AWI - Earnings call transcript Q4 2024 | Armstrong World Industries, Inc.

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Operator

Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Armstrong World Industries Fourth Quarter and Full Year 2024 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Theresa Womble, VP of Investor Relations and Corporate Communications.

conference. your begin may You

Theresa Womble

World Thank you, morning. our our this our discuss everyone, and year and XXXX results and today's call, welcome, and Armstrong to On CFO, Grizzle, outlook. Calzaretta, to Fourth we Quarter Chris Full call XXXX our John, Industries have CEO; Vic

section to World Armstrong Industries a We results is the have presentation provided available of that these accompany on the Investors website.

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

uncertainties the performance the any of financial forward-looking implied. materially or statements We morning. securities update may no During our call, from to provide what of and earlier we'll obligation filed the as involve We a SEC that expected be XX, represent we of law. undertake and this risks statement our detailed risks view including making XXXX. operating XX-K filings, required in differ date, those that forward-looking applicable by February today's is uncertainties These discussion beyond and have our statements

Now to I over will turn Vic. the call

Victor Grizzle

execute record-setting consistent to Thank a continue and quarter fourth results growth. and call. you thank our Good year teams Today, you, full priorities morning, Theresa. we strategic all for announced and as our XXXX our joining deliver

EBITDA XX with adjusted the net our from year, results, sales XX% our company increased our the adjusted XX% for expanding XXXX basis full margin At nearly and EBITDA points. total level grew

per up rose flow our XX%, cash adjusted XX%. diluted free share earnings and adjusted also were Our

of relentless generated to team's This This and market marks the consistent without the on excellence in results. of innovation teams. I'm of not which face consecutive growth our customers execution commitment enabled challenging and proud to in extremely the our would have these conditions. all dedication we focus possible by serving record-setting net sales been earnings year well, and execution, fourth

thank our to and say partners for work want to to with deliver channel of closely I who our So Armstrong customers. to we you distribution colleagues, X,XXX and all

Fiber these XX%. Both results. and growth of of EBITDA net year Mineral Zahner, and more and basis year-over-year expansion And XXX generated Architectural Specialties growth, contributed EBITDA segments adjusted X with than positively XX% adjusted addition acquisitions, Mineral margin Architectural growth the with points. ended Specialties record-setting the growth net of X% to Fiber approximately XX% and sales adjusted of EBITDA Xform

by Architectural approximately on progress toward Importantly, segment. also basis XX% adjusted XX%. an margin our basis, a to in organic EBITDA expanded this This margin furthers XX segment of the our Specialties goal points

average results. quarter rate fourth X% growth achieved our year to Mineral turning value, Now Fiber, the by of driven or the mix pricing. In and unit AUV both growth, like-for-like was we quarterly strongest and

full nicely historical year, grew average. our X%, the For above AUV

along results, drove XX venture, volume EBITDA to XX.X%. growth our expansion to Similar XX% Mineral to points conditions. performance Mineral impressive largely Strong initiatives EBITDA and last to AUV from AUV continue growth Fiber contribute WAVE softer and productivity results margin Fiber with of gains positively our our joint offset quarter, and solid the and growth, market basis

margin in the the since Fiber was This best EBITDA XXXX. Mineral segment fourth quarter

segment EBITDA quarters. in margin year-over-year each this X in the expansion generated we've last fact, In of

Fiber. our innovation the all teams, performance strong manufacturing across including parts Delivering execution our demonstrate sales This of business, this resilience of our in teams. and growth consistent requires the model Mineral

Specialties Xform this results portfolio demand driven in BOK, continued with of organic and with by our acquisitions to Sales our year-over-year that Specialties. to up this XX% segment Architectural solid Architectural XX% for recent quarter, turning growth half of accelerate also Now increased more across sales Zahner. quarter fourth The our than

from a our our on broad-based portfolio. product increased intake -- Order across strength

As throughout large we've noted XXXX, we transportation see benefits to continue from projects.

play the of enabling continue the us we in opportunities diverse specialties XXXX, [indiscernible] expanding important been This space, have clear capabilities opened new of unique an and spaces. more capabilities, portfolio we've with design XX become creating advantage manufacturing and for our broad products acquisitions portfolio world-class to grown materials as role a has to has more into network. completed in have Acquisitions and In a growth. competitive sell

evident metal category. particularly the is in This

interior and past the and design Over Armstrong capabilities specialty acquired for railings metal world-class manufacturing has decade, walls. and successfully developed

interior of an have this a North in solutions result work, architectural established America. we in As metal industry-leading position

exterior Now industry of the building. leadership a this taking we to position are

