10-Q 1 awi-20240331.htm 10-Q 10-Q
0000007431--12-31Q10.3333falsehttp://fasb.org/us-gaap/2023#BusinessCombinationContingentConsiderationArrangementsChangeInAmountOfContingentConsiderationLiability1http://fasb.org/us-gaap/2023#BusinessCombinationContingentConsiderationArrangementsChangeInAmountOfContingentConsiderationLiability1http://fasb.org/us-gaap/2023#OtherAssetsCurrenthttp://fasb.org/us-gaap/2023#OtherAssetsCurrenthttp://fasb.org/us-gaap/2023#AccountsPayableAndAccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#AccountsPayableAndAccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2023#OtherComprehensiveIncomeLossNetOfTaxhttp://fasb.org/us-gaap/2023#OtherComprehensiveIncomeLossNetOfTax31-10-20160000007431us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentAssetsMember2023-12-310000007431awi:MineralFiberMember2023-12-310000007431awi:InterestRateSwapsCoveragePeriodMarchTwentyTwentyFourToJuneTwentyTwentySixMember2024-03-310000007431us-gaap:TreasuryStockCommonMember2024-01-012024-03-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000007431awi:WorthingtonArmstrongVentureMember2023-01-012023-03-310000007431us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000007431us-gaap:RevolvingCreditFacilityMember2023-12-310000007431us-gaap:AccumulatedTranslationAdjustmentMember2023-03-3100000074312023-12-310000007431us-gaap:RetainedEarningsMember2024-03-310000007431awi:RetireeHealthAndLifeInsuranceBenefitsMember2024-01-012024-03-310000007431srt:MinimumMemberus-gaap:DevelopedTechnologyRightsMember2024-03-310000007431us-gaap:CommonStockMember2022-12-310000007431awi:MineralFiberMember2023-01-012023-03-310000007431us-gaap:CommonStockMember2023-12-310000007431awi:USDefinedBenefitPensionPlansMember2023-01-012023-03-310000007431awi:TermLoanMember2023-12-310000007431srt:MaximumMemberawi:July2018ProgramMemberus-gaap:CommonStockMember2016-07-290000007431us-gaap:RetainedEarningsMember2023-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-310000007431awi:ArchitecturalSpecialtiesMember2023-12-310000007431us-gaap:TreasuryStockCommonMember2022-12-310000007431awi:ArchitecturalSpecialtiesMember2024-03-310000007431us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToDecemberTwentyTwentyFiveMember2024-01-012024-03-310000007431us-gaap:OtherNoncurrentLiabilitiesMember2024-03-310000007431us-gaap:AccumulatedTranslationAdjustmentMember2022-12-310000007431awi:InterestRateSwapsCoveragePeriodMarchTwentyTwentyFourToJuneTwentyTwentySevenMember2024-03-310000007431us-gaap:TreasuryStockCommonMember2024-03-310000007431srt:PartnershipInterestMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2023-01-012023-03-310000007431awi:MineralFiberMemberawi:HomeCentersMember2023-01-012023-03-310000007431us-gaap:InterestRateSwapMember2024-03-310000007431us-gaap:OtherIntangibleAssetsMember2024-03-310000007431us-gaap:RetainedEarningsMember2022-12-310000007431us-gaap:CommonStockMember2023-03-310000007431awi:RetailersAndOtherMemberawi:MineralFiberMember2024-01-012024-03-310000007431awi:DistributorsMemberawi:MineralFiberMember2023-01-012023-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-310000007431us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000007431awi:OvercastInnovationsLlcMember2023-01-012023-03-310000007431awi:UnallocatedCorporateMember2024-03-310000007431us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-03-310000007431awi:UnallocatedCorporateMember2023-12-310000007431awi:MaconSiteMember2024-01-012024-03-310000007431us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMember2023-12-310000007431us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2024-03-310000007431awi:BiLateralFacilityMemberus-gaap:LetterOfCreditMember2024-03-3100000074312018-01-012021-12-310000007431us-gaap:InterestRateSwapMemberus-gaap:AccountsPayableAndAccruedLiabilitiesMember2023-12-310000007431us-gaap:InterestRateSwapMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-03-3100000074312024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel2Member2024-03-310000007431us-gaap:AdditionalPaidInCapitalMember2022-12-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToNovemberTwentyTwentySevenMember2024-01-012024-03-310000007431awi:ElizabethCityMember2007-01-012007-12-310000007431awi:TermLoanMember2024-03-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2024-01-012024-03-310000007431us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2024-03-310000007431us-gaap:CommonStockMember2023-01-012023-03-310000007431us-gaap:TreasuryStockCommonMember2023-12-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000007431us-gaap:AccumulatedTranslationAdjustmentMember2024-03-310000007431srt:PartnershipInterestMemberus-gaap:EquityMethodInvestmentNonconsolidatedInvesteeOrGroupOfInvesteesMember2024-01-012024-03-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-03-310000007431awi:USDefinedBenefitPensionPlansMember2024-01-012024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentLiabilitiesMember2024-03-310000007431us-gaap:TreasuryStockCommonMember2023-03-310000007431us-gaap:CommonStockMember2024-01-012024-03-310000007431us-gaap:FairValueInputsLevel3Member2023-12-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000007431awi:ArchitecturalSpecialtiesMember2024-01-012024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2024-01-012024-03-310000007431us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310000007431srt:MaximumMemberus-gaap:NoncompeteAgreementsMember2024-03-310000007431awi:MineralFiberMemberawi:HomeCentersMember2024-01-012024-03-310000007431us-gaap:FairValueInputsLevel3Member2024-03-310000007431awi:UnallocatedCorporateMember2024-01-012024-03-310000007431awi:UnallocatedCorporateMember2023-01-012023-03-310000007431srt:MaximumMemberawi:TrademarksAndBrandNamesMember2024-03-310000007431awi:TURFDesignIncMember2023-03-310000007431us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateSwapMember2023-12-3100000074312024-04-250000007431us-gaap:RetainedEarningsMember2023-12-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToJuneTwentyTwentyFourMember2024-01-012024-03-310000007431us-gaap:TrademarksAndTradeNamesMember2024-01-012024-03-310000007431awi:TrademarksAndBrandNamesMember2023-12-310000007431us-gaap:RetainedEarningsMember2024-01-012024-03-310000007431awi:DistributorsMemberawi:MineralFiberMember2024-01-012024-03-310000007431awi:WorthingtonArmstrongVentureMember2024-01-012024-03-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-12-310000007431us-gaap:CustomerRelationshipsMember2024-03-3100000074312022-12-310000007431awi:InterestRateSwapsCoveragePeriodMarchTwentyTwentyOneToMarchTwentyTwentyFiveMember2024-01-012024-03-310000007431us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000007431us-gaap:DevelopedTechnologyRightsMember2023-12-310000007431us-gaap:MeasurementInputDefaultRateMemberawi:BokModernLlcMember2024-03-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000007431awi:DistributorsMemberawi:ArchitecturalSpecialtiesMember2024-01-012024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:CashFlowHedgingMember2023-01-012023-03-3100000074312023-01-012023-03-310000007431us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310000007431us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToDecemberTwentyTwentySixMember2024-01-012024-03-310000007431us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateSwapMember2023-12-310000007431awi:MineralFiberMember2024-03-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToDecemberTwentyTwentySixMember2024-03-310000007431us-gaap:RevolvingCreditFacilityMember2024-03-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToJuneTwentyTwentyFourMember2024-03-310000007431us-gaap:ComputerSoftwareIntangibleAssetMembersrt:MinimumMember2024-03-310000007431us-gaap:AdditionalPaidInCapitalMember2023-12-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-01-012024-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-03-310000007431us-gaap:AdditionalPaidInCapitalMember2023-03-310000007431us-gaap:FairValueInputsLevel2Member2023-12-310000007431us-gaap:LetterOfCreditMember2024-01-012024-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2024-03-310000007431awi:MineralFiberMember2024-01-012024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:OtherCurrentAssetsMember2024-03-310000007431us-gaap:MeasurementInputPriceVolatilityMemberawi:BokModernLlcMember2024-03-310000007431us-gaap:MeasurementInputPriceVolatilityMemberawi:InsolcorpLLCMember2024-03-310000007431us-gaap:DevelopedTechnologyRightsMember2024-03-3100000074312023-03-310000007431us-gaap:CommonStockMember2016-07-272016-07-290000007431awi:RetailersAndOtherMemberawi:ArchitecturalSpecialtiesMember2023-01-012023-03-310000007431us-gaap:AdditionalPaidInCapitalMember2024-03-310000007431awi:OvercastInnovationsLlcMember2024-03-310000007431awi:MaconSiteMember2010-09-012010-09-300000007431awi:TrademarksAndBrandNamesMember2024-03-310000007431awi:ArchitecturalSpecialtiesMember2023-01-012023-03-310000007431awi:ShareRepurchaseProgramExcludingAcceleratedShareRepurchaseMemberus-gaap:CommonStockMember2024-01-012024-03-310000007431us-gaap:SeniorNotesMember2024-03-310000007431awi:DirectCustomersMemberawi:MineralFiberMember2024-01-012024-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:OtherNoncurrentLiabilitiesMember2023-12-310000007431awi:DistributorsMemberawi:ArchitecturalSpecialtiesMember2023-01-012023-03-310000007431us-gaap:OtherIntangibleAssetsMember2024-01-012024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-3100000074312024-01-012024-03-310000007431awi:OvercastInnovationsLlcMember2024-01-012024-01-310000007431us-gaap:RetainedEarningsMember2023-01-012023-03-310000007431us-gaap:OtherNoncurrentAssetsMemberus-gaap:InterestRateSwapMember2024-03-310000007431us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310000007431us-gaap:AccumulatedTranslationAdjustmentMember2023-12-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToDecemberTwentyTwentyFiveMember2024-03-310000007431awi:InterestRateSwapsCoveragePeriodMarchTwentyTwentyFourToJuneTwentyTwentySixMember2024-01-012024-03-310000007431srt:MinimumMemberus-gaap:CustomerRelationshipsMember2024-03-310000007431us-gaap:LetterOfCreditMember2024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:AccountsPayableAndAccruedLiabilitiesMember2024-03-310000007431us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310000007431us-gaap:OtherIntangibleAssetsMember2023-12-310000007431us-gaap:NoncompeteAgreementsMember2024-03-310000007431us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000007431srt:MaximumMemberawi:December2026ProgramMemberus-gaap:CommonStockMember2016-07-290000007431us-gaap:NoncompeteAgreementsMember2023-12-310000007431us-gaap:SubsequentEventMember2024-04-242024-04-240000007431us-gaap:ComputerSoftwareIntangibleAssetMember2024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:AccumulatedGainLossNetCashFlowHedgeParentMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000007431awi:RetireeHealthAndLifeInsuranceBenefitsMember2023-01-012023-03-310000007431awi:RetailersAndOtherMemberawi:MineralFiberMember2023-01-012023-03-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2022-12-310000007431awi:InterestRateSwapsCoveragePeriodNovemberTwentyTwentyThreeToNovemberTwentyTwentySevenMember2024-03-310000007431us-gaap:TreasuryStockCommonMember2023-01-012023-03-310000007431srt:ScenarioForecastMember2024-04-242024-04-240000007431awi:InterestRateSwapsCoveragePeriodMarchTwentyTwentyOneToMarchTwentyTwentyFiveMember2024-03-310000007431awi:InterestRateSwapsCoveragePeriodMarchTwentyTwentyFourToJuneTwentyTwentySevenMember2024-01-012024-03-310000007431awi:DirectCustomersMemberawi:ArchitecturalSpecialtiesMember2024-01-012024-03-310000007431us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-03-310000007431srt:MaximumMemberus-gaap:ComputerSoftwareIntangibleAssetMember2024-03-310000007431srt:MaximumMemberus-gaap:CustomerRelationshipsMember2024-03-310000007431awi:OvercastInnovationsLlcMember2024-01-310000007431us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:InterestRateSwapMember2024-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:OtherCurrentAssetsMember2023-12-310000007431awi:RetailersAndOtherMemberawi:ArchitecturalSpecialtiesMember2024-01-012024-03-310000007431awi:WorthingtonArmstrongVentureMember2024-03-310000007431us-gaap:OtherNoncurrentLiabilitiesMember2023-12-310000007431awi:InsolcorpAndBokMember2024-03-310000007431awi:TrademarksAndBrandNamesMembersrt:MinimumMember2024-03-310000007431us-gaap:FairValueInputsLevel2Member2024-03-310000007431awi:DirectCustomersMemberawi:MineralFiberMember2023-01-012023-03-310000007431us-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2024-03-310000007431us-gaap:ComputerSoftwareIntangibleAssetMember2023-12-310000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2023-01-012023-03-310000007431us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000007431us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310000007431awi:FormMemberus-gaap:SubsequentEventMember2024-04-012024-04-300000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetGainLossIncludingPortionAttributableToNoncontrollingInterestMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000007431us-gaap:AccumulatedTranslationAdjustmentMember2024-01-012024-03-310000007431srt:MaximumMemberus-gaap:DevelopedTechnologyRightsMember2024-03-310000007431us-gaap:CustomerRelationshipsMember2023-12-310000007431awi:OvercastInnovationsLlcMember2024-01-012024-03-3100000074312024-02-012024-02-290000007431us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000007431us-gaap:InterestRateSwapMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310000007431us-gaap:MeasurementInputDefaultRateMemberawi:InsolcorpLLCMember2024-03-310000007431awi:DirectCustomersMemberawi:ArchitecturalSpecialtiesMember2023-01-012023-03-310000007431awi:ShareRepurchaseProgramIncludingAcceleratedShareRepurchaseMemberus-gaap:CommonStockMember2024-01-012024-03-310000007431us-gaap:CommonStockMember2024-03-31awi:Sitexbrli:pureiso4217:USDxbrli:sharesxbrli:sharesiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-2116

