Armstrong World Industries (AWI) 30 Jul 242024 Q2 Earnings call transcript

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

begin. may You

quarter and Today, Abby, Chris to call Industries our our year rest Thank outlook. have welcome, Vic morning. second World Armstrong we to and results Grizzle, this and CFO, of you, discuss everyone, XXXX our Calzaretta, CEO;

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and measures Regulation operating of financial within G. meaning discussion include financial performance Our non-GAAP SEC the of will

the of most Investor in both with comparable issued A GAAP release included reconciliation measures on Relations of morning; is directly the and measure these the this available are in the press website. earnings the appendix presentation

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

Vic. I'll Now over the turn call to

efficiently. year consistent and very and execution morning, increase continue to joining and we results for for strong our as on we growth in you, Today, Theresa, Thank our and from initiatives all good It call an full our quarter of the record-setting everyone, XXXX. a and today. thank drive of operate you fronts reported quarter guidance was another strong

strategy successful execution X,XXX to to the products and of respect, team commitment continued in for way will let quality excellence continue efforts integrity day. production and highest our levels come. me the to their Xform nearly the employees including now our and begin with differentiate through many that of Armstrong with years the for to the members So thanking winning by best-in-class be Armstrong their every commitment of Together marketplace and the our right service

we we marks growth Turning XX%, XX% that in This quarter, adjusted for growth, this adjusted per to our X and muted the financial total growth share net results EBITDA row a margin adjusted year-over-year have company company. quarters EBITDA of expansion. of all a company year-over-year sixth Adjusted against EPS with achieved XX%, the margin quarter expansion increased of generated market total earnings consecutive backdrop. revenue marking

with unit driven market more delivered growth I sales our of AUV, or segment along sales Fiber from value strong Mineral net increased by growth volumes contributions shortly and average will Our year-over-year stabilizing about talk X% with initiatives. which demand,

our are our an their These initiatives making ProjectWorks platform in Both and impact increasing innovative new efforts. advancing and online innovation automated are product digital design platform platforms our and capabilities on include Canopy, business.

into of year, our XX% In positively projects of platform first increased design this half has the More continue year the of ever from the through our increasing contractors projects ProjectWorks. quarter, XX% And the using and expanding digital and integrate moving ProjectWorks, in we where a we coverage number the to first and Canopy of from XXXX. quarter. With contributed products more for and can second to architects month construction to half over largest process. are the increased of quoted remarkable improve the in value the EBITDA results its also June. Canopy shipment prior more sales catalog, our had

is of The Armstrong digital growth our of these positioning strengthening Further industry. and more initiatives with further more win to architects ProjectWorks more us product into is engagement specifications in sell both differentiating contractors and our spaces.

Mineral and quarter. our points, from growth, earnings in XXX EBITDA Fiber AUV the XX% costs nearly continued increased by and reaching percent EBITDA improved joint input basis moderating venture, margin from contributions contributions our XX% and WAVE growth initiatives these from With our

continue of strong high results and efficiently a these to performance execution. Our products. quarter plants operate level, also at operating and another high-quality reflect delivering Again,

Architectural largely of due year-over-year, contribution segment. acquisition Now from our the Net acquisition Modern. sales as turning Xform April increased Specialties our our well BOK to of XX% inclusion as XXXX in to

addition project saw several we to In custom across categories. the in inorganic growth contribution, sales product

been country. awarded International as and more Airports. we've other projects, previously reported, large as Pittsburgh been the Seattle, recently, and as we well Fort Tampa smaller And airports across Myers projects airport Now the now including at awarded airports have regional

segment. be projects a to to AS expect funded continue for multiyear opportunity federally We transportation

funding. of and That likely Our XX.X%. segment, the variety for AS segment said, variability segment. margin with a activity inflation of availability, project quarter-to-quarter remains inclusion backlog the choppy the of our strong Xform of labor include for dynamics. quoting XX% due project speed to uneven increased this and and sales healthy line be to EBITDA Adjusted a These due are remains in overall to to the continue time with

organic expect Importantly, Xform margin adjusted the look the as do we improvements onto to to of for EBITDA see margin continuing Armstrong forward results the this. We improve. continue to integration AS platform and

it Although second are in how integration and the is is integration, early pleased the their Xform quarter with performance progressing. days still we the in

be Xform the to of and light to using excited design unique elevate by space. a of continue color, capabilities the We texture

design BOK and applications us also well exterior integrated acquisition category. for architectural expectations, has systems and believe further to Our ability metal for we recent performed in this growth line positions interior other and our their develop in Modern with

details, conditions Chris feedback are remains conditions although outlook seem a Now speaking, for market Broadly and our and overall economy. a second from the we the sideways impact have this year, With them. inflation half the comment of improved financial interest to the moving modestly before experiencing. we of rates, uncertainty like and around to the level on have have the customers, stabilized on I'd field to market underlying I call turn the to over additional for

