Good day, ladies and gentlemen, and welcome you to the First Quarter 2019 Armstrong World Industries Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference Mr. Tom Waters. You may begin.

Thanks Skyler. 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 armstrongceilings.com. With me today are Vic Grizzle, our CEO; and Brian MacNeal, 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 10-Q filed earlier this morning. Forward-looking statements speak only as of the date they are made. 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’ll 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 2019. We delivered sales growth of 7% and adjusted EBITDA improved 17% with margins expanding 330 basis points in the quarter. Organic sales were up 4% and our recent acquisitions added to that growth. Both segments performed well and we remained confident in our 2019 guidance. Now, in a moment Brian will walk you through the details of the results of each of the segments, but I first want to touch on a few of key themes in the quarter. In the Mineral Fiber segment, average unit value or AUV as we refer to, was up double digits in the quarter. Our AUV accelerated as positive like-for-like pricing, outpaced inflation, and solid mix gains from our recent new product innovations continue to gain to traction in the market. Mineral Fiber volumes got off to somewhat of a slow start with specific pockets of weakness in Latin-America, our Big Box channel and weather-related challenges in the upper Midwest and parts of Canada. Our view of the underlying North American commercial market is unchanged as we believe much of this softness is timing related and will be recaptured as the year progresses. Volumes in our new products and high-end products were positive year-over-year and continued to outpace the market, and WAVEs earnings were up double digits in the quarter. On the operation side, our Mineral Fiber plants ran particularly well, and good cost control resulted in lower SG&A as percent of sales. The new innovative Mineral Fiber platform DesignFlex is now fully launched in the market and we are actively working over 150 projects. The customer excitement for this new platform continues to energize our expectations for continued mix…

Thanks Vic. Good morning to everyone on the call. Today, I’ll be reviewing our first quarter results, but before we go into the financials, as a friendly reminder, I’ll be referring to the slides available on our website. Slide 3 details our basis of presentation. Consistent with our basis of presentation principles, in the quarter we adjusted out $20 million of expense associated with the conclusion of the Rock Fund litigation matter. This includes cost, expenses, and attorney fees paid under the settlement agreement. This matter is behind us and we do not expect any additional cost going forward. Turing now to Slide 4 for our first quarter results, sales of $242 million were up 7%. Adjusted EBITDA increased 17% with margins expanding 330 basis points. Adjusted diluted earnings per share of $1.10 grew 24% as profitability increased and we lowered our share count via buybacks. Adjusted free cash flow improved by $14 million over the prior year quarter, driven primarily by the higher profitability. Net debt decreased by $188 million from a year ago, primarily as a result of receiving payment for the sale of our international business in 2018, partially offset by stock repurchase activity. In the quarter, we repurchased $20 million of stock and to date since the inception of the repurchase program, we have bought back just over 8 million shares at a cost of $450 million for an average price of $56.18. Currently, we have $250 million remaining on our program, which runs through October 2020. Turning now to Slide 5, adjusted EBITDA increased $13 million as strong AUV gains driven by like-for-like pricing fell to the bottom line. Mineral Fiber volume declines offset gains in architectural specialties. The input cost increases came from raw materials, including waste paper and mineral wool, as well as…

Thanks Brian. As you can see, 2019 is off to a good start. The underlying commercial market in North America is solid and consistent with our expectations. The conversations I've had frankly in the field with our distribution partners, some of the architects, and leading contractors indicates a good level of activity out there, and we’re in a really good position to service that activity. Earlier this month, we celebrated our third year of being a standalone ceilings and wall company. It truly is amazing how fast three years can go, but we've accomplished a lot in those three years. We've invested over $100 million to reinvigorate the Mineral Fiber category with innovations like Sustain, Total Acoustics, DesignFlex and now AcoustiBuilt further propelling AUVs higher. We have completed four acquisitions in the attractive Specialty category of Architectural Specialties and those are on track to add over $100 million in new sales. We've addressed the poor returns in our international business through the sales of Knauf for 13 times EBITDA. Cash generation has grown over 25% per year. And finally, we've returned over $450 million to shareholders through a combination of share repurchases and recent regular dividend program. Now, as an America's only ceilings and wall company, we are more focused than ever. We are more stable than ever generating more cash per revenue dollars than any other building products company. And now with consistent topline growth driven by a successful Architectural Specialty segment, we are well-positioned to create even greater value for our shareholders, and we’re just getting started. With a power of focus together with a clear and a consistent strategy can deliver extraordinary results, and that's what we’re excited about here at Armstrong. And in talking with our customers, they’re excited too about the difference they are seeing from this company. So, with that, we’ll be happy to take your questions.

