8-K
ARMSTRONG WORLD INDUSTRIES INC (AWI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2025
ARMSTRONG WORLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
| Pennsylvania | 1-2116 | 23-0366390 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation or organization) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
| 2500 Columbia Avenue P.O. Box 3001<br><br>Lancaster, Pennsylvania | 17603 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (717) 397-0611
NA
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ◻
Section 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition.
On July 29, 2025, Armstrong World Industries, Inc. (the "Company") issued a press release announcing its second quarter 2025 consolidated financial results. The full text of the press release is attached hereto as Exhibit 99.1.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
Section 7 – Regulation FD
Item 7.01 Regulation FD Disclosure.
On July 29, 2025, the Company issued a press release announcing that it will report its second quarter 2025 consolidated financial results via a webcast and conference call on July 29, 2025 at 10:00 a.m. Eastern Time which can be accessed through the “Investors” section of the Company’s website, www.armstrongceilings.com. During this report, the Company will reference a slide presentation, a copy of which is attached hereto as Exhibit 99.2 and incorporated herein by reference.
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, is being furnished herewith and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Act, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| No. 99.1 | Press Release of Armstrong World Industries, Inc. dated July 29, 2025 |
|---|---|
| No. 99.2 | Earnings Call Presentation Second Quarter 2025 dated July 29, 2025 |
| No. 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ARMSTRONG WORLD INDUSTRIES, INC. | |
|---|---|
| By: | /s/ Austin K. So |
| Austin K. So | |
| SVP General Counsel, Head of Government Relations & Chief Sustainability Officer |
Date: July 29, 2025
EX-99.1
Exhibit 99.1
Armstrong World Industries Reports Record
Second-Quarter 2025 Sales and Earnings
- Quarterly net sales increased 16% to $425 million with a 7% increase in Mineral Fiber net sales and a 37% increase in Architectural Specialties net sales
- Operating income increased 30% and diluted net earnings per share increased 34%
- Adjusted EBITDA up 23% and adjusted diluted net earnings per share up 29%
- Operating income margin expanded 300 basis points and adjusted EBITDA margin expanded 200 basis points
- Raising full-year 2025 guidance
(All comparisons are versus the prior-year period unless otherwise stated)
LANCASTER, Pa., July 29, 2025 -- Armstrong World Industries, Inc. (NYSE:AWI), an Americas leader in the design and manufacture of innovative interior and exterior architectural applications including ceilings, specialty walls and exterior metal solutions, today reported second-quarter 2025 financial results highlighted by strong net sales and earnings growth with operating and adjusted EBITDA margin expansion in both the Mineral Fiber and Architectural Specialties segments compared to the prior year.
“With strong performance across our enterprise, we delivered robust top and bottom-line growth with margin expansion in both our Mineral Fiber and Architectural Specialties segments,” said AWI President and CEO, Vic Grizzle. “These record-setting results continue to demonstrate the resilience of our business model and strong execution on our growth initiatives including our acquisitions, innovation and digital tools. While macro-economic uncertainty persists, we are confident in our ability to navigate these challenges and continue generating profitable growth through strong commercial and operational execution.”
Second-Quarter Consolidated Results
| (Dollar amounts in millions except per-share data) | For the Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|---|
| 2025 | 2024 | Change | |||||
| Net sales | $ | 424.6 | $ | 365.1 | 16.3% | ||
| Operating income | $ | 123.2 | $ | 95.0 | 29.7% | ||
| Operating income margin (Operating income as a % of net sales) | 29.0 | % | 26.0 | % | 300bps | ||
| Net earnings | $ | 87.8 | $ | 65.9 | 33.2% | ||
| Diluted net earnings per share | $ | 2.01 | $ | 1.50 | 34.0% | ||
| Additional Non-GAAP* Measures | |||||||
| Adjusted EBITDA | $ | 154 | $ | 125 | 23.2% | ||
| Adjusted EBITDA margin (Adjusted EBITDA as a % of net sales) | 36.3 | % | 34.3 | % | 200bps | ||
| Adjusted net earnings | $ | 91 | $ | 71 | 28.0% | ||
| Adjusted diluted net earnings per share | $ | 2.09 | $ | 1.62 | 29.0% |
* The Company uses non-GAAP adjusted measures in managing the business and believes the adjustments provide meaningful comparisons of operating performance between periods and are useful alternative measures of performance. Reconciliations of the most comparable generally accepted accounting principles in the United States ("GAAP") measure are found in the tables at the end of this press release. Excluding per share data, non-GAAP figures are rounded to the nearest million and corresponding percentages are based on unrounded figures.
Consolidated net sales for the second quarter of 2025 increased 16.3% over the prior-year period due to higher volumes of $46 million and favorable Average Unit Value (dollars per unit sold, or "AUV") of $14 million. Architectural Specialties net sales increased $43 million and Mineral Fiber net sales increased $17 million from the prior-year period. Architectural Specialties segment net sales improved primarily due to a $28 million contribution from the 2024 acquisitions of 3form, LLC ("3form") and A. Zahner Company ("Zahner") and increased organic net sales driven by strengthening broad-based penetration throughout our specialty product categories. The increase in Mineral Fiber net sales was primarily driven by favorable AUV and modestly improved sales volumes.
Consolidated operating income increased 29.7% in the second quarter of 2025 primarily due to a $25 million benefit from sales volume growth, an $8 million margin benefit from favorable AUV and a $6 million increase in equity earnings from the Worthington Armstrong Joint Venture ("WAVE"). These benefits were partially offset by a $6 million increase in manufacturing costs and a $4 million increase in selling, general and administrative (“SG&A”) expenses. Increased sales volumes and higher operating costs were driven primarily by the acquisitions of 3form and Zahner, which contributed $28 million to the increase in net sales and $5 million to the increase in operating income in the second quarter of 2025 compared to the prior-year period.
Second-Quarter Segment Results
Mineral Fiber
| (Dollar amounts in millions) | For the Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|---|
| 2025 | 2024 | Change | |||||
| Net sales | $ | 267.0 | $ | 250.2 | 6.7% | ||
| Operating income | $ | 98.4 | $ | 81.7 | 20.4% | ||
| Adjusted EBITDA* | $ | 121 | $ | 104 | 15.6% | ||
| Operating income margin | 36.9 | % | 32.7 | % | 420bps | ||
| Adjusted EBITDA margin* | 45.2 | % | 41.7 | % | 350bps |
Mineral Fiber net sales increased 6.7% in the second quarter of 2025 compared to the prior-year quarter due to $14 million of favorable AUV and $3 million of higher sales volumes, both of which were primarily driven by strong commercial execution and benefits from growth initiatives. The improvement in AUV was driven by both favorable like-for-like price and favorable mix.