Our engineering our metal to ability our expert highly metal crafted architectural most accelerates position now Zahner, in projects. exterior recent fabrication complex, the design, and is grow a company with a applications, that architectural acquisition, in exterior of globally leading

potential. Modern we are Architectural extension designers a segment, metal within the XXXX, architectural to our specifiable natural to the category. Zahner. addition and platform BOK projects, in that us applications penetration of highly exterior of Specialties metal allows Building our go acquired Zahner accelerate for most interior architectural the said, exterior adjacent, on to iconic capabilities architects Simply that we high with metal market of believe growth this The

addressable estimate bringing come. $X.X apply than this to we've the and above-market years rate model billion billion. We're for added to addressable market market continue to to for $X Specialties total of its to to the more our growth adjacency, Architectural excited another adjacent we our our this market With segment, growth addition

over there results. it financial pause Chris our me on and details hand for second more let to for So a

Christopher Calzaretta

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

slides which of on reminder, remarks, be to website, Slide available I'll basis throughout my a referring the As our X, presentation. our and details

lower we and modestly positive sales X, both pricing. by strong grew increase on results. volumes. quarter, AUV in X%, segment the The partially discuss AUV sales balanced mix Mineral our Beginning roughly the like-for-like Mineral driven Fiber fourth of between quarter in Fiber X% Slide offset by growth was

On despite grew EBITDA the EBITDA by Fiber volume, partly joint to was offset margin extra with in in from adjusted that XX the shipping stabilize. expanding primarily expansion continue segment points market XX% X fall-through AUV adjusted to day equity earnings quarter venture. conditions Mineral the WAVE of our approximately XX% driven by Adjusted lower volumes. higher EBITDA basis and quarter, margin

the WAVE equity to gains increase deferred higher primarily was by in higher AUV, and decrease which employee steel compensation volumes an than by earnings to costs year SG&A, period. as plans offset These and benefits were driven life related Mineral driven more Fiber favorable insurance costs. in a officer company-owned prior lower compared

adjusted our the in for the consistent of joint was Mineral venture. including QX Fiber Fiber's creation drivers, Vic margin XXXX. annual EBITDA from and performance highlights our best WAVE this As since XX.X% of AUV growth, financial value Mineral level mentioned, segment earnings This quarter performance margin productivity

Mineral solid full year adjusted finished XX% this performance, fourth margin quarter expectations. With above consistent previously was Fiber and EBITDA our outlooked with

AS, On and primarily discuss results. quarter Architectural in of Specialties, Xform XX% growth recent sales from of or Slide we Healthy BOK, segment X, acquisitions our Zahner. driven by our the contributions was

AS accelerate organic growth sequentially. Importantly, to year-over-year continued sales

along top organic pleased sales to AS of AS And X EBITDA with expansion basis XX we the margin on delivered half expected of that AS business with second in organic the expansion As points. organic report we continued to calls, last I'm we growth in line growth organic continuation of of XX%, our see adjusted noted the XXXX. margin

of our SG&A in AS more from year. segment the the year-over-year than adjusted the over EBITDA increased half sales XX% XXXX. Higher rate offset intake and strengthened Order growth recent grew quarter, also accelerated second throughout the acquisitions.

We progress also by the throughout positive pipeline the year. build remain project vertical, the our optimistic we activity we're traditional are seeing that to as and continue will encouraged in

the the which the with December previously AS XXXX, for adjusted and EBITDA year For was not XX% approximately did acquisition of Zahner. segment expectations, full our outlooked margin consistent include

the adjusted recent basis year. adjusted that margin EBITDA for to on of AS dampen organic the acquisitions our margin pleased to able are We dilutive and expanded the approximately AS EBITDA XX% impact was the segment's XX points

improvement recently expect businesses. these of and increased acquired progress We on continued margin profitability

Slide earnings margin reflecting XX% and XXX recent our compressed share EBITDA metrics our strong which quarter for and both delivered in sales consolidated X per points, fourth growth acquisitions. EBITDA. adjusted company grew net double-digit diluted basis highlights company we Adjusted

company EBITDA the margin acquisitions, XX adjusted expanded total Excluding basis recent points.

