AWI - Earnings call transcript Q3 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 Q3 2021 Armstrong World Industries, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. Instructions]. [Operator like Womble, conference Director now speaker to turn Theresa today, of to would over the your I Investor Relations. ahead. go Please

Theresa Womble

Thank discuss our rest Armstrong of our growth to Industries' third have, initiatives. CEO, welcome, outlook results, morning. World MacNeal, and our XXXX Brian to we our Vic and call CFO, our year quarter Today Grizzle, you, this everyone progress on

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

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

of our Vic. to those our presentation, as call the please along for you Now, with four following turn turn to I slide

Vic Grizzle

of sales prior increasing we This XX% improving We results, to X% morning ahead Good results. another XX% specialty of impact architectural Fiber delivered $XX morning today. Theresa. everyone of up Mineral Thanks was announced XXXX third sales growth, topline call recovery for and strong versus million quarter you XX%, XXXX. the on quarter thank adjusted EBITDA year and of results with COVID from joining

moment. results Despite of manufacturing And throughout point failure also performance times. Inflation disruptions these than costs of will to and the freight, backdrop supply prices causing which throughout a Brian ahead XXXX material, We over rare industry a decade, successfully that AWI, expected discuss rare this production strain industry. against service our are choppy the construction to and the to stay increasing those finish September, we pressures. increase products At midpoints in recovery, a ahead and equipment To throughout raw issue past strength we industry. experienced proactively to with have stayed as to challenges, achieved unique leading of continue inflation. a of the increases on we chain inflation in guidance energy the reaffirmed price full to the rates in market the allows marketplace. the and unprecedented the high our remains quality and it's earn the innovative and construction have consistent these we have have pleased Unrelated challenges labor We production manufacture year these year. the our these inflationary these to year moved of that be model in recognize us testament and a detail expect to strong greater we lower

inflationary a pricing segment high and we value since service teams in been pressures, our economy this Specifically, AUV who the separated agile business which component them. They the critical and performance. largely set game. throughout quarter on like-for-like proposition throughout limiting under on from have contractors of for level to important flooring models of we distributors within have to of chains to customers remained top And our organization of bar dedicated their our Again Fiber our is improvements. we've our Because growth disruptions because to not the is Mineral also supply of best-in-class and reported the XXXX, pressure. highest achieved growth by driven was depend partners. unprecedented the been XX%, our third this have This importance, our service and we an unrelated

XXXX with And improved companies segment we threshold six, order remained what delivery, Mineral great our accuracy, of returns. measure. it is our particular, part I measure track share defects accuracy, above metrics, can service Fiber include product in on-time These satisfaction track third many or and damage, you call we that quarter. XX% in this performance with not three as may While order-fill perfect two billing but only the throughout the shipping for

our challenges proud I'm needs. unprecedented So, how to to meet customers these handle internally our of executed teams have

externally delays challenges Mineral increased Fiber segments. of in volumes Mineral Despite sales in Fiber the and specialty architectural our our impacted challenges, business Now the project form have these impacting both these third construction strength offset quarter more impact and the business, the part of has on prior lower new activity. year that the of R&R project our these versus to of than delays

Our per sales quarter. day improvement showed rate the shipping in also sequential

gross year day of the our level in per segment production pricing, strong since metric this and XXXX, the to for this efforts. mentioned I compared positive margin Fiber XXXX. a ability like-for-like that to quarterly now generated sequentially headwind overcome eclipsed for fact, results earlier productivity with In And prior quarters. reflecting improved XQ and was the other improved mix last the margins best five perspective, has fact, sales Mineral the of rate gross From September's profitability

pleased WAVE they stay strong performance of the joint another maintained of inflationary newest group's also quarter, innovation We're discipline one of as ahead have excellent pricing with SimpleSoffit. venture delivered the pressures. called to Our

Now we've install those of innovations products. efficiencies many our SimpleSoffit and for ultimately drive introduced customers and our drive like for who our

commercial is and and significant of on based labor of that framing complexities on use a construction the a interior has materials and jobs, Soffit HVAC of design variety requires systems. a design accommodation feature common

our architectural be design team are our making realized match introduced speed software boxes. pressures the the design generator be a a automated our up flat they given the Including been their What creating New puck and islanders We're easy the have traditional three can installed as this a out drop as on strong pre-fabricated has significant the at it's And profile performance. and the value SimpleSoffit sites and could -- some hours. well, first mid-November. systems where and difference design savings segment Arena Kansas methods top-line material Airport WAVE to will Park the product very significant for Now International UBS high SimpleSoffit faster framing on less headquarters are where value pre-packaged the that terms California, engineered for improving to area excited come and using for traction York in time creating of to Belmont with specialty soffit labor times systems and labor, customers. the improving than that and used. Because PG&E had how we there quarter costs gained in the our new customers. of the projects new hockey innovative are fans in this in such City about specs handle margin for the

these as helping the from to organic acquisitions, inflationary also for that sales prior this pressures our addition segment increases well. business We've address introduced the the rebounded XXXX In from earnings successfully some and and price contributions from of is year products on nicely lows.