Mineral Fiber operating income increased 20.4% year-over-year primarily due to an $8 million benefit from favorable AUV, a $6 million increase in WAVE equity earnings and a $4 million decrease in SG&A expenses.
Architectural Specialties
| (Dollar amounts in millions) | For the Three Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|---|
| 2025 | 2024 | Change | |||||
| Net sales | $ | 157.6 | $ | 114.9 | 37.2% | ||
| Operating income | $ | 25.6 | $ | 14.2 | 80.3% | ||
| Adjusted EBITDA* | $ | 34 | $ | 21 | 60.7% | ||
| Operating income margin | 16.2 | % | 12.4 | % | 380bps | ||
| Adjusted EBITDA margin* | 21.5 | % | 18.4 | % | 310bps |
Architectural Specialties net sales increased $43 million in the second quarter of 2025, driven primarily by a $28 million increase from the 2024 acquisitions of 3form and Zahner, in addition to increased organic net sales driven by strengthening broad-based penetration throughout our specialty product categories.
Architectural Specialties operating income increased 80.3% in the second quarter of 2025, driven by operating leverage and improved custom project margins on strong organic growth, in addition to contributions from the acquisitions of 3form and Zahner. The benefit from higher net sales was partially offset by a $4 million increase in
manufacturing costs and a $7 million increase in SG&A expenses, both of which were primarily attributable to the 2024 acquisitions.
Unallocated Corporate
Unallocated Corporate operating loss was $1 million in the second quarter of 2025 and 2024.
Cash Flow
Year-to-date cash flows from operating activities in 2025 increased $39 million or 46% in comparison to the prior-year period. The favorable change in operating cash flows was primarily driven by higher cash earnings and an increase in income taxes payable, partially offset by unfavorable timing-related working capital changes. Year-to-date cash flows from investing activities increased $95 million versus the prior-year period, primarily due to cash paid in 2024 for the 3form acquisition.
Share Repurchase Program
During the second quarter of 2025, we repurchased 0.2 million shares of common stock for a total cost of $30 million, excluding the cost of commissions and taxes. As of June 30, 2025, there was $610 million remaining under the Board of Directors' current authorized share repurchase program**.
** In July 2016, our Board of Directors approved our share repurchase program authorizing us to repurchase outstanding shares of common stock (the “Program”). Since inception of the Program, we have been authorized to repurchase up to an aggregate of $1,700 million of our outstanding shares of common stock through December 2026. Since inception and through June 30, 2025, we have repurchased 15.0 million shares under the Program for a total cost of $1,090 million, excluding commissions and taxes, or an average share price of $72.67 per share.
Updating 2025 Outlook
“We delivered strong profitability in the second quarter, highlighted by robust adjusted EBITDA margin expansion in both segments. Given these strong first half results, we are increasing our guidance for all key metrics,” said Chris Calzaretta, AWI Senior Vice President and CFO. “Given continued uncertainty in the macroeconomic backdrop, we remain focused on disciplined cost control and capital allocation. As a result of these efforts, we are well-positioned to deliver strong results for the remainder of the year as we continue to demonstrate the resilience of our business model and create value for our shareholders."
| For the Year Ended December 31, 2025 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollar amounts in millions except per-share data) | 2024 Actual | Current Guidance | VPY Growth % | |||||||
| Net sales | $ | 1,446 | $ | 1,600 | to | $ | 1,630 | 11% | to | 13% |
| Adjusted EBITDA* | $ | 486 | $ | 545 | to | $ | 560 | 12% | to | 15% |
| Adjusted diluted net earnings per share* | $ | 6.31 | $ | 7.15 | to | $ | 7.30 | 13% | to | 16% |
| Adjusted free cash flow* | $ | 298 | $ | 330 | to | $ | 345 | 11% | to | 16% |
Earnings Webcast
Management will host a live webcast conference call at 10:00 a.m. ET today, to discuss second-quarter 2025 results. This event will be available on the Company's website. The call and accompanying slide presentation can be found on the investor relations section of the Company's website at www.armstrongworldindustries.com. The replay of this event will be available on the website for up to one year after the date of the call.
Uncertainties Affecting Forward-Looking Statements
Disclosures in this release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, those relating to future financial and operational results, market and broader economic conditions and guidance. Those statements provide our future expectations or forecasts and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. This includes annual guidance. Forward-looking statements, by their nature, address matters that are uncertain and involve risks because they relate to events and depend on circumstances that may or may not occur in the future. As a result, our actual results may differ materially from our expected results and from those expressed in our forward-looking statements. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections of our reports on Form 10-K and Form 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”), including our quarterly report for the quarter ended June 30, 2025, that the Company expects to file today. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements beyond what is required under applicable securities law.
About Armstrong and Additional Information
Armstrong World Industries, Inc. (AWI) is an Americas leader in the design and manufacture of innovative interior and exterior architectural applications including ceilings, specialty walls and exterior metal solutions. For more than 160 years, Armstrong has delivered products and capabilities that enable architects, designers and contractors to transform building design and construction with elevated aesthetics, acoustics and sustainable attributes. With $1.4 billion in revenue in 2024, AWI has approximately 3,700 employees and a manufacturing network of 20 facilities, plus seven facilities dedicated to its WAVE joint venture.
More details on the Company’s performance can be found in its report on Form 10-Q for the quarter ended June 30, 2025, that the Company expects to file with the SEC today.
