AFI - Earnings call transcript Q4 2018 | Armstrong Flooring, Inc.

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Operator

Greetings. Welcome to the Armstrong Flooring Incorporated Fourth Quarter and Full Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the Officer. to turn Bingham, host, now Financial Chief would conference your over Doug I Mr. may you Bingham, begin.

Doug Bingham

joined Executive for Armstrong you XXXX I'm Flooring's you have fourth our Thank joining release quarter earnings us seen our conference this We Don Maier. Officer, today press for by trust Chief morning. call.

of the advise refer of our or website of Actual implied. that the copy accompany from you a materially call, be section slide presentation to we those and and may this outcomes making that www.armstrongflooring.com. Investors I that call during this Additionally, forward-looking expected differ slide uncertainties. is you involve to two available presentation on will at risks statements

Armstrong Flooring, review filings. more SEC please a discussion risks detailed and affect For our the of uncertainties may that

speak securities date beyond forward-looking any made, as they to no applicable statements statements undertake only the by are laws. obligation required of we and update what is Forward-looking

our within discussion operating addition, the include of and is measures will comparable A of most of performance G. included meaning directly to press appendix presentation. GAAP Regulation this these the In in release the reconciliation measures financial measures of in non-GAAP the SEC

completed As December of in we Flooring business. sale a Wood reminder, our the

The I on fourth be entirely resilient. will XXXX, of prior will the presentation. over operation operations, amounts conform our Wood that, periods to updates is Flooring for continuing the results business focused have business discussion now classified to of call which As quarter this Don. With to the as the and now the discontinued our been turn is reclassified

Don Maier

manage and and to that full will business cover three, before Doug, our updates. I closing on you provides some everyone for the morning operating questions. turn highlights call. results we highlights prepared enhance on answer open Today, initiatives then offer outlook key which Good I you and results Doug. our our discuss to drive participating you, XXXX earnings our will details call financial our and reflect After fourth quarter page XXXX thank new comments. productivity our to remarks, year portfolio. additional many your costs, products, and Full activity. Thank will year I'd ask innovate and

investments grew year, completed EBITDA Vinyl months growth the LVT selling former pressure, sales In of which prices delivered volume in working an adjusted another of in of well times capital at of by CapEx and Flooring our we value, many $XX net flow impact business generating of On the representing million. we helped X.X% X.X an significant year and of on industry. Luxury December, spend. as the the as segment's Tile, trailing proceeds attractive We that positive this delivered impart timing free we cash to X.X% strong across or product the margin categories. EBITDA During face sale Wood growth, higher continues inflationary XX

We operating a are flooring pleased resilient to be company. as focused now

attractive award a We winning profile. which stronger have us more margin trajectory strong portfolio a with and of a provide growth products,

of company the costs, have that we area processes, industry. year sheet seen service with enhancements, rationalizing committed in operating balance and a as our the evolution streamline evident the our on focus positive market flooring on deliver with in priorities. the investments would innovation, capacity on attractive performance flexibility invest our Combined elevate and strong our leader resilient solid to capabilities. our is increases increasingly in strategic ended team go Our We of returns becoming categories to this growing to the that

markets remain a nearly have Looking right Commercial and to and third are LVT which our for is representing residential quarter around categories, and now our past primarily strong sales. confident also one resilient, represents product sheet exposure at of product four, the Vinyl quarter the over of composition are is of a sales. we growth just tile, transformation XXXX our where our enhancing several our on sales. together commercial we largest page the end fundamentals spent business years channels. future that category, of

of focus shifted including our towards realignment mix business and towards in realize the our of With commercial more category, business all growth from categories. assets continues in share LVT, our expect Several purchase flooring we efforts VCT take on XXXX sales and of that XXXX. marketing weighted national significant actions commercial a the heavily better accounts in to the recent to more years, heavily and in additional which to other have

