AWI - Earnings call transcript Q1 2024 | Armstrong World Industries, Inc.

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Operator

Thank you for standing by, and welcome to the First Quarter 2024 Armstrong World Industries Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Theresa Womble, Vice President of Investor Relations and Corporate Communications. Go ahead.

Theresa Womble

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

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

Relations Both of these are on our Investor website.

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

turn Now Vic. call the to I will

Victor Grizzle

all from the you, help results, traction announced conditions. the pleased morning, Thank Xform to good our within market continued segment thank key joining which last of well the year quarter and from acquisition We're excited to more also momentum as recently weaker of share Architectural Specialties growth offset and call our a as We're continues today. our initiatives, to you first Theresa, record-setting of report for financial continuation XXXX. into

of of be without our X,XXX our acknowledge the important focus all it's to to not dedication ability possible execute nearly employees. and could And these on

to thanks Armstrong team. entire So the

XXX company to quarter with total the in growth points sales margin expansion. a XXXX net we of compared increase of EBITDA of and first XX% EBITDA basis adjusted level, at reported adjusted X% starting Now

rose cash flow adjusted Mineral volumes. quarter all increased XX% AUV year. XX% increased by net cash for more EBITDA, record lower offset and first and of from a first these driven X% adjusted segment, earnings strong adjusted flow sales, free prior Within year-over-year our Each free EPS at per than sales Adjusted share level diluted performance were the diluted quarter. that adjusted Fiber

Our represented solid driven of Fiber Mineral AUV the price sales the quarter also in mix benefited and X% largely channel digital in compared to and balancing inventory initiatives, a mix. center our performance by like-for-like our in year. favorable lower improvement build growth favorable volumes of AUV from prior project home was as the works. lower The Canopy

from solid XXX in increase the XX% EBITDA joint WAVE Fiber contribute with Mineral to architects, continue growth, an performance initiatives strong with our points in continued contractors. expansion. from input largely Sales XX%, offset venture and quarter, market works these headwind with softness. in Fiber traction while margin coupled of gain The Canopy to and from resulted project growth modest and EBITDA designers margin lower earnings of volume a basis costs, Mineral year-over-year AUV

execution these disciplined and they our and execution teams. high our commercial a steady with and as product results and our innovation. of our pleased efforts, performance I'm consistent reflect process ongoing productivity includes by level This

provide product competitors. critical with are and All of distinguish levels providing that service our these innovation customers factors to versus consistently our we customers best-in-class Armstrong what

in we to our of that's Fiber to out important and service performance the specifically call the levels results, Mineral achieved contributing continued manufacturing quarter. the quality factor plants Another our was

the metric important to we feeds our we and single As an are I've mentioned measures order before, which a measure. index of quality perfect that call X service track key of customer, critically

includes important single levels an differentiator measure quarter, another serving a for order near And accuracy, of versus order strive record delivery, every measure we on-time accuracy. it's ourselves the piece and product billing This on this perfection experience measure defect total as our tough to as customer and competition. damage, was just shipping customers. to hold is to This our the

an segment. quarter outstanding in our Mineral overall, So Fiber

our Architectural Specialties Net to business. and the of grew given some X% can experienced quarter, In increased EBITDA the project X%. turning this time choppiness to Now segment. time sales the in pattern, which demand we nature from by happen

infrastructure However, build. in projects activity related transportation the of we result to to see a an increase continue as government

large in can quarter-to-quarter to these We first quarter. tailwind possibly the continue and choppy time experienced a we provide projects, lines as Shifting expect to project X-year coming quarters to for however, lead specialties business. this activity X- patterns in complex demand for to our sales the

positive the in our the order confident be to than grow and the continued specialties to in ability we in category. market remain quarter, Our intake faster