[Operator Instructions] Our first question comes from Nishu Sood with Deutsche Bank. Your line is now open.

Thank you. First, I wanted to ask about the pricing growth, the AUV growth on the Mineral Fiber side, very, very strong number there. I think that’s the strongest number I may have seen in the time I’ve known you folks. Just wanted to understand maybe a little bit about the factors that might have affected that, and maybe the sustainability of that? Were some of the timing of the shipment issues – did that may be boost that number higher? How should we think about the sustainability of what’s a very strong number?

Yes Nishu, this is Vic. Yes, a very strong pricing both like-for-like pricing and mix, both of those made up the double-digit gains in AUV. If you remember last year and we were facing an inflationary period last year, actually a much higher inflationary period than we’ve seen a long time. So, we pushed hard for price increases to make sure that we covered inflation in 2018, and we realized the majority of that actions in the second half. And I think so part of what you're seeing in the first quarter is nice carryover from the realization that we had in the back half of last year. So again, that's the like-for-like part. And then again, we had nice positive mix gains on sales at the higher end of the product portfolio growing faster, and then a little softer, to your point I think Nishu, a little softer on the lower end gave us a little bit better mix overall. So, I think the combination of those two things are contributing to the strong pricing. As far as the sustainability of that, you know, as we get into the second half of the year, I think we'll see some normalization of our pricing as we comp the stronger realization rate that we had in the second half of last year. So, I think we’ll hang on to a good portion of this, but I think the realization comps will get a little different in the second half.

Got it, got it. Thanks for the color. And then, on the volume side of the Mineral Fiber, you've maintained the, you know, kind of flat to low-single digit Mineral Fiber volumes. As you look into the kind of post quarter trends and some of the timing, and you know, potentially be the weather issues that affected it, are we still on track for that when you take a kind of year-to-date view? Because obviously the 1Q numbers themselves implies that volumes were down, probably what, may be mid-single digits or so?

Yes. No, I think – we look at each of the components of where the volume was softer. It was really related to timing type activity. So, in Big Box channel, we talked about this. Every once in a while, we will get some depletion of inventory levels and we’ll get some timing on to when the orders and the shipments happen. That occurred again in the first quarter. And again, a lot of weather-related impacts in parts of Canada and the Midwest. We had some larger projects also that contributed to some of that timings. So, for the most part, we’re hanging onto that because of this fact that for the most part it's timing related issues. So, again, I think we’ll recapture those – that demand, it wasn't lost demand, we’ll capture that in the coming quarters.

Got you. Just one last one on the macro, some of the forward-looking commercial construction indicators on the new construction side have weakened, any concern there? Are you focusing that? I mean, obviously with your sales network, you have very deep roots into looking at that yourselves. Are you concerned about that, and maybe it was just, you know, weather issues or, you know, volatility earlier in the year, but any thoughts there if you could please?

Yes, we’re not really concerned on 2019. I think 2019 looks solid, and again, I like the on-the-ground data. We had our industry show last week, the [Cisco] show, well attended, and I think the sentiment generally from contractors and our distribution partner certainly are the backlogs or building nicely, the activity is strong, quoting activity in particular remains strong. So, we’re not seeing anything in terms of the ground-level activity or change in the ground-level activity that would give us pause for 2019.

Okay, thank you.

Thank you, Nishu.

Our next question comes from Stephen Kim with Evercore. Your line is now open.