With commercial, which sales are more generally provides our approximately the only mix less stable more our renovation current not balanced, is and but better. a believe We growth are margins and for for our dynamic. us results. the three market Wood completion are XX% now stronger projects, situate predictable sale, Roughly more of sales quarters of where our cyclical end

local were the leverage of distribution distribution, front are to we in sales users service. end the through products Additionally, exceptional able approximately with XXXX partners XX% where of expertise right get of our our to

fourth entire four on five, distribution goal our are to portfolio, all strategies these to innovative in categories growth other us page by the of LVT, our we achieved drive than commercial market. with leverage for attributes allowed strengthen by our that strategic of helped leadership gaining double-digit grow our products our to commercial and aligned growth Moving year faster full described position our the innovation partnerships, across in LVT, have product priorities particularly categories. I quarter just in and our strong In new supported

innovation continue of Armstrong through to in In combination primarily existing brand categories, support including design, repurposing by initiatives, the growth Report, our assets. in as in architects applications. Market our weeklies, one there believe our recognitions this LVT, in to Intelligence and to tariff Innovation investing The sourcing and with specified flooring in retail, are objectives recognition, LVT the by our key remains strategic These Designer top maintenance we attractive number investments advances residential taking and ReCo pages floor are by brand our in poised recent our success recognized opportunities composition. Following developments Star output independent portfolio meaningful in by all LVT. was Award Spec commercial installation, covering category. and durability, increase produced material domestically in of share as validate we Flooring

Surfaces alternative portfolio. with Our our our in good we proprietary of award Technology Diamond Diamond designs in winning in Core Rigid XX continues debuted At traction sheet. VCT customers, to and about several the XX represent across vinyl with new collectively categories Technology plank LVT, larger format new January, and have which XX% LVT, exciting including International products Event sales. Three

highlighted XX by cost which we XX%. Diamond with domestic addition, reduces our VCT In total Technology, of ownership

more of in anticipate allocate we marketing will Beyond exposure we our our on to commercial plan to market better commercial pivot, our through and increased amplify But to which strategy. these exciting focus to us efforts our exclusive on and to scale. high distribution, broad our continue national we and of of products. sales and We benefits accounts. can that portfolio this believe compelling leverage allowed we in the resilient XXXX, our In an has have invest demand products, we go pipeline completed

strategic and best share the ecosystem, this but to serve increase smooth of aligned only our We portion distribution wallet commercial, a better to merchandising On leverage additional directly gaining has local provide support are strategy. is the ourselves and customers The will categories. sales our represents objective significant efficiency aligning partners been LVT in with for our our in local with needs. majority of forward and customized who residential the of the retail strong positioned side, growth in our will products the distributors it their position of a our our support to transition the to traditional also shift which are customers. to position Not look

more innovation performance. improving Our efficiencies our in better team products, drive we effectively operations commercial channels cost across through Overall, augmenting categories presence. is grow are dedicated market and actively performance to and our to business our to our

take our sheet profile of improved financial significant have our opportunities and our business, balance strengthened We simplified ahead. to advantage

to walk position the performance. We a of our call strengthen our will Doug the investing leader through turn our as in financial are to now over to flooring. resilient to committed business I details in

Doug Bingham

morning six. call with year our I'll Thank full on today. the of begin good to the page you, those on and results review Don

As reflect our our results purely resilient. reminder, continuing a operations, which are

XXXX XX% was as due improved volume and grew to higher $XX.X improved and inflationary adjusted growing $XXX as the The was For improved and offset to sheet, which products, in the $XX.X million improvement in sales shipments spending, lower prior total especially softer net to residential in sales. The category. selling by cost in X.X% new primarily popularity in double-digits, more year is of sales, compared Overall to roughly the net our to to gains traditional EBITDA $XXX favorable of prices million adjusted productivity significant net Full XXXX the X.X% that inflation sales than pressure. SG&A increase million was due LVT now in year which response million to overall higher input pressure. full market compared year. prior year. lower helped to due categories, mix EBITDA

in adjusted $XX was Flooring in business EBITDA our million Wood prior connection divestiture the adjustments presentation basis with of Excluding XXXX. under

the as in fourth our lower fourth to million X.X% to fourth overall in compared of net sales selling was and attributable Now higher sales response volumes at the The million net decrease seven, in $XXX results $XXX quarter slide mix on decreased looking improved in offset XXXX. pressure. quarter inflationary quarter to by to prices partly primarily

