Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Q1 2025 Armstrong World Industries, Inc. Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and the number one on your keypad. Star and the number one. It is now my pleasure to turn the call over to Theresa Womble, VP of Investor Relations and Corporate Communications. You may begin.

Thank you, Amy, and good morning, everyone. On today's call, Vic Grizzle, our CEO, and Chris Calzaretta, our CFO, will discuss Armstrong World Industries' first quarter 2025 results and rest of year outlook. We have provided a presentation to accompany these results that is available on the Investors section of the Armstrong World Industries website. Our discussion of operating and financial performance will include non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of these measures with the most directly comparable GAAP measure is included in the earnings press release and in the appendix of the presentation, both of which were issued this morning. 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, April 29, 2025. These statements involve risks and uncertainties that may differ materially from those implied or expected. We provide a detailed discussion of the risks and uncertainties in our SEC filings, including the 10-Ks filed earlier this year. We undertake no obligation to update any forward-looking statement beyond what is required by applicable securities laws. Now I will turn the call to Vic.

Thank you, Theresa, and good morning, everyone, and thank you for joining the call today to discuss our first quarter 2025 results and our expectations for the rest of the year. Our first quarter was another quarter of record-setting sales and adjusted EBITDA for Armstrong as we continue to execute our growth strategy well, improve our productivity, and expand our capabilities into new market opportunities. In the first quarter, total company net sales increased 17% and adjusted EBITDA increased 16% with meaningful margin expansion in both of our segments. In fact, it was the best Q1 margin performance in both segments since 2020. These results were a clear demonstration of the strength of our business model, the diversity of our end markets, as well as the strong execution culture we have here at Armstrong. Delivering these financial results in an environment of elevated uncertainty requires focus and agility to adjust to changing operating conditions and customer needs. Doing this well while continuing to deliver industry-leading quality and service levels our customers have come to expect. Again, the agility and commitment to execution by our teams was on full display in the quarter, and as many of you have come to know, this is the hallmark of the organization we have here at Armstrong. So I want to take this opportunity to thank all of our employees for their tremendous efforts and their commitment to execution. Now taking a closer look at the first quarter results in our Mineral Fiber segment, net sales increased 2% while EBITDA increased 7%. Sales growth for the segment was driven by a 7% increase in average unit value or AUV versus the prior year, which included favorability in both like-for-like pricing and product mix. This increase in AUV more than offset lower sales volumes primarily…

Thanks, Vic, and good morning to everyone on the call. As a reminder, throughout my remarks, I'll be referring to the slides available on our website and slide three, which details our basis of presentation. Beginning on slide six, we summarize our first quarter Mineral Fiber segment results. Mineral Fiber sales were up 2% in the quarter, driven by favorable AUV of 7%, partially offset by lower sales volumes. The strong AUV result was fairly balanced between like-for-like price and favorable mix. Lower sales volumes were driven primarily by softer demand from our home center customers, who experienced lower store traffic due to a number of factors, including negative weather-related impacts in certain markets. We also had one less shipping day compared to the prior year quarter, which represents about a point of volume in the quarter. Overall, the market we experienced was consistent with the choppy conditions that we expected heading into 2025. Mineral Fiber segment adjusted EBITDA grew 7% despite softer volumes, with adjusted EBITDA margin expanding 180 basis points to 43%. Adjusted EBITDA margin expansion was primarily driven by the benefit of AUV growth and manufacturing productivity gains despite lower volumes. In addition, the segment margin benefited from lower SG&A expenses and favorability in input costs as compared to the prior year quarter. The decrease in SG&A was primarily driven by deferred compensation plan gains. Input cost inflation was more than offset by favorable inventory valuation timing impacts. Similar to Mineral Fiber, we saw softer grid volume in our WAVE joint venture, driving weaker equity earnings in the quarter. Recall that we are also lapping a strong first quarter of 2024, which was the highest equity earnings quarter of 2024. As Vic mentioned, Mineral Fiber's adjusted EBITDA margin of 43% in the quarter was the best Q1…