Adjusted of primarily were impacts AUV driven impact EBITDA increased fall-through sales AS our strong acquisitions. by These SG&A and positive the recent the was growth by in quarter performance, attributable to increased equity earnings. partially WAVE offset

XX% lower Adjusted as driven with resulting XX% rate up consistent remain of adjusted margin earnings, year Page X, in shares per drivers key full diluted pretax full tax outstanding. we were up earnings were full year turn XX%, lower points EBITDA effective share up was expansion. sales year and period, as net the by basis and higher XX These to

XXXX a adjusted by of grew tax of estate sales full tax The flow XX% rate the healthy and statute lower Adjusted a year release capital cash reserve to net was related of and tax a was benefit free sale $X.XX year and closure. a in XX% at driven fourth EBITDA. and the discrete to primarily valuation real related loss allowance items: quarter

by significant value contribution the AUV SG&A, benefits recent acquisitions. our and acquisitions than which core initiatives, offset volume from drivers and earnings was growth These delivered with our of healthy WAVE. portion XXXX, in strong driven growth recent equity from profitable In a consistent performance more incremental increase

Slide profile strong allocation partially higher of to paid. capital adjusted higher cash The The our cash free primarily XX flow increase shows our of cash driven full business year. XX% was flow performance margin offset by on allows by prior us the our year priorities. cash execute versus all adjusted taxes earnings,

highest first, repurchases. to execute we dividends the and to to returns; to shareholder and business partnerships As value; shareholders create and reinvest see the a through share into these reminder, third, are: where second, back return strategic acquisitions cash to

reflective fourth of to shares adjustments $XX Zahner acquired the $XX cash issued the customary $XX million, of post-closing cash quarter subject of for XXXX, In acquired, of million, consideration we purchase million inclusive outstanding of a of price capital. for and working of

$XX fourth and quarter, shares of of million Additionally, in paid million the dividends. $XX we purchased

XX, we December which $XXX of existing million share As the the authorization, repurchase have under XXXX, through of end remaining XXXX. runs

all cash of strong to with to And ample proven We balance consistently we entered with remain available liquidity. allocation sheet and a free our our XXXX priorities. generate capital committed strong flow, ability

Slide XX full Fiber conditions, volume for the and choppiness overall year. our Mineral stabilizing presents we throughout XXXX. the expect flattish year for guidance market With

growth X%. above We also AUV average expect of about Fiber our Mineral historical

through we Adding and will that entire will to continue be X from be Xform results the the as fragmented penetrate XXXX, from first Zahner expect we growth, year. incremental results highly to AS almost incremental organic months Mineral growth the market. Fiber Note of throughout

the of in to segment sales. half We drive total sales total of expect growth growth together X net these than in acquisitions to more company This results AS X% XX%.

of in As quarter with and weaker Fiber, Mineral our in and stronger activity. timing you and weather QX is first one construction due QX typically the to conditions renovation new our know, year better of our quarters quarters of

we a While of as expect guidance, higher we choppy in we market do quarter-to-quarter conditions. XXXX don't degree navigate provide quarterly variability

Moving EBITDA. to adjusted

We to AS AUV the in input benefits XX%. offset impacts growth single-digit and EBITDA growth WAVE inflation. expect low to adjusted we of Mineral cost throughout expect focus X% the from segment, on Fiber organization, execution the continued With this,

acquisitions. the We recent as expect we the total flat segments for both in drive expansion margin company year with year, prior the adjusted of integration to EBITDA our full

diluted adjusted For EBITDA. the similar free we and net expect flow adjusted cash at EPS full to rates grow year, to adjusted

future capital ceilings You'll energy-saving our notice as slightly is growth. manufacturing to capabilities years to expenditure compared investments planned that in our due of higher support in assumption recent

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

we demonstrate positioned outlook. We model despite to market are a XXXX of as results well near-term continue our in the resilience deliver choppy strong business to

have consistently market XXXX. while Our that recent advanced to uncertain navigating expect in I continue and strategy, teams years, have our proven conditions in agile and

now And questions. Vic to I'll turn your before we take it back

Victor Grizzle

markets just up in me XXXX. on we're on referenced, provide thinking additional about that color Chris the the market how Thanks. Picking conditions let there

in uncertainty potential and from key we to our policies. the new we while navigate see markets Overall, demand stabilize continuing tariffs

New a construction XXXX. education, driven starts and to by markets were contributor in data XXXX be centers. transportation our positive starts should Lagging positive throughout those

over encouraged Dodge it recent are increase pattern, choppy office and higher activity remained all the activity sideways And the mandates has fourth moving we a in bidding quarter and year. the back-to-work in as vertical. by in quarters leasing

to sports We from stadiums. major well convention benefit also I entertainment projects, mentioned, other and transportation large continue sports and centers, NFL news, as as including as

some cause factors potential policies new choppiness potential and timing. a there likely is their additional these impact that inflation and impacting Still, interest project of wait-and-see remains rates, on could create level decisions tariffs and to in uncertainty pauses XXXX. With and

to and That how with diverse in positioned are XXXX. said, we uncertain we our to again of And well in and business know sales resilient market deliver set conditions. execute model, earnings end markets growth

the of road element Underpinning key of model strength a our our our map industry-leading and business is innovation. value-creating

is one need for of solutions. needs. Our prevalent energy-saving is And innovation by guided and most strongest, customer market the

consume As we said buildings. energy energy. the of all In half U.S., that nearly before, built of and about is environment electricity heat to buildings XX% used nearly XX% cool the consumes global used, and of

companies usage. a like building desire strong there's to energy this, for Given commercial Armstrong reduce help

on strain of likely and supporting for and come. system benefit an our data to centers. need catalyst a there's many be of to across need many to of industries for build-out larger grid energy expansion the savings This innovation electrical the reducing economic the energy is for savings, AI Beyond years support solutions a for

