AWI - Earnings call transcript Q1 2021 | Armstrong World Industries, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Armstrong World Industries, Inc.

First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. now today hand Corporate Tom would to conference Finance. I speaker your Waters, Instructions] like the to over [Operator VP of Please go ahead.

Tom Waters

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

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

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

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

Vic Grizzle

a the expect to markets. what in and the our of to A quarter Tom Overall solid continue see of we start Armstrong. be recovery and for first good we be you to with today good robust growth review Thanks, everyone. quarter, improvement morning, results. sequential to will year It's our

prior quarter conditions accelerated -- of from COVID adjusted saw last and from by nicely by business. continued of market year, organic of Adjusted of improved acquisitions, little $XXX sales quarter offset volume the first XXXX pre-COVID period. million from more the reductions $XX declined driven impact of than into our daily year that quarter as total business very XXXX, first the our driven initiatives XX% EBITDA through prior COVID-driven we in April. resumption The the volume sequentially spending the has X% COVID-related hit. declines, increased growth investments the the in company year shipping against million as expected. rate base this This that we end pandemic our In and Mineral in revenue has our Fiber Our acceleration of is and from the of deferred started when continuing our comparison was which

the faced and The territory experienced channel. center forward. pandemic challenges going expected have country. past already and the areas the have relatively metro third home six as posted York Like-for-like was input rest pricing shipping mix channel strong again essentially mix daily outpace of of Fiber headwind of premium with in as New major although to is out return a as was continue the by recently called extent during to begun diminished work lesser a and to sales products markets City as sequential a we people a headwind, line the be sales mix our continue exceeded of positive the rate Channel the quarters other cost top-line has improvement product Mineral and offerings once Our to quarter consecutive for few point to subside mix driven to rest price reopen. we inflation, we've in are not lower our

the by with to deliver side, solid Fiber performed costs ahead challenges operations winter storms. steel joint well rising quarter. Mineral and a WAVE the well first price able ran plants was of despite our to our And strong On created productivity venture the

Our our XXXX architectural the at of the in delivered specialty XX% Arktura. acquisitions real in organic Moz that's Turf, acceleration order level the versus quarter backlog. and in A by intake business again solid highlight of stronger-than-expected prior record driven sequential with quarter a year top-line was a order intake growth resulted

be versus and projects to differentiate our rates offering We competition. on continue win our ability encouraged to by our our

XXXX than capabilities this backlog, in the and more investment Given XX% confident In further our extend support sales specialties three technology go to capacity to outlook their and potential strong our expectation our the across in growth strong continued our platform. continuing our capabilities of growth. our in our continues remain and remain the we quarter, I excited incorporating architectural design for delivering well we of Armstrong to segment. Integration of new acquisitions by

and pipeline grow, have and acquisitions alliances. to acquisition Our robust continues is appetite sheet, additional we and and the to execute balance liquidity

which be signaling rising the environment are the indicator and improving for Bidding CEO an statistics showing expectation GDP macroeconomic activity. overall for and revised markets are thus for desire favorable the conversations together, of manufacturing renovation are classroom, operations of return far schools I the desire they venture infrastructure, delayed in collaborating, continued where most suspension our get up. to greater data effective steel spending be inflationary trillions along renovating the with strong to can a the distribution has more in can so a productive is have we of These innovating work by stronger of year momentum. The tone including return-to-office is through Along confidence trends most our are released. creating and of networking. projects a get most quarter in been impacted are trends primarily and potential in backdrop. improved WAVE positive the signs marketplace. specifically and the systems. gaining activity dollars back encouraged with targeted There's estimates pressures and and in improve are teams our the increasing optimism our outlook to by more government students and to is am and with being spending back last marketplace conditions, material terms joint economic upwards, teachers being of and used for a partners. the economic seeing in In customers on leading they ramping raw at

As a by as challenging WAVE's our teams our in they have we five but both distribution increases first implemented a It's and result, partners for results. quarter been more to than beginning sales well evidenced of back XX%. work December, and totaling body manage, performed have price

costs and Fiber We Specialties Architectural are Mineral also in experiencing rising input segments. freight our and

we top increase a effective Fiber X%. normal. adjusting standard Mineral products are our of and the price February announced increase XX% result, Specialties, May, projects. custom quoting processes increased have is have and on on pricing on date products to heavier-than-normal a In than Architectural implemented This of As up also earlier on the pulled we

With these price confident once operating input like-for-like realization segments at remain than inflation. I actions, both a that Overall, are again high greater we cost will deliver level.

ahead And are more we because supporting teams for customers any ever our price partners We initiatives, our have experienced well allowing fortunately digitalization on And initiatives before recent chain inflation. of outstanding of executing staying than and our position. project connected our to closely service levels. a strong to backlog not stay are supply disruptions,

the first of review for of call So quarter result state full in with to operation, remainder Brian the details the market February. our financials. year, reiterating guidance we over solid and a this to year I'll our we outlook And the with the XXXX Brian? that, provided healthy are turn of

Brian MacNeal

million a XXX will I our Good reminder, quarter first quarter versus the be margins first consolidated EBITDA morning presentation. call. up referring acquisitions. as the our XXXX the available adjustment. reviewing Vic. But is On and approximately Thanks, Adjusted to X% I on our I'll adjusted results. points. adjustments These to fell Today, before slides last were this and guidance be full begin, our accounting $XXX XX% of quarter basis the contracted with XXXX purchase details results begin This slide to Adjusted we'll $XXX,XXX our everyone year. EBITDA X on basis include and website sales year. sales of for friendly our for prior related of X, slide

