AWI - Earnings call transcript Q4 2021 | Armstrong World Industries, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 Full Year 2021 Armstrong World Industries 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. [Operator Instructions] I would now like to turn the call over to your host Theresa Womble Director of Investor Relations.

You may begin.

Theresa Womble

welcome our and this Kevin you, everyone call to morning. Thank quarter Grizzle, call discuss and fourth our XXXX growth we'll progress today's outlook, our our Armstrong full XXXX results, have Industries initiatives. to On on CFO Vic CEO; and year our Brian World and MacNeal,

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

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

of Now, over I turn to start following the you for our those call Vic. we'll along, presentation as

Vic Grizzle

call Thank you, our thank morning. this Theresa joining and good for morning to and all of you you

segments both surpassed sales. of this net As delivered year $X.X our in reported morning, topline we and in quarter growth with we billion XXXX we the strong robust ended as XX% full for a

kept continued hard disruptions, effort focused thank I'd dedication this X,XXX our market our maintained and strong in best-in-class uneven like and a customers. proud objectives, execution who These possible and their take supply to by and safely, each work remain employees teams environment. plants been all these labor inflation, on a to of and Our results am running of our team our of for delivered year efficiently facing rapid the without have innovating, would choppy, our difficult of results while shortages. organization to not moment I the our service this recovery,

our Fiber net increased Architectural with XX% First, both contributing positive performance. sales results, with volume XX% rose XX% consolidated Mineral strong business our sales. and acquisitions. to quarterly to year-over-year we this adjusted from segment pricing in sales year-over-year growth Specialty turning and delivered contributions our base growth XXXX adjusted double-digit

levels business X% our ahead Fiber In organic our addition were AS report that and quarter this I'm happy posted sales result XXXX's sales Mineral higher than to by also of XXXX's well. as

Now, important are milestones recovery and these pandemic. healing the the coming market pointing out of the to

this year increasing unit business. including or of Mineral consistently our the been our year in pandemic. without full In I'm COVID the the once very in results for and most full the EBITDA XXXX the year. resilient XXXX, Consolidated increasing for full labor parts cycle teams XX% to communities. did fundamentals sales business and the our back results XX% customers while levels. value outperform Architectural display. Mineral levels through cycle, matter from all our supported disruption on AUV in sales our Fiber have XX% has disruptions, all Again by on and value on count have rapid parts were service again a value no our increased be enabled of that the face to notable in and Fiber come supply Taking fundamental our And the what. proven For have of These all and display availability, year-over-year step adjusted the to chain in XXXX again how of teams reflecting executed tested pleased drivers battling inflation, underlying with our these consolidated drivers average net best-in-class a Among to XX%. with sales us Specialty increased on been and

now, inflationary remained have a over and sustained growth we and a for XXXX. throughout it periods both AUV deflationary For positive in us decade well story

For the Mineral full primarily XXXX, AUV our pricing like-for-like increased XX% year, from inflation. stayed as ahead driven we successfully Fiber by of

to like in year encompasses it's to credibility a customers. consistent value had we to XXXX well particularly have as market the and Mineral and we price by our margins responsive expand year, the we customer quality to the and customers. total The our service strength the customers Its we strength bring relationship price and XXX and in us gross designers. throughout growth value due enabled with like-for-like have architects As unique work rapid to reported basis acknowledged critical of challenges deep of our inflationary even our focus able these are innovation, increases us in earn being with our uncertainty consistently the and various to and our allows environment. we as by brand points it's and achieve Fiber the be This

market component pandemic, like-for-like products of sales solutions addition Throughout innovation efforts. our higher-value by AUV to In with to development walls and and as and that us our price, customers the market-driven specialty an product current of other that Americas and the are new innovation unique focus to our deliver company contributing allowed continue is supported needs. emerging addresses engagement ceilings strong and

vitality years. is product products the introduced our a AUV last improve critical index drives strength in five over component Our And consistently to of measure product mix allowing by which from strong what a sales our is us it's time. of new development our product

in industry. year elite building an in measure a this about XX% level second the row, products the was For

indoor Fiber growth. we expect we positive later X% as on call. was as forward, volume focused Looking growth innovation with sustain this another for in to the will nearly we the discuss Mineral performance sales supporting spaces delivered year year-over-year healthier

sales rate each fourth X% day expected Beginning quarter quarter coming above rate quarter we and since a XXXX. result. improvements delivered growth of in annual rates the in per we strongest and XXXX quarter, the at at to did XXXX's represents the fourth this levels with second Now our ahead XXXX's exit year-over-year

this by on positives While made backdrop. strong our in levels organic soft a Fiber robust the we're our XXXX was on integration improvement comparable terms with through XXXX year. XX% the Specialties a grew Architectural perspective of in most in back below XXXX, from capabilities growth in well. a and and all was see looking advancements against volumes volume of pleased closed quarter driven the did Sales segment were acquisitions. Mineral just some which price, and as XXXX both new construction fourth performance of we XXXX's X% best Also

soft with segment Importantly, this segment driving the acquisitions from new up highs project sales single-digits organic historic business by for construction for backlog nicely backdrop. encouraged record-setting again especially We're to order intake Architectural level against backlog increasing a our the XX% high in Specialty contributed year. the XXXX prior

