Executive Summary

Record Q3 performance with net sales up 10% to $425.2M and adjusted diluted EPS up 13% to $2.05; management raised full‑year 2025 guidance across all key metrics .
Consolidated adjusted EBITDA rose 6% to $148M with margin compression of 120 bps from timing-related cost headwinds (higher incentives and medical claims); management said margins would have expanded excluding ~$6M discrete costs .
Versus S&P Global consensus, AWI delivered small beats on revenue ($425.2M vs $423.5M*) and Primary EPS ($2.05 vs $2.02*); Street EBITDA definitions differ from AWI’s adjusted EBITDA disclosure (see Estimates Context) .
Architectural Specialties net sales +17.6% (acquisitions + organic growth), while Mineral Fiber delivered a second straight quarter of positive volume and ~6% AUV growth; both segments expected to expand margins for FY25 .

What Went Well and What Went Wrong

What Went Well
- “Record-setting” Q3 net sales and earnings; Mineral Fiber AUV strong, second consecutive quarter of positive volume, and double‑digit AS growth .
- Raised 2025 guidance across net sales, adjusted EBITDA, adjusted EPS, and adjusted FCF on solid YTD execution and stabilizing markets .
- Digital initiatives gaining traction: ProjectWorks boosting win rates and Canopy delivered record sales and EBITDA in the quarter .
What Went Wrong
- Adjusted EBITDA margin compressed 120 bps YoY (to 34.7%) due to timing‑related discrete costs in both segments (incentive comp and higher‑than‑normal medical claims) .
- Architectural Specialties margins diluted by recent acquisitions; AS adj. EBITDA margin 18.8% vs 20.1% prior year (organic ~19.8%) .
- Mix headwind from stronger big‑box/retail in Q3 moderated AUV versus prior quarters; management expects AUV to remain strong into Q4 (~6% FY) .

Financial Results

Consolidated metrics

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	$386.6	$424.6	$425.2
Operating Income ($M)	$111.3	$123.2	$117.2
Operating Margin (%)	28.8%	29.0%	27.6%
Adjusted EBITDA ($M)	$139	$154	$148
Adjusted EBITDA Margin (%)	35.9%	36.3%	34.7%
Diluted EPS (GAAP)	$1.75	$2.01	$1.98
Adjusted Diluted EPS	$1.81	$2.09	$2.05

Segment performance

Segment	Metric	Q3 2024	Q2 2025	Q3 2025
Mineral Fiber	Net Sales ($M)	$258.0	$267.0	$274.0
	Operating Income ($M)	$93.0	$98.4	$98.7
	Adjusted EBITDA ($M)	$113	$121	$119
	Adjusted EBITDA Margin (%)	43.9%	45.2%	43.6%
Architectural Specialties	Net Sales ($M)	$128.6	$157.6	$151.2
	Operating Income ($M)	$19.2	$25.6	$19.3
	Adjusted EBITDA ($M)	$26	$34	$28
	Adjusted EBITDA Margin (%)	20.1%	21.5%	18.8%

KPIs and cash/returns

KPI	Q3 2024	Q3 2025
Mineral Fiber AUV YoY	+? (implicit favorable AUV)	~+6% (MF AUV growth)
Mineral Fiber Volume	Slightly negative prior	Slightly positive; second consecutive quarter >0
WAVE Equity Earnings ($M)	$25.2	$28.0
Adjusted Free Cash Flow ($M)	$107	$123
Share Repurchases	N/A	0.1M shares for $27M
Dividend	N/A	10% increase to $0.339/sh (declared 10/22/25)

Notes:

Consolidated YoY growth drivers: +$24M volume, +$14M AUV; AS +$23M, MF +$16M .
Total discrete cost headwind in Q3 ~ $6M affecting both Mfg and SG&A .

Guidance Changes

Metric	Period	Previous Guidance (7/29/25)	Current Guidance (10/28/25)	Change
Net Sales ($M)	FY 2025	$1,600 – $1,630	$1,623 – $1,638	Raised
Adjusted EBITDA ($M)	FY 2025	$545 – $560	$553 – $563	Raised
Adjusted Diluted EPS	FY 2025	$7.15 – $7.30	$7.45 – $7.55	Raised
Adjusted Free Cash Flow ($M)	FY 2025	$330 – $345	$342 – $352	Raised
Capex ($M)	FY 2025	$100 – $110	$105 – $110	Maintained/Tightened
D&A ($M)	FY 2025	$117 – $122	$119 – $122	Narrowed
Interest Expense ($M)	FY 2025	~$35	~$33	Lower
Book/Cash Tax Rate	FY 2025	~24% / ~22%	~23% / ~22%	Slightly lower book rate
Shares (diluted)	FY 2025	~43–44M	~43–44M	Unchanged
JV Return ($M)	FY 2025	$108 – $116	$112 – $114	Refined

