AWI - Earnings call transcript Q1 2019 | Armstrong World Industries, Inc.

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Operator

Good day, ladies and gentlemen, and welcome you to the First Quarter 2019 Armstrong World Industries Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference Mr. Tom Waters.

You may begin.

Tom Waters

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

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

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

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

Vic Grizzle

Both to in growth. the sales confident up were guidance. that our performed we Organic good our to sales with to It's everyone. today acquisitions points to X% and quarter. solid with margins XXX added you of growth in XX% XXXX review basis and good XXXX. improved Tom, expanding first Thanks, X% and well our a morning, results, recent delivered remained quarter be start segments We EBITDA and adjusted

unit segments, on I of or was through of digits AUV we quarter. to, up the themes a each in the double segment, first walk want as Now, in of of details you average touch Fiber a the Mineral moment the few In the value in key refer to quarter. will results but the Brian

off new recent Big specific solid Mineral inflation, and accelerated the weather-related Canada. our gains channel parts gain upper pockets in to traction slow to and to the of Our in our Midwest mix pricing, start in from product a like-for-like as volumes innovations Latin-America, Box outpaced somewhat positive market. got and of weakness continue AUV challenges of Fiber with

of and unchanged Our we progresses. in digits earnings year in softness the believe quarter. and WAVEs the North be new market products the American commercial as continued view our underlying the outpace is of as this double and high-end market, to related positive products is year-over-year much up timing were and recaptured will were Volumes

and continues Mineral the in for new is plants for DesignFlex side, been the Mineral over platform customer projects. this Fiber platform in continued working sales. The are market On good Total The our excitement of gains operation energize launch XXX viewed we and On expectations into particularly Fiber the resulted of mix Acoustics. unprecedented new ran actively website, lower the has now since fully most success our DesignFlex innovative as the future. our well, to our cost SG&A control percent launched

another that XX% sales EBITDA is solution strong line consistent in suspension example had the another to This the this margin gap active drywall The drywall aesthetics combines It to and have we are category. designers DesignFlex be to to of extension up regional and and architects is Fiber benefits our number AcoustiBuilt The Architectural spring AcoustiBuilt, for drywall embraced with used Fiber EBITDA our between platform pre-package making XX%. white an going the specify our with already including launch how an alternative feature grew of will launch in Mineral acoustical products. of it highlight the are Mineral ceiling a jobs. innovation of Armstrong is will upcoming XX%, contractors installation adjusted This smooth spring and adjusted latest ceiling same parameter Mineral kit ceilings. the drywall the many for Our easier formations. A by with market quarter process design acoustics Fiber. of methods was of acquisitions the The working full the installation superior with with contractors. and Specialties jobs. recent bridges XXXX. on year simplify

resources Even and as our growth expanses we layered acquired future for newly businesses. of the in absorbed additional

leverage the progress will SG&A Given again Specialties that with we base, remain full-year. our we are making on the Architectural operations, gaining margins expand we’re our and confident the for

to adding our is of the will year segment. in of capabilities or wood the strengthened year the manufacturer of is March and our well leading Armstrong acquisition notable broad out architectural ACGI’s close is integration strong another ACGI Architectural position for Also in the Our category. also sales leading closed ceiling the Missouri business growth specialty the in systems. Marshfield, Group based of to ACGI Components further important is quarter, backlog in remainder of and underway. confidence This specialty product fast-growing the and category in a wood this enhance strategically nicely for architectural wall

a in our excellence We art facility. wood add Architectural future new will state $XX accelerating $XX million for further ACGI center our manufacturing XXXX, Specialties focusing to design investments for sales here are our be wood will to ACGI growth. of to of and making we million create the

continue Plasterform work We progress make to we Ceilings. at on two and did Steel year, good last integration acquisitions the

by our new the we our project expected XX% in metal design capabilities to flexibility of to improve there. plant equipment the further quarter Ceilings our confirming at processes began We’re in business our manufacturing our we capacity will and will Montreal Metal the expansion increase an include Also, up cases. synergies and that increase

well employing strong technology progressing and future frictionless are service demand highlight, level, create focused digital experience you digitalization to As we the can for continue walls. build At remain and to to a all platform ceilings we company on other out the notable a our our see, to both current in customers. specialty Architectural in first activities initiatives Specialties more

as So far result a for year, doubled Architectural up coating coating year-over-year. technology, this is the digital self-service capacity we’ve through and use Specialties our XX% of

to and downtime, our forward digitalization and and just product reliability, to planned manufacturing energy this projects digitalization We’re on in digital updating reduce To gather initiatives quarters. need manufacturing usage, other the in the to manufacturing cost. our real our improve Using to preventive I plant of plants our we’ve data, these sensors we’re for quality data XXX health also you is detailed our initiatives of this in factory processes. and to maintenance the one processes. on over initiatives time increase date, advance ultimately minimize look coming deployed in predict able undertaking