stabilizing also with for Francisco, signs it rise markets AI sector office early activity. We're in the space. While of regional improved office depressed the the be of some in renewed seeing demand with activity continues that projects throughout pockets to of like rebound challenged, are is York Mid-Atlantic the a San been had project New These signs. seeing Pacific are again. in encouraging in up in We've in we're the activities And paused early but Metros. the start tech bidding the Northwest stages, the seen

be Other area value verticals sale and to rapid an grid like education steady, continues remain higher health component and centers holding data are and care growth provide of and Transportation opportunities. strong

the for in new bidding country. projects We in XXXX are positive XXX construction Dodge the across We're territory. in activity steady seeing latest remains currently forecast starts and tracking center growth data also new over construction

the of These to XXXX the of consistent, our and into profitable set are XXXX. enables is as our balanced growth. deliver benefit good markets end business signals one And over of the us several for years, key of attributes past demonstrated stabilizing we've

Now Chris it over I'll pause Chris? and for turn details more some to financials. on our

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

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

X% on up our by mix, Fiber primarily segment extent, were as the to second by stabilizing a contributions strong as Mineral AUV quarter, from initiatives. versus pricing and Fiber of from year. in growth well X% X, Higher result were volumes. X% quarter Beginning we AUV drove demand driven prior higher our positive the lesser sales like-for-like and, results. favorable Mineral driven Favorable Slide discuss volumes

Manufacturing fall-through in margin Mineral as AUV driven margin covered benefits were a by offset as and was expanding Fiber than SG&A. basis XX.X%. EBITDA by expansion uptick XX%, benefit than The the an of more grew segment costs. in in and EBITDA points primarily the energy by adjusted freight inflation input EBITDA adjusted input by to from costs inventory well plant-related and a These productivity lower costs. temporary XXX quarter adjusted increase deflation Lower valuation. driven more

and focused driven primarily Fiber compensation our of And drive the in higher expansion the segment this due despite demonstrates costs conditions. to consecutive quarter marks margin sixth and expansion EBITDA second higher employee for adjusted The result margin SG&A increase margin market for Mineral efforts year-over-year to incentive inflation. EBITDA strong quarter by uncertain consistent adjusted was

Sales Specialties larger the transportation of quarter and contributions segment previously well the acquisitions we Xform as X, our we of results. in XX% discuss recent of Slide organic driven projects our as from Modern by On have some Architectural BOK primarily growth was by or sales that AS driven growth mentioned.

organically. basis see were Xform organic We're XX work sales the as the happy to performed by expected second AS impacted can adjusted sales margin acquisitions track. BOK, Xform be points. be quarter XX.X% project Including and business we and in report compressed was to by patterns to the adjusted continue total pleased organic EBITDA margin and lumpy EBITDA quarter-to-quarter. Despite that of is expansion lower-than-expected dynamics growth, and quarter the on AS integration

margins We half AS the April. also expand segment deliver portion AS organic year. see over the total adjusted to to expect had for to XX% EBITDA the on the continue in the margin track remain second of We we target approximately outlooked of the business

growth metrics. the delivered expansion, the X XX% with sales growth Slide are X EBITDA year. of first basis similar share. in The EBITDA highlights We EBITDA quarter and the earnings adjusted drivers XX% margin quarter adjusted XX% largely second per of XX diluted growth our consolidated along of company points adjusted growth second adjusted net with to months

basis company consolidated the primarily which net X, net adjusted with on turn to free higher points up X%, and due period. continued metrics, through year increased we and earnings. moment. cash a XXX to per Notably, X% X margin our up half in versus further sales reflect diluted comment first Adjusted of XX%, first margins we I'll expanded increased as And share months expansion. the flow that year, Page the XX% present EBITDA prior earnings Adjusted

WAVE and for and in as expand helping cash costs. due XX partially in an majority increase more The Fiber by our paid cash company an in X% shows year-to-date a capital well the earnings driver unfavorable equity the flow of Higher was cash of volume period portion of adjusted were SG&A. half, changes, also acquisitions receivable most this SG&A prior expenditures. EBITDA AUV earnings higher growth accounts a for first changes versus the in EBITDA taxes driven by year. and The free the and year-to-date increase in strong capital income offset were to adjusted earnings. a offset lower cash as notably largely performance sizable fall-through driven total higher by drove primarily was to earnings than primarily growth by higher margins. Slide Mineral recent timing-related benefit increase Adjusted increase working volumes,

The reverse than we to the the lower on of the is the impact growth it XXXX, captured an single-digit is this half second cash result adjusted free double-digit adjusted growth is in flow cash we and expected with This related. of free flow timing capital in year. the operating Accordingly, expect cash through working adjusted flow year, bridge. resulting half for first full

adjusted Our to cash proven growth consistently in to strong capital ability our invest free allows allocation priorities. deliver of all flow us

for on Xform As million of the second our we acquired. a in April of acquired purchase quarter, cash price discussed we call, net $XX

