Oct 27, 2026 earnings call — Record third quarter sales and updated outlook
Armstrong reported record third quarter sales with net sales increased 12%.
Revenue $0.5B (est $0.5B) · EPS $2.26 (est $2.39)
Key quotes
"The increase in input costs was driven primarily by freight and raw material inflation."
"Turning to Architectural Specialties, net sales increased 22%, including impressive organic growth of 16%, the highest quarterly organic growth rate in the segment's history."
"Our Mineral Fiber manufacturing teams were part of that effort and continued to execute well this quarter, setting an all-time record in plant reliability for the network and topping their record Q2 performance, while also keeping our perfect order fulfillment measure at high levels."
Analyst Q&A 10
how company tells designers about products
Q (Susan Maklari · Goldman Sachs): How are you communicating your recent product initiatives to architects and designers, and how are you monitoring channel demand and macro changes?
A: They showed products at NeoCon and equipped the sales team to present the full portfolio to architects and designers. They market big projects like SeaTac, stay close to design customers, and gather market insights from commercial teams, distributors, and contractors.
"We are going to market and equipping our commercial organization with the full range of that portfolio." — Mark Hershey (CEO)
pricing and customer pushback
Q (Tomohiko Sano · JPMorgan): Are higher rates and costs changing customer behavior or causing deferrals? And is there pushback to recent price increases and surcharges?
A: They are not seeing material deferrals or weaker intake; project values remain high and demand for premium solutions continues. They take a disciplined, market-based pricing approach tied to inflation and expect to maintain that discipline despite the rapid inflation, especially in freight.
"We take a very disciplined approach as we have for, frankly, decades." — Mark Hershey (CEO)
Mineral Fiber AUV and next year pricing
Q (Adam Baumgarten · Vertical Research Partners): Do you expect the mix pressures on Mineral Fiber AUV to continue into Q4, and could price realization be higher next year given recent inflation?
A: They expect a full-year AUV of 5.5% with stronger-than-expected pricing and some softer mix carrying into Q4. For 2027 they are still modeling the budget but noted additional off-cycle price increases in 2026 across businesses to address input inflation.
"Just to unpack AUV kind of progression, if you will, outlooking a full year of 5.5%." — Chris Calzaretta (CFO)
cost pressure outlook and timing
Q (Keith Hughes · Truist): Will cost pressure get worse in Q4 for Mineral Fiber and continue into early 2027? Is AS facing similar cost pressure?
A: They expect inflationary pressure to remain elevated into Q4, especially freight with diesel above $6 a gallon, and metal costs pressure in AS. They keep using their pricing algorithm and can realize price with possible lag effects, but they expect AS margins to improve sequentially in Q4 from actions taken.
"Sequentially heading into the fourth quarter for sure, we believe that the inflationary pressure is still elevated, especially on the freight side." — Chris Calzaretta (CFO)
Canada pull-forward and SG&A drivers
Q (Garik Shmois · D.A. Davidson): Can you quantify the pull-forward from Canadian shipments and expected destocking? Also, what drove Mineral Fiber SG&A and how do you control costs?
A: They called the Canada effect a timing dynamic and did not size the pull-forward precisely, while still expecting 1 point Mineral Fiber volume growth for the year. SG&A was flat at the company level; Mineral Fiber was favorable by $3 million due to compensation timing, AS SG&A rose by $3 million for organic growth and the Eventscape deal, and they are focusing on discretionary cost controls to keep SG&A under 20% of sales.
"At the total company level, we were essentially flat, versus the prior year." — Chris Calzaretta (CFO)
acquisitions performance and outlook
Q (Rafe Jadrosich · BofA): How is inflation outlook changing and which acquisitions are not meeting expectations or are driving lower margins?
A: Total input-cost inflation is at the higher end of mid-single digits, driven by 20% freight inflation; energy and raw materials are low single digits. Of the three recent AS acquisitions, two are performing as expected, but the smallest, Parallel, is ramping slower operationally and not meeting expectations yet, though integration and performance are improving each quarter.
"The smaller of the three, the Parallel business, is the one that's not meeting our expectations and ramping, frankly, more slowly than we had expected." — Mark Hershey (CEO)
AS margin lag and Q4 recovery
Q (Stephen Kim · Evercore): Will the AS pricing lag still be a headwind into Q4, or will margin rebound by year-end?
A: The comment that Canada mix moderates by year-end referred to the Canada dynamic specifically; they still expect continuing inflation and pressure in AS but are expecting sequential margin improvements into Q4. AS project pricing has short, mid, and long-duration quotes, so price realization will move through steadily while their actions offset the lag.
"We are going to continue to expect to see, as Chris said earlier, some of this continuing inflation and pressure in AS." — Mark Hershey (CEO)
WAVE volume and equity earnings timing
Q (John Lovallo · UBS): Why were WAVE equity earnings up in Q3 and do you expect steel pricing or timing to affect Q4 or require more price actions in Q1?
A: WAVE saw higher volume from commercial business strength and Canada, and data centers also helped top-line growth; some of the Canada volume was timing ahead of tariffs and may come back in Q4. They expect continued steel and input inflation but feel well positioned and have taken pricing actions this year.
"WAVE benefited from higher volume in the quarter with strength in the commercial business and also Canada." — Chris Calzaretta (CFO)
sensitivity to interest rates and M&A needs
Q (Phil Ng · Jefferies): Are higher interest rates affecting bidding or project timing, which parts of the portfolio are rate-sensitive, and is more capex or M&A needed for structural grid or data center growth?
A: On-the-ground bidding activity remains steady with maybe some longer award timelines but no meaningful change yet; contractor backlogs are solid. They do not split the portfolio by rate sensitivity because they sell integrated solutions, pursue differentiated capability M&A, and are investing at the WAVE joint venture for data center growth as needed.
"The on-the-ground sentiment does not suggest that we're seeing a material change in the steadiness of that bidding activity." — Mark Hershey (CEO)
AS growth: more projects or more share per project
Q (Brian Biros · TRG): Is AS growth from winning more projects or from cross-selling more products on the same projects? And what productivity actions are included in the typical 3% savings?
A: They do not track wins exactly that way, but directionally they are winning more on each job and also growing by project value and count, especially in transportation. Productivity comes from operational excellence: reducing downtime and scrap, improving plant reliability, and extending that mindset enterprise-wide to SG&A.
"We are winning more on every job, and that's absolutely what we're trying to do." — Mark Hershey (CEO)