Thanks, Chris. And one thing that we have been consistent with here at Armstrong is staying with the investments in our growth initiatives even in times of uncertainty. The reason for this is our high level of conviction in our strategy and the confirmation from the traction we are realizing from our growth initiatives. We kept our investments going in 2020 during the pandemic, and again during the disruption that occurred in 2022. And we will again continue our investments in our growth initiatives in this current period of uncertainty. The strength of our business model and our balance sheet allows us to do so. We continue to be pleased with the reach and the contributions of Canopy, our online selling platform. We've shared how it's helping to drive incremental sales volume for Mineral Fiber and grid products. We have also been adding many more of our Architectural Specialty products to the platform, including solutions from our recently acquired Three Form business. Our ProjectWorks platform, our advanced automated design service, had strong results this quarter and added incremental sales volumes. Using ProjectWorks meaningfully increases the productivity of designers, architects, and contractors with designing and executing complex projects and achieving more efficient use of materials resulting in less waste on the job site. We continue to expand the capabilities of ProjectWorks both in terms of products and design optimization. More and more customers are using this service to enhance their own productivity in their pursuit of their own cost and quality goals. Our innovation, in particular around energy-saving ceiling tiles, is gaining traction in the market and confirming that companies are indeed looking for energy savings for both cost savings benefits and for achieving internal decarbonization goals. Our phase change material innovation, coupled with our acoustical performance, is changing how architects…

Just as a reminder, if you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad to enter the queue. If you would like to withdraw your question, also press star and the number one. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when answering the questions. We do request for today's session that you... Again, your first question comes from the line of Susan Maklari with Goldman Sachs. Your line is now open.

Good morning, everyone. This is Charles Perron in for Susan. Congrats on a strong quarter.

Thank you. Good morning, Charles.

Good morning. Just maybe first, I want to talk about your expectations for volume acceleration in the back half of this year. It sounds from your commentary that orders and activity are holding strong through April. So against that, is the deceleration more signs of conservatism or any other sign to slow down your hearing when speaking with customers? And how do you expect those to flow through across your two segments over the course of the year?

Yeah. It's a good question because we're kind of in the middle of this. Right? Thirty days outside of the announcement of much broader and larger tariffs. So kind of in the middle of this now. So it's a good question. The sentiment from the customers and the reason why I mentioned the on-the-ground bidding activity does remain to be kind of intact and steady and not reflective of what we think the downstream impact of this uncertainty could have in the back half. So, yeah, I think in the current moment and what we're experiencing today is about what we would have expected before I think, again, the announcement of the size and the breadth of the tariffs that has maybe changed the sentiment. So our basis of this outlook for the back half of the year is really experiential. In prior periods where we have event-based disruption in the marketplace, the first thing that goes to the sidelines is that discretionary work. Projects that aren't critical and that can wait, and customers or owners behind those projects move them to the sidelines and wait for a little bit more visibility and clarity. That's what we've experienced, and that's kind of what we're modeling in here. Even though we're not seeing it and feeling it today, we do expect that based on prior experiences, when we have this level of uncertainty for this length of time, the first thing that's going to show up is a softening in the discretionary project work. So again, we've modeled our outlook for the back half based on that experience.

Okay. That's super helpful, Vic. And maybe second, talking about the mix impact in Mineral Fiber, when you consider the pricing actions that you look to put in place or you have put in place, the benefit from recent product introduction like TempLock healthy spaces against the risks of a slowdown. Are you seeing any signs of trade down in mix moving away from those new products? And maybe also it would be helpful if you could provide some context about what you see historically in mix what happening during private dungeons.

Yeah. Again, good question because under these conditions, you would expect maybe some of that trade down to happen. We have not seen that. As you can see in our results in the first quarter, we had a positive product mix, which means that customers continue to trade up to our highest technology products, our highest aesthetic products. So that's continued into the first quarter. Actually, this is a dynamic that transcends downturns. We've seen this for well over a decade now, this natural dynamic to mix up. I don't see that changing in the back half of this year even with the downturn. We didn't see that in the great financial crisis. Didn't see that during the pandemic. And those were much deeper downturns, of course. So we don't expect an AUV mix impact from that dynamic that you're referencing. But let me just add though, when you look at the new technology that we're talking about with our TempLock product, for example, and some of the other technologies around low embodied carbon, these products come at a higher AUV into the marketplace. And so we believe as those transition and become more of a volume multiplier in our portfolio, that there's upward lift on our AUV performance over time. So we believe this has been a trend that's been continuing for a number of years. Well over a decade frankly, and we think that this is a trend that can continue as we innovate into that dynamic that the industry wants to mix up in all parts of the cycle. Again, good question. Thank you.