activity specialties, with to New construction and our points investments was EBITDA due XX% bidding improved uneven above I growth optimistic order to Even specialties level. we strong expect back and delays. improved, and given sequentially segment, basis major challenges margin project in on continued exit continue improvements those these remains very about and remain outlook the XXXX a that activity the architectural XXX and track but backlog for XXXX renovation We with to this the fact architectural are XXXX robust.

expect from support Similar in digits. to for Data strong new quarter. quarter, activity or to as capture the GDP These growth reading the of and As billing recovers. X%, investments index as and at of our the broader XXXX growing we these optimism positioned we recent improve the for September are further territory additional our positive bidding above construction forecasts growth up growth well have both the AS are regains construction this and the also sales The accelerate in starts Fiber indicators momentum remain continued territory segment. to and to that into track architectural indicators August ended with market Mineral XX.X. double second improved industry XXXX, XX.X both remained for segments, third Dodge well we in many expansionary in

Now, with performance. for financial that, to Brian over Brian? turn the I'll at look call more our detailed

Brian MacNeal

our I'll EBITDA our versus Adjusted updated Vic. EBITDA free net EBITDA Thanks, on consolidated presentation. contracted reminder, website reviewing the referring a the prior slide million in I'll per prior lower our everyone continued third and year. contracted XXXX I with year were manufacturing XXXX X% grew begin three On SG&A $XXX of basis earnings investments results. guidance up Good of results. Adjusted the share Adjusted details flow year begin diluted X% morning and XX% sales XX% points. results. $X.XX as due our above results five, our for and available year. slides margins slide third But call. on and cash quarter quarter to before we Adjusted friendly of above productivity. was to margins prior was to XXX basis Today, be be

at repurchased and our or and credit the available covenant at $XXX quarter availability X.XX. as $XX we well average our $XXX remains $XXX revolving of end terms balance under for net an $XXX $XX Our million share. a XXX,XXX of including In price below million balance of with million sheet healthy the agreement of end our threshold of facility. per debt-to-EBITDA of cash the shares about of remains X.X liquidity [ph] Net was calculated our quarter credit million the ratio we on debt as the of quarter million

had repurchases in third we Last remaining balanced into December in business, capital with increase through XXth, our our XXXX. our returning that September expires reflection is under dividend. XX% of continue we and when This of the million our three which and in investing a is to last repurchase announced years be in As acquisitions our quarterly a program, week the $XXX capital share disciplined priorities shareholders. increase our to and expanding adjacencies allocation to commitment paired

the acquisitions million driven variable raw investments XXXX EBITDA compensation, primarily an This volume driven You consolidated The we for companies, year our earnings. due by The mix, inflation and favorable and XXXX the materials was higher acquisitions. acquisitions. from third quarter more SG&A was the driven than by felt in can gain in as contributions manufacturing favorable on like-for-like cost healthy costs the costs discretionary on increase AUV and increased and to prior well. Bridge albeit EBITDA positive to by see growth surprisingly, future equity by spending adjusted increased our input normalized in increase initiatives results other favorability chain, by companies. channel this $X in WAVE pricing spaces XXXX slide prior manufacturing compared partially our SG&A many and cost, the and of from like offset energy, driven freight, increase was less digital some building and impacts throughout product Not other supply reductions, year

partnerships year supplier to the great fourth done see for XXXX. strong and X.X% We quarter. our expect now our of the challenge, have this of to through we teams been While job sold more in X.X% cost into have inflationary inflation a somewhere pressure full managing the goods range never important continue

to above we'll As quarter, and drive this in work inflation. pricing demonstrated like-for-like historically

across the previously improvement increased segment the metric track both this in and in and trended These at continue a of The another sequential spending inflation of gains the August, mentioned. to great announced AUV quarter to by has Mineral strong areas our of In issues Fiber segment increased supply done and offset energy reductions, the May quarter partially the Mineral which to AUV us six. as increased sales fell XXXX highs outcome to are higher XXXX. due Fiber through steel of shipping we of ability remains cost historical results job Input SG&A again and of raw result gains on adjusted favorable February, saw We team driven XX% to of price XX% and prior a end sales variable material, year by ahead price slide top support to year our freight for and closely XXXX. at this a higher joint per EBITDA a venture. ahead chain. to pricing the comparison WAVE focus compensation from inflation, is WAVE investments day EBITDA and in our for as prepare to the the return equity and mostly inflation. due quarter cost due we earnings were increases Our managing AUV and growth initiatives.