Second the in have saw the quarter, that doubt resolved you lawsuit. no we Rockfon

matter is behind all we As us. and dismissed claims reported, now this are

pertaining Thirdly, continue and expect we we close continue to the in sale conditions of to Knauf international sale to support their and second our clearing EU quarter. to the efforts the satisfy business, to

So, I’ll more let turn some details. Brian me there, pause and to it over for

Brian MacNeal

in our stock $X.XX by from to for with of our diluted details as matter up morning attorney basis we sale associated not we we of earnings program, on first points. results, adjusted business of increased litigation be higher our lowered quarter offset referring were of at settlement bought of just we available cost, for a on via quarter runs Today, quarter, international cash basis million which our million presentation. going sales into expenses, Thanks reviewing we Consistent our be but as driven $XX and a payment million XXX website. million primarily reminder, by behind an prior This the I’ll In fees stock Rock Vic. Slide $XXX flow Good $XXX before the year profitability call. result over quarter X our the principles, paid of friendly Currently, $XX Slide of Adjusted decreased grew the the cost This date conclusion our the I’ll year slides count million a out shares ago, inception everyone $XXX million Adjusted now as any over additional expanding partially to X go X%. for October forward. we and have includes of under per the primarily on million our results, improved the profitability. X XX% since presentation agreement. the the matter. $XX.XX. repurchased with XXXX. activity. and the cost Net XXXX, have price us basis Turing average expect EBITDA $XX receiving increased is of of a share in Fund the and we with buybacks. of do financials, free margins first of debt Adjusted back to expense to through program, by repurchase share remaining repurchase by quarter, million the $XXX XX%

in freight inflation raw from expected as by are Turning our to now adjusted Overall, driven gains $XX EBITDA costs increased including flat line. well numbers to like-for-like and were mineral costs. end The wool, gains quarter. offset Energy low paper as X, of Slide the specialties. input pricing volume in AUV relatively materials, as cost at declines Fiber waste fell the range. Mineral came year-on-year these increases the architectural million bottom strong

the mix volume retailers, pricing to than declines. capabilities by inventory X flat and quarter, delivered with Volume quarterly Our as were and the our cash Slide and continue WAVE’s as momentum, increase adjusted prior management increased was anticipate growth of cash XXXX. was in expense inflation, spending of reporting. prior sales companies. cost the were grew quarter, acquired earnings. $X was improvement. higher X%. versus gains WAVE rates also operating in year the we capital businesses. latter America. year. of costs Latin by well, market higher the part softness SG&A begins Mineral free first as in Cash added flow improvements in savings by of plants AUV segment full-year flow offset and primary Architectural acquired like-for-like interest to million XXXX. continued positive the The X investment to over driven timing performance offset Big by Fiber our Specialties XXXX driven the is of despite gains more run higher SG&A timing the projects our restructuring capital due driver continued by the the quarter relatively Box dividend expenditure driven In at primarily Slide impacted quarter of was shows price. strong be or in Earnings the flat

weather geographies impacted wet the February certain Additionally, and were March. by in

was much improve costs We freight year, solid and margins EBITDA. from increase million the higher optimization related actions EBITDA Productivity rate shortfalls savings recapture the footprint year the expect than SG&A result XXXX. of biggest progresses. the the gains lower Adjusted $XX pricing took in up or XXX and last to the of last as basis to plants realized were moderated. actions points. Like-for-like of XX% expanded in the as timing our a driver year. has expenses material were we were we as Raw rightsizing but were

and remember, XXXX, of will are half first to across we’ve savings driven you track and restructuring by As $XX both benefits. SG&A on actions in we the million deliver XXXX outlooked in these manufacturing our

another $X Finally, WAVE adding quarter good to million line. had the bottom

acquisitions segments extent X,XXX the Slide Architectural a an Adjusted offset quarter decline margin strong especially increased the and Specialties XX% Specialty by of The growth support as the Quarterly sales the partially additional was small in as Plasterform, and acquisitions. the in X% on EBITDA points were expanded. XX.X%, up Moving from quarter. EBITDA and grew gains in in an as was quarter capabilities adjusted points Organic sales cost impacted down the drove in Steel Architectural in continue. basis sales X. QX XXX share XX% Ceilings of of acquisitions investment fixed gains The this the ACGI sales basis to margins organic XXXX. to sales

our solid To cash in year-on-year margin to plans model. our over that bit from is ranges. in value to growth we’ve confident February. remain before, start Specialties, that, expansion results in double-digit revenue, creation our it have EPS it with as XXXX EBITDA growth unchanged to we pleased I’m adjusted we EBITDA, confident and can and expect With Architectural close, high-single what digit and Slide flow quarter-to-quarter with our to lumpy. remain a XXXX I'll be in back continue consistent sales and the and Vic. We deliver turn place shared X is We said guidance