Thank you. Good luck.

Your next question comes from the line of Garik Shmois with Loop Capital Markets. Your line is now open.

Good morning. This is actually Zach Pacheco on for Garik. Thanks for taking my question.

Hey. Good morning.

Maybe to hone in on the Mineral Fiber AUV again. Just curious, how much of the implied guidance rate 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.

Sure. Hey. Good morning. Yep. So, yes, our guidance does incorporate, you know, kind of as we've stated in the past, getting back to our, you know, normal cadence of, you know, two price increases a year. So, yes, it is reflective of that. And, you know, just to maybe break it down a little bit further, the guide in terms of the AUV does include positive mix and positive like-for-like pricing. So kind of given the backdrop of, you know, tariffs and, you know, higher costs accordingly, that AUV incorporates positive mix and is a little bit tipped to a little more price than mix. But overall, expect, you know, again, a good solid AUV performance in the year. And for modeling purposes, a little bit heavier in the back half than the front half getting back to your question on price increase and pricing.

Understood. That makes sense. And then maybe just any more color on current bidding environments across your verticals? Any change to the office end market or what you're expecting to see? Thanks.

Sure. Let me add a little bit more than usual on the bidding activity. I think it's something obviously, since we're right in the middle of the uncertainty, getting underway here. I've talked in the past about bidding activity in terms of the Dodge first-time tracker on bidding activity. It's really the earliest phase of project launching, and it's something we watch quarter to quarter. That particular measure softened in Q1, as uncertainty was building, and really no surprise. That's exactly what you would expect first-time bids, things that are in the early stages like that. Could take a pause and a wait-and-see mode. And we did see that in Q1. It softened at both the new and the large renovation. And again, just as a reminder, this Dodge first-time bidding activity has somewhere between a twelve to twenty-four month sometimes even greater than that out before ceilings are needed. So it is something that we look at as a kind of high level across the horizon type of indicator of activity that's out there. Again, in summary, this is kind of what we've been seeing over the last seven or eight quarters leading up to this quarter has been this choppy kind of quarter to quarter sideways movement in this particular bidding activity metric. But what I mentioned in my prepared remarks is another bidding activity, altitude if you will. It's really the ground level on the ground, sublevel project bidding type activity and what this bidding activity really reflects is more down to ceiling projects and the interior projects bidding level. In Q1, this remains active and steady. And what we saw was good activity across many verticals like data centers and transportation, schools, hospitals, even Office TI, we saw good activity in the quarter. And I think this is to your question, what we're seeing today is really a kind of a consistent sideways motion on our bidding activity at the ground level. We're going to continue to keep an eye on the flow or the discretionary portion of that ground-level business because we think that's what we're going to see as the first signal that the market is softening up based on this uncertainty. So we'll continue to track that closely and report out on that.

Your next question comes from the line of Keith Hughes with Truist. Your line is now open.

Thank you. A question is along the way with the steel tariffs coming in. Can you talk about the impact, what you're having to do on pricing there?

I'm sorry, Keith. Would you say that last part again?

Yeah. The question is on WAVE. Could you talk about the impact there steel tariffs? What they're having to do on pricing?

Yes. In the WAVE business, we obviously use steel and aluminum for the structure of the grid, structure of our ceiling systems. As a reminder, most of what we source in terms of steel and aluminum comes from the US and is locally sourced. We do bring a small percentage from external markets for, I will say, strategic reasons. We do that so we can shift that volume as we need to local sourcing here. But what we have seen in the first round of tariffs that we saw back in 2018 was steel imports. Is that the local steel companies begin to raise their prices. And so we're seeing actually a kind of an indirect, if you will, or ripple effect impact from the steel tariffs on local steel prices. And so we're having to raise prices in the marketplace to help pass that on. We have two price increases already in the first quarter on the street to try to help us stay in front of that steel inflation. So a little bit less of an inter or a direct impact on tariffs on our fleet business. And a little more of an indirect because of the market pricing coming up.