Contact
Investors & Media: Theresa Womble, tlwomble@armstrongceilings.com or (717) 396-6354
Reported Financial Results
(Amounts in millions, except per share data)
SELECTED FINANCIAL RESULTS
Armstrong World Industries, Inc. and Subsidiaries
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net sales | $ | 424.6 | $ | 365.1 | $ | 807.3 | $ | 691.4 | ||||
| Cost of goods sold | 248.8 | 215.8 | 481.6 | 417.8 | ||||||||
| Gross profit | 175.8 | 149.3 | 325.7 | 273.6 | ||||||||
| Selling, general and administrative expenses | 84.5 | 80.6 | 162.5 | 146.0 | ||||||||
| Equity (earnings) from unconsolidated affiliates, net | (31.9 | ) | (26.3 | ) | (58.5 | ) | (53.5 | ) | ||||
| Operating income | 123.2 | 95.0 | 221.7 | 181.1 | ||||||||
| Interest expense | 8.6 | 11.1 | 17.1 | 20.1 | ||||||||
| Other non-operating (income), net | (0.7 | ) | (3.2 | ) | (1.4 | ) | (6.3 | ) | ||||
| Earnings before income taxes | 115.3 | 87.1 | 206.0 | 167.3 | ||||||||
| Income tax expense | 27.5 | 21.2 | 49.1 | 41.5 | ||||||||
| Net earnings | $ | 87.8 | $ | 65.9 | $ | 156.9 | $ | 125.8 | ||||
| Diluted net earnings per share of common stock | $ | 2.01 | $ | 1.50 | $ | 3.59 | $ | 2.86 | ||||
| Average number of diluted common shares outstanding | 43.7 | 44.0 | 43.7 | 44.0 |
SEGMENT RESULTS
Armstrong World Industries, Inc. and Subsidiaries
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net Sales | ||||||||||||
| Mineral Fiber | $ | 267.0 | $ | 250.2 | $ | 512.1 | $ | 489.8 | ||||
| Architectural Specialties | 157.6 | 114.9 | 295.2 | 201.6 | ||||||||
| Total net sales | $ | 424.6 | $ | 365.1 | $ | 807.3 | $ | 691.4 | ||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Segment operating income (loss) | ||||||||||||
| Mineral Fiber | $ | 98.4 | $ | 81.7 | $ | 182.9 | $ | 160.9 | ||||
| Architectural Specialties | 25.6 | 14.2 | 40.4 | 21.9 | ||||||||
| Unallocated Corporate | (0.8 | ) | (0.9 | ) | (1.6 | ) | (1.7 | ) | ||||
| Total consolidated operating income | $ | 123.2 | $ | 95.0 | $ | 221.7 | $ | 181.1 |
SELECTED BALANCE SHEET INFORMATION
Armstrong World Industries, Inc. and Subsidiaries
| Unaudited | ||||
|---|---|---|---|---|
| June 30, 2025 | December 31, 2024 | |||
| Assets | ||||
| Current assets | $ | 375.6 | $ | 348.9 |
| Property, plant and equipment, net | 595.1 | 598.8 | ||
| Other non-current assets | 891.3 | 895.0 | ||
| Total assets | $ | 1,862.0 | $ | 1,842.7 |
| Liabilities and shareholders’ equity | ||||
| Current liabilities | $ | 232.9 | $ | 249.7 |
| Non-current liabilities | 791.3 | 835.9 | ||
| Shareholders' equity | 837.8 | 757.1 | ||
| Total liabilities and shareholders’ equity | $ | 1,862.0 | $ | 1,842.7 |
SELECTED CASH FLOW INFORMATION
Armstrong World Industries, Inc. and Subsidiaries
(Unaudited)
| For the Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Net earnings | $ | 156.9 | $ | 125.8 | ||
| Other adjustments to reconcile net earnings to net cash provided by operating activities | 8.7 | 3.6 | ||||
| Changes in operating assets and liabilities, net | (43.0 | ) | (45.7 | ) | ||
| Net cash provided by operating activities | 122.6 | 83.7 | ||||
| Net cash provided by (used for) investing activities | 13.2 | (81.4 | ) | |||
| Net cash (used for) provided by financing activities | (134.7 | ) | 1.1 | |||
| Effect of exchange rate changes on cash and cash equivalents | 0.7 | (0.6 | ) | |||
| Net increase in cash and cash equivalents | 1.8 | 2.8 | ||||
| Cash and cash equivalents at beginning of year | 79.3 | 70.8 | ||||
| Cash and cash equivalents at end of period | $ | 81.1 | $ | 73.6 |
Supplemental Reconciliations of GAAP to non-GAAP Results (unaudited)
(Amounts in millions, except per share data)
To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company provides additional measures of performance adjusted to exclude the impact of certain discrete expenses and income including adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), adjusted diluted earnings per share ("EPS") and adjusted free cash flow. Investors should not consider non-GAAP measures as a substitute for GAAP measures. The Company excludes certain acquisition related expenses (i.e. impact of adjustments related to the fair value of inventory, contingent third-party professional fees, changes in the fair value of contingent consideration and deferred compensation accruals for acquisitions). The Company also excludes all acquisition-related intangible amortization from adjusted net earnings and in calculations of adjusted diluted EPS. Examples of other excluded items have included plant closures, restructuring charges and related costs, separation costs and other cost reduction initiatives, environmental site expenses and environmental insurance recoveries, endowment level charitable contributions, the impact of defined benefit plan settlements, gains and losses on sales or impairment of fixed assets, and certain other gains and losses. The Company also excludes income/expense from its U.S. Retirement Income Plan (“RIP”) in the non-GAAP results as it represents the actuarial net periodic benefit credit/cost recorded. For all periods presented, the Company was not required and did not make cash contributions to the RIP based on guidelines established by the Pension Benefit Guaranty Corporation, nor does the Company expect to make cash contributions to the plan in 2025. Adjusted free cash flow is defined as cash from operating and investing activities, adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures, environmental site expenses and environmental insurance recoveries. Management's adjusted free cash flow measure includes returns of investment from WAVE and cash proceeds received from the settlement of company-owned life insurance policies, which are presented within investing activities on our condensed consolidated statement of cash flows. The Company uses these adjusted performance measures in managing the business, including communications with its Board of Directors and employees, and believes that they provide users of this financial information with meaningful comparisons of operating performance between current results and results in prior periods. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance, as well as prospects for its future performance. The Company also uses adjusted EBITDA and adjusted free cash flow (with further adjustments, when necessary) as factors in determining at-risk compensation for senior management. These non-GAAP measures may not be defined and calculated the same as similar measures used by other companies. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies. A reconciliation of these adjustments to the most directly comparable GAAP measures is included in this release and on the Company’s website. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures.
In the following charts, numbers may not sum due to rounding. Excluding adjusted diluted EPS, non-GAAP figures are rounded to the nearest million and corresponding percentages are rounded to the nearest percent based on unrounded figures.