 

ARMSTRONG WORLD INDUSTRIES, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Pennsylvania

23-0366390

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

2500 Columbia Avenue, Lancaster, Pennsylvania

17603

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (717) 397-0611

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

AWI

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Number of shares of Armstrong World Industries, Inc.’s common stock outstanding as of April 25, 2024 – 43,758,250.

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

PAGE

Cautionary Note Regarding Forward-Looking Statements

 

3

 

 

 

PART I - FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements

 

5

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

28

Item 4.

 

Controls and Procedures

 

28

 

 

 

PART II - OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

29

Item 1A.

 

Risk Factors

 

29

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

29

Item 3.

 

Defaults Upon Senior Securities

 

29

Item 4.

 

Mine Safety Disclosures

 

29

Item 5.

 

Other Information

 

29

Item 6.

 

Exhibits

 

30

Signatures

 

31

 

 

 

2


 

When we refer to “AWI,” the “Company,” “we,” “our” or “us,” we are referring to Armstrong World Industries, Inc. and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q and the documents incorporated by reference herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, our expectations concerning our markets, broader economic conditions and their effect on our operating results; our expectations regarding the payment of dividends; and our ability to increase revenues, earnings and earnings before interest, taxes, depreciation and amortization. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors that could have a material adverse effect on our financial condition, liquidity, results of operations or future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:

 

Risks Related to Our Operations

changes in key customer relationships;
availability and costs of manufacturing inputs or sourced products;
financial contribution of Worthington Armstrong Venture (“WAVE”), our joint venture with Worthington Enterprises, Inc.;
labor;
cost savings and productivity initiatives;
progress towards environmental, social and governance (“ESG”) and sustainability objectives and related compliance;

Risks Related to Our Strategy

benefits from strategic initiatives, including investments in digitalization and product innovation;
identification, completion and successful integration of strategic transactions;

Risks Related to Financial Matters

our liquidity needs and indebtedness;
ability to make dividend payments and stock repurchases;
unanticipated negative tax consequences;
defined benefit plan obligations;

Risks Related to Legal and Regulatory Matters

environmental liability exposure;
claims and litigation;
effectiveness of intellectual property rights protection;
operations in Canada and Latin America;

Risks Related to General Economic and Other Factors

economic conditions;
construction activity;
market competition;
customer consolidation;

3


 

information technology disruptions and cybersecurity breaches;
dependence on third-party vendors and suppliers;
geographic concentration;
public health epidemics or pandemics; and
other risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), press releases and other communications, including those set forth under “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Such forward-looking statements speak only as of the date they are made. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

4


 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Armstrong World Industries, Inc., and Subsidiaries

Condensed Consolidated Statements of Earnings and Comprehensive Income

(amounts in millions, except per share data)

Unaudited

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net sales

 

$

326.3

 

 

$

310.2

 

Cost of goods sold

 

 

202.0

 

 

 

198.1

 

Gross profit

 

 

124.3

 

 

 

112.1

 

Selling, general and administrative expenses

 

 

65.7

 

 

 

62.7

 

(Gain) related to change in fair value of contingent consideration

 

 

(0.3

)

 

 

-

 

Equity (earnings) from unconsolidated affiliates, net

 

 

(27.2

)

 

 

(20.8

)

Operating income

 

 

86.1

 

 

 

70.2

 

Interest expense

 

 

9.0

 

 

 

8.7

 

Other non-operating (income), net

 

 

(3.1

)

 

 

(2.4

)

Earnings before income taxes

 

 

80.2

 

 

 

63.9

 

Income tax expense

 

 

20.3

 

 

 

16.6

 

Net earnings

 

$

59.9

 

 

$

47.3

 

Other comprehensive (loss), net of tax:

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(0.8

)

 

 

(0.1

)

Derivative gain (loss), net

 

 

0.5

 

 

 

(2.2

)

Pension and postretirement adjustments

 

 

(0.6

)

 

 

0.2

 

Total other comprehensive (loss)

 

 

(0.9

)

 

 

(2.1

)

Total comprehensive income

 

$

59.0

 

 

$

45.2

 

Net earnings per share of common stock:

 

 

 

 

 

 

Basic

 

$

1.37

 

 

$

1.04

 

Diluted

 

$

1.36

 

 

$

1.04

 

Average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

43.8

 

 

 

45.4

 

Diluted

 

 

44.1

 

 

 

45.5

 

 

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

 

 

5


 

Armstrong World Industries, Inc., and Subsidiaries

Condensed Consolidated Balance Sheets

(amounts in millions, except share and per share data)

 

 

Unaudited

 

 

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

69.6

 

 

$

70.8

 

Accounts and notes receivable, net

 

 

125.4

 

 

 

111.0

 

Inventories, net

 

 

106.4

 

 

 

104.0

 

Income taxes receivable

 

 

0.4

 

 

 

0.8

 

Other current assets

 

 

28.9

 

 

 

26.4

 

Total current assets

 

 

330.7

 

 

 

313.0

 

Property, plant, and equipment, less accumulated depreciation and amortization of
        $
614.1 and $598.2, respectively

 

 

559.9

 

 

 

566.4

 

Operating lease assets

 

 

26.7

 

 

 

26.6

 

Finance lease assets

 