Vic Grizzle

Thanks Brian.

third leading position a contractors some The distribution good out to North partners, with As market and you underlying how this years architects, can propelling solid The really the America lot and year celebrated invested see, of further month, off service our and the those with being but to is a commercial We've is company. Acoustics, that we XXXX Sustain, standalone in Earlier a AcoustiBuilt higher. innovations wall indicates fast and reinvigorate level accomplished amazing truly a and activity. three three go, the of Mineral good conversations had years. of to now we've is million with consistent category over Total Fiber our activity frankly in like our start. It we’re a I've DesignFlex ceilings in $XXX in there, field can expectations. AUVs good

combination in over grown to the program. recent attractive a Specialties sales. has over the category returned per business sales share and for million repurchases $XXX in on international dividend Specialty XX We poor finally, $XXX over addressed year. XX% million Architectural of have completed track new our Knauf And through those acquisitions EBITDA. we've to of of four in and shareholders regular through the We've returns Cash generation times are add

Now, wall company, are as ceilings America's only an we more than and focused ever.

consistent with of stable topline about are ever are and a and here segment, We strategy this customers, difference successful with greater company. growth seeing the any well-positioned a more driven talking create generating clear And a from products they’re our we’re power with in for about Architectural now Armstrong. revenue deliver just they our consistent and And With even results, focus we extraordinary started. too dollars that's to are cash shareholders, at a other Specialty excited we’re than value together per more building what excited getting can company. by than

we’ll that, with questions. So, take be happy your to

Operator

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

now Your line open. is

Nishu Sood

you. Thank

ask AUV the the strong to wanted the about growth, Fiber number on I very growth pricing there. side, Mineral First, very,

the you I number have in seen the I folks. think I’ve strongest known may that’s time

the about factors shipment wanted of that? strong should How a the did some affected that might understand – issues boost Were that and to about timing Just think bit little that maybe have higher? what’s sustainability that, of we maybe number? of the sustainability a the the be very may of number

Vic Grizzle

those in Yes Vic. of pricing and mix, Yes, like-for-like both Nishu, a made strong pricing gains the both is this AUV. up very double-digit

we’ve If year last a you actually we much long seen period a inflationary remember period last an facing and year, were inflationary time. than higher

XXXX, from price the in we second the for quarter hard the make that nice And last pushed think to actions sure you're half realization in realized the of of that we So, year. so that of I first half. in inflation increases majority we carryover covered what and had the we back part in seeing is

on a little So again, gave overall. mix I that's part. faster, end little like-for-like end better lower sales positive higher of the your at bit the to had softer, then portfolio then us on product and we the again, And gains mix little nice a a Nishu, growing the think point softer

are things to of combination two the So, the those I contributing pricing. think strong

the we'll as the half year, as stronger the we rate sustainability of I know, normalization see in half we the of year. had that, of into of as we get last our you think comp second the that pricing far some As second realization

the think I comps of in will a I we’ll hang get So, different good little to on a think half. realization the second this, portion but

Nishu Sood

side volume Fiber, flat of volumes. maintained of Fiber for it. digit the you low-single Got you've know, kind the, the it, color. on then, Thanks the Mineral And got Mineral to

obviously XQ the what, you affected were kind volumes on and the be still kind view? take As potentially year-to-date weather you implies track are look a it, digits for issues of that timing, some you may know, post that numbers quarter of Because down, when the themselves or into of probably mid-single that the and trends be we so?

Vic Grizzle

the I at It – each where type was related was we the No, think look to of Yes. of softer. timing components volume really activity.

parts some we in We and orders depletion occurred Big a the when in to again, timing and the And Canada weather-related also will So, the that that to while, impacts timings. contributed the levels some first shipments we’ll we get a on get That lot and of in Every in once talked about Box of larger channel, of happen. again some projects had some Midwest. of inventory this. quarter.

hanging most timing because the it's the part part, most this for of related fact we’re So, that for onto that issues.

So, – again, I lost we’ll think those recapture it demand, coming that that wasn't we’ll capture demand, the quarters. in

Nishu Sood

Got you.

concerned construction on of your that sales in indicators side forward-looking new about weakened, issues you if know, there at it mean, Just the Are one looking on know, and just, network, thoughts some was obviously the concern very yourselves. or, into any have that, the the any you earlier you that? one you construction but there? you weather last with have roots macro, volatility you focusing please? deep Are maybe I commercial could year,

Vic Grizzle

Yes, we’re not really concerned on XXXX.

