Armstrong World Industries (AWI) 21 Feb 232022 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Armstrong World Industries, Inc. Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Theresa Womble, Vice President of Investor Relations.

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

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

this involve of forward-looking statements our risks may differ and During XX, those of that have operational be and February we as uncertainties or performance that view we call, from implied. financial today's materially will statements represent expected These making date, the XXXX.

to risks We uncertainties undertake that also provide filed and this the securities beyond law. by in applicable our obligation any of detailed We XX-K discussion filings, including what is was update a morning. required forward-looking statements our SEC no

will that, over Vic. the turn With to call now I

and be Theresa, for of joining and we sales net our adjusted rose results, you markets. and quarter EBITDA all continues solid you, call environment X%. today. Thank morning, Today, and our reported what and quarter Fourth full-year a fourth good challenging to thank for end many increased X%

plants. by increased strong net fiber well full-year, earnings strong sales gains solid as from in X%, and XX% in AUV Specialty growth our as XXXX EBITDA Mineral driven and the growth, For sales and Architectural results improved mineral productivity Fiber,

primarily levels. lower-than-expected of equity expectations to many close of heading earnings. at On were did was challenging on into teams what the due products. inventory our the I'm grid corrections end a results continuation All-in-all, These proud work quarter, WAVE out fourth on a low year the to of our the

a Taking our segments. look at closer

and fourth growth XX% This marks XX% in specialty Specialties of Let the where we the for Architectural quarter the growth ninth me begin full-year. segment, in sales achieved consecutive quarter segment. sales with our year-over-year the double-digit

by These were both for our products. driven outstanding demand results strong standard custom and broad-based

span While saw strength higher verticals, server these demand in for transportation projects. products particular education and we

has in product that by Specialties We've and we've the reach segment in us of to the allowed more participating and This been over the platforms ceiling category, more and design importantly, built jobs. buildings last Architectural years, spaces create past scale and the penetrate the new complex over further growth decade. acquiring leveraging strong wall delivered Armstrong capabilities and commercial we've the to specialty the several in larger,

and of advantage of the Kansas best projects as One was illustrates City that project. competitive highlights our the and the completion scale capability quarter Airport true of the International a

design are As challenges. many and imagine, can airport contain complex, you large, projects

Later Airport to look City week, products unique generate to the likely for the tremendous have is open and the achieve our there. next from helped community interest Kansas design feel,

our simply As see the inspiring. products, you the there, wood notice, you work design, with particularly is when will

from products able our I'm that also safety industry-leading This felt, few mineral products. portfolio, product to and It's would meet confident new broad to demanded have companies fiber that meet. standards Armstrong also multiple of lots project and tapped technology a wood been heightened utilizing metal, project to

combination the the along awarded terminal airport, point, growing continued here our the Americas. of have Again, of And Armstrong. were the enabling in ever in our capabilities Pittsburgh our just the success sciences we which is that category. is at to new largest further this with capabilities all a at to we this and project material these further passion and factors testament team innovation a It's

incredible win fiber and our products multiple from mineral competitive and Moz look a unique products, column scale, with of again, metal, wood custom MetalWorks involve panels, capability. and covers, our an confirmation size, and built our will It advantage including WAVE the portfolio, we've grid

generated Fiber solid growth quarter was Mineral positive with like-for-like at pricing, mix segment. by year. the driven driven the growth of achieving to levels. top primarily Turning and fixed of a line by double-digit secondarily, This We contribution the robust the product second AUV fourth strongest year

Our successfully AUV execution to materials and raw inflationary allowed us pressures gas. manage on natural

value innovation, all are affirmation the As market is to said customers, and an committed differentiate helping granted, best-in-class and price us this support to pricing and quality, we for we've being before, achievement. for and the of speed, you take never the in to our create in

run delivering offset which plants execute pressures. Fiber continue to well, Our helped strong inflationary productivity, also and Mineral

all continue execute with and to service I and products help continue quality still results Our market efficiency levels. to while excellent consistent of variety deliver in every innovate practices production product impressed how teams we new a that conditions. introduce benefits. maintaining and be continue and deploy initiatives And adapt plant drive lean mix teams to year, manufacturing our

into year began was the the most half the lower-than-expected challenged and the deceleration by market weakening demand fourth inventory reported, weaker soft then by throughout to year tied market that primarily turn, equity the third as in inventory weakness second earnings year. and in driven early was corrections in volumes Fiber the we've the continued steel and of quarter. Mineral demand were Fiber the the corrections in exacerbated quarter headwind throughout volumes As WAVE year The WAVE significant to earnings began Mineral volumes. prices by in

market After disappointed in begin XXXX. up outlook strong how shaped We to the were certainly in a year. having demand

office mid-single-digit chains against with XXXX Dodge driving Mineral activity, You'll improvements That year volumes. increasing remember, bidding backdrop return at positive supply beginning in forecast at in based activity the positive a X.X% was low strong market to and on into macroeconomic we came January. GDP the Fiber tailwind expecting to a

the in of throughout the year construction [weakest] weakened eventually the GDP rising commercial with inflation, economic including growth from [ph] real outlooks rates, the Ukraine, at level Conditions interest of quarter repercussions year. to war deteriorated rapid Macroeconomic the leading in for the the also and uncertainty. fourth

negative with markets below our in bidding Dodge areas demand there turned This of XX backdrop, negative Consequently, are industry strength. three for of notable in towards and activity end softer ultimately the last months. the ABI key remaining and indicators this weaker Against the turning year. resulted decelerated

a and worth as side. grid a the we're higher both verticals our demand the life the seeing for that stronger AUV and centers higher education, Data product Within health bright and products, noting, that are and well both K-XX from key the also Mineral side, tile our care have ed, and as sciences Fiber, spot, on is positive been transportation.

