AWI - Earnings call transcript Q2 2021 | Armstrong World Industries, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Q2 2021 Armstrong World Industries, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

conference be this reminder, a call recorded. may As turn over to would now host, conference to like I your the Ms. Theresa Womble, Relations. Director of Investor

Theresa Womble

Ashley, Industries' and second strategic On everyone. XXXX results, CEO; our and year Vic quarter will you, outlook of CFO, World our MacNeal, and today's Armstrong discuss progress. rest Grizzle, Brian Thank call, welcome,

with comparable discussion operating are Relations website. and Investor A financial measure meaning the within Regulation in of press financial G. non-GAAP the directly the morning. our Our release the of of we reconciliation the is included measures and Both these measures this on issued GAAP appendix performance will most presentation SEC earnings available include of in

view and of expected of detailed morning. performance in implied. uncertainties we We a and this required operational this any We obligation the SEC risks date, statements materially undertake earlier laws. today's filings, financial from forward-looking have uncertainties those our or forward-looking During no provide securities what to discussion be will the which filed call, our as by we XX, is may differ and beyond including update these making XX-K, involve XXXX. July that These was statements of represent statements applicable risks that

to ask as turn I'll call Now the our Vic. operator Slide presentation over of X to I to turn the

Vic Grizzle

Thanks, Theresa.

on this her. of morning quarter. voice phone Theresa really the retired new backfilling is She have a Tom great It's recognized to all Waters, You last Womble. who

quarter and their been excellent challenging current the we the employees to this their work to our We accelerating, at mark quarter the excellent a expanded positioned a capture recovery It's with from thanking mandates. I by execution $XXX in shut XX% that to good strong pandemic pandemic, second increase grew million consolidated market was many of last AWI because XXX by second and were increase year-over-year government sales morning net be since and results recovery. sales points. effectively of for Fiber begin generated in is these well Specialties year's AWI which And driven the trying during XX%, Theresa. basis, you so It's onset call a for was thank by XX% times. agility posted markets a the dedication, sales. XX% second X,XXX today. The our and adjusted welcome, On quarter you Architectural It's basis a adjusted months when from our results, year Mineral of want joining margin EBITDA EBITDA, So all increase XX a and review to results. prior down

strategic is Now given are persistent we and we and our the particularly technology a growth this in in and priorities margin support investments pressures beyond. of innovation serve the and people, to ahead see making XXXX for performance of inflationary impressive the rest

On XXXX half of and the the the guidance. expected the back updated in of recovery continuation year, increased have strength these market and we our the results of

quarter this rebound details, Specialty Architectural Brian Fiber some into strong we we heading insights Mineral behind momentum Before experiencing Across segments, of I'll year. half a are have the renovation and developments back market the and into provide financial the gets drivers activity. solid both into the the in

projects strengthen of continue since over have the Of starts from the half is improve, to offset the sector recessionary and from coming and delayed to to have Overall, is conditions, many nonresidential providing XXXX. consistent expected the projects construction various and the monitor, construction drivers April. this new of out across historical verticals majority XXXX resumed. of norms indicators softness in continued we our continued expected As activity with broad-based

office and the all in in first improvements. again levels, verticals, quarter improved verticals. quarter activity improvement bidding retail with strongest posted from activity Within sequential the Additionally, those

these the a are and XXXX XXXX, outlook XXXX levels. half providing of clarity greater at rate and positive of that to sales for All run above our enter strengthening we indicators second at can or is recovery more the are confidence that

our result, a sales, year EBITDA EPS we adjusted full As have increased adjusted outlook. and

to line we segments looking the improvement July's Fiber sales expect the and first Mineral a continued trend the are shipping are segment, at rates Turning upward from consecutive the continuing specifics seasonality our would point perspective. show the of normally quarter. this with sequential per recover what rate and at day in for and to fourth

sales outstanding pressure. of As And price with continue pricing of in impact most of history, companies, are offset consistent an and teams actions to quarter. that to our teams the to inflationary manage announced our realized ensuring like-for-like with again the ahead delivered inflation, inflation job our have we persistent do hard marketplace been working our this

bright The operational than a more Mineral times given This has and for the has chains, our with the of we our price expect throughout the in third our teams and XX% rebound strong our becoming persist, plants As along the in maintained quarter territories. strong in to critical go pandemic we in mix sequential leverage Fiber we year-over-year ran significant service quarter, territory as excellence aided and Operationally, outstanding best-in-class a operating realization. by inflation each challenging price this an well, construction improved total levels. the spot the was been manufacturing now, have never been posted to improvements increase in most our competitive have mid-August. Even industry. of announced AUV like-for-like we with highlight Armstrong. is a real for material shortages mix effective improvements X AUV in in supply these advantage improved. year top broader

