AWI - Earnings call 4 2023 | Armstrong World Industries, Inc.

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Operator

Thank you for standing by, and welcome to the Q4 and Full Year 2023 Armstrong World Industries Earnings Conference Call.

I would now like to welcome Theresa Womble, VP of Investor Relations and Corporate Communications to begin the call. Theresa, over to you.

Theresa Womble

Thank you, and good morning to everyone on our call. On today's call, Vic Grizzle, our CEO; and Chris Calzaretta, our CFO, will discuss Armstrong World Industries fourth quarter and full year '23 results and 2024 outlook. we Investors a World section remarks, available that Industries these the on of accompany have presentation provided is website. To the Armstrong

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

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

will I the Vic. to turn call now

Victor Grizzle

XXXX for have Thank welcome, I'm and to our discuss everyone, this XXXX. expectations results our opportunity call you, delighted our to today. to and Theresa,

half you levels did, as sure backdrop in of market makes. have We view XXXX the of For you'll those began high what back cautious of for difference expectations in I'm us many year a uncertainty who a a particular, appreciate been with of year. a while, following the a the sentiment with with and negative of rather

Better-than-expected economy and rapidly inflation, our our better-than-expected both execution and softer consistent Despite overall results factors pressured and steady in XXXX. strong along interest off quarter the helped in year. deliver markets our markets, by with for higher coming team's of with that overall also fared the XXXX the economic several factors demand, and were like rising We're uncertainty. office these rates results

which X% full net company from a year was full we a total $X.X delivered the basis record-setting for increase On results. year, billion, sales of XXXX

grew than XXX improvement Our EBITDA $XXX XX% record XXXX. greater EBITDA in was X% our EBITDA in adjusted million $XXX points set million adjusted margin. prior basis This our also of for back of to result adjusted representing

On diluted million an $XXX grew basis, growth EPS our free delivered year XX% cash prior results. adjusted above and of we XX% adjusted flow of

We strong with and initiatives. end also of mission with work We market of a results drive our our set ensure plants, work strategy, levels the service and do. reflect who our customers. X,XXX company to model and execute results earnings These growth quality want these best-in-class of expansion, margin to are balanced for employees conditions. allow that pleased develop business our and customers them about and they soft demonstration the attractive we and for passionate who with more even verticals strong market growth represent thank productivity market they are attributes its revenue than ongoing as our resilient an in the These the our position, Armstrong's diverse great projects and deliver in maintain the

better-than-expected on segment, which sales. X% retail the quarter year, Mineral increased and fourth due volume conditions versus our flat sales market prior our In sales better-than-expected was Fiber to

margin delivered WAVE expansion, strong a XX%. with sales for year, XXX joint with Fiber our adjusted full reaching points EBITDA margin basis net just EBITDA growth the growth and solid our AUV full X% year and of almost the XX% of segment over For Mineral contributions adjusted venture, from

had the and service safety evidenced productivity as performance. levels and well plants full year, operated also and by Our in strong quality for quarter results the strong

helped initiatives. growth positive Fiber the I'd growth as the selling to our our more platform, initiatives. the Architectural initiatives Healthy from moving these to These the Spaces weakness. Canopy digital We well year by initiatives platform, estimate growth include like impact Mineral and that to call offset automated market full to as before attention design we're Specialties, volume ProjectWorks than our for Now Armstrong drove getting X% and

variety platform to Sales wide through renovating platform us is is creating XX% for and the for a options Canopy our cost-effective awareness easy-to-use to to was more Fiber has ramp for Canopy new and of bringing the to similar the with that of access their the Mineral ceilings. This selling the base EBITDA and renovating our customers know-how Armstrong fourth many access solutions of the installed is platform and third partners. positive of in portfolio limited solutions the The large continues allowing quarter, distribution quarter. to

automated of customer number in service accelerating and compressed continues well. cycles complete ProjectWorks with architects to Our within face completion advance addresses and same This the speed is collaboration. efficiency is higher of project as projects unique capability and and architects staff. our the number growing a design challenge designers nicely to of the industry on ProjectWorks

and reduce this the materials. waste helps to get of architects expand excited more addition, bill of project and incorporated We're and In contractors the through that costs and optimization number more platform. of eliminating ProjectWorks and the on of by products designers are and owners to ultimately, the in design contractors front

differentiating target We products. are great projects what the here, and just clearly to bring beyond we right over

remain And products outpace intended growth. initiatives the both impact they of health and the outside finally, product sectors our Healthy education verticals spaces. our positive products volume growth. volume growth Fiber in our portfolio these care AUV Overall, like and Mineral overall are progress Fiber making gain on contributed growth of and grew double sales In traction the original to office these Spaces as to XXXX, we pleased Mineral with continues digits and

quarter Specialties. X% with the for sales delivered X% acquisitions. turning We to year, growth sales Architectural growth from the Now in recent contributions and

expansion. with improving to XXX adjusted EBITDA continue EBITDA time expansion in points. toward increasing that has seventh the margin also the last basis segment the this for year This segment marks of prior profitability the progress We XX% X delivered quarters and grow versus with margin earnings period-over-period made

more year, we EBITDA full of the than basis on margin operating margin segment. expanded With improved Specialties the throughout XX% Architectural points. target Specialties remain our Architectural EBITDA For to our for XXXX, path performance XXX

earmarked in billion infrastructure through the development airport this we organic and the by airport supporting with approximately with funds country. XXXX, Further $XX passed in $X remain has encouraged across growth billion projects bipartisan in activity XXXX. infrastructure segment, the Through quoting the federal allocated been for bidding law

multiple projects, As we've mentioned, complex more product sought architects by and are with these the typically types and larger designers.