Consolidated Results – Adjusted EBITDA
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net sales | $ | 425 | $ | 365 | $ | 807 | $ | 691 | ||||
| Net earnings | $ | 88 | $ | 66 | $ | 157 | $ | 126 | ||||
| Add: Income tax expense | 28 | 21 | 49 | 42 | ||||||||
| Earnings before income taxes | $ | 115 | $ | 87 | $ | 206 | $ | 167 | ||||
| Add: Interest/other income and expense, net | 8 | 8 | 16 | 14 | ||||||||
| Operating income | $ | 123 | $ | 95 | $ | 222 | $ | 181 | ||||
| Add: RIP expense (1) | 1 | 1 | 1 | 1 | ||||||||
| Add: Acquisition-related impacts (2) | - | 2 | - | 2 | ||||||||
| Add: WAVE pension settlement (3) | - | 1 | - | 1 | ||||||||
| Add: Environmental expense | - | 1 | - | 1 | ||||||||
| Adjusted operating income | $ | 124 | $ | 100 | $ | 223 | $ | 186 | ||||
| Add: Depreciation and amortization | 30 | 25 | 60 | 50 | ||||||||
| Adjusted EBITDA | $ | 154 | $ | 125 | $ | 283 | $ | 236 | ||||
| Operating income margin | 29.0 | % | 26.0 | % | 27.5 | % | 26.2 | % | ||||
| Adjusted EBITDA margin | 36.3 | % | 34.3 | % | 35.1 | % | 34.1 | % |
(1) RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP.
(2) Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration.
(3) Represents the Company's 50% share of WAVE's settlement of their defined benefit pension plan.
Mineral Fiber
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net sales | $ | 267 | $ | 250 | $ | 512 | $ | 490 | ||||
| Operating income | $ | 98 | $ | 82 | $ | 183 | $ | 161 | ||||
| Add: Acquisition-related impacts (1) | - | 1 | - | - | ||||||||
| Add: WAVE pension settlement (2) | - | 1 | - | 1 | ||||||||
| Add: Environmental expense | - | 1 | - | 1 | ||||||||
| Adjusted operating income | $ | 98 | $ | 85 | $ | 183 | $ | 164 | ||||
| Add: Depreciation and amortization | 22 | 20 | 43 | 40 | ||||||||
| Adjusted EBITDA | $ | 121 | $ | 104 | $ | 226 | $ | 203 | ||||
| Operating income margin | 36.9 | % | 32.7 | % | 35.7 | % | 32.9 | % | ||||
| Adjusted EBITDA margin | 45.2 | % | 41.7 | % | 44.1 | % | 41.5 | % |
(1) Represents the impact of acquisition-related adjustments for changes in fair value of contingent consideration.
(2) Represents the Company's 50% share of WAVE's settlement of their defined benefit pension plan.
Architectural Specialties
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net sales | $ | 158 | $ | 115 | $ | 295 | $ | 202 | ||||
| Operating income | $ | 26 | $ | 14 | $ | 40 | $ | 22 | ||||
| Add: Acquisition-related impacts (1) | - | 1 | - | 1 | ||||||||
| Adjusted operating income | $ | 26 | $ | 15 | $ | 40 | $ | 23 | ||||
| Add: Depreciation and amortization | 8 | 6 | 17 | 10 | ||||||||
| Adjusted EBITDA | $ | 34 | $ | 21 | $ | 58 | $ | 33 | ||||
| Operating income margin | 16.2 | % | 12.4 | % | 13.7 | % | 10.9 | % | ||||
| Adjusted EBITDA margin | 21.5 | % | 18.4 | % | 19.5 | % | 16.5 | % |
(1) Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration.
Unallocated Corporate
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Operating (loss) | $ | (1 | ) | $ | (1 | ) | $ | (2 | ) | $ | (2 | ) |
| Add: RIP expense (1) | 1 | 1 | 1 | 1 | ||||||||
| Adjusted operating (loss) | $ | - | $ | - | $ | (1 | ) | $ | (1 | ) | ||
| Add: Depreciation and amortization | - | - | - | - | ||||||||
| Adjusted EBITDA | $ | - | $ | - | $ | - | $ | - |
(1) RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP.
Consolidated Results – Adjusted Free Cash Flow
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||
| Net cash provided by operating activities | $ | 82 | $ | 57 | $ | 123 | $ | 84 | ||||
| Net cash provided by (used by) investing activities | 7 | (87 | ) | 13 | (81 | ) | ||||||
| Net cash provided by (used by) operating and investing activities | $ | 89 | $ | (30 | ) | $ | 136 | $ | 2 | |||
| (Less)/Add: Acquisitions, net of cash acquired and investment in unconsolidated affiliate | (1 | ) | 94 | (1 | ) | 99 | ||||||
| Add: Contingent consideration in excess of acquisition-date fair value (1) | - | - | 1 | - | ||||||||
| Add: Arktura deferred compensation (1) | - | - | - | 6 | ||||||||
| (Less): Proceeds from sale of facility (2) | - | (2 | ) | - | (2 | ) | ||||||
| Adjusted Free Cash Flow | $ | 88 | $ | 62 | $ | 136 | $ | 105 |
(1) Deferred compensation and contingent consideration payments related to acquisitions that were recorded as components of net cash provided by operating activities.
(2) Proceeds related to the sale of Architectural Specialties design center.
Consolidated Results – Adjusted Diluted Earnings Per Share (EPS)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||
| Total | Per Diluted<br>Share | Total | Per Diluted<br>Share | Total | Per Diluted<br>Share | Total | Per Diluted<br>Share | |||||||||||||
| Net earnings | $ | 88 | $ | 2.01 | $ | 66 | $ | 1.50 | $ | 157 | $ | 3.59 | $ | 126 | $ | 2.86 | ||||
| Add: Income tax expense | 28 | 21 | 49 | 42 | ||||||||||||||||
| Earnings before income taxes | $ | 115 | $ | 87 | $ | 206 | $ | 167 | ||||||||||||
| Add: Acquisition-related impacts (1) | - | 2 | - | 2 | ||||||||||||||||
| Add: Acquisition-related amortization (2) | 4 | 3 | 9 | 5 | ||||||||||||||||
| Add: WAVE pension settlement (3) | - | 1 | - | 1 | ||||||||||||||||
| Add: Environmental expense | - | 1 | - | 1 | ||||||||||||||||
| Adjusted net earnings before income taxes | $ | 120 | $ | 94 | $ | 215 | $ | 176 | ||||||||||||
| (Less): Adjusted income tax expense (4) | (29 | ) | (23 | ) | (51 | ) | (44 | ) | ||||||||||||
| Adjusted net earnings | $ | 91 | $ | 2.09 | $ | 71 | $ | 1.62 | $ | 164 | $ | 3.76 | $ | 132 | $ | 3.00 | ||||
| Adjusted diluted EPS change versus prior year | 29.0% | 25.3% | ||||||||||||||||||
| Diluted shares outstanding | 43.7 | 44.0 | 43.7 | 44.0 | ||||||||||||||||
| Effective tax rate | 24% | 24% | 24% | 25% |
(1) Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration.
