Armstrong World Industries Inc

Good day and thank you for standing by. Welcome to the Armstrong World Industries, Inc. First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Tom Waters, VP of Corporate Finance. Please go ahead.

Thank you. Good morning and welcome. Please note that members of the media have been invited to listen to this call, and the call is being broadcast live on our website at armstrongsealings.com. With me on the call today are Vic Grizzle, our CEO, and Brian McNeil, our CFO. Hopefully you have seen our press release this morning, and both the release and the presentation Brian will reference during this call are posted on our website in the investor relations section. I advise you that during this call we will be making forward-looking statements that involve risks and uncertainties. Actual outcomes may differ materially from those expected or implied. For a more detailed discussion of the risks and uncertainties that may affect Armstrong World Industries, please review our SEC filings, including the 10Q filed earlier this morning. Forward-looking statements speak only as of the date they are made. and we undertake no obligation to update any forward-looking statement beyond what is required by applicable securities law. In addition, our discussion of operating performance will include non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of these measures with the most directly comparable GAAP measures is included in the press release and in the appendix of the presentation. Both are available on our website. With that, I will turn the call over to Vic.

Thanks, Tom, and good morning, everyone. It's good to be with you today to review our first quarter results. A solid start to what we expect will be a robust year of growth for Armstrong. Overall in the quarter, we continue to see sequential improvement and the recovery of our markets. Our total company daily shipping rate sequentially improved and accelerated through the end of the quarter, and that acceleration has continued nicely into April. This first quarter comparison is against the last of the pre-COVID market conditions, as we saw very little impact from COVID in our base period. In this first quarter of 2021, adjusted revenue of $253 million increased 2% from prior year, driven by sales of our 2020 acquisitions, which more than offset COVID-driven volume reductions in our organic business. Adjusted EBITDA of $85 million declined 12%, from the prior year driven by COVID-related volume declines, continuing investments in our growth initiatives, and the resumption of spending that was deferred when the pandemic hit. The mineral fiber business has started the year as we expected. Our mineral fiber daily shipping rate posted a third consecutive quarter of sequential improvement as people returned to work and markets continued to reopen. Like-for-like pricing exceeded input cost inflation, Top line mix was positive as sales of our premium products continued to outpace the rest of our product offerings. And channel mix was once again a headwind, although to a lesser extent driven by relatively strong sales in the lower price point home center channel. Channel mix, as we have experienced during the pandemic, has already begun to subside and is not expected to be a headwind going forward. The territory mix challenges we've faced for the past few quarters have diminished as New York City and the other six major metro areas we've recently called out are essentially in line with the rest of the country. On the operations side, our mineral fiber plants ran well with solid productivity, despite the challenges created by the winter storms. And our wave joint venture performed well and was able to price ahead of rising steel costs to deliver a strong first quarter. Our architectural specialty business delivered solid top-line growth of 25% versus prior year quarter, driven, again, by our 2020 acquisitions of Turf, Mose, and Arctura. A real highlight in the quarter was the acceleration in order intake, with the sequential organic order intake at a record level. That's resulted in a stronger-than-expected backlog. We continue to be encouraged by our win rates on projects, and our ability to differentiate our offering versus our competition. Given our strong backlog, we remain confident in delivering our 2021 sales outlook of more than 30% growth. In the quarter, we continued our investment in architectural specialties to further extend our capabilities and our capacity to support our expectation of continuing strong growth in this segment. Integration of our three new acquisitions continues to go well, and I remain excited by the potential for incorporating their technology and design capabilities across the Armstrong platform. Our acquisition pipeline is robust and continues to grow, and we have the balance sheet, liquidity, and appetite to execute additional acquisitions and alliances. In terms of the overall macroeconomic environment and marketplace conditions, markets have improved and are showing signs of gaining momentum. I am encouraged by the trends we are seeing in the data and by the tone of the conversations with our customers and distribution partners. Bidding activity can tend to improve through the quarter and more projects delayed last year are being released. GDP estimates are being revised upwards, which is a positive leading indicator for increasing renovation activity. CEO confidence is rising and return to office statistics are improving significantly. proving signaling a desire for an expectation of return to the marketplace. There is a strong desire to get students and teachers back in the classroom where they can be most productive and to get work teams back together so they can be most effective in collaborating, innovating, and networking. These trends, along with the potential for trillions of dollars in government spending on infrastructure, including spending specifically targeted for renovating schools, is creating greater optimism, and a more favorable economic backdrop. Along with stronger economic outlook, inflationary pressures are ramping up. The raw material most impacted in our operations thus far has been steel, used primarily at our WAVE joint venture in the manufacturing of our suspension systems. As a result, beginning back in December, we have implemented five price increases totaling more than 40%. It's been a challenging body of work for both our sales teams and our distribution partners to manage, but they have performed well and as evidenced by WAVE's first quarter results. We are also experiencing rising input and freight costs in our mineral fiber and architectural specialty segments. As a result, we have announced a heavier than normal 10% price increase on mineral fiber products and pulled the effective date up to May, earlier than normal. This is on top of the implemented February increase of 7%. In architectural specialties, we have also increased pricing on standard products and are adjusting our quoting processes on custom projects. With these actions, I remain confident that we will once again deliver like-for-like price realization greater than input cost inflation. Overall, both segments are operating at a high level. We have fortunately not experienced any supply chain disruptions. allowing for outstanding service levels. And because of our recent digitalization initiatives, we are staying more closely connected to our customers and partners than ever before, supporting a strong project backlog position. And our teams are executing well on our price initiatives to stay ahead of inflation. So with this healthy state of operation, a solid first quarter result, and our market outlook for the remainder of the year, we are reiterating the full year 2021 guidance we provided in February. And with that, I'll turn the call over to Brian to review the details of our financials. Brian?