Along business to shares. we and million with our and dividends sizable directly return value of In investments regular repurchases. the acquisition, continue $XX into of back second repurchased capital paid $XX share through this quarter, make we million quarterly shareholders the dividend and to

As of the have repurchase remaining authorization. we share $XXX under million June XXXX, XX, existing

committed our additional With intent of to remain to and allocation our liquidity, complete and sheet balance healthy ample we all advancing acquisitions priorities. available capital remains unchanged, a

Slide full guidance. XX XXXX our updated shows year

raising key to of and metrics half year. on quarter improved reflect for all our solid performance are the our second second the We our guidance expectations

have be uncertainty about on removed continues, outlook. our we from these scenario market expect we conditions. conditions Mineral have down the market believe X% full While volume stabilized. to year We macro now better-than-expected Fiber downside Accordingly,

X% AUV full the to average. historic also Fiber We expect Mineral year above be

of April up in AUV guidance and mineral change costs. due total now for volumes, sales material our company our provided to to better The EBITDA There We adjusted expectations lower growth AS XX% segment growth to company fiber EBITDA our XX% total of and improved to XX% the our changes to X% prior higher net from prior driven in by X% input range, in are is no adjusted year growth. guidance. expect versus guide profitability XX% full expect the

XX%. we expect cash free expect to to flow earnings that net grow additional share XX% in at appendix Please XX% and available are the full grow diluted year, the per to adjusted XX% note at to of presentation. this For adjusted assumptions

for cash profitability we to regardless deploy shareholders generate to half create environment. committed to of we As look growth and the XXXX, remain value to market back of and continuing driving the

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

Thanks, Chris.

in business We're all in is year to and like built with deliver Xform acquisitions our bringing products continue have support in to market, future, in the on BOK needs have growth continue summarized, productivity construction our in and to environment. Modern while market next-generation make through in annual since new as investments this earnings current each as market to of through for muted we as aligned track longer-term with company well revenue for our for we trends performing to aligned operations investments innovation well growth our As XXXX and the secular commercial a we XXXX environment. and investments

and the the demand discussed impact for In that quarters, reduce by cost the can generated solutions building the couple buildings. energy environmental last rising of we've

product This industry's with energy on block which sealing are application phase that tiles temp a our ceiling mineral costs first change innovation specifically our through temperatures energy-saving reduce strides within regulate buildings great tiles. and making are fiber material with includes savings focused unique can help coupled the decarbonization. and energy products, We of

is over by reason itself of time ceilings. facility for This provides building product owners This up economic that return and savings XX%. pays energy a existing to ceiling first managers replace to the generating

recently market and helps embodied Low on lowest LEC typical attributes. tackle Ultimate or acoustical maintaining of The the aesthetically also its Embodied commercial while carbon products line appealing industry-leading We Carbon the that tiles of ceiling embodied are buildings. LEC carbon challenge the an tiles today, new in launched

Together, make carbon meaningful its building operation. these footprint a and on products impact overall the of a

for products these in the things and attention for stages of and of on and Although expect to initiatives to increasingly demand regulators. launch, are their And where products industry solutions early decarbonization state are and feedback these standard trend industry given going. are community federal from the groups the confirm types the energy A&D grow efficiency by the these setters, we the increased local

example reductions proposed to building carbon. health. guiding to These call in with new establish note Green seeks principles, lead standards resilience including the Building version for is decarbonization, U.S. One embodied that operational the practices sustainable for additional standards X Council ambitious from several and standards and

Maintaining saving those provided will finding and and products. benefits of require both standards sources decarbonization energy LEC like savings energy by additional the our

Council. positive by a space and customers X feet has supporting U.S. billion long Council project their the of history Building perspective, through to are there to innovation. For close to square achieve of building working Green currently lead drive certified Building Green change Armstrong real-world goals with the

Energy that We're of technologies that be the new Administration called was Department Green also pleased run Ground. of a XX by temp by Services program tested will the block product with Proving the General our named X

the help new as in lead and technologies validating government's innovative building looks Wong, by This World and ceiling program companies is senior special changer can Jetta a recently testing This Armstrong U.S. construction through adviser face-change program deployment buildings tiles. multiyear a the operational for estate need tile using transformation market real footprint install new to made for because the GSA's game of costs called the down Industries, several technology sites. testing training technologies. don't new drive that

activity innovation fiber new is in around lead the many process these of growth. We the drivers as the Again, largest value included are to to customers key a to educating with been program for have mineral new part orders products be placed phase has benefits of date And of a and program. change important know, over AUV already and But we're is and just volume are the element, the enabling for AUV company The one for the on and only early building growing, market thrilled last could products this we solution catalysts the ceiling-based order our in taken be future. material Mineral in and to is our our interest that you demand. growth decade. of renovation week. These core of Fiber products