segment are ceiling the opportunities, these products, the the a Fiber to we to Mineral we capture next and for provide wall nice uniquely specialty come. years positioned to of portfolio largest Architectural the With and expect several in vertical and tailwind Specialties transportation

Now outlook. I'll and it Chris? results financial our to turn pause Chris and some over XXXX our on for detail more

Christopher Calzaretta

everyone on and Vic, to morning good call. the Thanks,

and As a the referring our a in X% I'll combination mix. pricing Fiber AUV On of remarks, quarter Slide reminder, X, and we by throughout segment presentation. fourth grew primarily to my X, our available of which discuss slides the Fiber details represents Mineral be quarter website, on which like-for-like sales driven basis Slide our results. Mineral

mix. partially the offset unfavorable In driven like-for-like growth quarter, favorable pricing, AUV by was by

in we due deliver related. a headwind, our driver in dynamics but channels, Fiber to continue remains which softer are Mineral essentially We for And delivered strong core AUV Mineral flat XXXX, in year within Fiber despite believe growth realization price contributions we our is line were expectations, average. mix with the AUV in X%, historical segment. market. mix mix volumes line to a as timing largely growth value was a from pressure the offset our full which of initiatives with quarter

the they fourth ahead guidance Fiber quarter expectations as our market Mineral in resilient we of While was expected. prior were the compared volumes flat the more broadly were than year, to

Additionally, were sales retail better-than-expected. customers also volumes to

AUV fourth volume our EBITDA form equity the earnings expansion for adjusted by or provide expectations, in AUV prior Mineral in the sales retail versus from XX drivers mix points headwind an were and margin contributions our $X primary WAVE While versus and The expanded by upside grew period. contributed Fiber follow-through adjusted of X% the basis year the million outlook. to the also channel quarter. segment of it EBITDA to margin

to than As Input the to input were deflation. prior timing prior inflationary a we P&L. outsized year both was year remained saw from related moderating productivity input were and higher but raw inventory quarter offset more by than benefit due by lower strong costs favorable the in of period offset through and as expected, included impacts valuation a costs This gains. the lapping of materials flowing where costs manufacturing control costs also cost energy freight the

was with well line higher selling primarily to the of in support SG&A top prior combined lapping increased incentive line a year, versus increase our with prior This period as versus in the current in outlook. compensation, higher prior as of expenses year $X the growth. was year million which due benefit promotional the year

to approach margins equity volumes. WAVE $X control due market to earnings as as teams grew a continue were Our conditions. with Volumes cost conditions. largely on year to more navigated our EBITDA better-than-expected, market discretionary higher we supportive to favorable prior soft maintain spending million and disciplined compared slightly

timing AS contributions Slide in X% Architectural impacts. recent acquisitions we from Sales quarter by X, On segment was our Specialties results. project-related or led offset discuss our of the growth which

project time lines more Mineral As a reminder, is AS by than revenue impacted Fiber.

and project delays lumpy scheduling impacts can have or quarters quarter-to-quarter. tend So to can be outsized

quarter and in expanded over prior third XX.X% basis margin the XXX year. expansion segment. This consecutive points full resulted of highlight year for the adjusted EBITDA versus a segment's which AS adjusted marks from the XXX EBITDA over EBITDA quarter expanding the XXX prior year A period. margin basis basis margin in XX.X%, for points the the with points of was adjusted of

and segment. continue noted on level the to margin by earlier, in we EBITDA progress we this we to return to our that Vic XX% can well remain encouraged this be way As believe

higher our basis expanded Input increased each in with up XXX year adjusted Slide total company period. offset from WAVE quarter fourth metrics earnings by X consolidated offset partially versus EBITDA EBITDA where share, volumes, manufacturing diluted equity benefits AUV per improved and XX% points adjusted Consolidated were prior and largely the X% SG&A. higher costs other. adjusted earnings shows margin up

strongest margin XX.X% EBITDA and adjusted drive remain the XXXX, quarter result fourth was focused EBITDA expansion. continuing adjusted on to margin we Our since

company year XX% growth cash flow by in of double-digit that points. a double-digit free proud full adjusted and the period, EBITDA increased basis teams our year grew free $XX adjusted expansion XX%. versus earnings year per and our done cash share throughout deliver adjusted margin also consolidated to flow the EBITDA market. million highlights growth, or Adjusted X XX% XXX have diluted I'm metrics. and soft expanded adjusted Slide the margins prior We increased work