in seems is negatively sales this to continues tenant We stalled in to activity, believe Fiber Mineral to improvement Office some however, areas. back-to-office lag, and and impacting contributing work momentum headwind volumes. have the

current given particularly hikes, We are to weakness interest as market tries to Fed rate economic in additional and continue inflation. outlook expecting further the XXXX, the curb

quarter – expect of full activity. volume digits. to a to with is be We renovation in fourth as segment to sales also further Fiber at XXXX first reduction result extent further of to levels activity activity XXXX mid-single Fiber in Specialties experience in likely Architectural the compared to Mineral weakness Mineral down back half potential, year however, half a the activity, XXXX, and lesser

and was when required, will activity positive the positive XXXX. a said, in partially offsetting be provide new of into could construction ceiling in second demand And lagged That XXXX when XXXX. for half

to Chris? more on and I'll moment for turn Chris financials. over our pause to provide some details it here a

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

and I website, full-year to as outlook, Slide available as XXXX our keep results, presentation. slides on X that quarter I'll well our referring fourth our As in of review and the our details basis XXXX mind please be

quarter results. On Slide X, fourth consolidated we our begin with

mentioned, margin prior points. $XXX and contracted segments. As XX basis both net year, by million, were Vic EBITDA sales Adjusted up X% growth versus of driven adjusted in increased X% EBITDA the

offset count diluted effective $X.XX to prior the by increase or share to decreased primarily by per Adjusted below rate, year, prior tax a reduced share year. X% the earnings from an in $X.XX due partially

also shows AUV in driven levels The primarily by adjusted favorable volumes venture. fourth X WAVE adjusted versus increase our of in was partially and EBITDA inflation, X% prior earnings by which Slide increased equity quarter performance, decrease was a the joint year. lower EBITDA bridge our from offset

headwinds cost from component inflation the the partially of Inflation Fiber were quarter volumes prices gas remained fourth quarter. segment. although input another the Mineral largest in AS contributions solid Negative remain, softened by natural of inflation. offset Raw material

Fiber in price buying were quarter, Mineral fourth period year volume to addition the declines in customers XXXX were weaker a by market demand a lapping prior which January increase. some strong driven ahead in of

negatively prior WAVE by the were impacted by customer XX% continued down equity as partially were offset volumes lower inventory into quarter, favorable and fourth year AUV. corrections earnings versus

XX%. On with XX%, pricing we results. volumes net by we Slide Mineral partially favorable driven positive delivered offset sales of channel lower quarter, mix. On X% year-over-year increased and along favorable summarize in quarter X, segment by product the of Fiber which was Fourth AUV like-for-like AUV, our

result center driven higher-end comparison products quarter. sales the the large of relative Channel of to year. decline portion from prior or mix our was lower as positive by white volume, home sales of a customers year smooth mix tile. to SWAT Product stronger benefited On acoustical XX% versus was a the difficult prior

in of we've market the primarily volume As buy-ahead the channel. decline of The center increase. weakening the our XXXX January fourth customer prior was included advance demand, quarter remainder calls, price driven activity XXXX in by in home discussed the of

in third quarter and sales increased negative As channel not mix particular a reminder, lumpiness uncommon. volumes home this the drove center and in channel is

the price With productivity. fourth result QX. X%, of EBITDA benefits and strong moderating sequentially from dollar execution as in improved realization over manufacturing Mineral quarter over performance grew our Fiber price inflation and the a AUV strong inflation,

quarter, solid plant the across our In contributions productivity manufacturing the network. overdelivered operations teams with

by prudent were input we from earnings weaker continued saw also and These joint lower benefit partially offset as lower a inflation from on venture. finish our control the WAVE year. cost volumes, cost SG&A positives We

WAVE Mineral The than SG&A by offset margin earnings, expense. more EBITDA was weaker partially by Fiber explained lower compression

this energy XXXX. we mentioned, our happy to pricing, and see of were we cost driven I see gas key natural by moderating materials to pressure, inflation into continue several to continue expect raw but As

Architectural this or completed a is In castings reach Plasterform Products, tuck-in quarter, area. X, architectural GC product which and discuss in expands acquisition we Slide our fourth our On attractive segment existing results. Specialties complement an AS we of our to the geographic business

delivering consecutive quarter in XX% efficiencies to year. AS X enabling and fourth grow the penetrating to growth the last of delivered and sales X double-digit broadest margins. product growth. segment's categories, further we're scale growth product marks through well the channels ninth quarter our versus expanding of over of out XX% year-over-year prior AWI the sales with By This perform portfolio, continued network and building the market

quarter manufacturing their the the margin of year. points top versus basis XX segment expanding Driving fall-through EBITDA fact, QX expansion delivered In from fifth the with increased SG&A AS sales was prior margin consecutive expenses expansion year, growth. the the with in-line due by offset increased prior costs, of in line, higher continued partially higher which than was to were investments slightly sales. support