Historically, when WAVE raises prices, is there a margin drag until they catch up with the input? But with the what's happened on the inputs?

Yeah. In 2018, that happened because the steel tariffs went in. If you remember during the first administration, that happened very quickly, and it took us a quarter or two to catch up. In 2022, that did not happen. We stayed ahead of the prices or the inflation and we didn't see the drag on our margins. So our plan here is going to we're staying ahead of the inflation with our prices and trying to stay ahead of those steel tariffs tariff price increases. So and I expect that we'll continue to expand margins in that business throughout the year.

Hey, Keith. Maybe just one additional point on WAVE is that we still expect that we are used to grow mid-single digits for the year.

Final question on the specialty business. How much did price play a role in the reported numbers, and what are you expecting for the rest of the year?

I'd say minimal. That's really the number of projects that we're winning and the size of the projects. I think it's more on the volume side than a meaningful price. We are raising price in various substrates to stay ahead of any impact from tariffs. But for the most part, the goodness in the strong performance of that business has really been projects and win rates and projects driving that business.

Alright. Thank you. The next call comes from the line of Philip Ng with Jefferies. Your line is now open.

Hey, guys. Congrats on another strong quarter. Quick question on the home center side of things. You called out weather impacting the quarter in Q1. Have you started seeing that normalize out? I think weather's 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 inventory. I mean, it's sloppy from time to time.

Yeah. That could be lumpy as you acknowledge. Yes. We have seen orders to normalize, especially in those locations that were hardest hit by the severe weather. So, yeah, that's getting back to its normal run rate.

Okay. So we should expect the drag you saw in Q1 from the home center to kind of flush out kind of a non-event for Q2.

Yeah. I think for the rest of the year, I would just I wouldn't call it Q2, just because they can flex their inventories over a quarter as we have reported on numerous times. So I would say for the year. We don't expect this to be anything different than what we see in the rest of the marketplace for the year. So this timing-related impact should work its way through.

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 on new construction. But I think based on the backlog you have right now, it sounds like you're pretty confident it could carry through 2025. 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 in 2026 if you've seen bidding activity quoting activity for that channel, AS particular, going out to 2026. Know, what's an early look right now?

Yeah. You know, the new construction side of the business and the equation is from the back half of 2023 and 2024 positive new construction starts. Right? So those, when you lag those out for when a ceiling is required for those new construction jobs, we think that that's really going to hold for 2025. And if you spent all that money on those projects, the time you get the ceilings you're likely to finish that work. And so that's kind of our assumptions going into that. We don't see a big disruption on new construction coming through as we lag it into 2025. We have better line of sight. Folks, to your question around project the and the project nature business of the Architectural Specialties. I can tell you that we're closing good work for the back half of this year in 2025. Of course, into 2025 or 2026, and even into 2027. Some of these projects are larger and longer-term, so we're starting to close work out into those. But it'd be really premature for me to talk about the magnitude of that and what that could mean for us for 2026. But again, I would just point you back to the momentum this business has created, started in the half of 2024, it's continued into the first quarter of 2025. The team is doing really well. And closing work. I think we're closing more work. And I expect that momentum to continue.

Thank you. Your next question comes from the line of Adam Baumgarten with Zelman. Your line is now open.

Hey. Good morning, guys. On the incremental price increase, I know it's typically been in February and August each year. Is that another way to think about it this year as well and perhaps maybe a higher price increase than maybe what you put through in February or kind of similar? Just curious how to think about that.

Yeah. I would say it's, at this point, on our normal, twice-a-year pricing cadence, I think the amount and the extent of that will really be dependent upon, you know, kind of how the overall tariff and cost landscape unfolds. So gonna continue to keep an eye on that as always. But for purposes of, you know, at this point in time and what we have, you know, somewhat of a line of sight too, that's how we're thinking about it. Again, as I commented on AUV and our AUV growth for the year, you know, again, tips more towards price with positive mix, and again, that's largely on us continuing to stay close and monitoring the cost side of our business. And then adjusting the price side accordingly.

