AWI - Earnings call transcript Q3 2024 | Armstrong World Industries, Inc.

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Operator

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2024 Armstrong World Industries, Inc. Earnings Call. [Operator Instructions] I would now like to turn the call over to Theresa Womble, Vice President of Investor Relations and Corporate Communications.

begin. may You

Theresa Womble

Industries' and On Bailey, CEO; to call Armstrong our Chris of and Thank outlook. year call, welcome, we morning. World discuss to today's our our quarter have this results Calzaretta, rest you, CFO, everyone, third Vic and Grizzle,

have presentation these to We results on available is provided website. section Investors a the of accompany that our company

measures the A financial press Our will appendix include in these within operating reconciliation on this measures issued G. Regulation and included performance the Both the of comparable meaning of release directly SEC our are discussion financial of is the most GAAP available with of Relations non-GAAP Investor morning. presentation and measures in earnings the website.

making we discussion SEC will We or With the be call that filed operational and filings, applicable update that to During is law. may of XX, financial date, and risks materially we forward-looking have expected a as our These from this view implied. of by today's forward-looking take detailed XXXX. uncertainties done, do We differ performance housekeeping provide statements including in the October obligation any no required our uncertainties this will morning. XX-Q beyond earlier represent securities the of now what involve risks turn statements that statements call, I and the over to those Vic.

Victor Grizzle

for joining Thank you, call. Theresa, morning, and our good you thank and everyone,

executed conditions for still all today, of on quarter while as again enabling facing Similar once reported full we through another us of X well growth, sales guidance managing our fronts muted last third hurricanes. quarter, XXXX. our As delivered impactful earnings record-setting year earnings market teams to raise quarter strong as well results strong Armstrong and with to

Florida for to from the and and storms. Hurricane And from storms quick and to our Pensacola, our entire our we Milton, these extend customers chain Saline our our at group, sincerest these and for minimal our customers. physical economic our by impacted damage and operations to with a communities supply to hope Georgia teams recovery to Now through the facilities you interruption managing thanks successfully and

a is our and customer and dedication X,XXX work customers and employees of day. I'm service this excellence, operational agility our of to example and proud every This -- the commitment our his who of serving to clear effort our to exemplify

earnings talk XX%. a segment, from our increased our were Fiber more will strong closer EBITDA taking in each quarter. with realization which to by specifically quarter These total at performing acquisitions, productivity solid levels our about at results sales XXXX and form contributions our Now look price which venture had prior along results and This third well, like-for-like and and XX% both in was shortly. our Mineral Chris the strong solid full performance were BOK X AUV manufacturing from and contributed we modestly increased contributed expected better from a nicely the very results, here of also year per record-setting share architectural than collective joint adjusted increase diluted driven gains and year Modern, outlook, WAVE performance are company while adjusted also specialty recent contributions

increased perform more offsetting key verticals. to quarter, continued modest market performance, Fiber than AUV on our segment conditions Mineral as volumes. sales Fiber Mineral X% remain across decline Our a in sales mixed well this solid even net

our share in gain quarter, in Our strong retail along commercial achieving price teams with executed well some the channel. like-for-like

rose the Mineral offset adjusted overall third market and quarter Fiber we this this and from to quarter, EBITDA quarter strong seventh in X% of margin with And Together Canopy the reported adjusted execution XXXX. year-over-year performance our expansion. result digital were consecutive able adjusted growth the PROJECTWORKS, margin contributions initiatives, EBITDA strongest marking and since XX%, softness. EBITDA margin also reached almost is largely

strong by ongoing driven ahead remaining to quarter, delivered and mineral service. plants reflect our order our focused ability results our our of deliver plants were fill levels. consistent on AUV In Measures productivity rates like-for-like These at quality fiber the while performance like perfect performance gains service measure our and pricing in levels targets. and elevated

KPIs high-quality best-in-class to market you've position discuss levels heard as areas and our help service value our our strengthen in proposition our customers. marketplace. me that with are in Consistently And these the industry-leading products before, and measure to key providing our earn pricing performance customers

do with in the The hand teams our Armstrong competitive our goes advantage. from and be foundational commercial work differentiate to our plants to contribution hand to continues

up Architectural acquired in the strong second of sales XX%, a inclusion which April accelerated we of acquired year, quarter contributions Modern, reported along form Our Specialties by from of with we the segment that this net both with XXXX. in also half

as and vertical broad large step-up On was year performance specifically, activity performance the basis, growth projects a to half and sales solid segment sales net mentioned the portfolio, organic our was expected, an I've first of airport organic the in the our from across and of in by this the X% driven generated previously. transportation