hear be I'm in our operations in construction doing. of our customers a market that ability as the consistent distinguishes reliable but Armstrong, commercial we proud to result, well. and supplier a are broader the from our the As space, extremely only ceiling teams not work

managing The at earnings has WAVE price again, excellent excellent had an through on both Our done ahead pressures and availability. extraordinary quarter, of job pricing and solid inflation an steel to WAVE team joint growth. managing steel significant venture delivered also

service and this are to we of half robust more have to XXXX primarily year production driven for improved our buildings. as half, inflation and our prior Specialties our EBITDA for the but renovation recovering positioned by both great due investments Architectural levels XXXX into segment, was they below and the XXXX. our remainder organic a work due strong of second maintain margin commercial in demand ahead our work return to With in levels, outlook business well meet growth major business people bounce topline in year. the remained in acquisitions the In stay sequentially, to first commercial this back to and nice capabilities going in of their

to progress this to Architectural of integrating The continued as on levels accelerate improve. thus acquisitions, in we through the are We our sales pleased margins referenced specialties the fragmented is quarter back half the continues to expect and we Specialties far XXXX encouraging first and backlog year, build continue of penetration with record demonstrates our in This segment. into the particularly call. the

and impacting renovation some expect activity. shortages Now similar future experience new we and see material Mineral with major projects short-term Fiber do we upstream to sales, also delays while building labor bodes due for what this project construction well to to

our segment Architectural the So term. short we And we here momentum markets, Fiber see Specialties to material expect to to was also with growth to and in that, despite with additional strong similarly the this our a we Brian offset key are the to And Inflationary second the backlog, Brian? the of experience turn strong impacting third pressures the details. our year. segment. in quarter All Mineral on call a we discuss could some for all, in price activity, in more I'll are raw increase the choppiness the financial of inflation. company deliver over half

Brian MacNeal

be and introducing basis was prior XX% million has been earnings per acquisition-related this or quarter on $X.XX, diluted adjusted periods. share comparison and material. above we are prospectively the of Good retrospectively Theresa. we morning included for be year. and and our of reminder, quarter reconciliation results. more an amortization. Vic. call, results guidance referring in Adjusted margins on consolidated EBITDA available XX% as $X.XX XXXX XXXX second made I'll earnings adjustment our tables $XXX sales points. Adjusted an excludes Slide of on basis, adjustment our begin, website, $X to updated begin up slides full our Adjusted X quarter reviewing second I'll On But Thanks, we a basis friendly before results. our a the million expanded it the and welcome, EPS performance with provides year. grew operating the result prior XXX I meaningful versus Slide everyone X, in EBITDA year our This because is of between believe to XX% presentation. were Today, details of This This

calculated and our Net facility. of million, with agreement, Our threshold available balance -- terms quarter and strong in debt-to-EBITDA a at X.Xx, a $XXX credit sheet $XXX of ratio the our our availability quarter the the million net below end was strong covenant remains under of on million of $XXX ended of debt as a remains $XXX balance the of liquidity, X.XXx. cash credit as of revolving well million position including we

from you'll program, share. WAVE under an our well comfortable We $XXX.XX driven feel results. XXX,XXX volume considerable average increased This repurchased EBITDA AUV On current earnings. by bridge consolidated million We we December second or shares prior was million expires and from slide, in currently positioning. for million and QX which gain also purchases a primarily XXXX. quarter, the of of have clear million. EBITDA in this have the year marks headroom remaining quarter our our per as The step-up favorable $XXX $XX our In here $XX repurchase see $XX price equity increased as

Slide and discuss quarter, to spending XX%, year's shut from mostly driven offset in saw key of efforts, results This improved markets. sales the temporary XXXX digitalization we As SG&A last costs healthy our in as due higher cost down. Mineral like-for-like growth driven by our increased following a In in acquisitions. We sales continued expected economy the X was year's pricing volume Vic was resurgence our segment increase an by spaces Fiber normalization as territory last outs in was partially actions the positive mentioned, by on investments and QX AUV mix both X. trough and our

rebound we're our and was volume see of in this anticipated, expectations. happy AUV come to both While ahead

to XXXX, and We weeks quarter. beginning with where of daily of ship to and our in in couple the closely trending third XXXX happy we're are rate continue monitor the compared we both the

across SG&A the by also we Both headwind atypical months reason in gains, cost expect unusual the due by announced quarter, remain occurring investments offset price temporarily and an XX%, adjusted seasonality were segment spending of in partially XXXX. this volume reduced costs normal May Mineral comparisons was supply of to This to that growth August typical to certain to our summer. to this the have with As EBITDA year Fiber increased our closer support driven a part which a impacts return higher and our reminder, our and the reinstitution were something AUV price Input strongest which sales a the of chain. an is added we've increase increase. during XXXX.