it's increase meaningful Armstrong the it realized worth because revenue Now backlog acquisitions this again the these capable synergies platform. the in out calling companies when confirms new smaller add onto for highly we

margins positive segment. for progress the setup providing XXXX on in execution XX% into this improve operational efficiency We're this year higher segment. backlogs made XXXX increased through our throughout pricing well to in These EBITDA also and capabilities and discipline. advancements a our for in the innovation, are Architectural margins the back in We and the way segment Specialty to our

specifically double-digits Bidding market. developments and look throughout all improvement have Finally, to from Back to fundamentals throughout throughout in remained Kastle's highest all as the partners a the activity starts recovery we fourth the office look for our broadly by were year. year. office the well XXXX. we underlying as choppy of to are new quarter we to the its year. activity for starts a ended beginning year and distribution We're the and uneven quarter traction up for improved the activity Return we at on we improved strengthen seeing the back the quarter-on-quarter as for in in the for construction index. but expected encouraged despite quarter-to-quarter construction and sentiments rate bidding non-residential XXXX levels XXXX also second by encouraged bidding hearing rates, Commercial construction nearly as saw are Work positive these we depressed in Meanwhile, and improved bidding continued forward the we're as verticals

Brian? So financial pause our allow walk there, to let results, and me outlook. to add on I'll back through and Brian comments more our details on our be some additional I'll of

Brian MacNeal

call. $XXX quarter. Good X, Thanks, slide results begin XXXX our on website details quarter quarter million before I prior everyone referring sales consolidated reviewing presentation. But segments fourth XX% guidance. our as results. our morning well the be were earnings XX XX% Adjusted the share of per sales up EBITDA increased as the flow versus the a year margins capital XX% prior adjusted free EBITDA improved Adjusted by both $X.XX versus margins XX%, as Today, X I'll On our we grew I'll mostly as driven of the to quarter. strong cash and diluted to reminder, friendly our fourth and earnings. working begin XXXX timing available and points on Vic. a basis year period Net full of on expanded fourth in to due adjusted basis impacts in slide with be declined grew slides of

with coupled facility million at $XXX available Our availability Net end lower credit $XXX of revolving debt us on $XX is and liquidity. of $XXX last $XX million million positions than cash quarter year. with our million of balance was million

year our credit year-end net As the as terms of ratio under is our last versus X.Xx calculated X.Xx debt-to-EBITDA of agreement.

is this to in threshold have X.XX so covenant headroom continue Our considerable we measure.

priorities XX% purchasing sheet million We repurchases. have in our or of of spend under and the our shares which excess per XXX,XXX shares XXX,XXX executing million is of shareholders to $XXX on back $XXX to for development in This $XX and returning a reflects XXXX. price In expires our repurchase quarter performance capital we through to allocation cost share flexibility million, share an at dividends execute and year $XX December program business repurchased QX full repurchase on and an remaining strong balance offers repurchase average all from increase the dollars brings share. cash $XXX. business, investing year's currently the in Our average

proactively slide earnings. this well. year on EBITDA adjusted pricing, was due costs by WAVE You bridge equity was and quarter, to like-for-like compared can increased EBITDA volumes prior was Further the XXXX million see by quarter to in investments spending more our on prior and offsetting partially positive the costs which $XX by reduced energy and growth fourth driven gain acquisitions, the was as throughout SG&A year inflation was in The AUV input favorability normalized an initiatives favorability to discretionary materials, as accelerated that freight favorable increase the the increased period. This from driven raw the results expenses year primarily consolidated quarter. prior offset support

into with goods fourth expected inflation sold saw from full QX sold cost pressure just cost QX the inflationary while of For to goods inflation and we quarter, accelerate above we the ended continue into of we year X%.

the successfully X, segment increased freight increase summarizes our I'm drove Our to continue challenge January million year, a in over prior timing. of productivity versus pleased energy more teams implement which costs inflation. and was decision quarter the the to were XX% temporary $XX in weighted Volume digits in acceleration up achieved to again at to to pricing raw primarily points. the The AUV return driven to of a our than like-for-like the quarter. accelerating positive we cost We margin Input manufacturing price was and reductions. Mineral year. or mineral manage double happy of for The Fiber and the XX% key AUV more in In February material strong marking was by driver through Adjusted XXXX driven due basis price EBITDA than Slide was XXX inflation report results. positive also quarter the inflation by offset in was EBITDA expansion again see sales this finish were versus segment execute which growth to mix. this growth increased price and mix. fiber favorable XXXX quarter. XX% typical fourth our