This storage, Armstrong mega phase-change the industries works led energy and releasing trend heat material thermal absorbing reducing and building is to heating passively product, addresses our this Templok challenge. in technology the that that a across contains sealing unique Templok as for cycles and cooling. has

heating systems. helping new puts electrical meaningful energy-saving to can while and environment the Templok tiles the reduce of built the also attribute, strain costs generate on this and With reduce cost grid ceiling nation's our cooling savings,

credits tax the Section a regulations today Act. material the Reduction and investment Treasury Code. confirm phase issued Revenue energy when expanded IRS under customers, received type thermal is energy investment Inflation This credit positive may Section under Internal In the under the news January, final These some that XXA(d) storage our solid-liquid qualify of that of regulations final U.S. the with change along we, XXA(d). section for tax

XX%. qualify the that phase-change a ceiling Templok for means or installing This investment tax as for them depending that an new a in to material less credit to investment that qualify may credit tax pay does projects on an allow customers construction may Templok renovation of up project, more. for would

are government an In that products of available now also last products office we Government addition, selection learned of which U.S. portfolio week, ceiling Templok just for Services Agency, manages part approved and initiative in the of potential the the of large long-term its encouraging growing driving volume mineral are these renovation These are developments of buildings. part impact validation on and products the fiber marketplace for milestones important growth. the

for strengthen along that closing, thank record In for with employees dedication to blocks competitive we in and another us further to overall value-creating again, again I been This has our execution important enabled building us our XXXX. year want strength. deliver as our their results

acquisitions offset significant sealing strategic parts and innovation strengthened to Templok ability our pursuit to specifiable time. In including initiatives We've our the energy-saving to made themselves over its market provide unique, our market XXXX, included of our exterior. building continue a products We industry-shaping now pay and this of growth more for technology, products, to soft like conditions. that and addressable

both And serving initiatives our our and and and resilient, our have continued finally, we channels, even with with and of volume digital with architects, traditional beyond. growth support model in AUV markets untouched by PROJECTWORKS. strengthened our growth continued deepening advancement further These by position more Kanopi and relationship business and made by for further well Armstrong; advancements Armstrong contractors designers us XXXX to

questions. that, with take your be happy now And to we'll

Operator

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

Susan Maklari

there? products there the is of some that is much like pricing really talk about results. you seeing that of 'XX? are How additional products the in just because for to come Congrats marketplace. on initiatives How any of truly a Can coming AUV starting more, are think by for the you're sounds through through there? in to it some that these in momentum those out should relative want the like-for-like start Mineral a Fiber talking in we the nice initiatives nice range how Vic, on the to new from those to And bit gaining quarter. about come historical color I you ahead about coming guide

Victor Grizzle

Happy to you. address Thank Sure. that.

Our had again. get continue growth on as both niche were AUV last very customer double-digit contributed have reaching growth And that over that kind And small of cracks. falls that XXXX years grow in to, we to to very continue a through -- to platform we by you see We're initiatives encouraged Kanopi the we our and the growth. there. traction of continue in the saying, couple volume traction example, for platform,

by And positive is Kanopi to AUV a your growth. around the AUV, net to the contributor question way,

Our platform nearly Mineral average Kanopi the average for Xx unit of value value is on Fiber. unit our

of is example in where And XXXX. traction. We we doubled gain of another nearly so projects continue PROJECTWORKS to PROJECTWORKS amount the through

And again, Fiber the unit the connected Xx growth, AUV of to project value works is or average our volume. back Mineral X AUV

growth nice future So to growth. current adding that's again, initiative AUV a and

by having a for I a this who with looking customers And tiles. then adoption conversation the right new they being of credits energy tax in of have. the real very in continue market to very by is that ceiling that your the I overall the level energy the big milestones and the that new this question, the think we specific for are challenge adopted got GSA, savings, we're, application savings of of are milestones different the solve also over encouraged technology And to fact be terms target, which support of marketplace

AUV to value again, on again, prices. our tie look it's when you of Fiber energy-saving back so tiles, Mineral it our AUV Xx unit our to X, ceiling And growth, the average at

has new you of encouraged the be the AUV legacy and in continue excited and and a growth going new the So by business and think and growth we're the help when the can't you forward. to to initiatives that bringing you that about this years growth this think to been this technology past XX-plus consistent grow the our consistently AUV for business market, opportunity AUV about