Xform to me let announced is applications. business that employees represents date, Xform to Xform. of Armstrong. a and category the glass a design and almost Now the acquisition turn resins in wide is a brand of excited welcome exciting acquired to range the respected largest Xform's interior news to we're and in we yesterday, leader leader we've well-established XXX and translucent highly used

on occupant commercial. multiple bringing designers, to spaces specialties broadening access continue ultimately the architectural our indoors. deep are wide in enabling products position and like elevate design specifiable centered can expertise truly across With the acquisitions a strengthen using space. the our be found light building to and highly on into of in and any product are and a range products trends, we've of specified verticals. well-being more important Xform more to category the color, within we and Their natural offering market Their almost design has texture completed, selling Xform

do platform ability use ] to [ sales. of the coupled with With successful well As the to a we to to with grow same we've in billion to and we're excited acquirer, segment within penetration category, $X.X we're way the strength proven, Xform. Armstrong's on organic our from this this acquisition the this have unlock and value additional and unique company's our grow over

call closer the results. Chris for a the financial pass I'll over at to look Now

Christopher Calzaretta

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

Slide slides on Slide in basis quarter our first lower X% our be we available website, a driven Fiber Beginning volumes sales As details partially X, discuss on to presentation. my referring segment throughout and by X, of Mineral quarter, the reminder, by Fiber offset results. grew of remarks, which the our Mineral I'll X%. of AUV X%,

was driven quarter favorable favorable AUV and mix. First by like pricing both

favorable current in quarter. decrease with year lapped home drove volumes. did mineral that largely in in center We continued as our was our prior the and in level mix line also by to quarter, channel increase driven the the mix realize channel This we dynamics in inventory expectations year the fiber not repeat price

In year soft delivered addition, positive which compared as in the prior the largely offset quarter, to quarter. conditions our initiatives market

were segment $X adjusted main and Fiber volumes by expansion and WAVE EBITDA EBITDA $XX margin XX%. million WAVE drivers Mineral improvement. expanded a margin fall-through contribution by or earnings. and to of million EBITDA year, adjusted XX% points versus prior AUV the of adjusted equity solid XXX earnings The grew grew the margin higher basis driven equity from by

were project an results. during driven prior shifting our input of mid-single-digit our Modern and, we of SG&A support This was AS Sales by metal continued quarter from specifically larger delays favorable We time freight Bok uneven help valuation category. is costs demand versus Architectural [ quarter. contributions extent, Specialties ] costs segment year the primarily the unusual the that by in growth the the choppiness These a primarily X% AS. strength period. also segment of gas increase growth, input to sales mineral by discuss On contributions driven for in project-based expenses. in not offset inventory lower or and businesses drove saw lesser natural Slide from acquisition projects some and timing energy, lower fiber our in X, and Despite XXXX transportation lines

quarter. points by compressed margin basis EBITDA XX Adjusted the in

and we than business. were margin returning pressured And we previously remain margins due on of selling costs to committed greater the our margin investments, goal remain have a focused EBITDA as level to to in AS segment. the mentioned, manufacturing lumpy we XX% in expansion While

the organic expect expand XXXX, basis on we year In fact, margins EBITDA full segment. an for in this to still

by project vertical. few and to transportation the remain Xform to financials AS on noted, our second As be comment in XXXX. included excited quarter just we're our to impact outlook a time of results we add the encouraged minutes. the surrounding activities segment, Vic to monitor XXXX as will continue lines beginning in I'll in consolidated the And we backlog, our Xform's

the versus grew period, per driven year expanded and EBITDA adjusted by consolidated prior the highlights and share to cash basis margins increased points WAVE flow year adjusted diluted equity XX% XX% our by earnings. first free X period. solid EBITDA and Adjusted metrics. AUV company Slide versus XX% fall-through We earnings increased quarter XXX prior

to performance Slide shows since of the margin our company a of total XX.X fact, ]% the margin higher impacts. impacts. unfavorable primarily by quarter marks earnings start year Our cash and in and performance was increase our cash The was [ any partially year. prior CapEx, adjusted working flow adjusted lower EBITDA to by year-to-date best XX offset solid versus free prior was driven significant first XX% capital which pandemic-related XXXX, QX

be generation. to driving growth on flow with to which cash cash pleased remain adjusted fuels free continue and ability our We our focused strong profitability, deliver

with $X into a investment innovative an McKinstry, million earlier we leading a made and mentioned services February innovations entered our we and As energy call, on company this interest. overcast ownership year, a XX.X% partnership for equity construction in strategic

for our which results in we multiple million, to of of our Xform historic announced X EBITDA And pre-synergy of are with just of a our a multiple within overcast unallocated XXx. portion purchase price that acquisition recorded is yesterday, $XX segment. line reflects Our corporate