Adjusted the Vic earlier, the demand pressure the as make from temporarily fact in we that year we given earnings $X Adjusted reinstituted year. was $XX a of prior earnings continue declines, diluted on share reconciliation XXXX free we as below this Furthermore, pension million cut EBITDA million QX related slide initiatives of XX% result that expected appendix amortization at were impacted versus $X.XX COVID-related QX the to persists results. adjusted contraction have this annuitization. expense you cost reminder, look quarter $X.XX of investments XXXX declined to our As our acquisitions. cash This reported our by the in and flow significantly XX, stated per our when includes year. by or prior last were growth the

of position facility. balance cash million ended Our of million $XXX in $XXX remains balance a a our we the on available quarter credit including with of as revolving availability liquidity, sheet $XXX and strong million

calculated agreement covenant remains debt-to-EBITDA While ratio times X.XX above our net our million X.X terms our credit as of debt of $XXX well $XX under of QX XXXX results, million was times. the threshold net of below

inception or an million our In price shares for our million segment considerable of due We note per a repurchased X.X year mix to cost and Mineral basis. this daily average impact month-to-date versus which and at headwind $XX.XX in of $XXX XXXX. Since XXX,XXX prior The the the December X Through program shares back shipments prior of for In program, sales rate as $XX.XX like-for-like the second year we of than Slide the March headwind in declined XXXX, higher price is our $XXX pricing summarizes quarter versus rate-per-day repurchase currently up a quarter repurchase quarter, a in and with year have of affected favorable measure. XXXX. We on the X% million channel Fiber share. have remaining quarter, the Vic ship in XX% average million fall-through a we have on $XX an bought mix expires product under share. exited April's mentioned continued. positive per Fiber Friday, But the was Mineral prior shipments rate. positive to COVID. flat results.

reductions. inflation valuations, channel and this segment SG&A last proactive Fiber to our driving We XXXX face mix is cost will offset actions. the EBITDA clearly through growth a as fall-through inventory our plants we COVID-driven by quarter volume the temporarily inflation spending expect of XX% investments pricing well of the cost bottom was temporary of The fell that and and but to up ran drove productivity Fiber line. ramping adjusted Mineral Input the Mineral reinstitution headwind. be was support the result rate down declines, this

out As pricing mentioned, steel costs. WAVE Vic has been of ahead rising

Vic be performance. both to capability first as support or million Moz growth the for acquisitions sales COVID-driven $X Moving of for Arktura X. Sales AS. trajectory acquisitions continue organic that in segment made We XXXX as of quarter and our in intake versus a more slide AS than capacity $XX were Architectural for of to contributions investments AS of the mentioned. were prior the out of in EBITDA sales order and were Specialties organic for and guidance contributed the our than expectations our favorable business first million projects $XX by confident $X million. business Turf, our the quarter on delayed the our organic decline we AS EBITDA year result Adjusted million AS and to lumpy XXXX the grew as line more offset quarter as segment from declined in top offset AS XX% remain sales

the for our Sales performance shows our we acquisitions. breakout Slide acquisitions flow the versus driven in flow As from was of sales free free build operations down was cash for have for that the mind Fiber XXXX. SG&A. but XX% XXXX. impact throughout declines. expect flow from a our from EBITDA we driven quarter the quarter first consolidated was volume Cash organic lower we Slide Mineral for deliver inventory positive in weakest remain AUV by the improve. in cash drivers offset X shows adjusted summarizes quarter offset year, the service earnings. We of quarter as cash contributor X segment, pricing the million guidance by the our we margin margins higher like-for-like generation is first summer including ramp Keep $XX Slide free essentially demand X adjusted will that that the to up period. confident to by of results flow too year. the EBITDA a guided strong typically our XXXX

adjusted we EPS overall we early our reiterating cash X% are share we This to reiterates to in XXXX. XX% quarter. developing are not start to in free something is We we guidance expect annual for a guidance make sales consistent data. and is will yield usually XX%; April very on flow Slide our second any provide and have off we too XX%; the XX%. our to an and deliver the seasonality trends grow seasonality X% the with of XX%; expectations adjustments to good is more XX adjusted EBITDA typically July to update in sales as It year-to-year. is to our when optimistic

provide health about will improving conclusion, our experienced additional positive With disruptions unusual However, portfolio year-on-year given so seasonal the is an new with back XXXX, and remain included tools Armstrong turn to that, advance our In evolving digital I'll outlook backdrop, insights. and this we've XXXX. sales creation in healthy model of be Vic. page the XXXX, well and the of to for capabilities, I economic it products, in an positioned XXXX, in spaces pattern value to

