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Armstrong World Industries Reports First Quarter 2021 Results

General News

Armstrong World Industries, Inc., a leader in the design, innovation and manufacture of commercial and residential ceiling, wall and suspension system solutions, today reported financial results for the first quarter 2021.

Key Highlights

–Net sales up 1% versus the prior year quarter

–Operating income down 29% versus the prior year quarter

–Adjusted EBITDA down 12% versus the prior year quarter

–Maintaining 2021 guidance: Net Sales of +10% to +13% and adjusted EBITDA of +9% to +13%

“The first quarter of 2021 was a solid start to what we expect will be a robust year of growth for AWI,” said Vic Grizzle, President and CEO of Armstrong. “We are encouraged by the re-openings in many of our markets and progress toward broader economic recovery, highlighted by the record order intake for our Architectural Specialties products in the first quarter. We remain confident that our actions over the past year have strengthened our position to capitalize on a market recovery in 2021 and beyond. I am especially pleased to see growing interest and engagement in our Healthy Spaces initiatives. We are squarely focused on the emerging opportunity to provide solutions designed to facilitate a return to safe and sustainable indoor spaces.”

First Quarter Results from Continuing Operations

(Dollar amounts in millions except per-share data) For the Three Months Ended
March 31,
2021 2020 Change
Net sales $ 251.9 $ 248.7 1.3%
Operating income $ 54.1 $ 76.0 (28.8)%
Earnings (loss) from continuing operations $ 37.5 $ (222.6) Favorable
Diluted earnings (loss) per share $ 0.78 $ (4.64) Favorable

Consolidated net sales for the first quarter of 2021 increased 1.3% over the same period in 2020 due to favorable Average Unit Value (AUV) of $5 million, partially offset by lower volumes of $2 million. Mineral Fiber net sales decreased by $9 million and Architectural Specialties net sales increased by $12 million. Volumes for both the Mineral Fiber and Architectural Specialties segments were pressured by lower market demand due to COVID-19 which began impacting the Company’s sales activity in the second quarter of 2020. These declines were more than offset by a $17 million increase in net sales attributable to the acquisition of Turf Design, Moz Designs and Arktura in 2020.

Operating income decreased in line with Company expectations from the strong prior year quarter, driven primarily by lower sales volume in the Mineral Fiber segment and higher SG&A costs attributable to incentive compensation accruals and incremental costs from the 2020 acquisitions. These headwinds were partially offset by favorable AUV, improved manufacturing productivity and an increase in WAVE equity earnings.

Prior year period net earnings were impacted by the transfer of certain pension benefit obligations and assets of the U.S. Retirement Income Plan (RIP), which resulted in a $374 million settlement loss recorded in 2020.

Additional (non-GAAP*) Financial Metrics from Continuing Operations

(Dollar amounts in millions except per-share data) For the Three Months Ended
March 31,
2021 2020 Change
Adjusted EBITDA $ 85 $ 97 (12.0)%
Adjusted net income $ 41 $ 54 (24.5)%
Adjusted diluted earnings per share $ 0.84 $ 1.10 (23.4)%
Adjusted free cash flow $ 23 $ 36 (37.9)%

* The Company uses the above non-GAAP adjusted measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods. The Company also believes that the adjustments help users of our financial information understand the effect of those adjusted items on our selected reported results and provide useful alternative measurements of performance.   See Supplemental Reconciliations of GAAP to non-GAAP Results (below) for a breakdown of the adjustments and a reconciliation of the selected reported results to these non-GAAP measures.

(Dollar amounts in millions) For the Three Months Ended
March 31,
2021 2020 Change
Adjusted EBITDA
Mineral Fiber $ 78 $ 87 (10.1)%
Architectural Specialties 7 10 (28.9)%
Consolidated Adjusted EBITDA $ 85 $ 97 (12.0)%

Consolidated adjusted EBITDA declined in the first quarter when compared to the same prior year period, driven primarily by unfavorable channel mix and an increase in SG&A expenses, partially offset by favorable AUV, and WAVE equity earnings. Adjusted free cash flow declined primarily due to lower operating cash flows, driven by volume declines. The decline in adjusted EBITDA was in line with management’s expectations.

First Quarter Segment Highlights

Mineral Fiber

(Dollar amounts in millions) For the Three Months Ended
March 31,
2021 2020 Change
Net sales (as reported) $ 188.7 $ 197.7 (4.6)%
Operating income (as reported) $ 60.6 $ 70.0 (13.4)%
Adjusted EBITDA $ 78 $ 87 (10.1)%

Mineral Fiber net sales decreased due to lower volumes, driven by decreased demand due to COVID-19, partially offset by favorable AUV. Favorable AUV was driven by positive like for like pricing and mix attributable to the sale of higher end products.

Operating income decreased as expected in the first quarter primarily due to the negative impact of lower sales volume and higher SG&A attributable incentive compensation accruals, partially offset by higher WAVE earnings, the impact of favorable AUV and a reduction in manufacturing costs.

Architectural Specialties

(Dollar amounts in millions) For the Three Months Ended
March 31,
2021 2020 Change
Net sales (as reported) $ 63.2 $ 51.0 23.9%
Operating (loss) income (as reported) $ (4.9) $ 7.5 Unfavorable
Adjusted EBITDA $ 7 $ 10 (28.9)%

Net sales in Architectural Specialties increased by 24%, driven by the 2020 acquisitions of Turf Design, Moz Designs and Arktura, partially offset by a reduction in demand as a result of COVID-19.

Operating (loss) income decreased in the first quarter due to increases in acquisition related expenses and amortization expense related to the 2020 acquisitions, as well as lower sales excluding the impact of the 2020 acquisitions. Manufacturing and SG&A expenses were also higher due to additional investments in manufacturing, selling, and design capabilities.

Unallocated Corporate

Unallocated corporate operating loss was $2 million in the first quarter of 2021 and 2020.

Market Outlook and 2021 Guidance

“We continue to see market conditions steadily improve and are pleased to see the vaccination rollout across the US begin to allow more businesses to open their doors,” said Brian MacNeal, CFO of Armstrong. “Through our growth initiatives, including Healthy Spaces and kanopi, and the year-on-year benefit of our 2020 acquisitions, we are maintaining our 2021 guidance and expect to grow sales 10% to 13%, adjusted EBITDA 9% to 13%, to drive a free cash flow margin of 19% for the full fiscal year.”

For the complete press release, click here.

About Armstrong World Industries

More details on the Company’s performance can be found in its annual report on Form 10-K for the year ended December 31, 2020 that the Company expects to file with the SEC today. Armstrong World Industries, Inc. (AWI) is a leader in the design and manufacture of innovative commercial and residential ceiling, wall and suspension system solutions in the Americas. With $937 million in revenue in 2020, AWI has approximately 2,700 employees and a manufacturing network of 16 facilities, plus six facilities dedicated to its WAVE joint venture.


Thomas Waters – (717) 396-6354 –

Source: Armstrong World Industries, Inc.