teams to construction these doing job able managing of supply quality. service we've projects with level and discussed, advantage and the has complexity larger coordination often on for these to As provide coordination, service I'm chain Being a multi-phased large Armstrong. pleased are a efficiently differentiated projects execute to become our the required and are transportation report great

on projects, more of seeing projects begin airport into a are we as projects Importantly, to orders mentioned We call. activity turn last forward. couple move awarded our bidding Florida being

the awarded were additional country. in X of airport projects parts various we quarter, This

to to multiyear federal these expect Armstrong. for continue provide funding opportunity the a We projects for

performance for of pursuit an XX%, with annual of actions including that adjusted our pleased AS stated EBITDA this earnings the in adjusted organic the our margin segment, above and EBITDA executing with in noting every quarter XX% XX% I'm the our It's margins Architectural particularly of least on EBITDA the at worth impact XX. have expanded with margins Specialties demonstrating goal segment are we basis. of adjusted EBITDA XXXX, right increasing

in stabilize transportation, while parts further along improvement with activity conditions of the continues stabilized education, tenant in Now country. are work office centers, positive and have be Activity to to returning slowly appears data with to care overall continuing health market

of level we uncertainty by are a are encouraged verticals. Although remains, our what we across seeing

details And and results. allowed As and some markets, we and of adjusted conditions deliver let our business me sales EBITDA positive consistent and the since every choppy of our to our diverse somewhat allow our on here the organization have execution these navigated COVID, set of inconsistent financial has year us post impact to provide model demand dependable XXXX. additional end of now the pause net growth Chris resilience

Christopher Calzaretta

good and the Vic, call. on everyone Thanks, morning to

to our Fiber be I'll website, Slide driven Mineral modestly a sales AUV third on throughout X, As Mineral X%, remarks, by the Slide offset the Fiber in favorable slides X, of which details quarter up our we reminder, on partially our by Beginning my available segment volumes. presentation. discuss quarter, basis referring lower were of in results. X% sales

in higher very quarter, offset prior partially increase to channel like-for-like Market was strong and pricing conditions in volumes a flat mix softness. market on along our with The the strong comparison. with continued year initiatives, our stabilize AUV in by retail driven

expansion XX% WAVE Mineral by of points Adjusted from earnings X% softer margin EBITDA and despite adjusted venture. fall-through margin primarily productivity grew improved EBITDA AUV, the volumes. was from by Fiber with EBITDA modestly adjusted manufacturing higher expanding segment our driven to equity gains XXX basis joint

cost, by in favorable equity an with productivity consistent price was were and increase target quarter quarter with market expansion their partially offset benefits a primarily was focus These mineral on which offset volumes. SG&A, how incentive WAVE margin driven ahead despite in in commitment driven earnings executed more muted growth, compensation. Manufacturing the by and drive team to of I'm fiber by lower profitable our higher conditions. than pleased our the

some noted projects, or On acquisitions Robust transportation as acquisitions we organic segment results. Architectural Freeform continue by driven in top line business larger expand the of AS BOK, Boat the the to to half total see margin primarily of expected and sales and in Slide And Freeform growth we XX%. the organic adjusted driven our discuss and call, as margins X, quarter our by of the Specialties, of from increase of growth XX% primarily recent including the well our quarter growth back an on was AS Modern sales EBITDA accelerate as we third AS, was last year.

We're sequential improvement encouraged quarter. that that and reflect results the our third in fourth top expect quarter line

the XX% adjusted AS approximately and the margin had for year we deliver EBITDA the total to outlooked XXXX track July. for April segment that full in on are We

Armstrong customers. we and platform, is continue best-in-class our the Xform recent scale service acquisition. business We're delivering on the to the with track our also solutions pleased on innovative of leverage levels to as and The integration while plan performance

Vic as we momentum we're XXXX transportation activity intake the by on close activity positive the also order we out vertical. noted, in and continued As encouraged as positive and bidding

year. Slide per EBITDA The adjusted consistent metrics consistent adjusted sales margins company the months fairly quarter double-digit the X of with diluted drivers consolidated for with quarter highlights of adjusted growth EBITDA in earnings third the we earnings XX%. which third are net Notably, and our delivered X with share growth first prior year. grew

expansion with performance company turn drivers, of EBITDA sales value to our total basis was driven by of core we company. reflect which as consolidated XXXX growth, which year-to-date our year-to-date earnings X, adjusted metrics, present profitability we double-digit And the margin foundational points. Page XXX and to company are our

initiatives contribution portion the from for volume the drove by and strong which consistent equity significant SG&A healthy acquisitions. WAVE Incremental period. These from than acquisitions and increase EBITDA in AUV benefits was recent driven performance our adjusted growth a year-to-date more earnings of offset growth