Vic Grizzle

Brian. Thanks

new to in get would On of in the want our XXXX an to last initiatives that, a touch some ESG digital on be I we and company Spaces, call focus Healthy Armstrong. namely Before mentioned important us by few for our ESG, platform beyond. I area Kanopi Q&A, and

our a our As history, to we on fit stakeholders with culture it's history our has increasingly it responsibility, our and engagement of and strategy. mission, natural community our our important and build all corporate

and we of you this that month, our website goals XXXX many redesigned product earlier establishes of pillars As our three these our a seen of focus: sustainability launched have planet section in reflects People, areas. and

will and In which because first commitment importance is take improvement our comprehensive effort GRI, strategic And we complete come progress opportunity to to the More summer. aligns and of needs SASB a addition, work, and our moment into on important TCFD. address sustainability work far, capturing goals. along effort on this of and of by long-term report total report gone great this deal the underway on baselining our our well teams emphasis meaningful this want of our has that journey, this thus and achievements to This recognize I developing Healthy to Spaces. the as for with track

ceilings a point As focal Healthy Spaces continues increasingly to becoming more be relevant. recovery, in economic are

delivering And trends interior suits ceilings space, need air Armstrong critical current aesthetics. and As performance flow optimal indoor the for managing of revitalizing in spaces. category are this ventilation, the These making an category and capstone of relevant for to for the well. providing acoustical as more are and ceilings well design healthy future as this course,

can construction, that the the a longtime approach on have space As in well-being in of majority with Armstrong large leader, capabilities. of new a this as confidence spend made becoming solutions XXXX, category they're we we've fruit our people, Healthy on the from where holistic will time. recognized in leader design the thought investments Spaces XXXX our importance planning, and new is digital and while the of and is impact bear which growth doors, and gains We believe

but here been the changed safety them for for commercial innovations product managers, much for pandemic and definition It's more what are demand. people the healthy future are back on forever and bring that and Architects, spaces than looking our Our always designers, use. pandemic opportunity. expectations of more health a owners Spaces event-driven all important, for business suited target facility solutions make Healthy spaces. indoor an into has Healthy stay. is Spaces to has market post will

the central acoustical only in space and collaborative clean the to has performance become are -- As will solutions. providing as offices ceilings dedensify expansive these manage flow. the air for need increase, as norm, will we and need to better Ceilings

broad-based provides access What's to is despite Our utilizes months and ventilation what of unable XX/X to to been solution, pent-up designed online driving our purchasing transportation. health that a products in is Online Armstrong and including an Armstrong, visibility Spaces have solution, artificial solutions are sectors: specifically quality we core CleanAssure office, that's and learning XX/X AirAssure, being kanopi and machine us earlier education, and and Kanopi scale is our network, a launched five defend intelligence including of Kanopi market renovation air best-in-class diagnostic efficiently ago, ceiling to our allowing family Launched improve well Mineral services. sustainably. were into end-to-end Armstrong all into provide facility products of K just pre-certified at technology Armstrong defend VidaShield positions enhanced help making the kanopi by This sold small tapping volume large market owners to are demand and for clearly influence demonstrates and new These coupled is catalyst easy. kanopibyarmstrong.com. with Healthy commercial recovery by timed evolving of results this capture by growth. early distribution Kanopi retail track. part to installation for Healthy previously Early This the is consulting managers platform the product encouraging. and innovations opportunity, Spaces. care, fulfilled the tools, opportunity consumer-friendly an and smaller opportunity. year, Fiber digital encouraging spaces

orders, across to take throughout deliver spaces, healthier I positive are make for us and our the difference the of and on relevance by And increasing We the seeing And all been are capture excited positioned Armstrong we we that, encouraged to deliver that value opportunities our and traffic continue ceiling to and metrics the ahead Again, improving are To especially to mission order year. by growth critical creating live we'll and this is the last, shareholders, market our commitment, than significantly heal where market better each be results a has we category. well our expect date, work questions. learn to sales. website will conditions on month with play. will your so strong the that enable about happy

Operator

first from Thank Kathryn comes Thompson question you. Instructions] [Operator Our Thompson with Research.

is line Your now open.

Kathryn Thompson

taking more Hi. about granted what how of terms should thing, Helpful versus comps. One Thank could with March on, – you your – construction unusual a April residential which we're little and just in in bit new questions my in we some think repair model. today. stair-stepping seeing give and clarity the color you if for is

launch Healthy would want to new there. product, unusual your environment? demand of how of a seeing contributed the being I Given understanding is you're But in a pretty Spaces which versus construction growth really of, imagine, better greater much get retrofit is by

Vic Grizzle

Yeah.

or I the So going reflective think new is happen to is – in you opportunities in of now activity what of what in experiencing was XX sales, Kathryn, into to we're – actually in was of revenue, XXXX, okay, out, is or reflect XXXX. particular, current know in ship or what laid terms what what's as activity laid today not construction right? months

So the is new last expect, should year. bidding the construction construction standpoint new of this in first sales activity is in construction the headwind. said, be several the quarter With we activity be versus in activity positive a we've seen quarters. from prior positive I time a And year, that activity think was new what this new slight to going

part the sign near-term for headwind that, the me, that and to start end developing from we're new to the the and activity. last see were on projects we're into see an it we see of renovation for latter of quarter. seeing that's part that of now. encouraging released an I starting selling construction we're Most think a of that get quarter is into really, And and first the to I continuing the the today second side. activity, when So expect there's to XXXX was Several delayed year,

well starting front. and or business of that our encouraging remodel to side, know, again, sign activity for from well activity the more new second we're an see projects. bodes there you XX% So the And That's of bigger construction part large on renovation even half, the the business, fact Kathryn, XXXX. is for the on into us our

Kathryn Thompson

from follow-up was I the going question parse to clarification in comp Really, release? the quarter. higher higher SG&A the increase And incentive acquisitions is of structurally is that out, SG&A December one-time costs of on Okay. XXXX want much forward. in is you noted three believe the closed the to the in Really sort due acquisition, how which structurally versus get your wanted essentially completed more your a mid-December how ramp-up just and of much to higher