(2) Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles.
(3) Represents the Company's 50% share of WAVE's non-cash accounting loss upon settlement of their defined benefit pension plan.
(4) Adjusted income tax expense is calculated using the effective tax rate multiplied by the adjusted net earnings before income taxes.
Adjusted EBITDA Guidance
| For the Year Ending December 31, 2025 | |||||||
|---|---|---|---|---|---|---|---|
| Low | High | ||||||
| Net earnings | $ | 300 | to | $ | 304 | ||
| Add: Income tax expense | 92 | 97 | |||||
| Earnings before income taxes | $ | 392 | to | $ | 402 | ||
| Add: Interest expense | 34 | 36 | |||||
| Add: Other non-operating (income), net | (2 | ) | (1 | ) | |||
| Operating income | $ | 425 | to | $ | 436 | ||
| Add: RIP expense (1) | 2 | 2 | |||||
| Adjusted operating income | $ | 427 | to | $ | 438 | ||
| Add: Depreciation and amortization | 117 | 122 | |||||
| Adjusted EBITDA | $ | 545 | to | $ | 560 |
(1) RIP expense represents only the plan service cost that is recorded within Operating income. We do not expect to make cash contributions to our RIP.
Adjusted Diluted Net Earnings Per Share Guidance
| For the Year Ending December 31, 2025 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Low | Per Diluted<br>Share(1) | High | Per Diluted<br>Share(1) | ||||||||
| Net earnings | $ | 300 | $ | 6.93 | to | $ | 304 | $ | 6.99 | ||
| Add: Income tax expense | 92 | 97 | |||||||||
| Earnings before income taxes | $ | 392 | to | $ | 402 | ||||||
| Add: RIP cost (2) | 1 | 1 | |||||||||
| Add: Acquisition-related amortization (3) | 16 | 18 | |||||||||
| Adjusted earnings before income taxes | $ | 410 | to | $ | 421 | ||||||
| (Less): Adjusted income tax expense (4) | (99 | ) | (103 | ) | |||||||
| Adjusted net earnings | $ | 311 | $ | 7.15 | to | $ | 318 | $ | 7.30 |
(1) Adjusted diluted EPS guidance for 2025 is calculated based on approximately 43 to 44 million of diluted shares outstanding.
(2) RIP cost represents the entire actuarial net periodic pension cost recorded as a component of net earnings. We do not expect to make any cash contributions to our RIP.
(3) Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles.
(4) Income tax expense is based on an adjusted effective tax rate of approximately 24%, multiplied by adjusted earnings before income taxes.
Adjusted Free Cash Flow Guidance
| For the Year Ending December 31, 2025 | |||||||
|---|---|---|---|---|---|---|---|
| Low | High | ||||||
| Net cash provided by operating activities (1) | $ | 322 | to | $ | 339 | ||
| Add: Return of investment from joint venture | 108 | 116 | |||||
| Less: Capital expenditures | (100 | ) | (110 | ) | |||
| Adjusted Free Cash Flow | $ | 330 | to | $ | 345 |
(1) Net cash provided by operating activities is based on a normalized cash tax rate including the impact of 2025 tax reform.
2nd Quarter 2025 Earnings Presentation July 29, 2025 Exhibit 99.2
Safe Harbor Statement Disclosures in this presentation contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including without limitation, those relating to future financial and operational results, market and broader economic conditions and guidance. Those statements provide our future expectations or forecasts and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” “target,” “predict,” “may,” “will,” “would,” “could,” “should,” “seek,” and other words or phrases of similar meaning in connection with any discussion of future operating or financial performance. This includes annual guidance. Forward-looking statements, by their nature, address matters that are uncertain and involve risks because they relate to events and depend on circumstances that may or may not occur in the future. As a result, our actual results may differ materially from our expected results and from those expressed in our forward-looking statements. A more detailed discussion of the risks and uncertainties that could cause our actual results to differ materially from those projected, anticipated or implied is included in the “Risk Factors” and “Management’s Discussion and Analysis” sections of our reports on Form 10-K and Form 10-Q filed with the U.S. Securities and Exchange Commission (“SEC”), including our quarterly report for the quarterly period ended June 30, 2025, that the Company expects to file today. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements beyond what is required under applicable securities law. In addition, we will be referring to non-Generally Accepted Accounting Principles (“GAAP”) financial measures within the meaning of SEC Regulation G. A reconciliation of the differences between these measures with the most directly comparable financial measures calculated in accordance with GAAP are included within this presentation and available on the Investor Relations page of our website at www.armstrongceilings.com. The guidance in this presentation is only effective as of the date given, July 29, 2025, and will not be updated or affirmed unless and until we publicly announce updated or affirmed guidance.
Basis of Presentation Explanation Results throughout this presentation are presented on a normalized basis. We remove the impact of certain discrete expenses and income in certain measures including adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), adjusted diluted earnings per share (“EPS”) and adjusted free cash flow. The Company excludes certain acquisition related expenses (i.e. – impact of adjustments related to the fair value of inventory, contingent third-party professional fees, changes in the fair value of contingent consideration and deferred compensation accruals for acquisitions). The Company also excludes all acquisition-related intangible amortization from adjusted net earnings and in calculations of adjusted diluted EPS. Examples of other excluded items have included plant closures, restructuring charges and related costs, impairments, separation costs and other cost reduction initiatives, environmental site expenses and environmental insurance recoveries, endowment level charitable contributions, the impact of defined benefit plan settlements, gains and losses on sales or impairment of fixed assets, and certain other gains and losses. The Company also excludes income/expense from its U.S. Retirement Income Plan (“RIP”) in the non-GAAP results as it represents the actuarial net periodic benefit credit/cost recorded. For all periods presented, the Company was not required to and did not make cash contributions to the RIP based on guidelines established by the Pension Benefit Guaranty Corporation, nor does the Company expect to make cash contributions to the plan in 2025. Adjusted free cash flow is defined as cash from operating and investing activities, adjusted to remove the impact of cash used or proceeds received for acquisitions and divestitures, environmental site expenses and environmental insurance recoveries. Management's adjusted free cash flow measure includes returns of investment from the Worthington Armstrong Venture (“WAVE”) and cash proceeds received from the settlement of company-owned life insurance policies, which are presented within investing activities on our condensed consolidated statement of cash flows. Investors should not consider non-GAAP measures as a substitute for GAAP measures. Excluding adjusted diluted EPS, non-GAAP figures are rounded to the nearest million and corresponding percentages are based on unrounded figures. Operating Segments: “MF”: Mineral Fiber, “AS”: Architectural Specialties, “UC”: Unallocated Corporate. We define “organic” as total company and/or AS results excluding the impact of the April 2024 acquisition of 3form, LLC (“3form”) and the December 2024 acquisition of A. Zahner Company (“Zahner”). All dollar figures throughout the presentation are in $ millions, expect per share data, and all comparisons are versus prior year unless otherwise noted. Figures may not sum due to rounding.
