Masco (MAS) 27 Jul 232023 Q2 Earnings call transcript

Good morning, ladies and gentlemen. Welcome to the Masco Corporation's Second Quarter 2023 Conference Call. My name is Michelle, and I will be your operator for today's call.

As a reminder, today's conference is being recorded for replay purposes. [Operator Instructions]

the FP&A. to turn Investor Benedict, now and Relations will call Renee over Director, I

begin. may You

Thank you, good quarter Michelle, and conference XXXX Masco call. second Corporation's morning. Welcome to

Masco; Allman, With are Chief President and David and Financial me Officer. Chaika, Keith CEO today Interim Masco's of

under earnings website Relations. second on quarter slides available and release Our presentation the are our Investor

your call Following we will follow-up. questions. directly to yourself limit with our open one analyst please remarks, one we If question at XXX-XXX-XXXX. take can’t Please me the call now, question for

statements and performance, today from materially and actual XX-Q other These subject will our our Our in XX-K our statements. and we include Commission. our differ risks which and statements Form that about views to uncertainties disclosures described future the cause to and statements. that forward-looking uncertainties could factors constitute We our forward-looking Form with risks results Exchange these the filed are Securities in risk our

metrics. Our statements will also financial include non-GAAP

and will Our to operating per We earnings Relations. in these our adjusted under which available website be otherwise unless on release references noted. our are profit as GAAP presentation metrics adjusted, Investor slides, reconcile to earnings and share

turn the I'll to that, over With now Keith. call

today. to and everyone, you Thank Good the in of you, year. our Renee. morning, the Slide pleased performance for Please joining with thank I'm us turn X. first half

our of while to ability returns. our the mitigate of and and demonstrated focus our maintaining conditions, business on volatile impacts have market resiliency growth, We shareholder the productivity

actions against down partially comp. was quarter, second XX%, X%. a decreased our pricing strong by the top X% XX% In line offset Volume of

margin cost solid and million only our of X%. in operating profit execution improved basis margin a due $XXX operational down to only profit were decremental This and million, declined points sales XXX operating of expansion resulted efficiencies. $XX recovery strong While

strategic like initiatives to $X.XX. addition, our X% our per strong results. continued execute to and dedication and efforts the earnings I'd share quarter their In to on our for thank for grew deliver employees

to Plumbing the currency, across XX% sales the segments. demand began Plumbing, In in demand and American categories. channels international XX% slowing our see soft declining Europe X%, to to and Plumbing, product in Plumbing expected, in China into and respectively. local second International Turning In be continue American first as declined quarter. we and trends quarter with the North North continued

Plumbing We market full high International to digits down continue single expect to for be our year. the

Despite significant taken the well was strong points topline quarter. American particularly inflation our in our the in North This to performance decline, the operational Plumbing to business. have basis margin recover we experienced XXX in actions efficiencies, pricing by margin second Plumbing improvements as expanded XX% driven as

we the focused are time, profit We making Plumbing progress level driving of segment. at pleased over are to with XXXX I'm the operating margins the back in on our least and XX%

executed strategy our leverages also product in bolt-on and SaunaXXX, into acquisition steam, complements business, acquire wellness on acquisition We network. infrared Watkins a leader by offerings, the dealer industry. our This entering wellness our expansive to and an expands agreement spa sauna,

quarter. third We to the transaction this in expect close

Plumbing, wholesale by our to pleased we we the and are our of Delta one strength customers Partner Showroom Faucet Year our in value channel. provide wholesale Lastly, plumbing that in named the demonstrating large the customers, of was plumbing

a paint segment, approximately comp a declined strong against Turning paint XXXX. in XX% robust the declined sales in of teens quarter of the low mid-single to strong single-digits Architectural quarter a X% DIY against digits low comp. our XX% declined against Decorative second sales PRO comp.

This exceptional and the demonstrates PRO of brand, of launched our During to quality our our we paint additional of categories, secured year, adjacent strength products, and our products, invested business. commitment half shelf the the Behr first in product space in service new performance.

partner, paint to The propane our we market. XX-year strong over share the to have grow opportunity is Home continue in we with extremely a together Depot, Our believe significant and relationship

that first announce distributing quarter levels in business. in paint in expect in our located we to begin the service capacity the we of to year. September This begin us excited the of enables new and expected early next to continue facility also to facility producing provide we accommodate Central product distribution will new We're growth in to from Ohio this and new business manufacturing the superior paint our paint facility of expect and

allocation, the and generate to strong we solid flow cash maintain continue quarter free Turning capital during to sheet. a balance

million shares balanced for buying $XX to a and in deployment $XX shareholders capital our and strategy we As repurchases, dividends the million executed through returned share including result, on XXX,XXX back quarter.

our acquisition pending $XXX share million, be for for repurchases approximately SaunaXXX the will year of €XXX million. approximately the With