metrics all that We contributor positive will acquisition in be our expect XXXX. of a key to this

and capital our value Xform priority capital shareholders. for shareholders and business second, we that value partnerships we're strategic dividends. first like and investments share our repurchase creating allocation Strategic program executing allocation highest where through into are create back on the Recall our bolt-on examples are the to lastly, see how we acquisitions; overcast second returns; reinvesting of pursue priorities for

generate flow, the million priorities. dividends. we $XX ability cash and of and $XX well Given our to healthy to distributed sheet remain on execute of capital million strong all shares we In our allocation repurchased of balance positioned quarter, proven our consistently first

of existing last component million and in Recall As important allocation support extended July XXXX, over our XX, XXXX year, was this repurchase of [ moving of increased remains capital remaining strategy share the authorization. have ] in and of $XXX March our authorization through under by an forward. $XXX priorities we million

XX guidance our updated shows for XXXX. full Slide year

net our of our sales net sales an the company X% fiber for year primarily profitability the this of to and in XX% raised acquisition We contribution Xform. increase to Including expect the guidance for improved Xform. X% total from the now guidance acquisition, to have reflect year X% guidance the mineral prior by in growth our The growth. driven range, from increase we

back in lower fiber in mentioned be expect our growth in partially the and expect February to As offset economic continue low range. still call, down half we XXXX, of our volume slower modestly growth we resulting single-digit initiatives to to the demand, market mineral in

Mineral mix, contributions and along in our a average Fiber mid-single Fiber with expansion. earnings drive to to expect line equity of margin more be balanced with returning EBITDA solid historical WAVE AUV and We digits, from split to to continue Mineral of price

year, in fiber February from our from profitability evenly expectations driven compared flat we roughly is to increase expect contributions to the improved guidance adjusted our contributions costs from growth now primarily first range, now to X% to better-than-expected outlook Xform X% We mineral full by between quarter an lower-than-expected that the increase WAVE The mineral adjusted company for and versus split of profitability. XX% year in input closer based prior their on EBITDA and to growth. EBITDA is be improved fiber X% the The expect performance. prior our total

the accounting appendix our adjusted still adjusted a guidance. flow the assumptions compared prior note EPS diluted additional this free Please to diluted EPS and presentation. grow about increase adjusted of adjusted rate to EBITDA, are cash expect with in similar to for at We that Xform in of half

As macroeconomic half EBITDA the year, the of our back look forward, remains in we solid execution expansion focus despite XXXX. margin in on uncertainty and lingering

cash I'll And for flow for we it support We further and take remain committed our value now Vic comments free to to capital allocation continue create profitability driving your and to generation back turn questions. shareholders. to to before priorities consistent

Victor Grizzle

Chris. Thanks,

several backdrop quarters. a been Let what and and me seeing take past consistent we've the minute market market a Overall, in markets. the with currently the about low seeing over talk appears low be down single-digit to we're stable what -- and level commercial at

There and be more of appearing like to care to retail stable. continues and pockets centers office strength education, transportation, be health data verticals in with

uncertainty direction half, economic of ahead and there activity. a the inflation interest around of remains level on rates, overall Looking to back impact their the

customers this We in they to level pertains seeing hear are also their of backlogs build the than as market. uncertainty in from what it the

on uncertainty impact growth In our same and resilience this a expanding of overall create margins market year. modest unique expecting and well despite profitable delivering resilience. we XXXX, profitable the provides the of and resilience likely this the soft discretionary market renovation a back we're do market, its softness, With regard more This model We to allows demonstrated challenging positioned conditions. growth, was are and to value softening deliver activity, what this year. half us in still to business in

years, uniqueness ceilings an innovation in will value new has continue this of and attributes add leader, to many our and has along to resilience as The category. category the unique with for position a the hallmark ceiling of the it been and business

grow that year It's to new and to positioning our innovation provide customers value consistently after us AUV ultimately -- the unique that year. and is proposition a provides attributes these

carbon believe Now products involves to and that customers is our reduction. innovation and solutions energy address of an area that we important efficiency