to And we products energy-saving AUV ceilings, and continue. growth are new temp low expecting carbon with like embodied block

that market in from increasing through our we In AS penetration as flooring on platform. of profitability the we separated XXXX. million in a again, seek core demonstrating, driver are Armstrong. grow to We bring XXXX, businesses while to the $XXX is segment Investing we revenue value ability was and our for also business business, this the a when acquisitions just

exceed we this XXXX, revenue. $XXX In million for segment on are to well track in

category specialties success doing demonstrating are the so penetrating profitably. in We and

and both and to Our digital growth. initiatives, the investments business in volume and ProjectWorks support growth sales Canopy also contributing AUV are overall

and to and like in for excellent architectural role service critical play that success. service. our growth of supports it's highlight partners our model also products and providing within distribution and last specialty grid essential Their the metal best-in-class mile for fiber, specifically our service I'd our that, partnership our

We clearly All these positioned have delivering our partners. market in the continue well XXXX is remain consistent expected. well executing best overall are distribution to profitable the stabilized best We better in of than all, but unfolding and teams conditions. muted growth

now your happy questions. that, to be take we'd With

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

well half. you're My morning, conditions them? even as have some opening first that markets you your more there, supporting should what back? mix what then what made these that which are? in mentioned is, us start we coming is on that stabilized coming question about you projects seeing those of are a what markets for bit perhaps could about and momentum some there's also talk depressed feedback your to Can commentary from newer And as getting this mean gain some view remarks improved those with shift some And offerings think Can from how about is encouraging. customers more that everyone. of hearing you for you back, comments the you some you're that give back Good a bit

you kind and question think and has to market we I the we with biggest their about backlogs specifically with our in that customers office talked there, your and strong. -- relates that the drag think Yes. know, as to conditions to Susan, being the hanging visibility specifically, how into And as one forth. because a been education, the key healthcare so their overall more probably transportation is input of

hold some particular, particular, referencing for These in the Northwest So office were tech that segment back in in come hold. encouraging the were that part intelligence San some signout on demand Francisco that downtown online of on as now the was in West were I let artificial large lower-cost of Francisco. me Pacific address space with in projects in particular have those office San into that the for new companies moving the out because and office buildings put of

speaking, when there some back there's feels in and But helicopter that I experiencing, look signs flight if stabilization support broadly view and what like marketplace. real at the up we're it out the what

in the you quarters. when declined in X pandemic. volume was And up to rates, they the the last That's at that, space highest connected office quarter. look XX% the Leasing quarterly the since in sublease activity the vacancy

consecutively So with decline. of X the actually rate in having quarters, QX steepest last the

this X the really and a So about Tier availability, encouraging think you especially that's Tier some X space. sign when of

their P&C that CFOs There's may CFO increase XX of have interesting -- survey survey in I to the thought the a many square office footage was you survey it that about XX% also read of of expect months. next was very the

They may looking the CFOs And were years similar footprint. survey their remember, a X you reduce some ago, had to opposite. of exactly of just

green space. mid-Atlantic positive office some think, of the San another like about that's as shoots markets together in and of Again, demand distressed I with some overall our well. we're Francisco areas talking So for in the the sign,

and think, say seeing I I we're things there would are that marketplace So customers. feel with the we several stabilization that are our in conversations supporting, the have the

Yes.

color. helpful That's Okay.

Sorry, go ahead.

to York, contributes metros, going -- second some have just they part of I helpful markets. say San what And really of your New to come those be those mix those some mix always of into overall our like to sell products It's the certainly, No, value when think Francisco, going be and to the this we will going to shift? on helpful richest markets. Chicago how When for I question was larger markets the markets. back, the in always we was it

also forward. mix -- going additional positive So sign for a positive that's product

Yes.

how nicely as That's M&A Okay. on of these get for Any those color. next Thank about Architectural look in quarter. you've you year? about initiatives to that really And And are within the and out helpful. that conditions then Specialties, some integration coming that these all you're target? to and seen turning margins we XX% thinking through, that recent perhaps think we we this holding of the commentary how

Yes.

think the operational we the those I around drive part organic them the them is business and grow play profitably. excellence it's of the the on of margins in those throughput productivity businesses, clear improving making so from kind to our could the getting been we're grow the investments and running very we've been and we have

So operating win good it's projects. that bringing the discipline That's we're service to what these part and do, that. really get marketplace, and then we of and inside leverage we how continuing

again We're better as play. organically better expecting that just that is we from We to it's to that quarter. drive saw to in that think a benefit get those second level. that go running each margins at the quarter and I and same continue XX%

we So I where like are.

we're on the think there. track right I

of we're here. kind acquisition, at Xform starting the course, X Of

We platform. to in business have that there. on already we the case progress making saw that Armstrong We're we're scale our coming the the to business play into acquisition. the synergies like run after this I

Susan, that, about that that the been It's business doing and forward. the several been revenue very cost both side to the for we've side work, the up going last synergies, the in familiar running. improve So play with similar to very I years. our just we're going think running go we've a driving think I margins you're

do that. to continue to expect We

and it, it's coming with together familiar am well. I No, Yes.

for that with and you color luck good everything. thank So

question from Truist. next of with comes the line Keith your Hughes And

just some list. but to Mineral you wanted In could -- about and were negative? markets in this, the you quarter just -- didn't were quarter, you've which positive the what of I In talk done Fiber, get markets a

we the and care got Keith, that to, Education Well, spoke health the to good off markets a education. start.