 

27.8

 

 

 

25.2

 

Prepaid pension costs

 

 

86.1

 

 

 

84.6

 

Investments in unconsolidated affiliates

 

 

26.2

 

 

 

17.4

 

Goodwill

 

 

175.3

 

 

 

175.5

 

Intangible assets, net

 

 

408.6

 

 

 

412.4

 

Other non-current assets

 

 

50.2

 

 

 

51.3

 

Total assets

 

$

1,691.5

 

 

$

1,672.4

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current installments of long-term debt

 

$

22.5

 

 

$

22.5

 

Accounts payable and accrued expenses

 

 

131.1

 

 

 

159.9

 

Operating lease liabilities

 

 

6.9

 

 

 

6.8

 

Finance lease liabilities

 

 

3.0

 

 

 

3.0

 

Income taxes payable

 

 

20.9

 

 

 

2.3

 

Total current liabilities

 

 

184.4

 

 

 

194.5

 

Long-term debt, less current installments

 

 

558.9

 

 

 

564.3

 

Operating lease liabilities

 

 

20.5

 

 

 

20.4

 

Finance lease liabilities

 

 

26.4

 

 

 

23.4

 

Postretirement benefit liabilities

 

 

42.1

 

 

 

42.4

 

Pension benefit liabilities

 

 

26.6

 

 

 

26.9

 

Other long-term liabilities

 

 

24.4

 

 

 

26.8

 

Income taxes payable

 

 

15.5

 

 

 

15.0

 

Deferred income taxes

 

 

165.9

 

 

 

166.9

 

Total non-current liabilities

 

 

880.3

 

 

 

886.1

 

Shareholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value per share, 200 million shares authorized, 63,072,232
        shares issued and
43,777,371 shares outstanding as of March 31, 2024 and
        
63,054,340 shares issued and 43,902,061 shares outstanding as of
        December 31, 2023

 

 

0.6

 

 

 

0.6

 

Capital in excess of par value

 

 

595.3

 

 

 

591.7

 

Retained earnings

 

 

1,394.1

 

 

 

1,346.6

 

Treasury stock, at cost, 19,294,861 shares as of March 31, 2024 and 19,152,279
        shares as of December 31, 2023

 

 

(1,257.6

)

 

 

(1,242.4

)

Accumulated other comprehensive (loss)

 

 

(105.6

)

 

 

(104.7

)

Total shareholders’ equity

 

 

626.8

 

 

 

591.8

 

Total liabilities and shareholders’ equity

 

$

1,691.5

 

 

$

1,672.4

 

 

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

6


 

Armstrong World Industries, Inc., and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(amounts in millions, except share and per share data)

Unaudited

 

 

 

Three Months Ended March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Treasury Stock

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Shares

 

 

Amount

 

 

(Loss)

 

 

Total

 

December 31, 2023

 

 

43,902,061

 

 

$

0.6

 

 

$

591.7

 

 

$

1,346.6

 

 

 

19,152,279

 

 

$

(1,242.4

)

 

$

(104.7

)

 

$

591.8

 

Stock issuance, net

 

 

17,892

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Cash dividends - $0.28 per common share

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12.4

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(12.4

)

Share-based employee compensation

 

 

-

 

 

 

-

 

 

 

3.6

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3.6

 

Net earnings

 

 

-

 

 

 

-

 

 

 

-

 

 

 

59.9

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

59.9

 

Other comprehensive (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(0.9

)

 

 

(0.9

)

Acquisition of treasury stock

 

 

(142,582

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

142,582

 

 

 

(15.2

)

 

 

-

 

 

 

(15.2

)

March 31, 2024

 

 

43,777,371

 

 

$

0.6

 

 

$

595.3

 

 

$

1,394.1

 

 

 

19,294,861

 

 

$

(1,257.6

)

 

$

(105.6

)

 

$

626.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Treasury Stock

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Shares

 

 

Amount

 

 

(Loss)

 

 

Total

 

December 31, 2022

 

 

45,572,185

 

 

$

0.6

 

 

$

573.6

 

 

$

1,169.9

 

 

 

17,364,635

 

 

$

(1,109.0

)

 

$

(100.1

)

 

$

535.0

 

Stock issuance, net

 

 

12,328

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(76

)

 

 

-

 

 

 

-

 

 

 

-

 

Cash dividends - $0.254 per common share

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(11.7

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(11.7

)

Share-based employee compensation

 

 

-

 

 

 

-

 

 

 

3.6

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3.6

 

Net earnings

 

 

-

 

 

 

-

 

 

 

-

 

 

 

47.3

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

47.3

 

Other comprehensive (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2.1

)

 

 

(2.1

)

Acquisition of treasury stock

 

 

(367,269

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

367,269

 

 

 

(27.3

)

 

 

-

 

 

 

(27.3

)

March 31, 2023

 

 

45,217,244

 

 

$

0.6

 