by regarding To third October the factors, a first demand, customer of a on the XXXX, particularly on further to round the in on in increases compounded eventual and impacted We U.S. imported effective of double-digit of Chinese was announced LVT product, quarter from timing Chinese seasonal in the response normal departure While uncertainty the outcome end achieve quarter, growth soft bit macro volume by to imports. tariff explain into tariffs two of which This imports. price Xst, negotiations more, trends purchases. due our overall we XX% ongoing that was year-end. fourth was market experienced

price the increases in announced the behavior administration. We pulled middle market. XX% the air of customer the created tariffs administration. into Xst sales impact in related January proactively January increase the price of of implemented significant announced originally to in the October. This pre-buy XXXX result an delayed was had followed the Lower EBITDA Xst quarter. a called Therefore, Xst. inventory levels inflation the large to on as quarter increased cost savings. the ahead In overall forward elevated quarter that by pocket activity a buying eventually our by tariff drag and further for fourth by previously scheduled across in expectation distributor The with the the channel productivity in experienced customer during third would demand increase fourth question tariff fourth on as muted we due quarter, increases by the the also of fourth effective was improved and increase performance of quarter purchases This delay fourth January primary tariffs offset partially adjusted the input in for cost the and were quarter,

our $XX of approximately this XXXX, to with a flow and Turning on The performance. operating year. eight, we liquidity during in slide was flow factor movements of in prior free million networking generated QX capital consistent timing cash favorable cash

of the we third Overall, we we $XX sale performance for our our with invested net upon rate were of which pleased the a year million of year, depreciation. on Wood cash approximately for was December $XX run $XX XXXX, free our completing proceeds received full business. In the CapEx, flow year. million below million For straight

subject networking quarter. sheet customer these In cash position. with net reminder, a in we remain cash to with first capital true-up a the ended strong balance As XXXX generated in by combination a operations, and proceeds

opportunities. We invest in initiatives growth ongoing pursue significant have additional to and resources

focus Our pursuing our on internal to support and initiatives, opportunities capital allocation objectives growth remain funding unchanged strategy. M&A our growth with

of manner in return and In to the addition, expect determined the we investors a time Wood to board. be portion to from proceeds of the by a business the sale

and to our performance with resilient positioned improve full are refined Turning simplified on our company. we the business profitability year to focus, of outlook nine, strategic our and objectives, slide

of to We categories. above at to grow rates continue expect each the sales or respective within growth market our of

million. $XX For the in year expected of EBITDA be to adjusted range XXXX, we $XX to the million full

continue increases We which and will in transportation, a materials costs, operating experience expect for be we energy, raw headline cost XXXX. to

to X% and and X% implemented We have residential commercial of additional increases effective inflation price freight select on April products, on X. based in

great Our and team in overcoming has inflation. presented done a the job anticipating challenges by

help additional cost mind, to weaker productivity actions, be savings the impact offset second anticipate to with combined weighted will down. these full channel gains XXXX year-on-year. expect in We in towards levels expect quarter growth With in market and this of continuing other heavily as are pressures. elevated pricing to we EBITDA strengthens be the of first the the inventory year EBITDA and We the worked half inflationary

P&L our expenditures expect approximately XXXX. be we we tax but to significantly quarter-to-quarter, rate be capital expect the to $XX investments. $XX to million. for cash X% CapEx the change with In continue On to in the effective approximate high rate spending should our range could Maintenance flow, regards XX% tax balance of the of to million X% return budget of to in sales,

flows, due receivable than mentioned particularly was collections. I year-end our earlier, working networking capital the expected, primarily better As of capital at to timing

which software operating sales year fewer quarter, resulted the In With end. addition, in uncertainty as normal in around first be and receivables both at lows part and capital the seasonality second to we this the we in to the negative of led usage. flow outstanding significantly of mind, cash rebuild in the of latter quarter also increase timing tariff expect working cash year-end quarter first experience

year cash outlook, comments. hand free build flow to Don I While XXXX first quarter. not With move cash past a the closing that, for to we providing expect now back as we are will call the full we

