Armstrong World Industries, Inc. (AWI) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Quarter 4 2012 Armstrong World Industries Earnings Conference Call. My name is Patrick, and I will be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Tom Waters, Vice President of Treasury and Investor Relations. Please proceed.

Thanks, Patrick. Good afternoon, everybody, 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 armstrong.com. With me today are Matt Espe, our President and CEO; Tom Mangas, our CFO; Frank Ready, the CEO of our worldwide flooring businesses; and Vic Grizzle, CEO of our worldwide ceilings business. Hopefully, you've seen our press release issued this morning and both the release and the presentation Tom Mangas will reference during this call are posted on our website in the Investor Relations section. In keeping with SEC requirements, I advise 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, please review our SEC filings, including our 2012 10-K, which we anticipate filing next week. In addition, our discussion of operating performance will include non-GAAP financial measures within the meaning of SEC Regulation G. The 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. Finally, forward-looking statements speak only as of the date they are made. We undertake no obligation to update any forward-looking statements beyond what is required by applicable securities laws. With that, I will turn the call over to Matt.

Thanks, Tom. I'm pleased today to recap a challenging and exciting year for Armstrong. I'll spend a minute on the fourth quarter and full year results, which were largely in line with our guidance. And then Tom Mangas will provide a comprehensive review of our financial results. I'm also going to review the operating environment we experienced in 2012, highlight our accomplishments and then look forward to the environment and results we expect in 2013. The fourth quarter of 2012 was characterized by mixed commercial sales in the U.S., with continued weakness in the healthcare and education sectors, which rely on public financing; and modestly favorable performance in the office sector. New residential construction continued its strong recovery, but residential remodel activity, which is the real driver of our residential business, remains constrained. High employment (sic) [unemployment], unsteady consumer confidence, difficult access to credit and a lack of clarity both politically and economically are constraining homeowners. Given these conditions, we believe homeowners are deferring discretionary remodel spending. Fourth quarter in Europe, especially in the Eurozone, was weak even despite relatively easy year-on-year comparisons. Our ceilings business in Russia experienced a slight sales decline in the fourth quarter, but this is as expected as we completed our transition to a local sales model. I'll talk about that and full year Russian results in just a minute. Both of our Pacific Rim businesses saw year-on-year sales growth despite overall weakness in Australia, our largest market in the region. Net sales for the fourth quarter were $613 million, in the middle of our guidance range. Compared to the fourth quarter of 2011, sales were down $10 million or 2%. On a comparable foreign exchange basis, sales were down $7 million or 1%. This sales drop can be attributed to our exit from the…

Thanks, Matt. Good afternoon to everyone on the call. In reviewing our fourth quarter and full year results, I'll be referring to the slides available on our website starting with Slide 4, key metrics, as Tom Waters already covered Slide 2, and Slide 3 is simply an explanation regarding our standard basis of presentation. Matt mentioned quarterly sales and EBIT results. So I will only point out that operating income and EPS were also up versus last year by 62% and 88%, respectively, with fourth quarter EPS benefiting in 2012 from a 40% normalized tax rate versus the 42% used in 2011. Fourth quarter free cash flow was $25 million, down $65 million from the fourth quarter of 2011. I'll address the drivers of EBITDA and free cash flow in more detail on upcoming slides. We closed the fourth quarter with net debt of $735 million, down from $784 million at the end of the third quarter, but up from $362 million at the end of the fourth quarter of 2011 as we increased leverage to pay our $500 million special cash dividend in April. Finally, our unadjusted return on invested capital, or ROIC, on a continuing operation basis was 9.8%, an increase of 220 basis points over the prior year and up from 1% in 2010. This represents a record since our emergence from Chapter 11, and growing ROIC remains a focus for us. Slide 5 details the adjustments we made to EBITDA and provides a reconciliation to our reported net income of $9 million in the quarter. As you can see, there are only a few minor adjustments in this past quarter and in the fourth quarter of 2011. In addition, interest expense was higher in 2012 than in 2011 as debt increased by $250 million to finance…

