A Member of Pat McKeough’s Inner Circle recently asked for his advice on Armstrong World Industries, a company that specializes in innovative products for commercial and residential applications.
Pat likes the company’s strong financial performance in 2024 and into 2025 which highlights its ability to grow even in challenging market conditions. The company’s strategic acquisitions have also significantly expanded its Architectural Specialties segment.
Armstrong World Industries (Symbol AWI on New York; www.armstrongworldindustries.com), is a leader in designing and manufacturing innovative commercial and residential ceiling, wall and suspension systems. The company has over 3,500 employees working from 19 facilities in the U.S. and Canada.
In April 2024, Armstrong acquired 3form LLC, a Salt Lake City-based maker of sustainably crafted architectural resins and glass for ceilings, walls and other interior applications. The purchase included three U.S.-based production and design facilities, with around 390 employees.
3form added complementary materials and design capabilities to Armstrong’s Architectural Specialties portfolio. The acquisition lets the company sell more products to architects and designers.
3form has been in business for more than three decades. It generated 2023 revenue of $96 million. The purchase price was not disclosed.
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Armstrong reported revenue of $1.04 billion in 2019. Revenue then fell 9.7% in 2020, to $936.9 million, as the pandemic hurt demand for its products. In 2021, revenue rebounded, rising 18.1% to $1.11 billion. Revenue then climbed 11.4% in 2022, to $1.23 billion. In 2023, revenue rose a further 5.0%, to $1.30 billion. In 2024, revenue increased 11.6%, to $1.45 billion.
Excluding one-time items, the company made $237 million, or $4.78 a share, in 2019. Earnings then fell along with revenue in 2020, by 24.1% to $180 million, or $3.74 a share. In 2021, earnings rebounded 16.1%, to $209 million, or $4.36 a share. Earnings climbed again in 2022, rising 5.3% to $220 million, or $4.74 a share. In 2023, earnings rose a further 8.2%, to $238 million, or $5.32 a share. In 2024, earnings increased 16.4%, to $277 million, or $6.31 a share.
In the quarter ended March 31, 2025, Armstrong’s revenue rose 17.3%, to $382.7 million from $326.3 million a year earlier. The rise was due to higher sales in its Mineral Fiber and Architectural Specialties operating segments, partly due to acquisitions. Excluding one-time items, the company earned $73 million, or $1.66 a share, in the latest quarter. That’s up 19.6%, from $61 million, or $1.38 a share.
Armstrong World Industries’ savvy acquisitions continue to pay off
Armstrong’s outlook remains positive. Its recent strong recent performance is being spurred by resilient global product demand, even amidst a challenging operating environment, as well as higher average unit values and steady volumes. The company’s recent acquisitions are paying off as well.
The stock trades at 21.0 times the company’s forecast earnings for 2025 of $6.99 a share. The stock yields 0.8%.
Recommendation in Pat’s Inner Circle: Armstrong World Industries Inc. is okay to hold.