Thanks very much guys, strong quarter. Wanted to ask you just a follow-up on Nishu’s questions on volume in Mineral Fiber. Just to clarify, I think you also mentioned that LatAm in there, as well as the weather-related issues geographically here in U.S., and then you talked about inventory destocking. Just want to make sure we got all the pieces in volume and confirm that there was one last day versus year ago. And so, if you could just maybe shed a little bit of light on LatAm, did I catch everything that was affecting the volume? And can you quantify what you think the timing issues in aggregate amounted to in the quarter year-over-year?

Yes. So, for LatAm, it’s two components for us really. Mexico, which through the new election activity down there and some of the freeze on spending, we saw it in Mexico a bit, and then the other piece was in Puerto Rico. Again, last year if your member, we were shipping to the devastation from the hurricane, and so little base period comp issue in Puerto Rico. I think those are really the two softest points of Latin America for us that we saw. So, part of that in Mexico may not come back. I think, you know, that could be one of the areas that’s more market related and we’ll have to see how that develops as the new President gets fully seated there. And I think I can’t add anymore color I think to the rest of the segments that were both, you know, retail Canada and weather related on the volume side.

Okay. But there is going to be – there was a day’s issue, I think, right, from a comp perspective, correct me if I’m wrong, and I think that that – does that continue also in 2Q based on what you see?

Yes. So, Stephen, the primary drivers of the ones we listed – I mean we continue to look at those shipping days, but it wasn't as impactful in Qs 1 and 2 as we anticipated.

Oh. Okay, interest. Alright that’s fine. And then, in general, you know, with the strong performance, you know, in aggregate particularly with, you know, AUV more than making up for the volume temporary shortfalls this quarter, I mean it would seem that you’ve maintained your guidance, but that perhaps your confidence in the higher end of the range might be greater. Could we – is that a fair characterization of your assessment?

Well, I wouldn’t want to get any more color on the guide. I think we’re confident in our guidance for sure with the strong start and the performance. Our plants are running well. I mean the operation overall is in good shape. So, I don’t want to give any more color than that. Its early, it’s the first quarter, but certainly we’re confident based on our first quarter performance in our overall guidance for the year.

Okay, great. And then, one last one for me regarding your self-service quoting, I find that, you know, important and interesting. You said it was a 25% I think on a year-over-year basis at this juncture. What kind of our growth do you think that digital technology enabling self-service quoting can drive in the future? Is this the most rapid rate of acceleration that we’re going to see? Or could we see substantially greater gains than even that?

Well, I think the way to think about this, and we’re very excited about this because it's a – if you – the way I talked about it, it's a way to create capacity for growth, right, without adding a lot more cost in the business. So, we get more efficient at the work streams that we’re handling so that we can do more of that and that’s going to be supportive of growth. It’s also an opportunity in some ways for us to reallocate resources to other areas of the business to create more value, whether it's margin or productivity-related or it could be more on the growth side of the business. We, in our order entry area, we’ve redeployed people that were doing a lot of management around these orders that are now being self-served by our customers where we’re diverting them to more job follow-up for example. Those are real growth-oriented type activities that we’re able to do. So, it’s going to be a way for us to be more efficient and create a better experience for our customers, number one. And number two, it's going to create capacity for us to sustain this level of growth that we’re – the trajectory that we’re on now. Those are both very exciting results or impacts of the business.

Great, thanks very much guys.

Thank you.

Our next question comes from Ken Zener with KeyBanc. Your line is now open.

Good morning, gentlemen.

Hi, Ken.

Good morning, Ken.

So, once again you’re proving that you don't need volume to grow profitably. Realizing that you don’t want to shrink to oblivion. Can you guys just talk about, you know, how – given you had a volume decline of 6%, realizing weather and the things Brian outlined, and we’ve had this talk. But could you kind of talk just about what a cycle would look like for you guys if the industry – if you face down 5% volume just so we can get clarity around the operating leverage that you believe your business has not on a quarterly basis, obviously, but let's say, you know, if shipments were down for the industry 5%, what would that mean for AWI in terms of earnings sensitivity?

