AWI - Earnings call transcript Q1 2018 | Armstrong World Industries, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Armstrong World Industries’ Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference, Mr. Waters. Tom begin. may you Sir,

Thomas Waters

posted on release Skyler. the Brian you during Good and the our of MacNeal Investor Brian the to note members reference differ are have call, press Grizzle, broadcast that welcome. call me our we advise both armstrongceilings.com. today presentation seen this will are forward-looking will our Relations morning call implied. media have CFO. and risks materially and be outcomes and Vic live involve being uncertainties. the on is this listen CEO; the Please I may website in those been at and website from With and that making our call or morning, Thanks, this our section. MacNeal, that Actual invited this you statements during release to expected Hopefully,

the Armstrong the review uncertainties detailed For and that risks more earlier filed XX-Q SEC affect may our morning. this discussion a please Industries, filings, of World including

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

and our discussion available Vic. of the these most are the call financial include performance that, operating within the in to appendix GAAP measures, reconciliation Both measures comparable directly over of With presentation. on the meaning In will release measures, in I’ll our SEC addition, press A of G. the the Regulation non-GAAP of website. with turn included is

Vic Grizzle

for with moving to expectations the start the in due you weather. and and results first you be everyone. to primarily the Thanks, on the parts review our with line quarter Overall, update good segments, largely financial good to of some XXXX year. impact were morning, with within Tom, our outlook It’s of today

Architectural day. Revenues is up a and underlying First improving start our earnings last in truly Coast from were those can benefited you the as sales is with The East first the It’s shipping a severe as appreciate. design by year and almost revenue Box an a in XX%. load-in Specialties Big paying market great portfolio quarter off. impacted more sales and organic margins guidance million years of strong segment, we've consecutive our Notwithstanding versus over quarter off weather, XXX and $XXX are expected, XXXX, the extra revenue our to growth points. of the X% capability the conditions expanded was up quarter which are on also for making been to In basis unchanged. than XX% services our expand strategic investments and of several build second weather,

in involved designers, solutions most building the We architects, earlier deliver are owners. capable to design more to innovative the process are increasingly and and

our reputation, in segment. our service to projects meaningful ability portfolio, is this Our complex driving and share gains

are distribution in initiative investing Our capabilities. extending also our with coverage partners service us, and this growth

date. has this pipeline with of position to strongest us All a the in

be to and and addition, In Architectural continue. strong Specialties SG&A a from has is business. leverage been for going expansion This significant margin growth year sales will the

million less and repeat headwind including Fiber quarter. mix. factors led the products by earlier. like-for-like million $XX drove mix Sustain Now the impacted and that did slightly to of both adverse the unit of to up products, weather shipping sales base in resulted which I improved with a not Big segment, were one turning Box standard Volumes continue conditions and newer to day Mineral period load-in mentioned value, combined more the The outpace in three $XX improving. Total or the families, Favorable sales and AUV, over year-over-year. higher-end our Sales growth average were pricing Acoustics

the by accelerate right where volumes and been year, to is as aided from the the weather-related of for delayed today, we Now sales however, it volume Mineral quarter. we've positive year-to-date seen April Fiber volume expect in And first has be. which

our where the we Given in outlook year. Mineral Fiber for we underlying improving conditions, for sales are year-to-date the market confident remain and

experienced has gained gains, in X% more increases Now actions declining quarters. and traction had strong. and inflationary growth in Rico manufacturing pressures. the Puerto market especially note declines sales sales than been the expanded management volume with quarter. XXXX strong $XX of year. have higher quarter, Specialties well Latin which throughout Mineral QX and million of were all the Architectural in along despite we three and steel in And several was are responding America particularly EBITDA Adjusted performance margins AUV into in to inflation, offset for the this The up price already the business quarter is and solid Fiber pricing supported acknowledged steel. costs SG&A WAVE These in from

WAVE the results for inflation We price WAVE’s remain will expect that increases the than to second these full-year. we greater further confident in quarter deliver and reflect