as inflation excellent to ahead It joint supply doing and our over stabilize an inflation of back chain issues. year. venture half pricing elevated of expect job steel very of they strong but a quarter was We the for managing the remain WAVE are

by XXXX acquisitions. consolidated growth. X-month offset including impact WAVE per The of XX% now amortization the growth to the and We X. shows Moving of were our our Slide and adjusted $XX and acquisitions sales the than offset with increased to AS, a The of Arktura Architectural EBITDA business current results or increased in by first a similar equity reported manufacturing at million adjusted we was year levels we SG&A an up for higher segment year-to-date increased increasing period, AS partially normal remain Moz in sales or Slide in our and sales favorable back further for AUV will the volumes, drivers contributing SG&A growth lower XX% for of XX%. EBITDA CapEx that organic strategy and historic second million in or help our that increased diluted from again, for on story year-to-date Turf, earnings organic segment from the were get spend. improved improve support as higher share XX%. $XX first Specialties, important the strong and increases $X of both line the X XXXX free our share for And and which we as the up earnings, XXX months million, our XXXX of breakout million flow excludes ensure segment by capital order shows intake maintain the XXXX the Adjusted quarter the as that levels basis the liquidity. this as SG&A to in And manufacturing quarter spend. segment our X spending from results planned note service as prior Sales increase $X.XX. year, spending more this and year. cost and to and EBITDA spending acquisitions sales $X million period. highs. with expenditures driven The margins to performance expect through $XX as levels we base increased improved XX% versus for ramp manage quarter. points following margin the decline acquisition-related Slide EBITDA cash sequentially cash the customers X It's

cash Our on updated for guidance expectation issues. X guidance cash was through next is no slide. XXXX. significant summarizes pandemic-related guidance shutdowns months for the XX as due the delays the and note, flow supply update or adjusted assumes for Slide year, increasing to generation first free our chain you'll Please the see this job our above full basis

variants We COVID-XX on our their monitoring business. of closely are impact and

our growth XX%. of for key growth adjusted to adjusted increasing our revenue to are XX% We of all year-over-year now guidance metrics EPS XX%, expect XX% of XX%, ranges EBITDA to of and XX% growth

both our our to generation $XXX flow acquisition-related to of free for amortization decision the and adjusted million. calculation. $XXX lifting cash are We The to figures million the XXXX bands XXXX EPS in also reflect exclude

Fiber of volume the you'll of see will On changes page, our I'll the Mineral to second, X% Mineral changes others. key highlighted the first, you'll X% AUV Fiber increase right in those our in in get increasing the touch side the revision. but are to to X% to of notice guidance largest The on I drivers a to X X%. and

acquisition AS the are We XXXX of our performance segment the benefit of to dropping reflect expectations and to date to for X% the second year. ranges actual half the by

being for by the an accounting and of see increased Arktura. driven depreciation acquisition You'll December amortization finalization our the of purchase

taken update drive As the Earlier, CapEx this Mineral to have on is of been previously and and and in #X for excluding from in increase are adjusted our allocation business. X%, growth that reinvesting May X August but in now intangible use were amortization we provide And the actions capital those modeling. EPS year, amortization mentioned Vic their priority acquisition-related to support noted, our Fiber to Mineral Fiber AUV XX%, we've XX% with The being respectively. in wanted an volume. which priorities pricing in February, and in

for to it's price part full rate the not we to do increases, AUV granted, of large increases our price fully get increased of pace these the we for never X% take range to and our we're to While ability X% success. a the are realize vital We elevating realize announced and the reason these year.

macroeconomic back favorable traction and first year, We Mineral innovation lift spaces us. anticipate With always have has Armstrong, we've achieved, turn about our initiatives, input levels priority to the for Fiber performance advance and digital behind to teams full we continue was to our and put also performance of it And in work mix healthy I'll We're the fall-through trends the that, full the that key our our legacy increased return and for feel and a unusual with the product and our X% Fiber know optimistic XXXX in of the channel the years same In territory AUV and now historical year and growth Mineral half as seeing teams volume and of months delighted we're volume the with headwinds we AUV the conclusion, been for done of through growth I'm us. guidance. XXXX confidence QX a Slide expect and of that Vic. our X% the to excited to have our way. XX, I to in come year. our raising to with let's results