Okay. Got it. Thanks. And then just maybe on the education market, not sure if you guys touched on that, but curious what you're seeing there. I know the Ester Funding kind of rolled off to some degree. Are you seeing any change in the trends you've been seeing over the last year or two?

Yeah. Not materially. We've been watching it very closely as well. There were a lot of bonds that were approved for education at the state level in November. We were hopeful that that might fill in some of the gap from the extra funds. But what I can tell you, what we saw in the first quarter is still good activity in the education center. So we'll see how the summer season plays out. That's really where you see the bulk of the education, K through 12 action anyway. So we'll be very watchful of that. But so far, we've not seen a fall-off in education activity.

Alright. Thank you. The next question comes from the line of Rafe Jadrosich with Bank of America. Your line is now open.

Hi. Good morning. Thanks for taking my questions. Last quarter, you said you were expecting, I think, inflation 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?

Sure. Good morning, Rafe. Yeah. So just to size our inflation assumptions for the year, we expect freight to be relatively flat for the year. Raw materials, expect to be inflationary in that mid-single-digit percentage range versus prior year. And then energy between 10% to 15% inflationary, and that's really kind of driven by volatility in the natural gas market. So what that puts you at is from a total input cost perspective, in that mid-single-digit range of inflation for the full year versus prior year. So again, just a reminder within that energy bucket, it's about pretty evenly split between electricity and natural gas. But you know, from a raw material perspective, this does kind of dial in a little bit of an uptick in some of our raws that that'll be slightly impacted by tariffs tariff impacts. So mid-single-digit inflation for the year as a percentage versus prior year.

Got it. That's helpful. Then the higher price realization, your guide is what's offsetting that?

Yeah. I mean, we think about this more broadly than just the pricing component, which certainly is, you know, as Vic mentioned in his prepared remarks, a mitigation and way to continue to offset. But we also are focused on continuing to drive productivity. We've had a really strong track record of being able to demonstrate manufacturing productivity in our plants. We expect that to continue as well as the focus on ongoing, you know, disciplined and rigorous cost and cost management. So I think all three of those components coupled together is really what gives us, you know, the levers, if you will, to continue to grow and expand margins here. And that's how we're thinking about operating the business, you know, given these dynamic times.

Okay. That's helpful. Just on the AS side, the organic growth obviously, you had M&A contribution, but the organic growth is really strong in the first quarter here. How do you think about sort of 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?

Yeah. So for kind of implied in the guide for the year in the organic side of AS, it's a softer back half than the front half of the year. But really what's at play there is lapping a really strong back half of 2024. So as Vic mentioned and I mentioned in our remarks about, you know, keeping a watchful eye on, you know, overall projects, project delays, etcetera. You know, that could certainly be at play. But again, we have a little bit of a timing dynamic given just the strength of the back half last year. Relative to the expected strength in the back half of this year. And I'd say we're continuing to do well and win in the AS business. And are very pleased with, you know, the double-digit, top-line growth that we saw organically here in the quarter. So really pleased with that business and its performance.

Thank you. Again, if you would like to ask a question, please press star and the number one to enter the queue. Your next question comes from the line of John Lovallo. Your line is now open.

Good morning, guys. Thanks for taking my questions. The first one is on Mineral Fiber AUV incrementals. They're percent, 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 mix 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?

Yep. So yeah. That's largely you're talking about the impact the EBITDA impact on AUV in the quarter. It's really timing in nature. We can see this from time to time and can get some quarterly noise, if you will, around how projects ship, which can influence the overall basket of products and how that falls to the bottom line. So when I take a look at, you know, our overall expectation for the year, we do believe that our incremental there on EBITDA will return to and kind of be in line with our historical fall-through rate there. But from time to time, you get a little bit of quarterly noise, and that's what we saw here in Q1.

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?

Yeah. I'd say largely, when you look at the AS segments, again, with the inorganic growth that we've seen, you know, the manufacturing costs are stepped up in connection with, you know, the acquisition of two businesses that we saw in 2024. That's largely the, you know, call it the manufacturing cost increase that we've seen in that segment.

Okay. You, guys. Thanks.