flow Recall lower that performance and The we XX% expenditures, capital the by $XX cash improvement dividend XXXX, free higher fourth capital XX from WAVE repeat not working from in of an interest. by Slide adjusted versus that quarter the million prior higher shows driven primarily offset XXXX. in year-to-date cash cash our and increase WAVE increase special received dividends was year. a partially earnings, did in

dividend year, XX%. by grew that prior robust Excluding cash in we free flow a special the adjusted

highest soft us healthy where on The remain all a is the Armstrong. balance key projects These we innovation of in advances way to that to free fuels drive strengths we business ability priorities A by and of generate first key allocation as of consistently priorities. enables a look and strength into invest execute one cash the productivity generation back even the our growth flow market to capital returns. of sheet, unchanged

our noted we of Modern, maximize a sales we is expand July, our dividend to shareholders category. portfolio. growing BOK strengthen all product within to capacity XXXX, and broad through In QX, metal ongoing third, and with and that we the looking completed we returns And we already value partnerships In EBITDA. in on growing which delivered back differentiated and X. specifiable to solutions products business target capabilities acquisition and share investment the acquisitions incremental And repurchases. our Second, AS a providing and provide on

the repurchase have million a fifth increased shares we to XXXX. still, and shares year, our XXXX. since XXXX, of consecutive year. $XXX we in the the shares for our we XX%, October, dividend the in of Since we quarter, at And dividend inception fourth In end of by million for And shares throughout -- total in annual $XX the share repurchased approximately increase full repurchased X/X the repurchase our of or the $XXX million we million. repurchased XX.X since total outstanding inception program of continue

and balanced remaining for million end existing authorization. This As to $XXX to capital over of value shareholders. we continues approach have of create under the XXXX, disciplined the our deployment

XXXX Slide XX guidance. year shows full our

and carry into solid the XXXX. of XXXX momentum expansion margin from execution to expect focus on We

net We X% the sales expect range. company total to in growth X%

demand, in growth to offset in expect We resulting the Fiber initiatives our single-digit lower low market Mineral partially modestly range. volume down

be Mineral split balanced historical a expect and AUV average in of margin digits, and mid-single Fiber of We mix more contributing to line to EBITDA our to returning expansion. with price

paired also levels to manufacturing normalizing for the expect margins, And in total expand efforts XXXX. with fragmented X% a We AS productivity penetrate X% to of and market growth inflation adjusted EBITDA company range. in continued we expect and

presentation. EPS that free similar at additional are assumptions grow to adjusted to of and the flow We Please expect note a cash adjusted EBITDA. rate appendix in this diluted adjusted

to to We similar be less anticipate XXXX, uncertainty. market with albeit XXXX

modestly margin to conditions. growth, momentum for create we as softer despite our adjusted Our teams strategy cash this growth expansion execute further and delivering and our value remain profitable flow continue excited shareholders. market free I'm laser-focused on to

And for back now questions. to comments before take turn further it I'll Vic your Vic? we

Victor Grizzle

today. McKinstry, systems, we in tenant announced an and devices another commercial and And tackle parts of invest challenging to to meet a business innovation Chris. from to proven few leading get needed cycle. of Thanks, In partnership company highlights with to all consistently back ability The steadily and Armstrong's like to the January, a your our today's new construction requirements. the moment we in take to energy through of services inefficiency installation share a and before I'd aspect and components questions, waste construction innovative

solutions. with Equity equipment integrate in manufactured HVAC, this ceiling beyond represents Overcast sensors ceiling goes we're integrated works Innovations factory audiovisual streamline systems an and and McKinstry early-stage into that increasingly lighting, an that ceiling complex codeveloping Venture, process. architects With Investment other This plug-and-play components, architectural approach tiles. to well Overcast

pioneering accelerate go-to-market portfolio growth ceiling with The solutions. partnership ceiling solutions systems through ceiling and sustainable bringing to of Armstrong's unique investment expected Overcast offer By Overcast to are Armstrong and modular access design, can we industry-leading platform. and together integrated

Healthy has of focus of include in our area evolved Spaces efficiency Another initiative overall thermal has energy and the comfort to commercial innovation been over buildings. time and

may consumption. of for nearly energy you are responsible buildings XX% global know, As

nearly the XX% in electricity carbon And alone, this U.S. nation's and represents all energy emissions. of the of consumption XX% used

cool buildings. of XX% heat energy to consumption over Importantly, that is used and

healthier their can role we accelerate efficiency significant of on part energy how spaces and our and sustainable have and owners and operators zero research efforts, sustainable more energy aspirations. and As for more enable focused a the building development buildings to ceilings play net in creating achieve ultimately efforts of