Thanks, Tom. I hope that when we host this call next year, we're reflecting back on a 2013 where consumer remodel spending was surprise to the upside, where commercial activity met or exceeded outside estimates and where Europe started to recover. And while the scenario is possible and we certainly have the capacity to meet this opportunity, it's just not one that we see today. While I always hope for better market conditions, with or without them, Armstrong will continue to focus on the factors within our control to drive profitable growth, create shareholder value and position ourselves to win in the markets. For that, thanks for your question today, and we'd be happy to take any -- thanks for your attention today, and we'd be happy to take any questions.

[Operator Instructions] And your first question comes from the line of George Staphos with Bank of America Merrill Lynch.

I guess my question is this. You obviously had a very strong fourth quarter when you look at the percentage growth rate. You enumerated a number of factors that sort of talked to why growth will decelerate this year. You had easy comps. You had $30 million of start-up and other expense to contend with this year. The cost reduction program has more or less completed. You have a new productivity program on tap. Is there anything else within the business that is driving this deceleration? Is it purely those factors? Is there any lessening in your ability, as you see it, to create margin or turnover time from your pricing and distribution model?

Thanks, George. No, really it's the factors we're pointing to. The GDP outlook causes us to be very cautious and somewhat pessimistic about volume opportunities in the commercial market. We continue to be really pleased with new housing starts. That, obviously, contributed to relatively strong Wood Flooring growth. The issue there is that really only represents about 10% of our total revenue. So if you look around the world, we're expecting challenging markets again in the U.S. and Europe. We expect Asia to continue to be robust with the exception of Australia, so that -- we're going to offset that with price and mix. And then we have, as Tom pointed out, $30 million to $35 million worth of expense investments this year that help position our emerging market opportunities and bring the plants out of the ground. We're certainly not -- we're never done with SG&A and manufacturing productivity. But I think we have kind of 1-year plant start-up phenomenon here that we have to consume.

Matt, if I could, just if you were in our seat, what would you look to in terms of the green shoots of a commercial recovery in the U.S. or -- I'll leave it there, other than seeing it in your numbers in one of these quarters.

Sure. I think the answer there's a couple things. I think the first thing would be real traction in commercial starts, and of course, traction in commercial remodel activity. That really drives our business. And then sustained positive growth in the Architectural Billing Index.

George, this is Tom. Just on your first question, I wanted to come back. I think one difference between '12 and '13 is the inflation environment. As you looked at our bridges, we essentially had no inflation on the year in 2012 and we were able to execute a lot of pricing, particularly in the ABP business. Next year, we're anticipating significant inflation, particularly in Wood, which is typically not our strongest market in terms of ability to take -- hold and win price there. We're being very aggressive there. So I think the difference in '13 to '12 is our ability to achieve price over inflation.

Your next question comes from the line of Bob Wetenhall with RBC.

Just wanted to ask are you expecting stronger trends in the second half of 2013 relative to 1H? And I'm just trying to infer this from your guidance for the first quarter.

Yes, we are slightly improved second half. That generally helps us close the year strong, relatively strong. If we see a meaningful rebound in commercial starts and commercial activity in the second half, of course, Bob, that doesn't roll through for us in revenue for quite a while. I mean, that's stuff we -- that's revenue we'd see in 2014. But we're expecting, at least in North America, a slight improvement in second half versus first half.

Got it. And you had mentioned $4 billion revenues, $800 million of EBITDA mid-cycle. And I'm just trying to understand in thinking about that number, is that including the foreign emerging market investments you're making?

It does.

Yes. It would include the additional plants coming online in China and Russia. And it also assumes kind of a normalized operating environment with respect to housing starts and commercial starts.

Any guess on timing on that or...

Boy, I tell you, if I could do that, well, I'd probably be in a different job.