year company the was pressured WAVE The in XX%, per contraction share EBITDA Slide EBITDA X% X% diluted of increase X of and flow our Adjusted equity by net WAVE growth sales majority an inflation, growth adjusted metrics. full margin earnings We result drove cash the shows results. lower free was SG&A while by negative of in consolidated and the earnings. driven increased XX%. increased by

and SG&A equity full-year lower initiatives, at the sales volumes positive inflation, and AS WAVE including offset increased investments to growth AUV the earnings. primarily EBITDA and related expenses by were bridge, Looking favorable growth higher partially company-wide

debt increase versus flow the companies. reviews XX% the special Slide the the joint a of an Directors resulted periodically adjusted adjusted increase excess which returns Board prior WAVE free in WAVE cash capital year. includes cash dividends, XX leverage shows performance structure in dividend. The full-year net million $XX from The flow parent of cash and and venture, primarily free to

capital That In cash dividend, was Cash WAVE on earnings free was by timing-related offset interest capital headwind versus addition our environment we through Returning spend and of due the and this share expenditures benefit. strategy is pillars net continued negative to our partially working throughout XXXX. cash higher cash benefit a to shareholders XXXX. repurchases the dividends lower in to rate provided rising allocation prior X year on impacts. the and capital special to deliver interest of one flow the

time million of $XX total of our total In program inception the XX.X of share share than more XXXX, full-year the $XXX $XXX for of outstanding repurchase million Since million. shares repurchase in we quarter, repurchased authorization XX% the the brings have repurchased we of or which shares, million. about shares the to at fourth a

When dividends our over we including returned shareholders payments, share to $X dividend through have billion XXXX. repurchases since both and

quarter. quarterly dividend our the in we XX% cash addition, increased by In fourth

XXXX year full our guidance. shows XX Slide

We environment. macroeconomic are growth in delivering focusing on sales and a earnings challenging

most of in Our pressure in guidance year. assumes a back weaker the with the half pronounced market XXXX

to sales range the We adjusted X%. of range in growth X% expect consolidated X% the and EBITDA to net in of growth X%

offset challenging expect from netting mid-single-digit to macroeconomic contributions market decline on volumes year-over-year. weigh a conditions Fiber initiatives, Mineral our by in We demand, partially positive

We fall-through AUV historical growth rates. expect Fiber with above average Mineral

expect year, results. We prior the rebounding positive equity from WAVE earnings versus XXXX

Additionally, investments related we of operating decided one normal initiatives. as to growth investment rhythm have of part assessing our back and pull returns, their our of to digital

the As a we a $X million, primarily to actions in of will more Vic year. result restructuring expected of have this in of reduction deliver and savings realized are SG&A that decision, annual the headcount about These initiated half detail explain shortly. second plan

in grow free higher grow flow X% the close the in the EPS working and XXXX earnings discussion cash to to to XX% expected adjusted of range, adjusted and driven X% benefits. range to expected out is on by capital our cash To X%, guidance, is

to available are presentation. in assumptions Additional the this appendix

And provide EBITDA million input while the timing. weigh million related Fiber the Mineral This to Mineral quarter, but in will expect cost $X we margins throughout impactful we headwind first first be rest guidance, don't quarter to quarterly will the inventory a by year. valuation of $X temporarily Fiber impacted less to on be inflation

before I'll it additional we Vic some thoughts back your And turn questions. now, for to take

Thanks, Chris.

we're and further a have weakening look referenced, planning organization. Chris As in our at for thoughtful taken XXXX economic

deliver to investments consistent in all growth ensure levers and our Our growth. profitable the we control

to XXXX, optimization. an January, our we expect conditions effort an workforce stopping in has to we result, investment of size initiatives to organization digital our our in trimmed related see market in also sales the one this a in included to lead As growth

it to tool, investing the our be continue enhance to built time. we'll at expand While and further thus this will team has not we use far,

to the organization is scale, opportunity to This point and one streamline of Armstrong's of the of effectively advantage efficiency, important an delivers breadth also size, manage further for the management sales Mineral as sales and We face Specialty took Fiber our capability. to Architectural that leverage customer. competitive and

case each by demand. continuing Project Canopy their to of are and We Spaces in new Healthy investment and are these meeting Works of initiatives Armstrong, invest unlocking as sources

declined. With Healthy the Mineral further these are and portfolio can the products Spaces is industry. continues initiative, and are while This because initiatives specifically, the antimicrobial need our and XXXX, grow, gains for most we in digits double outperform Healthy improving position market Armstrong's Fiber we cleanable Mineral Fiber our strengthen of Spaces the to products is portfolio the grew products providing demand unmatched competitive in

for Building addition, IQ innovation. we recently, market signing XXXX to half and the healthier In winning gaining in Air was is awards leading spaces movement StrataClean the in in our of product the House our second that launched White product just advanced and Challenge. traction toward commitment And the Clean EPA's line by