Well, Ken, I think to answer that question you have to go back to the value drivers of the business, right. So, AUV is one of the value drivers in the business that in the downturn would continue, and we saw that in the last downturn. When in the last downturn, customers continued to mix up the higher value products, and, you know, and that was a very deep downturn as we all remember. So, in the next downturn, we expect that the AUV improvement would continue in the face of a downturn. And the other thing this business does very well is continue to manage costs in a downturn. On the productivity side, in the plants, as you can imagine, these could be very volume sensitive plants and assess, but we’re able to manage those costs and move very quickly both non-structurally and structurally to take cost out and manage cost in the downturns, and especially in a gentle downturn, we’ll call it versus the more severe downturn that we experienced back in 2008 and 2009. So, those two big value drivers are going to continue in the next downturn, and I think this business will behave a lot less cyclical before when we had a foreign business, before when we had an international business. I think AWI is going to behave very differently in the next downturn because of those two big value drivers as, you know, America's focused ceiling and walls company.

Understood. And just one final question, for LatAm, could you – and I apologize if I missed this, could you kind of bookmark what that was in terms of FY18 sales just so, you know, we have a better sense of what, you know, your exposure is there, if this is a one-off thing?

Hi, Ken. This is Brian. So, when you – what we’ve said over the years is LatAm, Canada, Big Box, in total those three are roughly 20% of our total sales.

Equally split Brian?

I’d say, pretty close.

Thank you.

Thanks Ken.

Our next question comes from Michael Wood with Nomura. Your line is now open.

Hi, thank you. You mentioned in your prepared remarks inflation at the low-end of the range, is that expected to continue for the full-year? And I imagine you had some legal fees related to the settled lawsuit. Now that those look like they're shaping up to be better, I'm curious what the – the other side of it is that you maintained guidance, was it primarily the softer volumes that kind of kept that guidance in check?

Hi, Mike. So, on the inflation, yes, we guided roughly 3% to 3.5% on inflation for the year and we came in the quarter just on the lower end of that. So, we continue that to continue through the rest of the year and stay within our range of 3% to 3.5%. On the lawsuit, you know, we've adjusted out the $20 million, that's both our cost and the cost of the settlement and we don't expect that to continue on. That we’ll not continue on. So, as we think about guidance, it’s Q1 and, you know, we’re early days, good solid quarter. The individual pieces of our guidance could obviously ultimately move, but we’re pretty confident in our overall sales growth, EBITDA, cash flow and EPS ranges.

Got it. What are the more volatile end markets? Over the past years, it’s been education. Do you have any early leading indicators or thoughts on how, you know, particularly the busier season as we get into the summer might fair this year?

Yes, it’s too early to tell, Mike. But again, I have the position that I had at the beginning of the year. I'm still more optimistic that we’ll have a better education just based on the macro data on funding at the state and local level. So, we’ll see. It’s a little earlier to call it right now, but I'm still optimistic about a better education season.

Great. And finally, can you give us any more specifics on what portion of that average unit value was related to shipment and timing of the lower priced products that were delayed in like home centers in Latin America and anything else? It would be helpful to, you know, know whether it’s just a timing related piece.

Yes, frankly it’s a smaller portion. I think that’s the way to think about it. The continuation of like-for-like pricing and the mix from product – product mix or sales from the higher end and higher performing products, I think was the bulk of the AUV improvement and I think that’s the way to think about it. There was a small component to, if you will, the channel mix, some of the lower end, but I wouldn’t think about it as being a larger meaningful part.

Okay, thank you.

Thank you, Mike.

Our next question comes from Garik Shmois with Longbow. Your line is now open.

Thank you. I just wanted to ask on Architectural Specialties, there was just some deceleration in organic growth to 9%. I think you’re comping strong mid-teens if not better to last several quarters. So, you know, if you could speak to what was driving that? Was that also timing related or are you seeing any change in the end-market environment?

Yes. No, I think it’s a good call out. The organic growth portion of this is as volatile quarter-to-quarter as the overall business, and I would attribute that not as a deceleration, but more of a timing between projects within that business and the lumpy sales that can come in that business quarter-to-quarter. The other thing I would point you to is, last year, first quarter was specifically a strong first quarter for Architectural Specialties. So, we’re comping a little bit of a stronger base period also in that business. So, frankly, when I look at the backlog, I wouldn't characterize it as a deceleration at all.