As we in energy. and the Templok. enabled and is as Phase PCM absorption to or much the cycles enabled as XX%. cooling of heat thermal thereby performance This introduce energy save improve tiles Change technology has to commercial can release that shorten integrate by properties Ultima consumption our to This Armstrong and us PCM heating of technology into by mass their ceiling buildings the announced Material December, the to acquired reduce

of we of a portfolio to its expect tiles. energy-saving ceiling and broader The first become first of the what kind

the Templok a time. now smooth that same same acoustical superior first tile package is over energy. This will brings also today, our performance for saves customers the look, Ultima but the that enjoy ceiling in that pay itself white

to and study government first that an the saving benefits. as for Energy decarbonization energy a is energy ceiling Our offer solution an costs of buildings U.S. ongoing of Department more part Needless building make technologies innovative the customer to of sustainable. way new this new efficiency energy ceiling for say, exciting to category reduce this and owners operators their is entire innovation brand-new for and and

unique focus our strategy customers. a value of ongoing to our provides proposition that a of key element innovation all is on Our

continues value advantage. to ultimately well and and valuable and relevant our it attributes AUV ceiling new building the the designers making category, and innovation architects ceilings more to overall competitive add Our positions our and consistently products grow to to and of enhance Armstrong owners,

providing we a market since conditions hallmark carrying in during more many and modestly expecting wrap, growth And the market been have sales XXXX. in unique momentum XXXX, fully innovation challenging repurchases, again, good times. economic into though returns even this, demand we All enables we pandemic, modestly consistently in the our XXXX commercial by in drive the direct has to our addition to softer ahead, expect this for resilience generated future to in shareholders and markets XXXX year same. business a each growth resilience of fuel back And have finally, demonstrated ability not our earnings do into This delivering even the to market. business to year And to despite a growth We of construction The with through and some the profitable years. recovered. weaker softer invest dividends growth. share are

to stop and we'll that, your with be So questions. take here happy

Operator

Our line with first Capital Loop the Markets. of Instructions] [Operator question comes from Garik Shmois

Garik Shmois

not how headwind, anything and on you from sales we've maybe a you take in you Congrats that the Hoping expect seeing speak little that's first companies the progress into bit the a the speak as to hearing been a and then you're far to to little account other of for so has slope weather there? year margins, been sure quarter. to both quarter, bit of impacting what could

Victor Grizzle

measurable first far. X so year of the Garik, Yes, in on weeks your question, weather business any direct impact here on the not of the part we've on seen the

we market that see, year, quarter. again, -- third in than So a what saw a what than back the marketplace let expecting. third we that, similar seeing last directly. we saw the quarter to quarter, the we in were market saw and And answer condition expect better start the in we was that me with What we're fourth very then of

and the expect and half we first year to the of along level just the what back halves more half just with So at quarter, progressing effect back seems outlook. part in this this fairly business, at saw the and as see. the be activity potentially softer some of our we overall current lag rates, the the second be what year kind market the there's Again, of to we're with might outlook of our to see is of our exactly economic uncertainty year. half. we that that to that's we that, It interest we going conditions In see uncertainty, lag of where the hit we the and again, discretionary volumes this effect back of some That's XXXX, expected, could slower higher regards softer in of kind in level. first to similar half business have

And his outcomes there's we did same But as going look uncertainty in into activity mentioned like. as going the potential variation prepared still some the to remarks, see what the 'XX. economic about of Chris in don't kind we overall is

half first bit a of little the -- quarters, kind back softer been a in as of half. seeing recent kind maybe So modestly we've in recently conditions

Garik Shmois

allocation. wanted I on up to capital follow

given free sheet flow balance in cash shape. position, strong is good your Just

Just and maybe as environment well. M&A the to thoughts on priorities speak

Christopher Calzaretta

continue our shareholder take returns. allocation last value for first, to create to see priority And And back I M&A then, capital invest there's strategic that remain into then they and and we we it's by way business, believe mean the to as continues repurchases. mean, bit and those if to Chris. way deploy where that. flex planning our be with value returning unchanged. little Vic, priorities Garik, capital our highest inorganic for they're that remain capital believe planning company. there. and continue grow the I'll we best growth the the on shareholders lot priority, Yes, of long-term gone following And side. priority to to disciplined second, seek a business of the you unchanged And through we to creation our approach third a to on allocation cash steps, I we've share our wanted add to

Victor Grizzle

go acquisitions point, the And we're We is especially of and platform. to Armstrong priority trying second our the to where to opportunity category. that Chris' lots cash this there. bolt-on in still free believe fragmented specialties to capabilities use Yes. of there's to accelerate add flow

pursue opportunities. I continue We we're say those to very would active.

is active very pipeline Our and fluid.

think how sale that we the I closer these that companies not and are around in a may pipeline. rates are forth to of with a to, interest lot so we're Again, working be get a or our get lot process. affecting questions trying of

or And affected we're by not really interest rates the interest rate so environment.

add the use a So to to companies relationships else think those on build by with and we we third-party that we'll own those build continue that we need lot would these with of capital value don't platform, relationships place. targeted can continue and Armstrong we our being to the assets, we think

that and those the set the us through we to hopefully Specialties there's active. build and still opportunities segment faster to some believe We remain of pipeline across we'll So that in a these continue finish and of good get go for build acquisitions line.