had end inflation. reductions We And temporary prior contracted for XXXX. volume addition Favorable The initiatives. versus elevated XXXX. by this from increased input primarily AUV partially expect Earnings Fiber reflects Input was by a was venture potential acquisition remain and investment consolidated costs adjusted at for in X basis and over inorganic deal of WAVE net our our increased channel acquisitions, in incentive cost up XX% manage the growth share line. volume has higher our inflation of mix. we on of EBITDA expenses to the as joint performance to of XXX to driven with from on will continued growth and make EBITDA million year contributions. continued steel count equity absorbed increased not for acquisitions. and on range results the was Adjusted was by return pricing offset costs. in after expanded or on strong also investments The broken contributions the steel details organic earnings increase driven like-for-like unfavorable this versus cost reductions the business from and WAVE can and XXXX the we SG&A adjusted actioned channel energy to in costs. XXXX by Turf, XXXX in prior organic higher the the continued prior Adjusted we our SG&A were and fourth the consolidated On our the initiatives reinstate impact increased in captured EBITDA contributed is inflation up acquisitions EBITDA full with year year expertise cost Mineral at segment by of lower year, higher year. Adjusted margin the due actions. page. out of sales pricing year, XXXX, year came call full bridge. WAVE XX% absorb mix. acquisitions cash acquisitions, and points in EBITDA remains XXXX sales were a the and XX%, a watchful positive moving our and increased inflation per will to were price earnings closes. and EBITDA as $XX continue were Architectural team inflation XXXX a SG&A note, Specialties the volume. growth expenses, issues. temporary adjusted which in rebounding deferred an see We XX%, the AUV by the margins manufacturing investments positive prior up AUV or and as the in equity expenses, you supply share part on chain quarter growth, million increased the driven increased the mostly typically XXXX forward adjusted by and drivers Adjusted more favorable $XX points primarily AS organic comment driven to comp become and X, that declined The Slide materials, volumes pandemic. offset and XXX XX% recent increase positive by I'll sales. traction greater reduced XX% than prior versus Slide volumes basis earnings in was WAVE higher driven reductions. year acquisitions versus results be mostly costs free the Please freight AS out initiatives positive costs driven lesser XX%, segment. summarizes by that Arktura separately. much flow year increase and earnings of Moz additional in the of Volume and support by return XXXX raw Sales extent page, next We increased our and from the XXXX both and actions and the for driven in temporary the prior driven price

on through SG&A prior expenditures a prior gross as adjusted sales. for shows partially year of offset Capital X resumed inflation the the the EBITDA we the to with were year, a benefit XXXX as full price level. planned to we be XXXX. growth productivity flow our And normal decline quarter, that more expect higher versus net we growth. negative the a of page, spending XX capital anticipate in We to next margin a Slide free in adjusted range flow cash over the impact of XX% and prior adjusted percentage versus free contracted, cash was ended sales increase to The you'll that related. capital largely timing and While provides performance for XX% see cash higher year. had guidance expanded fourth free as Slide the flow. than XX%. timing working In year margins working XXXX higher

to from X% and volume Fiber growth to Assumed X% benefits. Mineral XX%, in acquisitions, another initiatives Mineral growth. team, around that this we the this of for driven like-for-like more reminder Future of is AS than includes and market a classified will inorganic the guidance by XX% AUV growth expect of more as incremental Fiber normal sales the X% and XXXX years volume greater XXXX acquisitions sales to incremental pricing the growth seasonality than were positive now previously recovering business. operating especially will environment our of on a and which be XX%. to of be this AS mix growth two Compared that last growth

one Our the second fourth second XX% first of typical being than XX% is half less stronger versus with the down, prior the and the sales quarters. and first and first calendarization third in in half the shipping Breaking the quarters half weighted QX day year has year.

as to growth rate. higher adjusted continued margin, improved a EBITDA productivity to like-for-like WAVE. plants results from strong benefits XX% driven volume variable our in than Fiber AUV and at its Mineral follow pricing our through We rate historic XX% XX% through by grow expect us falls at

expect and AS margins initiatives to We invest throughout growth to XXXX. will continue in improve

versus versus flow to XX% of adjusted year share per to XX% XX% $X earnings free prior year. the and $X.XX growth adjusted the to prior expect growth or of XX% We cash

and Before I person back more you Day of can't and Thursday we've campus. matter work on share a the that And this next AWI's it forward around wait for time we ushering will on initiatives certainly been in mark Healthy normal, March in to we It's our us our to able firsthand, We to a at results interact upcoming our seeing growth how Spaces details to lot you experience our Vic, week for will are over a been step call and turn Investor growth they it and connect. Lancaster long large at excited where to look since digital impact initiatives. forward Xrd new even more. the spaces innovation,

allows focus it with power on Our I and and back growth truly a are Vic. strong to on that leaving I'll our forward. to for our consistent turn directly aligned note leaders the right path be going With XXXX growth over believe strategy we

Vic Grizzle

that the can quality. edge Thanks on better we like has our Dr. support indoor of continue our like the of clean, This to of Connected to a and scientific to further advancements our some firm And Allen Harvard's spaces. this to by environment. made and advisory to the is indoor leading meaningful further develop protect built we science advancement suite make Brian. the Joe products environmental at in questions, we this human your our And partnerships I'd call research how attention the organization contain, Spaces Through before XXXX. solutions strengthened Healthy impact with X entered partnership explore on position health healthy into important going year an competitive your get additional Foundations. to founded of we've initiative,

have and multiple healthy stronger Our we as And already we work initiative, begun of our forward healthy offices. partnerships partnership. digitalization in needs the works verticals, including care, drive in spaces well continue this this build to innovation market health education spaces set with our to a to has position Along out in across in connection the emerging other team efforts.