Okay, thanks. And then, just wanted to ask some clarifying questions just on Mineral Fiber and AUV. As you sort of anniversary the price increases from last year, should we expect positive AUV in the second half of the year just from the mix benefits that you sited?

Yes. No, I think you should expect positive AUV in the second half of the year. However, we are starting to anniversary the bulk of the price realization that happened last year, which is in the second half of the year. So, as I said earlier, as we start to get into those comps, we’ll see some normalization of our AUV for the whole year.

Okay. And as you look at inflation or maybe the lack thereof, is there any additional price increases that you need to put in the market to offset?

Well, we expect the inflation to continue throughout the year at a similar rate as Brian was talking at the 3% to 3.5% range. So, we’ll assess that as we normally raise price in the summer time and we’ll assess that and we’ll size our price increase accordingly.

Great, thank you.

Great, thank you.

Our next question comes from Kathryn Thompson with Thompson Research. Your line is now open,

Hi, thank you for taking my questions. First, just on your – in your Investor Day, outlined $27 million in investments in tech over the next three years. Given some of the early successes you’re seeing, is there any change in that figure? And then also could you just remind us what type of turns you’re aiming for these investments? Thank you.

Sure. And we have not changed our outlook on that investments, and I'll let Brian comment on some of that. But we’re very excited about it, and I think we’re gaining traction and confidence and these investments can generate a very nice return. Brain, do you want to add anything to that?

Yes Kathryn, thanks for the question. You know, we’re in the early days of our digitalization journey. Like many companies, we’re still in that optimization phase of digitalization as we outlined in the Investor Day. And so, while we don't anticipate that investment going up, we’re always looking for opportunities to invest more in that area as we get better at that digitalization effort.

Okay, great. And just a clean-up question on guidance, I’m understanding it's a fatuous assumption that given the seasonality of Q1 you really – it shouldn't change your full-year outlook, but just to confirm, you still are keeping that 0% to 3% for Mineral Fiber growth for volumes in the AUV growth of 5% to 6%, and really just wanted to make sure that those assumptions are still in-line for the full-year?

Yes, Kathryn. They are still in line for the year. Again, most of the volume in Q1 was related to timing issues, and obviously our AUV came in stronger than we originally anticipated. So, in the end, there are some puts and takes, but we’re very confident in our overall 7% to 10% sales growth for the year.

Okay, great. Thank you very much.

Thanks Kathryn.

Our next question comes from Phil Ng with Jefferies. Your line is now open.

Hi guys. Can you give us a milepost on the adoption and DesignFlex in AcoustiBuilt and when do you expect the contribution to flow through more fully, it’s probably more of a 2020 event? And when you think about this contribution, will it come in more on the AUV side of things or do you actually see nice lift on the volume side as well?

On the DesignFlex, Phil, I’d say it’s probably more of an impact in 2020, just because something as unique as DesignFlex has to go through the specification process. So, you’re at least 12 to 18 months of the specification process. So, I think that’s the way to think about it. And because, DesignFlex for the most part is going to go into existing spaces were Mineral Fiber is being used. You will see it show up more on the AUV side initially. Later, what we hope to see and we expect to see is that DesignFlex will allow architects to use Mineral Fiber in places that they wouldn’t normally use it. And because of its unique shapes and colors and things that you could do with Mineral Fiber in this case. So, that’s further down the road I think, but that’s the way to think about it in terms of the impact there. AcoustiBuilt’s are slightly different, although the AUVs are nicely accretive and will drive a mix-up as well. That’s clearly going into the dry wall category where they are considering the used Mineral Fiber and that should be additive on the volume side. So, again very similar. This was going to be a spec product. So, you got to think anywhere from 12 months to 24 months from when we launched that and we’re officially launching it in the market in May. So, more to come on that. We’ll keep you updated, but that’s probably a little further out.

Got it. That’s helpful color. And just given the amount of cash you guys are generating, even factoring in some bolt-on you should still have a fair amount in excess cash. How you guys think about buyback? I mean the stocks obviously had a very nice run, will you guys be taking more of an opportunistic approach or pretty systematically every quarter just based on the cash you are generating?