Operator

Our next question the Jefferies. Philip line comes Ng of with from

Philip Ng

Strong on the so congrats team. finish. years, X

those half. good start activity your some Is And So customers? of trended to that a is the Or to bidding back in how the are color little Any challenged the end pretty weaker. and be conservatism? that Vic, a more activity just more informed in starting some particularly see lately retail, in like kind to first about have and it's office of hear markets are orders by demand off on half baking are you commented bottom could out you here? you how solid

Victor Grizzle

Yes.

quarter all, was think of worth and XXXX the positive. that activity in bidding on projects. throughout office I was stable enough, number as the overall for it of positive year gets the Fourth I bidding we talked with of value bidding it's noting activity projects in both the all in first QX, would XXXX. last being activity So reported And the say year the bidding again, kind activity. the Interesting as as was much Philip, office positive. about, of choppy

end back-to-office in other talked the sector, with volumes XX% about leasing this stabilizing things third supply quarter, and increasing the marketplace, of mandates. with some that Class in at the A of signal another in A+ the our of get is this high the think particular, continues the quarter We both to tighter, in we along part

XX% Fortune back are XXX an days office, average So of the X the a of week. employees in now

are additional we're signs of lots some in market complemented there's and that by to retail office again, strength a in So pointing particular. that seeing then particular. in education And stable the that's,

So in again, we I would market of of so see this year we're half say is early that it's year. year, to experiencing the we're overall, the far, very half again, in the back Phil, and what last seeing first what the expect but in that's

In of second question. the to back the half, and part your

although lagged again, So back half was more their is different still there this think, back the they're backlogs is that's year. half say, some year, where of our for where this side. a lot concern I less show back of probably it lot weakness informed by of the of who in of the in who And their the indicators into of by comfort, year, visibility where both up. could Again, beginning was a the the I the our think, less have at than the 'XX, more on backlogs that's informed would half the customers it's discretionary -- of the customers have about it's still some

on of some project to to see which, smaller of back have discretionary to that less have happens this, visibility discretionary the what the half a get closer on we'll exactly again, lot side work. So we

Philip Ng

call And X% then AS roughly strong to to, M&A, X% incredible growth guiding I that's believe color, it, in for X business, you're your growth. about That's pretty Okay. points nonetheless, of XXXX. but Vic.

standpoint? part way out to how and I'm So Any from you're strength where just an for being seeing the market called a piece that. transportation of big out of parse AS? kind us that certainly of curious infrastructure business is end some You help of the big

Victor Grizzle

in through. Phil, back from the from new I benefit What continue those of on of half lag you if the should recall, We to starts. side, construction had positive, new construction good XXXX, is projects new -- we construction new XXXX, the in pretty benefit coming that construction to, the point would

projects, I think believe a dollar when a there. again, with our both standpoint in It's office very mentioned alteration transportation. that the comes has going see We education, segment and the it benefit to remain footage it square positive. Specialties continue I opportunities bidding you segment. office activity in to but of we're And small Architectural relatively larger And education. were from big some and to busy

be meaningful We to growth And Architectural think I outlook, to expect a the transportation contributor in overall Specialties I as segment 'XX. beyond.

Operator

of Our next from John comes the Lovallo UBS. with question line

John Lovallo

The just a mean, in Fiber, quarter. a in on Mineral plus half the first is in the bit in comps the I first one they're particular, first with, little X% tricky I think,

of should I a think, sort on moving input cost the of kind How you thinking a we year? first lot with same through items. quarter. similar volume that inflation. the There's about along X% we year? of And load in and half then of are lines, the pieces a other and energy this minus second think -- those as move the then into How along about

Christopher Calzaretta

volume half, softness at Mineral little low overall guiding more the half so half, the with the in Vic really Mineral made single-digit range the a to we're you're Thanks and looking the the Chris. remarks market. back for And in down first on Fiber that than about right. splits, front second half nears question. that being it's that Yes, John, Fiber, volumes in

a build lapping where we first that inventory saw 'XX, we're of comp strong retail. of quarter, of some in quarter First the really

and to break the and of inflationary part total half percentage low we're in input then QX the driven than that in bit. bit Raw the say of those bit low on little of basically QX softness that first expect comp full gas. basis we area looking to kind single-digit overall little right, kind out the primarily I'd materials, you're side freight little a slightly then in cost be softer a to opposite costs, be to the of input by inflationary year on you a range just deflation energy out be for in of digits, the So But nat inflation and back pointed inflationary, the a volume single year. On out.

input total that range again, in for So 'XX. low cost inflation single-digit are

John Lovallo

That's really helpful.