Your next question comes from the line of Brian Biros with Thompson Research Group. Your line is now open.

Hey. Good morning. Thank you for taking my questions. I guess on the sales guidance for Architectural Specialties, looks like there's a slight rate there. I guess, kind of goes against the general uncertainty in the market. 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, if that's project timing or better acquisition cross-selling or something else, just what's driving that?

Yeah. I'd say, you know, there's a little bit of what, you know, what Vic had mentioned earlier around, you know, project the overall visibility to projects there in that side of the business, you know, more clear line of sight due to, you know, our backlogs and you also have a bit of that, project call it, timeline, which is, you know, once the project kind of gets started, it's from the time of breaking ground to ceiling shipment. It can be in that twelve to twenty-four month range. So we feel that that line of sight gives us confidence around our ability to call that top-line growth increase slight increase in AS. But tempered with that too is a little bit of the uncertainty and cloudiness around what potential project delays could look like. So overall, it's the backlog and the line of sight that we have that gives us confidence in the uptick in the top-line growth expectation for AS, albeit balanced with, you know, that potential uncertainty that's out there.

And, Brian, let me add. What Chris has said is exactly right. You don't mind, I'll just add that the other component that's a little different in Architectural Specialties is the market penetration growth dimension of that business. Remember, this is doing much better than the overall market is doing. And that's something that we can continue to do even if the market softens in the back half. So that's the other, I think, growth dimension that we have here growth driver that we have here that's different than, say, in our Mineral Fiber business.

And then on the updated Mineral 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.

Yeah. I understand the question. You know, going back to an answer I gave earlier around the discretionary portion of the renovation work is where we're going to see the softness in the back half. Our experience here has been it's really vertical agnostic. If it's a discretionary project, whether it's in education, health care, or office, it is subject to a wait and see. When there's a high degree of uncertainty. So I wouldn't say one particular vertical is going to stand out over the other. I think we're going to see across the verticals the discretionary work again, I think that's where we're going to see the softness in the back half.

Thank you. And our final question comes from the line of Stephen Kim with Evercore ISI. Your line is now open.

Yeah. Thanks a lot. Vic, I just wanted to follow-up on that last point there. Discretionary projects do we see any kind of would we expect to see any kind of AUV or margin impact if you do see a decline in discretionary first, 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 and similarly, like, could that have an AUV or margin impact worth calling out?

Yeah. You know, this discretionary business flow business as we refer to it, Steven, as you know, is where we have the least amount of visibility. It is concentrated more with the installed base and kind of mirrors more of the installed base, which still is a lot of older, more would say, lower AUV type products. So if there's any AUV impact, it would be a lift on AUV or a help to AUV because of the mix improvement by not having some of the lower AUV in it. Whether it's material or not, I think that's another question. But directionally, to get at your question, I think if there is an AUV impact from that discretionary spend, or the lack of the discretionary spend, I think it might show up there. I think these are smaller projects, not smaller customers. I would think about it that way because even larger customers might forego or put on hold smaller projects. And again, I would say it's the same dynamic. I think anything, there might be less lower AV products in the mix and be an upward help to the overall mix. Does that help?

Yep. Absolutely. That was exactly my question. Appreciate that. Okay. And then second question relates to the against thing on AUV impacts. The home center soft I'm wondering, does that also have, you know, some sort of an AUV effect? In other words, was AUV maybe a little benefited by the home center softness this quarter as well?

Yeah. Yes. Definitely. As we've talked about, that's our lower AV channel. We have a very low or a small group of products that we sell through that channel. And they tend to be at the lower AUVs. So yes, there was a little bit of a help in the quarter on the mix side. From the lack of volume in that retail channel.

Okay. Great. Very much.

You bet.

There are no further questions at this time. I would like to turn the call back over to Mr. Vic Grizzle.

Well, thank you all for joining our call today and for your questions. I think as you can hear in our discussion today, we have a resilient business model and we have a proven ability to execute on our controllables. That gives us confidence to navigate these choppy and uncertain market conditions. So we're ready to and poised to execute even in softer market conditions that we're forecasting for the back half of this year. Thank you again for joining our call today.

This concludes today's conference call. You may now disconnect. Goodbye.