Now with and I improved continue. with on our was and about in and plans expenses expect they of weather, cold not forward performance executed to performance this XXXX, I to did more key I talking the metrics. last that their looking our disappoint quarter. first associated call, manufacturing on progress in challenges mentioned am I all today our pleased manufacturing Despite

automated performance flexible quarter their also around specifiable and our capability of plan. in on design truly and up the is Marietta, features line for ceilings first be the to going The market. exciting walls an This saw ramp is

the be in new our running. up facility progress where Oregon shut make The in our and production facility, in Helens, to is St. center Phoenix in when is stop distribution continue scheduled quarter to total We May. third closing will late

to EMEA will businesses Rim that schedule. would remains that report achieve call, performing are this now to the the our our sale end combined range. high and of and an confident of by million that of plant additional closure, XXXX. Pacific $XX with million we we on of actions am Americas-only end mentioned our savings rightsize we the pleased profile And range very then, As the reflect identified businesses initiated plan yield well. G&A in and to our I savings on last these Since cost to $XX are The business, we've

necessary We expect and granted $XXX expect to the net tax return third a and to approvals of to with will cash continue realize regulatory cash quarter million be transaction after in we this the connection the majority to shareholders. in

for details results. Now I'll with our to financial turn over it Brian more that, Brian. on

Brian MacNeal

morning Good on quarter to Today, call. reviewing our I’ll results. the Thanks, Vic. XXXX be first everyone

the be our our go into we presentation. as to Before slides referring website. of on a friendly reminder, X I’ll details available the basis financials Slide

on will dollar longer in results. no currency should presenting we adjusted X material sales as You Slide be be that our movements not will to note the Canadian

increased quarter insurance reached to earnings by inception of Adjusted were to we of for of the our of $XXX $XXX quarter prior back X% first quarter the million. from up year repurchased Adjusted due the cash quarter per and primarily repurchase second million XXXX. results, XXXX. flow program quarter $XX by million count. Turning cash bought in the $XX XXXX, for up in to the million. X, Slide half X.X expanded. first first X.X million Adjusted million settlements million. due of EBITDA of receipt higher over increased from $XX share shares X% improved have share margins for diluted Net XXXX, sales free debt were third lower the shares we a X% Since our we earnings and In

grew lower were volume in Mineral EBITDA Turning higher than Fiber the this free as of XXXX. $XX steel now in quarter. lower main year increased softer results and We've load-in our announced for improved the net volume and WAVE seen year. quarter was of Box third offset full-year. as be Slide to as the million capital WAVE. insurance X% Slide Depreciation from to has earnings of in WAVE. of impacting three more cost normalized proceeds, which adjusted manufacturing productivity a driven Big is group the already the arrangement price SG&A AUV through accelerate Capital due segment by in In sales the announced the headwinds recent lower at revised cost reporting. as million the from and a impact inflation mentioned, flow prices returned Slide result working well a AUV, year. volume flow, change increases SG&A and quarter as declines, more as than expect expenditures X, X greater three the million over investment. $X was to cash compared Fiber factors earnings to AUV offset flat our $XX level were gains leverage support equity as quarter weather, X.X% begins more cash we've The and in Mineral WAVE quarter adjusted we and that higher receipt shows settlement of capital declines inflation calendar inflation quarter X the savings gains quarter, Vic capital. prior price factor the investments. this day declines our to a which than prior offset the shipping EBITDA

our X, quarterly segment Moving increased Specialties sales Architectural to on XX%. Slide

As you remember, we in January Tectum XXXX. XX, acquisition closed on the

sales in to AS products. latest increased forms up ceilings entirely range walls is penetration superior up almost including XX% portfolio what the organic was Armstrong's had our expanded We our capabilities basis in Wood, and specialty and nature. So with all EBITDA sales in growth broad this XXX performance all coupled service quarter. points and Adjusted this Tectum substrates strong historically, in Metal, is is product with us XX% margins and and market. support allowing across

only line the our to But X, to Slide its This expand the topline XX%. segment margins grow Architectural Specialties quarter of us bottom potential the not demonstrate guidance. meaningfully XXXX again ability updates help and business.

our is guidance. mentioned, Vic from unchanged As guidance our revenue initial

is also EBITDA to XXXX. cash guidance is which flow unchanged XX% adjusted XX% up is as versus Our

We only change the operating This costs and range EBITDA. back of quarter to on end leverage turn targeted priorities, pension Vic. M&A. With low to plenty support allocation capital of have I'll of and has it remained XXXX a that, and Note other segment post-retirement taking including expected to as three This EBITDA our our service and benefit below EPS XX%. as close, million Fiber result our which near repurchase excluding repurchase times to no adjusted our Mineral innovation, accounting for of the count of To share two of all XXXX to year. we standards consistent of previously reported are components is the adjusted growth supplemental share change, been year-end EPS up an $XXX is ranges from adjusted bottom XXXX effective a share increased requiring with activity XX% of for driving January our was results top now We anticipate $XXX has X, that comparability. to the impacts change lower results. recorded end liquidity be the $X.XX net income. our impact plans And