Your next question comes from the line of Keith Hughes with SunTrust.

Just to go back over something you said earlier. You had 3 items that were hurting you coming up in '13, $15 million on fixed production costs, $10 million on lower pension credit. I believe there was a third one. Can you repeat what that was?

Yes, it was SG&A-related investments associated with our Architectural Specialties priority investment as well as the emerging market SG&A to support the plants. So expanded sales presence, promotion vehicles, displays, that sort of stuff.

In China, are you not going to be able to offset some of the production overhead by not having to ship into the country anymore or is that included in that estimate?

Well, Keith, it'll take a few years to load the China plant. So we'll be incurring the freight expense as we import into China as the plants kind of ramp up this year and next.

Okay. Then final question. I interpolate between your numbers, looks like there's about $110 million of D&A in '13, is that correct?

That sounds about right, Keith.

I'm looking at the difference between the operating income range in '13 and the EBITDA.

Yes, yes.

Will that come pretty even throughout the year?

I'm sorry, Keith. You broke up there.

Does that come fairly even throughout the year?

I think you'd see it build because as we start opening these plants, we'll start the capitalization and the depreciation process, so we're functionally operating the homogeneous plant now. The hetero and the ceilings plant will start coming online in the second quarter, third quarter. So that -- it will ramp through the year, but...

Your next question comes from the line of Ken Zener with KeyBanc Capital Markets.

Could you maybe just taking a step back, if you look at the 3 different segments, I realize this year with plant closings -- or plant openings and costs, there's some different impacts. But generally, could you give us like a real rule of thumb for operating leverage or incremental EBIT that you'd expect for each of your segments?

Absolutely. Ken, we -- and we talked about this a bit in our mid-cycle discussion. We believe very strongly that with incremental volume here, and I think that's the key is with new volume on the Building Products segment, we think we can achieve 30% to 40% incremental margins. On the Flooring segments, on Resilient somewhere between 25% and 35% and wood at 25% to 30% incremental margins. So we are excited for the day we start growing volumes. Part of the issue behind our -- and those are EBITDA margins, by the way, where in our guidance, sales growth of 5% at the midpoint, the bulk of that is actually from pricing and mix, not from incremental volume. As you took Matt's outlook and you talked about flat to down commercial markets, flat to slightly up residential remodel markets. So you're not seeing that incrementality on the sales because the sales is not being driven by unit volume. It's by price and mix. But when the volume starts kicking in, we do expect to have a great engine of growth that yields to that $800 million of EBITDA at mid-cycle or effectively a 20% EBITDA margin, up from 15% in the fourth quarter.

Okay, good. And then it sounded like in the comments with Building Products, it did sound plants, the plant opening, and you have some price coming in, in February, if you could maybe give us an update or if that's just to offset incremental costs that you're facing. But in Building Products, are you going to have up margins? It sounded like you said down margins. Could you just confirm that? For the year?

Well, the -- yes, the price increases that we've announced effective in February are related to raw material increases that we continue to see. And our yield on the price increases continues to be at sort of our historical average. And with respect to margins...

Yes, we haven't guided at the segment level where we expect margins to go. The margin guidance was purely at the company level, which is reflective of the total company's pressure on commodity as well as plant start-up costs.

Sure. And if I could, the wood flooring that you described, the mix impact to new builders. If your -- could you give us a sense of how much lower perhaps the margins are to the new side, which is obviously very helpful for the volume, but -- just so we can think about the impact as 2013 continues to have a lot of new construction impact?

Yes, Ken, we're generally not disclosing the magnitude of differentiation. Obviously, the builder market can be very competitive and you're bidding big developments and generally takes a lower-end product than the residential remodel. So we're not giving that level of transparency. But as you can imagine, given the builders are trying to have specific price points, they're selecting product forms and conducting bid processes, that leaves lower margins.

So just to build on what Tom said, what that means is we've got a mix impact from new construction, not pure price. So we're selling a somewhat lower mix product line. It doesn't necessarily drive margins quite the same way sort of pure price would.