As time. February entered the regulate pay XXXX, temp industry's block tile first ultimate can the ceiling we costs, and over call, temperatures reduce ceilings late themselves noted in buildings in energy help first within ceilings, our that for that we

generated because of annually carbon the cooling is we and about related to X/X XX% buildings all This generate and U.S., emissions a is that an in powering heating of building. important increasingly know

fiber appealing The Our carbon new tackles tiles Low ceiling embodied for lowest the LEC carbon or X/X and building's from year, Ultima this The carbon. while impact carbon maintaining ceiling typical of market acoustical account most generation. the recent LEC embodied product on the the launched tiles Embodied mineral a Carbon, are aesthetically of remaining tiles today its challenge Ultima embodied attributes.

of These relevant. more growth the increasingly for innovative that products the part are category And as Armstrong. overall products help again, come address the of to challenges making industry's thus solutions deliver [indiscernible] in an building important, form AUV ceilings

proven to earnings growth the me well recapping that let close lots long-term by growth So cycle. consistent our economic of model deliver positions and us

products drive and works and mentioned, with that that like the Our our carbon begins business, repetitive services initiatives back on products growth embodied model design AUV position create energy organically investing growth. the respond innovation just and into our evolving project current to saving value-added and market low strengthen long-term like ultimately I and needs, that

generation businesses growing Specialties, we're In services products building Architectural top cash can providing And new that a the be are flow highest net products high proven the and scaled able this record and to portfolio among And free opportunities of lastly, acquiring strong line attractive acquisition pursue our leverage. existing to margins strong, the our improve industry-leading have offering industry. we to and deliver track in broadest efficiencies and to attractive category. these growth of investments [indiscernible] in we of because specialties that make consistent operating add that EBITDA platform

invest for be to take economic market model company also This us questions. inorganically to of to And us our allows us attractive while even generation position leverage during these levels. consistent shareholders. uncertainty. in our we'll well times of growth to this believe keeping organically our attractive while business to your is that, and our an returning investments enables The cash at happy also We flow cash make long-term that with continues and softness,

Operator

Instructions] [Operator

from first Goldman Sachs. Susan the of Maklari comes from Your question line

Susan Maklari

map specific that the I implications any some choppiness Is coming can I on of just those any specialty talked terms more you And of anything time that in question you that helpful. first more in color color think would shifts think, caused you be architectural quarter. is those a this bit on there? lines? Or some projects about give through of just the wanted My there that,

Victor Grizzle

The ago, couple time a get we mentioned the Yes, projects and -- not right, get some airport quarter-to-quarter large more as quarters seen backlog, is I or of of of can more this, chop month-to-month, this into a you experienced And those bit land then -- that's -- first this that these kind of quarter. and of we your if shift large as jobs we've affect those flow. we in quarter-to-quarter we sure. we what chop, in little quarter-to-quarter our what timing will, in the of that's

what the we we year. activity, the quoting activity the growth have. the in prior be positive and in And from that quarter categories the support It order to to think encourages Again, these that versus bidding continues I continued robust. intake us guidance continue be saw Armstrong the to as

I these and quarters moves in again, of what So would in just, some larger more as we're the is normal out of of it terms the experiencing. describe of timing projects

Susan Maklari

just margin and overall that with Okay. line XX% it on Can through that should and the thoughts you are profile in All a helpful. That's you nice maybe acquisitions today about have synergies, talk the announced? sounds getting about then getting segment from there. more back And right. maybe trend Xform target? you some bit little the towards any in like how the come that that just think And you we

Victor Grizzle

architects these It spaces working product overlap, line is Yes. opens Armstrong. Absolutely. our such with and by with designers really industrial and we're We're really specified to excited applications it's for highly about same new for product little a and new very materials line but that this acquisition. complementary existing the up

it's line product also we're it's nature translucent very and product complementary the of excited the about the and that unique material. fact really a a So line,

actually to past the gaps -- of translucent in in products from materials Xform today the we've had, portfolio plug for some that We of we've don't some those gaps. purchased have our

So this really we well. really their company well. We know know products

a and So an with of couldn't be offices I broader, think architects strengthening even more the designers from more position in about of portfolio. that. We excited standpoint our complementary