Vic Grizzle

the platform by I capacity XXXX Architectural And I our decision then overall Healthy first some Brian I'll our that made of Armstrong, the as initiatives temporary our to a cost about. continued that cuts We those in -- came the the of let I we've details Specialty talked digital deferral. Kathryn. in in Spaces back would from think conscious those. reflected year the continue investments Yes. Kanopi very on capabilities, of SG&A certainly comment last in And was and this our But new expected. resumption are numbers. growth that investments quarter

to So, I'll as do add at driven what Brian look to those of Brian the intended our much comment but by let our and when do really was of you specifics color very it with to I that? track any want some on our initiatives. we SG&A growth expected around on

Brian MacNeal

sure. Yes

Spaces. million more As the that is XXXX coming $X didn't reduction temporary of the is remainder $X in Kathryn, making roughly $X AS you growth and investments last to we're then down, that Kanopi break it repeat and here of further And in to year around acquisitions. from Healthy a support had the in QX. million that's comp say that a we item deferred million and incentives that was

Kathryn Thompson

all to your Best going going before to word luck you I'm wanted and congrats part I perfect. efforts at challenge. Tom And Okay, Armstrong. in IR with retirement. of big miss I miss say to We're to our for

Tom Waters

you that Thank Kathryn. for

Operator

you. Thank

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

open. now is line Your

John Lovallo

you my for taking Thank well. as guys. questions Hey

XX% you Brian, this up you said volume first I I correctly, think Fiber April Mineral was heard if The year-over-year. one

if basis curious in XXXX. could Just cadence remind a monthly on XQ us of year-over-year you the volume

basis. So, XQ on April, May, year-over-year XXXX June XQ a -- in

Brian MacNeal

John, that's the of I XXXX. one referenced Yes, April was that reasons above

I'm to impact. that rate the see exceeded day we years ago encouraged had per So, before two sales COVID that

the last range. roughly year -- sales So, Fiber XX in sales down Mineral were

a in and encouraging we're nice that So, seeing April. that pickup it's

John Lovallo

Got do -- you. added follow-up was you, But you I'll have follow-up. with could be a on to basis. curious I I monthly But but

The is which to AUV, positive level we're pressure territory of guys second question was at and through obviously, in you confidence this encouraging if the quarter sort have ahead certainly the the was ahead returned expectations. point. of our this And Curious of expectations. your that the that of worst of

Brian MacNeal

show And by would its was as AUV first that fact No, product did to very it this unevenness through that to in quarter drive has shutdowns And it last of year a through occurring product as has last of was last part this COVID start and year. expected. of this driver mix has And happened AUV last way way was underlying year. unnatural XX this component XXXX. and wasn't and industry that caused about that remained impact that positive talked we that of of we there the underlying that driver in for expected mix kind territory been the territory -- its The in the been of of And this some year as The was in years mix. work as on the John there. last that had that mix of that transitory. the these course, some mix major cities our

think backdrop help continue us think improve So, it to to kind in channels. in it balance of of it's be as already here that exactly it's and normalized we mix to demonstrating rest with has inflation territories and here will from again through remained already the I its our And it's for year. slight work with way pricing. of mix Channel subsiding going we the with the only was -- to itself territory and where first it's of like-for-like of the expected the a quarter rest that rest one the the the headwind. its terms And of the this

exactly trending the AUVs where think you our toward that with of I we're in as And I easier the now high of say and to at rest fair second expect range. think end it's our end third we comps guidance So, quarter to for look it the the year that be.

John Lovallo

Thanks much Great. very guys.

Brian MacNeal

bet. You

Operator

you. Thank

next with from Goldman Sachs. Maklari Susan Our question comes

Your line now open. is

Susan Maklari

My well? first order the question those geographies you just how context in where seeing is going you coming on you're just are? trends seeing that what that sense the Can back to there. end some and color about Any maybe to us it's markets are give And of some that on from? activity as think

Vic Grizzle

sooner the as let up and Northeast the than, -- the even market I of parts the of think States start of of Susan, Northwest. United certainly Yes, parts the sooner me part with have better say, the from those demand southern we opened part geography that, because maybe have seen

nicely. see trend New a So, kind be York the improving transitory I it's to particular California, -- in City, though of seems it other are Northeast -- and like

geographically, the kind see different the or XXXX so all didn't in it sectors, or a of vertical those side, to everything new what was was really renovation rest But country the up and was some the other education I -- was because of of see, the matter what Really of uniformly so, of Florida, the was office, of shut Georgia, indiscriminate down expect in. catching it across country sector uniformly, areas. bounce And to those some sectors. we what of project Texas vertical did front the versus that, on see And happened the out would say, I parts type that. in of we back what

activity And uniformly here trend though But we and is of funding these across sectors. And that's the upward ahead in verticals. the around the the seeing that -- since first health that's So, of all additional going all we're will market other think and a question the what or that just in I I you've in activity days I terms kind again, into I think it's that's of asked some we education bidding funding that would that's expect those to sectors. into going in here of early would I sectors. drive two some of of those early. across bounce like see trending back April of in And the recovery of the of activity care the mention say activity is and the a reflection maybe nicely, quarter.

see. So, we'll

determined in -- think So, we the and to third that see second be as quarters. I that be will unfold

Susan Maklari

improving does lot on It there's schools a of Yes. and of focus out there. the kind education feel like

And And like is second around many capturing be of through? I Can And a color some the expect pricing -- you'll think do of are give obviously so, the those against expect Should balance through year? little the usually which should about we we that think normal that there going know about kind this thinking see I you? how transportation of you How that expecting that, to you could guess for you further about that you how already Do just announced increasing. see on that you next we price inflation. obviously the talked come to about are increase? expense question increases? be you've bit it seems cadence from of how us to that how is My year? flow is certainly you the for encouraging. some