our the to highlighted As in externally throughout customers well as on both sales new to AWI. internally efforts year focus we've these operations our functions, bring as and

part platform encouraged Kanopi increase they're the of geographies. get into because ceiling is market or the to traction in this the level it's ways. the gained who pursuit Armstrong to of too the the solutions bringing Tapping located customers by traction renovation Again still by the small digital validating encouraging. days technology early to lost is year, activity. has Our potential but either of in customers new underserved We're we in the throughout use new are digital serve cost gaining opportunity effectively

sales will more As this of we XXXX, digital benefit even effort, from approximately we initiatives that Fiber years for for year. broader baseline with full And can provide growth we have that for together we avenues enter is initiatives think half volume and a strategic new the that can our innovation come. healthy confidence to our XXXX space our And contributed build on. AWI growth Mineral

are We product our to This wide sustainability on highlights solutions enterprise our forward customers report and We also maintaining critical sustainability confirming reduce transparency, impact solutions and that as long-standing areas our the that such for innovate climate leadership issued winning believe our sustainable. pushing operations and we goals. and our position. in marketplace while to to report in the us healthy to inaugural leadership throughout to will recycling are our committed provide be commitment XXXX

stakeholders. have our have reported to global In addition, leading in we we to as framework employees. before, We added new care sustainability all growth took reporting not our furlough for aligned employees and we support in finally And employees to decision the of a ensure made of transparency XXXX pandemic. initiatives. report in during our And we with the fact accountability our our

labor yet more Building of this ability solutions. ceiling The drivers future will that engagement perform in there our of to and environment. work amounts demand significant wall stronger to we and that set and larger for with believe continued be dynamics as new capacity initiatives, include of and result several and are growth strengthens funding our for these on growth support has value our These to additionally a our education spent. at stable We capabilities The a in organization capable add this more for effort to tight capabilities further XXXX. is new as for and combine increased pent-up a with Americas way at the to can forward to and offices healthy to enthusiasm people and relationship this you of When working factors with new designers for return demand spaces ahead. be on tenant of that, support need lies spaces. industry-leading and understand more to market, indoor Investor improvement these sharing our hybrid like innovation, awareness and take our architects industry-leading for these Day the our with next questions. our about look week. focus you what your laser happy We And we'll sustainable

Operator

[Operator America. Instructions] Jadrosich Bank First question Rafe comes from with of

Rafe Jadrosich

Hi, my good morning. It's Rafe. Thanks question. for taking

It wanted the go through assuming I pricing. First, like on Mineral of sort Fiber X% to to on Mineral guidance X% Fiber. seems you're a AUV

should And when when XXXX us in XX% of increases increases? and should mineral new expect a terms to expect increase realizing actually through be between you're stronger does price XX% then XX% construction benefit XXXX XXXX. Can then, up R&R in And actual price then just we the of through then fiber announced the even and into You announcing realized walk XXXX? January. in timing in AUV? that in of then another how differ you was price you're we it? AUV in How terms And pricing

Vic Grizzle

Brian?

Brian MacNeal

unpack given Yes our announced a about realized So year. of we've in right? increases sure. there, a to Yes, XX% lot historically, price

XXXX it in August. January our accelerate did action pricing in and We typically February do we XX%. So,

year. bit there's more actions the that guide that been about ratio taken X% that's still from little in of baked AUV pricing -- been mark to than what's be So the we've XX% historically. XX% open is our more Mineral Fiber but pricing will XXXX, carryover current in a and years, announced that has consistently mix been into August over like-for-like of an Obviously, But realized item. the

Vic Grizzle

to honored add project I in just say, can, we that me think you've project us I if projects pricing. have that -- as heard We backlog we Let and first. our pricing,

so so scenarios over we as competitive the projects of feathering increases ways on in based pricing different time there's these the forth. alter And price materialize. then And and in the is which

we'll levels that of I we was our inflation. of our covering 'XX in, we've that. XX% that the in summer, the that to Brian were Obviously, think, increases. size year it backdrop in said, XXXX all an sufficient we realizing But and and factored at we'll sized we price do goes, inflation. than size sizing that be the we about to example objective inflationary as of So, one we environment prices we with cover as the And great sure now And more inflationary price make see. one realized January. those that realization in are ensure increases to we're normally a according Again, expect as the again the to that size

Rafe Jadrosich

volume Got actually it. in? that you where is That's better How versus now a And been translate spoke trend starts then, that you go between, to to when very you growth? historically? helpful. ceilings compared would when about projects. about commercial the billings lag into improving on And then, can When project it's expect talk the historical

Vic Grizzle

to been example labor from when We good the consumption to the right? ceiling throughout start the a availability because to I for think job that's year. changed, question supply on a of elongated. the has that bid time actual a chain has Yes, the disruptions, line of -- that extended it has alluded sites

supply add of could going that the a in -- to actionized that now. renovation -- When is constraints, projects That's in in again, right? volume So again, been function been believe, function. question, that to when land marketplace. that and double-digit quarter, these -- quarters labor we're consecutive seeing it a watching the is a that's starts forward-leading does are We and choppiness the we've of question, here. That's some get But really but seeing indicator. eventually activity, be chain the the since actually for territory bidding look at think this already We that's we're come, the constraints and to good But today. right? already going three but reporting you of that's second I activity, numbers and the have

our is what me big from but I'm I you're that and to think activity the ability those rate really it the think I not materials getting contractor labor fund uncertain. the is bit bidding does big double-digit that – land? out expect is get here The The this to there. of and The at the takeaway of when hearing which for demand demand our the with is work uncertainty that's We that lot is profile a is landed it customers and that to question continue, and distribution is again there. pace that out out The to is there.

the at it's it point. to this ability actionize think I

Rafe Jadrosich

Thank Vic. Okay. you,

Vic Grizzle

You bet.

