Earnings from continuing operations	$	47		$	49		$	224		$	200
Add: Income tax expense		14			15			75			58
Earnings from continuing operations before income taxes	$	61		$	63		$	298		$	258
Add: Interest/other income and expense, net		6			7			25			21
Operating income	$	66		$	71		$	324		$	279
Add: RIP expense (1)		1			1			3			4
Add: Acquisition-related impacts (2)		7		-				11			19
Add: Cost reduction initiatives and other		1		-				3		-
Adjusted operating income	$	75		$	71		$	340		$	301
Add: Depreciation and amortization		23			20			89			84
Adjusted EBITDA	$	98		$	92		$	430		$	385

Operating income margin		21.2	%		23.2	%		25.0	%		22.6	%
Adjusted EBITDA margin		31.4	%		30.1	%		33.2	%		31.2	%

(1)		RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP.
(2)		Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration, deferred compensation and restricted stock expenses.

Mineral Fiber

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022
Net sales	$	220		$	216		$	932		$	887

Operating income	$	61		$	61		$	286		$	261
Add: Cost reduction initiatives and other		1			-			3			-
Adjusted operating income	$	62		$	61		$	289		$	261
Add: Depreciation and amortization		19			17			75			69
Adjusted EBITDA	$	81		$	78		$	364		$	330

Operating income margin		27.6	%		28.3	%		30.6	%		29.4	%
Adjusted EBITDA margin		36.8	%		36.3	%		39.1	%		37.2	%

Architectural Specialties

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022
Net sales	$	92		$	89		$	363		$	346

Operating income	$	6		$	11		$	41		$	22
Add: Acquisition-related impacts (1)		7		-				11			19
Adjusted operating income	$	13		$	10		$	52		$	41
Add: Depreciation and amortization		4			3			14			14
Adjusted EBITDA	$	17		$	13		$	66		$	55

Operating income margin		6.5	%		12.1	%		11.3	%		6.3	%
Adjusted EBITDA margin		18.4	%		15.0	%		18.1	%		15.8	%

(1)

Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration, deferred compensation and restricted stock expenses.

Unallocated Corporate

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2023			2022			2023			2022
Operating (loss)	$	(1	)	$	(1	)	$	(3	)	$	(4	)
Add: RIP expense (1)		1			1			3			4
Adjusted operating (loss)	$	-		$	-		$	-		$	-
Add: Depreciation and amortization		-			-			-			-
Adjusted EBITDA	$	-		$	-		$	-		$	-

(1)

RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP.

Adjusted Free Cash Flow

	For the Three Months Ended December 31,				For the Year Ended December 31,
	2023		2022		2023			2022
Net cash provided by operating activities	$	57	$	63	$	234		$	182
Net cash provided by (used for) investing activities	-			20		(10	)		28
Net cash provided by operating and investing activities	$	57	$	83	$	223		$	211
Add: Acquisitions, net		3		3		27			3
Add: Net environmental expenses		1	-			1			1
Add: Contingent consideration in excess of acquisition-date fair value (1)	-		-			5			2
Add: Arktura deferred compensation (2)		8		5		8			5
Adjusted Free Cash Flow	$	68	$	91	$	263		$	221

(1)		Contingent consideration payments related to 2020 acquisitions recorded as a component of net cash provided by operating activities.
(2)		Contingent compensation payments related to the acquisition.

Consolidated Results from Continuing Operations – Adjusted Diluted Earnings Per Share (EPS)

	For the Three Months Ended December 31,										For the Year Ended December 31,
	2023					2022					2023					2022
	Total			Per Diluted Share		Total			Per Diluted Share		Total			Per Diluted Share		Total			Per Diluted Share
Net earnings	$	47		$	1.06	$	49		$	1.07	$	224		$	4.99	$	203		$	4.37
Less: Net earnings from discontinued operations		-			-		-			-		-			-		3			0.07
Earnings from continuing operations	$	47		$	1.06	$	49		$	1.07	$	224		$	4.99	$	200		$	4.30
Add: Income tax expense		14					15					75					58
Earnings from continuing operations before income taxes	$	61				$	63				$	298				$	258
(Less): RIP (credit) (1)	-					-						(1	)				(1	)
Add: Acquisition-related impacts (2)		7				-						11					19
Add: Acquisition-related amortization (3)		2					1					6					8
Add: Cost reduction initiatives and other		1				-						3				-
Adjusted earnings from continuing operations before income taxes	$	70				$	64				$	318				$	283
(Less): Adjusted income tax expense (4)		(16	)				(15	)				(79	)				(63	)
Adjusted earnings from continuing operations	$	54		$	1.22	$	49		$	1.08	$	238		$	5.32	$	220		$	4.74
Adjusted diluted EPS from continuing operations change versus prior year				13.0%										12.2%
Diluted shares outstanding					44.2					45.6					44.8					46.4
Effective tax rate				23%					23%					25%					22%

(1)		RIP (credit) represents the entire actuarial net periodic pension (credit) recorded as a component of net earnings. For all periods presented, we were not required to and did not make cash contributions to our RIP.
(2)		Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration, deferred compensation and restricted stock expenses.
(3)		Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles.
(4)		Adjusted income tax expense is calculated using the effective tax rate multiplied by the adjusted earnings from continuing operations before income taxes.