activities situations larger headwind $X productivity, at plants. additional experienced unplanned and caused two scrap In at downtime higher our our maintenance plants addition, This maintain I'm freight for is the This the best-in-class during due and lost in both October. AWI. are to plants of costs a happy costs service drove to and quarter, to we report were million an well levels. running event atypical Both that remediated very

you after of we productivity year year. many know, As drive consistently plant

manage $XX points impact margin results each AS contracted quarter a the results. which in were disruptions impacted basis volumes project from including quarter, acquisitions year for specialties of push-outs XX% organic or still Moz, acquisitions. are eight of our and period push-outs, year-to-date quarter X% we drivers consolidated inflationary pressured increases segment adjusted from SG&A architectural We've left the when announced increased challenges. delays had to acquisitions of of increased the grew for by second is construction, segment In equity slide and our nine effect. the and increasing Sales for the million XXXX. spend XX% due earnings, Slide year. but conditions $X.XX. the project nine SG&A is prior are sequentially share higher of an cost. organic additional round XX% commercial cash and increased a than gone earnings, points which quarter flow compared increased in as by revenue and more capital versus Slide offset reduced products, already AS to adjusted higher for WAVE WAVE and spending into the partially chain XX%. prior the adjusted with and year being project XXXX The effort improvements first The dividends tax diluted AS price to to offset up second CapEx basis manufacturing by for cash supply nine increase the EBITDA some as higher on QX higher million by adjusted breakout million. payments pandemic. the third improved shows sales cash offset shows month XXX during the results Adjusted an sales input following increased and pandemic. improved recent or continued free in with of of XXXX in a AUV segment prior EBITDA and increased were seven, third have costs. more quarter significantly spike Arktura EBITDA price XXXX working AS to per labor year-to-date net This related September, manufacturing which year and performance delaying XXXX. adjusted in an $XX income a along XXX XXXX Increases and to and and by increases driven Moving contributing Favorable earnings sales Turf, liquidity $X the flat the the the segment were business The months

through is nine no line Please in slide guidance update We updated pandemic months to chain delays the material job related assumes XX. expectations. summarize on with or cash for first our shutdowns significant our due XXXX this note, Our issues. supply generation guidance

down side XX% X% page of XX%, to adjusted XX% We July. prior XX% EBITDA XX% of for cash EPS would updates for X%. the communicated now year-over-year adjusted are to adjusted in revenue -- growth metrics we XX%, highlights all to flow the guidance ranges the narrowing and from our of to key growth of and right free prior of expect The growth guidance

range a Mineral job Mineral X% great price three Mineral our the to realizing teams our our notice delayed and projects We're volume remains You'll months increases year. continue increase are XXXX. XX%, choppiness and from AUV do range to to -term from Fiber X% this down of to as bringing near as in out Fiber into Fiber the the X% of

spaces in This delays. previously single investments the expect revenue be challenges quarter but digit healthy about range. a [ph] the our shift and We the face from project I throughout invest to in is year partnerships volume segment With contributors delivered larger to they are conclusion, and initiatives, delays initiatives third chain in work organic but have it's a of XX% contribution It the believe in for that unlock of discussed. is future future turn impact growth. level XXXX I'll people, accomplished challenging a and certainly But supply the the wasn't our felt for the I'm in AS between continue now We remain AWI. current our meaningful will or our in XX. digital In easy, proud will organic growth acquisitions XXXX the and business solid to acquisitions impacts slide project of growth the growth to contribute are of to as the the AS the the next renewal on COVID-XX they quarter. it Vic innovation times, concerns. that, optimistic teams These back whether for and the mid-to-high

Vic Grizzle

Brian. Thanks,

session, Armstrong. our at means our get into we trajectory. we progress persist how recovery, back more key demonstrating our have construction advantage initiatives are next likely But And inflation chain new uneven me like Despite fashion. improve, are position Market what unevenness future returning focused to the a and the in the manage AWI, are current conditions into kids supply offices chain and are remained ahead through the an and choppy impact albeit year. returning. improving Before on growth strengthening that let and on here for and to in successfully way thankfully People disruptions. Q&A we share continuing classrooms. competitive minimizing little is supply see and and at to long-term challenges the bit this of we're we delivering Inflation from can our price that activity in about the

position to those allowed such as continue healthy and are us spaces digital and in gaining progressing well financial strong has investing efforts and Our innovation growth initiatives our traction.