It's office specialty and their scale in sides, things and leveraging on the both the the Armstrong some when back and businesses, cost their side, opportunities that good on a doing at architectural profile more other we've we Susan, seen look you platform. similar see Armstrong profitability, of really

what there similar our some do than So of we've previous our see as can more this business, getting that Armstrong in into margin well to profile machine cost them good synergies architect's to go-to-market to seen the distribution channel into improve we the of the acquisitions, as afford they again, today, leveraging has. offices

So we than deal is see deals. play similar of outcome terms this a in we're Obviously, business a smaller run little other similar very going some similar, a larger XX% we performance is to and level. of profile bit the But EBITDA a getting to expect our synergy that this very

Operator

line the from comes of question Garik Capital. with Shmois next Your Loop

Garik Shmois

Congrats on the quarter.

Just end you just wanted the transportation strong And markets the to outlook up follow moving growth that cited. forward. on given

agencies? could wondering get might an moving Specialties to pushback Do maybe difference the given piece X the on on we dealing speak you if just maybe with be think a tend transportation you're margin should accelerating part ]. you no maybe especially how component, Just the about mix forward. is [ those bit of there government if real more Or margin Architectural little

Victor Grizzle

material and a think the combination profile the the into. design architects to the I trying function really is margin spec Well, are that of

custom. less the more So general

you're I of you in have areas. to competition general, mix both. -- some of in those it's going a -- more have obviously think You But

profile far won. for experienced on not ones big thus there's we've margin the these the so And we've with departure that projects a that

across down right what more of are business. visible. see in of terms the kind They the It's middle we

Armstrong more much These we projects. true. -- bidding, So more -- going designs of we're there's an going these is be there's make can to so advantage unique to larger are They're to unique as design these to the to the provide projects. competition. and as Again, be that visible in trying bring portfolio

in the -- that's accretive an to opportunity, think, jobs. really that have I that's margin sure us profile these we larger make for So

Garik Shmois

bit question backward quarter. first more Understood. My on just a is follow-up looking just little the actually

provide the had just last year more from QX dynamics retail versus of year in you and what a and volume If impact was could on color on that little the this margins. AUV bit what impact mix, and channel

Christopher Calzaretta

Yes, Garik, it's Chris. Yes.

the in in outsized by of all quarter volume driven from perspective, retail that terms comparison quarter there. So dynamic a prior really was a And I'd year-over-year say the the the of year bit a build in that. mix terms of as mix, little result in was

price up in retail. was really in QX again, X%, mix mix, that largely saw by year-over-year So between we that pretty here but balanced AUV and benefit this comp fairly quarter driven

Operator

line Your next question Zelman & the Associates. of Adam from from Baumgarten comes

Adam Baumgarten

guidance, onetime or the at of looking quarter balance the Just the for that saw Or maybe of a WAVE the be perspective from for year. year? some Was kind year. about for the maybe isn't the in million why in you expansionary just implies there continuing less first benefit an equity to $X earnings so of bit seems the the rest balance that outlook of year-over-year

Victor Grizzle

a -- those the of had price or a been volatile steel normally the little know I have the if raise increases. X over Adam, you And we've dynamic recall get that. last very as ahead Yes, price dynamics we actually, result of twice months, to X and don't

think were than we I expecting. we little experienced more a bit

terms bit there the is remainder there out of its So year. timing normalizing of the that little way volume of a for in

result of buy a that as say more well. So operating on I'd good the would around side. I little there of really say [indiscernible] head a as But got volume really we've some it's bit

Adam Baumgarten

just purely Or out then it. there? more it helpful. kind back That's of you're like open or there cancellations And numbers timing? AS, come to permanent delays organic some looks bit. Is the just a Got revenue down little are Okay. that seeing

Victor Grizzle

impact in first based choppiness This the there's quarter. And my is to delays. the on again, in really -- we definitely Now answer the is back around business organic of that saw project certainly, prior project the no cancellations. timing part

Operator

line Twist. Keith question Hughes the of next from Your from comes

Keith Hughes

on Canopy. [ questions A ]

covered some kind had growth, again was out up markets weaker to out called that additive the of of there. it You

of more or doing playing detail in guidance do dollars XXXX. what the role for You that's that's see of how big

Victor Grizzle

If with really healthy low our at about our initiatives, terms But the Canopy, of large works actual that you growth and publicly single-digit some spaces offsetting haven't and initiatives, amount. markets, look we when of a that, to of talked in really dollars that part best we're together the probably to I reduction, is with think, these be the do continue size of impact initiatives. these you We're target help reinforcing and with we of initiatives. we pleased can the over the project right

Keith Hughes

Absent would mid-single mean, be for year. volume digits I those, the your down

Victor Grizzle

you, For an think the low that as is the answer area to I in year, give maybe close whole -- I could high probably single-digit Keith.