Vic Grizzle

we're continued as in so to, have we the year. And was Brian pleased alluding with Brian. reason the Thanks, performed far XXXX. market, about more business how has recovery rest very for broader to be And positive with our and of the the outlook optimistic of the

a generated progress accomplish to Kastle's the pandemic. end, some glad by on at to Q&A last see second on since employers, to us to key this the the U.S. capture ordered of people our opportunities starting construction large strategy for spaces quality in seeing We return district innovative owners, level back received we've improving additional index of largest and Defend the The share on And healthy Before XX/X products achieving defined to this Armstrong ceiling place. yet densification the on to our we and evolving technology The forever. occupants are spaces We're new while top. in this for family as I'd and has order designed strong CDC because healthy Florida. remove able emerging a designers redesigning specifically interior really challenges opportunities are has economy for the that's new we its architects, for gaining redefined of continue products AUV in quarter focus their format to and when been March a airborne the reversing and to we to products made meet a VidaShield session, defines role into year end changed pillars products healthy The despite the just our the the the pandemic rethinking spaces. thoughts put mark integrated of our get Fiber in a monitor now dynamics of into the forces These has of play quality strategy. the pathogens hold restaurants, to our took ceilings and demand indoor to new The critical these traction. The of safe with support recovers. are air newly endorsed renovation although we've in revitalizing position by work work like and been Mineral air schools improved from demands and cornerstone products. the offices, of To the been what pandemic the recently are highest emerging hit creating directly spaces trends schools the are certainly for

of we which headquarter holistic optimal conditions is and lab and as a showcases brings to for Lab, thermal environmental recently indoor new people. building well-being as lab the at to how to these quality. design lighting, and Living as focusing well various approach environmental designs, hallmark demonstrates for campus, Our acoustical to healthy This quality what opened and how allows supports products psychological our the the important as that drive benefits of is the and total together solutions on bring for a product quality. health a social innovation is are physical, data indoor spaces healthy Ceilings of air The well partnerships and and collection demonstrate experimentation vehicle spaces. defined, by of

and Mineral The is The and of architects strategic in a business only in speed our continue these another advantages leading, progress with Architectural make important is both are growth platforms and but Projectworks for digital to in that cost change not platforms. with digital sequential we've our outcomes priority efforts also contractors. and industry Growing platforms represent these offer us. made progress digital step more also the key from they creating We for quarter kanopi customers design Fiber. through a scale Specialties support growth long-term with to

Through XXXX specialty into more broader and increase We we level reach organically, commercial array to integrating in of maintaining with a allocation a we capabilities, priorities. have major made our continue And to double-digit this construction top products our business. spaces projects, of line expect finally, and are extending we solid progress buildings. growth in continue recent margin our And acquisitions, penetration. and while disciplined the rounds capital expansion even our to delays new out in approach

strong start we while While acted emerged. strategically of made have investing And providing priorities. to programs. direct pandemic allocation and priority still the our into cash, maintained the we when returns cash to our these at we With we our capability of through and prudently the the intent dividend and of forward, going investments maintain all innovation these opportunities share preserve important our to shareholders balance both acquisition capital have buyback the confidence back flow #X in business

of the where the and form and focused Our distribution our priorities advantage, a helping The team overall spaces our and coupled dedication with the to our partner heal relationships, competitive and our live, of best our strong products returns unique work, committed to strategic difference play. and remain best-in-class company, of these for learn, is for employees, we making network a purpose positive the deliver customers us shareholders. in

evolving we monitor ahead. for is Armstrong to to happy that, now. continue positioned a with conditions, future questions we'll be your take And While strong well pandemic

Operator

And your Thompson first Research. Thompson [Operator question from comes from Kathryn Instructions].

Kathryn Thompson

see increases, seeing then actions more mix is about full realistically appreciate of you have color effect start But and and And are price thinking on generally this renovation, XX? late the also so also the with year these, has higher you topic that changes mix the hitting the Inflation along which the into pricing of increases a to been standpoint? to you're a line, and given starting price more price realizing is from in 'XX far. the the with point, the really in

Vic Grizzle

I Mineral the something for in our particularly, has pricing been Fiber question. through WAVE. our in and business you business thank think Kathryn, Yes, grid

on being inflation. those continue demonstrated our staying And record track realization ahead we initiatives ahead that. anticipate the of the We half have performance then to and stay and ahead to of initiatives price able of of that, of stay I think have a first our

August, these think, of we'll year. I we are the into think, Our should, entire portfolio. that's about the price in inflation ahead on based price second I of reassure product the increases and that talk everyone the history, across the increases, stay anticipated to price continue half increase again, when And

the at at portfolio, then So the the realization. end, mid we the price product of similar low get to and end high

what So that expectations across the to the products environments more no entering similar realization mix of get those have matter in we which happens be a environment, all it now we in of because should we're renovation-rich price entire portfolio.

from a think we unnatural in see shutting dynamics the So overshadowed overshadow being -- mix that's got but something what nice the the it was second the don't the markets. any And way. going second guy, the heal the half last we're continue and is key second mix mix, that price efforts the mix. will to those I mix that to these territory about being see talked to half. second a the last counting -- on, activity we from price that the Those territory realization we we expect quarter the by in of year I and and mention mix, by our we continue in heal, overall expect product to down actor I from good which benefit in impacts these to are on and quarter, continue saw and year, was bad