Susan Maklari

Yes.

any how exciting Okay. market you're And rates the where That's just as on commentary I those coming in. R&R of discretionary some But you're how that through that great color. side. about to hear seeing to discretionary gave the appreciate about turning broader thinking thinking you're R&R It's the talk and and what then a maybe you that. factors we And move about there you bit color given been? have on piece additional XXXX? very

Victor Grizzle

When look with down. same XXXX, bidding quarter quarter at pattern down, the we it followed you Yes. X activity and saw quarter through kind overall, positive, positive quarter all next of the next next

this pattern, That but Following kind of quarter. in moving. continued the fourth sideways choppy

bidding really been the this been throughout And past construction quarters new light. has which bidding consistent starts, on new question, And side, which construction what activity XXXX the to really pattern we've the XXXX. was the on the seeing over of kind been your in positive X versus has strongest matches

been -- type question. weakness while the So I'm -- of on the discretionary the particular, renovation activity, uncertainty been we've discretionary the the has out. your sure plays some has itself of genesis this renovation hold, That is

tariffs on of the it's to be -- like things level that, the that changes and around sidelines. discretionary the work and continues Given renovation policy uncertainty, now renovation

market around renovation I construction tailwind. year is we're to the closely see to back going that overall going very of the when progresses marketplace. that's as into new renovation watching overall XXXX, come think and optimism market be a 'XX -- of discretionary Again, the some around the throughout the the in -- in some to so be uncertainty And

to XXXX. a into As those starts be we in new us lag going 'XX, tailwind for it's construction

rates at activity the the And vacancy office XXXX. you segment, the levels into had in fourth in improve for office then that in consecutive at that increased are highs the outlook pandemic leasing XXXX. look And the quarter And is segment third XXXX now in it's forecasted particular, when we going to post of quarter.

optimism point, discretionary but around turning So provides a more been segment. and office more shoots at renovation of that there. this verticals there we softer won't green point call color us, a the the this little for are and I one necessarily that's hope more

Operator

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

Garik Shmois

for little I should was quarterly be the if you more we how year. a modeling color wondering provide bit could on the cadence

would indicated additional choppy of be navigate these to any the handholding, more line it's whether you expect You conditions. as top on variability or you'd see on margin, some great? But the

Christopher Calzaretta

side I volume dynamic, the We and Chris. take Garik, on year the Mineral that's if that's quarters. it's first a the navigate more year and speak in little market think a in with see to of and winds around to out how for outlooking guide I'll don't back volumes. And kind Fiber Mineral Yes, shakes But obviously turning then step Hey, half. the Mineral to out half more specifically softness flattish uncertainty of the trying some half Fiber the about first really up Fiber, favorable really half-second back the of and the of settling in down. in there --

a in front and favorable half softer in the bit So little 'XX. back half of more the

Garik Shmois

to Okay. I That's AUV. on helpful. follow up wanted

another that moving and respect to above forward. reasonable better with to be If to conditions year Maybe it being previous with normal of we demand question, might and of period speaking, to expecting, favorable could both extended to time you're as been be and for see guiding normal here? certainly entering the the mix we the normal AUV AUV you've into is AUV to growth, of answer above growth. mix, start period You're an a think like-for-like

Christopher Calzaretta

Yes.

existing our terms mentioned the call XXXX, to relative the for it's I I the, I of think our in half growth. additional that our of year and when in first a think AUV the longer-term relatively and say -- horizon, new between potential step year, I half some the When back think of about products AUV of balanced and growth AUV it, AUV, the that provides future. think and kind I'd of longer the incremental some back innovation the about Vic take points

a innovation But our really equation. of lot in sure, side of to our for to I opportunity products a solutions mean, staying our continue to market. think close it's And AUV the really to to and with that grow our us pipeline, themes aligning testament aligned and I the create customers

Operator

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

Keith Hughes

I on to just a And market renovation, want discussion. office, order of pattern, you in did lot end in gets narrow which that particularly the what couple, sort a in XXXX? How office the are year? one industry of from expecting

Victor Grizzle

offers that of office. we activity -- And in the notably was been office. of the positive was quarter this kind what bidding also with third Yes. activity notable, sideways in leasing have a the quarter in pattern quarter was consistent vertical, The improving. consecutive Keith, it seeing, of stabilizing third fourth kind Again, is

the So pattern office the moving years downward the stabilizing vertical. couple in it consistent last I of we're motion -- and experiencing in was versus was sideways think soft that the

trough it's office I modeling on be But I in office. early downward we're a a it's behind to to as recovery That's is segment. trying at sideways Not consistently So the office as what a think think least certainly, a again, big segment. into in recovery we're little well. the going But here. calling 'XX the pressure establish moving us