Operator

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

Stephen Kim

to was you to could purchase about I'm I of any maybe the we're And made. But accounting there? that wanted route market to Does be market and success, pretty of? of superior Xform. to we about of ask that given similar, presence seasonality size inventory sort think write-ups I that the a thinking was, other acquisitions affecting I Xform, should was acquisitions. in its its guess, -- I guessing, its that near-term any some it's specialties you've kind the architectural other little profitability that indicated issues aware kind thinking bit of have

of and to owner so be better you basically And going power how just that to a on to little if and see could wanted breadth the achieve context Xform allow which give you distribution a is the I assets? to your degree

Victor Grizzle

Chris? Do you take want first, to the

Christopher Calzaretta

pattern Yes. Xform as your more call from the items Stephen, here from for second seasonality. the rest And accounting smoother a of Yes. of to of year, projective. out Yes, pertains it question XXXX. kind no to contribution purchase expecting I on a to of mean,

Victor Grizzle

you're company for this this company network presence well-established Stephen, done that respected, plan highly We've footprint the have and network. to because They to for we and of best-in-class high-quality a We've a this company. distribution it's company. our quality addition is time call with agent We've well-established though, a long a out, our business have continue right had long we a Yes. and to a eye the set in time. company do leverage. with [indiscernible]. is known the that with But on to that, independent

can representation We well. know and in as marketplace that we exposure additional the bring channel that some through

to So initial that. complementary into marketplace. think as well-established definitely company something can We in nature a the a very we bring our going thoughts

Christopher Calzaretta

one comment just thing that maybe second got the obviously quarter the previous as X you on months -- QX QX to of year. months in here rest about my and think highlight full Steve, And in the then on out modeling you've and contribute the of X

Stephen Kim

in sense makes That Yes. ]. [ XQ

X And owners your great. But on contributed little you Okay, past if guess, I just background of called in then I was can lastly, left. bit adjustments, a on that. the of if months. color former provide ], of it's could out Atura you flow [ little the million cash cash curious flow $XX on, bit about you give a

Christopher Calzaretta

[indiscernible]. to Yes, that than aspect there no additional provide what other on we've of color disclosed

Stephen Kim

appreciate we'll follow up All right. color, I Well, all later. with though. you the

Operator

comes UBS. John the next question line Your of Lovallo of from

Unknown Analyst

John. for Spencer This on is Kaufman actually

weak one, on based your in first mentioned some conservative? kind second the to are of the you're the that print? And what signs change of March Or economic just slower relative growth half Is view you've first expecting slowing recognizing you could ABI The seeing here, out that there? half.

Victor Grizzle

voice indicators the Yes. the I the of ground the the again, a as in well mean reflection on modestly market really a softer and for is, the conditions, lot half that's field. of as back outlook

not So trying here. to we're conservative certainly be

spending, activity overall long the some likely we're back uncertainty lasts think that trying that in discretionary slower is half. economic I to will likely to impact in be back represent what we half, generally if think how there's going and about the especially

back that the again, which at the and mixed number GDP half. I that some the all impact signals at to including going to ABI a are activity. the that's we're And you when think mixed lower there, referenced likely you that I think So think referenced, you economic that, just on moment, really the fairly business have we look reaffirm modest see in indicators, overall there's the that

Unknown Analyst

Right.