No, I think the way for us to think about this is, and for you to think about this is, we have $250 million left on our authorization and we plan on executing all of that $250 million. There is about 18 months left in that timeline to do so. We still are very, I’d say, optimistic and bullish around valuation of this company and when you think about – does the stability now without foreign business, without an international business, the ability to drive tremendous amounts of cash as you are referring to. We still think that there is plenty of valuation and value creation opportunities ahead of us. So, we’re going to be in the market buying back our shares in the coming months. So, we plan to continue to execute against that $250 million. Brian, do you want to add anything to that?

I think you said it well. So, year and a half left, six quarters, $250 million everyone can do that quick math for a straight line spend. As you know, in any given quarter there may be certain events that we are privy that preclude us from trading at certain times, but we will be back in the market.

Got it. That’s helpful. And there is one clean up question. Vic, I think you alluded to maybe spending a little more capital on enhancing the facility via ACGI and then this Montreal facility on the steel side of things. Can you talk about, if – what type of investments should we expect on the CapEx front and could there be any near-term impact on margins as you kind of step up investments in the short-term?

Yes. These capital investments on the architectural specialty’s sides are quite different on the Mineral Fiber side. So, the way to think about this is, they are much smaller. I would say they are in the $1 million to $5 million range type of investments and we will be feathering those in. I don’t expect a lot of headwind on Margin from those. You might get it in a quarter or two, but overall, we’re feathering these investments and I would continue to expect us to expand margins on the annual basis.

And Phil I would just add, you know all that’s considered in our guide right now of 70 million of CapEx.

Okay. Thanks a lot. Appreciate it.

Our next question comes from Peter Galbo with Bank of America. Your line is now open.

Hi guys, thank you for taking for call as well. Vic, I just – you commented a little bit on the education sector, but I believe last quarter you talked about maybe a better year for healthcare with maybe a little bit of moderation in office. Just want to understand how that’s been trending both in the first quarter and I guess through this far in the second quarter?

Yes. My position on that view hasn’t changed. I think healthcare and education should be better this year and it’s too early really to call that after the first quarter. But my position hasn’t changed on that. I still, I’m optimistic like I said earlier that there is a better education season out there.

Okay. That’s helpful. And Brian, maybe two quick one. First on architectural specialty, I know you had mentioned in your prepared remarks improving EBITDA margins for the year, I believe last quarter you had talked about 20 basis points to 50 basis points, I just wanted to make sure that that was the same? And then on the 10 million of SG&A savings in the first half of the year here, just how much of that was in first quarter relative to what we should expect for 2Q?

Yes. So, Peter, really it hasn’t changed for AS margin expansion. We’ll continue to focus on building margins year-over-year as we leverage this scale from the acquisitions and increased sales. So, that low 20, the 50 bps is not out of the range of possibility and obviously we continue to drive margin expense from Mineral Fiber with strong AUV. And I apologize. I missed your second question, what was that?

No worries. On the SG&A savings, the 10 million, just what the impact was in the first quarter just so that we know for 2Q?

Sure. I think that is 5 and 5, both Q1 and Q2 benefits. So, as we complete that benefit over two years, $20 million, $10 million last year and we are seeing about $5 million in each of the first two quarters this year.

Awesome. Thanks guys.

Thank you.

Our next question comes from Keith Hughes with SunTrust. Your line is now open.

Yes. Question on the acquisition, you had talked about it being kind of your platform for wood products, I guess my question is, in terms of deals, how many more sectors or sub segments do you need to do, kind of platform deals versus building up where you are right now?

Keith, the way to think about that is, there is more platforms under consideration. Maybe I’ll leave it like that. There is, we have wood and metal as you know and there is a couple of other platforms that are of interest and that we’re exploring. So, I wouldn’t say that we are finished with the platform buildout. And then there is also this other side of the matrix that you’re pointing to, which is capabilities. And so, like in the metal area, there is still more capabilities that we want to have in our portfolio that we think are critical for architects to specific around. So, I think there is work on both dimensions for us to continue to do, platform buildout, as well as capability buildout within the platforms.