We again, attended, distribution looks and generally nicely, I backlogs the our like sentiment building XXXX is the well from solid, remains the and show, think partner activity on-the-ground strong, think contractors the had the I industry show week, I activity [Cisco] strong. last quoting are our data. or particular in certainly and

seeing So, that ground-level in anything change the or terms activity in would pause XXXX. give the for ground-level we’re of activity us not

Nishu Sood

Okay, thank you.

Vic Grizzle

Nishu. you, Thank

Operator

Kim comes question Evercore. next with from Our Stephen

Your now is open. line

Stephen Kim

Nishu’s questions guys, strong ask Thanks on Mineral you Fiber. just follow-up quarter. very much to volume Wanted a on in

well then Just weather-related LatAm you the to that in geographically and think about in talked as issues inventory clarify, here mentioned destocking. there, I you as U.S., also

year that pieces was day we make to in versus confirm sure one the want last all got Just volume there ago. and

quantify affecting was in the so, amounted just I of the in aggregate volume? timing everything shed on little And light you you think could maybe bit a to that you quarter year-over-year? can And what the issues catch did if LatAm,

Vic Grizzle

Yes.

Again, for Mexico election and which new it’s we us the it down really. LatAm, through bit, member, piece was in devastation activity year little from we then Rico. the base freeze period for two a and if on spending, were components some of Mexico, the Puerto So, your saw there the comp Puerto other last to issue Rico. in the and hurricane, in shipping so

are points that Latin us we I think of saw. America softest those really the two for

may So, back. part come Mexico in of not that

I add that as were that think, segments on the have and develops that related the think could know, the areas think President of of you to I Canada weather And market seated that’s can’t know, both, fully we’ll I and you related one volume to I how there. see gets new side. more rest the anymore retail color be the

Stephen Kim

Okay. I’m XQ there to was be going is see? based comp right, me think, there continue a also if does wrong, think a that in perspective, – what you But from and I issue, that – day’s on that I correct

Brian MacNeal

Yes.

So, impactful listed – of primary days, X ones Stephen, the look we to I as shipping in it at we anticipated. the mean we as X and but wasn't Qs drivers those continue

Stephen Kim

Oh.

strong that with, more of this for would we perhaps might that’s maintained quarter, the And characterization Could know, than mean be know, know, confidence that range shortfalls I seem your Alright your of making a assessment? AUV in higher volume you you the you’ve fair in it you interest. then, general, in – guidance, aggregate fine. is end the up but that your temporary Okay, with particularly performance, the greater.

Vic Grizzle

the want guide. Well, on I get color more to any wouldn’t

and the confident sure our with performance. guidance we’re the strong for think I start in

good Our the running shape. operation well. is in plants are overall I mean

any we’re first for the performance to than don’t that. our Its it’s our quarter year. overall certainly early, guidance quarter, give but in based first color on I more the confident want So,

Stephen Kim

regarding you for that, great. self-service one interesting. one and quoting, last And know, then, important find Okay, me I your

greater XX% I self-service the this going think You kind in on juncture. think Or said see? rapid drive that? of future? we’re this What of do enabling technology at basis it a that quoting gains can our than a digital growth we even could year-over-year rate the you was see most acceleration substantially that to Is

Vic Grizzle

about growth, it's lot think talked way very create right, way Well, excited it's – think because to the in this it, business. a I a if the you about way – without about and this, more I to a adding for capacity we’re cost the

areas entry more productivity-related that’s get the to it's reallocate some can that of more are our the for ways type that people to streams be work management be where we business. of create redeployed margin the and being for that an opportunity do So, we’re It’s we’re at that growth are more more of real of resources handling of efficient doing around able were customers whether them order on business side the us self-served area, these growth. going in it now to diverting more that or we’re to could We, activities that we’ve do. or also Those orders growth-oriented our lot value, to we by so supportive a job follow-up example. in other to

be to and going growth a that create Those level to the going our of on number efficient it’s for of or results this now. us more business. exciting And way be customers, So, two, to very both – it's to trajectory impacts that a us the experience one. create number are capacity sustain we’re for we’re for better

Stephen Kim

Great, guys. thanks very much

Vic Grizzle

you. Thank

Operator

comes question from next Ken with Zener KeyBanc. Our

is line now open. Your

Ken Zener

Good morning, gentlemen.