continued healthy. quarter-on-quarter spaces healthy recognition can of to ensuring and improve growing clear Our product the play sales ceilings spaces have are are of indoor in role signs there the

This For uptick our significant example, our line of products. health healthy in a zone we have solutions. spaces for demand is the first seen

of meet quarter third healthcare products and increased sales the to XX%versus have several of introduced important progress on and attributes two hospitality. a the transferability XXXX applications over more the sales As and we the to indoor need offices as encouraging. of than outside of purpose and trials the have in doubled and in were space products This last healthy more levels. still the spaces. sales days, the products are these early Sales back the any And are in number of large VidaShield of to approximately schools introduced that these quarter years doubled general washability, validating levels. at most from and the end disinfectability products the AirAssure, again, terms year-to-date existing encouraging a projects. quarter XX% is is XX% now from now we conducting which solutions On such needs of of but XXXX reminder, these second scale active the are year, projects versus few all and basis of a vertical. What's these healthcare the coming broader environments is that

along invest our build is works, concept of service. pre-construction and design continue materials, speed days. minutes benefits initiatives design and is to with the versus for initiative the process or allowing the our project front, hours drastically automates digital design focus design on a speed in which One several while such way digital in from increasing the across service On customers. we This to iterations [ph] cost

power we addition, collaboration provide how projects ultimately service a digital leadership mutually position innovation contractors In This specifications and more and of the to power the once product ongoing much is in the helping our summary, an project architects, despite advancement that the evolving testament efforts. in it's into an materials sell walls our we been by especially America's in throughout industry. being company. as lives the no In a deepening operation of works and plans of the pandemic with focus the marketing that of contractors have can commercial processed design to is of secure makes we pandemic We're to beneficial designers all strengthening COVID a kept more build and accurate construction is of complete, as is Armstrong's challenges only the focus spaces. way. has ceiling number us excited commercial sales our additional critical It's This cuts and our about made and easier. products

us achieving we not Our strategy. maintain and track powerful execute supply Throughout our also has our maintaining focus of long disruptions inflation uncertain the company unique helped and service have price manage best-in-class to challenges record over slowed levels. period to our through this chain inflation and on efforts of our

relationships opportunities. ever. providing now are growth stronger top-line product important than customer And Our innovation and digital ongoing our is

As we're for recovery, to our to to increased value with we'll this happy of take And creation shareholders. to position deliver be excellent capitalize your levels in markets continue an our and questions. that, recover, on

Operator

of Instructions] from Hughes our is question first [Operator Truist. And Keith

Your line is open.

Keith Hughes

you. Thank

questions. two Just

greater it all your daily is said comment? September that the is beginning call, Is a the Mineral that than Fiber on you'd was sales rate in products? of First Or XXXX. in

Vic Grizzle

above really Well, Fiber were levels. got probably what's know particular acquisitions we've XXXX and growth it's conditions. going Mineral for the market our an true because architectural in for the both, Keith. with this best that true that's products year, it's referencing, It's we in we has what our which proxy specialties for underlying well But is continued the in which

I to market that back get true pre-pandemic trying for But again, importantly the Fiber more So when for it's recovered levels. proxy Mineral it's the is And both to to business. cases. think true we're

Keith Hughes

guess July? have Was been would there you talk how question my that some did Okay. And in dip out August, assume kind I sequentially? a -- well, must quarter that about is play orders. I given of that,

Vic Grizzle

right? a next mean, it month strong We'll the seeing, that plays to a have we're the really choppiness then in month and then and see I strong pause month a we'll month. Yes. and the

So reflecting it's and things. uneven actually very couple a choppy

think in delays recovering, but also as broadly these I the the some projects. markets of

delayed weeks. are projects Some of a couple

are projects being months. Some delayed

So some certainly, August this height just where the of a that lot as activity and And will certainly creating after see say delta chop. impacted September that in in of say I'll the what we added shortly together the then event variant comment, is in you an of seeing up that, I it was were broadly month. that. But again, happened

that's through of good we're really directionally uneven So it's -- right as a but and seeing think go this it's I reflection choppy what in recovering, now this. it's we recovery,

Keith Hughes

Thank Okay. you.

Vic Grizzle

You bet.