On Canopy the XXXX. growth quarter-on-quarter Armstrong digital delivered front, throughout by

opportunities seeing sales survey large base the to been from we latent our our validation new intent has points. create And proof mineral work, fiber installed ceilings. of beginning from are from Our the of in demand

in today indicated Canopy than an of that ceilings never XX% years of website. XXXX Surveys before And customers old. buying have using a Canopy third the that the purchased less buildings nearly are of Armstrong XX customers product were and renovating customers on

average. Now, national that's the well above

marketplace the and creating something validating in that missing is Canopy providing demand. Again, new

to are full-year. strong be And growth XXXX a we EBITDA for we continuation expect Canopy encouraged with positive results, growth contribute importantly, expect trend. the We and to XXXX of the

packages important simplify less and increasing platform, designs Throughout design the products ProjectWorks automated of speed the its number has to AWI team than and in shortened more turning the and the the expanding year, project progress days. that service by into doubled ordering installation. its and on turnaround made ProjectWorks, three than XXXX our drawing design of projects also number time

to key The and our bill value and time design are community. instructions goods savings, along architect propositions job strengthen on relationships contractors an waste of the site accurate our the that with and with customers eliminate installation that

business. investments have sets our in investments the weaker solid we growth have capabilities Architectural XXXX in for selling delivered These in Specialties a strong market. us rapidly growth supported and included XXXX, growing up the Our also and increasing despite manufacturing growth

statement of developed to in small And large win unlike existing and sector players is power we've category. architects, in to we here key chain basis. best across ceilings focus with distributors, the The wall the this and contractors, positioned are with specialty relationships and general the have the value both we to designers

Mineral to the by initiatives fundamentals supported cash ability in segment. of unique Our invest attractive is resilience the free generation, of Fiber by the these enabled flow our overall

as shareholders existing continue in return operations, as we said, for to attractive allocation dividends delivering well our our growth complementary to invest flow consistent and strategic we'll free through look in We commitment repurchases. our capital opportunities solid and continue expect cash as beyond this, established into priorities. back will And to cash with further to share our XXXX Chris value our acquisitions,

thank to beyond. attractive our their Finally, a With unique like tireless in company profitable entire confident XXXX in position people focus places and through right our year economic team, I out the efforts right XXXX. have all to challenging cycle. parts growth, to industry the remain our an say and you to consistently we our the category, more turned in team on I of deliver be that strong the lead ability results forward to and have the we what would and Armstrong for

to that, to the take hand operator. And I back your be it happy now with we'll And questions.

Instructions] Maklari Sachs. question [Operator with Goldman from Susan Our you. comes Thank first

may proceed. You

morning. you. Good Thank everyone.

Good morning, Susan.

pricing the inflationary the lot last years in you first of success a Good of segment, know obviously in Mineral couple you've question the environment. over actually seen this about morning. Fiber there thinking My is,

bit talk XXXX, a ability carryover get of to you're to the can gains about reflect moving a of pricing? expecting normalized incremental you And think back you how much more this pricing versus potentially through? for of continue year to cadence the As

backdrop the that is, environment. to Susan, inflationary as continuation mentioned, a the Yes. clearly of Chris

condition companies lot in tail as some contracts in XXXX. over, curve of this of to a terms under – exactly, a I or some the the on we're there's be a that's where of are contracts inflationary in roll those situation in inflation going expect in. contracts and And protected We are And those in think, catch-up given they inflation. probably

going items raw materials certain some rolling – energy. our and to inflationary in although some over both We're of see

additional going that rolled over are We to and see some contracts from inflation now have are repriced.

I a again, companies that. lot So, of in are think

we're to So, going in your going us. incremental to the inflationary be be environment for question, an to really important is pricing where,

With and that for get our said, I cadence at us, to point, is increases. price hope a plan on to this regular our back

So, priced in then price and one of carryover February expecting increases X%, you're August, first that get the already in to get good our our one year. a our to normal referencing. with one that two on We've – realization realization and we're at back cadence really

have going into that's margins going I think XXXX. to support the carryover our need to expand we to again, in that's year to price normal – rates have we're And going some historically, plan. foundationally realization the

gains pricing our that from see with it price can deliver carryover, increase the the You cadence more fall-through. in to in a regular outlook expansion incremental margin the the

area to kick relation What's about about of some a see you that space weakness over the talked little seeing you in do That's those How how the that that's a very to slower we of that to been come think your in And broader to sectors been office really time? where do Okay. about you think volumes business about relative [end-market]. that investments the then of to in Clearly, really other back through? cover thinking the sense? in coming there, some some there. you're helpful. And the ability sort bit an to you of grow That's that, in that going finally can there. get

Yes.

business, referencing. in the certainly but – business, of the our it's our think So, Fiber about right? impactful the I majority of segment Mineral the is is again, it XX% not you're as office business,

around think I people the mentioned tenant were normal activity, maintenance I a we as and their work. our in on way, with their were So, to prepared remarks, cadence well I think back-to-office getting my improvement back

profitability around in back. and companies I economy, on about discretionary the and think pulled offices of clearly these got half projects back year of pulling know back the expenses, uncertainty the are I course, the thinking their

So, question And to And what needs renovation to I to some a hasn't – the those uncertainty needs funds get It office think away. back then into lot But back done. have get curve think to work office that's up. your segment that's about segment the for again, this think up. going we'll uncertainty still in a And on think I there. to the that healing us back particular. of to this happen? people we're get to projects, as cleared itself, growth I in I get to offices. be has It gone think sitting is the to get clear what's to of required find I going for have to

all good for Thanks luck. and Okay. color the

you, Susan. Thank Yes.