GAAP and non-GAAP Financial Results AWI Consolidated Results Q2 2025 Q2 2024 YTD 2025 YTD 2024 Net sales $424.6 $365.1 $807.3 $691.4 Net earnings $87.8 $65.9 $156.9 $125.8 Operating income $123.2 $95.0 $221.7 $181.1 Adj. EBITDA* $154 $125 $283 $236 Operating income margin (operating income % of net sales) 29.0% 26.0% 27.5% 26.2% Adj. EBITDA margin* (Adj. EBITDA % of net sales) 36.3% 34.3% 35.1% 34.1% Diluted net earnings per share $2.01 $1.50 $3.59 $2.86 Adj. diluted net earnings per share* $2.09 $1.62 $3.76 $3.00 Net cash provided by (used for) operating & investing activities $88.8 ($30.0) $135.8 $2.3 Adj. free cash flow* $88 $62 $136 $105 Net cash provided by (used for) operating & investing activities % of net sales 20.9% (8.2%) 16.8% 0.3% Adj. free cash flow margin* (Adj. free cash flow % of net sales) 20.7% 16.9% 16.8% 15.2% Segment Results Q2 2025 Q2 2024 MF AS UC MF AS UC Net sales $267.0 $157.6 - $250.2 $114.9 - Operating income (loss) $98.4 $25.6 ($0.8) $81.7 $14.2 ($0.9) Adj. EBITDA* $121 $34 - $104 $21 - Operating income margin (operating income % of net sales) 36.9% 16.2% NM 32.7% 12.4% NM Adj. EBITDA margin* (Adj. EBITDA % of net sales) 45.2% 21.5% NM 41.7% 18.4% NM *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. “NM”: Not meaningful.
$425M (+16% VPY) Net Sales $154 (+23% VPY) Adj. EBITDA* $2.09 (+29% VPY) Adj. Diluted EPS* $88M (+42% VPY) Adj. Free Cash Flow* 2nd Quarter 2025 Key Takeaways Double-Digit Top and Bottom-Line Growth *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Average Unit Value (“AUV”). Includes both like-for-like price and mix impacts. Worthington Armstrong Joint Venture (“WAVE”). Recent acquisitions include 3form and Zahner. Net Sales up 16% and Adj. EBITDA* up 23% Total company Adj. EBITDA margin* of 36.3% with EBITDA margin* expansion of 200bps Mineral Fiber segment Adj. EBITDA* up 16% Adj. EBITDA margin* expanded 350bps to 45.2%, with solid AUV1, strong contribution from WAVE2 equity earnings and positive volumes Architectural Specialties segment Adj. EBITDA* up 61% Organic growth and recent acquisitions3 drove robust AS results; Adj. EBITDA margin* expanded 310bps to 21.5%; Organic Adj. EBITDA margin* of 22.1% Raising 2025 Guidance Expect double-digit growth in all key metrics
Mineral Fiber Q2 2025 Results Solid Sales Growth with Strong Adj. EBITDA Margin* Expansion *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Excludes the change in depreciation and amortization throughout the presentation. Includes raw material, energy and freight impacts, in addition to inventory valuation impacts. Net Sales Growth VPY Q2 Mineral Fiber Key Highlights ● Adj. EBITDA margin* expanded 350bps to 45.2% ● Solid top-line growth with AUV of 5%, driven by like-for-like price and favorable mix, along with modest volume contribution ● Lower manufacturing costs, driven by productivity gains, partially offset input cost inflation ● Well-controlled SG&A expenses contribute to Adj. EBITDA margin* expansion ● Strong WAVE contribution with margin improvement and higher volumes Adj. EBITDA* VPY Q1 Q2 2024 Adj. EBITDA* $99 $104 AUV 8 8 Volume (7) 2 Manufacturing1 1 1 Input Costs2 2 (2) SG&A1 3 3 WAVE Equity Earnings (1) 5 2025 Adj. EBITDA* $105 $121 % Change 7% 16% +7%
Architectural Specialties Q2 2025 Results Robust Results Driven by Organic Growth & Recent Acquisitions *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Excludes the change in depreciation and amortization throughout the presentation. Adj. EBITDA* VPY Q1 Q2 2024 Adj. EBITDA* $12 $21 Sales 27 23 Manufacturing1 (3) (3) SG&A1 (12) (7) 2025 Adj. EBITDA* $24 $34 % Change 94% 61% Q2 Architectural Specialties Key Highlights ● Robust sales and earnings growth with Adj. EBITDA margin* expansion of 310bps ● Better-than-expected sales growth from 2024 acquisitions of 3form and Zahner ● AS organic* sales up 15% and Adj. EBITDA margin* expanded 300bps ● Increased operating expenses driven primarily by 3form and Zahner ● Strong order intake expected to support solid organic growth for the year Net Sales Growth VPY +37%
Q2 2025 Consolidated Company Key Metrics Strong Results in Both Segments Drove Robust Top and Bottom-Line Growth Q2 2024 Q2 2025 Variance Net Sales $365 $425 16% Adj. EBITDA* $125 $154 23% Adj. EBITDA Margin* (Adj. EBITDA % of Net Sales) 34.3% 36.3% 200bps AWI Organic Adj. EBITDA Margin* (Adj. EBITDA % of Net Sales) 35.3% 38.3% 300bps Adj. Diluted Earnings Per Share* $1.62 $2.09 29% 1 2 1 *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Excludes the change in depreciation and amortization throughout the presentation. Includes raw material, energy and freight impacts, in addition to inventory valuation impacts.
