Americas Construction Building Products Non Residential Construction Data Centers and Institutional Projects Support Growt...

Equity Research 21 August 2026 | 1:28PM EDT

AMERICAS CONSTRUCTION: BUILDING PRODUCTS

Non-Residential Construction: Data Centers and Institutional Projects Support Growth in DMI while Billings Deteriorate

Inflation and Exposure to Key Verticals Drive YOY Momentum While Resi Billings Susan Maklari | Improve Sequentially: The Dodge Momentum Index rose 7% sequentially in July Goldman Sachs & Co. LLC compared to -1% in June given strength in data centers and institutional planning. Charles Perron-Piche, CFA This contributed to 12% growth YOY. Conversely, the ABI deteriorated sequentially to | charles.perron- 46.6 with negative billings across all four sectors. Despite this, we note residential Goldman Sachs & Co. LLC and mixed-use improved vs June while commercial/industrial and institutional were Rhea Bhatia | flat. Geographically, weather related headwinds drove the largest decline in the Goldman Sachs India SPL South. Although we are encouraged by continued expansion in key sectors, the Galilee Best macro remains an overhang to a broader, more consistent recovery. In the meantime, | Goldman Sachs & Co. LLC we look for relative outperformance in healthcare, transportation, and education given industry-specific dynamics. Given these sectors represent ~60% of AWI’s sales, along with greater exposure to R&R and company-specific initiatives, we maintain our positive view on the stock. We also believe CSL is well positioned led by the re-roof cycle along with a focus on innovation and cost improvements, allowing it to better leverage the shift towards more energy efficient buildings.

Office Utilization Improves Across Majority of Top 10 Metros: Utilization across metros was 54% as of August 5, up 140bps YOY and 120bps sequentially but 250bps below the post pandemic high in March, per Kastle card swipe data. Utilization increased in 9 of the top 10 metros with New York up the most sequentially at 3pts while Washington DC declined 1pt. We note utilization has continued to increase relative to early 2025 as employees return to the office.

Non-Res Exposure in our Coverage Led by Armstrong & Carlisle (on CL): With ~95% of AWI’s revenues from this end market, we look for it to realize the greatest impact from the initiatives and operating environment described above, followed by CSL at ~80%. Others within our coverage could also see implications, though to a lesser extent, including Owens Corning, A.O. Smith, and Mohawk, all of which derive 20+% of sales from non-res construction.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Americas Construction: Building Products

Architecture Billings Index The July Architecture Billings Index (ABI) deteriorated to 46.6 from 47.3 in July with all four verticals in negative territory on a T3M basis. Notably, residential and mixed-use improved sequentially to 48.4 and 43.2, respectively, from 45.6 and 42.7 last month, while commercial/industrial and institutional were flat at 46.7 and 47.4, respectively. This comes as billings have been in negative territory for 35+ months, one of the longest sustained downturns in the architectural industry. We expect pressure to persist as elevated rates, inflation, and labor constraints weigh on developers leaving activity concentrated in select verticals. We note the ABI is a leading indicator of spending for non-residential construction activity, with an average lead time of 9-12 months.

Exhibit 1: July Commercial/Industrial and Institutional Billings Were Flat Sequentially on a Trailing 3-Month Basis Architecture Billings Index

40 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25 Jul-25 Oct-25 Jan-26 Apr-26 Jul-26 Commercial/Industrial Institutional

Data Above/Below 50…