Armstrong World Industries Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Zach Pacheco - Loop Capital Markets - Analyst : Good morning. This is actually Zach Pacheco on for Garik. Thanks for taking my question. Maybe to hone in on the mineral fiber AUV again, I'm just curious how much of the implied guidance rates includes maybe a second price increase later this year versus kind of just what you're currently seeing and what you've already secured. Thanks

Question: Zach Pacheco - Loop Capital Markets - Analyst : Understood, that makes sense. And then maybe just any more color on current bidding environments across your verticals? Any change to the office and market or what you're expecting to see? Thanks.

Question: Keith Hughes - Truist - Analyst : Of course, it's a long wave with the steel tariffs coming in, you talk about the impact, what you're having to do on pricing there.

Question: Keith Hughes - Truist - Analyst : Yeah. Question is on wave, you talk about the impact there, the steel tariffs and what they're having to do on pricing.

Question: Keith Hughes - Truist - Analyst : Historically, when wave raises prices, is there a margin drag until they catch up with the input, with the -- what's happened on the inputs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 2:00PM, AWI.N - Q1 2025 Armstrong World Industries Inc Earnings Call

Question: Keith Hughes - Truist - Analyst : Final question on on the specialty business, how much did price play a role in the reported numbers and what are you expecting on that for the rest of the year?

Question: Philip Ng - Jefferies - Analyst : Quick question on the home center side of things, you called out weather impacting the quarter one. Have you started seeing that normalize that? I think weather has cleared out a bit in March and April. So just curious to see what you're seeing on the home center side of things and then how they've kind of managed the inventory. I mean, it's lumpy from time to time.

Question: Philip Ng - Jefferies - Analyst : Okay, so we should expect the drag you saw on 1Q from the home center to kind of flush out it's kind of a non-event for 2Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 2:00PM, AWI.N - Q1 2025 Armstrong World Industries Inc Earnings Call

Question: Philip Ng - Jefferies - Analyst : Okay, that's helpful. And then Vic, I think you kind of pointed out, if I heard you correctly, maybe it was AS or maybe it was a broader comment for new construction, but I think based on the backlogs you have right now, it sounds like you're pretty confident it could carry through '25 and appreciating that AS business new construction, there's a longer lag. Do you have enough line of sight to give us some color on what you're seeing on 2026? If you've seen bidding activity, quoting activity for that channel, AS particularly, going out to '26, what's an early look right now?

Question: Rafe Jadrosich - Bank of America - Analyst : I think last quarter, you said you were expecting, I think inflation -- a cost inflation for the year in the low-single digit range. Can you just give an update of what you're expecting now and then the difference between energy and freight and raw materials?

Question: Rafe Jadrosich - Bank of America - Analyst : Got it. That's helpful. And the higher price realization, your guide is what's off offsetting that?

Question: Rafe Jadrosich - Bank of America - Analyst : Okay, that's helpful. Just on the AS side, the organic growth, obviously, had M&A contribution, but the organic growth is really strong in the first quarter here. How do you think about what the implied organic growth is for the remainder of the year? And how does that compare to the market? What's the market share that you're seeing or your growth relative to the market that you're anticipating?

Question: John Lovallo - UBS - Analyst : The first one is on mineral fiber AUV incrementals, which you know it's consistent with last quarter, but it's below historical levels. I was under the impression that this may have been driven by a little bit more mixed versus price in AUV, but that doesn't seem like it's the case. So curious what's driving that and would you expect this to kind of normalize higher as we move through the year?

Question: John Lovallo - UBS - Analyst : Okay, gotcha. And then manufacturing costs have been a headwind to AS adjusted EBITDA for a few quarters now. Curious what's kind of driving that headwind, and do you expect that to subside as we move through the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 2:00PM, AWI.N - Q1 2025 Armstrong World Industries Inc Earnings Call

Question: Brian Biros - Thompson Research Group - Analyst : I guess on the sales guidance for architectural specialties, looks like it's a slight raise there, I guess kind of goes against the general uncertainty in the market. And I know you talked about a few trends there throughout the call, but just curious if you could expand on what is behind the raise there for the guidance of its project timing or better acquisition cross selling or something else, just what what's driving that?

Question: Brian Biros - Thompson Research Group - Analyst : Understood. And then on based on the updated middle fiber volume guidance, are there any specific verticals that you would expect to see? Maybe a quicker or more severe pullback based on your historical reference, or is that more of a broad-based view that everything would discretionary type spend would pull back kind of in line with everything? Thank you.

Question: Stephen Kim - Evercore ISI - Analyst : I just wanted to follow up on that last point there. Discretionary projects, do we see any kind of -- should we expect to see any kind of AUV or margin impact if you do see a decline in discretionary first? And I'm also kind of wondering whether or not you might see or anticipate you might see maybe smaller customers having more of a sort of a disproportionate impact from the sentiment impacts you were referring to earlier? Similarly, could that have an AUV or margin impact worth calling out?

Question: Stephen Kim - Evercore ISI - Analyst : Yes, absolutely. That was exactly my question. I appreciate that. And then second question relates to the again staying on AUV impacts, the home center softness, I'm wondering, does that also have some sort of an AUV effect? In other words, was AUV maybe a little benefited by the home center softness this quarter as well?