you. Thank

Our from Keith with next question Truist. Hughes comes

You may proceed.

you. Thank

markets framework give year, of of to volume? assume one standout end-user On flavor a it sort you're for contract fair expecting going your what's idea to on? Or the but of of some positives? of in kind is kind you or the guidance Can for it, you've what given is some every that the there

Yes.

the verticals. traction I activity think across broadly and Keith, of all speaking, expecting we're

of a there's couple think I standouts.

us products to on side volume. – business. airport those up Architectural are going Let Airport would that expect said, mentioned majority it of that outperform pull-through me mostly we're projects tend the Fiber But there with be does the Transportation And project, the the that's in Mineral to just mean, because that the show And of other Specialties in to I winning. transportation, but I Pittsburgh segment. several I

of bit a that's So, standout. a

of education with when again, to that, negative standout tracking that Act, you generally verticals sense When starts from the most we're speaking, And be still and that project as funding think of been that conditions. spent. And the is CARES some verticals there. But behind of stands that through, I come more look all positive hasn't education. majority we'll that see one think being activity, continues the about softer reason I at the the to expecting the the to other would I'm make right funding activity bidding the market now, that Dodge

about just And a earlier second volume guess, Is of year, kind that I being missed that? comment what was with there the half of or comment the a I weaker. you were towards going

referencing half, That's I've kind in it rate the back Keith. of see a around, half volumes, the volume and customers, in to its they as first – run it But to they on now. most I fourth visibility market again, talking impact have think I Keith right the our been quarter activity to rates. uncertainty in The a got similar run has as and think

the based of get I what and we does macroeconomic the and so figure kind think activity and trying to have what people out, will what's are going to spent on Fed conditions still forth.

Thank Okay. you.

you. Thank

Our from with comes next Garik Loop Shmois Capital. question

You may proceed.

Thanks.

to Just cadence as project to wondering you cancelations. the delays could if of opposed speak outright

last quarter, if cancellations. weren't maybe the over has days? seeing bit delays, wondering, proportion a there was changed were the I XX last you I seeing think you

Yes.

continue that to most continue Garik. We I delays. to part, the this, say for these be would track

couple projects a if to sector, Again, part, two especially it's isolated language, closed sector, it and right. it tech You'll cancellation hear continue of one a We'll that's even of sounds projects feels to for in hear like a cancellation. these in most or most but the be status. delayed delayed the in tech the projects, like some,

gotten think get bit important that based I part consider what in pipeline. or context creating labor doesn't supply of projects the terms issues or started a is what on chain in void hasn't of to of the issues the against Now, started that a

I works an way eye kind the that to on as its that through also system. think trying we're keep of

I Thank you for inventories. follow-up that. on to want

channels? in other destocking talked Are you any in You seeing any about destocking WAVE.

if inventory inventory. home you the of venture, in the tile we've channel, – the centers, sold but made and WAVE other like a that pattern But saw grid in and will, it's normal destocking. same We've same of remind channel. similar not right? the the products all products seen kind to We it's the seen package the channels a Just It's not our buildup same are unique by drawdown joint like, that our behavior, again, as through our everybody, in in behavior. are and

I think buying ahead what increases, business the unprecedented was increases levels nine we've products had of in drove everybody as in XXXX. side back-to-back these in grid seen in that we particular, steel – years of inflation the steel we've the inventory levels price reminder, of had price

drove prices our So, from most of lots they steel in as higher companies raising levels or channels. there was steel that rapidly and see products could inventory as than can other products what we

stabilized, of supply this destocking. – drove Most inflation of down chain condition that that and to with was quarter, our following I that was of it that that first believe start first we talking something were would level seems that the disruptions It's distributors, chasing unprecedented is the the and we're in an that again, majority have extraordinary around us. steel the in behind all here stabilize quarter, year. destocking So, to we and and say, behind really prices us. extent – be In as

very Understand. Thank you much.

you. Thank

you. Thank

with Phil Jefferies. Ng next comes question from Our

You may proceed.

XQ guys. tracking back on which your you was saying fourth sorry, about I mean, a visibility. on of first I weaker comments you're your a volumes. is the XXXX less was your of similar I thought were half or with down XX%, – saying also quarter was comments on outlook maybe was the Vic, have fourth kind on I I tracking Hi, – could little little to be think. levels, going to quarter be you But half confused confused

year? help us moving the progression think make sure kind volume understand I we just through want to So, of the through the pieces.

Yes. That comparison is comparison. really market-to-market

a If January the with that, in quarter drove of volume base a XX in noise period year. at more comparison that fourth in price we a quarter, there's you the had last right, from look the fourth minus lot that lot increase what

about that a period comparison. So, as talking part we've of XX, big base been as a

market, look what that we we in apples-to-apples the commenting saw the So, activity year. at in half think the is you expect I see comparison when that to the first of of what general we're market

right? down we it sure [ph] just like half make to high? mid? down we [mid-single] Or get number, closer down first that sure I back I is they're half. get want the to Is to make digits? want just the So, the right So versus

this we're think think to outlooking about our for for digits. the the I mid-single full-year is, way down Well, full-year,