Don Maier

to Thanks, please. turn Doug. I’d XX, you slide ask to

encouraged are business. of XXXX, entire during with We our simplified our team's performance our along prospects brighter by resilient

our winning number across are strengthen in partnerships strategic leadership, traditional with distribution our we leverage Combined on well supported our LVT position by and cost are We ongoing returns award categories. to to now ready to one priorities further generate Operator, enhance situated our believe focused commercial are in and innovation drive our shareholders questions. we savings improved and XXXX we initiatives, to results take for years come. portfolio,

Operator

a Baugh, your Our question-and-answer will conducting John question [Operator comes Stifel. Instructions] first proceed this Please At time, be we from with question. session.

John Baugh

product morning could of clarify for missed kind mix XX% in clarify thanks you again rest, I Good for Maybe Doug, And sales VCT. and again? the I for guess, XX% taking my XXXX, questions. that the of LVT, you could then

Doug Bingham

And out sheet you kind to Sure. round including of Yes, XX% that, for so about and and is add XX%, that three commercial, around residential. then be XX% LVP commercial mentioned, BCT residential to about products, XX% up XX%. be numbers those sheet around breaks XX% at XX%.Those categories at

stuff. adhesives of So the kind remaining XX% are installation tools, other all the

John Baugh

was the Okay. correctly? And sheet mix the the what of Did down then residential year? was of beginning you at say XXXX. XX% understand end of mentioned, I it the that And then, what at

Doug Bingham

about said Yes, XX% we're sales was of so that saying what was in and it's $X.X XXXX now we've when billion only. it of the before about XX% resilient we're total less than

John Baugh

Okay.

the volumes if the and so for fourth quarter. anomalies year I in and And understand appreciate

two, one how in think continued and do LVT one VCT I'm your XX% that or on the sales year the are were percent categories. does what something mid-teens around under up in continued of for and declines is shake a assume LVT we sure the at growth volumes you pressure of basis the in were categories yet of imply XX%, of low number other and down to right? projected sheet mix, XXXX volume the So is down those couple volume the Number How that that XXXX? and XX% volume was the out with

Doug Bingham

a been there roughly had a so And offset categories. volume you kind takes number other puts declines Yes, And sheet. speaking, in few other consistent years. were we see a mentioned, then we of in the of in in product residential did for LVT. as That's and theme

on strongly, be into the have same category that and see lesser to at greater expected experienced or at LVT categories look level, we to grow we XXXX. continue will XXXX kind As to continue continuing ratio in very patterns. similar of trends we other extents challenged

Don Maier

Yes, this is John, Don.

that improvements I really so volume the the your by almost right all I’ll think think -- I is in through offset price mix other on I across work the about piece it and think piece to categories. math have was

out year. So the for the to that netted growth X.X%

John Baugh

I’d is around for what I And inflation your through least the year-over-year had not P&L some now refer sequentially words what therefore we XXXX. you're point my stat, for flow details material raws seeing in now, buying to in or to at what And right relief in guess, your are question inflation some buying at the what's you for on transportation other Are number, some for? your on right versus that maybe to you're is sort not inventory. you. then going Thanks Thank if energy that. final of love you raw see

Doug Bingham

yes. Sure,

XXXX, as more in year-on-your half. be we of the just headwinds should our first throughout is than that price a reminder, our Because And into more to these So productivity as and going XXXX. around inflation inflationary created come it's offset is we pressure those. the expectation saw which that dynamic, pronounced actions mix

John Baugh

are So now? costs any or overall right materials stabilization seeing we of transportation

Doug Bingham

now I in we a to some towards to April We've geared recover experienced. effective really we've come headwinds we've also Xst the increase out X% some seen -- that price purchased the trying of of think with inflationary X%

John Baugh

good Great. Thanks, luck.