Vic Grizzle

Ken. Hi,

Brian MacNeal

Ken. Good morning,

Ken Zener

to But don’t oblivion. we’ve a and cycle given could Can you want had you sensitivity? volume had weather you that So, guys on X%, a need just guys obviously, if how things for talk for let's know, so would you say, your this industry the in decline and if down were Brian realizing profitably. you shipments shrink would if that talk. you once don't can AWI a know, look you that we clarity you just what get industry again to quarterly you’re what X%, kind to about earnings of not down the of you mean grow volume operating business but the around basis, you believe – talk leverage of has like about, volume Realizing X% proving that the outlined, terms face for – just

Vic Grizzle

right. question think to business, go back of Ken, have answer you to drivers the value the that to Well, I

downturn So, that of the and, the we AUV and saw that drivers in mix all customers higher remember. value in the value is very products, When downturn the know, you last continued a one we and to up downturn. was the downturn, continue, in would as business last deep in the that

the that downturn, the a expect face business we in improvement a costs is to in this manage well next continue downturn. AUV other would So, the thing downturn. of very the does continue And in

On plants, to manage and we non-structurally and the in as that structurally can you severe and it XXXX XXXX. imagine, costs call but side, the assess, downturn, gentle in the could cost these out productivity and in take move downturns, both be we’re very cost in very manage plants downturn volume those sensitive experienced more and to versus the and especially able quickly we’ll back a

business. we before two going had the foreign those before drivers value less a when an we next a So, I business, cyclical behave continue big in business will lot to when international are think downturn, and this had

going I think focused ceiling of differently walls AWI those behave very is because company. America's two know, next value as, big and downturn to you drivers in the

Ken Zener

thing? better question, Understood. missed know, this, and exposure apologize in there, sense a have was a is of FYXX of could you what, And that your if you sales you so, what know, just could kind you bookmark just final one-off we terms of LatAm, I I this – is if one for

Brian MacNeal

is This Ken. Brian. Hi,

in – our are Big of So, what those total is the we’ve over XX% roughly said Box, LatAm, three when total Canada, sales. you years

Ken Zener

Equally split Brian?

Brian MacNeal

I’d close. say, pretty

Ken Zener

Thank you.

Vic Grizzle

Thanks Ken.

Operator

comes with question Michael from Our Nomura. next Wood

is open. line Your now

Michael Wood

Hi, thank you.

lawsuit. the related full-year? prepared imagine your that you in mentioned range, to You inflation settled at legal And the to I had is low-end for some expected remarks the fees of the continue

up better, it it I'm primarily be Now what that softer side shaping kind the the in volumes the curious maintained that of that check? those other you – look of was guidance, like that guidance kept to they're is

Vic Grizzle

Hi, Mike.

that. we guided quarter year roughly X% end inflation, the So, for we to the lower on on just came X.X% of in the and the inflation on yes,

to through the of that stay we continue So, the within rest and X.X%. our of continue X% year to range

know, continue $XX cost million, our we've on. to we’ll on. On and That the settlement cost continue that don't both we the lawsuit, the you out the adjusted of and expect that's not

good think cash know, it’s sales confident flow in as ultimately So, you The and move, early EPS obviously EBITDA, we individual we’re guidance, solid of we’re pieces days, ranges. our but overall guidance quarter. QX and, could growth, about our pretty

Michael Wood

the been What it. education. are on you Over particularly how, it’s the have summer markets? season the we into volatile any or indicators fair years, you might end busier more Got as know, past year? this Do get leading thoughts early the

Vic Grizzle

the a education early I tell, still I too Mike. state more it’s that the again, to I'm data macro Yes, the optimistic of But on just the have have on level. year. funding position that at had beginning based we’ll better the at local and

optimistic still a better it now, I'm season. about a right call little education but It’s earlier we’ll see. to So,

Michael Wood

centers related what you you know, can in be it’s to, It give and related that else? was that helpful whether timing and a delayed products in finally, us shipment value just specifics were of piece. average portion anything more And the would lower Great. unit priced timing America any home Latin on know of to like

Vic Grizzle

a it’s frankly Yes, smaller portion.

about wouldn’t the of mix being bulk performing The continuation the was to think it. pricing I think AUV products, the mix end or I of from from that’s and higher the way like-for-like improvement and the about think sales and way some it product I of product the – it. channel but as end, I will, think There a if you was larger component the about think small mix, think meaningful part. to, a the lower to that’s higher

Michael Wood

you. thank Okay,

Vic Grizzle

Mike. you, Thank

Operator

with Shmois from comes question Longbow. next Our Garik

is Your open. line now

Garik Shmois

some to deceleration there you. just Specialties, on Thank wanted just was X%. I organic to Architectural ask growth in

not I last think if quarters. you’re better to strong comping several mid-teens

seeing So, also driving in related environment? end-market are you to could change you speak any you that? that what know, Was was timing if or the