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

Two main questions I had. First, with respect to your commentary about the public sector portion or public sector influence portion of commercial, can you break that down for us a little bit – in a little bit greater detail? Maybe quantify, of your commercial exposure, how much would you say is affiliated with the public sector related? I know you called out education. But if you maybe can just be a little more granular on that, that'd be great.

Well, I mean, it's -- in the 4 major commercial segments, it's almost equally split if you look at the entire company. It's a little differentiated between businesses. Where we see public spending affecting the most obviously is in public schools. And that's a function of state government and municipality budget challenges driving some of that. So that -- we'd see that. To a somewhat lesser degree, we'd experience it in health care. If you think about office construction, what we -- that's not obviously publicly tied to public spending, but we do see some regional differences or range in terms of the activity there. But if you look at the ceilings business and you think about office retail, education, health care, and you could throw other in there, but if you look at that, office is about 30% to 40% of the total business. Retail, and this would be ceilings for stores, not ceilings sold through stores, would be 20% to 30%, education's 15% to 25% and health care's 5% to 15%. If you look at the flooring business, health care again represents about 20% to 30% of the total. Retail, and again this is retail sold into stores for their use, not through stores, 20% to 30%. Education is about the same as ceilings in terms of 15% to 25%. And office in flooring is a smaller part of the mix versus ceilings. Office is about 5% to 15%.

Got it. That's very helpful. Appreciate it. Okay, great. And then secondly, I wanted to ask you about the Wood Flooring business. You've been talking now for little while about the home centers with their challenges. Obviously, they have a significant competitor out there who's been doing a good job on wood flooring. I was curious whether or not you guys had any view on how you can -- addressing things that are in your control? How you can address the ongoing weakness in wood flooring home center sales?

Well, we have commented in the past, Stephen, on a particular home center channel that drove a significant variance or deviation from our expectations. That didn't occur this quarter. So we're kind of withholding any specific comments. We're constantly evaluating and reviewing our channels to market and looking for opportunities to expand them. At this point, our -- with respect to wood, the independent channels are doing a phenomenal job for us. They're seeing real growth there as is builder direct. So we think we're holding, arguably gaining a little share there. But Frank and his team are always evaluating and looking at channels that optimizes our customer access.

Sure, okay. Well, let me throw in a last question then. With respect to trends throughout the quarter, in particular, I guess, we're all wondering whether or not there was any incremental signs of improvement as you headed into 2013. I believe it was a couple days ago, you had one company in the commercial market commenting about very strong orders, for example. I was curious whether or not you've seen any incremental improvement in the trajectory of your business, particularly in the commercial side or resi remodel as you enter 2013?

Yes, I mean, it's always hard to compare one company versus the other, different cycles and things like that. And -- but we didn't see a significant improvement in the fourth quarter in the commercial activity. As we said, the residential new starts continues to be strong. Commercial activity across-the-board continue to be a bit of a challenge in the U.S. Europe softened in the fourth quarter. And Asia had a very strong second half. So nothing beyond what we described for the fourth quarter. And again, given the GDP outlook in North America and continued pressure in the Eurozone, we're not anticipating any help at all for the economy in 2013 and we would love to be surprised on the upside.

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

On Resilient Flooring, margins improved year-over-year, but still was a touch below our expectations. How much of this was driven by higher cost or at least the net income margins? How much was driven by higher cost versus volumes maybe coming in a little bit lighter? Or any other event that could have explained the little bit softer operating margins for Resilient?

Sure. Kathryn, nothing meaningful in costs and we're driving price over cost and have through the year. Most of the -- the major driver in the variance is most likely our mix in commercial versus residential. So commercial was down and relative margins are stronger there.