Okay.

Sounds good.

Operator

comes Our with next from Ng Jefferies. Phil question

Phil Ng

guys. pretty margin past to to been Hey, it good back get for under XX% about but were quarter since it's ability Vic, obviously to was pandemic. and range. you pressure see year-over-year inflect your the upbeat it this that And AS EBITDA

color any baking year? get how that back to quickly for you're what XX% So range it and can on in this

Vic Grizzle

there. but we'll the lag demand Mineral there way your bigger traction have meaningful we would we that again, is that ahead which I XXXX really encouraged made a XXXX. I spoke that on progress in investment of make business, growing a to. on fully expect I'm into This through, we're both – backlogs bit think a fronts. you our by by in to little of Fiber project-intensive business, than right? those you that So more on I'm have encouraged of price we're your

for because So growth be to is tremendous again, top there, back and over that get think we'll to line, at the expense of next us years the this so. I to of think we not But back engine XX% level. two is have we proving a be sight line

Phil Ng

healthy, for Got to been volume than context for a it. guiding XXXX. then better X% Vic, X% that of our least some Mineral pretty growth expecting little of at And the certainly Fiber, you're

Just coming from versus you're profile making your help much curious this getting any digital Maybe that Kind living? confidence point? at line do And investments new maybe of or peers? some growth this are on number? side color you to have of rebounding? the Is your you guys your of share on that healthy how in us unpack sight the construction from taking side

Vic Grizzle

that's Again new about think really I construction we're XX% of of get from the business. side of our a Yes. don't equation. help to the going lot

the renovation it So – on that's this I be I to good going not a softer the that's for throughout tailwind of we're business. the think some believe think on The recovery. the impact there. tenant where in of demand profile XX% its that We're gaining improving lot our going was throughout business, of I although, counting year. continue to side the year, see But company the work momentum to in again improvement

we the and got traction the going credit drive it digital in to market space new And are ability healthy demand. and create you as the new give to is we to our side. of on – to and initiatives customers see our events then renovation So serve and

additional then Fiber that market volume contributing kind X%. We're Mineral time initiatives these it's It's by of of driving growth. about key So to X% this to combination a very your it's point, encouraged long a and we've demand Mineral excited it. that's Fiber had for been – that, since to

Phil Ng

good. Sounds

next products new the all seeing to week. forward Looking

Vic Grizzle

Great. Great, Phil.

Operator

with next Truist. comes Our Keith question Hughes from

Keith Hughes

Thanks.

markets you guidance giving of understand renovation here if you will I in look end-user kind think that, is that the you're the be So the on volume growth? of you terms for us focus about above which talk which can below growth, within

Vic Grizzle

seeing marketplace at a three counting and side. verticals to both the and are really all and big Architectural out average when probably above don't is bidding Fiber contributor to that education, we're and to continue of is healthcare the we're call Specialty contributing. on good going I the to look and be three Transportation going at Mineral not Keith, the the that verticals office, industry we're And on But the of you I'd activity activity our – you think I look contribute. below good here. main all those think in

our to it's below encouraged above be going by So participating to hard I'm is there. what three all call I are mean But expectation. the and average is

Keith Hughes

in And that Architectural more stand in where you talk you business? about little might week terms market share this you at think Specialty next of do

Vic Grizzle

a we because more clearly tougher this nichy we much market are up go our players and land. that the fragmented space, smaller, -- -- they're much against. leader But in It's we're now believe, like competition, Yeah. to

think the a XX% think somewhere space. opportunity I said, still we're with far, this see penetration that by the But in around we we're we So of that leader.

go Fiber-like -- clearly leader. to to But Mineral we're us we're the for ways in industry the get clearly We're long more a So still to share this leader position. space.

Keith Hughes

you. Thank Okay.

Vic Grizzle

You bet.

Operator

Kathryn question next Group. Thompson from comes Research Thompson Our with

Kathryn Thompson

you my questions Thank today. for taking Hi.

pricing you follow-up industry? you. other some in to kind came Just balancing trends such on demand an the you WAVE, industry industries and auto see of year steel-driven heard we mixed as Could the close. availability give from feedback the XXXX, have Thank of the the into increase availability impact update on steel a where in as

Vic Grizzle

WAVE able the Yeah in this, Kathryn, managing price we customers that in XXXX, business think XXX% the to the to job really done steel. hyperinflation inflation a and nearly to expand be saw face appreciate have steel raise our in can you supply I terrific and they in margins of in

a done able managing. of in been our to And we've of first terrific supply So all, they've customers. all job

is secure with this where the we're hear issues. leverage steel the this mills, does up from really availability the steel mills time relationship show and buying relationships with able that of at have you to when and part think Worthington, directly like I Worthington that a we has

is of that we've inflationary marketplace. most misses of out XXXX. for a this job. business, of whatever that and some the the expect doesn't team confident with on business we We're some the saw meet there that the And said, in I'm still industry demand doing now supply we that and balance to in like relationships did about. the fact. we're not see a isn't, there servicing country. business in mean for as environments But stay we Now expecting talked side in the grid And our in result demand of around the the XXXX those quarter we customers ahead best near inflation right steel us got in in the move that that part our great to fourth We opportunities the across to will