Kathryn Thompson

raw chain, of also there type of supplies others. seeing including Are but to shortages are and any value Okay. helpful. you're and and shortages in having of Then material bottlenecks certain the That's around? wide work aluminum there's a materials, variety that different

Vic Grizzle

we and business, that monitoring for very seen felt impact. grid steel the that we're We're managing well. our Across very our haven't closely, or business

very the time we business, that service to experiencing have very a part we're of in believe our lot lead watching issues fact the of across deliver it that issue are So customers I maintain be our on levels. chain seen at our Again, and the think a able moment. but not we and times the proud into not supply that's don't business, risk we're carefully. of Again,

Kathryn Thompson

a then XX looking biggest the you And when gives question. months? the managing forward what is in you've final And you that business? how step to Okay. sequentially think XX confidence is What difference the taking about back, next been

Vic Grizzle

Yes. true think moves when had Thanks, historically X in last We this been Again, I renovation territory, to have back X about new And of Kathryn. into picks up down talking construction recessions. activity activity bounce to activity the X last get recessions. positive been to expected again, year. territory. and goes decades into we you negative back That's go renovation to

that And been has that year, so again happen we're and norm, historically exactly what and we experiencing. the expected this that's to

was was in indicator renovation picked back different quarter, seen to at also watching a it the to rebound I bidding change where I stronger at the 'XX, the look one, closely off what and first of how from at leading activity only quarter in a it go it in but and how much of was But was, number when if negative, compare that QX from expected, it's look I makes second So back it as again, change fell one. strength step up look activity, sense number I'm a the coming XXXX, the the quarter, it but to the bidding future I step as was in activity than very it to not what when you. activity second and see when which even demand, bidding in the much

market, was in up So demonstrably particular, part the the in that the -- better. it across of of but renovation construction, spectrum of and was types again,

that's XXXX. And So I'll that's for thing. leading us second for leading -- then point and think certainly indicator to a I one into confidence half into the other

you know Specialties the projects. built best visibility terms Architectural had of in Architectural the which, in Kathryn, level our there on we Specialties business, the quarter. our in our backlog in Our businesses has we well, backlog first And record have

half, second the we've is optimism the some that's we the for I our half position expectation. -- than well have for Again, here most additional, and sitting backlog recovery providing So had underway. ever second think, second for quarter our

Operator

Maklari Susan Goldman from Sachs. comes next with Your question

Susan Maklari

improve My first mix most in as year, think last about But across and -- different have more ones the you and talk and question expectations together the are into where I comps seeing about the verticals. the incremental kind increase retail 'XX? room you've And we we over some Which about know through talked verticals that the you then things are kind which seen have when just of thinking that go your sequential to in growth? is quarter. second falling for time? can you moving and still come of office the the over the that second about parts there that the half in all

Vic Grizzle

Susan, -- to just reference those really retail back. all areas. was The improvement let standout verticals, in activity, across X I in was Yes. the office activity it the bidding and a bidding step in made think, the me and you

So -- That's and right? what we second of not leading indicator, a saw course, necessarily in quarter. that's the

was referencing It about the of that on So we entire point, uniformly was -- this a to -- industry. uniformly. makes we last that I everything the kind reported down back your across what year. And when segment-by-segment the was first sense which necessarily a quarter across bounce said, in in all actually still being saw verticals, second shutdown, wasn't it too you shut the think quarter

something so back that to I'll think, very year. There very And were starting some delays, last see watching cancellations. in the few was to naturally, we I was this. delayed those projects the the and -- we're on as saw were reported for we back And in have go resumed, uniformity And projects we're we last closely cancellations pipeline. of watch seeing we and bounce project year

should didn't I be experiencing half uniform to kind get in resumed, you that those reason of the along say. first of projects this to that nice canceled I bid But going it's really basis and with stands if what it we're forward, will, on interesting, office that's activity a outperforming, see the in So retail. it's would year, think

Susan Maklari

out to thinking growth of that color. getting a momentum. And of Any of it in? I can that. talk in very But right. new there, business you some and should around to then healthy to helpful they that's are seeing as kinds put terms things or some All either this made the bidding through? going Okay. forward? are know contribution be spaces, about coming like orders That's those sounds some And follow-up I of how comments the product actual how introductions, you've their just the to indicators coming contributing you just some you're we volume that of activity those kind guess,

Vic Grizzle

growth that the it's It's seeing the pleased growth the relative I'm the Yes, there. marginal business. seeing overall month-to-month -- with size really. we're fringes, to we're that on month-over-month of very contribution

be in not expect, not is will and the activity, they're the of would contributors year. driver uptick big for And So meaningful in half year. and this the 'XX, The biggest first here that renovation of driver rest for meaningful I level. the a it's single probably is the

