Armstrong World Industries Inc Q3 2024 Earnings Call Summary

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

Question: Susan Maklari Maklari - Goldman Sachs - Analyst : Vic, my first question is thinking about Mineral Fiber volume growth given the backdrop that you outlined and some of these stabilizing factors or some of the green shoots that you're starting to see across some of the end markets and the different verticals. How are you thinking about the potential to get back to that longer-term volume outlook in Mineral Fiber? Any thoughts on the trajectory there? And maybe how that could to come through over the next several quarters?

Question: Susan Maklari Maklari - Goldman Sachs - Analyst : Yes. Okay. You're right on that. But I appreciate the color and that commentary in there. And then maybe turning to margins. You saw some really nice tailwinds from the productivity initiatives that you've been pursuing in the last couple of quartes. I guess as you look out, can you talk to the opportunity that's still out there? And any thoughts on how some of that may come through over time?

Question: Keith Hughes Hughes - Truist Securities - Analyst : Input costs have been a tailwind for the whole year and pretty small here in the third quarter. Can you talk about what you're looking at for the fourth quarter and early next year? Again, this is in Mineral Fiber.

Question: Keith Hughes Hughes - Truist Securities - Analyst : That's very thorough. One other question, we had some nice growth here on Architectural -- organic growth on Architectural Specialties, you called out transportation. Is it particularly large as a part of AS sales or was it just this period of time that the end user market is doing particularly well?

Question: Adam Baumgarten Baumgarten - Zelman & Associates - Analyst : One topic of AUV, just given the August price increase, which seemingly has gone pretty well. Do you expect AUV maybe to accelerate a bit on a year-over-year basis in 4Q to get to that -- to the guidance you've given?

Question: Adam Baumgarten Baumgarten - Zelman & Associates - Analyst : Okay. Great. And then just on SG&A in Mineral Fiber, it's been a year-over-year headwind for the past couple of years. It seems to maybe be moderating a little bit. How should we expect that to trend into the fourth quarter year and then maybe into 2025 at this point?

Question: Adam Baumgarten Baumgarten - Zelman & Associates - Analyst : Just on Mineral Fiber SG&A has been a year-over-year headwind for the last couple of years or so. Is that moderating? It seems to down a little bit in the third quarter. How to think about that in 4Q and then into next year?

Question: Jadrosich Rafe Rafe - Bank Of America - Analyst : For the fourth quarter, I think you said that for AS segment, you would have quarter-over-quarter revenue growth, which does imply like a pretty big acceleration. So the first question on this, like, is what's driving that? And then what does that imply for Mineral Fiber volume? And what are kind of the puts and takes there?

Question: Jadrosich Rafe Rafe - Bank Of America - Analyst : That's helpful on the components. And then just following up on an earlier question just on the SG&A cycle. If I go back four or five years, like the SG&A as a percent of sales is up quite a bit. You've made really significant investments in like Kanopi and Projectworks. Can you talk about like the return you've seen on those investments? Where you are in those like the investment cycle for those? And then how do we think about that going forward?

Question: Garik Shmois - Loop Capital - Analyst : Just on the mix impact in 3Q on AUV. Just to be clear, is that mostly a function of the growth we saw in retail. And I guess just to drill in on the retail strength that you commented on. Was it primarily a load-in? Or are you see point-of-sale accelerate as well?

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

Question: Kathryn Thompson - Thompson Research Group - Analyst : Just following up on a recent WAVE acquisition in the data center space, can you give a little bit more color on this acquisition? And also when you think about M&A and growing the Armstrong portfolio, more color in terms of how much you're focused on the data center space versus other areas for growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 2:00PM, AWI.N - Q3 2024 Armstrong World Industries Inc Earnings Call

Question: Kathryn Thompson - Thompson Research Group - Analyst : How you go after business for data center? It's going to be different than some more of what I call traditional end markets, be it hospitality or office. How do you approach the strategy towards gaining growth and been gaining sales and gaining mind share specifically in data centers throughout the US?

Question: Kathryn Thompson - Thompson Research Group - Analyst : Yes. We're just finding in some of our work at the decision-making processes for data centers has been a big departure from other types of projects. And so that was really the driver for that question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 2:00PM, AWI.N - Q3 2024 Armstrong World Industries Inc Earnings Call

Question: Fiona Shang Shang - Jefferies - Analyst : This is Fiona Shang for (inaudible) Congrats on the good quarter. You mentioned the market conditions continues to stabilize. So just curious about your thoughts in terms of the recoveries as we're going into 2025? Should we expecting some more growth in the second half of 2025 following the rate cut?

Question: Fiona Shang Shang - Jefferies - Analyst : Perfect. That's helpful. And then just a quick follow-up. Margin expansion for Mineral Fiber this quarter was pretty good. So how should we think about the cadence for this segment going into 2025? Any color on margins or revenue will be helpful.

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

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