 

$

577.2

 

 

$

1,205.5

 

 

 

17,731,828

 

 

$

(1,136.3

)

 

$

(102.2

)

 

$

544.8

 

 

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

7


 

Armstrong World Industries, Inc., and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(amounts in millions)

Unaudited

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings

 

$

59.9

 

 

$

47.3

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

Depreciation and amortization

 

 

24.3

 

 

 

20.9

 

Deferred income taxes

 

 

(1.0

)

 

 

(0.3

)

Share-based compensation

 

 

4.1

 

 

 

3.9

 

Equity earnings from unconsolidated affiliates

 

 

(27.2

)

 

 

(20.8

)

(Gain) from change in fair value of contingent consideration

 

 

(0.3

)

 

 

-

 

Payment of contingent consideration in excess of acquisition-date fair value

 

 

-

 

 

 

(5.0

)

Other non-cash adjustments, net

 

 

-

 

 

 

(0.1

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

(25.1

)

 

 

(16.1

)

Inventories

 

 

(2.5

)

 

 

(3.5

)

Accounts payable and accrued expenses

 

 

(18.2

)

 

 

(11.7

)

Income taxes receivable and payable, net

 

 

19.5

 

 

 

15.5

 

Other assets and liabilities

 

 

(7.1

)

 

 

(3.9

)

Net cash provided by operating activities

 

 

26.4

 

 

 

26.2

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(14.7

)

 

 

(22.3

)

Return of investment from joint venture

 

 

23.4

 

 

 

20.8

 

Investment in unconsolidated affiliate

 

 

(5.5

)

 

 

-

 

Proceeds from company owned life insurance, net

 

 

2.7

 

 

 

-

 

Net cash provided by (used for) investing activities

 

 

5.9

 

 

 

(1.5

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from revolving credit facility

 

 

25.0

 

 

 

25.0

 

Payments of revolving credit facility

 

 

(25.0

)

 

 

(10.0

)

Payments of long-term debt

 

 

(5.6

)

 

 

-

 

Payments for finance leases

 

 

(0.8

)

 

 

(0.6

)

Dividends paid

 

 

(12.3

)

 

 

(11.6

)

Proceeds (payments) from share-based compensation plans, net of tax

 

 

0.6

 

 

 

(0.3

)

Payments of acquisition-related contingent consideration

 

 

-

 

 

 

(10.2

)

Payments for treasury stock acquired

 

 

(15.0

)

 

 

(27.0

)

Net cash (used for) financing activities

 

 

(33.1

)

 

 

(34.7

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(0.4

)

 

 

-

 

Net (decrease) in cash and cash equivalents

 

 

(1.2

)

 

 

(10.0

)

Cash and cash equivalents at beginning of year

 

 

70.8

 

 

 

106.0

 

Cash and cash equivalents at end of period

 

$

69.6

 

 

$

96.0

 

Supplemental Cash Flow Disclosures:

 

 

 

 

 

 

Interest paid

 

$

8.5

 

 

$

8.4

 

Income tax payments, net

 

 

1.7

 

 

 

1.5

 

Amounts in accounts payable for capital expenditures

 

 

0.4

 

 

 

2.5

 

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

 

8


Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share and per share data)

 

NOTE 1. BUSINESS AND BASIS OF PRESENTATION

Armstrong World Industries, Inc. (“AWI”) is a Pennsylvania corporation incorporated in 1891. When we refer to “AWI,” the “Company,” “we,” “our” or “us” in these notes, we are referring to AWI and its subsidiaries.

Except as disclosed in this note, the accounting policies used in preparing the Condensed Consolidated Financial Statements in this Form 10-Q are the same as those used in preparing the Consolidated Financial Statements for the year ended December 31, 2023. These statements should therefore be read in conjunction with the Consolidated Financial Statements and notes that are included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. In the opinion of management, all adjustments of a normal recurring nature have been included to provide a fair statement of the results for the reporting periods presented. Operating results for the first quarter of 2024 and 2023 included in this report are unaudited. Quarterly results are not necessarily indicative of annual earnings, primarily due to the different level of sales in each quarter of the year and the possibility of changes in general economic conditions.

These Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles. The statements include management estimates and judgments, where appropriate. Management utilizes estimates to record many items, including certain asset values, contingent purchase price liabilities, allowances for bad debts, inventory obsolescence and lower of cost and net realizable value charges, warranty reserves, workers’ compensation, general liability and environmental claims, and income taxes. When preparing an estimate, management determines the amount based upon the consideration of relevant information and may confer with outside parties, including external counsel. Actual results may differ from these estimates.

Acquisitions and Investments in Unconsolidated Affiliates

In January 2024, we entered into a strategic partnership and equity investment in Overcast Innovations LLC (“Overcast”) with McKinstry Essention, LLC whereby we contributed $5.5 million in exchange for a 19.5% ownership interest in Overcast, with future rights to increase our ownership interest. Overcast is a solutions company offering prefabricated ceiling cloud systems, modular grid platforms and engineering design services to reduce waste and inefficiencies in the built environment. Our investment and equity earnings in Overcast are included in our Unallocated Corporate segment.