Doug Bingham

John. Thanks,

Operator

proceed Wood question Instinet. next your question. Michael Our from Please comes Nomura with

Unidentified Analyst

Core Ronnie Mike. [ph] on This is for

of these Sounds to LVT about could year, LVT there is middle you of talk like almost by increases? or go the maybe and price itself the it just ahead elevated is exclusively rectify the tariffs is inventory inventory of outside related

Don Maier

rates QX. a through We the activities end in had we skewed quarter tariff varies given which so the in then it and softer Yes, towards impact the largely sell -- markets QX it then fourth increase. general through were the saw by category. LVT But at anticipated didn't price

into would in VCT, our say a hangover levels. of returned have a A QX. to And other what's inventory particular couple so as I a levels of that's we entered bit normal categories

seen through in sell we’ve were through that buying So any back increase QX. in the advance of of the work done price the activities

Unidentified Analyst

there, follow a any Okay. a there related related price just to And was this drag? it weakness up then volume merely industry pre-buy or LVT was

Don Maier

general, prices was related than the volume Yes, of other drag LVT really significant in in we a impacts. changes for more and tariff there it trends seen related the haven't

Unidentified Analyst

Thank you.

Don Maier

Ryan. Thanks,

Operator

Research. Alvaro your with question question. next Please G from comes Lacayo, Our proceed

Don Maier

Good Alvaro. morning,

Alvaro Lacayo

are Good morning, guys, guys? you how

Don Maier

on Good? your there. quick Got real name

Alvaro Lacayo

I Doug becoming on congrats, CFO. know. Well, first,

the start to then -- I Just commentary up on the capital. us And just there. I of usage appreciate

net And big Maybe this gotten leverage change you've terms about ratios? on been then guys balance the Now loan would to pay about debt position us year, secondly, had the at the any that term you're you there if in any your on thinking your prepayment how target you portion that? of the full? sheet. refresh the debt be can cash of off if think on end penalties of in outstanding And you decided there you

Don Maier

me Good the questions, question tackle let first. leverage

to our at change moment. question have bit bit of We kind of announced an for net essentially I'll leverage It's of point academic this target cash. little tell a not you any the little with a million ratio. $XX

of what is X we’ve times, said previously. In our terms X.X to ratio

Doug Bingham

loan we to loan able the are A. term the Our as as term penalty, revolver prepay well that portion without both

Alvaro Lacayo

color of kind balance what cap focused Great. And through cash, on walk with now cash as us about percent we investments, the you of should liability how / working little be the going a to talk you you XXX% us maybe bit sales the post that provide of sheet? then are you're then maybe you're growth liabilities pension business? portion making the some requirements to about free can to with have regards And the that CapEx? Can growth have thinking around -- regarding you retirement a resilient

Don Maier

maybe let's so start with CapEx. the Sure,

this think of expect growth to capital about see tend generate to I is receivables. point Working capabilities geared Wood capital financials we to a was remainder have maintenance we ended talked with capital. X% it kind in that we’ve able again, cleaner now and about mention will towards where initiatives, as before, in just mentioned for the I a spending then we levels we've capacity stripped that you'll the prepared really is be is business. at odd CapEx. lower And out our Working QX of before little the return. of The that of comments So our much working capital, low a X% geared I things than to was

balance down look $XX year-on-year you about it's If AR at our million.

line you so the on going with of But for gives a we although that one. efficiencies magnitude look opportunities to that working kind grow that of would sense expect forward, capital in that of one. we And always would sales, roughly

Doug Bingham

the on I And the company did items, not that flow after $X the attribute outlay primarily think in retiree that cash Wood. one stayed liability medical much was cash resilient separation of with the XXXX, we Other to very about million. that

Alvaro Lacayo

XXXX? have Should been in similar

Doug Bingham

be similar. will It

come a may to little attributable it business. small a think was this bit. Wood I down portion There

Alvaro Lacayo

Okay.

to guys I would dramatically EBITDA historically directionally guess be. you EBITDA would But highlight have look when didn't what free provide you free you change the guide, be guess I conversion that the seeing? and So I items at the you will guys cash flow know what cash would