First Half 2025 Consolidated Company Key Metrics Solid Execution Through First Half of 2025 YTD 2024 YTD 2025 Variance Net Sales $691 $807 17% Adj. EBITDA* $236 $283 20% Adj. EBITDA Margin* (Adj. EBITDA % of Net Sales) 34.1% 35.1% 100bps AWI Organic Adj. EBITDA Margin* (Adj. EBITDA % of Net Sales) 34.6% 37.0% 240bps Adj. Diluted Net Earnings Per Share* $3.00 $3.76 25% Adj. Free Cash Flow* $105 $136 29% *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Excludes the change in depreciation and amortization throughout the presentation. Includes raw material, energy and freight impacts, in addition to inventory valuation impacts.
Deploying Adj. Free Cash Flow* to Fund All Capital Allocation Priorities 2025 Year to Date Capital Deployment 2025 Year to Date Adj. Free Cash Flow* Up 29% vs PY *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Includes cash earnings, working capital, and other current assets and liabilities and proceeds from company-owned officer life insurance. 2024 Adj. Operating cash flow and other1 CapEx Interest Paid WAVE Dividends 2025
Remaining focused on solid execution and margin expansion Raising Full Year 2025 Guidance Commentary1 Net Sales Adj. Diluted EPS* Adj. EBITDA* Adj. Free Cash Flow* $1,600M to $1,630M 11% to 13% YoY Still expecting a softer second half … Mineral Fiber volume flat to down low-single-digits for the year Expect Mineral Fiber AUV growth >6% … delivering Adj. EBITDA margin* expansion WAVE equity earnings to grow high-single digits Strong execution and order intake supports improved organic Architectural Specialties’ outlook for the full year 2024 acquisitions of 3form and Zahner performing better than expected *Non-GAAP measure. See appendix for reconciliation to nearest GAAP measure. Additional assumptions available in the appendix of this presentation. $545M to $560M 12% to 15% YoY $330M to $345M 11% to 16% YoY $7.15 to $7.30 13% to 16% YoY Prior: $1,570M to $1,610M 9% to 11% YoY Prior: $525M to $545M 8% to 12% YoY Prior: $6.85 to $7.15 9% to 13% YoY Prior: $315M to $335M 6% to 12% YoY
Appendix
Updating Full Year 2025 Assumptions Segment Net Sales Adjusted EBITDA Margin* Mineral Fiber ~5% growth ~ 43% (prior: ~42%) Architectural Specialties >25% growth (prior: >20%) ~ 19% (prior: ~18%) Consolidated Metrics Full Year 2025 Capital expenditures $100M to $110M (prior: $90M-$100M) Depreciation and amortization $117M to $122M (prior: $115M-$120M) Interest expense ~$35M Book / cash tax rate1 ~24% / ~22% (prior: ~24% / ~25%) Shares outstanding ~43 to 44M Cash return of investment from joint venture $108M to $116M Shipping Days vs Prior Year 2024 2025 Q1 - (1) Q2 - - Q3 +1 - Q4 +1 - Full Year +2 (1) 13 *Non-GAAP measure. 1. Normalized cash tax rate including impact of 2025 tax reform.
RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP. Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration. Represents the Company's 50% share of WAVE's settlement of their defined benefit pension plan. Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements and other intangibles. Adjusted income tax expense is calculated using the effective tax rate multiplied by the adjusted net earnings before income taxes. For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Net sales $425 $365 $807 $691 Net earnings $88 $66 $157 $126 Add: Income tax expense 28 21 49 42 Earnings before income taxes $115 $87 $206 $167 Add: Interest/other income and expense, net 8 8 16 14 Operating income $123 $95 $222 $181 Add: RIP expense1 1 1 1 1 Add: Acquisition-related impacts2 - 2 - 2 Add: WAVE pension settlement3 - 1 - 1 Add: Environmental expense - 1 - 1 Adjusted operating income $124 $100 $223 $186 Add: Depreciation and amortization 30 25 60 50 Adjusted EBITDA $154 $125 $283 $236 Operating income margin 29.0% 26.0% 27.5% 26.2% Adjusted EBITDA margin 36.3% 34.3% 35.1% 34.1% For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Net earnings $88 $66 $157 $126 Add: Income tax expense 28 21 49 42 Earnings before income taxes $115 $87 $206 $167 Add: Acquisition-related impacts2 - 2 - 2 Add: Acquisition-related amortization4 4 3 9 5 Add: WAVE pension settlement3 - 1 - 1 Add: Environmental expense - 1 - 1 Adjusted net earnings before income taxes $120 $94 $215 $176 (Less): Adjusted income tax expense5 (29) (23) (51) (44) Adjusted net earnings $91 $71 $164 $132 Diluted shares outstanding 43.7 44.0 43.7 44.0 Effective tax rate 24% 24% 24% 25% Diluted net earnings per share $2.01 $1.50 $3.59 $2.86 Adjusted diluted net earnings per share $2.09 $1.62 $3.76 $3.00 Adjusted EBITDA Reconciliation Adjusted Diluted EPS Reconciliation
Deferred compensation and contingent consideration payments related to acquisitions that were recorded as components of net cash provided by operating activities. Proceeds related to the sale of Architectural Specialties design center. For the Three Months Ended June 30, For the Six Months Ended June 30, 2025 2024 2025 2024 Net cash provided by operating activities $82 $57 $123 $84 Net cash provided by (used for) investing activities $7 ($87) $13 ($81) Net cash provided by (used for) operating and investing activities $89 ($30) $136 $2 (Less)/Add: Acquisitions, net of cash acquired and investment in unconsolidated affiliate (1) 94 (1) 99 Add: Contingent consideration in excess of acquisition-date fair value1 - - 1 - Add: Arktura deferred compensation1 - - - 6 (Less): Proceeds from sale of facility2 - (2) - (2) Adjusted Free Cash Flow $88 $62 $136 $105 Adjusted Free Cash Flow Reconciliation
For the Three Months Ended June 30, For the Six Months Ended June 30, MF AS UC UNALLOCATED CORPORATE MF AS UC UNALLOCATED CORPORATE 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 Net sales $267 $250 $158 $115 - - $512 $490 $295 $202 - - Operating income (loss) $98 $82 $26 $14 ($1) ($1) $183 $161 $40 $22 ($2) ($2) Add: RIP expense1 - - - - 1 1 - - - - 1 1 Add: Acquisition-related impacts2 - 1 - 1 - - - - - 1 - Add: WAVE pension settlement3 - 1 - - - - - 1 - - - Add: Environmental expense - 1 - - - - - 1 - - - Adjusted operating income (loss) $98 $85 $26 $15 - - $183 $164 $40 $23 ($1) ($1) Add: Depreciation and amortization 22 20 8 6 - - 43 40 17 10 - - Adjusted EBITDA $121 $104 $34 $21 - - $226 $203 $58 $33 - - Operating income margin (Operating income % of net sales) 36.9% 32.7% 16.2% 12.4% NM NM 35.7% 32.9% 13.7% 10.9% NM NM Adjusted EBITDA margin (Adjusted EBITDA % of net sales) 45.2% 41.7% 21.5% 18.4% NM NM 44.1% 41.5% 19.5% 16.5% NM NM Segment Adj. EBITDA Reconciliation RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP. Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration. Represents the Company's 50% share of WAVE's settlement of their defined benefit pension plan.