Yes. Kathryn, I guess it's all relative to expectations. I mean, worldwide Resilient EBITDA margin in 2012 was 9.3%, up from 6.8% on declining sales. So we felt that was a pretty good margin outcome. And as I look across the different elements, I mean, they all have contributed to offset that lower -- the good news and the bad news is our incremental margins on an EBITDA basis with new volume are growing significantly, and when we lose volume, you've got a lot – a big hole to dig yourself out of. So I think that the business did a great job to significantly grow EBITDA margins 250 basis points in a declining volume environment.

Wanted to just make sure that there weren't any specific trends that would result in a deceleration in margins as we go into next year. We definitely saw the year-over-year improvement, but I want to make sure that there isn't anything else that we should take into consideration.

Right.

Well, relative to the $13 million, I mean the Resilient segment will have 2 new plants opening through the year and with only half a year or less benefit out of the heterogeneous. So yes, that segment will see pressure from that new -- the portion of that 35 -- $30 million to $35 million of incremental costs that I talked about.

Okay. And again, on Wood segment margins, mix versus higher cost, I know that our checks are showing some good acceptance in price increase, but a little bit more color on margins in that segment, too.

On which segments, Kathryn?

Wood.

On Wood, yes. So just Wood did see slightly down margins in 2012. We closed at about 10.6% EBITDA margin at the global wood level versus 11.1%, so down about 50 basis points. And again, that one is -- again, the volume story year-over-year sales on a constant FX basis down about 5%. A lot of that's Patriot coming out in August on a sales basis. And I think the business started to see lumber inflation in the fourth quarter started ramping pretty aggressively. In the summertime, we were seeing pretty moderate lumber inflation and that ramped through fourth quarter pretty aggressively and is a big driver of our 2013 inflation guidance. So really, the business is there. It's going to -- the challenge there will be to take pricing to offset that inflation fully in 2013. Obviously, in 2012, we weren't able to take any pricing because it came at us late.

Your next question comes from the line of Keith Hughes with SunTrust.

Yes, just one follow-up question. The $40 million to $50 million of hit from raw material energy inflation, is that before pricing impacts?

That's what pricing impact, Keith?

Is that before pricing impacts?

Yes, yes, yes. That's a gross. That's not net after pricing. That is a -- it's consistent with the way we'd show up on our bridges to you. So we split out pricing versus inflation.

Okay. And you're planning to offset how much of that this year in your guidance?

Our goal is 100%.

All of it.

Is that what you included in the guidance is the question?

It is.

Your next question comes from David MacGregor with Longbow Research.

Yes, Tom, question for you. The $30 million to $35 million in additional expense in 2013, how does that play out over the 4 quarters?

I think you're going to see it be -- well, we'll start with the easiest one, the pension credit. That'll get spread pretty evenly, like peanut butter, unfortunately. The SG&A and manufacturing start-up loads are going to be more front half-loaded and you can see that certainly in our first quarter guidance as we're bringing up 3 plants basically in the first half and trying to get the SG&A out there to support the commercialization.

Okay. And then just secondly, in saying flat to slightly down commercial opportunity in 2013, you called out education and health care. What are you assuming for each of those verticals in terms of negative -- possible negative comps?

Yes, I don't know that we've been that specific on it. I would say that those 2 non-office segments, we're expecting it to be the same trajectory as we saw in 2012, so it would be kind of low single digits to maybe as bad as mid-single digits.

Okay. And just how much forward visibility do you have right now in terms of the ceilings business?

Well, I don't think we have any incremental visibility to what we had last year. We still have the flow business that is very much a warehouse restock for our distributors and that is, at best, 30 to 45 days of visibility. And the projects that are related to big remodel or big new construction, we have the same kind of visibility as we had before, long 6 or 12 months of visibility. There are just not enough of them. And that's what -- that mix of high flow business and not a lot of projects leads to pretty poor visibility in general.

Right. As Tom said, we just see that part of the business as restocking orders from the distribution channel, just kind of flow business.