Okay. If sense. makes that

think of and you expecting input now the I that puts In of guys be your I'm flat of you're some terms mentioned outlook? curious year-over-year. to just to takes costs, that relative to prior that

Christopher Calzaretta

Yes, sure.

really So be energy flat, inflation. kind costs offset about input material by for expecting of raw year, deflation full it's the to

So And full deflation, a expecting we raw I single-digit COGS for expect inputs. year total On XX% there. then freight. that nets energy of you down Freight's our high full raw about line which little we're for in on a energy out inflation materials low and for to single-digit reminder, if raws, our is in kind single-digit XX% And bit about terms year, on just about deflation XX%. materials. COGS break the of of flat and are low inflation,

Operator

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

Rafe Jadrosich

on could guidance to the the if mineral you of see follow wanted the just I of up was just through walk fiber to guidance in and raise. the more bit Xform outlook. then us much upside? change XQ a and little want it How

change that? organic to that was your half change So the for by that guidance XQ and for Xform $XX expectation raised organic. is XQ performance? organic on million, Did was Or XQ is just performance said about the you other half

Christopher Calzaretta

it's Rafe, Chris.

me let that. through walk So you

raise strength guidance to the on So referring is that you're EBITDA.

of contribution from about so acquisition. yes, Xform the to attributable half And that is

the to joint look step combination venture, [ deflation the a and WAVE our a other from so ice previously as really the a of we expect and costs year. of WAVE and the of portion QX that in mentioned, half, contributions stick when The side ] favorability, rest back for performance input we that of it's at take

at the our to EBITDA looking year, QX of the forward rest for looking triangulating rate. performance really around it's those inform and the So

Rafe Jadrosich

it. Got

X% excluding and helpful. on margin. AS, line you And Okay. like would acquired on then just XX% guidance the That's view focusing X% Xform? look today? Xform, for prior if does Like have hadn't AS the that I you the to top changed think What then

Christopher Calzaretta

Yes.

have can you And attributable business the in perspective, effect prepared ] acquisition. AS AS expended there's So is organic -- of if the the that and pull change margin that EBITDA in of to I really, remarks, AS in bit see here little apart dilutive on effect Xform sales exclude the that, would a a from Xform Xform EBITDA for year, [ for the my an you XXXX.

Rafe Jadrosich

So the core unchanged? -- outlook the is for core

Christopher Calzaretta

Xform, Xform really all driven. primarily correct. That's X Correct. It's

Operator

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

Kathryn Thompson

flow Just follow up allocation cash free to on wanted capital then generation 'XX. and for

XX So versus with in [ free CapEx year. a year-over-year most lower it last up was QX, ]% you increase, of generation, nice driven by cash but had

dividends and repurchases, which look we cadence you are think and deployment capital CapEx full should year, the As this how activity. versus M&A share about at lower the of year for

Christopher Calzaretta

Yes.

follow our a was So to kind lot on favorability CapEx CapEx, to CapEx. right, of of the timing of expect you're in our I the historical still due And QX guide patterns. you range quarterly. our changed $XX I mean or million that in But still million can for on that year. inform range don't see we not the that has to $XX

take a just capital in dividends so overall terms million quarter, from I'd again, the an of step back In allocation perspective. $XX dividends, of

And repurchases with share third repurchases haven't priorities our of share as by at changed. flex. way continue to Our cash priority continuing to to look dividends a be earning shareholders and we

see acquisition as second they the entered on in And evidence can quarter. quarter, our program the have we deck that share just that's share been. You flexing of softer the opposite repurchase the of than here repos were the first was Xform

flow to thinking timing bit cash as So noise you about pointed no we're it, certainly free of in a strategy. on no change change our here little to and how QX But adjusted out.

Kathryn Thompson

other is be change any that to shouldn't priorities. year-over-year fair just significant for broadly, So the of roughly allocation there in terms say meaningful our acquisitions, capital excluding balance it the

Christopher Calzaretta

fair. that's think I

Kathryn Thompson

said horse on anything beating QX what you've missing than reported than perhaps different Am a our nuanced that from meaningfully anything? And for But changed been that I -- said dead is guidance. you more -- you're had QX what to bit a earnings. horse Okay. know little And you has earnings? volumes has I when what appear saying today perspective, been be doesn't the you've about

Victor Grizzle

Yes. Thank Kathryn. you,

we've total think markets year, the the our seen half and back year. nothing outlook market seem and materially exactly to I for has We're that half that's experiencing there's we've half. for on in right. moving The this been back for the the that that quarters. at point, track the for that for communicating changed first you the several that will, if stable market last fairly we're indicators a for be little economic probably say all for sideways, activity the lower And the in