Adjusted EBITDA Guidance

	For the Year Ending December 31, 2024
	Low				High
Net earnings	$	243		to	$	248
Add: Income tax expense		79				84
Earnings before income taxes	$	323		to	$	332
Add: Interest expense		40				42
Add: Other non-operating (income), net		(7	)			(6	)
Operating income	$	356		to	$	368
Add: RIP expense (1)		2				4
Adjusted operating income	$	359		to	$	371
Add: Depreciation and amortization		90				100
Adjusted EBITDA	$	450		to	$	470

(1)

RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we do not expect to make cash contributions to our RIP.

Adjusted Diluted Net Earnings Per Share Guidance

	For the Year Ending December 31, 2024
	Low			Per Diluted Share⁽¹⁾			High			Per Diluted Share⁽¹⁾
Net earnings	$	243		$	5.55	to	$	248		$	5.77
Add: Income tax expense		79						84
Earnings before income taxes	$	323				to	$	332
Add: RIP (credit) (2)		(3	)					(1	)
Add: Acquisition-related amortization (3)		7						8
Adjusted earnings before income taxes	$	327				to	$	339
(Less): Adjusted income tax expense (4)		(81	)					(84	)
Adjusted net earnings	$	246		$	5.60	to	$	255		$	5.90

(1)		Adjusted diluted EPS guidance for 2024 is calculated based on approximately 43 to 44 million of diluted shares outstanding.
(2)		RIP (credit) represents the entire actuarial net periodic pension (credit) recorded as a component of net earnings. We do not expect to make any cash contributions to our RIP.
(3)		Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles.
(4)		Income tax expense is based on an adjusted effective tax rate of approximately 25%, multiplied by adjusted earnings before income taxes.

Adjusted Free Cash Flow Guidance

	For the Year Ending December 31, 2024
	Low				High
Net cash provided by operating activities	$	270		to	$	285
Add: Return of investment from joint venture		85				95
Adjusted net cash provided by operating activities	$	355		to	$	380
Less: Capital expenditures		(80	)			(90	)
Adjusted Free Cash Flow	$	275		to	$	290

View source version on businesswire.com: https://www.businesswire.com/news/home/20240220877226/en/

Investors & Media: Theresa Womble, tlwomble@armstrongceilings.com or (717) 396-6354

Source: Armstrong World Industries, Inc.

FAQ

What were Armstrong World Industries, Inc.'s (AWI) net sales growth for the full year 2023?

Armstrong World Industries, Inc.'s net sales grew by 5% for the full year 2023.

How much did the operating income increase by for Armstrong World Industries, Inc. (AWI) in 2023?

Operating income for Armstrong World Industries, Inc. (AWI) increased by 16% in 2023.

What was the percentage increase in adjusted EBITDA for Armstrong World Industries, Inc. (AWI) in 2023?

Adjusted EBITDA for Armstrong World Industries, Inc. (AWI) increased by 12% in 2023.

What is the 2024 guidance for net sales growth provided by Armstrong World Industries, Inc. (AWI)?

Armstrong World Industries, Inc. (AWI) issued 2024 guidance projecting net sales growth of 3% to 6%.

What is the 2024 adjusted EBITDA growth projection provided by Armstrong World Industries, Inc. (AWI)?

Armstrong World Industries, Inc. (AWI) projected adjusted EBITDA growth of 5% to 9% for 2024.

Armstrong World Industries Reports Record-Setting Fourth-Quarter and Full-Year 2023 Results

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What were Armstrong World Industries, Inc.'s (AWI) net sales growth for the full year 2023?

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What is the 2024 guidance for net sales growth provided by Armstrong World Industries, Inc. (AWI)?

What is the 2024 adjusted EBITDA growth projection provided by Armstrong World Industries, Inc. (AWI)?

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What were Armstrong World Industries, Inc.'s (AWI) net sales growth for the full year 2023?

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What is the 2024 guidance for net sales growth provided by Armstrong World Industries, Inc. (AWI)?

What is the 2024 adjusted EBITDA growth projection provided by Armstrong World Industries, Inc. (AWI)?

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