Vic Grizzle

and good a that timing is projects of The lumpy the a not call it’s quarter-to-quarter but and would in of business attribute quarter-to-quarter. business, this within out. think that I organic deceleration, portion No, growth business between as Yes. come volatile that as can that I more the a sales overall as

quarter would other a is, I to year, last first point was strong Specialties. first The thing you Architectural specifically for quarter

business. little So, a in we’re that also of base comping period a bit stronger

So, at look at the wouldn't deceleration all. it frankly, when I as backlog, characterize I a

Garik Shmois

just And thanks. Mineral and ask just clarifying then, some AUV. to questions Fiber Okay, on wanted

half anniversary benefits positive price you expect you the from AUV sort from second year that of sited? last the the in we mix just increases should year, As the of

Vic Grizzle

the expect I think No, half the in year. second you Yes. of should AUV positive

to last of is starting which anniversary are the happened year, we in However, year. that the bulk the price realization second of the half

as our start comps, said get I those the AUV So, year. whole we’ll some as of we for normalization earlier, see into to

Garik Shmois

as or is at put offset? maybe need thereof, in And the lack you that additional to look to price you Okay. the inflation increases any market there

Vic Grizzle

expect we range. talking to the inflation a year at to the was Brian X.X% similar Well, rate throughout as continue the at X%

assess assess So, and normally we in price time that as we’ll raise the we’ll price we’ll that and accordingly. summer our size increase

Garik Shmois

Great, thank you.

Vic Grizzle

thank Great, you.

Operator

with from question next Our Kathryn Thompson Thompson Research. comes

now is line Your open,

Kathryn Thompson

questions. taking Hi, you for my thank

in over your $XX your outlined three the next Investor years. tech investments Day, million First, in on just – in

for type then remind any you’re Given of could also is figure? investments? change you turns just seeing, aiming some these us Thank of the there you’re you. in And what early successes that

Vic Grizzle

generate that And of investments, a and to some you that? anything we’re traction we do about add gaining very outlook to it, can nice and investments Brian on I want But think confidence let on not very excited Brain, have changed these I'll our and Sure. return. and we’re comment that.

Brian MacNeal

for Yes question. the Kathryn, thanks

of as know, the journey. companies, our we’re Investor in that we’re You the we of in days optimization digitalization digitalization phase still Like outlined Day. in early many

to looking we always in get effort. as for we opportunities don't that investment better more at going so, digitalization invest that we’re area And up, that while anticipate

Kathryn Thompson

Mineral to wanted question it's Okay, that of guidance, on clean-up you a seasonality full-year? growth confirm, are in-line those X% but great. fatuous shouldn't your the full-year given you volumes for Fiber outlook, just And it just assumption to still to X%, still keeping – and change that that understanding growth I’m X% assumptions for the a really in QX X% of to are make just the AUV really for sure

Vic Grizzle

They year. to our are in came stronger still obviously originally in for issues, than AUV timing the line anticipated. most we was Kathryn. Again, related in Yes, QX volume and the of

in puts the some are growth the overall in for confident our XX% we’re and So, but very X% end, to sales year. takes, there

Kathryn Thompson

very you much. Thank great. Okay,

Vic Grizzle

Thanks Kathryn.

Operator

Jefferies. comes Our with Phil Ng from next question

Your line open. is now

Phil Ng

side AcoustiBuilt Can it’s a do more as this us And side on will adoption DesignFlex probably and more in expect see AUV on when guys. contribution, you things through about or milepost on in you a actually XXXX the fully, event? come you you Hi well? the more do give lift nice it the contribution volume flow of think and to of the when

Brian MacNeal

DesignFlex DesignFlex, the On to probably process. the XXXX, of in impact through Phil, something it’s more go I’d as say as has unique because just an specification

So, the XX of months you’re specification to at process. least XX

it. spaces the that’s think into is way I Fiber is existing the Mineral used. think So, And for to about because, part most were going go DesignFlex being to

is see it. of to Later, initially. this things to You its Mineral on case. will and Fiber we see And in and hope use Mineral Fiber normally colors you they places AUV it architects what that could that show more will because unique do the DesignFlex allow see with use in up shapes expect wouldn’t and we to side that

the be terms So, the AUVs I slightly think are are think, the AcoustiBuilt’s different, accretive although that’s road about it down further way to but the there. of that’s the side. nicely in impact a should they additive drive considering on mix-up used Mineral the That’s well. dry are will volume clearly going wall category and that Fiber into where the as and

very was This product. a again So, be to similar. spec going

to XX from the market in got May. you think months in officially XX we’re we launched months launching that to anywhere when and it So, from

a that. keep but So, updated, that’s probably you further out. on little come We’ll more to