Vic Grizzle

Thanks a an Brian. All transitioning a in year Americas-focused we and all to company. XXXX ceilings to in good wall are which start

market anticipated, activity of quarter expanded margins are seeing our we As inflationary and pressures. had solid where even we we underlying in face the EBITDA another

products innovative margins. products Our more and continued product customers. on continue and higher positive to of more to value help allows focus drive a has priced us introducing added our and This mix for growth

we our to grow forward, will and multi-pronged plan move sales we As to profits. on execute continue

The products volume We to business category with improved on expand and range hitting cylinders is drive enhanced Acoustics, AUVs. drive of Specialties are continue growth revitalizing margins. Sustain flexible to and to Mineral Fiber the now Total all design our Architectural

over pivoted is and team on focus several productivity. the driving Our from now a focused is past capital investment laser manufacturing years

steps address an the inflationary this directly in WAVE rightsize inflation, structure is G&A necessary market. the savings drive want and expand is and obvious to to cost are to environment. actions concern the We in I which margins taking taking

steel certainly seeing We are in particularly our and businesses, it in freight.

a have committed we year recapturing terrific and every and that are I the This pricing decade. gives a for will confidence platform in through we you done that discipline XXXX. improving strong past deliver Mineral price costs we growth these However, increases, Specialties volumes us remind Fiber this to Architectural

So open for thank questions. that, up And attention. your it I'll with you for

Operator

Sood Nishu from comes Deutsche Bank. question first with Our Instructions] [Operator

now is Your open. line

Nishu Sood

you. first Thank Mineral volumes. to on Fiber I wanted the start

and that your overall. were mentioned enough probably strong – you kind it of here, XQ like has April in seasonality looks Vic, mid positive role volumes again, That in Mineral but So like Fiber’s a single-digits such down that the been volumes plays are year-to-date year-over-year. sounds

could through lumpiness like in sounds surge. you Obviously, volumes just low Can pretty in depending January that you as and that's times there's that? But the just walk us February, volume volumes through us that on Fiber walk of such So months maybe projects, impressive often a as significant sounds. place? the if kind Mineral it not on mechanics

Vic Grizzle

Yes.

demand, demand. month in know, Nishu they right And you it's back in it's delayed areas replenishment weather loss saw the orders impact those – delayed saw we As same certainly of come those the weather-related where not mainly March, the are April areas. impacts, in most in in we

weather-related the So well again days we to well April alone. month for can in you in adjust April, impact. even first seasonalities. offset to obviously in we when extra beyond way, link the up seeing And are shortfall And shipping the meaningful of the a is it up pretty the two volume in quarter Volume the is April the that

quarter. backdrop of out first right was the So in again, for be I exactly that again, against pretty whole where And the think a volume. It's terms the year. strong we we're expected laid we've to that within guidance that's

and very the side getting impact. So again, feel still are where the on we weather other we year-to-date, again, confident of

Nishu Sood

what weather it projects? or since have business like your delayed first depressing construction more it in and was up it effect driven patch in AUV kind it it more would it depressed and pretty match sounds have obviously quarter, kind words noticeable, because the by it, would have unit of of Got the wouldn’t mix affected it other new

Vic Grizzle

No, whether across standard when was it's we the didn't you ship can't categories. notice a can't or type custom – ship commodity versus product. a product you a It difference –

just You can't ship.

across was very we weather the impact. categories all the it But mix was the So strong. felt

portfolio. the of with We really flowing and and growth Acoustics getting total win in at had in noticed the our specified our market. and at high-end sustained As quarter, product products continue the market high-end we to you the them the first strong of

Nishu Sood

XQ year. on one catching Got expect steel clarification when WAVE up the real the or you strong mean – for as cost that Does we end XXXX I'm WAVE the price price of the exceeding itself the that cost will it. the XXXX? gains by by will year end for And to increases sorry price get get or we quick be the for that see of - steel entire year versus exceeding enough increases price

Vic Grizzle

seeing first is we Actually pricing. in inflation price quarter, the through price traction Yes, in WAVE the first to catch I question. good already are of March, already We're implemented. three up started And throughout as quarter, the increases. fact inflation. announced with see already the covered Two mentioned to month we

to on. I price year. like the exceed and that steel yes, total for should do We with covering we're sure So trend price better that increase better the the price see expect I realization inflation inflation additional total and line price the rest the make coming should in for of year. we're May And

Nishu Sood

Thank you.