Don Maier

the place. then CapEx addressed so, year, Cash through $XXX talked just our go with behave will that million $XX have rates expected but rate million here. of paying capital, and on that net new debt a maybe at QX burn could think I we of be interest out, that normally. And a in we've we're those of should more anomaly this think X% how one which NOL in we and an current under rates the bit until then Yes, facility with interest taxes model we working minimal you about that I again, what from we've is

Alvaro Lacayo

very and you Doug, thank Don. Great, much,

Don Maier

Alvaro. Thanks,

Operator

Speer, Associates. Zelman Justin your from Please proceed question. next & with Our question comes

Justin Speer

taking Thanks time. for you Thank morning. and the good

your if about -- what correct on that's the what we that's lower get A, were And if fourth guidance your and what B last million quarter wanted why? you in than characterization to terms think on $X were thinking? of it a Just we bit CapEx In quarter? I some CapEx expressed was little below

Don Maier

about million So, so be said was had $XX business. Wood combined we'd and we last that a what as resilient quarter yes,

where think to pretty saved little was be we -- came the about would Wood saved million and and close in we to on we was in close I side. Resilient little bit last on specifically we a a that. on said a resilient $XX bit it side we came little quarter, that relatively the expect it

Justin Speer

Got it, LVT. or Okay, then that in And us you where of the makes repurposing terms assets How And mechanics existing you dollar capacity forward of by you more sense. to there? purposes? the much maybe going towards understand take Can repurposing help LVT have for manufacturing capacity can that have you assets?

Don Maier

Sure.

large Justin, to with we subsequent that wanting But working to have, been announced we repurposing sharing a existing capabilities fairly believe assets capital produce can that entering product add team which look the we sure to calls. that this the are requirements. what probably engineering forward we implement the we but should more that is time have along that Rigid to have that's And market obviously some differentiated a on make again products domestic in offering. we reduce shorten to the Core here with are do with we next the and project that

that be news anything progress point really the announce by should than has encouraged forthcoming. to been don't I'm at We made. So this have other

Justin Speer

you based what means with on but -- on if most guessing tariffs? proceeding fact Asia, can’t that of not communicate, scenario, to you you source Chinese landed imports So that think you we tariff believe were that assume on and this a a the you're with if fully that a right excluding from do you compete can I'm basis no fully all

Doug Bingham

but not differentiated that a we a attractive only would from at and a polymer cost product advantage performance, competitive an Yes, have basis. we believe also

Justin Speer

we've of large with What seen their Do think large who would And the own And, rigid see of to in with you production will production from ramping? competitors approach in near-term we've some you proprietary have competitors Rigid them? distinguishes gone facilities. processes Core like you that of expect forth do you couple a same terms plants, that seen be approaches of setbacks some your from different? of that kind your

Don Maier

consider things So is you we've for Number I when that. we're should think two hard surface at -- making decades. one that resilient flooring there's looking been

our we benefit have demonstrated two related give capabilities a a to with lower amount a carpet so don't would time Oklahoma a through. go center lot we of is Stillwater somewhere and new trying were to to I where core the as Number around if the a now that. processes significantly that you competency. reduced different is And you answer we third debugged tuned capital have to repurposing in and the the work processes and that be need reduced of build

the So troubleshooting less do, and required. the that time can you repurposing is more up ramp

other end repurposing, far the be simple Rigid is at going but the to not of as that. the think Stillwater With -- quick greenfield and that challenges with as spectrum you it's the Core, I not the site as as and all as as a certainly as have the

Justin Speer

the within is repurposing XXXX that's your that And CapEx I'm idea XXXX? and all all guidance. all I The of in guidance this captured for guess but assuming captured again within effort that's that's CapEx

Doug Bingham

to were of be the talk we’ve that that million just so $XX large, That provided. million covers clear, Yes, disclose to investments, smaller to $XX we and guidance would about on do if separately. CapEx we something

Justin Speer

it. Got

increase my with relay associated The again in for Okay, to in -- that X% is you could price And X% terms last question. if the us. perfect. price April increase of

from maybe in I range. order or on from high the has end -- high is help What, price to standpoint, end the a maybe follow then, and that And something a think low of happen from or range? increase us to macro end a happen believe up the get from -- a standpoint costs, you your and said to this that I in low else. understand not guidance the transportation end of