Operator

our question Garik from is And of Capital. Loop next

open. line Your is

Garik Shmois

the Oh, bit if provide supply pushed in get on bottlenecks on chain end which raw it project Is just challenges it challenges more hi, great? little color more could to out? I'm on a that more timing material market you any is thanks. those be side just transportation So, you're seeing. would wondering or bottlenecks color continues the on or additional

Vic Grizzle

plants chains, chain the freeze from to or supply on feeding own say, and whether chains Texas which that's our of There's been our happened break up hurricane. chain. own it's chain in from supply internal the product the it supply the Sure. supply like year from that supply and I'll disrupted chemical earlier in really challenges some feeding customers, kind is inputs I'd and The part, our of -- the our our

the chains incidences several us. along that pressure for was supply way there on put So the

any I supply chain managed to those able have we beautifully. have like We feel those been plants we're in that manage our fortunate. We've our our not through to out disruptions. disrupted very and and from service amongst balance customers way And

So, business side, our on impact no to that little if impact very frankly.

labor and On therefore building now delayed or the the other impacted than projects being more which it's conversation impacted phase where I'm it's was and earlier second materials whether quarter. the are hearing -- hearing I'm other building we're it's and than are these are labor. material, in they both side being materials, the in different are delayed

our when contribute we're So as disruptions those they a of in the need both seeing particular material terms to that impact jobs. for now and that's product chain projects labor in on supply business ceiling

And that for give chain question? when a Did I so we're fully impacting the little bit you? ability that we top are to to about color referring and disruptions answer our your talk line what more that's And supply our recover.

Garik Shmois

That's architectural good. specialties. Thank is final My Yes. on question you.

You cited confidence something to in back return EBITDA XX% a in XXXX. did that margin, because you

But quickly You guess had Any of improvements. to to that back to the absorbing needs you're happen nice sequential recognizing some happen margin XX% get to what up EBITDA as acquisitions. how could possibly again?

Vic Grizzle

Yes.

I the key really there is absorption. think

year, also in we invested sites. it's backlogs year sites the that strong on about the saw new to and able production talked to and on we into add acquisitions backlogs But came ourselves for those really capacity as continuation And activity a absorption the frankly So deliver the backlogs were but beyond were you current backlog, in we the preparing we in our and reference. we earlier those we be as pursuing marketplace. the as of with record in some

delays absorbing in have investments slowed our year against business the that core that rate our happened the With project those this of new acquisition. let absorption alone

So, I made absorption. of Absorption absorption is us, of think the question the we're to manufacturing way and through answer your our acquisition that investments the some new in working our of sites. for really we've

Garik Shmois

Thanks that. Great. for

Vic Grizzle

bet. You

Operator

Susan And question from our of is Goldman Sachs. Maklari next

open. Your is line

Susan Maklari

morning. Good you. Thank

Vic Grizzle

morning. Good

Brian MacNeal

morning. Good

Susan Maklari

quarter, a kind it's also detail commentary how impacted fourth equipment the if that maybe September? in manufacturing you is, bit third there? quarter question reverberation deliveries, first more then happened and of but give cited Any there around us you failure on of My can the there's what any magnitude

Vic Grizzle

Brian. ahead, Go

Brian MacNeal

good Susan, Hey morning. Sure.

shifts did us had we of in some our cause our was So at I to prepared and And mentioned remarks. even some what days. Fiber plants unplanned that lose maintenance Mineral two production bigger some

it the in was is month actually we perfect mentioned good news measure, service to move but Now were of our our temporary. and on order with as the able continue September, great production it Vic improved around

through headwind any And the are so, expect And from month we of running well item fixed we that plants. very don't October. plants that maintenance more and problem the both in

Vic Grizzle

Yes.

the no in Susan, quarter. us. So and behind impact That's fourth fixed

Susan Maklari

right. then, months All my or more exposure energy inflation gotten We've prices. energy bit That's talk moving your prices from some wondering to on bit natural details seen couple a questions can gas especially the of other follow-up people. Obviously, is, last so. and And maybe helpful. up about Okay. give and over if a we've you little

the cost overall environment what Just talk about and seeing you're there?

Brian MacNeal

are gas Like we Yes. bucket. natural total total roughly goods It inflationary it item the -- of was the Susan. between is increase. quarter. had we that our cost X% sales XX% to our highest seeing runs but cost energy everybody, of Sure somewhere And in

that total we And up so clearly is raws, full is of were and inflation of to gas was the X% year-over-year. year look cost which sold. our one reasons on also we step as increasing natural so for Freight X.X% to back increased goods

sure So not that to being price like making But that. than it realization history. inflationary getting we're more attentive companies Not and cover seeing that we're see. impact other quite very to the

Susan Maklari

you. All Okay. right. That's helpful. Thank

Vic Grizzle

Susan. you, Thank

Operator

from Kathryn next Research. Thompson And of is our question Thompson

open. Your line is

Brian Barros

questions. Brian actually is taking This Barros Thank for you morning. my good for Hey, Kathryn.