Vic Grizzle

Thank you, Nishu.

Operator

from Lovallo comes John question with next of Bank Our America.

is line Your open. now

Peter Galbo

of up question, we second is the that point? Galbo kind the for I at for taking depreciation Hey, now about further guys. further It’s Pete any right, accelerated fully John. or think actually plant this step the question. guess first Thanks All that Helens of should expected there is St. into quarter

Brian MacNeal

see there. depreciation we Yes, QX better will some QX. million We accelerate out QX some accelerated another for on to $X.X and in we'll then be X depreciation there $X called and roughly million took a the continue

Peter Galbo

anticipate QX? QX bit little Should the continue then and in end or a QX of

Brian MacNeal

anticipate. Not

Peter Galbo

organic basis, about much very up the half? about just in growth the just year an volume on you're the going tougher think we there about Okay. And the thinking to rest just comps Architectural – go obviously of Specialties should strong I given of how business, guess against to the over trying cadence back

Vic Grizzle

business look very it pipeline the quite Architectural is little think we we track business way a a that to I given with intensive Specialties this, the portion business the to way business. a flow is at type about – Yes, project new think of a the

of the in visibility good our really second pipeline well of meaningfully pretty supports as the have first pipeline we and as a is year half So the strong and year. half the up

us So for continue deliver growth the the topline of remainder for the outlook to and Specialties. solid have drive that I double-digit expect Architectural year we to on

margin along the growth serving with pleased So again expansion at with really businesses. market. get this topline just in that I'm better fundamentally We the

Peter Galbo

Thanks guys.

Vic Grizzle

Yes.

Operator

Instinet. comes Your Michael from Nomura question next Wood with

Your now is open. line

Michael Wood

Thanks question. taking morning. good Hi, for my

You That's of great sounds the Fiber, it year-to-date quarter. to or cited guidance Mineral particularly In you're in off that a is good like to Mineral tougher past remodelling middle the and stated from the here? got sustainable strong the despite is in volumes on a your comps outlook, then start hear. often have customers with strength whether what not feedback curious Fiber you hearing

Vic Grizzle

Yes.

sustainable verticals part gives and pretty is we just of the about feeling But it marketplace marketplace think tracking the is And time And expected year of backlogs be and business. in to the is the activity Fiber. spent the now of the than in I of in would broadening base it broadened at that marketplace have new answer, well, the and believe I the going with as a we're a it sentiment it's out as good in it architects solid seems we was level the marketplace a again town Mike be I to stronger the their and the very year. we're personally year of and a the noticeable in it's in business Mineral closely. their this in and Again, last construction visible terms part be short contractors. lot to remodel it's activity. that right say, as first the seeing So to time quarter, which of – the seems out

Michael Wood

retail versus us gave expectations the where overall that year-to-date the X% price/mix, comp load-in, effect easy that quarter. price/mix I'm with mix then XQ as incrementals are since you a color. bit and I had the that this retail relatively your volume load-in just the little Okay, step is And tracking should back recall year-over-year a great. curious fades? in And you

Vic Grizzle

to Brian, that? you want take

Brian MacNeal

Sure.

happy frankly were AUVs with of what saw piece that with a and we'll think consistent retail of to headwind is in the expectations. our quite quarters plus AUV performance The I we in remaining continue see X%. the much so

Michael Wood

Okay. you. Thank

Vic Grizzle

Mike. Thanks

Operator

Kim question is from Stephen next Our ISI. with

is line open. now Your

Stephen Kim

very Thanks much.

that about hung I I actually Sorry think. up guys,

Vic Grizzle

Okay.

Stephen Kim

been being if you follow-up of – that In see can that part heard distribution to with you being in acquisition have pipeline could we aligned wanted on I marketplace. market. the we there company out the companies smaller have with that really provide your I a long because the from lot network with in backing a in benefit the such large reputation particular,

you that's so I the in not come apply of if was or whether conversation? some M&A curious broadly to ability areas benefits adjacent more your And and were as to seeing into those through