Susan Maklari

a been perspective Okay. past kind the Can All fair which makes one, right. that in on the has pressure really last channel to which you've mix, second alleviated mentioned things that that, in sense. is just quarter, normalize this one That the a channel say quarter? I business. not anything is in to that's in really it have and itself Does started from of squeeze --

Vic Grizzle

It the not I was or that's contribution That's really right. conclusion. minus. plus a right think meaningful

Operator

Phil Your Jefferies. next question from with Ng comes

Phil Ng

Your business Fiber conservative, volume in well guidance momentum pretty seeing July. into Mineral the the for given seems you're

comps. some easy got You

to of of, uptick need flattish be there look Vic. be mindful driving construction? for in helpful, volumes So back by the would things Any color what's expectations offset that Are the being we half, guidance? R&R any new you're if your your at the seeing we essentially in midpoint

Vic Grizzle

about May I there's levels, levels Okay. chop above and we and June XXXX of had normalized. April, we're some think in seeing. talked then Phil, kind still had that We Yes,

so And second across the is at chop we're July -- factoring some we're levels, or market. seeing for above I And so and into our a of the think outlook that unevenness half. of little bit XXXX but

of I have I of we Fiber to remarks, at think, get be of putting again, and -- stated year. I as my above to the XXXX later end we the chop, or year we the acceleration some for some Although, undervalue do expect some we mean, year, second in acceleration we But half half. are I the second do expectation expect in early the in the in Mineral wouldn't the as exiting until we the parts for

Phil Ng

a from new Okay. been right? pretty construction factor which has year, choppiness business, like it Is lag more last on has R&R So the sounds the solid.

Vic Grizzle

geographies, it well is really the It's across as as frankly, across construction types.

So is this I headwind, the into in than we but year, bucket wouldn't renovation starts that selling put outlooked. the just right? We be have the year last more it we activity offsetting of new. Obviously, the didn't as to knew

Phil Ng

XXXX, things? volumes, of Is then in then thinking of bidding of you to the step mentioned we on kind think Fiber you Mineral flowing Vic, should change fruition XQ. to coming expect that on out a we when side kind And activity more -- through? that your that when about in Okay. And

Vic Grizzle

at across a we value Well, well basis. basis bidding the on construction number look -- We at it as the as look the activity a types.

to but So it's Fiber It's business. Mineral certainly, not entire for really just the Fiber, pertains well. Mineral as

months ranges the on these months, So on the the XX size depending again, X projects. to starts lag of from

within And a months impact could on good but certainly, XX pretty that half, that, bidding XXXX. activity in have average. second So some yes, the is

Phil Ng

versus implying just to quarter, helpful. one. you price terms and factor break right pretty the a a accelerated to out increase seeing Super power Okay. your as there now? do up you're guy And the in -- August have of good in in color absolute one pricing nice for AUV what how half. back in nicely mix And you're the pickup Any impressive pricing? pretty guidance guys quick does

Vic Grizzle

In bit little We XX-XX our tend that of a inflationary of increase. year-to-date a little XX-XX But the August get around more Yes. than pretty with running end we bit at up the to a toward more split price XX-XX. historical might price close here mark. than year times, mix. We're end we're running yes,

that's to not use. proxy to a continue bad So

Phil Ng

be increase? your Or And could guidance includes upside? that Okay. August a narrow the

Vic Grizzle

that Yes. No, into factored our guidance. we've

there, considered it's in yes. So

Operator

with Adam comes Baumgarten question Zelman. from next Your

Adam Baumgarten

it Kind Just those on comps of flow-through. increases the of on very a despite but price starting AUV. AUV a would look imply for you mentioned slight year, easier at actually the and some modest deceleration in midpoint year-over-year to it guidance a basis of

some maybe year? all the in mix as mix of start kind did further Just of initiatives curious kind a wouldn't next it that by to bit given there. offset of is out normalize the back increases why accelerate So half and price

Vic Grizzle

our headwind. Yes, best with themselves. probably we have the didn't we in the And right, mix quarter, mix second contribution territories had channel correcting the

going mix way mix bit to the it second a So territories those about to on last think good back we of in that half as normalize X that's is, I the that think in some in -- is the had a year. overhang we improvement half was key

more of we think in to get think offset that's back the inflation, price expect way to to half right the inflation stay I as realization frankly. it about -- ahead

Adam Baumgarten

than around And of just, and could us of Just your it. be the the below supply you Are performance slightly then curious the kind color acquisitions Is some worse related? Got market you give some being constraints? there there. I'd more color that some more on performance if expectations. anticipated end

Vic Grizzle

Yes.

in with year this just digits of with had and the of double growing the start of face year, that they're the a strong me on pleased very They we're acquisitions. digits those Let They're that year. growing double last pandemic. performance saying very top

they're the place and the earn-out to we stretch the how nobody structure in that contextually, about want risk recovery, pace think say could we rate these numbers acquisitions of was because and given that the had Remember, recovery I So that's some that to performing. pandemic for and guess how that. them put

not which they're -- those But the the as very So an pandemic. And levels. really account that, and again, levels this Brian comment earn-out risk reaching company. the well accounting, at for towards stretch performing face those of in to had could levels put on structure, of pushed sellers we the the double-digit we they're and