Your next question comes from the line of Michael Rehaut with JPMorgan. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: First I just wanted to make sure I understood. With the Wood Flooring and you talked a lot about inflation continuing to impact that business, with the margin declines that we've seen in 4Q '12 and 3Q '12, if those year-over-year declines on a quarterly basis may accelerate in the first half of '13, if you're seeing incremental inflation and maybe not being able to fully offset it with price, I know that you've announced another price increase of 10% for March, but just trying to get an understanding of the timing of that and if the incremental cost is going to hurt you before you can offset it.

Well, let me start with, Michael. We do have a seasonal business in Wood. And so that's the primary driver for the deceleration you would see in our margins in 2012. You would have seen the exact same pattern in 2011 and 2010. So just the absolute level of sales in Q2 and Q3 driven by the seasonality of the repair-remodel cycle and also the new building cycle, no matter what the size of that is, is leading to the significant decline you see between Q3 and Q4. And I'd expect that you'll see it rebuild in the second and third quarter and tail off again. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: But Tom, I guess I'm talking about the year-over-year comparisons, not -- excluding seasonality. In other words, 3Q, you were down 270 bps roughly year-over-year. In 4Q '12, you were down about 120 year-over-year. So that actually was a -- you had a better year-over-year, a less negative comp in 4Q. I'm just trying to think about cost -- incremental cost inflation versus pricing offsets in the first half of '13.

Sure, yes. So I do think that the second half of the year, starting in Q3, as I said, we're starting to see the lumber inflation kick up. We've also been adding crews in anticipation of demand. And those crews aren't productive when you first add them. You've probably seen several announcements by us to be adding crews to meet increased demand and it takes them 3 to 6 months to become effective. That's -- those are probably the key drivers there. I do see your point, yes, Q3-to-Q3 down a few hundred basis points on margins on lower sales. There's probably also an impact of Patriot in there because we did sell the Patriot business in the middle of Q3 2012, that we sell other people's products without any COGS on it and through the Patriot business, so that's also part of the deterioration. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Okay. And also just wanted to make sure I understood. When you talk about the start-up costs of the plants in terms of like the extra fixed production costs, I mean, those are obviously permanent costs that you're adding in now that you'll eventually lever with -- as sales materialize. Are there any type of what you would consider maybe onetime start-up costs that you're expecting in '13? Or is this just kind of additional investments that you're making that you'll reap returns on in '14 and '15 as the sales ramp?

There are onetime costs in there, Michael. Each of these plants have to go through a commissioning and qualification phase that includes running product and scrapping the old product that you're not making, going through color trials, which is what the homogeneous plant has been doing. So there is a usage of materials that is onetime. There's the debugging activity that happens with increased resources to get the plant to work and run effectively. So I don't think all the '15 incremental is a permanent add, if that's your core question. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Yes. I mean any granularity in terms of what you would think would be temporary or onetime and if any of that is also on the SG&A side?

No additional granularity offer on that one. I don't think we'd be prepared to guide at that level of specificity. The SG&A is more of a long-term add. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Okay. And then just couple of minor clarifications. The unallocated corporate $51 million expense in 2012, should we just add the $10 million to that as the pension credit goes down and it should be in the $60 million range for '13? Or are there offsetting items there?

I would say that at least add the $10 million. We're -- we will endure some level of inflation in our corporate expenses as well and we'll also look for ways to offset it and drive it. But right now, I would assume it's at least a pension credit plus a little bit of inflation on the core SG&A expense there. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Okay. And then one last one. The tax rate of 39% versus the reported of 42%, which number is reflected in the EPS guidance of $2.30 to $2.60?

We show it both ways on the slide. If you're referring to the earnings guidance slide, which is #13, in the big number, big print, that's going to be on the 39% basis. So the normalized or everything, operating activity with the EPS is on a normalized basis there. But at the bottom there, you see those little footnotes. We try to give you the range on an as-reported basis. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Okay. So the $2.30 to $2.60 is the 39%?