and so to flow part. the how's turn current seems change timeline realize I with far to you pace. and so, I environment, the one a kind - turning that so bids bidding there, into the see there's that's for talked guess, awards with But then those out same into First projects much of your building but to I to guess that speak I at have comments the we through like product match guess on necessarily other first companies guys? sales few not bidding of wanted about, those

Vic Grizzle

Yes.

longer between into we we much activity, and out before bidding think that the leading a thing it's necessarily timed I bidding activity we're And data in is you're of renovation turns look out same of sales. that there's it sounds the types activity construction that's this is is, that hearing like, referencing, activity know at new dissect cycle the there. alterations Brian, a there, ceiling renovations. the indicator we activity Because And are to way a bidding sale. it not

kind months I and to as of look at changed? is of delay out. determined How the it in we to of leading a terms So think be six terms XX in that's yet and when the the material. between we're started, today normal is these frame. delay available of what in projects month -- and six can the XX of projects timing seeing that labor because and get Certainly, timing indicator time

the to job completed. to timing That's addition next those really these to on the In to started from in start to of of the move be that getting with projects these right and completions important the completions delaying sync the labor the for that jobs. the also in get has and job is able they're already new

we're the So the of there's some that choppiness of of definitely struggle projects. new labor part And with mismatching and in some existing starting experiencing. think projects material and I that's

Brian Barros

of Would the were you more follow-up kind even delayed Understood. of I across both Thank an as think saw more you. a of is issues variant in And then QX we you of the in segments. that it The answered. the and work come, with that stuff? labor seemed all and mentioned delta this more through kind to of August? comments guess the shortages indication just to in you Or blip kind characterize and XXXX material they more I impact the into with delays quarter, project your like similar as question quarter in

Vic Grizzle

to I persist. is think this choppiness going

I of catching think of woods to in we're terms themselves, not out supply chains demand. the up healing

up. get caught component to a think still I there's labor still has that

year. persist, this could in our which So of no, I is for think the reflected outlook think rest choppiness the I

Brian Barros

Got it. you. Thank

Vic Grizzle

Thank You, Brian.

Operator

And from Baumgarten Zelman. of next is Adam question our

Your open. line is

Adam Baumgarten

everyone. morning good Hey,

from this into Just through about point? this How we year price pushed next carryover year the you've pricing, about all at like-for-like effect thinking the should think pricing.

Brian MacNeal

take this. I'll

Vic Grizzle

Sure.

Brian MacNeal

Good morning, Adam.

we year have protect we that do every we what do we So, project have carryover. manage cases. through is in what And many pricing -- to

announced full that in and price there's XX% what been we've that see always of over Historically, year-over-year. XX% carry of range continuing. realization lag effect we've we So, sort the versus of that to

Adam Baumgarten

end gears therefore margins it. grow? to of mean, say SG&A, by a should Got you less Okay. drag the of continue I then be to that back normal you'll And next XXXX would more levels year as that switching see we just to you on and

Brian MacNeal

take. I'll

Vic Grizzle

Yes.

Brian MacNeal

[Indiscernible]. some add I'll

Vic Grizzle

Yes, sure.

Brian MacNeal

a year that sales I hit are leverage growing it, right? on -- year still this the these So and We're Adam, from getting SG&A. little you our the and last mean, abnormal. in

top But the as make continue And our so, to to by move a digital of of is some that percentage down. some sales encouraged we'll growth to or accelerate whether it's we're see line. we're of on what innovation investments able the product that

Vic Grizzle

we financial that and organizational you closing an organization, cost a our maintain made know XXXX, XXXX SG&A. that percent capacity had too, over And really and the very with global where not we company, We time that Adam, growth are were And right a some divesting America's into SG&A cut because we readying additional in were strength That XXXX. our add invest only XXXX XXXX say. right, organization decision color well ourselves XXXX, organization. some right-sizing we're intentional leverage as me now capacity. which were competitive a remember, only to as because And conscious had in because of to a in was I'll about focused for to just to to you'll become we and sales we very the We structure, levels gotten America's let to our done. had to the international. in

of for get out SG&A we'd intentionally years we reposition and to pandemic. So we XXXX growth higher went in would front couple -- in where were to this the have a knowing ourselves have we stronger into here that out coming

position again, initiatives over in. a that to be long-term of But to So growth given we're this where time investing kind we're isn't and be for expected we in. wanted the us

SG&A on as traction initiatives that number That's these and expect from to expect the the We we of get the growth get level of that get we XXXX absorption absorption to we leverage get to kind to first levels, SG&A. on back leverage back one. and need to then

But and that to leverage expect of sales we're generate couple and years we where of levels. back isn't Hope percent normal as more stay. to down the a helps. land next over this going So to to drive SG&A that

Adam Baumgarten

Thank Great. you.