Our is as X not to of a in of year first as average outlook much further probably digits. to the half get down we slowdown mid-single back down the as half that

to And Phil. more a on bit, maybe little add a maybe little just for there. Yes, just

first half kind quarter, the the then a positive prior in the softness QX. the the volumes decelerates we're year as of more we as really pronounced progression On of volume back but the of for rest year lapping which of through year. mentioned, softer, Vic expect period, the was And QX

appreciating think for that on this That makes some go of carryover in how relief year? terms AUV all on and gas much for but cost, And X% you're guide Okay. the then we is price do how on for inflation nat And you cost perfect inflation XXXX? side, should sense. you perhaps, guys your XXXX price seeing about think

Phil, Chris. So it's

the around overall I'd mid-single cost So, range. inflation, inflation – thinking in be the on digits about input the

of of in inflationary pressure the where Vic nat had of earlier, the higher on But mid-single XXXX, raw as side, of the of You really environment here those with there. XXXX, and inflation. we're mentioned deflationary that's a some little That's paint bit lot mentioned going input inflationary digits. continued see to of of a picking way by that landscape are kind up costs, for kind how rolling I'd levels contracts gas

our terms In going again, from Vic getting carryover here and bit mentioned, to, of forward. a cadence then price, of little normal XXXX price increases of as back

incremental is pricing between are it the Chris, versus or that you towards more is guys carryover evenly pretty is to split skewed price carryover? AUV, guiding

price the that in overall split more Yes. AUV more terms I'd be towards number. carryover, thinking that of in weighted AUV absent

it. you. Thank Okay. Appreciate

Thank you.

Our Zelman next from & comes question Associates. Baumgarten Adam with

proceed. may You

good everyone. Hey, morning

activity half levels first and commentary the XQ. you on to similar about talked Just,

sort XQ quarters we, So well? of the in should about the be thinking of similar to earnings year, quarterly couple as of first

I specific comparison. think proxy quarterly of We're not I of away – this some is I'm on Well, period again stay that, side we the a saw, about pretty good from think the going but volume the guidance was to what base talking for a minus the attention unusual volume. in and represent unusual in destocking base what got the And said, marketplace. first didn't event on comparison earlier as the you've in to was going XX with very another to happened except that quarter, XXXX period Chris pay

think that's that there's fourth I the quarter I again, little pay there. that's on as to first But into there’s negate recognize goodness be to sentiment we'll of customers volume close, that bit based give. the are to down noise going going coming seeing. again, quarter. like we'd timing some that as a were in similar side. But also some what market half Chris guidance we So, a fashion that quarterly is I and And some think see triangulation And the recognize of on to a we're the to on based could our the of first have to to issues very seeing what some attention in think, I the of

continuation unknown we're right further majority of with of the what the I the coming additional softness think, or, lack of the in then the half in now. and supports backlog year, given back And the that

of So, give in and the terms we're guidance, color as at in environment hopefully, especially that quarterly moment. like in an to as I that much the helps like

the know the just we I How couple shelving about as we the just you're years. your initiatives Okay. mentioned some about digital think perspective around speaking, been margin dollar's growing and think embedded a the last it in which on should then side, XXXX over SG&A, what's But has And of guidance? you in – of helpful. and just No, savings broadly that's that. from

Yes.

is So – this Chris.

above assumptions thinking both Fiber terms in the XXXX mean, highlighted initiatives it fund investments SG&A, in that of on AS, in well So, in about the of XXXX we've in as continued we I about, be The associated the invest there back business. further that of side some of to restructure there's I'd But with in the And that then savings guidance. talked and overall, as those in initiatives. and the those guide around continued Mineral business. terms helped growth that's

Okay. Thank you.

Thank you.

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

You may proceed.

Good morning. Thanks for my question.

this year, last will cadence give year margin commentary on Following little higher any a color first the up inflation just second the and ratio through in is on on more the XXXX, the be of the just there gross of assumption of year to question Can versus through SG&A, the you the bit half the compared half? SG&A. on

Yes.

part So, that let Rafe. of the second take first, me

to XXXX certainly expect the more margin but And going in expect to the our back overall the be as side, digital margins contribution little then outlooked on yes, some impact. a on here half initiatives, materials we obviously, initiatives, weighted. talked, inflationary front So raw strong haven't in margin really we gross

investments given and margins, SG&A contribution we're you in say, our EBITDA for macroeconomic expand WAVE company contribution, to overall, I'd margins overall looking XXXX, a know environment. challenging expand in AUV the back and the our from

then about Would some over helpful. kind those sort just longer-term you you of have going going, of back do market pulling SG&A the long-term Thank you into condition? of then on how stays, on longer term, at office the or in, of you some level look of investments? to investment weak. investing If think XXXX, SG&A Just the do kind relative pressure, of that sort stays the outlook, volume as more That's you're the And initiatives and about near-term. obviously cautious think you. under

Yes.

Let me take that.

we of we I room but be coming we're investments. Rafe, getting we're we is the and continuing market we'll way by pace this, about of these challenging, year. in face is, how investments another investments. our think think, into that from downturn. for kind investments, thought opportunity this is talk this another And organization If about encouraged of the it We're in part very the results rate themselves, making the which then about the new the investments why environment the those these there's would at which is of looking

a maintain moving overall. think of very we I would play. growth investments we And similar you challenge investments We'd run parts that making situation, again, is rate outlined SG&A the how of continue The initiatives given and to investments work the But we in other longer-term hypothetical the keep to XXXX, the did be for organization. forward. looking pace those our January. at the those for That's in do room

you. Thank clear. Very

Thank you.

next Ahlersmeyer from comes with Our Bank. question Deutsche Joe

You may proceed.