The Okay. taking a just be Fiber mean it step is single And you growth. to Mineral for then expectation low targets Investor I here. down outlined the Day X% digits. XXXX, back maybe to guys X%

As through as the the in of see And of volume? year, think years, we if the you should of we cadence how about possible? maybe progress the Fiber couple sort drivers over next Mineral this improvement

Victor Grizzle

that. take me let John, Yes,

kind I right haven't think Day guidance, and the the think of But building of building when building at after the same blocks. at They blocks here look conference. that 'XX when are in really and those changed we we sit look blocks, that that of world about course, they Investor today changed. you those, back

I get construction the got blocks market. to did commercial market. We the the outlook, we've one stabilization of of to building is think recovering a

more we as backdrop the so of with move positive get on forth. other 'XX for so side and a And into interest and rates construction commercial lower

the building then blocks Mineral but way. acquisitions the of profitable the blocks growth are blocks that one the main and overall is question, growth, see we then Fiber then marketplace. which growth construction We building for positive the company. your initiatives on Again of and there is the the building top think overall start commercial there, for are specific coming of volume which of the our along I think materialization still other to recovery for --

Operator

line from the Susan comes Sachs. with Our of next Goldman Maklari question

Susan Maklari

question to digits, for the a Fiber to that much that volumes organic of through the your be benefits guide underlying down how Congrats are talked single that those? thinking those the relative and about market from conditions can Mineral is low sense My is you've to come first of on you of initiatives starting us give to quarter. by driven some good and

Victor Grizzle

Yes, take I'll it.

yes, business. Susan, overall -- -- we think Okay. level think, the to to I about volume levels that will can And verticals this lower to an going overall, all across activity. activity subject of on I the be the is have economic volume build of is impact the way softer think of the I

getting growth initiatives, like of to in progress feel some So we about traction partially of that that's and 'XX. our the did the we're the We going backdrop. kind really there. offset good with We're

going to out. we out in thing talked and other XXXX, to about didn't of this through of The all retail some we that that 'XX, that expecting come out were build come is come is inventory some

so And also factoring coming out that in 'XX. in we're

there. our a the of you've coming So economic and takes softer a that little overall couple and 'XX. at help? offset some system of with out bit inventory modestly of out we're in puts headwind then softness. growth again, partially initiatives Does of market got from back backdrop. looking all It's And a not this Again,

Susan Maklari

benefit couple and to That continued the nice is relative softer understand, helpful. how a that last I quarters market? about to think your mean quarters where initiatives of trying Yes. sounds the been over momentum have of it gaining the some and over of we're lot that can to like a organic just go coming

Victor Grizzle

Yes.

sure. expect that -- we So 'XX to for in continue to continue there traction that

Susan Maklari

Yes.

margins. Specialties turning then to And helpful. Architectural the That's Okay.

getting continuing obviously XX%. progress there, to You're close some to really make that nice

the for distance of within could it? XX% in about really terms of of year, think and or thinking actually takes that margin the ability puts some through that about how you that get in striking And come segment? what the are to maybe are to you As setup the

Victor Grizzle

path terms Yes. back. that investments we were mean SG&A We're business, we're operating encouraging of to distance, investing within the striking from making in that very we the leverage the of getting a well right? really growth of see the we're in as of years as capital needed on I the that some ahead couple is

we're in we're sure -- the a good initiatives, get there pricing making path projects there. acquisitions operating of right pricing getting pricing way. then our We're job too. on good to on doing And platform. our I'd the leverage that say, So We're a some the the

artificially and get I that what for short-term doing, there, those row we're And any to demonstrated now, to using. to So XXXX. years a think make we the bad that that's in have X continue won't in that's decisions discipline do things we're it we we

large we're we really for of I after path projects. Some term, these is able to striking projects. to to in do were go -- the airport some to to If additional create And some that short in we over and we flex continue opportunities that right larger teams like and an winning 'XX of about, going the that, complex better these we of to in thing talk some the pushing we're projects multifunctional these airport see things get large we're of resources invested on. so did position do to that late could the we take we're one business there. distance, that's we that ourselves our important the is in 'XX for that term. long But

Christopher Calzaretta

build Fiber AS bit Susan, maybe to And the about have for EBITDA call Mineral too and And the both out XX% and we Fiber. Mineral we're for EBITDA XX% adjusted and is appendix, margin AS. looking for a that out just -- on in assumptions margin about little

Operator

with from comes Truist. of question Keith next Our line Hughes the

Keith Hughes

On organic Specialties, guide. the acquisition? between the in and the what's revenue guide Architectural for What's breakout

Victor Grizzle

say line the X% X% really say 'XX. and on It's with penetration driving market market that. I'd and continued that's minor the on within the contribution our Really, top in growth Yes. I'd AS to really expected we're from guiding growth segment, inorganic

Keith Hughes

one question. And other Okay.

was You segment that? quarter. adjustment amount How in? inventory What talked up about that was fourth the show in there did an much

Victor Grizzle

to inventory On the -- you're valves? referring

Keith Hughes

Yes.

