Armstrong World Industries Inc

Ladies and gentlemen, thank you for standing by and welcome to the Q3 2022 Armstrong World Industries Inc. Earnings Call. At this time, all participants are in list mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. I would now like to turn the call over to your host, Theresa Womble, Vice President of Investor Relations. You may begin.

Thank you, Kevin, and welcome to everyone on the call this morning. Today, we'll hear from Vic Rizzo, our CEO, and Chris Calzaretta, our CFO. who will discuss Armstrong World Industries' third quarter 2022 results and rest of your outlook, along with progress on our growth initiatives. Our discussion of operating and financial performance will include non-GAAP financial measures within the meaning of SEC Reg G. A reconciliation of these measures with the most directly comparable GAAP measures is included in the earnings press release and in the appendix of the presentation also issued this morning. Both are available on our Investor Relations website. During this call, we will be making forward-looking statements that represent the view we have of our financial and operational performance as of today's date, October 25, 2022. These statements involve risks and uncertainties that may differ materially from those expected or implied. We provide a detailed discussion of these risks and uncertainties and our SEC filings, including the 10Q filed earlier this morning. We undertake no obligation to update any forward-looking statement beyond what is required by applicable securities law. For those of you now following along, please turn to slide four on our presentation as we turn the call over to Vic.

Thanks, Theresa, and good morning, everyone. Today we reported solid top-line growth of 11% for the third quarter versus the prior year. with mineral fiber net sales increasing 9% and architectural specialty net sales up 18%. Adjusted EBITDA increased 5% year-over-year, and our consolidated EBITDA margin performance improved sequentially. As we noted in our press release this morning, we achieved this growth while facing continued headwinds on input costs and softening market conditions. This softening was primarily felt in discretionary renovation work, that limited our mineral fiber unit sales growth to just 1%. This pause in discretionary work developed throughout the quarter and was experienced mostly in our independent distribution sales channel. We saw impacts on both mineral fiber and grid sales. In contrast, we had good performance in our retail and Latin America channels, which resulted in an unfavorable mix that pressured AUV performance in the mineral fiber segments. Supply chain issues improved in the quarter, but labor constraints continued, constraining construction capacity and perpetuating elongated project timelines. And as expected, new construction activity remained a headwind in the quarter. However, as the quarter progressed, we experienced the impact of greater economic uncertainty and higher interest rates on commercial construction activity. This unexpected slowdown appeared to track the decline in overall economic sentiment such as weaker GDP estimates, deceleration and commercial construction indicators, and expected further moderated inflation. This backdrop presented opportunities for projects to pause, and many did. Despite softer than expected market conditions, however, I'm very pleased with how our teams are executing and how our plants are operating. Their efforts are responsible for driving strong productivity as we continue on our lean manufacturing journey. Our teams are also maintaining a best-in-class customer service level, and our sales teams have worked diligently to execute well on our pricing initiatives. In the architectural specialty segment, we continue to generate strong top-line and bottom-line performance in the quarter. Our team delivered a third consecutive quarter of record-setting sales and generated $16 million of EBITDA. This is the highest earnings quarter on record for the segment and a 20% increase from last year's result. Importantly, EBITDA margins expanded above 17%, continuing its sequential margin improvement on our way back to 20%. Although sales strength was broad-based across all material groups and verticals within architectural specialties, we are particularly pleased with the growth achieved by our most recent acquisitions, Turf, Arctura, and Moe's each generated double-digit sales growth in the quarter. Turf specifically delivered year-over-year sales growth of more than 40% in quarter while expanding their margins. These are outstanding results and further demonstrate the synergies possible for these smaller but highly capable companies on the Armstrong platform. New order intake in the quarter remains strong also and supportive of our double-digit growth expectation for the full year and continued strength in 2023. We've seen robust quoting activity in education and transportation, with solid wins in both of these verticals. The activity on transportation projects includes a mix of new construction and major renovation projects. Our recent investments in new product development in metal, wood, and tectum has also strengthened our ability to get specified into more projects, into more spaces, and ultimately drive additional growth. The breadth of our portfolio with our expanded design capabilities and now our size and scale, we're clearly establishing our leadership in this most important growth segment. With that, I'll pause and hand it over to Chris for some more details on our financial results. Chris?