On this page of StockholderLetter.com we present the latest annual shareholder letter from ARMSTRONG WORLD INDUSTRIES INC — ticker symbol AWI. Reading current and past AWI letters to shareholders can bring important insights into the investment thesis.

 •  4/29/2024 Letter Continued (Full PDF)
 •  5/1/2023 AWI Stockholder Letter
 •  More "Construction Materials & Machinery" Category Stockholder Letters
 •  AWI Benford's Law Stock Score = 89

AWI Shareholder/Stockholder Letter Transcript:

Experience, Above All   
2023
Annual
Report

Dear Fellow Shareholders,
Our company delivered record-setting results in 2023, overcoming
significant macroeconomic uncertainty and weak market conditions. Our
results reflect Armstrong   s resilient business model with its strong market
position, diverse and balanced set of end-market verticals and attractive
growth initiatives. These attributes allowed Armstrong to deliver both revenue
and earnings growth with profit margin expansion, despite soft market conditions.
Highlights from 2023 include:
     Record-setting total company revenue of $1.3 billion, up 5 percent from 2022, with
operating income growth of 16 percent and adjusted EBITDA growth of 12 percent
     Significant improvements in adjusted EBITDA as a percent of sales for both Mineral
Fiber and Architectural Specialties segments
     Strategic acquisitions of B  K Modern, a leading architectural metal design firm for
interior and exterior applications, and Insolcorp   s Templok   panels with proprietary
phase change material (PCM) technology supporting the launch of our new energy
saving ceiling solution
     Substantial value returned to shareholders with approximately $179 million of
share repurchases and cash dividends
     A meaningful improvement in our already world-class safety performance with a
18% reduction in total recordable incidents across the company as compared to
the prior year
These results would not have been possible without the extraordinary talent and
dedication of our 3,100 employees who are passionate about our mission and our
customers and remain dedicated to delivering on our growth strategy. From delivering
productivity in our plants, to pursuing new product innovation, to building and
maintaining our best-in-class service and quality levels to meet and exceed customer
needs, our people continue to be the key to our success.
Our 2023 performance also demonstrates the value of the strategic choices we have
made over the last 8 years. By becoming an Americas-focus company operating in the
attractive ceiling and walls segment of the commercial construction industry, we have
been able to invest for growth throughout economic cycles while also demonstrating
resilient financial results. Our strategic growth investments include expanding our
Architectural Specialties segment through acquisitions and internal investments, digital
tools that further strengthen our business and access new demand from underserved
parts of the market, and innovation to enhance product development and support the
introduction of healthy and sustainable products.
Growing Capabilities in Architectural Specialties
In 2023, we continued our investments to expand our Architectural Specialties
segment. This included completing a multiyear investment in our Johnstown, Ohio
metal facility to increase its capacity and capabilities. These investments included
expanding the plant   s footprint and installing equipment that allow us to broaden our
finishing capabilities. As a result, we have tripled the production capacity of this site,
while significantly reducing customer lead times. These investments further enhance
our ability to capture growth in metal products.
We also acquired B  K Modern to complement and expand our metal capabilities. B  K is
a pioneer in the design and development of integrated architectural metal systems for
both interior and exterior applications and has a particular focus on innovating to deliver
customers    design intent with greater efficiency. In addition to adding aesthetic appeal,
many of its patented designs reduce the amount of metal needed for support structures
leading to significant project cost savings and increased installation efficiency.
Advancing Digital Initiatives
We are in our fourth year of investing in digital initiatives to enhance our competitive
advantages. These digital initiatives include both our digital selling platform, Kanopi   
by Armstrong and our automated design platform ProjectWorks  . With Kanopi, we
seek to access that portion of the 39 billion square feet of installed Mineral Fiber