Additional assumptions: MF volume flat to down ~1%; MF AUV ~6%; WAVE equity earnings growth ~6%; MF adj. EBITDA margin ~43%; AS adj. EBITDA margin ~19% (organic ~20%) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Digital initiatives (ProjectWorks, Canopy)	Emphasis on “digital tools” supporting growth (Q2) ; no specific detail in Q1 PR	ProjectWorks boosts win rates; Canopy delivered record sales and EBITDA in Q3	Strengthening impact
Macro/tariffs	Elevated macro uncertainty; softer H2 expected (Q1) ; uncertainty persists (Q2)	Tariffs earlier increased uncertainty; now “stabilizing” conditions into Q4	From uncertain to stable
Office end market	Not highlighted	Early “green shoots”; vacancy declining; broadening across ~18 regions; tenant improvements starting	Improving
Transportation/airports	Not highlighted	Additional federal airport funds; multi‑year opportunity; strong pipeline	Positive
Data centers	Not highlighted	Robust opportunity; launching tile and structural grid products	Positive
AUV/pricing	Strong MF AUV across periods (Q1/Q2)	MF AUV ~6%; big‑box strength modestly weighed mix in Q3	Still strong; mix noise
Costs/margins	Margin expansion in both segments (Q2)	~$6M discrete costs (incentive/medical) compressed margins; not expected to recur	Temporary headwind
Innovation (Templok)	Not highlighted	Upgraded Templok launched; Macon plant capacity added; pilot reduced cooling demand and delayed AC by ~2 hours	Scaling

Management Commentary

CEO Vic Grizzle on execution and results: “Record-setting, third-quarter net sales and earnings with strong Mineral Fiber AUV… and double-digit net sales growth in Architectural Specialties… overcame lingering market softness and some timing-related cost headwinds” .
CFO Chris Calzaretta on guidance and margins: “We are raising our full-year 2025 guidance across all key metrics… Expect full-year margin expansion in both the Mineral Fiber and Architectural Specialties segments” .
CEO on digital and growth flywheel: ProjectWorks “providing visualization… eliminating waste… improves our win rates,” and Canopy “had both record sales and EBITDA in the quarter” .
CEO on innovation: Upgraded Templok now in sustained portfolio with improved thermal capacity and fire rating; pilot projects showed meaningful energy savings and delayed AC usage .

Q&A Highlights

Discrete cost headwinds: ~$5M in Mineral Fiber and ~$6M total company from higher incentive comp and atypically high medical claims; not expected to repeat at Q3 magnitude .
AUV/mix: Elevated big‑box volume in Q3 modestly pressured mix; management still expects a strong Q4 AUV and ~6% AUV for full‑year .
Office outlook: Early signs of improvement across ~18 U.S. regions; more tenant‑improvement projects starting but still early; 2026 could benefit if trend continues .
Inflation/productivity: Full‑year input cost inflation low single‑digits (raws low‑single, energy low‑double, freight ~flat) with continued productivity gains to offset .
Architectural Specialties: Organic margins at ~20% despite timing costs; growth visibility supported by double‑digit orders and backlog; bolt‑on M&A (e.g., Geometric) to continue .

Estimates Context

Q3 2025 vs S&P Global consensus: small beats on revenue and Primary EPS; EBITDA metrics not directly comparable to AWI’s adjusted EBITDA.
Values retrieved from S&P Global (consensus and actual as tracked by S&P methodology):

Metric	Consensus*	Actual*	Result
Revenue ($M)	$423.5*	$425.2	Beat
Primary EPS ($)	2.02*	2.05*	Beat
EBITDA ($M)	152.1*	119.1*	Not comparable to AWI adjusted EBITDA ($148)

Note: AWI reports adjusted EBITDA of $148M; S&P’s EBITDA definition may differ (e.g., treatment of JV equity income and adjustments). Values retrieved from S&P Global.*

Key Takeaways for Investors

Quality beat with raised FY25 guide: modest top‑line/EPS beats vs Street and a broad guidance raise should support estimate revisions higher into year‑end .
Margin narrative intact: Q3 margin compression was timing‑related; management expects full‑year margin expansion in both segments and MF adj. EBITDA margin ~43% (pre‑COVID highs) .
Growth engines diversifying: Digital (ProjectWorks/Canopy), innovation (Templok), and M&A (3form/Zahner/Geometric) are driving above‑market growth and AS scale with margins ~19–20% .
End‑market setup improving: Stabilizing macro, airport/transportation funding, and early office “green shoots” add optionality into 2026; data center product launches expand TAM .
Cash returns rising: Dividend lifted 10% (seventh consecutive annual increase) and steady buybacks ($27M in Q3) backed by strong adjusted FCF ($123M in Q3) .
Watch mix and cost volatility: Big‑box mix can dampen AUV optics intra‑quarter; medical claims/incentive timing created transient margin pressure in Q3 .
Near‑term trading lens: Positive revisions and a “raise‑and‑beat” print with visible cash returns and improving office datapoints are supportive catalysts; focus next on Q4 AUV execution and cost normalization .

Appendix: Additional Data Points

Consolidated Selected Financials (Q3 2025 vs Q3 2024) including gross profit and equity earnings (WAVE): Gross profit $178.5M vs $164.1M; equity earnings $(28.0)M vs $(25.2)M (negative sign denotes P&L credit) .
Balance sheet: Total assets $1,893.4M; shareholders’ equity $889.2M at 9/30/25 .
Adjusted FCF reconciliation: Q3 adjusted FCF $123M vs $107M prior year; excludes $10M non‑recurring cash tax benefit .

All data cited from AWI Q3 2025 press release and 8‑K, Q3 2025 earnings call, and prior quarter press releases as referenced. S&P Global data marked with an asterisk.

ARMSTRONG WORLD INDUSTRIES INC (AWI)·Q3 2025 Earnings Summary