So sure plants no condition, our our and we're inflation growing margins. and expanding change our even AUV, really than in in and volume again, we plan productivity do a job good that outlook our making more in -- these softer to covering on this

Thank the play clarification. again to we and 'XX. quarter, 'XX. So that first on that's in for plan continue ran in run we We've the in it you that

Operator

next Ng Jefferies. question comes Your from from Phil

Philip Ng

take XXXX, stabilization back the us lag down? the sell business, activity to over guess for And we color looking XXXX? and mindful that perhaps starts Or a the to risk around volumes question. of just Dodge that Vik, of that I a pretty in you XXXX little with bit thanks step the good Kathryn's softening should given this data a half into year. as ABI be is your could help could bidding look kind where seen of you've beyond

Victor Grizzle

even there's API in right? really. back But our long publicized, ABI, and indicator The a a weak would we've business is positives I it's for that. you peel corelator. weak -- the ABI when mixed negatives of correlation actually time, kind And within that, quite but a is It say, even for standpoint, within from said some Yes. that, a

about 'XX. and that into not overly eye not is the certainly ABI And an We'll business, of in it keep came outlook concerned our it indicator. so because -- reading for on an out 'XX we're in not our terms

our bidding activity, activity at aggregate was look that in and in again, at and we and particular it the the the course, But economic -- at flattish. overall fairly of indicators Dodge verticals, looking activity, look across bidding as to other

moving -- it to kind a like feels to of So it's what very us. kind That's stabilized stabilized forward. all pointing market a more of

Philip Ng

I helpful. really That's Okay. guess a question for Chris.

prepared said XX% make when the EBITDA some EBITDA range. to guide you I remarks, out to think in want just Xforms. your in was upside ]% I X roughly that about XX% the in margins [ Does shake now? Armstrong's of under your longer And about growth that you is correctly. in of typically the sure business product are that think I'm thinking profile right term, what what's about it watch? applications used the And in

Christopher Calzaretta

to double-digit again, that Yes, initially. demonstrate Phil. acquisitions, that and as so and we the in And in it's range. how a to Yes, Vic then to value additional kind directly, Thanks. these synergies. creation is we've But driving them value able EBITDA been we that then kind of looking through, obviously, cost mentioned, through on about your question, low question initially of how low shareholder the it's range yes, integrating at answer margin platform double-digit think good top bringing Armstrong line through creation margins

Philip Ng

should I about... think

Victor Grizzle

No, go ahead, Phil. Go ahead.

Philip Ng

if going to was growth I ask to of profile business was miss and applications the this of Chris going the used. some that's

Victor Grizzle

as through think more it business, in a synergies of revenue similar. it's this some architect's of think getting So opportunity that go-to-market terms right? the larger a little on offices there's service we business, We to platform well. leverage another that So our and Yes, similar platform, of will we a it the well-established business that exposed that's real it's network. Armstrong. bolt leveraged the size, positive We is it's which It's think aspect distribution -- right? be as onto

Philip Ng

Okay.

it of guess... as currently. And growth standpoint your think AS business to pretty largely how a is I should we comparable growing So from

Victor Grizzle

correct. That's

Philip Ng

have it's you think of relationships the the since -- your out things? you that how into an products relations? opportunity to could bring some quickly a for larger these side independent you there called of is distribution kind on of leverage of existing you, deal that products And is do And onto your some they already

Victor Grizzle

Yes.

established network, reverse with that. well this there's as well-established network at With synergies their

team it So at starting quickly up to here. everybody on ground the on integration of There we're going products. other yes, a sense we've And we run to play to after run going acquisitions. that other's these very will the process. side a -- each on emergency the get to We're be today other have to speed be

Operator

conference the now Vic There will to for are I no questions time. turn over this remarks. further back closing at Grizzle

Victor Grizzle

to addition excited mean model it in. having what we're today. Yes. we're obviously to and entire to start how operating Thank Xform excited We're we're and very that that can in year portfolio joining about of for our the you the markets extremely additional leverage. the we're the all in And and by our the for call business markets about portfolio the this

you again. you thank forward to So next quarter. Look updating

Operator

joining. That for Thank concludes today's you call. all

disconnect. now may You

Armstrong World Industries (AWI) 30 Apr 242024 Q1 Earnings call transcript