Financial Score Card
Dollars in millions except per share data
Total Company As Reported & Adjusted
Diluted EPS from Continuing Operations*
$4.30
$4.36
$3.86
2023
$263
$244
$223
Total Company
Adjusted Free Cash Flow*
$78
$211
Total Company Cash Flow from
Operating and Investing Activities
$173
2022
As Reported Diluted EPS
Adjusted Diluted EPS*
Operating Income
Adjusted EBITDA*
$94
2021
$4.99
$5.32
2020
$4.74
2019
2023
$221
2022
$190
2021
$212
2020
$3.74
$(1.76)
$4.88
$4.78
$430
$324
$385
$279
$372
$260
$330
$255
$403
2019
$346
$288
2019 2020 2021 2022 2023
Total Company Operating Income
& Adjusted EBITDA*
$317
$211
$212
2019 2020 2021 2022 2023
$363
Architectural Specialties Net Sales
$932
$887
$819
$726
$827
Mineral Fiber Net Sales
2019 2020 2021 2022 2023
2019 2020 2021 2022 2023
2023 Capital Deployment
16%
29%
$289
Acquisitions
9%
46%
Capital Expenditures
Share Repurchases
Dividends
* Non-GAAP measure. Reconciliations to nearest GAAP measures provided at the end of this report.
EBITDA: Earnings before interest, taxes, depreciation and amortization. EPS: Earnings per share.

products in North America where the owner or occupant has limited access to the
know-how of ceiling solutions, and as a result, has put off renovating their ceilings. The
easy-to-use Kanopi    by Armstrong platform creates more awareness of the many options
for renovating spaces with our large portfolio of solutions including both Mineral Fiber
products and Architectural Specialty products. The platform is bringing a wide variety of
new customers to Armstrong and our distribution partners. Importantly, the ongoing yearover-year growth we   re generating with new Kanopi customers, repeat customers and
sales volume support the strategic rationale behind our investment.
The use of ProjectWorks   also continues to gain momentum. This digital design service
is a unique capability within our industry and is accelerating the speed and efficiency
of customer project collaboration. ProjectWorks addresses the growing challenges
architects and designers face with compressed completion cycles and the need to
complete increasing numbers of projects with the same number of architects on staff. In
addition, ProjectWorks helps contractors, and ultimately the project owners, reduce costs
by eliminating waste through optimization of the project design and bill of materials. We
continue to expand the breadth of products incorporated into ProjectWorks and widen the
use of this service by more and more architects, designers and contractors.
Innovating for a Healthy & Sustainable Future
The innovative approach we have taken with digital initiatives is just one example of how
we   re actively seeking and delivering solutions that differentiate Armstrong within our
industry. The solutions we provide also help our customers as well as building owners
and operators achieve their own goals for efficiency and sustainability.
With our recent innovations, we have broadened our view of our Healthy Spaces initiative
to incorporate sustainability as well as indoor environmental quality (IEQ). The solutions
we are developing in this area can now address the pressing need expressed by our
customers to reduce their energy usage and overall environmental impacts while also
enhancing the well-being of building occupants.
Using our recently acquired PCM technology, we have launched a new product portfolio
that delivers energy savings along with thermal comfort, aesthetics and acoustical
properties. Ultima   Templok   ceiling panels, the first product in this portfolio, has the
ability to reduce energy costs for heating and cooling a building by up to an estimated 15
percent.   This unique product offers a completely new specifiable attribute to ceilings    
energy savings. We view this as an initial step to building a multi-generational portfolio of
energy savings ceiling products that address growing market demand for solutions that
reduce carbon emissions within the built environment.
We continue to see strength in our other Healthy Spaces products like AirAssure   and
Health Zone   . These products that were once focused just on healthcare spaces have
gained traction in other markets, particularly offices, education and data centers. Sales
volume growth of these products in 2023 continued to outpace our overall Mineral Fiber
sales volume growth, as they did in 2022.
Delivering Value for Stakeholders
Because of our market position, the resilience of our business model and our strong cash
generation, we have been able to make these important investments while continuing to
provide direct returns to our shareholders. Over the past 5 years, we have been able to
generate over $1 billion in adjusted free cash flow. And since 2016, we delivered more than
$1 billion in shareholder returns through a combination of dividends and share repurchases.
What we achieved in 2023 further validates the strategic choices we have made over the last
several years as we exited less profitable markets and increased investment in our core North
American market. The actions we have taken have strengthened our competitive position
and increased our resiliency. With our resilient business model and the strong dedication
and efforts of our employees we are delivering profitable growth, despite challenging market
conditions, and we are poised to do more of the same in the years to come.
Top: CastWorks    GRG Custom
Ceiling Panels, Prelude   XL Max  
Vic Grizzle
Bottom: MetalWorks    Linear     Classics
President and Chief Executive Officer
   Measured cooling energy savings in lab tests. Results may vary. See details on company website.



 4/29/2024 Letter Continued (Full PDF)