In October 2023, we acquired a portion of the business and certain assets of Insolcorp, LLC (“Insolcorp”), based in Albemarle, NC, used to develop, test and manufacture energy saving products deployed in building and roofing installations. The acquired operations, assets and liabilities of Insolcorp are included in our Mineral Fiber segment.

In July 2023, we acquired all of the issued and outstanding stock of BOK Modern, LLC (“BOK”), based in San Rafael, CA. BOK is a designer of metal facade architectural solutions. The operations, assets and liabilities of BOK are included in our Architectural Specialties segment.

Subsequent Event

In April 2024, we acquired all of the issued and outstanding membership interests in 3form, LLC, a subsidiary of Hunter Douglas, Inc. (“3form”), for a purchase price of $95.0 million. 3form, based in Salt Lake City, UT, is a designer and manufacturer of architectural resin and glass products used for specialty walls, partitions and ceilings, with three U.S. based production and design facilities and 2023 revenues of approximately $96 million.

 

NOTE 2. SEGMENT RESULTS

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net sales

 

 

 

 

 

 

Mineral Fiber

 

$

239.6

 

 

$

228.4

 

Architectural Specialties

 

 

86.7

 

 

 

81.8

 

Total net sales

 

$

326.3

 

 

$

310.2

 

 

9


Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share and per share data)

 

 

Our product-based Mineral Fiber and Architectural Specialties segment net sales represent the product-based group offerings we sell to external customers.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Segment operating income (loss)

 

 

 

 

 

 

Mineral Fiber

 

$

79.2

 

 

$

63.8

 

Architectural Specialties

 

 

7.7

 

 

 

7.2

 

Unallocated Corporate

 

 

(0.8

)

 

 

(0.8

)

Total consolidated operating income

 

$

86.1

 

 

$

70.2

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Total consolidated operating income

 

$

86.1

 

 

$

70.2

 

Interest expense

 

 

9.0

 

 

 

8.7

 

Other non-operating (income), net

 

 

(3.1

)

 

 

(2.4

)

Earnings before income taxes

 

$

80.2

 

 

$

63.9

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Segment assets

 

 

 

 

 

 

Mineral Fiber

 

$

1,097.9

 

 

$

1,091.9

 

Architectural Specialties

 

 

430.0

 

 

 

421.1

 

Unallocated Corporate

 

 

163.6

 

 

 

159.4

 

Total consolidated assets

 

$

1,691.5

 

 

$

1,672.4

 

 

NOTE 3. REVENUE

Disaggregation of Revenues

Our Mineral Fiber and Architectural Specialties operating segments both manufacture and sell ceiling and wall systems (primarily mineral fiber, fiberglass wool, metal, wood, felt, wood fiber and glass-reinforced-gypsum) throughout the Americas. We disaggregate revenue based on our product-based segments and major customer channels, as they represent the most appropriate depiction of how the nature, amount and timing of revenues and cash flows are affected by economic factors. Net sales by major customer channel are as follows:

Distributors – represents net sales to building materials distributors who re-sell our products to contractors, subcontractors’ alliances, large architect and design firms, and major facility owners. Geographically, this category includes sales throughout the U.S., Canada, and Latin America.

Home centers – represents net sales to home centers, such as Lowe’s Companies, Inc. and The Home Depot, Inc. This category includes sales primarily to U.S. customers.

Direct customers – represents net sales to contractors, subcontractors, and large architect and design firms. This category includes sales primarily to U.S. customers.

Other – represents net sales to independent retailers and certain national account customers, including wholesalers who re-sell our products to dealers who service builders, contractors and consumers, online customers, major facility owners, group purchasing organizations and maintenance, repair and operating entities. Geographically, this category includes sales throughout the U.S., Canada, and Latin America.

 

10


Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share and per share data)

 

The following tables provide net sales by major customer channel within our Mineral Fiber and Architectural Specialties segments for the three months ended March 31, 2024 and 2023:

 

 

 

Three Months Ended

 

 

 

March 31,

 

Mineral Fiber

 

2024

 

 

2023

 

Distributors

 

$

169.3

 

 

$

159.8

 

Home centers

 

 

31.0

 

 

 

31.1

 

Direct customers

 

 

13.1

 

 

 

14.7

 

Other

 

 

26.2

 

 

 

22.8

 

Total

 

$

239.6

 

 

$

228.4

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

Architectural Specialties

 

2024

 

 

2023

 

Distributors

 

$

53.8

 

 

$

39.2

 

Direct customers

 

 

30.0

 

 

 

42.0

 

Other

 

 

2.9

 

 

 

0.6

 

Total

 

$

86.7

 

 

$

81.8

 

 

NOTE 4. ACCOUNTS AND NOTES RECEIVABLE

 

 

March 31, 2024

 

 

December 31, 2023

 

Customer receivables

 

$

120.5

 

 

$

102.1

 

Miscellaneous receivables

 

 

8.1

 

 

 

11.8

 

Less allowance for warranties, discounts and losses

 

 

(3.2

)

 

 

(2.9

)

Accounts and notes receivable, net

 

$

125.4

 

 

$

111.0

 

 

We sell our products to select, pre-approved customers whose businesses are affected by changes in economic and market conditions. We consider these factors and the financial condition of each customer when establishing our allowance for losses from doubtful accounts.