Adam Baumgarten

Got schools. it. We're seeing I some are and just what given of markets. kind of you're education would assume, the in towards that have, surpluses And local picking is lastly, just and of things up, governments some going then state that government hearing curious and that

maybe yet education not call, Just if the and sure government you called on I'm seeing in out but -- of just you're verticals. some what it the

Vic Grizzle

there. Yes. Again, an bidding from seen I would institutional there we've so institutional segments contribution the activity education or is spending say, or not activity -- the is abnormal far.

coming. still that's think I

activity going I in -- but wouldn't make there going way. going they're there, think a of going to what changes the schools so good activity seen We're say they're to I that's they're make, kind still and on in they're step-up based forth. to what through stimulus government working we've their modifications design seeing

Operator

ISI. from comes with Evercore question next Your Kim Stephen

Stephen Kim

had negatives some other also that here be I I some some additional the there I may we in in or delta you think general, see X that question see other of over positives. the the on Vic, about potential could variant year delays be a think In would of obvious next what hand, something project the could work. some But maybe general form or might variant like. or months impact the a potential

And would of negative? be curious that, net from into kind a out sort variant the so dust you of is the COVID wave that how settling would has I'm it as now exposure you initial whether think sort or of what be, picture positive ultimately reflect back on played of on net the coming your

Vic Grizzle

to came out we that be go far. expecting variant. it's an from down last there a basically. you Stephen, happened were question. and literally back to would the activity happened Yes, Remember to appetite not down sense I halt. last planning for if scenario The sites year. don't Because shut shut markets That's or what a interesting you're Construction go year. happen referencing what and that any were

certain completed very resumed. see it that go that we said, in sites pace closely impact regulations watching because job with or we're place, on being rate depending local that could of could Now and

you this, on enough about which function eye front close lives healthy just can and economic down variants have said, that come and our keeps a can the keeping positive continue may spaces exist and of to so these that pipe. The other we with we make that the to variant go we it to we're So side work in on everybody that. of

also spaces healthy but think be there's spaces them keep only need there's these the and we back to way, in So variant, have into how event them, for reinforces get not about to variants. people this it the to in a newer but able

very the but half activity watching the its in it, So of back of it of on we're we're year. construction and in pace closely terms balanced about the impact rate

Stephen Kim

split between then general Yes, Was about ask line. secondarily, SG&A that fair And the some improvement was SG&A and curious the across the just specifically? seeing run you to geographically of of on reversals give on if I walk I you us the sense your what could the about business? New of through some point. the kind inclusive -- of City wanted side in investments York the talked was investments? are you that temporary cost actual that

Vic Grizzle

Yes.

I'll answer Let me improved, the the question, on part of yes, and X of take the territories, SG&A Brian But the let York also and them second City. all including split. New

California improved New In and quarter. the York both in fact, nicely

X big for markets very us. are So -- those and

SG&A you do So handle it's want question? the see good Brian, to it. to

Brian MacNeal

question. good Stephen, Yes,

those XXXX last at in the did back others coming year higher cuts is in. you Page we we've $X coming of As SG&A. million and we our X, a temporary look may $XX you said it's recall, EBITDA XXXX quarter. bridge, from $X from And about that acquisitions, million million $X got million

the healthy then And total in So quarter. in digital spaces. level investments it million rounded growth, another the this company to around at $X $X and

Stephen Kim

is that for of -- investments next is million, be that the Okay. number $X a couple level about we of roughly that of quarters? And kind could thinking

Brian MacNeal

stay Yes, that but $X number. no that will around it higher million, than

Operator

Ken Your next question Zener comes with KeyBanc. from

Kenneth Zener

-- rolling range to I'm about clear. of overall Is XQ what level. little prepared a implies given XQ? guidance would imply off seasonality that talked I trying Is from you Normal your Brian, normal which within think, So your XQ remarks. so normal communicate? the the Just that seasonality, were up at you in

Brian MacNeal

our QX we typically see up and its of proportionately is quarter, dead back percentage on. strongest QX some the normal and expect year. Ken, to -- that to pick be would Yes, lower

Kenneth Zener

please? it be to 'XX be made kind you could to be FY either, specific? just you It 'XX. you're margin. think I Vic, above be exiting could talk around of what Could Okay. could sales, you comments FY referring it there, Could

Vic Grizzle

daily because back probably future been That's on to Mineral when tracking the we're that condition I the part Sure, day the represents platform a and Yes. building proxy Fiber for back to use rate sales to to the rate, that's we're the proxy market to get and we're growth. broader that and versus kind market we've health a full the does overall Ken. because of acquisitions. because sales as so this as And a shipping is AS the of a really to That's -- overall looking. shipping overall per XXXX recovery, that of trying the -- already above market. and But growth broader our mean the of in of proxy really

Kenneth Zener

seasonality. Got it. And XQ the it. Got with then Okay.