Vic Grizzle

particular answer the Steve, the as distribution projects but – offices. The of strategy a part have, is helpful really scale the yes. provide only as well that have that's think service the notch. into this is in we of smaller to companies that do benefit geographically, in to answer that covering profile premises again, addition projects, our the our that to – not short capability to reaching and very one being go-to-market partners top architectural from smaller these but the smaller been is I And the And attached big projects and

we seeing to business show how and take as those combination bottom at our like synergies, drive leverage revenue is business. this that public only can as point productivity we're of that which a really which it's I So in the think synergies Tectum, things line well example

the premise continue is to you and tell encouraged I the for. one by it I pipeline. our would development Relative that pipeline, I the of demonstrate we've of to got to think be So that that

the new we've in the things working last up for moved six to companies the been months and adding process Some and targets the of on that have pipeline. we're

front make about So XXXX. I the think I the we're going be optimistic that throughout M&A continued to progress on to

Stephen Kim

believe, And the regarding we great. Armstrong when think I could draw that be I versus a me that believe if any for as I curious was Tectum, one And by talked walls Tectum, I'm then to distinctions but you to – non-demountable are about walls. had that important demountable previously, correct well. is as within category? had whether And you That's chatted the demountable if those preference being wrong, addressed category had there's

Vic Grizzle

learning of a one that ton that very we're a acquisition. – substrate of demountable a it and Stephen, wall and you're the around part wall se, by substrate that per bring the learned lot Well, abuse-resistant of on types more. required provides but business wall Tectum right, a the point properties Acoustics a tents in And nice does as and we've Tectum are is with applications. not that overall being inside walls some wall and It's wall those a

this. more in and the learn So move Armstrong’s our for to the Architects, strength. we an to again, plays other opportunity the more about conversations just nicely wall, is more there design continue to And acoustics of very it and with to aesthetics and

nice to acquisition come and I us So gives off to platform the learning lot more a there, we're of. a think build Tectum

Stephen Kim

one Great. are just looking for think item. in quarter, just that. year? that. million I And And the million was want Productivity, Thanks a about I for $X confirm $XX still you to housekeeping

Brian MacNeal

this Stephen, Yes. Brian. is

out costs I associated million with call would weather. productivity, $X in mention is it that's what we headwinds So some of but

As here our some and ran plants with really the cold into additional you could in it imagine costs throughout was so Northeast, some that. the associated of quarter,

expected So at deliver number year. XX costs was fully the the productivity we those slightly to offset that for and of that least ahead

Stephen Kim

Great. Thanks very much guys.

Brian MacNeal

Stephen. Thanks

Operator

with Keith next comes question The Hughes from SunTrust.

Your line open. is now

Keith Hughes

a steel talked inflation on the lot about call. We've you. Thank

next several tiles, are you to wanted of run what in the traditional to Just quarters? you kind that how inflation and back saying there to expect the do get

Brian MacNeal

Brian. Keith, this Hey, is

X%. to stay range concern give the the going hitting in anything won't expect range that So we first that that full-year. to and quarter within see X.X% for us don't we ranged We're that's

Keith Hughes

of independent the And that’s correct? situation of steel that WAVE, is

Brian MacNeal

correct. That’s

to that comes equity our you earnings. as through we know – for WAVE So account

steel is having for higher, we've inflation yes, through mentioned, of a cost and our our in cost actions. as not that exceed to and goods WAVE pricing path sold. it's that got steel Vic But So

Keith Hughes

will the a to on be was unclear more half? come question. answer a the price on one Do other the I cost, second are is in WAVE the on in to And positive side going little it back you think second

Vic Grizzle

as But said answer and price we're progression cover that again, by March that of inflation it that but the to in not my was saw and of I breaking March, out saw amount I of we quarter, continue. to realization Keith, in steel expect the we in the

So realization positive full-year the that that side we should of be the back on inflation. price for

Keith Hughes

the Okay. any business of in your your there Europe ceiling of hostile a this bid has Is the has in the that been business? Final question, buyer here. embroiled – changed indication sale

Vic Grizzle

and business we Pacific project EMEA there. applications the all progress have track, Our are sell and making to our been regulatory filed, is on Rim

around So project. no that change

Keith Hughes

Okay. Thank you.

Vic Grizzle

You’re welcome.

Operator

Michael Your question comes Rehaut from JPMorgan. with next

Your now line is open.