Vic Grizzle

reflect what we inflation. We second the we we ahead expect pulled little of our as do of pulled May. a it forward, well. in with can typically price that It's go that to price increase increase Well, fact we terms into August. so we It's forward to in what happen normally than inflation stay XX% heavier obviously I think the

So, the determined. to your answer is question to really be

we're acceleration I think going we're then say, as to stay with go get seeing if out a to be increase it. we around price And afraid front of the we wouldn't or expecting in summer of to months. I'll take inflation into another look an

see. So, I we what like

February. and from in we is in the have we is started notable bit able in and August than the in steel in where increase business WAVE see I'm think costs very price effective. the then of with then good inflation, really highest What to inflation is go with stay go last months levels of is we'll Our -- terms in really little that May, was have they've implement I again expecting of ahead the X% last And several February which to increases our we over regularly, heavier there. XX% really been that a we'll normally inflation. where steel fact success

same good system. selling a on doing ceiling they're well as Remember the that raises the this the grid organization as our is sales prices It's tiles So job. organization. same

I'm So, ahead of as terms good inflation. confident do of staying in job we we'll are already a

Susan Maklari

Thank Okay. helpful very color. good That’s you, and with everything. luck

Vic Grizzle

Susan. you, Thank

Operator

Thank you.

KeyBanc. Zener from question comes next Our with Ken

now line Your is open.

Ken Zener

Good morning, everybody.

Vic Grizzle

Hi, Ken.

Brian MacNeal

Good morning.

Ken Zener

we Is try is above that XQ talking that correct I When product is mix being is you think, which where think regional driven your much mix a – the So Vic? XQ obviously accurate mix think you're in by really to half. XXXX. – mix. That's fading Is second regional about good. product to

Vic Grizzle

And across The all products positive. Ken positive fundamental. territories. continued be California, a be continued New as overall to quarter. carry mix. and normalized as all is that harder the and year here mix Chicago were underlying product last those a areas That's we've It to out much pretty territory some was it mix: then the drove in that's York first No seen positive hit of that but the negative higher-value

Ken Zener

you're It would things a I appears improving had think. if many be the good gains, certainly so There's metric – Okay. we happening. share

You We being that in see disciplined. price. can guys very are

could I really northern back lot wasn't to Timbuktu farm spend little I it shopping think. like you'd the refurb. my the shot, or I a focused you huge maybe crazy suburbs, thinking from blue terms I get – just mean uncommon your they're fields, right? Because if bigger that could being curves? kind Could is exurb appropriate but demand adding about had curve of big the of there be like it about. Is just But take weeks the you schools. please? your technology a office a could where just understandably. coming centers, I buildings drove – aren't there a this in step exurbs couple get you is you the things into talk built California I ago, demand be trading know some that mean beyond it suburbs there shift – is which on bill to like as know people something be area we infrastructure we're of demand products more I in focused schools building But urban Could sky have for is, have is inflation? traditional and all that second is you've perhaps with Francisco a which this Or address on stock could the that big in the seems kick a San out As exurbs. area bit from

Vic Grizzle

said we trend article of cost to was city cost areas the not at a that of folks suburbs. see that beginning enough the happening not there's opportunities Wall these activity, we've there. new folks trend. of lower on That minimum out Yes, higher there's And activity. in construction that's create move there And there for Street do cities, will the Ken, this new this renovation areas place but capacity, enough the Ken nice to today out the house construction again, of on moving infrastructure from

gone crisis, been the inter the look investment last commercial hasn't the since you the for years, construction. financial at the the over in new most is It XX has If cities where suburbs. construction

that areas. construction activity the the folks – so, always renovation but don't need that's forget inner for number we very viewed moving capacity the cities to in in those capacity minimum, moving out of those you an a folks shouldn't in And the suburbs. into about, as left also the cities. new for And opportunity again at additional forget we can't talked for house and we Ken, believe We've there's significant as a of there

That I renovation that's that a capacity latent the Armstrong. drives that for think Somebody us. how be for event to is trick again, utilized And for void. demand will fill long is which will it take

a or transitory believe positive So you construction when have volatility the commercial in net-net, we trends this is area. trend

Ken Zener

that XXXX, volumes Architectural, think volume from guys they like a down XXXX, when with been And is really perspective you declining XXXX where context put out had cyclical But Fiber you necessarily could to maybe there really footage. in do is recovering new or Mineral much swapping obviously be were are it its' that in a gaining in in be I this square moving the Because which on this to just the in mean have you're one Mineral never space not – extent FY had tech North peak Florida and the Carolina. to office basically so trough perpetual XXXX companies cyclical FY plant and Apple because in to fell since been Could extent tech Fiber? effectively. decline of renewed jobs building the

Just but I how in if product example? that your wouldn't putting something Salesforce the Raleigh into are business affected into you're mean but and I for bid hurt might And putting can long by mix, seeing mean you. not the Thank we tower, -- I dedensify? mean a suburban really activities it that? the increasingly be that take thinking about you time, --

Vic Grizzle

this role high-quality for standpoint, the the lighting real and playing a or Healthy role, standpoint. spaces; the any a suburb whether in versus it's companies we delivering importance want standpoint; a have from that change is from catalyst in a don't Ken, occupants Francisco. Spaces now or standard in in San intercity they terms of and the ceilings category of ceilings of driving Yes their And North Carolina in will quality with whether the in the it's catalyst interior mix it's new for These acoustical the from air and a overall. an see of

the part of going think in in role interior ventilated to solution healthy, the we're the it as category opportunity air that the create from see ceilings I to additional So, plays design. highly

this think net-net I for tailwind a is category. So opportunity the

Ken Zener

is Tom, very for Well, your of It much into you help Yes. you over the thank years. and thank things. all

Operator

Thank you.