performance year-to-date versus expenditures, by was lower cash prior adjusted Slide and changes. working higher The free shows capital increase partially cash XX driven earnings offset X% by flow unfavorable capital year. our the

the accelerated as cash in expected quarter. we the free free XX% and flow versus prior in with the strong in year. cash third third call, flow and capital double-digit contributions adjusted We last the continued full our growth quarter, cash We for from growth adjusted delivering earnings working generation As saw noted confident positive year. remain on

to Our return strong returns; back create are: that cash allows acquisitions third, value; partnerships priorities. first, adjusted us into strategic the to to shareholder priorities repurchases. and business our second, and flow dividends allocation reinvest ability to all share execute capital demonstrated highest cash shareholders allocation we and consistently capital through where Recall to free to deliver the see support of our to

we week, confidence and Just in evidences quarterly Directors' dividend increase our our our reflects dividend, last our to shareholders. of of a continued Board program to increase announced cash consecutive inception sixth ability This strategy to return the our to growth in the XXXX. increase since annual long-term XX% marking continue

and shares $XX of the million million of paid dividends. In we quarter, third repurchased $XX

XX, September we intent additional of capital million With acquisitions have As $XXX ability remains unchanged, complete existing and sheet of healthy under share remain ample available the authorization. liquidity, and repurchase a our allocation priorities. remaining and XXXX, we all advancing balance to committed our to

third guidance. flow. per the XX outlook improved full our year, Slide strong increasing our of quarter updated adjusted EBITDA are year the adjusted guidance as in guidance and earnings well With remainder adjusted the our free shows for we net increasing share profitability as XXXX cash modestly for and for our diluted profitability

have year our outlook. on tightened We also range sales the full

volume stabilize, we continue about X%. Mineral Fiber to year conditions expect down market full As be to

our to to be We AUV Fiber above full also expect year historic Mineral average. continue

growth. the is XX% range Our sales of XX% the outlook in to for year full

solid There Given material an full expect prior growth our changes year XX% quarter expectations are profitability for performance segment to AS the July in total our full outlook. assumptions the from XX% now growth. expectations, and adjusted of range. third company increase our no EBITDA to XX% improved year XX% to we from

diluted we share XX% to per the to compared prior of XX%, increase rate to and XX% with to now by tax cash year. adjusted a and in to lower net For grow expect full effective adjusted the driven half at year, flow free the EPS about expect the XX% earnings grow outlook

additional that the in presentation. of note are Please appendix available assumptions this

of light consecutive fourth of our remains in we growth. will growth challenging be unchanged, market profitable environment expect XXXX driving sales and a on focus Our and earnings net year

And full before year Vic The results the your questions. we've confidence with positive for us to momentum. delivered back far now turn strong and finish I'll that we enter take robust XXXX it will thus our strong we gives and XXXX growth outlook

Victor Grizzle

Thanks, Chris.

top double-digit As growth Chris another for well and of we are summarized, year positioned in line bottom record XXXX.

expect that the to We have XXXX, far momentum carry year. and proud forward I'm accomplishments into we of so this extremely

our to low current carbon needs. attributes Products and are responding innovation Temp and Our product and our like and focused remains lock energy-saving solutions future on products ceilings. body market that important sealing

directly for years we we to in trends products, our macro business come. these that addressing driving will believe large important With be are many

in with discussed In commercial of cooling. XX% have about energy carbon significant annually by our both updates, heating the buildings related and recent consumed we play XX% this, contributing about emissions use of Within buildings the in is role all to buildings generated carbon and emission U.S. energy

to I'd One efficiency greater the driver pressuring the energy trends these rapid of elaborate like these the a need are which increasing grid. on both to are for of electrical buildings. adoption take moment centers is expansion of data U.S. and driving within AI technologies, the that

data to by Power Institute, nation's XXXX. projected centers are in up nearly X% According electricity Electric That's from to the the Research of consume X% 'XX.

increase energy to considerably. everyday into integrated AI consumption continue is becoming As and will more is technology,

simple have For may query example, the XXx typical of ChatGPT a Internet search. you uses that energy a stat the seen

aiming adding serious of this grid to with achieve they concerns to power sustainability reliability energy both are on aging increase strain systems. to from The will electric demand, grid unprecedented to energy keep decarbonize up savings in owners shift about gas look raising and electrical building to heating supply. as struggle the the the to emission Meanwhile, electricity electrical natural and