It's quarter in Coast a we it's dynamic, with continue health you the on third As to the second universities, lot but the the to strength West east quarter. of a later work frankly, and the both mostly see especially in connected know, East Coast, care, and west.

So it's all strong. education. the there. Data strength hanging the the strong. transportation very continues and be of Retail in health transportation, was kind centers care to around And Certainly, in activity bidding very is

So think us. bulk verticals that's probably the of flattish the for I overall. But

still is office the there. And in

said You the for office. of positive future some things

Sure. the about lot last left off, in I a that I that but talked one. Yes.

would So still overall. sure. it's on for That's I yes, a verticals the moving lower but at a say sideways, level. it's overall other drag

the of Okay. office, you talked before call, some be your in this direction? turn a in could something year about in would And you positive that at backlog look positives next like if it potentially

But Keith, it's I impact on to it 'XX. behind some in materialize the some point, we're the got is driver seeing green 'XX. think really, your don't stable. believe these with but is projects, guidance shoots -- for the I'd stabilization the were we again, we're if most and now, to half. expecting the does give us There's main back continue raising the that benefit, this the bulk that 'XX of of half, in to confidence the for softening we're say these most lag the in and -- in we you part, that of benefit the that's back have

have component to the it. to has higher construction more and has Specialty headwinds some construction? tends remained a positive obviously Okay. organically. despite able on to Architectural How continue It been that of growth there's

positive still in part of occurred construction of new activity living We're Yes. late off the XXXX. that

an know, XX-month to XX- lag. you that's As

new important So that large we're a still equally are some and XX-XX as But degree good the the Architectural we it's split of about the of lesser also business, between And renovation projects health and X. that. don't some that as a because construction of in Specialty in and care education seeing seeing talked benefit those in the there, verticals the transportation we're about, activity to segment. course, overweigh

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

it Should the year? growth similar thinking AUV, in AUV increase the there year. know half. year. you increase like we a on mentioned in half X%, did I the about assuming I'm looks back we expect move first cadence a for price year-over-year the It expect of about some Just just above the I guys of know color there's you more through on so as AUV that the -- realization out X%

Yes.

mix it's compared lesser price we've half kind year, deflation. the year. And a but and first Adam, but back as Yes, also Chris. than little get of some of of a bit terms first again, So softer AUV bit facing of the to half thinking on price, on the positive been to year. the in of half a extent little of the about dynamics positive the -- Really expect the to

on in the AUV but bit half, there deceleration mix. strong certainly positive price contribution of a So and a back little

airport And the Got AS then Okay. it. projects. just to just on switching

perspective You mentioned sure you was it maybe wins I and others. that I'm and revenue when or if of given on think existing help a from cumulative size some actually P&L. X have the the timing the so, there's opportunity you hits Maybe could

Airport We're now and in Pittsburgh the shipping Seattle soon. project

our size. projects larger are and again, outsized these the normal some -- we of project average So projects, to

So Pittsburgh these the of the you very renovation continuum, large normal-sized And of mentioned, end new normal, -- but I as of kind some right, projects. then projects, smaller and be smaller on of some the these regional can projects, projects. they have other the

We that as have between that well. are in some

in P&L. into of back Certainly, So we'll see projects. 'XX continuum But hitting the year, whole that of this it's and and into a the sized they're different half 'XX.

of As that X-year a in remarks, at and the number I particular Architectural this we're projects the my Specialty on sector across said in airport the country, tracking of particular. business X-, terms tailwind with that bidding is the in least activity

around add -- maybe I those phases could a of lot projects. context Adam, are phases just transportation different jobs. little more within these of multiphase if them the A

choppiness, So that shifting. individual those lend to lumpiness as can phases completed are and

So second like [indiscernible]projects. in those types with quarter we'll see associated some talked here we've choppiness sometimes larger of the

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

prior think to you've spoken quarters, I delays. in project

was bringing if And after wondering pace it slowed. what's to fair maybe I'm so, back. some that just QX. delays the if I of maybe think particularly it's of assume projects acute those has

still -- delays. seeing still we're seeing we're think I

the reason seeing changed to XX of last, funding of say, I the we're was large labor and can supply I these more projects. projects, been XX bit. actually of funding, and influence chain would months. these the some especially It's delays the rate It lumpiness the pace a in think has related more

-- mix to it's say So terms causing a But difference bit we're and that's on little of depending They're better projects. delays. episodic some seeing point, the wouldn't or type yes, could worse drivers, the quarter-to-quarter lumpiness. some -- of of in the cause I overall that's, the of Chris' projects but of the

was back was just size I was the then the Got comp? for the quarter. it. SG&A, of Okay. of think SG&A the acquisition how performing increase on actually could year? in in much wondering much inflation, That's much if maybe impact? you half just piece how was And How maybe just helpful to the clarification. So how the

Yes.