Don Maier

that we same of increase is the that Raw dynamic. three Doug the continuing but transportation saw really energy. throughout drive remained bit, drivers continuing in mentioned to the drivers areas, the a course transportation are so then abated to of and inflation XXXX and Yes, shortage materials as they’ve

real the drivers are those were saw, those that we So continuing. three

the just We inflation really pricing looking are with actions. offset our to

the that to off upon so And And we there. in. that competitive extent in further it's inflation see dependent participate obviously, that all we’ll reductions arena take pressure we happens what in the that

on So adjusting and the accordingly. market we're focused set price obviously letting

of looking a hopefully as and those here. off tapering we'll to did continuation of bit XXXX.And offset So trend see XXXX of inflation we're in we costs a the

Justin Speer

guys. Thank you,

Don Maier

Thank Justin. you,

Operator

Please next Adam comes with Our Group. proceed from your question. question Macquarie Baumgarten,

Adam Baumgarten

guys. Thanks

I given guess from know gains expect it's been VCT, is is now Diamond overall out the And growth -- you to drive volumes VCT in XXXX? bit. how VCT share a adoption little Just have that other volume on for that do for materials. kind been? the been How tough line one, it's two, road And of out a XX I

Don Maier

as the by advantage in Diamond now ownership it essence VCT. stay disadvantage categories. largest concrete, so rather cost that been changing in cost really cost And conversion of solution staying Diamond the with on we're about the pretty flooring of XX And to Yes, positions overall a has not XX Technology, it's LVT of you other to excited see XX%. addition than concrete. story The impact the in VCT the

we're being particular, is seeing in coming that's projects. So received specifications and received on been larger in the well, on extremely

applications and not well. processes such, square are fully this on Diamond result equipment has And of lot main the of was with the positive do the maybe effort polishing appeal a installations. is smaller is VCT cost street that as that applications, its all a and fairly the what the VCT Something require Technology street in see And you another is created in you doesn't footage install XX into to a product that initial going have go as and increasing main which the those as contemplated disruptive. that

Adam Baumgarten

Great, thanks guys.

Don Maier

Thank Adam. you,

Operator

Our Baugh, Please next from proceed comes question question. John Stifel. with your

John Baugh

Thanks for allowing me.

one changed up, that I customers. quick Wood Just curious divested have Don, have now you follow with how distributor was your conversations perhaps

less more volume investor seen post just compare your certainly I focused that overall you I'm how curious with the distributors. talking big pre-divestiture, You're with say to discussion have Thank you. And you have if them.

Don Maier

But well. the you'll sure it's well, gone with extremely Great distributors follow as question, up frankly. John. And directly I'm

sources, the I most transition we understand think in of made. they business. usual all well business been In it's frankly, had the as distributors wood Wood as cases the move the but alternative that

transitional and commercial obviously can we that bringing done business can. this free where in to down really significant to that providing plus of So really double for through have the possible. really us categories. have focus areas the business our distributors, as the force, a and dedicated innovation we to our And service that driving And offering to we've they our Wood product we the make attention pain so LVT really on continue allowing is and value do differentiated as I with the everything side capability a on elements to then sales then that them other all add

put work off in -- well. handing we I that So the is to into guess that make were weeks think to team of drop have real extremely going we to I all so business is it this AIP. but XX gone into advance any sure the the didn't And balls far of in transition, the this it's credit a

John Baugh

Great, thanks. luck. Good

Don Maier

John. Thank you,

Operator

reached the of question-and-answer the We session. end have

Now call to I over would remarks. like turn the closing Maier back for to Don

Don Maier

today. great Have Thank your you of and joining you. a you in Great. operator us rest We we future thank Flooring truly day. Thank look your everyone forward for to Armstrong and on interest appreciate you, updating calls.

Operator

conference. today's concludes This

lines You may time. Thank disconnect at participation. you for your your this

Armstrong Flooring (AFIIQ) 5 Mar 192018 Q4 Earnings call transcript