So addressing while the to strain order like believe demands to newer role and a buildings critical Armstrong centers AI. in important area of grid data here. play We of the the lower redirecting on an support is to has energy applications focus energy

over thermal cost occupants XX% sealing pay and provide savings on which of reduction products up These significant for heating buildings, Energy that contribute the energy while in for carbon building's they usage to products maintaining a cooling the themselves lock are building comfort the and market lowering savings Temp to operators. for is first for Our emissions time. ceilings

capacity main also to hours, these electricity electrical these usage. relief build this and needed a can and Temp leveraged is spikes it's in storage cooling further, has demand peak during most. one to these of heating driver expensive step that Taking when of peak demand buildings infrastructure grid providers providing utility forced thermal lock to handle be moderating

As critical grid building efficiency of operators driver for Also seek a more new stability, demand increased is solutions energy kind this more and standards. regulatory grid support a and energy of system. in energy building through for flexibility is for utilities resilient becoming savings codes

introduced our One level example standards to is governments. currently that Louis, standards these have few. cities state Boston, St. City, That a enhanced mandate-specific XX New Seattle, gaining implemented U.S. in momentum reductions. across by building and York local name energy as on performance the being are the including and laws country, of building use and emission XXXX,

cities are XX XXXX. There another laws by launching planning similar on

these become order of will economical Now standards to buildings, over to more competitive. Class contribute acceleration operate. meeting new Class time, tenants also believe is older particularly more buildings know these will we B to standards This an and buildings C that in comply, retrofitting because but to be

help positioned owners and come. are reach years standards saving renovation energy we well to launched products for building a to to will have these contribute tailwind The

a Now back before to your made turning I questions, like to go point would I earlier. to

far has in to a environment XXXX, and So growth. is Armstrong continued profitable resilience in delivering challenging consistent demonstrate

manufacturing acquisitions margins. growth rates, above scaled offset on through penetration by drive the these the market-driven and mineral from include level While a and Architectural that provide Armstrong for persist, growth inflation our early are Mineral growth market expand too steady, XXXX, product pricing improvements supported detailed Fiber innovation, we expect algorithm to like-for-like growth to that initiatives to of volume market fiber platform, components do productivity foundational and AUV our it's outlook sales consistent Specialties and growth

execute continue to of we through provide Armstrong's model return to strong in program. to share all results and we dividend to our cash confident our As strategy, consistent free business fund flow of consistent growth economic parts successfully the ability continue the hallmarks are our an are growth shareholders repurchase through to that generate and cycle. and These drive attractive future

on market your framework, profitability backdrop, that, a and come. With opportunities ability With we'll growth to we in deliver strong navigate we for to to questions. capitalize our again, this dynamic happy years take the proven and confident are be see

Operator

[Operator with Susan Sachs. question of line Your the Maklari Goldman Instructions] first from comes

Susan Maklari

potential the My outlined mineral thinking come you factors to And first there? the that that about to to fiber? the to you and on over volume How that backdrop through the different and end are green about given markets trajectory how question the of fiber longer-term quarters? back is thinking shoots next these Any you're stabilizing some that of growth across could the maybe volume some get or in outlook see the thoughts verticals. several mineral starting

Victor Grizzle

that that even last quarters. The Yes, sure. really moving it's had you're quarters. We've a right, market in activity is on quarter-to-quarter in about bidding last sideways, the kind and And the talked basis been a over this, several X that we've or really referencing X we moving of -- has range monitor market tight a stabilizing. the

And volume and was at your that new kind will, outlook, we've When created so I To outlook here, range. a of X% if blocks point, on like to the blocks fundamentals in do are The outlook. stabilized that feel go the building that for forward. the and building we look Susan, base X% there. to you

the the demonstrating to stabilized growth in renovation an from getting cycle. have we've cases, volume, follow, some somewhere the we've is building market when We look X, north are X might dynamic believe that construction But to distance still the you by where around initially been that recovery. ability X% in And it a to X% to help a do X that, from or our X% of and to us intact. still be there. some that's back that interesting with market X%. those to of initiatives, tailwind particular quarters. volume last block been of levels and and in is the generate big other we slightly building this gain we've of It's which new is block led of at offset we that experiencing Now pre-pandemic a weaknesses That

we're to -- of energy were And very so the add another of about. when initiatives tiles, excited our when that in which you has growth and savings, early stages you that sealing leg very

that you into that that still is X% to back So X% gets to I building intact believe that and block range.

feel So outlook for midterm. we good the the about

the that the think question to we and get I that. to you're rate Susan, is alluding here, back pace to

I'm blocks there. So building confident the in

to that I think have work of the still well. get so and up the rate can market in We this as see the for of and back how us uncertainty some kind wait pace. clears discretionary

Susan Maklari

Yes.