For the Three Months Ended June 30, For the Six Months Ended June 30, Total AS Recent Acquisitions1 AS Organic UNALLOCATED CORPORATE Total AS Recent Acquisitions1 AS Organic UNALLOCATED CORPORATE 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 Net sales $158 $115 $45 $17 $113 $98 $295 $202 $86 $17 $209 $185 Operating income $26 $14 $5 - $21 $14 $40 $22 $8 - $32 $22 Add: Acquisition-related impacts2 - 1 - - - 1 - 1 - - - 1 Adjusted operating income $26 $15 $5 - $21 15 $40 $23 $8 - $32 23 Add: Depreciation and amortization 8 6 4 2 4 4 17 10 8 2 9 8 Adjusted EBITDA $34 $21 $9 $2 $25 $19 $58 $33 $16 $2 $41 $31 Operating income margin (Operating income % of net sales) 16.2% 12.4% 11.3% 0.6% 18.2% 14.4% 13.7% 10.9% 9.5% 0.6% 15.4% 11.8% Adjusted EBITDA margin (Adjusted EBITDA % of net sales) 21.5% 18.4% 20.0% 14.1% 22.1% 19.1% 19.5% 16.5% 18.9% 14.1% 19.7% 16.7% AS Organic Adj. EBITDA Reconciliation Recent acquisitions include the April 2024 acquisition of 3form and the December 2024 acquisition of Zahner. Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration.
For the Three Months Ended June 30, For the Six Months Ended June 30, Total AWI Recent Acquisitions1 AWI Organic UNALLOCATED CORPORATE Total AWI Recent Acquisitions1 AWI Organic UNALLOCATED CORPORATE 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 2025 2024 Net sales $425 $365 $45 $17 $380 $348 $807 $691 $86 $17 $721 $675 Operating income $123 $95 $5 - $118 $95 $222 $181 $8 - $214 $181 Add: RIP expense2 1 1 - - 1 1 1 1 - - 1 1 Add: Acquisition-related impacts3 - 2 - - - 2 - 2 - - - 2 Add: WAVE pension settlement4 - 1 - - - 1 - 1 - - - 1 Add: Environmental expense - 1 - - - 1 - 1 - - - 1 Adjusted operating income $124 $100 $5 - $119 $99 $223 $186 $8 - $215 $186 Add: Depreciation and amortization 30 25 4 2 27 24 60 50 8 2 52 48 Adjusted EBITDA $154 $125 $9 $2 $145 $123 $283 $236 $16 $2 $267 $234 Operating income margin (Operating income % of net sales) 29.0% 26.0% 11.3% 0.6% 31.1% 27.2% 27.5% 26.2% 9.5% 0.6% 29.6% 26.8% Adjusted EBITDA margin (Adjusted EBITDA % of net sales) 36.3% 34.3% 20.0% 14.1% 38.3% 35.3% 35.1% 34.1% 18.9% 14.1% 37.0% 34.6% AWI Organic Adj. EBITDA Reconciliation Recent acquisitions include the April 2024 acquisition of 3form and the December 2024 acquisition of Zahner. RIP expense represents only the plan service cost that is recorded within Operating income. For all periods presented, we were not required to and did not make cash contributions to our RIP. Represents the impact of acquisition-related adjustments for the fair value of inventory, contingent third-party professional fees and changes in fair value of contingent consideration. Represents the Company's 50% share of WAVE's settlement of their defined benefit pension plan.
Full Year 2025 Low High Net earnings $300 $304 Add: Income tax expense 92 97 Earnings before income taxes $392 $402 Add: Interest expense 34 36 Add: Other non-operating (income), net (2) (1) Operating income $425 $436 Add: RIP expense1 2 2 Adjusted operating income $427 $438 Add: Depreciation and amortization 117 122 Adjusted EBITDA $545 $560 RIP expense represents only the plan service cost that is recorded within Operating income. We do not expect to make cash contributions to our RIP. Net cash provided by operating activities is based on a normalized cash tax rate including the impact of 2025 tax reform. RIP cost represents the entire actuarial net periodic pension cost recorded as a component of net earnings. We do not expect to make any cash contributions to our RIP. Represents acquisition-related intangible amortization, including customer relationships, developed technology, software, trademarks and brand names, non-compete agreements, trade secrets and other intangibles. Adjusted income tax expense is based on an adjusted effective tax rate of approximately 24%, multiplied by adjusted earnings before income taxes. Adjusted diluted EPS guidance for 2025 is calculated based on approximately 43 to 44 million of diluted shares outstanding. 2025 Adj. EBITDA Guidance Reconciliation 19 Full Year 2025 Low High Net earnings $300 $304 Add: Income tax expense 92 97 Earnings before income taxes $392 $402 Add: RIP cost3 1 1 Add: Acquisition-related amortization4 16 18 Adjusted earnings before income taxes $410 $421 (Less): Adjusted income tax expense5 (99) (103) Adjusted net earnings $311 $318 Diluted net earnings per share $6.93 $6.99 Adjusted diluted net earnings per share6 $7.15 $7.30 2025 Adj. Diluted EPS Guidance Reconciliation Full Year 2025 Low High Net cash provided by operating activities2 $322 $339 Add: Return of investment from joint venture 108 116 (Less): Capital expenditures (100) (110) Adjusted Free Cash Flow $330 $345 2025 Adj. Free Cash Flow Guidance Reconciliation