Keith Hughes

'XX, enter question as end-user other One the we market is is, strongest one? Okay. what

Victor Grizzle

in highlights transportation, there. Well, broken which centers, now is real terms data opportunity I growth are of the office, out think being from

even really in funds think positive. election it season the continues expiring the the good to are ESR municipal likely be education And ESR care That to though state for was backfill bonds. is I a the health funds. segment,

I funds tailing So anticipated be negative But ESR someone maybe off. the to going think positive. I be the wouldn't real a would say it's it don't with that

I of Keith. kind for order us, So it that in see

Operator

comes of question Ng next Your from Philip the Jefferies. line with

Fiona Shang

tariff is for the aluminum do wondering if Just Fiona to to Phil. your WAVE you have earnings the and on recent expect ability How impact price XXXX? in higher? push on steel you This

Victor Grizzle

Yes.

a also your is the the might because the then here. And broader on question, that, take a a of me of tariff Let part to point I put impact Chris here. ask question WAVE us And the maybe question cost that the fine think basis. approach and part on to I'll take for have answer part of

And tariffs With or limited. well impact on the for have that know plans on the at limited business overall we short insurer, the still at tariffs answer is limited mitigation at when further potential of are even publicized, you look that our there the impact impact minimize least the we and out that the quite that. to

So very me break down let quickly. that

sales pretty projects items We supply you mostly you large the Montreal for a primarily have chain that U.S. or less by type represents And as know, mitigate the a the some those manufacturing that sourced a chain. it's really in it in spare here buy United really local the very ceilings States And place, plant we sourcing boil footprint ceiling when down, company. have American tariffs little metal metal are supply do than can X% in business. we Canada, North a for for we we are nothing. And from China, of In part can U.S. China that that MRO be from locally. Mexico, virtually

were in XXXX. our any course, cost grid pricing move that we import discipline, of And sources in plans and tariffs or WAVE joint we can a To impact aluminum WAVE factoring quantity imports question place too. be our of the of we here the in we pricing part systems. have for impacted, volume our our venture, production the that of from venture could into though, the local your it's other aluminum where steel And the and buy steel early -- Armstrong small really in joint

impact that from impact the impact. record we track know, but to specific, these both inflationary a just I'll about. Chris, our ask the pricing So the tariffs comment cost say, tariffs ones covering the of we again, on to any know we I'll we in initiatives. potential very you limited strong from that with ones have place, And And have get

Christopher Calzaretta

Specialties, relatively and than Architectural chain Vic on of than insulated of a aluminum. of their impact And cost sold a AWI as WAVE, XXXX. for goods X% less Taking on side, step goods mentioned, and back X% supply at cost Fiber there. in mentioned, as Vic Expect and less steel the on Armstrong Mineral sold looking

And a this backdrop, similar a in tariff from backdrop I also folks of broader the to facing similar and other it as overall, dynamics impact. about competitive market think pertains there's

relatively minimal we're I So impact, think supply about impact terms costs. of insulated small, it, chain on and as in

Fiona Shang

be Mineral in really helpful. My your guidance, outlook probably that volumes choppy in in Chris, Fiber. market for follow-up will Do you segment question that's a XXXX? XXXX to expect inflect mentioned you

Christopher Calzaretta

pause Again, of I'll XXXX. want I short Yes. to XXXX unfolds. guidance how see stop for and

mentioned, uncertainty, a choppiness associated degree of market. Vic obviously, the As there's with

So best Fiber, Mineral before volume we'll and about progresses for thinking thanks now right see the 'XX. year But is our flattish the how question. for view

Operator

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

Unknown Analyst

for Atish This is on Steve.

first there quarter. through Mineral think of Fiber, inputs the as how the in Could move input about you should clarify mentioned we we pressure you in So became and headwind costs XXXX? a that kind which

Christopher Calzaretta

sure. Yes,

total low input and me what our XXXX. a guide for and So talk perspective, outlooking about just a single-digit inflation. in cost back let take pause Overall, step from we've assumed

and inflation about is and raws inputs Fiber. labor about XX%. COGS reminder, a Mineral our is XX% XX% is Energy XX%, Just freight in are of

low on And in and in so all so fuel from range. range, input costs total rate a single-digit the freight perspective low business both inflation that basis, single-digit expecting in, inflation that

will and a Raws latest you 'XX for really 'XX. 'XX, so on then low about and for by lot or has energy, driven of into natural natural inflation that think gas. of for And from sense. 'XX gas if progressed that's XX% kind make And the about outlook pricing how single-digit inflation

of around we're bit little just about how thinking a year. So this more kind add color