Okay.

on margins. right there. color I and that. And You're then to maybe But commentary appreciate that turning in the

You out, opportunity that from I through really initiatives couple in out some nice as of over time? may you last pursuing productivity come saw how you've there? can thoughts tailwinds that's still And the talk the you on to some the guess any that been look

Victor Grizzle

And multiyear so Yes. programs And and our equipment We've actually teams and of around at implement doing, year, on established to that so each methodology. providing every and able uptime almost that irrespective scrap of the reduction of productivity on taking forth. we're a what productivity. programs multiyear our a history volume lean the a than X% we approach driving is take now, fundamentals a greater look really it's are right, pipeline

We pipeline. a have

our the productivity that of along So therefore, expectation intact. expect about healthy. very forward, that be still business model forward. is is going intact, greater when It's part going And we X% continued with gains than our of to I confidence, and think pipeline

Operator

the comes line Your Keith of Securities. Truist Hughes next with from question

Keith Hughes

early have year. small to what you're again, the third been here quarter. the Input a whole next quarter costs Mineral tailwind you and pretty at in for Fiber. the year, Can for looking about talk fourth

Christopher Calzaretta

Yes. Yes. Keith, it's Chris.

So yes, exactly.

raw of split break even energy, about XX% inputs, and gas. pretty quarter, just is the electricity freight to fourth About down XX% of XX% related. inputs and our material the our between components is For are

were seeing deflation input deflation with, single-digit in in on the it, level on freight, the and in raws. quarter, So quarter, deflation inflation single-digit costs the double-digit third low mid-single-digit low on call we energy

fourth going year. at I a largely for that to we're of quarter, the the we continuation So out the as end think finish of see

step years to is look for tied about to inputs, back to think -- raw have on material some multiple I our inflation and our When forward some XXXX, about spend just X/X and those of of a and them. example, contracted take raws span

I 'XX, and we'll a as new can lot a components level fluctuate call volatility don't of of time. expect some out early see the time energy we do into modest XXXX. But freight again, inputs. So our XXXX heading from and start finish the variability year. to of on and to the modeling inflation too holds. material The what inputs raw year our we That's yet of work in

So Architectural next you nice the I it market is context year of very a large into out growth of or some believe time particularly had that looking this of that period sales helps give was well. part here tie Is for you doing a AS transportation. One on and called Specialties, particularly user end as the of other we little question, end thorough. growth year. the bit That's it

Victor Grizzle

wood which of But up organic the are business. contributor. portfolio parts locations in activity added seeing I are a again, to some growth. recent are that. contributor that large the projects I years the these Some our the way of across in think, supporting large. meaningful want a it's right? From main of of metal they're the growth wouldn't this tied we've for broad-based airport Keith, mentioned of some being quite But businesses projects. organic we're projects to to sure, And and or overemphasize our all some that only supporting We've specifically smaller

really, contributing by backlog nice when think broad-based. going our confidence projects the certainly, healthy next I'm really of that airport forward the in it's they're gives these contribution. And step-up well. couple as fact us the large backlog, -- is to encouraged years I So that are about having a But nice a

Operator

line Associates. from comes question Baumgarten with Adam next Zelman Your the of &

Adam Baumgarten

gone -- given? increase, that On well. in get on a given maybe the the you accelerate AUV, XQ to you've seemingly which AUV just One of on basis to topic a the to pretty year-over-year has topic AUV expect -- August Do price to bit guidance

Victor Grizzle

some August February really had increases the and in We've both realization our price our nice Yes. throughout year.

remember, Teams you component and a third price nice the back with got has increases a As quarter didn't we have and of good. size positive normalization price have realization, -- What mix to done some been we the our of increases was really the strong our again, job AUV. on that. in

as bit an on third was the AAV quarter mix pricing, more on versus our it but the so quarter to a acceleration a should Similar fourth is fact the side your kind performance. be bit the of and In point, like-for-like side. the more in quarter little mix as channel contribution flat, we -- of out -- normalizes Chris from in mentioned, mix what expect fourth contribution

Adam Baumgarten

a at Great. Okay. this should the we year-over-year into maybe seems been into How on then year the maybe moderating for little fourth a XXXX to be that SG&A headwind quarter just past It and then point? expect And Fiber, bit. Mineral in it's years. trend to of couple

Victor Grizzle

Adam? was first sorry, what that, of I'm the part

Adam Baumgarten

think about that then so. a seem of next bit XQ Just little Is and SG&A , For in How last to Fiber Mineral years couple the a to that year-over-year down you or year? has in moderated, the third been into headwind quarter.