Our from with next Keith Truist. comes question Hughes

line now open. Your is

Keith Hughes

thank Architectural Question Okay, you. on Specialties.

April pace sales in does Fiber. like you X-year do You basis And Mineral over Architectural it stand What Specialties? lot in a a talked business and on acquisition? about kind of of outside that where look

Vic Grizzle

and order terrific business these -- projects or of It's rate quarter some we're of has -- out on the delayed the coming saw delayed the as quarter. of some organic of -- the Keith the been Yes we into saw the talked we we into quarter projects first Ken part these first about. getting

delayed. expected on his about had -- these were that But on Brian -- some strong had outlined of So signals, some top we said seeing really of as the we getting given projects that we we order what remarks intake. with landed really we of strong in we had

really In lots order for fact the of there. month record of strong us Architectural canceled. of that, in signal March a not was out getting us They're there's level Specialties for was intake which projects

going quarter. the the there. year, our our positions us is to be time for in quarter line pick I projects the the of And can we're first delayed on this at in of of second being I right gives these going one at fine the top if deliver confidence that up backlog the And that to and what look third year. so, out backlog for expect at them we're remember better now to And we

So again, -- think there's in continue to I we win space. this

new gives know these architectural is credibility big that you specifications design we integrate us the driver the with this more to to acquisitions in the pricing structure win to and category. continue that a margin We community have which

Keith Hughes

increases Okay. I price on materials, about the WAVE steel final all and And of on and there. kind we're raw talking question understand

themselves AS most for where right your -- at now? tiles what look the from you Mineral and Fiber is inflation If coming inputs the

Vic Grizzle

the is right? a Well lumber with it's really on packaging part what's well the And side going interesting. know It's big lumber you packaging on that. which of

Keith Hughes

Yes. yes. No

Vic Grizzle

Yes.

both impact across way So businesses very the outside of packaging seeing greatest is our clear. is really which the of where we're steel with

the are I we're -- freight highest that's you business. seeing inflation but to and of -- think that So that? the levels Brian where add across want to two

Brian MacNeal

to million be Yes $X we're to that businesses. the to million million Keith, cost of total million range now looking talked at $X $X.X we about across previously sold $X.X both in goods inflation

up picked it's some been us forward pulling the basis pricing while that's our So activity. for

Keith Hughes

not that's numbers. million steel that That's $X component correct? And to million excluding WAVE the $X.X

Brian MacNeal

That's correct.

Keith Hughes

Thank Okay. you.

Brian MacNeal

you. Thank

Operator

you. Thank

next ISI. Our Evercore Stephen Kim question from with comes

now is line Your open.

Stephen Kim

areas pick than that to XXXX was guys. of Yes, on amount where that given particular, commentary the of I some question My New others. -- an you back you you have that guess kind know those areas know fully is. I in City fact particular cities. it that a a what -- I exposure lot going improvement, did fair attention-getter your my shipments the up be also seeing April fully actually you're mentioned based in that participated higher or whether little even REIT was thanks was about not was, of very there's much do is and I to had in of wanted some or the on but I if York a back. these in which in not April question guys coming your guidance underpowered catch maybe to maybe

that clarity helpful. some would be just around So

Vic Grizzle

Yeah.

of is and the that's March us, month really when that pre-COVID like milestone. market important So month for the is key what really an It's but XXXX April. context one know milestone the conditions key month right? the level we marker all seeing in right back acceleration a that putting into from Stephen and -- such we we're to for its But into a that trend it's so actually one

by more one and it go April these activity by with think or I City those on have the would we're There's more on it's seven overweight and still those markets, conversations of very April I all the is you encouraged say why healing can't -- which going go, regions California bidding the not the encouraged particular seven over-waiting in York We still we're are not still we're and say -- key I to So participating context month in yet. key fully which and those territories, okay? we're customers regions, York still to those taking are like healing closely watching that. the activities. markets. activity, in So in having in we're into territories will without New are two there's the of New still

days. in the encouraged we're that. So early we're by But

Stephen Kim

Sure. encouraging. additionally Yeah. that's No, but

to So, one a bigger second relates plenum picture, design open around specifically. question

the need awareness all to the treat think made manage the -- more growing to things occupied clear of that there's is -- a you being and that makes difficult. actually of have air very that just I One that tremendously is job

I could have -- open would plenum. that a that theoretically that plenum degree persists tough ahead treat the your an the gain share back think to to so that open And sweating and of is -- you ongoing going airspace need to business some awareness [ph] real pretty from

you'd or high-level that I concrete seen just anything more not just whether that might a lead what thinking wondering to was So little be than might you conclude?