Okay, that makes sense.

looked since XXs backlog. You with prices the Obviously, -- sounds these your early to, actually you saw you price recession increases these the by stuff. in Are chance? what these exceeding are it on like about XX-K at back talked

Vic Grizzle

products our of or project prices? Prices

Kenneth Zener

increases X mean, that Yes, just I the sequential price increases it's -- big here.

might like So record guys be this seems this all actual XX-K, through -- the in price increase Fiber. is accurate? you haven't but I nearly it certainly for a gone that Mineral Is

Vic Grizzle

the particular. steel it's high Yes, some number. close. inflation on similar Maybe in rapid had not as when pretty we XXXX a mean, I in cumulative had, again, based we tariffs

yes, there, Ken, your point. So up it's to

Kenneth Zener

I'll to Yes. you it. no, are be seeing demand, shifts AWI get specific all? I But versus you others, it's share wonder not around. no, ask, know want No, something at I backlog, I

to sensitive that. I'm So

the just how something you're seeing you're to in capacity given if seeing industry. demand understand in to share shifts affect. I'm that just wondering fits I'm or trying or However, that if constraints

Vic Grizzle

holding chain. supply share and really significant versus don't you have with customers your gain. Yes. winning your in to we're right a Ken, I renovation specifications margins in on servicing helps think because job and new and your activity now pricing this really and good seeing always that what in specifications plants your driving inefficiencies is doing moves We're our

recovery. So our reflection of some really we're tailwind doing market a well. We're well positioned. I'd and a innovation say, from this is

Operator

question with Capital. comes next Shmois Loop Your from Garik

Garik Shmois

little you it more Or kind color was more kind this what's if a ways the pre-pandemic? of just activity Is in And times kind on normal that than wondering of renovation more is could if to in one back people just provide office returning on mean, on side? a cited a a expected, retail you're bidding seeing driving space that? you getting of is didn't different the and I office just work, on we any would it retail the in that have function call. that space, color mostly of COVID? of just Just maybe of bit it used have increase return couple of

Vic Grizzle

pretty it's were the Yes, positive. broad-based. All verticals

it's not So down of because that and too was was And surprising from kind delayed everything year. last again, encouraging to see. shut

reflects So imagine, and I and and renovation, from versus it meaningfully to I split there's retail would in activity construction again, higher some what construction by new in was But what stronger rates alterations renovation. see alterations down, alteration it I have in expect the on is office would new higher in there, didn't which bidding when catch-up the than the then of activity, growth And we renovation you happen when would there was XXXX. and and the others. again, bidding think

No get dentist people ready. a recovery create get office, again, a again, done something pent-up people owner, didn't those there year, stuff a doing being generally, I feel to in restaurant of a you're, kids their back a the have and are gymnasium come little demand things returning to to good to owner, is classroom. for last think do and combination that from office, of more bit And spaces. So people to about plus matter a if again, spaces people environment back back healthier in the

this environment. board, the activity, expect you all of across with and across So again, construction the is contributing higher I which across verticals, think would to really alterations of the on of again, being is all renovations, this kind in higher the types what activity

Garik Shmois

to Okay. as follow-up And a that. just

bidding. strong renovation and the referenced You alteration

some some price by categories, the pushing get right building hindered inflationary other experiences given increases and now? that we're product at the be inflation bidding inflation, of context across at the given could and that seeing the point, worried Just you're the that you point, strong environment

Vic Grizzle

that. hint that Yes, or watching seen not for a I that. have of

much supply I more cost chain think this the driving the really versus and the inflation. availability rate and is pace product of

that, So sense for don't be that's I should to to a but we continue watch driver. that, going really get the

the going the I is be think availability to on rate and driver supply and pace.

Operator

At there hand remarks. this are call will time, Grizzle, I CEO, no further to now questions. for Vic closing the back

Vic Grizzle

getting everybody thank for the we up fully a about mark a market pandemic of a unevenness joining again investing tailwind here year market transition and and a strong Yes. excited here but of taking as chop and halfway our really love with are bit a year of pleased the the opens position out where today. positioned. market I recovery, some we're this we on Again, just the I at we're the of about pandemic. out call, and talked where of with back we're little and open call We're advantage want into bit for to our as of coming

we for and your So next again, thank your interest, to you today forward and attendance you talking all look quarter. to

Operator

That concludes your participation. Thank today's conference. you for

You may disconnect. now

Armstrong World Industries (AWI) 27 Jul 212021 Q2 Earnings call transcript