Christopher Calzaretta

Adam. Yes,

been incremental little of in And So step XXXX, our over normalize moderation versus our has X we've SG&A the I continue quarter, I'd to leveraging about SG&A sales for QX. take established the as of and level focus our to When operating we'll level forward a growth looking that XXXX, a continue the we've a on When small. quarters, and bit say -- them investments. leverage. foundational down and that -- fourth obviously, XX% relatively back on and getting items forward on investments for to to we're comp think about couple look and of get looking I some and relatively to percentage talked of being that of below the that the a past incentive

relatively obviously continue a So I similar new QX, Fourth to will maybe from leverage the think, continue to investment to base bit to that look forward we better, our drive to but it's profitable quarter, and be get as that year something growth. little

Operator

from line of the of question next Rafe with Bank Jadrosich America. comes Your

Rafe Jadrosich

fourth would volume? for segment, have quarter, driving on big takes like revenue that you -- what . acceleration that? growth, puts you is think the I for fiber like a imply then which the kind there? the said And For that what's AS and mineral quarter-over-quarter imply does what so question this pretty does first And are of

Stephen Kim

Yes. .

Christopher Calzaretta

It's Chris.

part So let me first. start with the second

quarter Vic So volume component. that of fourth expecting Again, kind frame that. with outlined of the AUV flattish particular a mineral fiber just on side the business, to help help

on from referring referring step-up volumes line AS and So I that QX, AUV, we're the of with of -- speaking the to a organic growth you're the business flattish specifically, side, but bit think there. the top a component to

line organic continued again, year top business. organically. finish EBITDA see as the expansion the on quarter out to acceleration expect we And of the do margin we fourth sequentially side the So in

you. that a hopefully, So bit . helps that frame for

Rafe Jadrosich

a on helpful then X earlier components. of back That's percent an the SG&A as bit. the on a following up And just is SG&A the years, question sales If or cycle. quite X on go like I up just

in like going really the those investment significant And about forward? like are the you on seen PROJECTWORKS. do then talk cycle those you've made like how you where about investments Canopy return investments those? You've Can that for and in we think

Victor Grizzle

investments were some of initiatives, which and growth you're the we really you've Those we some XXXX right? started -- that investments step-up real foundational space The SG&A that. continued been there. were X the are these pandemic, these the take we in back me white through you that's referencing let Rafe, And Yes. on because that mentioned, in in. which we investing

As we're of talked about, foundational. past have the we kind

and past the started we're get continued we've to and which leverage, investment we to leverage We levels get, operational for those in initiatives. on those foundational initiatives operating seeking 'XX good the are in 'XX

from been the I've initiatives fact, think those meeting continue. to reporting EBITDA investments foundational initiatives. that That's level investments, platforms the as In of at those those forward. positive we don't going of look way particular been going going we've I forward

higher can So and returns leverage to we're generate higher confident we on initiatives. and the get operating those that continue

pairing where I helping offset cutting really of weakness good feel us the with are materializing instead that now that's investments and them in this we on again, or through So like back, markets. the we I'm commercial lingered we And about looking they're continue glad them those those. back feel pandemic continued because

yes, we generate forward, initiatives. to and think greater I so greater on those operating leverage should And continue going

Operator

Your comes of from the Stephen question Kim Evercore. next line with

Unknown Analyst

Latish This for on is Steve.

touched on a script. the bit in little this You

For in the anything than you in markets see quarter, you're which And kind forward, looking of Mineral any this talk then underperformed? seeing you Fiber about right of performed now? can do kind shift

Victor Grizzle

Yes.

think So be terms quarter we've right? on at office last about Mineral consistent verticals But stabilized, things. data segment verticals, positive health the so center of office are been -- continues was was the third quarters softer couple I side, very the centers and transportation is all but were leading contributing. to education. again, small contributors and in the whereas lower the of the overall with Transportation care also Fiber data relatively conditions, than of what talking Certainly, with and a level scheme in

continued signs in of softness office care health although the are overall market, offset we've office positivity, that in education, stabilization positivity, really encouraging. which continued market, seen consistent by So

Operator

of line Shmois the from Loop comes question Capital. Garik next with Your

Garik Shmois

Just on on mix EUV. impact XQ the in

that retail in Or of drill accelerate be on on. in you as you Was retail. And the to strength commented load-in? mostly saw growth the a primarily just clear, Just function it are it's see a guess point-of-sale I we to well?