So yes.

included saw wage the And have call in that comp the Xform and salaries to inflation, within incentive that's is acquisition. But inflation, largely, also you here you again, the SG&A line. the So to SG&A, on quarter, the contribution it based in obviously, performance. related SG&A that's

really on of that run normalized when the And that about SG&A So contribution quarter, model to SG&A the rate that's Xform of increase in here something was the a driver quarter. basis, second more think given for continue the loaded. kind to the I in

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

on This is actually Kathryn. Brian Biros for

could the that second maybe based be address comments, construction the the seeing out between your outlook outlook improved new to half, versus of R&R.? on just But hear. is break between interesting On X that slightly can I'm if how that improved the correctly. the you more new seems maybe interpreting out breaks would you It in if side

think, would new to positive half is -- it's market But break I some XXXX, Brian, part we're difficult what half, the think in of say still as really be positive. indicative are, the them of continue we to that expecting the fair the those be say, see the the in is back to to half seen we've I they to -- pattern continue that first out. last starts of we Yes, I of positive construction starts, in as mentioned, benefiting I and from

clear we're discretionary think this softness think uncertainty renovation the seeing to for renovation in I are the the and side side waiting on of up. some really particular, still people as I

departure new versus wouldn't in the half. say a versus here of big I activity renovation our there's back terms half in So in outlook first the

business, any second throughput it. given benefits or guess, better Got way quantify there you'll again, means then least Mineral the the productivity that that lines. is half? better production on the think I in And at raised slightly have assume with, about Fiber or outlook, margin margins, throughput the to I guidance,

again, that that of be the to this going half. We ahead confidence side, the at about Well, productivity we're think the we're way I productivity slightly on year. to a goals. modestly on really deliver with good improved we outlook the is targets should our above or for in track first our And have volume think to were degree

that. So we feel good about

cost well both on. margins as your AUV and expecting margins continue expand that maybe We're and side and to through trend in the that again, to QX manage to expecting we're Brian, QX point, growth. of profitable the should the ability side expand And to profitability we've our the -- as to continue follow been to company both deliver

And other maybe one Mineral is adjusted thing EBITDA to our within add is increasing. margin Fiber,

If you XX% it for assumptions year now point was at our overall than We're full to XX%. Vic's around look expansion. about margin at greater XXXX,

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

is market stabilizing here. It that is that pretty encouraging the signaling you're

because this it the strength little bit in new not of teased resilient. full pretty you're XXXX a are last you construction lagging saw in back some you think is the like question, still sounds half that good I

where buckets these rental context still it less sounds X could been, how bad? point it's weaker think on give major has on little more more performed? us Is a it like color you about have Any at and is this Just how how it's but a it.

continues some stabilization the Yes. projects line the the that we're these of renovation of is I terms it's -- part on of between And those a it's renovation would me side. major a fine getting some say it and projects It's of in for stable. renovation of feel and discretionary equation activity. work sideways value number kind of the of the

X, a positive, between And sideways Even put construction activity, mentioned. from stabilized. new I still like and So they benefiting wouldn't of the you both this of at lower seem in the they're of level, the they're we're positive again, stabilizing. line some moving kind kind though as too fine but

Okay.

So that's helpful.

back So are things it in half. some level of at sounds have like least you stabilizing confidence, the

right? of So guy next of contextualize of should you a that kind currents that those in there could good Dodge So XXXX, right? -- Is rates down, us Is of a could we be unpack should to look construction obviously X.X like all years green a for get going or kind how And of last shoots called think, in recovery XXXX, lot have sideways? of for a when about risk kind the terms here, kind weakened, You new are then things your at to different we handful year coming still we unpack the starts of dip, a move where some I and think out cross so. that kind year Or XXXX? help gotten double how into flat? XXXX?

Yes.

fact talked have shoots I starts green call construction to year -- that here troughs early and but and in positive far the that think the really again, 'XX in we're turned So going it's starts that stabilizing stage to of and the go we're this called at Dodge that the the I mirror, to stabilizing best that are at this recessions XXXX. that point, at we're here. -- be fact rearview stabilizing and kind are the forecast point. right? about this think positive encouraging it's are really And not we're I here, new But this Actually, encouraging.