Phil Ng

just given Got have helpful pretty factoring very in the buyback? systematically And That’s still run, an on cash approach or just it. quarter amount stocks should think even guys more generating? I you about guys How guys of be based you fair mean had you taking are the the excess color. cash. obviously every a some nice you amount bolt-on in a opportunistic of generating, cash are will you

Vic Grizzle

There that we so. million. think stability I of business, ahead to cash still value months plenty around without to. this left our for of do of as you when million and bullish is, we No, valuation We the of referring you that creation the authorization are $XXX on does are and on optimistic all is, company and say, of foreign timeline very, now We and and ability us. is think have about you XX in plan international business, valuation to tremendous there think this to about still us – think this is opportunities $XXX that without an executing amounts I’d way think to for about drive about the left

be market our to going buying the in we’re So, shares in coming months. back the

anything want continue that? to million. that Brian, you $XXX plan we add execute to to So, to against do

Brian MacNeal

I think well. it you said

math So, a can left, million everyone do quick and $XXX spend. half six for quarters, straight that line year a

be there are in preclude privy we at As but events you market. be any we may that trading from back know, certain given us certain will quarter that times, in the

Phil Ng

is you you if it. And facility you spending helpful. be I facility question. could should alluded ACGI then of front about, up steel the the Vic, Montreal CapEx to margins what enhancing there think on on the Got and up capital and more near-term expect investments we short-term? – on little of side Can the via impact clean investments talk any there as of this in kind step type things. on That’s a one maybe

Vic Grizzle

side. on the Fiber the capital investments are on These sides quite different specialty’s Yes. architectural Mineral

Margin of million on in. they a much investments feathering So, those they the I would smaller. be are from the about this $X range lot to type are I million think and we those. will way to of in don’t $X expect headwind is, say

in two, I to quarter it investments us feathering margins but get overall, expect basis. might You annual would or continue a we’re and the these to on expand

Brian MacNeal

add, And know in right would our of Phil considered XX CapEx. all guide million that’s you now I of just

Phil Ng

it. Thanks Appreciate a Okay. lot.

Operator

next of America. comes with Peter Our Galbo question Bank from

line Your open. now is

Peter Galbo

maybe as moderation quarter of for you last in on a better – about believe Vic, for just bit the healthcare for taking well. you thank office. call I guys, sector, Hi talked you year bit with but commented a little I maybe education little a

that’s understand guess I Just through the and quarter? far trending want first this to second been quarter both in in how the

Vic Grizzle

position that Yes. on My hasn’t view changed.

should too really education is said there. be this I earlier I better still, But education after I on I’m early a to there like first think it’s call healthcare my quarter. year that season the and better optimistic that. that and out position changed hasn’t

Peter Galbo

quick That’s two one. And Brian, Okay. helpful. maybe

improving how I your wanted had margins architectural about to talked to you the year, XX points I sure And make specialty, in year same? XQ? on the first just I then the quarter First million remarks EBITDA of basis was for that the prepared should savings basis mentioned SG&A the relative last first we of quarter for had know you half in was believe XX that just XX on here, points, in expect of that to much what

Brian MacNeal

Yes.

increased Peter, really for scale focus to margin expansion. leverage we as sales. acquisitions So, building hasn’t AS and it this from margins continue changed year-over-year We’ll on the

of question, apologize. we XX the bps missed low continue range your I from out is with XX, that? not expense And possibility Fiber and the I second what obviously So, Mineral was drive AUV. that strong margin to of

Peter Galbo

worries. No

the just in SG&A savings, was know the what we just that million, for XQ? the first the quarter impact On so XX

Brian MacNeal

Sure.

is and both that benefits. X QX X, think I QX and

$X last are the we that this in first seeing million, quarters as year. million benefit So, $XX year and complete we million $XX over each two about of two years,

Peter Galbo

Thanks Awesome. guys.

Brian MacNeal

Thank you.

Operator

Keith comes Our next from SunTrust. with Hughes question

now is line Your open.

Keith Hughes

deals, up Question more the to of now? platform many my talked for segments had acquisition, you you kind question it do sectors being platform or how are of terms sub right deals of where is, on about guess your wood Yes. kind products, you do, building I need in versus

Vic Grizzle

platforms that have other we’re I’ll Keith, there of there that as a leave think wood and There is is, that are know Maybe is, consideration. about interest is and you metal more under that. the way platforms exploring. of like we it and couple to

we is this buildout. is the platform which I say are capabilities. So, matrix that And of to, other side the with also pointing that wouldn’t then you’re finished there

that there our have in like are portfolio in critical area, capabilities to so, architects we is And around. to more the think want metal we still for that specific

on is as to for continue platforms. work I the buildout to So, both buildout, dimensions platform think capability within as there well us do,

Keith Hughes

acquisitions, And X% XX% just includes the guidance that of growth [indiscernible] is or correct? that X% Okay. to X%

Vic Grizzle

That’s Yes. correct.

