Armstrong World Industries Q1 2025 slides: double-digit growth across key metrics

Armstrong World Industries (NYSE:AWI) reported strong first-quarter 2025 results on April 29, showcasing double-digit growth across sales, earnings, and cash flow metrics. The company reaffirmed its full-year guidance despite acknowledging elevated macroeconomic uncertainties ahead.

Quarterly Performance Highlights

Armstrong World Industries delivered impressive financial results for Q1 2025, with consolidated net sales reaching $382.7 million, a 17% increase compared to $326.3 million in the same period last year. Adjusted EBITDA grew 16% to $129 million, while adjusted diluted earnings per share rose 20% to $1.66.

The company’s adjusted free cash flow increased 10% to $48 million, representing 12.5% of net sales. These results demonstrate AWI’s continued momentum following its strong performance in Q4 2024, when it exceeded analyst expectations with earnings per share of $1.50 against forecasts of $1.39.

As shown in the following comprehensive financial summary:

"We delivered strong top and bottom-line growth in the first quarter," stated the company in its presentation. The results were driven by a combination of strategic acquisitions and organic growth, with AWI’s organic adjusted EBITDA margin expanding by 170 basis points to 35.6%.

The company highlighted these achievements with key metrics showing growth across all major financial indicators:

Segment Performance Analysis

Armstrong’s Mineral Fiber segment, which represents approximately 64% of total sales, posted modest revenue growth of 2% to $245.1 million. However, the segment achieved its best Q1 adjusted EBITDA margin since 2020, expanding by 180 basis points to 43.0%. This improvement was driven by 7% average unit value (AUV) growth from pricing and favorable mix, partially offset by volume decline attributed to softer demand from home center customers and one less shipping day in the quarter.

The following chart illustrates the Mineral Fiber segment’s performance:

The Architectural Specialties segment delivered exceptional results, with sales surging 59% to $137.6 million. This dramatic growth was primarily driven by the recent acquisitions of 3form and Zahner. Adjusted EBITDA for this segment nearly doubled, increasing 94% to $24 million, with margins expanding 310 basis points to 17.1%.

Even more impressive was the segment’s organic performance, with 11% organic sales growth and a 290 basis point expansion in organic adjusted EBITDA margin to 16.9%, as shown in the following breakdown:

A detailed bridge analysis reveals the components driving AWI’s overall adjusted EBITDA growth, with volume contributing $20 million and AUV adding $8 million, partially offset by increased SG&A expenses:

Capital Allocation and Cash Flow

Armstrong World Industries continued its disciplined approach to capital allocation in Q1 2025. The company generated $48 million in adjusted free cash flow, up 10% from the prior year, supported by improved adjusted operating cash flow and increased dividends from its WAVE joint venture.

The company deployed capital across several priorities, increasing capital expenditures to $19 million (from $15 million in Q1 2024), dividend payments to $13 million (from $12 million), and share repurchases to $22 million (from $15 million). This balanced approach to capital allocation demonstrates AWI’s commitment to investing in growth while returning value to shareholders.

The following chart details the company’s cash flow performance and capital deployment:

Forward Outlook and Guidance

Despite acknowledging "elevated macro uncertainty" and expectations for softer market conditions in the second half of 2025, Armstrong World Industries reaffirmed its full-year 2025 guidance. The company continues to project 9-11% growth in net sales to $1.57-1.61 billion, 8-12% growth in adjusted EBITDA to $525-545 million, and 9-13% growth in adjusted diluted EPS to $6.85-7.15.

For the Mineral Fiber segment, AWI expects volume to be flat to down low-single digits, offset by AUV growth exceeding 6%. The Architectural Specialties segment is anticipated to benefit from both the recent acquisitions and a solid order backlog supporting organic growth.

The detailed guidance is presented in the following slide:

Armstrong’s management noted that while they anticipate challenging market conditions in the latter part of the year, their diverse end markets and strategic initiatives position the company well to navigate these challenges. The company’s guidance aligns with statements made during its Q4 2024 earnings call, where CEO Vic Rizzo emphasized that "our diverse set of end markets plays well for us to keep a very stable business."

Armstrong World Industries continues to demonstrate financial discipline and strategic execution, maintaining a balanced approach to growth through both acquisitions and organic initiatives. The company’s strong Q1 2025 performance provides a solid foundation for achieving its full-year objectives, despite the cautious outlook for the second half of the year.

Full presentation:

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