Armstrong World Industries Inc (AWI) Reports Strong Q3 2023 Earnings with 7% Increase in Net Sales
AWI's net sales up by 7% compared to the prior-year quarter
Operating income increased by 37% with a 630 basis points margin expansion
Year-to-date cash flow from operating and investing activities up by 30%
AWI raises full-year guidance for all key metrics
Armstrong World Industries Inc (NYSE:AWI) released its third-quarter 2023 earnings report on October 24, 2023, demonstrating a strong financial performance with significant growth in operating income and adjusted EBITDA. The company reported a 7% increase in net sales compared to the prior-year quarter, primarily driven by strong average unit value (AUV) performance.
Financial Highlights
AWI's operating income rose by 37% with a 630 basis points margin expansion, and diluted earnings per share from continuing operations increased by 32% compared to the prior-year quarter. Adjusted EBITDA was up by 19% with a 380 basis points margin expansion, and adjusted diluted earnings per share increased by 18% versus the prior-year quarter. Year-to-date cash flow from operating and investing activities was up by 30%, and adjusted free cash flow increased by 50% compared to the prior-year period.
Strong Performance Across Segments
Both the Mineral Fiber and Architectural Specialties segments contributed positively to AWI's robust financial results. The Mineral Fiber segment reported a 6.8% increase in net sales, while the Architectural Specialties segment saw a 6.9% rise in net sales compared to the prior-year quarter.
Share Repurchase Program and Updated 2023 Outlook
During the third quarter of 2023, AWI repurchased 0.5 million shares of common stock for a total cost of $40 million. As of September 30, 2023, there was $752 million remaining under the Board of Directors' current authorized share repurchase program.
Given the strong third-quarter results, AWI has raised its full-year 2023 guidance. The company expects net sales to grow by 4% to 5%, adjusted EBITDA to increase by 9% to 11%, and adjusted diluted net earnings per share to rise by 7% to 9%.
Conclusion
AWI's third-quarter 2023 results highlight the company's resilience in the face of challenging market conditions. With its diverse set of end markets and consistent Mineral Fiber average unit value growth, AWI continues to deliver strong financial performance. The company remains well on its way to generating solid sales, earnings, and cash flow growth for 2023.
This article first appeared on GuruFocus.