Keith Hughes

Alright. Thank you.

Vic Grizzle

Thank you.

Operator

with Speer from And comes Associates. Justin our next & Zelman question

line is Your open. now

Justin Speer

Starting architectural Thanks guys. the out with business.

the last terms for level, were at looking that you in think quarter? has Your organic changed growth year all for the of mid-teens I

Vic Grizzle

changed. No, hasn’t it

that is Now, sequencing bit the about little again, in again but than there – a we as that’s quarter, was earlier have of, right, first less just little – the talked that’s quarter-to-quarter.

still on hanging that. of and backlog to look the we’re in So, supportive that good

Justin Speer

particularly piece, versus thinking was that And it and help accelerate thinking here that like underlying do of market Okay. you you component Mineral along in switching what context in in then, you’re if just refurbishment on the accelerates unpacking underlying within you’re terms and can, trends in what the can or your the the if for gears first how full-year out break growth X% to to estimation think underlying quarter side, new that market, if the it you it out from Fiber component market the will you volume view, some of growth year, construction lines the as you this think map looks X%? from your

Vic Grizzle

Well, the impacts overall the I new for new our with outlook and my related X prepared first these as our X quarter, a market the projects in is overall activity R&R There’s around proxy consistent the activity market as I volume on construction talked for to as so X% timing think construction, that’s renovation in and the but a some year. X% is remarks. about around for well activity to good view new blended activity, construction on the market changed and hasn’t the

on Again, related the we in see haven’t of position should quarter. expect the changed what think that in I we quarters. to remaining timing minus issues our and the some So, first that’s that

Brian MacNeal

And Justin, this is Brian.

closed we’ve at XX% previously say, Just acquisitions going that back growth, volume of the those want there. clarify just our point, that’s of In start AS than your XXXX. I greater reflective guidance, something to AS we

from ACGI, as grew AS ACGI. recall So, there the quarter small in and you it some doesn’t were include contributions but XX%

our track. on from benefit estimate AS you So, our know –

Justin Speer

shake kind today? growth, what out out you and that the what mass on that back For organic the – all when of does

Brian MacNeal

we what closed Yes, that and added quarter those additional then and that. on a Ceilings was XXXX X,XXX the articulated basis percentage organic Plasterform in the ACGI Steel in deals of we was X% small side points.

guidance. So, to just on the shown what clarify we’ve

Justin Speer

the so that’s think about full-year, was mid-teens taking still I’m intact? I full-year Oh, characterized

Brian MacNeal

yes. still That’s intact,

Justin Speer

Fiber about look destocking and just just across they distribution I home follow-up looks Okay. the you in you part. at of underlying the comment Mineral center your mentioned core channel it how channels, implied to I just how wanted think terms of inventories,

in of think thinking? business, look and distribution with XX% growth is that do you plus you your how I roughly be will were run-rating underlying think situation line you that does inventory that demand

Brian MacNeal

in quarter. that the Yes. levels on, you independent They we we and around are much It’s channels, which The referring volatile – know more haven’t would commented in say what not levels. see to independent that’s issue inventory we’re probably comment normal what we the and channel, and retail in is it channel, I managed definitely we be to on is the really the the That’s those. quarter-to-quarter the than Box better the Big that one than volatile won’t to channel. see more that seems seems

Justin Speer

And February, first the as first that XX% in AUV on was unpack of question pricing how you the realization quarter, – realized to last of for the was you two? know, last January, I terms announcement, is the from the just opposed year it can then much me think Okay. in if quarter of carryover

Brian MacNeal

Yes.

carryover rate to year. mix-up the run way then think your solid pricing you is, have the Justin think most prior on and it and good is of that’s consistent like-for-like it I with a about

quarter. overall a first So, price February you’re referring the the to, portion increase, which it’s of minor

only of days there. XX to XX As imagine, is there price you in real can

So, about most of think That’s way carryover. it’s to it. the

Justin Speer

thank Well Okay. it. you guys. Appreciate

Brian MacNeal

Justin. Thanks

Operator

At over to further like closing turn remarks. the Q&A I’d I’m no for this of call back showing to Vic time, End questions.

Vic Grizzle

a Americas start and and we much forward front questions wall a in XQ attention Thank a excited that for in few you focused your us everybody you look of the ceilings we’re results about we you day. Thank updating on nice today. have to and your that have very year and our company have Again, as the really months. and

Operator

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

disconnect. have You great Everyone, may day. now a

Armstrong World Industries (AWI) 29 Apr 192019 Q1 Earnings call transcript