Michael Rehaut

morning, Good Thanks. everyone.

question volume spoken continues past. of the there be trying big part a sales, this and Specialties, first you years, saw obviously, or margins bit we of I And quarter from think picture – The three for just story. part given a or that exciting of either that obviously, And itself, number, interesting the the any had to in perspective to of on on I of something out like business guys sales the you you've targets is two achieve the was this also the if to an growth. a four just kind have But that Architectural little you that story, apologize kind pick to in improvement want gold terms of great size type or do see margins. or think post

over a you the that years. to part extent So next is here well? a kind could or – three two margin from of as question What that sites in size mean your the have of the standpoint

Brian MacNeal

segment. to It's Yes, of our continue Michael. low. positions of part this are Michael question that our There's as category penetration think Mineral facets segment you Armstrong different of it no I in of I But lot for it it. business. explore tell more highlighted about to into those have this got more level and share than get before mean relatively this Fiber is I'll the a is we and this. into quite an exciting we we Relative

lots growth the there's So move industry consolidating we opportunity, as penetration of and forward.

a of there's that forward. so runway moving long And

And in so growth growing this come higher than other stake we're level of out in years we to of ground for be a in to not in many a get the segment in putting as this should irrespective to the is market the concentration future what double-digit segment, segment – solid the next continue kind that I several several doing. there double-digit demonstrating And we're last out put years, years. guidelines I nice that's over the we the the for and of think that and growth expect to

Michael Rehaut

as you Specialties. then part thinking XX% the that the on Architectural full-year guidance that reiterated All plus guess sales cadence right. I obviously and appreciate the appears and and about I And of – the for year, it that your reiterated you

the expecting things even growth a as could it just as the year shouldn't some back tougher get obviously perhaps or comps we a is that in to at guidance? that think I there end XX% implicit the upside the bit just in the back be guidance sub the of half, organic show be day to out that of half

Brian MacNeal

and sticking to the here nicely guidance, and visibility pipeline project the support to will a year. that second in as timing I in the seen this based double-digit very outlook growth Yes, our the And and we’re pipeline Michael. segment. mention segment half did the intensive that our is still expect in approach good pretty of past will up think it the being say we've is that we of that what we've is on the is earlier I projects I repeat and

some again strong sticking Architectural we're volatility, see we to expect year, Specialties year. You the this the year to guide can and in but quarter-to-quarter really on

Michael Rehaut

one I last Okay, then could. if just and one

margins you the that the your productivity heard Fiber able – if and make inflation it that $X goal that On apologies reiterated inflation being to million I right I numbers or in for I million have was to offset material and the cost that those that offset, in exactly? about if sure for productivity a years freight want similar Mineral don't just the gain and amount with of right I $XX

Brian MacNeal

Michael, Hey, Brian. its

reported we out some So $XX deliver more or million on from the mentioned of for to $X our million headwinds our productivity so productivity there there's of I track bridge year. in that we're cost, and

Michael Rehaut

Great. Thank you.

Brian MacNeal

Thanks Michael.

Operator

from Ken Our KeyBanc. next comes question with Zener

Your line open. is now

Kenneth Zener

Good everybody. morning,

Vic Grizzle

Good morning.

Kenneth Zener

into and Q, breaking customer the it, first were I was this anything but I the what's major I – or Is read could the home the quarter? called look think see you've conversely shouldn't missed be by broken out a there or you into since just as there we looked you group by know each through I distribution, that As at looking business wonder time K, U.S. is we and within segment? channels that that different reading your something don't out now business is can I should we to centers

Brian MacNeal

that's no from angle talking Brian. part there. about new different I than real disclosure its we've Hey been other look what Ken, new into wouldn't change as before, No it revrec, now so required of any that

and You the distribution can see the Mineral by composition points. of both Fiber AS various

Kenneth Zener

in much. through, we but and so for different didn’t didn't there XQ part to centers, is anything talked that call – related that come or is looking so thought quarter, guess bit, XQ there out, look there, we you through, Is this know XQ be I Thank come just verticals very you about obviously realizing last sensitive to you and you get at little guidance the anything would as much load-in – you? anything we education Interesting, I data. year’s your into example? your home any then whether Is but drilling call is for school at don't a when XQ should there out that there as had

Vic Grizzle

Thanks in in expect the There are second out outlook. but don't last first first the quarter the of Ken. don't and we verticals And consistent third as environment supportive that unusuals guide is what talked to four territory that the looking we which the activity of to. we versus we're quarter is base it's or earlier of year I is relative don't segment broader and nothing quarter about expect out out the five to, we which is and expected, with ordinary positive any

Kenneth Zener

Thank you.

Operator

with Our Shmois next Garik Longbow question comes Research. from

Your now is line open.