Yes.

Your next question comes from the line of Dennis McGill with Zelman & Associates. Dennis McGill - Zelman & Associates, LLC: I was hoping to just drill in specific to volumes in the Americas if we were to just look at it for the full year. I think you reported that revenue was down a percentage or so. Wondering if you could tell us what that was in volume terms? And then to the extent that you can, can you split that between residential and nonresidential?

You're talking which...

2012? Dennis McGill - Zelman & Associates, LLC: 2012 for the Americas across the business.

For both businesses? Dennis McGill - Zelman & Associates, LLC: Yes.

Okay. So on a volume basis for Resilient in the Americas, like we said, low single digits down for Resilient, exclusive of Patriot. Up mid-single digits in Wood. And then for ceilings, on a volume basis, low single-digit growth. Dennis McGill - Zelman & Associates, LLC: That's in total or that was...

That's fourth quarter. That's fourth quarter. Were you asking a different question? Dennis McGill - Zelman & Associates, LLC: No -- yes, I'm sorry. I was looking at the full year, but I was wondering if you have the rough splits between residential and nonresidential, just to differentiate between the overall numbers you mentioned.

Okay, let's see. I don't know that I've got. Yes, I'm not sure I'm going to be able to give you the -- give me a second here, and I'll come back to you on that. Dennis McGill - Zelman & Associates, LLC: Okay. Well, and maybe a bigger picture question is if you -- even if you just focus on revenue for the year, I think across Americas, you disclose it down a little more than 1%. And last year was up somewhere in the 3%, 4% range. So even considering all the headwinds that you mentioned, Matt, with public spending and uncertainty on the home improvement front, all of those things being relatively challenging last year as well, I guess I'm trying to figure out why volumes and revenue would be weaker on a year-over-year basis in '12 than in '11 when you had an accelerating residential market, and you could argue non-res is no worse. So I'm just trying to piece through maybe the relative shifts.

Well, residential is, in the Americas, is what, about 1/3 of the total revenue. So you had -- that's -- we had -- that volume was up -- really half of Frank's business, half the Flooring business in the U.S. and virtually all of the ceilings business in the U.S. is commercial. So you just had volume softness just offsetting the relative strength in resi. And then, Tom?

Yes. So on a full year basis, let me come back and maybe -- I think I understand your -- what you're probing here. For ABP in the Americas, total unit volume was again down low single digits for the full year, okay? On a residential Resilient basis -- or total residential basis, total residential basis, full year down low single digits. But that's probably, frankly, includes a little bit of Patriot drag in there. Yes, that has a Patriot drag in there. So call it flat to slightly up total residential on the full year, again with builder coming in strong in the back half, but a pretty weak consumer remodel all year long. And then on the commercial side in Americas was down mid-single digits, okay? So I think your thesis of the housing's getting going, we agree. We see that. We see it significantly in wood, but we've not seen it translate into a differentiated commercial growth rate. And as Matt said, new construction for the total company is only 10%. And so we're much more dependent on seeing that commercial number respond. And when we see it, we'll be happy to pass it through. And I think that we've tried to piece out our outlook to you all so you can -- if you have a different view of what the macroeconomic looks like and the market opportunity for commercial and residential, you can piece it in there in your own way. I think we feel like over the last several years, we -- at this time of year, everyone's a little euphoric about the... Dennis McGill - Zelman & Associates, LLC: That's why I'm asking historical numbers, so it's more factual. But just so to be clear, though, the commercial and nonresidential, as you think about it, volumes in the Americas was down mid-single in 2012 and that decline was greater than the decline in 2011, is that fair?

It is. It was greater.

That's right.

Yes.

That concludes the time allotted for questions today. I would now like to turn the call back over to Matt Espe for closing remarks. Please proceed, sir.

Yes, thank you. Just really briefly, we certainly covered a lot of ground today. We appreciate your attention, and thank you for your questions. And please have a good day.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.