As and I 'XX good mentioned in that's my for remarks, 'XX.

and I that's back as see these overall half So of inflect to we this construction where think believe in have wait to signs for some year get the the uncertainty commercial of up we'll a where But the in and got it's clears you've 'XX. activity. to again, better inflect encouraging picture to we

has tailwind a Can big AS for you business. point your how nice for transportation then And percentage-wise? this Okay. been AS transportation is us remind at

Well, for it's business, overall us. the about vertical for XX%

verticals, to but of contributing smaller Specialty business. the fortunately So part our of our just it's Architectural one

a for but it think, So get specifically nice a -- out the flavor, you broken we can it's haven't contributor, nice for segments, I business. our for a tailwind

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

fuel earnings First, wanted the like a prices steel impacts I lot JV? how far have the that prices? then us volatility remind and And how want through you you in have this WAVE if to year. that margins can with to moved and -- down so also I flows ask your And

of accounting just... Do you and this take side the want to

Yes.

Okay.

been of price a and coming P&L. basically inflation with it's Rafe, actually WAVE there. in and this terms actively lag We saw steel. to in typically, because monitoring that And this some costs the and in pricing line deal demonstrate able the manage we hitting to quarter consistently seen we've -- running some managing pricing has through in So about it's

expansion So of about been successful way drive there. in and lag a accordingly. AUV the pricing managing, business monitoring by margin that steel and it's But and very continuing not has to quarter manage drive

Yes.

Let me just add.

organization some we auto team some saw had pricing in to of good to front raised then despite would we volatility, December, react it's we to of get say, WAVE November, of get right? out December, because and by part very the terms do February rarely our -- again steel the year, been price big in spikes, I in did unions think a we renewed manage After We job last really in in the which really and it. Armstrong pricing, very I last steel quickly. selling

done equity in front then. since you But that. it's point, moderated to margin of through job your our has earnings, up a Rafe team shows to to nice stay venture, but joint well, of up -- look for an us that And And out that we shows inside right? know try at We stream. it the expansion -- earnings equity terms the in

know you then estate, the announced, really overall, do government the of your on just opportunity so we on aggregate sense to helpful. I like That's you about proven there comments how potential markets it end then have some are ground the I can just you just it. Got spending talk a got of had program. longer green have but of like or term? And up about in wanted to opportunity? tied to And much government this real follow sense

pull-through really energy as well exciting. this to billion earmarked drive try basically accelerate little as savings. program and a the to out of There's Yes. go decarbonization program for $X innovation over This is that can

a footprint, of my and the in I large very -- remarks. Government just as have course, So Federal mentioned

of the market. rate the construction when really a a should adoption lot brings building about is be this the we think an exciting and to So in validating, technology accelerator of the credibility technology

So excited considered. very with we're really but that's that. early the part we're to company of again, and technology excited And ceilings being the be about innings this in it of that, only

So very excited about that.

segments the of versus footprint think distributed all say equally we to we're that institutional verticals overall it's The plays. noninstitutional verticals of institutional fair where market. these market, construction participating these I playing of institutional of participate since across commercial all across and the we're across the in And those,

very That's helpful.

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

to wanted do on cleanup of a Just couple little items. housekeeping a

comp reform. that, in with was mostly in expect to I you that or think talked incentive SG&A, First, the related

to continue the Fiber was we're if right. Could expect rate continue to a you similarly in So X quarters, we here I that I for you about heard talk Mineral SG&A thought. because model assume that, run going quarters? Should than few also little higher another we for that another to

some talked in cap. issues timing And working about then you

clear just could you if for were, those us. up what that wondering Just

Sure.

company your then higher employee in see did impact from Mineral Fiber to go if the start -- If so contribution with SG&A to then I due Let incentive to me compensation. the based costs, acquisitions. specifically And costs driven in the go $X by comment million to due on was with I being the about the that largely question, and was inflation. employee quarter Fiber of the Mineral SG&A back terms We back total the SG&A to go acquisition. was overall AS, to higher

I run if run and rate rate a acquisition incorporated take of kind that about is from think So into a the forward. going more sticks back basis, it's the and contribution step it

on what perspective, second itself is. adjusted It's items free will of confident in the On accounts was out half. related here timing back that work that updated really timing in working of this the cash again, the to issues AR about and receivable, we and and half Again, reverse not that's will a timing from just collectibility guide what year. here capital, that the saw in our the confident flow. No

you. Got

comp, to don't forward? make that's expect -- Fiber, just of at that that to Is going necessarily that, the continue to $X higher on correctly million higher what rate saying? going you you're due sure So incentive you heard Mineral I

Yes. Yes. quarter -- that associated recorded That performance. was was yes, the in our with

extent forward. going that not So to no,

Perfect. That's clear. very

is the project Second Vic, And them XX% Canopy. Canopy you guess more improvement? what initiatives question curious of we in broadly, as work should we there I relates to discrete driver about to in these a I running thinking about was about sales up or continuous about talked ProjectWorks growth think XX%. digital line as be through

these should way getting you to expect get Or sort going from these for thinking the is seen be initiatives? about rather to much sense or assess term. just benefit Just a of we as in a other that from more or margin advantage be words, sales to you're a how there kind your is In competitors? get trying incremental of how versus longer just to sustained

