Armstrong World Industries Inc Q4 2024 Earnings Call Summary

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

Question: Susan Maklari - Goldman Sachs - Analyst : Thank you. Good morning, everyone, and congrats on a nice quarter. I want to start by talking about the new products because it sounds like you're gaining some really nice momentum there that is starting to truly come through in the results. Can you talk a bit more, Vic, about some of those initiatives that you are seeing out there? How we should think about the guide for the Mineral Fiber AUV to come in ahead of the historical range for '25? How much of that is coming from these initiatives relative to like-for-like pricing in there? And just any additional color on them and how those products are coming through in the marketplace?

Question: Susan Maklari - Goldman Sachs - Analyst : Yes. Okay. That's great color. It's very exciting to hear that. And then maybe turning to the discretionary R&R side, I appreciate the commentary you gave on the broader market and how you're thinking about some of those factors coming in. Can you talk a bit about that discretionary R&R piece, just given where rates have been and any additional color on what you're seeing there and how you're thinking about that as we move through 2025?

Question: Susan Maklari - Goldman Sachs - Analyst : Yeah, no. That was great. Thank you for all of that, Vic, and good luck with everything.

Question: Garik Shmois - Loop Capital - Analyst : I'm just wondering if you could provide a little bit more color on how we should be modeling the quarterly cadence for the year. You're going to continue to expect to see more variability as you navigate these choppy conditions, but any additional handholding, whether it's on the top line or on the margin would be great.

Question: Garik Shmois - Loop Capital - Analyst : Okay. That's helpful. Wanted to follow up on AUV, you're guiding to another year of above normal AUV growth. You've been speaking (inaudible) previous question with respect to our favorable mix moving forward. If you start to see some better demand conditions as you're expecting, is it reasonable to think that we might be entering into a period that is normal with AUV growth, both on where for like and mix? And the AUV could be above normal for an extended period of time here?

Question: Garik Shmois - Loop Capital - Analyst : Okay. Very good. Thanks. That's all I have.

Question: Keith Hughes - Truist Securities - Analyst : Thank you. Just on the rear end, a couple one end-user market office with solid gets a lot of discussion. How did the order pattern, particularly in Office renovation in the year-end, what are you expecting from that in 2025?

Question: Keith Hughes - Truist Securities - Analyst : Okay. One other question is we entered '25, what was (technical difficulty) news remarkable as strong as well?

Question: Keith Hughes - Truist Securities - Analyst : All right. Thank you very much.

Question: Fiona Shang - Jefferies - Analyst : Hi, this is Fiona on for Phil. How do you expect the recent tariff on steel and aluminum to impact your WAVE earnings in 2025? I'm just wondering, do you have the ability to push price higher?

Question: Fiona Shang - Jefferies - Analyst : Thank you. That's really helpful. And my follow-up questions will be in your 2025 guidance, you mentioned a choppy market outlook for Mineral Fiber, (technical difficulty) said volumes in that segment probably inflecting 2026?

Question: Fiona Shang - Jefferies - Analyst : Thank you. Appreciate the color.

Question: Aatish Shah - Evercore ISI - Analyst : Hi, this is Aatish on for Steve. Thanks for taking the questions. So first, in Mineral Fiber, you mentioned the input costs become a headwind in the quarter. Could you clarify which inputs? And how we should think about the pressure there as we move through 2025?

Question: Aatish Shah - Evercore ISI - Analyst : Great. That's super helpful. And then on our expect upon the Bear acquisition, can you help us contextualize the total percentage of the company sales that are in exteriors now?

Question: Aatish Shah - Evercore ISI - Analyst : Great. Thank you.

Question: Rafe Jadrosich - BofA Global Research - Analyst : Starting with Templok, can you talk about how you think about the potential either TAM or market size of Templok relative to some of the other growth initiatives you've had over the last few years, like a Healthy Spaces or Canopy. How big could Templok be over time?

Question: Rafe Jadrosich - BofA Global Research - Analyst : And then two more follow-ups on Templok, of the cumulative growth initiatives you've had there has been investment and ramp associated with that? Do you need to put additional SG&A to drive that conversion or for product innovation on Templok to realize that market opportunity? And then the second question is like how do we think about Templok AUV relative to your average check?

Question: Rafe Jadrosich - BofA Global Research - Analyst : You wouldn't expect to step up and put beyond '25, you would not expect a step-up in SG&A or CapEx where you'd already done to support the growth?

Question: Rafe Jadrosich - BofA Global Research - Analyst : Great. Thank you.

Question: John Lovallo - UBS Securities LLC - Analyst : The first one is you're expecting flattish Mineral Fiber volume growth in 2025. Curious, first of all, how that compares to the market? And then I think, last quarter you guys it seems reasonably confident in the ability to return to more normalized 2% to 4% volume growth this year. Sounds like markets have stabilized a bit, maybe some green shoots. So what's it going to take to get back to those levels of growth?

Question: John Lovallo - UBS Securities LLC - Analyst : Okay, makes sense. And then on Architectural Specialty, the EBITDA margin forecast 18%, it seems like that's being impacted by some of the more recent acquisitions like Zahner. Just curious, does this change or push out the outlook for consolidated 20% EBITDA margins in that segment?

Question: John Lovallo - UBS Securities LLC - Analyst : Got it. Thank you, guys.

Question: Brian Biros - Thompson Research Group - Analyst : On the Zahner acquisition, I guess it seems like a larger step into the exterior space in like a strategic decision to go into that category as mentioned. I guess, how do you think about further acquisitions to round out the extra offering? Or is that more of a organic growth initiative from here to attack that? I mean, you mentioned $1 billion in new addressable market.

Question: Brian Biros - Thompson Research Group - Analyst : I'm excited to see how that turns out. I guess on the guidance for '25, I guess what are the puts and takes to get maybe to the high-end, low-end of guidance between volume AUV, and they also drive the range it seems like volume, I think the biggest driver of the range. Any more color would be helpful. Thank you.

Question: Brian Biros - Thompson Research Group - Analyst : Thank you.