Victor Grizzle

It small. small. was Yes. was It

About the in smaller related back quarter, it impact amount. remember the the quarter, cost QX. much line of in input the in had we on and you in If was bridge a was first XXXX, sizable pretty valve a fourth valve half

Operator

comes question from of next America. line Our of the with Jadrosich Rafe Bank

Rafe Jadrosich

sounds some to in Fiber of you was expectation What in revenue to forward? assuming Is earlier it mix overall in 'XX? on headwinds reperformance in expect Vic, guidance. your market mentioned you anything that to question sort there's that's relative reverse there and ask going just an I of changed retail mix the 'XX are share Mineral Ray, then wanted you 'XX. there gains, headwind mix like a And for It's the in to just 'XX. Do destocking the

Victor Grizzle

going this Yes. of channels. lot some to 'XX it in a be in AUV retail was 'XX, a channel channel of headwind No, the I reasons and think for the contributor higher our which why between positive imbalance a same mix is is

our more think of of mix, which the through product driver better that some mix channel, is back inventory to able in which, product ultimately shine when then channels the expect balance. is a I and is the come of the yes, contribute of our into higher again, as the mix are the to company retail allows we balance So which AUV, brings it out

that's hopefully, architects don't our one this the of business put And But of sense. put in. renovate, the makes work. stuff renovation and of drivers that is old back they in, new stuff business back and when designers is XX% And building they owners

performing happen up balance. decade to and So happened proportional going dynamic value, it next a shine products for to come to will channels once higher And their this naturally for we in decade, what wants back continue. 'XX natural mix that would is that higher over the to that's begin these industry that's expect to again to through into

Rafe Jadrosich

gain assumption on the for 'XX? share just then And

Victor Grizzle

we're that and getting our assuming driving any of share our with initiatives, we're gain share our not category Yes, expansion. -- assumption. we're proportional share in Again, expansion

what us from the growth dynamics our around contribution for doing, by the is initiatives. positive offset market growth So really

Rafe Jadrosich

the sort margins because you margin gas natural assumptions prices come just Like then hedging moved talk where then talk have Fiber so embedded about the of resetting? 'XX? have the are you you around you rolling tailwind in so Okay. on going -- your guidance? Mineral forward? down And just And in Can Can about off is there? what's assumptions. the can much. And from What energy strategy

Victor Grizzle

take that? you will Chris,

Christopher Calzaretta

Yes.

XX% So Mineral XX% Fiber sure, tied of freight, materials, raw energy. about remember, are XX% inputs our to

single-digit the slightly gas. different of kind in a on then really to that. at digits and forward single influences raw obviously, by again, a we Freight materials earlier, curve tailwind shapes shared I And inputs as be largely look low as that, the So range. inflationary, of model driven were and expecting low nat NYMEX deflation, to we inflation bunch that,

carried environment saw I going than that but recent of nat that's immaterial But in really a don't bit much driving inventory nat that XXXX, we really we we again, price Kind to it of and forward, as a do to call with we volatile perspective, hard and lesser said, say as into peg, little hedge in of expect as hard when 'XX. looking think 'XX. position and about in locks to gas, gas item category. over terms extent a have had have energy back a much it's at a nat 'XX from and deflationary I'd really -- 'XX, history in gas that

to really price locking looking not do So or any hedge longer term.

Operator

with line Our Kim Evercore Stephen the next comes from question of ISI.

Stephen Kim

you in if some or planning? been I color talk quarter show a And you little far. a XXXX didn't you show bit time for last again in Appreciate like your so you're sense expecting in already. inventory couple drawdown about But why first other the it as was it you it of the Wanted the expecting later all quarters. expected could centers. us just to the XXXX. it the a just didn't are up wondering bit home see It's in at up last over this give discussed to looks year, materialize

Victor Grizzle

No.

control hard, some it just -- question. to as is this we've it. around a come of us you home and I really control let for for alone Steve, year inventories they'll think know, is these what predict to centers alone the their why in sure, But we kind sprinkle let throughout that this normalization or is expect good

answer It's example. there's a they for shelves remerchandising but ceilings, around different centers, are their different in for which home timing

side, see of around different build too, them a a on inventory down the their that change. anticipation in across draw again, merchandising when drive other behavior we stores. can they And that So

kind in line what we centers. with with of it's periodically So home these see

and phase bit inventory one a we a with with one to little talk -- have it's our they're related over time they're with another and feel do some it it's able to channels in sometimes quieter about their timing little of and that. But another, and out really come they good in to normalization and more. service phase do Sometimes they're and we

year. first quarter. expect the it quarter-to-quarter into throughout just don't -- expect probably that We the -- not to transition that kind loading of from over we've the again, normalize So we we're

Stephen Kim

Appreciate more the attributed Vic, go the longer expect. Okay. that about investments talked success projects are your better earlier of complex, and investment you've of a That's success that. larger required our helpful. to great you the been subsequent we've the teams that things in seeing multifunctional -- that after And those then, and or to way, really in in some

of you then you Ray's sort you question, think that share. that not did think, But I -- gain to said you

these just that you You're just not Fiber, like gaining these can are remark into that us a sales was help understanding share. you didn't more complex wanted teams projects coming I'm projects. go sure from understand you way serviced, were together share, if your products are maybe Mineral And changed take that previously that make because that that -- I benefit. put these right? to around has went somewhere, They to the actually those multifunctional obviously which How

bit better. just could you help that little If us understand a

Victor Grizzle

was Fiber Yes, build. around Stephen, to assumption question our share Ray's be Mineral Fiber Mineral around in clear, gain