Vic Grizzle

in plenum seen at on performance acoustical recent designs. Well, no I from even all, we've back plenum the before the because open the pendulum away now swing in of ceiling those open time, think

So our we've the that business opportunity to acoustical seen have going and for provide products things in looking specialty some that's but that provide created nice with provide some there. architectural -- we look, of open us like a linears solutions an already open really and

of in the versus plenum. year more number And the This trapped a in two being all efficiency, to seen equation. add conversation the of on will a the the scrutiny additional already get year open becoming think of change able energy popularity important sustainability again So the we've plenum. is or and doesn't more that year I which on the in treat of XXX% portion

the some will it's encouraged In play is say say to So, too to additional an happen going those is this category plenum lot for Stephen, a to role what's category important believe in to again, the we're -- opportunity of there's overall. that designs. do This ceilings early both but that. more open I And a cases, it, by add to scrutiny conversations. I'd

Stephen Kim

Well, great. meet and Tom forward And again congratulations to to. absolutely. Time we'll look you. Yeah,

Tom Waters

Thanks Stephen.

Operator

Thank you.

Jefferies. question Ng with Phil comes Our next from

is line open. Your now

Phil Ng

last a improving last back you more coming products customers where social delayed of that you maybe some Hi guys. take ventilation that customers activity the rolling seeing out on that living few retrofitting are that's was Have been seen R&R over perhaps or improving these little air The are And space year. from you've these quarters? these healthier distancing?

Vic Grizzle

renovation the in certainly Well, that forward. going already on was moving stuff and the now is activity is works that's

projects have can specification products, changed benefits larger lift we process Some to of on, the of those through our nice little specifications that until new the get so get for created a and That's they so forth. been Spaces. Healthy early

of -- for And education, good across I way, So, not really the we this. absolutely it restaurants office just really is encouraging great was not serve. me was lots all -- specifically, as around by but that traction, the it what getting mentioned, we're really including verticals every conversations just or was getting

Phil Ng

you shaking gave April. some trends color are out appreciating about in great. That's how then, great And

to handoff be inflect So weaker that's construction terms to maybe activity But in Just of of a construction then hand that the is there's kind the piece year pickup, much awesome. expect that want more how get QX? of better this a appreciating, that bidding little on lag. new new quantify could handoff. and versus a from positive? you up this mid-XXXX? backlogs Can that appreciating And you when in QX Is

Vic Grizzle

Yes.

range. positive single-digit the in roughly So,

help the quantify that's you -- level year prior Just much than and of to the was fourth and better versus it quarter.

months this activity. from opening how on And activity, another it's you the sequential how market the and data to is. is extensive six in the bidding the improvement it be the project in out, as again, -- the point in project depending that's So, big know, of and can XX anywhere

may second was part your question, the of missed that. So, have what I Phil?

Phil Ng

seeing activity handoff construction will potentially sense trying on a just last had to get talking flipping a were you the from perspective you're offset I'm timing side, Yes, year, new bidding the obviously with terms a of now in drop-off that the you of handoff positive. about when some headwinds just because improvement that right

Vic Grizzle

similar timing XX really Yes. very -- the that. it's size of of somewhere Again, in We're between itself months. terms drives the and six that of project the

a ceiling. of some to And before large months the these can are As you Phil, can projects course, smaller six out months. need XX be imagine of three they'll of some projects

different average, projects On hard good really and of think, So, a average different to say. pretty window it's I XX-month types a is good the verticals. across

Phil Ng

And helpful. all help. appreciate Super Good the luck. Okay.

Operator

you. Thank

Our comes with from next question Capital. Garik Loop Shmois

open. now is line Your

Jeff Stevenson

for questions. improvement my like-for-like Jeff how the price year mix? Thanks the is Garik of the between My should for on look on, today. and first This taking is AUV Stevenson Hi. rest

Vic Grizzle

Yes.

a say that had to think, it's pricing we're we year range, given I this about to normally Again, could see pricing. that contribution And Again, given bit right little I expect at expect and that first to the like-for-like -- half from normally year, last pricing mix like-for-like and of than to mix inflationary strong quarter. we year, it's a outlook. end as the I see really But at just from the end contribution X% think, I are toward currently the closer we're earlier, your our end more to territory for half about see of on year, backdrop don't performance, reference, like-for-like going and high the typically indicated where we that I outlooking the of X%. in and now. fair we we half half. this the headwinds -- think, the mix, repeat we're given We're

Jeff Stevenson

the these higher expected may faster markets makes the than and it's Well, if the some forward? X% Mineral X% than But given could that toward end potentially especially of higher higher-priced early tracking upside, mentioned I moving usual northeast be you're to AUV Fiber guidance. sense. increase, And know, that, Right. of you there come back

Vic Grizzle

Yes.

and half persists now these of year. inflationary the think like course, I of bounce the second the appropriate. of outlooking back And we much still some then this in and see which have talked how they range wait is California We'll the year. we're remainder rate of key and the it how backdrop, right markets to New York pace about, the of through

again, high is an think toward that I of the end So, trending still range appropriate range. the have we

Jeff Stevenson

questions. Okay. Thanks my for taking

Vic Grizzle

You bet.

Brian MacNeal

Thanks, Jeff.

Operator

you. Thank

BNP Exane with Bromehead Yves from comes Paribas. question next Our

now Your line open. is

Yves Bromehead

two. you get a is just taking question. to thank I've on one-off I the morning side. Good on exactly the clarification cost and AS want got my for what

$X in $X acquisition $X in I think on mentioned to million million incentive you QX. million

Just numbers. numbers should wondering the And if we those correct going around how I've think got forward?