Yes. Thanks everybody, good morning.

morning. Good

that as you'd a I we to that I to quantify think that said an year, you that on following don't hear number of incentives? you I just full-year you thinking which correct. SG&A on some sort you know lapping earlier I new to that. was we questions here. on here loud have XXXX. XQ third And of we I a make release the one, be then heard pretty up about sure that for volume for explain having to the into questions going the But productivity. like guys need and of incentives, that I on want hear comps, Is clear accruals incentive the unfavorable have I next is, component from there and the about the the to say plan from investments. with rebase

Yes.

hey, think I – Joe, it's Chris.

overall, assumption wages, quantifying that it, certainly about stop SG&A. short it, included inflationary step-up that's for cetera, I there coupled I'll that think on right into way. SG&A that step-up, goes et of you're the thinking with in call but the an

under the that's in Okay. volume the number? manufacturing when specific more are down productivity volume the Is contributing for absorption on your factors still right absorbed get That's have production included line, in, look levels. helpful. where decremental would line? under on that have number volume, positive the on to seems is the And to putting on that the manufacturing, then you you actually XXXX, your imply if bridge, of have remaining productivity might where quarters such in that and I'm with I what's at you volume higher the And EBITDA sort because volumes that costs a you

That's Yes. right.

productivity manufacturing you'd to to bridge, kind out. fall any line think of That's So, see it in that the in about the right back would way where table, that going that's it.

a Is on you're that XXXX? manufacturing targeting there for the number

Mineral about how spend and is. productivity X% there adjusted Yes, we it's historically been and against around kind number public COGS targeting of side. we've is, delivering Fiber productivity of that's, that what manufacturing And and

Thanks a Alright, great. lot.

welcome. You’re

you. Thank

question John next Our from UBS. comes with Lovallo

You may proceed.

my taking for questions. Thanks guys. morning, Good

and education and you for was do in Act opportunity there. funding the see talked then mentioned mentioned CARES Spaces? as you the – one about real strong a growth Spaces in Healthy first you also mean, education in XXXX The Healthy XXXX I for the

Yes.

it. dynamics. I what XXXX, got think education actually in the quality, was activity, And for with in But overshadowed a portfolio, we're based by yes, no a point strong in there's question think improve bidding on think product us the schools. our again, lot spent it's there, I to being about Again, opportunity. air I in and an money other obviously, particular, of seeing

and given the any acquisition and the of then are I on in mean, present just in And we're slowing some front maybe themselves seeing the helpful. seeing you opportunities of Architectural broadly the just Specialties That's Okay. terms that slowing? economy.

activity. I just wouldn't slowing tie a it

been I of companies proactive these with think a are not we've lot for that sale.

there's in advancement XXXX. So, slowing of based pipeline building the in more at economy, the a interest very to specifically. on committed level I wouldn't step We're a But in attribute doing that we're to say change our active wouldn't I pipeline. least

I pipeline building developing. So out how the our is like again, like – I

these talked say to pipeline, forward, companies. to kind the but of companies when and get position how they companies the these done relationships these John, the I'd that we're deals is eight the they're a the, developing the sell, about, as them vision sale, of they that are in pole – lot then ready of and we've have however into for done pipelines, majority these to with already. we acquire we've of obviously in take kind believe That's we're we've So,

forward. it's I of more that think kind So, of going

it. guys. Thank Got you

you. Thank

Kim from comes question Evercore ISI. next Our with Stephen

may You proceed.

for of Mineral couple quick a was provided. Lot curious, A guys. good you already and of positive lot from mix. little info ones talked about I me. Fiber, if a bit thanks Yeah, In specific more a the whole of bit there a little Fiber. what And a about company AUV then I be seeing think versus there? could in you you're Mineral was difference little

So, does that you Specialty XXXX measurable AUV And degree? pressure? bit any continue Architectural of little into that mean to to expect do a saw

Yes.

the grab one me Specialties. Architectural second Let include don't AUV first AUV we our because in numbers, on

So, that's Mineral really Fiber number. a

the nature cost that Architectural not of and nature project choose Specialties, Given pollute metric. the to of we

Mineral really is is AUV in okay? Mineral Fiber, all seeing you're anything So, Fiber driven,

a softer, primarily of inflationary we're environment, an going still like-for-like but AUV, component above in as XXXX, we alluded get channel had in mix had AUV against going on. you again And and we're in our particular, good think to, plus channel mix, which environment, channel missing negative being inflationary I the mix, we in a to modest our retail because highest expecting pricing more historical performance channel

answer in channel mix, as operating well we'll at through, AUV a particular? coming we we're should question say, contributing back inflationary product and and XXXX, on channel XXXX. mix, pricing positive to That mix, the Did that a expect to get your in as context positive adding on product and based normalize to that mix neutral get in that least the like-for-like I'll

to continue. but XX Yes. company, the probably in or Historically, in It's rounding certain XX think it Fiber, for and was presentation, it know looked your your like I AUV to that's and sure going is I'm just Mineral just, whole that's that limited Mineral suggest Fiber I for comments fine. something. it's