Unknown Analyst

then helpful. kind on And us super That's areas Spec, next Zahner that can of the company Great. acquisition, sales are on percent you Arc in now? -- total contextualize the help the of

Victor Grizzle

that's and the excited Specialties course, it's but that. in Chris, Zahner we're look you to for a just and And organic XXXX, combination Architectural the you at of is then take XX% question that. CAGR another and Yes, because since When XXXX. me outlooking I'll this this inorganic of another step addition -- averaged penetration XX% of growth can let since Thanks about back into the really And add to specialty also then step business. we're first acquisition. area,

XX% the Zahner market. that, about CAGR establish we for another $X is the it of the the BOK XXXX the that design total a That's part addressable of market when coupled and this started exciting up size acquisition the worth That's of really in about of does with growth. is on acquisition, One the things manufacturing run platform building. billion of exterior

as we we growth up way come, future to us of [indiscernible] the confidence Architectural us about years addition leg opportunities. it for that site the but another of obviously it can in is think and opens X to penetration continue to rig opportunity a now So we the it, Specialties have gives for pool pay of opportunities renewed in

that was we consecutive in third the So margins I consecutive will the to in year again expand mention business is were able organically. that this this XXXX, quarter third

we're to and So margins. right in expand demonstrating top expanding strong have this to levers really pull driving the And business. line margins we we're

our we're about BOK just segment So excited the continue capability acquisition us Zahner to acquisition leg gives The future. the other with our overall. growth whole into a

Christopher Calzaretta

we've the XXXX. value can mentioned, specifiable capabilities leveraging And attributes we for -- company platform. shareholders Yes. well of grow, where related continue to to around that line 'XX. is your And by year. and for in half expand acquisitions, More contribution than create the is the to we and Armstrong XX% question, margins the AS run to play add inorganic segment overall bring growth segment as assumed we've in And Vic for top as just into on unique these this the

'XX really do the about with recent that opportunity excited our in So to acquisitions. 'XX

Operator

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

Rafe Jadrosich

a Starting Spaces other some with about you about of how the like or Kanopi? just Templok over Templok, relative to Templok initiatives the the market the either Healthy or years, TAM talk be size you growth How can potential time? could had over last think you've big few of

Victor Grizzle

really bigger we're this to why of technology lot the a much, different think Rafe, about is around much material Yes, go -- drive it, this. application, phase-change good with a excited question, that's we're particular opportunity. has why about broadly renovation, it's it. innovating that it's Which can avenues when a This because and you it's speaking, we

opportunity. of about you energy, installed time, getting base and save put doesn't to why the over in you time, would the XX exciting feet, when square ever think Mineral that at itself Fiber where billion over tile it's point it So ceiling another pay an doesn't for

large of to transition it as it's tiles. tile for we -- but years we based a think many over and opportunity, ceiling to So very installed can the publicly, many, time come you energy-saving not all ceiling sizing

Rafe Jadrosich

drive an think to -- innovation X like the more on kind about SG&A then of Do market associated growth your And to second Templok. put you've do been AUV Templok you on relative And for then The need in question of had, is that that Templok realize average conversion product there's the kind with day? additional initiatives of to ramp how investment or we to other opportunity? follow-ups that. some

Victor Grizzle

somewhere neighborhood X is our contribution of volume. AUV Xx average the in Yes, Fiber Mineral the of or

acceptance, a nice around positive you feathering and The the answer contributor it's we the are support make over market market this. AUV growth customers SG&A your the development in will, of already if So to time. SG&A development decisions question, adder that different to to

So we're to that XXXX, already we and continue and outlook. into that, doing we'll that factored do our into

to CapEx tile but additional support to in creation, notice addition one of our support addition to didn't capacity in ceilings you'll spending, ask, production. that in saving energy the a you plants little and some in step-up to is that creation our So -- that, capacity finishing

Rafe Jadrosich

expect but step you've So up to you expect beyond would wouldn't a what CapEx, support SG&A 'XX? up already like a growth? in in step the not or done You

Christopher Calzaretta

can there relative time. think could But Templok at and and we're outlook. working the in I growth no, a this to way CapEx excited be point opportunity growth, be we offers. should the pace, that hopefully with bit again, think that is the it Yes, not SG&A. -- remain support But our about at side, the -- there on a We of think short-term with the little capacity in step-up about of I rate obviously, and pace rate Rafe, sales

has. outpace volume about product fiber and the given that potential that level mineral expectations, excited should of opportunity that our remain this So growth, AUV we

Operator

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

John Lovallo

kind The all, first first guys expecting think the more is X% in growth of to to you're shoots. in XXXX. sort flattish market? seemed then a return compares to the green ability of one you of Mineral X% that the stabilized how Fiber to volume year. this It bit, I quarter in some And reasonably the have markets volume normalized like confident Curious, sounds growth have maybe

those what's going get to to of it So levels to back take growth?