Brian MacNeal

Brian. is This Yes.

our the from really hit you've On and So the investments then additional AS, happening Fiber SG&A of got Mineral one-off bridge. support combination to costs acquisitions growth. the EBITDA a

temporary Fiber, million Mineral they're more that's million So On that I QX. called less $X for out temporary. to base $X

Yves Bromehead

And AS. you. is Thank on Okay. my the question second

market Just could much the do five you continue trying your side understand achieve time, the side? the think division this in, already And How the of actual what achieve hit growth forward. revenue what on that years' you'd let's external then back level margin you assuming done should once of growth? is of able to to say, going specialty be the all that, OpEx you've investments the on like to

Vic Grizzle

that. take Brian, I'll

around far size neighborhood the $X we've opportunity, As segment for specialty billion of been as Americas. of being segment this in the the public the

the $X you And obviously how That's good in for think about think segment. innings proxy our into to early we think a it. billion penetration to that's so, We're I about. or relatively use, of

digits expectation other going in we than that, long-range is to space. our to we're So continue say provide that double to grow not any guidance every year

-- do receive model. different or EBITDA margins, example. We to at to have over we achieve this. better expect get opportunities. plenty expect as business Fiber-level more addition to improve the is opportunities a margins I very different this you business to this and would this very time, it's that a and with not And we efficient in penetration get continue to organic It's We manufacturing in of for believe think Mineral growth we business

companies we the our of out to that working question, level as mid Yves. which your business high that So And be of EBITDA to upper be there. and penetrate we building this the more I helps expect would more that's would business in hope margins, this we're market. products or among toward best-in-class XX directional

Yves Bromehead

again, you on retirement, Yes. Thank luck Tom. good Thank much. the And, you. very

Tom Waters

Okay. you. Thank

Operator

you. Thank

question with David Our Longbow comes Research. from next MacGregor

open. now is line Your

David MacGregor

morning, Good Yes. everyone.

Vic Grizzle

Hi.

David MacGregor

least into year. lean over and or if or at balance the here, how to want off how about you writers legs, marketing or that start of are kind asking you you to about do hard point, think your of want the see me. begin I orders just kind guess, thinking Do investment for this you your the of of on you profile just indication spec has -- excuse I with you and in adding wait encouraging just -- organization? your this kind Hi. bidding, looks just investment the How at given billings, the --

Vic Grizzle

Actually, XXXX more Even Yes. this. we've Specialties into especially business, support our Specialties. you our around been than need more out more invested to into and we pipeline projects, Architectural investing build project in projects of as we in go-to-market designers the where management capability, Architectural continue to

remind leverage us range one of and broad in on building of job. capacity too So specify that ongoing that, with of for of everybody design standpoint. Specialties organization Architectural every architectural a to is We sell Fiber community a and organization. an we capability and from selling kind just And organization. point the have Mineral it's one I'll selling products It really a

of support And that, so, managers experts subject and field when its sales lot we to organization. project that add capability designers to matter a and times, again

So, we're this that again that say, I just we continue gives And year. guess, kind answer, of but in long-winded the backlog going is would feathering good I us as go. our optimism some to throughout

David MacGregor

this of year? So your for guidance an organization expansion do selling you that, into built have

Vic Grizzle

do. we Yes

David MacGregor

what exceptionally you those or you in a to upturn Great. verticals? that you're meaningful remodel, much. you're Is mentioned there you about there just is Okay. component called very within there just versus other bidding you And the verticals. two there, new seeing or maybe were maybe, it the talking strong bidding that, the That's as wondering if I'm being education earlier and then Thank helpful. seeing -- healthcare.

Vic Grizzle

Yeah.

most XX the seeing the kind I alterations as renovation major part, was activity new feeding projects. which and to encouraging course the renovation renew say were it's type and will yeah, most again like and well would part months For of pipeline. that renovation see for activity. we But of good out, But some there activity to we're see

David MacGregor

little beneficiary back maybe so maybe come just kind the And it's the more question Okay. earlier just And an maybe how? you could ask then, the a topic to bill? just if an pointedly. on And And I broached question, infrastructure. of could of of I a infrastructure -- are

Vic Grizzle

activity. you it. we tremendous look us, Yeah. this again well schools investment Absolutely, particular when commercial for construction And And and encouraging presence real renovation focus at and have as think back education with strong as system one, new we the of the infrastructure a that and comes is because opportunity along construction I on, a there. that's course think in

in for that's beneficiary our Again a for and what's with net we're speaking Specialty our segment big So that those obviously Architectural subways, infrastructure. business. historically opportunities very of and are And business airports sure happened.

David MacGregor

these Vic, dependent many coming year. upon seeing I a bill? back Are last back hold of of bidding mean, around lot said, an infrastructure you're you coming projects projects from

stimulus think own merits? some on on their You moving forward moving expectation think around, you forward they're do funding, they're or based

Vic Grizzle

the projects this I own we're so last of were were think -- in And days lot early -- early a what they seeing -- merit. from their delayed forward recovery these moving say I'd year. on far. they're of That's really the

David MacGregor

Yeah.

great. much. very Tom. And good Thanks Okay, luck,

Operator

this for over now any the remarks. I Thank showing you. Grizzle at questions would closing call further back to, Vic turn time. not like I'm to

Vic Grizzle

next encouraged year to this in well by of underway. joining internal that just the ahead market start for expectations recovery to market position in thank Thank really the and a year, last us offers investments want you. in terrific quarters. the coming And solid we Again, whatever up, our today. I to the the to I'm be really put everybody has opportunity made seems commercial that capture

you to excited again about And you So, interest. your forward And we it. for next talking we thank we're look to quarter.

Operator

Thank call. conference for today's you concludes This participating.

You may now disconnect.

Armstrong World Industries (AWI) 27 Apr 212021 Q1 Earnings call transcript