Garik Shmois

just to the upper wondering guidance year think taking should pace just about to million range. How end $XX savings are thank the the I'm million of you. of XXXX Hi, the $XX about the XXXX? you and prior SG&A layering in that we

Brian MacNeal

Brian. is this Garik, Hey.

year $XX half So Obviously, occur will half. so loaded our to second see QX, end to of splits XXXX. commit $XX going the half a the higher communicated And it half, in that we're second that. and million million at $XX the more in now pickup and back given EBITDA departure percent first two years, call from roughly QX in of million over it's of that of of normal we we'll half

Garik Shmois

year-on-year. segment just then on the was a but And a incremental thanks. Okay, from step-up is margin the year-ago, margin margin the improvements, easy the that EBITDA the Specialties recognizing consolidated of plus Architectural fairly comp

incrementals and incrementals kind good think we just should again, and a moving about on margin forward EBITDA, how helpful? about the any mid-XX’s Just both very and to posts think a on way be would guide of on margins that

Vic Grizzle

take we leverage cost you infrastructure the got it, Garik, the I'll that Brian you the to like. on good the we namely could think I is But SG&A. Yes. think about color this sales with volume in have we way if had business, add some and then really that

this we our serve by. every quarter with of teams that to other get levels we're SG&A part we how elevating the this is leverage. So customers. run these underlying getting the as kinds more of level organic And we And should is skill business growth and goes long how of as similar of the continue efficient rates, just to see just part we

by So I think some based to the expect quarter on But in our of level. expand. business relative the you're continue margins performance going expect margin to going again, to continue noise on I to those what's this quarter-to-quarter to improve the I of projects. to have And

that your I hope So Garik. answers question

Garik Shmois

Okay. Thank you.

Operator

question with Phil comes Ng next Jefferies. Our from

Your line open. is now

Philip Ng

in of is big your part Hey a you rating that guidance guys. tough Appreciate EPS buyback. backdrop,

your look or counting via incremental at could divesture, make the And that potentially to you of over or you’ve you back be of shareholders look as return year? cash buybacks more you’ve already the want the that to Just function sure gradual done is course proceeds for to ASR? some the buybacks a from some will

Brian MacNeal

to it through ability to we program. Brian. generate call existing that continue to benefit we we from is chose cash and repurchase to share our in this Phil, insurance this call we shareholders net So XX% out, to way, flow return in million free a I in our roughly it be confident XX% as proceeds had improvement quarter the year-over-year. $XX And of

the on in significant share repurchased over pretty don't out a reflect will look EPS is what our what we in we've repurchase and there QX. actually amount year, we we done guide provide As guidance

Philip Ng

or holding any so. I And just that guys were had and I a lighter volumes guess, share out you few your for things there's impact QX a that anything in or on increase your if Fiber, But don't than do shipping of price moving it. if normalized line you're did lot Mineral that’s nature? was of on a sense. competitors notice volumes month little I on makes the by that a little any Got know earlier kind if call Thanks. pricing of

Vic Grizzle

so we don't outlined Now again, impacted the things really, we that was three believe, It that volume. Phil.

Philip Ng

a Got lot. it, thanks

Brian MacNeal

you. thank Okay,

Operator

next Our with Kathryn Thompson Research. comes question from Thompson

line Your is now open.

Kathryn Thompson

questions thank today. Hi, taking for you my

size the maybe quarter? you seen of that Thank seeing for billion we was First, projects color the what from on more early the more growth of our projects from projects bids curious if give carryover in you of in size much prior is large are to $X project Architectural you seeing pipeline? larger search it you but because seeing how past that on – are Specialties, and If could see in too type project primary this your and type we've there, segment are

Vic Grizzle

that nearly shipped first we we the on is in working that Kathryn, something were XXXX. quarter to in everything

working have that Some but and the building to, pipeline we of were in quarter on we fourth been were quarter. that that materialized could shipping from that the it certainly XXXX first all the

and the is size building very to which that with public As far actually out the broader Central goes think projects. Grand have marketplace. mid-size encouraging in speaks very the large we we've and projects I shipping about pipeline now some the plus $X million been been activity base Station, as projects is The very

filling we're the mid-size a over projects of So Kathryn well, which but in all one noticing I little contrary the notice we’re big did filling your projects that up as pipeline question lot things the a could is, again more that's of for encouraging to bit up projects very is course imagine, us.