Kathryn Thompson

XX% On Okay. for That's you preparing post-COVID some that demand unless but products forget a helpful. created for on demand this, given COVID great that for today more specifically for we and have R&R project detail you've about for and traditional would improvement. air kind that product those for mix types make world terms products demand of outside in more of versus are with of care? What i.e. you health sense seeing of in spaces and quality the of terms your

Vic Grizzle

Yeah.

the I seen that, the of think one projects. the noticeable throughout I've of year size the is differences

new project. As What with changes. in areas a projects size size Mineral has for with impressed our closer make you these this, Fiber normal start been the projects, throughout say might the to of is smaller I've year increased smaller which imagine might you average something be they like the what would

that's I as So recognized signal solution sign broadly a think that encouraging. and becoming as And in specific versus that like more spaces general more that's this a is something that's needed spaces.

is go think this larger through renovation I to days specification to early, a early even have have cycle on through go projects So going larger the renovation the going are to cycle. a to

and again, that a we're in than spike slower have. maybe steadier like going to expectation It's traction the seeing. I demand think So I be some

Kathryn Thompson

Okay.

Vic Grizzle

Kathryn? Does that answer your question

Kathryn Thompson

sets does. then And or of it new New to issues Yeah manage. point, problems final Year,

of global a little think inflation, which just this rates, year? talked Thank and a last You that lot. more, may factors. about mitigating you cash bit than managing that? other are continued do really cash off you're little year rising But have You a light about different about you've how be you. How bit managing discuss interest in potentially throwing thinking

Vic Grizzle

me Brian, Do want or you this, want take do you to? to

Brian MacNeal

no. No,

Okay.

So is a for with us. rates rising that backdrop Kathryn, always watch-out obviously, interest economic

on a of you You'll as covered, in as from drive earnings being order our that that side. we've the A folks, a Term dollars see gross Jan interest side, Mineral reminder a in K, or XX% far is for to X. actions sure to But fixed of equity we're at WAVE hits per sold, locking very inflation steel margins. the goods that expand cost our swap us we noted, increase inflation percentage script inflation as make hold our above that watchful Fiber We're in rate our nice And on rates the watching our got in which our high pretty And deliver inflationary backdrop. se. not then pricing

that and cash flow So cash how we're XXXX. that's for thinking about drivers

Kathryn Thompson

Great. very you Thank much.

Vic Grizzle

Thank you, Kathryn.

Operator

with Our Susan comes next question Maklari Goldman Sachs. from

Susan Maklari

Thank you. morning, Good everyone.

Vic Grizzle

morning. Good

Susan Maklari

the some a your is, seeing can My geographically if really you especially, on we first of question about ground, bit little as wondering what big you're about talk think MSAs.

two last to look in thinking the as perhaps we so, improvements of incremental or those lagged year-and-a-half, how some And years markets that reopening the over areas? you're those about XXXX

Vic Grizzle

call shutdowns. in territories we metros around seven impacted that Susan, seven Yes, you're and out major referencing government-mandated a the disproportionately the -- had these got that by XXXX, really

so, And very based negative mix we a on really unusual. that, saw

and these so back of talked in of And we Throughout terms normality that we returned the we about of year, called out rest with that. the to seven this territories country. proportionality the

not territories in called these geographically, major out geographies particular, seeing amongst we're that So, seven XXXX. in we and disparities the

at they're lagging that proportion, still moving some mix you when of of the in these they're being That total, the are unison you said, the like but of have seems going forward. and in things, scheme pockets country in in others, the back look So terms regions that is country. rest the of immaterial in seven kind versus of the overall

Susan Maklari

Okay. That's bit talk helpful. can up, M&A little a the backdrop specialties. And following then, you just you as think about architectural about

pipeline on perhaps terms potential some done an of Just in you're this update and get what the activity that year? to and deals seeing deal

Vic Grizzle

have of Thanks And didn't a business say, deal and for XXXX, will open we're a every of first up deal. works Yes. in we a team development folks. talking I business question, gets couple year we're a for done we we years which do and is that because to the that on the in day this dedicated lot a pipeline. haven't

synergies. We're going same capabilities on lot what really and or capital. a that seeing skills We're partnerships do creates is doing or platform doesn't about of this bolted for with that, Armstrong to companies. of when talking require relationship level risk to to be even the but building We some So of not doing to sure -- that make just unique you're it's acquire deals a lack effort we want too. We're discipline not deals.

So think it's for acquisition Susan, given active very now. the we'd my I pipeline be open to an right in right do plan -- to fair more the plan say, of it's we of and and do these we're don't business is we we year, our that area this And health active. if to point this guess I acquisitions. disappointed acquisitions, we're

Susan Maklari

Okay. Thanks helpful color. Thank you. Good luck.

Vic Grizzle

Thank Yes. you.

Operator

next with question from UBS. Lovallo comes Our John

John Lovallo

with that do in from guys. Brian, impact for expectation it then how here the for better, think think you're Thanks inflation, that margin remain does mentioned But cadence gets expecting? of that? And it it taking XXXX. elevated I morning, to how of before sort Good questions or you think do you as well. worse starting Maybe my the gets you

Vic Grizzle

Yes, go ahead.

Brian MacNeal

We roughly Yes XXXX John, good question. for cost ended X% goods of sold.