Mineral not volume So never not that's Mineral like around share any how just assumptions we'll answer to -- We to our in we're baking Fiber do. build volume Fiber gain plan. question clear, we our Ray's was be my

different in So volume. just Architectural that be To to my around it's very answer Specialties. clear, was Mineral point, Fiber your

We are segment. penetrating this

share taking are in this segment. We

now. entire for to allowing leverage us these brings years that portfolio multifunctional to are At just these have that been the of a Armstrong We number teams projects.

the bear There platform, and a on to complex of lots the can bring now is that projects. offer multifunctional ProjectWorks can design in to company bring, there's with large team other really we portfolio those of attributes of things that no requires it category these and ceilings breadth all our

of the advantage competitive So point our can the it's also bring we're large projects. attributes Armstrong that of it's for but leverage these to unique part creating,

effect are our on these and teams So we're the getting airport it's having pleased really the large rates projects, -- in overall. we're win projects with traction

Operator

from comes Group. line Research question of Thompson with next Our the Kathryn Thompson

Kathryn Thompson

a volumes. Just clarification on

in uptick some of -- the you you've as terms seen quarter? change cancellations? in do previous any from gave but you activity, in color quoting an could on seeing the or Are same You'd stasis the

Victor Grizzle

Kathryn. Yes,

these been projects or market in think thought of I seen on Mineral QX. hold. say would in lot fact, the And not Fiber, the the a we've in when volume QX, XXXX. on cancellations. we've we that have soften we in And at been side I delayed throughout continued cancellations, watching look But put would a has -- and bit

the some QX. market of in really these stable QX projects some the hold kind that or to saw QX that level discretionary we on kept gaps of was from were a What in in filled that of very bucket at

of so so. the think system So that or forward that wings lot on not they're do to hold can willingness as pulled when projects point of I a they the to in be canceled keeps there's and into pulled them capacity a

Kathryn Thompson

early see Box for from quarters certain a Big in a had Did benefit from And timing the XXXX? clarification. as been factor QX just also in that any

Victor Grizzle

some there little earlier. talked Well, was other of relative channels. is Again, that channel that drove that the retail about strength a that mix relative to the we in strength

drove but that the wouldn't that some lot it I AUV the in say stronger wouldn't higher channels other than channel, a activity -- mix. So of was I of put relatively,

the the big of a that additional in to of So inventory driver if you will, not us to, lot say overall that, improvement. for build, was point quarter a to

Kathryn Thompson

for And changes much fundamental projections XXXX market WAVE? versus finally of then growth by some other And your that of how core or initiatives Okay. factors the just on in you WAVE, driven WAVE? is growth outline could driving with

Victor Grizzle

conditions the way to Yes, the and very right? the we're Fiber business ceiling our modeling Kathryn, think tiles and We business to the as business sees, through I sell is WAVE overall do market a similar distribution. way grid about Mineral our WAVE that package think the

for overall same market market is virtually assumption business. and the the So backdrop our grid

the is our pricing watch commodities. steel factor can little steel inflation to volume be well you could something in really think with business bit ahead I a of that what's is different does So happening that the that. What team of side

of do. track sales a they on they're their inflation of how can inflation to we've strong that course, on their great forward to well experience going and, based are of stay protect staying steel margins. how so really margins to And move to the with record we're job doing That's of is of they'll going their And Mineral their similar have a ahead Fiber and that of ahead kind continue modeled side. expecting volumes what very initiatives it volumes the price they

Operator

question Baumgarten comes Adam line Zelman. of final Our with from the

Adam Baumgarten

then half performed volumes. the versus And you year? channels back If we of within also, share Just Mineral broader your the market were how Fiber last at 'XX, any shifts think market? there volumes a on question any notable do look

Victor Grizzle

worse, contributed I was portion expected of think we if in talked back market that we in down I our we growth I you as back less certainly better -- growth digits Well, will, about, low than we market the half think was what really good which the initiatives. the single half. than softness right initiatives offset And think our Adam, a with

expect And so to I XXXX. think continue going that's what we into

Adam Baumgarten

the Okay. in And price throughout year Got guidance. the increases just Does the typical then on it. X AUV Mineral assume that Fiber?

Victor Grizzle

twice the mix Yes. We're but that increases. And component X getting both AUV comes our like-for-like of cadence pricing of price, is price increases from also that. a referencing, remember, to back these year again, you're normal price

be to AUV So to we positive year. -- this expect we which mix the about earlier on talked contributor that a call

Operator

over remarks. like now to closing to would for the call I Grizzle Vic turn

Victor Grizzle

look We're quarter, to Thank updating nice thank and forward again of day. results for on and very have joining, you, in you the and obviously, for all you thank you proud questions a and you, our Thank progress. April today. your team's this we

Operator

call. This concludes today's

You may now disconnect.

Armstrong World Industries (AWI) 20 Feb 242023 Q4 Earnings call transcript