Okay. And just [indiscernible] the 7% or 10% growth guidance that includes 1% to 3% of acquisitions, is that correct?

Yes. That’s correct.

Alright. Thank you.

Thank you.

And our next question comes from Justin Speer with Zelman & Associates. Your line is now open.

Thanks guys. Starting out with the architectural business. Your organic growth for the year has that changed at all in terms of the mid-teens level, I think you were looking for last quarter?

No, it hasn’t changed. Now, again, we have – as was talked about earlier right, there is a little bit of, little less than that in the first quarter, but that’s – again that’s just the sequencing quarter-to-quarter. So, we’re still hanging on to that and the backlog look good in supportive of that.

Okay. And then, just switching gears to the Mineral Fiber piece, like some help unpacking your underlying market growth view, particularly on the volume side, what it was in your estimation in the first quarter and what you’re thinking for the full-year and within that from context if you can, if you can break out the refurbishment component versus new construction component as you map out this year, if you’re thinking that growth will accelerate in the underlying market, how that underlying market looks in terms of you think it accelerates from here or do you think it trends along the lines of 0% to 3%?

Well, so our outlook is 0% to 2% on volume and I think that’s a good proxy for the overall market blended for new construction activity as well as renovation activity, and our view on the market hasn’t changed as I talked about in my prepared remarks. There’s some timing related impacts in the first quarter, but the activity around these new construction, the projects around new construction and the R&R activity is consistent with a 0 to 2 market overall for the year. So, we haven’t changed our position on that and I think that that’s what we should expect to see in the remaining quarters. Again, minus some of the timing related issues in the first quarter.

And Justin, this is Brian. Just going back your AS point, I just want to clarify something there. In our guidance, we say, greater than 15% AS volume growth, that’s reflective of those acquisitions that we’ve previously closed at the start of 2019. So, it doesn’t include ACGI, but as you recall AS grew 24% in the quarter and there were some small contributions from ACGI. So, AS from our estimate – you know our benefit on track.

For the organic growth, what – when you back all that out what does that kind of shake out and on the mass today?

Yes, what we articulated was 9% on the organic side in the quarter and then those deals that we closed in 2018 Plasterform and Steel Ceilings added additional 1,500 basis points. ACGI was a small percentage of that. So, just to clarify what we’ve shown on the guidance.

Oh, I’m taking about the full-year, so full-year mid-teens I think was characterized that’s still intact?

That’s still intact, yes.

Okay. I wanted to just follow-up about Mineral Fiber comment just in terms of the underlying inventories, how they look across your channels, you mentioned I think you implied destocking of home center channel and just how it looks at the core distribution part. I think distribution is roughly 70% plus of your business, how does inventory situation look and do you think that you will be run-rating in line with that underlying demand growth that you were thinking?

Yes. The inventory levels and the independent channels, we haven’t commented on, we probably won’t comment on those. They are normal levels. That’s not the issue that we’re referring to in the quarter. It’s really around the retail channel, and that’s the one that seems to – you know that seems to be more volatile and it definitely is more volatile than what we see in the independent channel, which is much better managed I would say quarter-to-quarter than what we see in the Big Box channel.

Okay. And then last question for me is just on the – in terms of the 10% AUV realized in the first quarter, how much of that was carryover from pricing last year as opposed to realization of the first quarter announcement, you know, I think it was January, February, if you can unpack the two?

Yes. I think the way to think about it Justin is, most of it is carryover on the like-for-like pricing and then you have your mix-up that’s a good solid run rate and consistent with prior year. So, the February price increase, which you’re referring to, it’s a minor portion of the overall first quarter. As you can imagine, there is only 30 to 45 days of real price in there. So, most of it’s carryover. That’s the way to think about it.

Okay. Well thank you guys. Appreciate it.

Thanks Justin.

At this time, I’m showing no further questions. I’d like to turn the call back over to Vic for closing remarks. End of Q&A

Thank you very much everybody for your questions and your attention today. Again, we’re excited about the start that we have and the year that we have in front of us as a really Americas focused ceilings and wall company and look forward to updating you on our 2Q results in a few months. Thank you and have a nice day.

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.