Victor Grizzle

mix it the on driven Garik, on Yes, mix retail. nearly was impact, the channel all by if and

still is has the things at quarter I sometimes we I my is our we business, can based positive earned third by X of our product a awarded of -- experienced were highlight forward, One some in end continues what moving We I which stores quarter-to-quarter of service driven and good remarks, really real want what accounts. portfolio, higher years, flat That's the the the this we're these work. be big to box sure mix on by underlying the in to additional had is channel that like specification to of that on positive for driven That we handling But make contributor growing pushed retail get faster that it customers. sales and overall. business prepared our that mentioned noise the frankly. at way mix the the

stores, to you be So which awarded happy in load shelves the new require accounts and we're stores. these populate new and these to to these

what that's in mix And we so down in third the that experienced And the cause quarter. overwhelming dampened being the of the quarter. again, third is

Christopher Calzaretta

just And a maybe, AUV. in Garik, reminder year also of full terms

strong X and seen months, AUV on pricing through results QX really we've positive the Vic So mentioned. mix performance despite impact our year-to-date that

Garik Shmois

targets. your coming sense. make in ahead That called of to out could expand then on of bit in scrappage? little that little some respect it those up items driving and that cycle around you more? improvements to wondering times third are a Okay. saw anything initiatives you with on bit a those follow of longer-term maybe Is to Or longer-term if made wanted the is the comment related manufacturing besides maybe you I that And I was just productivity the productivity quarter? more you some there

Victor Grizzle

Yes.

we lot and be things a running of the plants that downtime I in well, gains right, to as in numbers that some mention record had the in of plant your the some big of just That our productivity We plants very plants. the is was very need component a the productivity is very One running having quarter were of and our runs fundamental reliability really effective just foundational make. really didn't well. not to

So And plants of it on well. yield the top around run initiatives really overall with first your starts you've that, scrap Fundamentally, then reduction got to quality, that. really quality. on pass with

really our being things fronts costs consistent can plant those the in plants driver, been throughout of on how the year, the run. actually good it's was have well and the that Some drive up

Operator

line comes question Thompson the with next Katherine from TRG. Your of

Kathryn Thompson

how growing areas of Just And growth? on Wave you about space, other on and following more bit for color the center when terms M&A Armstrong think more space acquisition data acquisition? also the data focused in little give versus up this a much center in portfolio, color on a you're recent the

Victor Grizzle

Kathryn, very efficient. question. make vertical. energy to new if of even terrific we We're a design for efficient, Yes, is the you centers, more kind data thanks them emerging, lot more it. and design There's believe, Yes, will, a and focused on opportunity trends of for

can bring really and about what space it. we're that to excited we So

from ceiling. There's trays in things One is heating cooling for is of the center that on strengths the lot grid data And the and that's design system more the more the containment suspended separation. as because our hinge from system, really X things being that grid cable of of system of design and company. to a grid about a fundamental

a you play from we will, skeleton, design the So that stems of really have in that ceiling. real here if efficient right to

bring what you're it's the but this to centers data of heating really into we highly acquisition more set structural componentry grid that's that referring an system. the the are So for. of system and off ceiling provide of is can solution and hang grid extension looking cooling going It's to the to ceiling

of how them, get success in have in So us for this It's majority an system. environment small of exciting the them control And really our space most data working acquisition And we're a most on it's cooling. them. heating off that to build this they and these in to is area. the vast ceilings the centers again, started of grid of

point data to So that the venture at want acquisition these this centers. structural of the grid joint it's and in how WAVE venture, goes given the the terms a of they nice importance because support spear we in in was upward system are for our that of opportunity us joint

So it's an a us exciting the of WAVE venture. one. company, but joint an for certainly focus And it's area as

Kathryn Thompson

different after gaining How office. How growth be it's center, the in you than and been for call or centers do share of approach to mind more markets, gaining it traditional data gaining data end throughout sales hospitality go be U.S. going some I you towards and specifically what business the strategy

Victor Grizzle

are some right? here, different There to centers in materials Architects is data in right those centers. Well, specification-driven, strength. actually to go They're of they're are the But it [indiscernible] different specification data Armstrong's and cases, of sets Armstrong's designing good overall quite of of a do news architects how what strength sets employing contractors. the similar. to is specifying plays The and contractors model you a win lot

to how plan we it. approach So that's yes,

in done around being able we've incorporate components to to sealing works now works. grid business design the project things we've of structural One in that our and able been the automate these project

PROJECTWORKS productivity to And and so architects for for we're automation complex also and tool these grid the contractors drive using the the systems.

Kathryn Thompson

at in types big processes finding We're has data just of our from a of Yes. centers been work for some decision-making projects. the other departure

was the that for so really that And driver question.