Brian MacNeal

it's a Brian. Kathryn, Yes,

all growth The point add and material other reemphasizes, I'd across over substrate. that we saw XX%

Tectum Wood, so business. broad Specialties itself, pickup nice Medal, very the in base So Architectural a

Kathryn Thompson

Okay, great.

gypsum, wall – Really systems an are different quarters versus community discussed are a years conversation over mainly your the on past With ago? open understand how will and couple who to wall environment traditional with conversations have which the we've the particularly been they cost? of the of two Tectum, say given to seeing versus you how rising systems, bring type with A&D today

Vic Grizzle

in this. platform having, into move in the products get much to and customers a to going different parts those walls. conversations into with not I'm go directions certainly us Well, specifically our conversation of to our But acquisition on Tectum gives applications which the we're about detail relative

the ceiling to applications traditionally they that into. go addition In

looking the of lot can things first a of to know out And as They again talk we're sourcing part personally And time the talking So committed quarter considerable a I community. expand spent opportunities amount our of for service to our in my and we're about to architects architectural always of imagine. we and business them. contractors. you our strategy support a

and of the Tectum that have So can conversation we acquisition been I'll it with A&D there, but a range is leave the terrific again community. the has acquisition expanding the

Kathryn Thompson

walls. Okay, getting about I question into on the so business? we interest of know software side side any talked the that kind wallet, planning or just in the that final of

Vic Grizzle

I'm this comment again looking intact not to to on mean expand we're Kathryn, going appropriate. platform our on Yes, that. I as

Kathryn Thompson

you much. Thank so Perfect.

Vic Grizzle

Okay, thank you.

Operator

from with And Associates. our Rednor next Zelman question & comes Scott

line now open. Your is

Scott Rednor

environmental, good for litigation there Brian, Hi, insurance, recoveries the morning. from years? balance are the the of additional

Brian MacNeal

out is One Scott, we to our us, call at P&L balance we've that that anything million probably time the $X million but of talk I'd to thing sheet, available and call beyond $XX on continue out. benefit show would got that topic. carriers this up nothing to above another to on to

Scott Rednor

should $XX Just year. there the is balance for to or perspective, everything expect clarify of the from from year flow a million cash we is influence last additional the

Brian MacNeal

but you'll of in total call offset then The million $XX.X million. $XX $X.X and see million expense that out by number, Q recoveries, down our net gross netted million the that's was $XX we in that to

Scott Rednor

actions to levels probably cash minus little you that are EBITDA the When think adjusted flow beyond, the business, levers bit and conversion back plus below there? the the XXXX XX% conversion like about out the when And last conversion the you're Okay. year if seems flow. took from getting think to you this additional in is about $XX million cash getting from get a or those what to of free year those you

Brian MacNeal

is our say which to XX% environmental million, I'd guide pieces. when XX% excludes midpoint first the up year-over-year $XXX we So that to

from mentioned the proceeds our I share So that’s fund from was benefit we an that additional operations. used cash insurance to in normal quarter. first like the just cash repurchase The

continue growth we cash. So in to will see nice

are We our normalizing CapEx on spending.

our We capital, has a continue nice obviously in working and to to. taxes been cash be very diligent benefit

Scott Rednor

how percentage Thanks inflationary And building you just is have for and discussed area that across the products? that just Brian. clarifying lastly, freight that's realizing of a then COGS been as guys large an

Brian MacNeal

our goods Yes. Roughly sold. cost of XX% of

Scott Rednor

you. Thank

Vic Grizzle

of Scott. Q&A End Thanks

Operator

for remarks. questions. turn to At showing Vic I'd call the over further time, no back I'm closing like this to

Vic Grizzle

growth. weather greater EBITDA, that that to portfolio you that and We're will XX% Mineral hope our of note, aside deliver what’s I on pleased day. Day sharing hosting on show excited to want breath Wednesday, Yes, Architectural a announce we're closing our we do cash we'll X% plant, Thanks the be impact, November and in year revitalized Marietta ceiling AWI, be Great. track we're And here to I than I’m be Specialties design to Lancaster everyone. topline, strong on where at flexible XX% next. X. to X% Investor the range on to mention right line from the heard Fiber also systems, the over for a of an going you going

there. you of day. have all for and seeing good to thanks forward your Again, attention look So a

Operator

program. conclude Ladies This and does conference. participation today’s gentlemen, in your the thank you for

may great day. disconnect. You Everyone now have a

Armstrong World Industries (AWI) 30 Apr 182018 Q1 Earnings call transcript