WAVE think be or would of the we earnings XXXX the deviation there could about curious rebound of consistent sort there we should some welcome. spread in throughout about to your should comparison in expect And in a of quarter-to-quarter And favorable I is could – that, see was that ask we year-over-year be a If the XQ? to WAVE, comment I WAVE, thinking certainly as the whether kind generally about? that pretty

the But It's our did Yes. EBITDA kind earnings, same, quarterly last tile part right, WAVE. Again, half the of big the to destocking our our I'll in again, on stay WAVE away terms the guidance we level. equity on – had of year the in from side. first a as of of year

same the have so the sold different happened and though, we half the comps What different WAVE channel going in year, maybe than than I what favorable to the when year you So, we when think continue business. to same had – we're throughout through again the back the certainly of get to pressures. under tile

is continue prices and and us to make how again, that as expand if to front. that's to watch are steel inflation. the on pricing of sure probably think going I going we're about your phasing to opportunity is And helps with as there it, So, our that can do the good And margins this that of what for an do. ahead given in expectations staying that to business margins

could the I'm Yes, large Architectural but that in within curious might categories that out as Specialties trends with on, Kind pretty And now. where be two-parter we sure. or a call division any Architectural shows that is eye a within grid little in segment any Specialties product of our product sort whole. could than the getting up you you Specialties. specific curious me And of is one segment? kind for want there, to Last just Architectural of Specialties That's are the there a if stronger is maybe is great. if – that WAVE associated even sequestered keeping Architectural

one is in we're new It's And these sign. in really nature And vertical the on going encouraging in what's in of one commercial it's really highlight the and of broad or that's the Probably across encouraging the playing category, question. good a buildings. a spaces product growth. that it's That's broadly Yes. Architectural demand the not very board. Specialties

The business. of using of a lot A metal driver airport continues are and ceilings nicely. that's metal these part for grow projects our and big to the metal business

come. and in from will, many – the So, Architectural as how just can to is, basic come for or Architectural foundational, if years the it's growth metal I Specialties it you illustrates, Specialties in where think, that

looking newer and participation some the of further So, expand we'll our continue the example, eye specialty to those in our like felt categories. more category, on for materials keep or to for ways

that can we I in new think are growth runways the to Architectural Specialties. those the add

to Stephen. just there, And out maybe close

WAVE sales So, should going earnings about through be equity the the line. you grid thinking

right. helpful. Thanks. That's All

Thank you.

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

You may proceed.

Hi, you thank taking questions today. for my

Just clarity you of been [ph] terms how volumes gotten approach do clients has approach all various and from think Any past guidance of in lot in we've how in lots been today, volume just Has a outlook factors way can post-COVID change terms landscape the lot as versus And on questions philosophy forecasting, there impacting a into and just, from a the detail changed any of obviously, clearly on terms and about higher-level base core our a in of but the past? a not world, terms you just years. your of us sure give get five other of predicting of of seven [especially] you and the i.e. Thank because that predictability product, for especially that product? forecasting in you how you. kind down it's today.

would just fair Yes, last the we've inability forecast was well I dynamics use Kathryn, think confused, it we to it's that on And a given some extraordinary of – – a for think information that our I forecasting. set question, of lot traditional year, think there the information forecasting. our I

information. sources our different maybe get of where I biggest and the information So, we is of for forecasting us, change, as the about think, we think levels

that with rounding. until been a dynamic have it different a last distribution dynamic dynamic. – closer example, we of adjusts We've never in kind It meaningful year. talked point, the Obviously, this inventories, partners for very our to a lot I we that about happens itself and on just connection mean, the saw up has

up So I to that's in into data, the like we confusing really have would we've additional sources guess, have XXXX. also what's I very of dynamics you to where on of you triangulate a and had just that – and think, tightened going set an example, level that forecasting goes our the in

think of about of to lot what's the the that is year, into And I year, happen in a level of And this opinions think there's we've Until in I our happen back I more about think given had a going forecasting uncertainty past. But taken the and the going uncertainty. people that. we there's forecasting. our in approach of more to we I get stable outlook lot of think this consideration conditions, think of half about what's prudent lot a a to in this as to to we've than there's back maybe half guessing operating so

the been going and and the guidance, stay continue around I business, the to customers, to We market continue the maintain to certainly agile appreciate have going way close as control investments, So, of to that we're do we're our have thoughtful moves kind XXXX. to that question. about throughout have this very to be cost the the to we of in

Okay, perfect. Thank you.

Thank you.

to Vic call the I'd Thank concludes now back for closing Q&A Grizzle you. any over like the to This session. remarks. turn

the in clarify joining marketplace that's Yes. as for could today. the Thank we questions. hard color and as provide and all much given you, worked uncertainty again, today for We the to

about. cost want about I that We we're that thing into some is XXXX. one go our position, strong think, waters that took position. I the in the we think to good about actions communicate that I talked very January to very to in in navigate we're We feel a

to much allow the again, we're be as requires I position in to the better around outperform to to us that's think, we're move and us a in a – market. going market agile and to position

that and us year. we to Our the expect in dampen talked the some to see second half is market we the growth initiatives downturn allowing about into that the of of

to have glad that. opportunity really market I'm us these that our And to XXXX. help made, the these we offset outperform initiatives in And investments that it's we've

and updated look our joining. quarters to the keeping Thank all look in So, to you come. forward again forward for to progress you that on

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

disconnect. now may You