Operator

from of Next question Chan line with comes Jefferies. the Fiona

Unknown Analyst

This on is Congrats Fiona the Game. good for quarter.

market the continue conditions mentioned stabilize. You to

following the recut? So in half of XXXX about more thoughts as being we Are the your going second just curious some maintaining terms the in into recoveries XXXX? of we're growth

Victor Grizzle

positive. I activity in -- really XXXX. part the It's and construction the peel a of you When what's new Yes. terms new throughout think is renovation, visible the been for second apart market

has New construction footage a XXXX. square activity starts rental consistently the in outperformed on basis,

pipeline activity that lag the I of XX XXXX starts could say XXXX, from about that second at think construction half a to of in I tailwind months there XXXX. new does when and out, So of XX activity construction in new in be

be looking that. we'll for So

of But which to what's On part to people the for demand business, renovation talking back of little in that bit what activity you going discretionary rate demand opportunities interest economy I business, dependent economy look across, and then I potential to for in for profile is uncertainty some as this from to the happen on of tailwind part I the base. just profile things more confidence other the in our ahead have the sidelines planning know, the next process really XXXX, into of to come a more course, them, we've the of That's overall one be we get of, the -- the of at installed activity XX% to larger being around to will going influence of it's will would to of say, are factors go release there when rates there's the comes on renovation total, going XXXX. our think some of our other going think, is activity we'll and That and and of and to kind drive I into think, drive. for how I the that some is today. assess headwind renovation discretionary business. the been one that pace opportunities further much year year about, the as of

thinking full So we outlook. we'll give have get as to closer about February, But kind that's it see to today. our we and we're of year how

Unknown Analyst

then That's quick quarter Perfect. mineral fiber good. for follow-up. And a was just pretty helpful. Margin expansion this

going cadence revenue XXXX? Any be will about on this color think we for margins should how into the helpful. or segment So

Victor Grizzle

do Chris, want take to you this?

Christopher Calzaretta

sure. Yes,

all again, the third And can way you and of in future margins margin for and quarter. manufacturing in Mineral yield pricing returns decisions costs, the think quarterly offset the margins going best of productivity to just kind and should in look those expansion. yes, all outlined of we performance a our core drive Vic ability about inflation. execution. our components back inputs really making margin we plants, ongoing again, to XXXX pull that minimum at determine the together the since to the And all drive blocks And Fiber. continued earlier, So again, in the continued that Fiber to year. then in again, healthy pricing to for of of to building terms drivers The expansion. see performance relative order It's controlling is to get of at the our Mineral disciplined our investment execution value and

expansion. That's at algorithm. the how of the run how at and ongoing to the profitable growth look continue we look we that's with fundamentals how that's we business, is drive to business So margin the

Operator

Your line next UBS. the John from question comes Lovallo of with

John Lovallo

fiber mineral The from in sideways. first did you of slight the moving the think, are the that market guys you on, of Mineral to the the stabilizing, spread volumes that next quarter, volume Armstrong's decline into you market in kind much perform? just would And one characterized and year, did how is you In where And -- see outperform. outperforming? sort context as the I move Vic, posted or of ability we between the how do market how say you Fiber

Victor Grizzle

John, X%, seemed level. single-digit quarter overall terms initiatives in third we've quarters to consistent of with the that X in incremental contribution. And I north maybe down or fairly low think volume be the in market we've the it percentage seen slightly X X characterize in sized to last what of our

And softness, part of year quite we've that not talked initiatives So the pretty all good but a all it. consistent from the been that's about. market of offsetting

clears can that and continue contribution continue that forward uncertainty about confidence tiles I As think initiatives, as still us. add market business, energy-saving the our next our growth to carbon in from again, our I until like gives going we of think we'll delta some products, growth should that But new the to X-plus X% we're -- than especially that body and year, growth we be expect I greater that the initiatives into in ceiling have I between initiatives again, would whatever moving some initiatives our that to slightly, low growth our percent be range. And the think reality here this market up. one, to sideways kind of we're

John Lovallo

at Make hurricane you occur could to call, rebuild opportunity a guys in there the talk onshoring role is that the sense. Okay. always rebuild mentioned effort there little impact. will the that. the to But beginning in ultimately? what it's for And And the uncomfortable of then participate and your be bit any about

Victor Grizzle

to of cycle this later kind the cycle. it storm, the versus is early it's John, really usually on in with Yes, in a that tell,

be to determined. think I So

overall I point, bit, how about think That's but early the material kind business. to of profile little storms, there's in of needle mover a big one it's we're it's to been a like similar this but this not of at the tell. thinking kind and

Operator

no Vic it and to closing Grizzle, remarks. turn for are time. will this over further at I questions CEO, President back There

Victor Grizzle

in very of into execution demonstration year going finish to to forward well the go joining Thank that's model, well continue and whatever we overall as think our for pleased positioned strong the 'XX. mentioned, to And resilience you for we're Again, call of we're and all conditions positioned XXXX. strong, the the happen the market business we and today. be really as with Chris

to to So thank later. for talking look Again, forward you you joining.

Operator

This does conclude conference. today's

now You may disconnect.

Armstrong World Industries (AWI) 29 Oct 242024 Q3 Earnings call transcript