 

NOTE 5. INVENTORIES

 

 

March 31, 2024

 

 

December 31, 2023

 

Finished goods

 

$

58.9

 

 

$

55.1

 

Goods in process

 

 

6.2

 

 

 

5.1

 

Raw materials and supplies

 

 

66.6

 

 

 

66.7

 

Less LIFO reserves

 

 

(25.3

)

 

 

(22.9

)

Total inventories, net

 

$

106.4

 

 

$

104.0

 

 

NOTE 6. OTHER CURRENT ASSETS

 

 

March 31, 2024

 

 

December 31, 2023

 

Prepaid expenses

 

$

17.3

 

 

$

15.9

 

Assets held for sale

 

 

6.7

 

 

 

6.7

 

Fair value of derivative assets

 

 

1.9

 

 

 

1.1

 

Other

 

 

3.0

 

 

 

2.7

 

Total other current assets

 

$

28.9

 

 

$

26.4

 

 

As of March 31, 2024 and December 31, 2023, assets held for sale included the land and property, plant and equipment of our idled Mineral Fiber plant in St. Helens, Oregon and the building and related land of an Architectural Specialties design center in Chicago, Illinois.

 

NOTE 7. INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Investments in unconsolidated affiliates include our 50% equity interest in Worthington Armstrong Venture (“WAVE”), our joint venture with Worthington Enterprises, Inc., and our 19.5% equity interest in Overcast. Both the WAVE joint venture and Overcast investment are reflected within our Condensed Consolidated Financial Statements using the equity method of accounting. WAVE is

11


Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share and per share data)

 

reflected as a component of our Mineral Fiber segment while Overcast is included as a component of our Unallocated Corporate segment.

Condensed financial statement data for WAVE is summarized below.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net sales

 

$

125.8

 

 

$

109.5

 

Gross profit

 

 

76.7

 

 

 

62.3

 

Net earnings

 

 

57.0

 

 

 

43.8

 

 

The following table presents equity (earnings) loss from our unconsolidated affiliates for the three months ended March 31, 2024 and 2023:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

WAVE

 

$

(27.4

)

 

$

(20.8

)

Overcast

 

 

0.2

 

 

 

-

 

Equity (earnings) from unconsolidated affiliates, net

 

$

(27.2

)

 

$

(20.8

)

 

NOTE 8. GOODWILL AND INTANGIBLE ASSETS

The following table details amounts related to our goodwill and intangible assets as of March 31, 2024 and December 31, 2023:

 

 

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

Estimated
Useful Life

 

Gross
Carrying
Amount

 

 

Accumulated Amortization

 

 

Gross
Carrying
Amount

 

 

Accumulated Amortization

 

Amortizing intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

2-20 years

 

$

183.5

 

 

$

154.7

 

 

$

183.6

 

 

$

152.1

 

Developed technology

 

13-20 years

 

 

101.7

 

 

 

84.7

 

 

 

101.4

 

 

 

84.4

 

Software

 

5-7 years

 

 

15.6

 

 

 

5.3

 

 

 

15.6

 

 

 

4.6

 

Trademarks and brand names

 

3-20 years

 

 

6.2

 

 

 

3.5

 

 

 

6.2

 

 

 

3.4

 

Non-compete agreements

 

3-5 years

 

 

5.9

 

 

 

3.9

 

 

 

6.1

 

 

 

3.8

 

Other

 

Various

 

 

2.8

 

 

 

0.2

 

 

 

2.8

 

 

 

0.2

 

Total

 

 

 

$

315.7

 

 

$

252.3

 

 

$

315.7

 

 

$

248.5

 

Non-amortizing intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trademarks and brand names

 

Indefinite

 

 

345.2

 

 

 

 

 

 

345.2

 

 

 

 

Total intangible assets

 

 

 

$

660.9

 

 

 

 

 

$

660.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Indefinite

 

$

175.3

 

 

 

 

 

$

175.5

 

 

 

 

 

The decrease in goodwill as of March 31, 2024 compared to December 31, 2023 was due to foreign exchange movements.

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Amortization expense

 

$

4.1

 

 

$

3.5

 

 

NOTE 9. OTHER NON-CURRENT ASSETS