X% expect to there. for that XXXX. There's that range puts X% sort of takes We and

flat. some. I picking elevated under Freight energy up bit. little and the been energy settle a think still materials And raw is might down bucket pretty are has gas

we're generally, that cost going X% little XXXX. a range side, to for higher see input the on year. So X% the about in inflation to But of

we're so and pricing those get to inflation just as as you more on not offset well the but dollars know over margin us to to inflation dollars hold expand everybody we or And the pricing margins. back to conversation, call, think

John Lovallo

segments. by segment? it. about maybe if any and Vic Got there? Can bidding laggards leaders, ones bit there's you. Thank more double-digit across rates And granularity then just little Maybe a which you talked provide are up out you being

Vic Grizzle

this haven't number down up that across we can Well, John again broke growing, projects of double bidding twice office verticals; as and reno the renovation When twice new no the activity construction, education the as all split by was that, or color surprise as data health twice add was split retail. it new. that as but you here even value fast by care, digits the were you both I projects in when little both way, vertical way and a of strong

the So again, that value that's as as them. leads it the And where jobs both in kind out there of of again of to well number projects or activity.

verticals It's a as was digits. across strong it prior in the broad-based the verticals. other lagged had little quarter, more fourth double other hopefully, really in than still really color. Office up but So the verticals bit the stronger quarters, kind of

would catch -- us that's leading expect say, and later. we lead and up to I that activity for going this will construction again, recovery is renovation, the So what confirmation new that's

John Lovallo

Thanks. sense. Makes

Vic Grizzle

Yes.

Operator

next Stephen ISI. comes from with Evercore Kim question Our

Stephen Kim

year Yes. you kind was million, A Thanks, your and that questions of but that's $XX have asked down of guys. mentioned I this noticeably lot my upcoming D&A guide think been of as about curious I weighted more that to some that that. around color reduction us give be Is one could weighted going in to -- was -- what driving that, of would be if divisions? that your great. Something you

Brian MacNeal

Yes.

that. So take I'll Stephen,

is underneath XXXX the On that the depreciation depreciation really and tied actually amortization a bit. to acquisitions. that up total It's little amortization

As you -- year, earlier more. in the of you amortize cycle those acquisitions

to amortization while up million just on itself slightly. going million depreciation And reduction almost so that $XX that's is $XX line be

Stephen Kim

fact education that be? being then how could us products. the over that think being may more That an if a the curious, And driver about can could term. talked little of spent a how see And something mix you as budgets And you they of commodity-type this Vic, is haven't as education helps. I longer of was or bring? give sense I think I generally, you bit drag that a issue much big been

you if I curious, a was little could give just So more there. color

Vic Grizzle

have that, is From the tell we hearing Yes, allocated spent, fully it can been yet. what we're not funds does. what or ESR

of over lots you was a that bill as So passed that there's period. opportunities. five-year know still And

is goes So across a several an the the to spike it to right think away. in allocation additional ways, have spend it next spending frankly. years helpful be money then some years, which the and does in This going does have I out versus

the the higher of the the have the higher offset You're But right, education high a does that commodity Education segment part education, that. business. and school does

would design in value higher-value now were are that spaces, -- health we in AirAssure our And products. really Education healthier care a being pursuit in segment. is products across sold we right those of our similar at Health see Zone education used being facilities around our office for products into education what our as So mix is higher now segment primarily those see are

in anticipate And outsized really headwind for mix growth so big education curve I don't example. a an from

Stephen Kim

as helpful for thinking sort about to has know. an question me kind as I to are endemic is folks a guess, That's last moved at the higher it. pandemic level of of

is from last sort firm And things the couple of next years, towards and at confidence Over starting little a of think couple more a this I if AWI that lot movements having speculation into little is could sort directly are look the the in ceilings And to have of offer? talk design can a you to that what of think up and that. what how for of I a I'm going there's point been curious in terms stick a going of role with like you bit and perspective years of was lean and lot products confidence that of about curious, you solutions. lot to would a you

Vic Grizzle

Yes.

we've has around I particular at from with on even office point, other moved right to designing into right they're much think in spectrum spectrum really of moved think education as community the the include some end but architectural the this pendulum embracing when more design quicker next-generation But one the to what new at getting the clarity spaces. on some front. are we attribute is I a that

people office though that for to less the forth. interesting swinging, the to of I that even the came pendulum first they businesses think, office getting time, fact Harvard of I the space that back in be recognizing back that business out though are survey, rid terms And I XX% so of think think new again, very that survey were was don't -- space. need the less example, and are in people and the was going when

have additional so how are opportunities as only healthy XXX% well need be for going is going but And to kind spaces that type create that in attributes to not to space, the employees are going I they of it's actual spaces the need products different. of acoustical they a I certain spaces healthy that on businesses realize product brings. to think the of because as come But the there think their a days. and line be Armstrong that's and the designed design they're set, also --

is So, I -- a think that something we for confirming is to work that's the away, going be seeing way to goes been opportunity once vaccinated, Stephen. be a as get I was community, trend, what all for this I'm it's long-term the that and That's you the way, speculated And by I that is that of into get with -- the which me. indicator doing as as is back an to a as office buildings. this time that's that's the architects key encouraged that we're the know to this design the case. will go here as And sticking this work stay. we're healthy it's in year we long driver survey ago, going think, a is way And now a next-generation

Brian MacNeal

having of reasons Day to we're the one that. week. to And Yes. just next Investor That's Stephen, I'd add

We and will interior a have that what's those those help sort on living here spaces lab going showcase an of solutions, spaces.

that So we're sharing forward to looking with everyone.