Victor Grizzle

plus the X% for The implication in is Yes. that range. market minus or

are growth X growth, initiatives offsetting adding still are condition. going our confident that We add point condition to of to flatter the softer a market to or up market

is I think choppy forward. minus pretty a plus a or for good going proxy X% market

levels. back plus As to market recovery far middle the long-term to X%, was as XXXX the outlook X% initiatives to X% the to growth the X%

recovery not wouldn't flattish outlooking a say XXXX -- that I So the we're we're market with be market. outlooking certainly to

range market X% get about. be we're -- to continue have initiatives have So to to the that to optimistic to to to the our we going get to complement very that X% X%, to X% to contribute to back growth

John Lovallo

forecast of seems acquisitions like acted Okay. like that's the being It Architectural then by And Specialties, XX%. some of Makes sense. on the Zahner. EBITDA recent more margin

EBITDA kind XX% this curious, for segment? in out change that or does Just of consolidated outlook margins push the

Victor Grizzle

to we're progress. continue going to Well, make

I earlier, expanded is third the margins mentioned in organically that consecutive this that business. the As year we've

the on right So we're path.

to that we given scale And EBITDA the these have. they business. for margin know, opportunity the the to opportunity businesses scale the as in add is to at or scale come the EBITDA you operating overall they this and acquisitions segment, As leverage improve lower new us margins drive lack of

play. We're running that

for continue I have the to up get But and like there's XX%. the bring certainly, We're them when pulling acquisitions, to the going the think And to years, demonstrating businesses we those X I EBITDA we're think on it levers really here, to way level. do make you're that those that. towards again, noting good XX% in to feel our work do headway new consecutive on. really I right we're focusing really about we right that good us

going over confident time. EBITDA to to we business So remain a XX% that get we're business this

Operator

Research with Your next Biros the Group. comes question from line Thompson Brian of

Brian Biros

category, space. decision the It like that organic you that here grow acquisition, addressable billion a Zahner the I step guess, do growth as how mentioned. strategic seems think from guess off that? larger seems On like to about exterior run that mentioned it we I you is further a Or exterior market. think the to an into attack of you acquisitions new offering? in of $X to I more into kind

Victor Grizzle

metal design been and we've X building But space the is it participate now it's with and and of well, play in have vacation a accelerator the acquisitions capability company that of side Brian, the been space brand to like space. And building. and world-class really application design attack. partly metal the to as that years that to a for because capability we through wouldn't really an this developing, And can use Zahner, expertise have Yes, of fabrication exterior an exciting a ago, we now for us. the could take organically this we us

look of less But $X than BOK share. at puts billion at Zahner and with again, opportunity, the the that you sales XX% when TAM us

place Architectural XX so And again, similar ago. very we Specialties years started with that over

are particular And as be open there's in here side. there's on to additional business of plenty So we organically, the in players that to we go. bolt this opportunity going we'll business penetration interior could as category that for also but be we

Brian Biros

volume, end that to to the maybe guess Sounds good. puts guidance the excited low and would what would takes drive that between I'm be turns any the volume out. might for of more get seems driver see I kind I the helpful. the and Anything AUV? like color to guidance be of else 'XX, how of on range, are It biggest but the range? high guess,

Christopher Calzaretta

-- the market, and and overall applied the landscape some more outlook a volume it's say calmness we little at chop take in clarity I'd year. for us have to take Yes, the broader just back a if for look the and that sure. But I

think could which end. around shakes downside some the be of to and, going just provide at macro shakes out, upside lower how is broader I a potential the it out, lot the market the case, on

variable quarter-to-quarter really the chop we XXXX the that dynamic in here on that's biggest the market. that and So face out

that's size range and kind how the the would of the on So guide. I variability

Operator

to questions Vic no at back would turn this President further time, Grizzle, remarks. are to now As closing and call over there the for I like CEO,

Victor Grizzle

end some us all Thank for conditions here, forward Again, going for to set your navigate we well again and you market very questions. our think of stable plays for I keep diverse turbulent markets you, and joining more as thank a business.

drive consistent even to like allow that Our resiliency ability ability market productivity, us in in conditions, to drive we growth, continue AUV soft market the need conditions really this. to our

next we call. Thank And look you forward outlook and very our you on remain in XXXX confident much. our updating to

Operator

you Thank call. This concludes today's conference participating. for

now You may disconnect.

Armstrong World Industries (AWI) 25 Feb 252024 Q4 Earnings call transcript