Yes, understand the question, question. I good it's Stephen. And a

maybe efficient. uniquely and their than this allows Armstrong best help improving make fully them about more engagement to the with more -- intent us, think I ProjectWorks, is our think architects realize to them design it's For It with solutions contractors believe, way others. we're more to and we

So the of AUV that specifications. and more really with and specifications helps holding on winning the of kind just both to

improves. quality So specifications be the the of may

risk more value what it to continuous taken out I is think, automation about the drive That's we've asking through right? higher solutions it, around of terms easy, of you're improvement. because probably way some the in marketplace ability on, into additive of the made the And software. think it ProjectWorks but to It's our we've by it --

the side, higher, so and to market, them incrementality through fall do with Canopy kind the and It and relatively do to the walk much of site. untouched, we think them, or to the this us transact of go to speak, that believe to a renovation underserved allows need them part we're we're helping expensive is renovation business they the them On educates platform. that through tapping on actually too smaller work, owners accomplish don't where cracks, through the into then know to it's

until one until and them energy contributing a some again, economic we quarter. get But which That's the far. to well about so this low the is to to The Healthy the have be we those savings had would is the in positive it's the So the in really benefit how market. Spaces that's I way double-digit complete, with both to products spaces been carbon, and as volume incremental some more real and think higher embodied healthy evolving traction growth. more growth nice on we our volume, in AUV side put get that, again, this

I as is the initiative think that healthy really can well. spaces EUV assume you boost an

lot know, lot business to next And growth a bringing AUV the over been confidence, growth. we're again, XX has of the now, brought this year. talking of of a that years, with drive consistently we're to continued rate about innovation we to hallmark growth support years. been has we're around in really XX continue of us we able every a encouraging to be date AUV platforms gives that these And going for the to you for AUV technology So market as of --

Great. That's really helpful.

comes question line UBS. of final your the with And from Lovallo John

off, extra on up contributions the John. outlook time. a Mineral from frame They from, outperformance are about base. versus how the guys I in you Fiber for relative down relative then how Actually kind of would volumes it, market your X%. could market on around given the [indiscernible] the the we half in the call the think guess, demand I zone that little again, Matt versus back AWI's contribution in over volumes you shipping first And versus implies appreciate X%, Again, your are quarter. outperformance? guys just

Yes.

last in kind first consistent the market been X of the range. of down on quarters. the the It's of single-digit low we've couple as calling been So parts out that, is there

Our our offsetting as to growth X% X% are contribution of the tune consistent they again, has initiatives initiatives, been, gain to traction.

the quarter, that for So noise compensate in the a low large portion single-digit to period second little we And downmarket. then offset that. with of that base of a bit

back let you... low Chris, market say I'd single our down line. half, X% again, And in I'll that X% days, growth then volume shipping contribution and to of the consistent -- in So initiatives digits a the on we're those low with on expecting very consistent

Sure.

we're the yes, days X prior So versus up the of year the year. and shipping back half

incorporated talking coming rest activity in the our now year retail guide back in year we've higher that this earlier the some saw for of we out. about the and for XXXX, year in full of inventory that recall, than is So been our guide

we of half that's additional X that days that, the shipping extra largely this happen back offsets to year. So and in assume going the

the it And up guidance, around EBITDA midpoint million then your in be around implies $XX back I guess based year-over-year. the could of of EBITDA on million $XXX half

are it in is et look how So you when your you the AUV, thinking half bridge costs, input EBITDA at guys back volume, cetera.? that guys about

on when like-for-like just back AUV lesser suggest performance to Again, extent think level, a does the I year, half the mean strong really on I a in a you earlier to the it of expect back to at deceleration, Yes. hit of half year. that bit about high of talked price strong the get half maybe first AUV. little

half we're the valuations, to the the the that's you inventory pieces, think But of of in not going of half here in day, when the other bit related at back the repeat year year. about seeing benefit and the end to a first of

from WAVE half We our of much equity saw an degree, front half benefit year. to the in a obviously, the of earnings outsized back this the year in lesser

of kind feel think But that. about So our about how and that's back for the 'XX. half full again, good I modeling guide with associated we what the published year and have

to And Mr. Vic that remarks. now back concludes question-and-answer closing will turn conference session. Grizzle our over for the I

consistently. you, very the much this thank muted you executing we pleased and performing all margins value our market, again sideways growing way for and in of Thank I'm kind Yes. as teams as Again, joining. are with and can extracting

with how in So outlook really performing and pleased our we're forward half. to better a looking back

you update. and our So again, we'll thank you next for on keep joining, posted

your this gentlemen, We participation. and call. Ladies concludes you today's for thank

disconnect. now may You