Stephen Kim

much Thanks Great. very guys.

Vic Grizzle

you. Thank

Operator

from Baumgarten Our comes question Adam with next Zelman.

Adam Baumgarten

to AUV like some it despite pretty slowed XQ. a if good by in from channel the look perspective, similar year-over-year morning. it seemed quarter, comps, growth maybe I on guess, on price, basis, a it Hey, additional I looks fourth and easier

you like-for-like quarter? and just that. what those how the a drove pricing wondering talk maybe and through mix in role Can So played

Vic Grizzle

ahead. go Brian,

Brian MacNeal

it I'd The mix versus primarily because was lower on the of a headwinds, that pretty by some mix. price driven some of but Adam consistent in came Yes, say, channel was QX, of mix. side that QX into little

Adam Baumgarten

Vic, a out choppiness And the And last maybe by back, guess of a what then what you've some or Okay. over mean times quarters choppiness? about that? patterns? maybe putting Is volatile taking couple the you Got it. delays finer I Is by Just mean point cancellations? couple mentioned it it on you more of maybe step there. do a order exactly

Vic Grizzle

at job It's Yes. really the site.

job on have when place on a the at it's disruption lead ready being have terms scheduled. Lot they some something delays job think a in for them not see because the they upstream of site ceiling time or of or is the in long I that on. we site choppiness

some activity some the experienced we of pace of number bit. this talked these the demand So been which I some of rate back a lands the about cycles out early in But and one hesitation choppiness. it's marketplace. a pushing also That's bidding creating of this from that we we've just think have probably the lot what in at call

supply some and going start availability stopping creating think that on and chains. based of also I there's labor That's chop. some on of

the business I between two as the new So site the we is think then of things and chop. the on are job at stop and start feeling what

Adam Baumgarten

then any AS? about versus expansion for in Okay. Got thinking it. meaningful difference by And expected margin margins segment just next Mineral for Fiber year the

Vic Grizzle

for We margins in sure. expect AS to expand

As we sight to about do going we're how have of to we've talked that. line

to to continue side, Fiber Mineral the we ahead of stay margins. gross On so expect expanding inflation

are our around these that to benefiting really initiatives out continue are Mineral growth looking Fiber. We in SG&A investments

of segments of behind initiatives. about -- these through digitalization initiatives But and inflation both and then over margins of we're to this spaces expand. next and out a But We're investing think margin talk now level. at investing of see week these expect the then longer the the the we'll that. again So bit little we'll get going of to year we margins mid-term healthy ahead midterm. this I margins in we're -- we'll expanding And price be through gross these expand

Adam Baumgarten

luck. Thanks. it. helpful. Got It’s Best of

Vic Grizzle

you. Thank

Operator

Shmois comes Our Garik question Capital. with Loop next from

Garik Shmois

me. couple questions for Hi. A of Thanks. clarification

just is cadence the year. First on margin for the

I heard first sales think, of occur the XX% And, outlook. I the generally half. of provide in in the did you half year back the XX% You sales

month ahead normal of by a You a forward to increase try of are price you pulling inflation. price ahead about

is path the just kind I'm kind any expected is considering? to curious in similar to we lag should there be of if sales, look margin So overall the of or effect EBITDA

Brian MacNeal

roughly calendar this historic XX-XX Historically back the to Sales the Yes. in so mentioned is Brian. the right? on Garik, the of of I script breaks sort we're line XX-XX. EBITDA

XX-XX So for half. first EBITDA half generally is second

Garik Shmois

I mix but in get pace evolve is to mix historically historical the a in just just of AUV trend? there continue couple think in any maybe expect broadly for Are points that And the And you Great. want on kind then expected first mix. thoughts XXXX just on seeing any of to you that. follow-up channel mix headwind of into for too? you how I still more XXXX? you Is the change quarter? Thank

Brian MacNeal

Garik. Yes,

can price channel quarter big box some the given geographies think strength inventory of the any other moves we're encouraged say from mix of historic which right I little grows some in LatAm positions. in creates Canada channel move like probably a average as bit point although of typically may of I'd at a below because -- mix. healthy our that's we a and retail seeing because R&R percentage nice mix by sometimes be just slightly a broadly margin. we'll We're our standpoint lower But

take mix we'll can that volume And so a headwind little but of day. bit that any a create

Garik Shmois

you Thank it. very Got Yes. much.

Operator

further any like I'd to back any I'm the this Vic questions time. at call And showing not remarks. for turn closing to

Vic Grizzle

XXXX where and we strengthened our to XXXX compete. Thank week hope we we us to that next we strengthened Investor Great. today. is week. we see there. next Investor our And Day. all We're have sharing The you Day done thing all again believe forward to for at position in excited We as one our of joining our to you position look about compete

for this again week. And forward joining So to morning. look next thank again everybody you seeing

Operator

conclude today's this and Ladies gentlemen, presentation. does

have now a may You wonderful disconnect day. and

Armstrong World Industries (AWI) 22 Feb 222021 Q4 Earnings call transcript