Operator

Paribas. our Yves Exane next from Bromehead is And of question BNP

Your line is open.

Yves Bromehead

Fiber question. I a bit on yourself just could digit. you'll morning. as question. prices guess price is I have you elasticity. comment on go the I'll more if you price double increases want one already you to for XXXX as into up Mineral my for well. taking a I Good Thank know mean, definitely need

So, some impact the well? are delays starting needed more competing on got due to or to have products when inflation see you've products what you to that demand, fact is reflect offset costs on could it also cancellation you and on your some as and the

Vic Grizzle

many level think other The answer that on line is, of far of building Armstrong's than greater short Yves, to the in products and inflation backdrop no. is cases. The I products

demand inflationary So, this of projects being don't new the pressures at see as point. or these we start result projects on impacted a of

Yves Bromehead

even indication and Are in us in Okay. to I those. And backlog was one give of level if could very terms high of you for MF? given a you level on you at you maybe and were able of but when arrived I to mentioned year, with just year-on-year AS was that the sort delays more. able for a backlog reach the XXXX you entered follow-up architecture not specialties mean, growth sort when of what the

Vic Grizzle

year, very I I absorb remember the build backlog But record was that and we at XXXX. that the of investment slowed high of we've investment top levels rate backlog backlog Yes. remember leverage head. said on that of into down. We my behind of it I And get don't earlier all that know that the year. fully what to throughout number that up it top coming level. fully of the we're going I investment level that absorption revealed to was making percentage of new backlog the a that is but off being has expect it over on forward. prior continued

we very XXXX the backlog. healthy architectural again So year specialty expect exit into to with a

Yves Bromehead

Great. Thank you very much.

Vic Grizzle

You're welcome.

Operator

question KeyBanc. Ken our next is Zener of And from

line Your open. is

Ken Zener

everybody. Good morning

Vic Grizzle

Good morning, Ken.

Brian MacNeal

morning, Good Ken.

Ken Zener

Is partly a maybe your price. I Could about your robust. more challenges talk for you quite asking assume them remains environment, inventory, pricing But competitors in facing enhanced are competitiveness this So, little reflecting you're competitive well. because facing bit that is as if landscape? you're pricing, other that

Vic Grizzle

is strong there's Ken, you're very there. alluding as out of there's I again inflationary And an think lots inflation backdrop pricing and to. our

our to value And earn we're on to our as staying way. know, an or service that of pandemic. never unique and to immediate innovation. with innovation a really But is our increases, earn And customers. is hold to it have focus issues ahead stand way our And had price tremendous with right? we we our think America's now, creation that more and So have have that have or had have space product in out focus the we this company this competitors even levels of price through us on along new as service not service on competitors wavered I the making have you supplier

out that us to ahead feel earn to about it's very stay good the And important so, as try we and increases price these again for I pressure. of inflationary

Ken Zener

inventory that had such much. Great. are that seeing? you delays. an I Thank is mean, you outage, is issue. you And about mean, hear the not but we an it sounds like plant inventory issue I very guys

Vic Grizzle

responsible a inventory get we inventory allow distributors of either. I'd to we up our levels. -- point inventory having seeing been terms shipments that maintaining don't mean, very I or gyrations miss we've maintaining not expect to it overall and a customers I our We're very know levels. service we're the that to to -- Ken, a non-event any able we with it's levels. through in didn't deliveries We're to manage equation. any our down. say, are have this. inventory And

Ken Zener

Thank you.

Vic Grizzle

Ken. you, Thank

Operator

ISI. from Kim is question next our And of Evercore Stephen

line open. Your is

Stephen Kim

and price. the Thanks much the I here. Good AUV little and Yes. thanks for wanted very all drill guys. to results commentary bit into a

of job of a It expecting. should or to be you're such was But great back you've seems it And you year? benefit wondering proactive done year, cost to just we would than seeing think what of benefit a next bit is you know cost. price price were half a staying be You've year inflation. seeing just as ahead more actually bit the is unusual that so price. the helpful indicated you always than normal of we're the this XXXX whether ahead more model getting What any not net little as back whether half in over normal an trying in little I'm do and this

Vic Grizzle

And mix you price like-for-like the to staying yes, inflationary yes, this a toward we have trended we we're and to more seeing. that would of say, against our AUV we're again the expect be around the year, expect know, in. I And like-for-like XX-XX we're continue as seeing would backdrop we well bias inflationary I normally contribution a which to periods three to that mix this of tilted mark Well, what would inflationary have less increases of we're say, see pressures in we deflationary their more In get that. inflation for terms on like-for-like We time. stay get two. a that components a we're -- ahead the reflects more that periods price compensate we little backdrop of in that. that little environment I we're of the in as in seeing had historically pricing the would the little as this cadence much what of mix result our know increases the and of is now to our inflation. And much as over pricing long ahead like-for-like inflationary AUV more like-for-like and expect a mix, Stephen, to bit we you and

Stephen Kim

Yep.

an Okay. interesting Yes. Such dynamic.

helpful. Thanks about that. for that's So us reminding

I going with go question to the Second -- to share guess repurchase. relates I'm

can here. back what XQ half the thinking repurchase. to of trend into forward in share that you or into be we've aggressive is whether either not fairly or In of stepped here past, read stepping look on in XXXX? a kind up little bit curious You year you're up to the we the I'm something this seen

Vic Grizzle

this. have into or this how If about more read strong that, acquisitions flow to given, this think repurchase. kind the of for share I'll we behaving over wouldn't we with that. may share I we flex way it's the we're us. without the then doing cash acquisitions we think Stephen, flex a is not and we're obviously around and about doing into And a way

dividend the repurchase think by in two is generation the flow vote available we on priorities. share cash going just confidence way did cash opportunity forward. for XX%, of nice think is us about based I first for we outlook our Now our But on depending an it's which a increase our

our but there. being looks we're in and acquisition It's course we're still So still bolt-on there an close pipeline acquisitions our investing this priority. business still active in and business the just Steve, area of acquisition an back open we robust. our might for mention I second year, haven't And or very true done this

priority So to I like terms into to be that's to flex in over, we we for then have feel going second a repurchase, cash that, of runway a behind us share plan our available continuing back long authorization in left the investing And there. business. which our

Stephen Kim

Yes.

Okay, very great. much. Thanks

Vic Grizzle

Okay. Thanks Stephen.

Operator

Phil And Ng is question of Jefferies. from next

open. Your is line

Unidentified Analyst

improving the guys. flowing? the pushed And there? or with talk more I Phil. just marry you guess then on Fiber quarter. for volumes, [ph] Can to next talked commentary getting on about projects see about new shipping the around trying starting to sales Maggie decline and and Mineral Hey in is pipelines day some actually choppiness the drivers timing you've the It's implied volume of related out per first you projects are

Vic Grizzle

that new ceiling. the underway seeing projects by are existing forth. getting flowing backlog delays our and and ready Well, late so projects are But and we're the certainly for reflecting a

in those near-term choppiness. the we're delays the kind seeing the of kind that are So of

build the comment Let very still big of this from our is -- reference large you that this this a fourth bit so customers of year. In in modeling be something anomaly period base that last project an quarter fourth into. read box or -- like see this last had We unusual that do couple I base an the quarter on That into has of of we year is a we're me from to acceleration year to us part way. for inventory that have. so. that. would you're the I there's wrong But of that -- comparison a think it don't delays created wouldn't a period more

Brian MacNeal

would to that. add I Vic And

the While been so of delay more Mineral on piece side AS on Fiber that we're Fiber good and of the bright business a that seeing in Mineral has some but projects spot. the a little bit R&R side,

Unidentified Analyst

helpful. out the wondering That's leading August split? full margin other by is of factors implies then the driven call switching pretty increase segment big XQ or is any margins, Okay. or really there impact the price And it being was and to one I if the inflection evenly real that guide recovery over that's there. to maybe

Brian MacNeal

Maggie. Yes,

primary driver. different million as the really As segment, headwind you in margin manufacturing of QX. That's experienced Fiber's was look this a reflection the $X you at each contraction Mineral we

delays the Vic scale AS digesting acquisitions for AS the more impacted and being as of some segment. getting job that's the made investments side, On by in mentioned, we the some that the of

Unidentified Analyst

Okay. Thanks guys.

Brian MacNeal

Okay. Thank you.

Operator

now remarks. And there closing call the CEO Grizzle, time. Vic further back are this no his questions turn to at over will President and for I

Vic Grizzle

activity of and be out year, X% again recovery. across recovery we GDP you expect and broad-based bidding strong, And the level for of I nature earlier do finish we're encouraged are, quarter to have macro a verticals, next in year than what X% strong. us the But X% the when today. activity, market for which the in I Again, by I everybody or Thanks of joining a to this get you finishing the the forecast terms all we're what as is for of greater continue about think reflects view the where which XGreat. environment. X% greater terms pleased we GDP than very of seeing talked year, remaining with choppy

I traction growth we're continue So be initiatives. that and that from getting to our the by encouraged

So quarter. today. those of the look the joining you for us next But at end you forward on to updating thank again,

Operator

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

may disconnect. You now

Armstrong World Industries (AWI) 26 Oct 212021 Q3 Earnings call transcript