Now, the turning remainder of to XXXX. outlook for our

XX guidance our previous during a As $X.XX execution per to earnings $X.XX. per from for up result share the be of first anticipate in half of now of $X. year, strong the the our range share, of to we $X.XX to XXXX

this margins XXXX driving minimizing to In volumes levels. environment, focused on our back of and we closely uncertain costs, lower impact managing remain the

and and and We to competition long near-term deliver the We well and homes equity and high we're near levels, to repair for home strong demand such housing age and ways. remodel the increased to staying long-term will in will homeowner believe environment our remodel invest longer, have returns markets. stock continue investors, weather activity in repair term. of Structural drive both the positioned and our several people brands, in as capabilities a in fundamentals in outperform the factors their challenging

to projects. income to will values, reach ages prime average the likelihood prime this above more remain appreciation due can homes remodeling age home prices to pullbacks supports through home Home XXXX the with in in then XXXX. in significant repair levels million old XX withstand home of remodeling and have XX and above remodeling, investing and which equity years be still single-family of Also, Households levels. record X.X at price are which to rapid correlated remodeling levels, highly homes and

taken homeowners to update willing to mortgage are with low many take and likely their And on of rates homes. addition, larger in more homeowners of advantage remain projects homes modeling to are their In equity, longer. levels record have these

All confidence economy structural of for our our and market when repair the remodel business stabilizes. for a strong tailwinds provide and forces XXXX these after increase

our favorable continued With for strategy, drive value the of we flow portfolio successful for and deployment, term. are capital creation execution strong fundamentals cash long and our shareholder free our with well-positioned to growth disciplined along

to CFO you over I I turn want call Before on search. the to Dave, update our

has we I well. external candidates quarter, As strong as have strong mentioned candidates, last firm search and delivered our internal

our process the naming and are final We CFO in shortly. the stages of selection anticipate

over Dave go our second to quarter Dave? the to in turn I'll detail. outlook over and results Now XXXX call more

Thank and you, everyone. morning, good Keith,

of the excluding As Renee today mentioned, will items. focus rationalization on adjusted onetime other and my comments performance, impact

price and in local to decline, offset expansion operational points in in by currency, Despite international efficiency focus Turning selling by basis executed sales Sales quarter, of XXX sales X%. net North helped decreased decreased our XX%, decreased sales and to on the of we X. American quarter the XX%, drive the and XX.X%. Slide volumes decreased sales well gross margin XX%, partially Lower X%. currency, excluding X%. increases decreased

was $XX by the higher in down a mostly margin XXX sales operating as by points only lower selling offset million expanded to XX.X%. SG&A quarter year-over-year. impacted volumes, profit percent Operating $XXX net basis was Operating And second of Our prices. was profit million, XX%.

X% the EPS quarter to our in share. per Lastly, $X.XX increased

sales Turning X%. selling in to quarter the and decreased by prices, by XX%. XX%, slide increased decreased volume decreased currency, Lower by eight. Plumbing which sales net excluding XX% mix sales offset and partially

North Plumbing local American sales XX% decreased in currency.

retail in wholesale well by spas. Our in channel Plumbing quarter, softness performed and offset the

Our spa over XX% against business a strong XX% declined comp.

sales comp markets many demand currency International China. decreased an continued against X% soften as to Plumbing in and in local European XX%

will small as which to likely we a see in will negative also the expect impact in international Plumbing, of the slow began further. the year second mix We increase half International markets

the Segment driven $XXX partially and to million, up operational was net improvement price operating margin selling offset by was improved second operating by $X in year-over-year and basis points efficiencies, expanded million volumes. continued lower Operating profit profit XXX increases XX%. quarter

sales decreased Architectural our strong quarter XXXX. the demonstrating comp. XX% comp the significant comp have X% approximately share the gained of of we stack second in nine. against is XX%, Decorative the propane robust slide quarter over sales propane mid-single-digits over a to Paint On Turning with up decreasing basis, two-year for XX% a past declined mid-single-digits sales a against second years. two

Operating selling anniversaried prices. XXXX profit have by impacted was price partially $XXX was half will Operating lower price million increases, most second the costs, and offset net investments, and so operating margin now input for impact profit was segment. XX%. little on of higher We've this higher increases volumes, selling growth by

overall our raw material first input year to the respect and elevated. cost the for costs With half inflation basket we experienced of in remains paint,

on costs low starting the half are raw paint single-digit deflation in We the relief modest certain see input year materials. expect these in to second and of

For we single-digit the basket. to raw low material year, full for inflation our anticipate continue paint

XX. to slide Turning

capital Our was X matched $X. balance of by working the billion debt-to-EBITDA liquidity. of with end. days. balance year, approximately percent prior net ended nine net sheet a days capital X.X sales though at with which times strong improved of as quarter remains quarter sheet XX. We Working X%,

year-end disruptions continue as With capital expected compared and XXXX. be we to percent fewer to lower in this XX.X% volumes improve of chain year, at sales XX.X% supply and working a anticipate to approximately

approximately quarter, we second for million. $XX XXX,XXX the During repurchased shares

strategy allocation repurchases deploying capital and disciplined share our to acquisitions on execute approximately anticipate the and to continue million for full year. We $XXX

up approximately for pending SaunaXXX expect year. for acquisition $XXX the we of full for million, the €XXX share With million to repurchases to deploy

for Now let's for outlook updated turn Slide the to year. XX our

top XX%. sales as overall, largely our approximately to is and For still Masco decline we line developing expect expected,

increased However, year execution approximately be margins we full with margin from and of to expect our our half XX%. now previous approximately first performance, XX%, strong guide

segment, range previous year XX%, of to now our down guide increased down from We we sales anticipate full from XXXX of to the XX%. expectation in margins Plumbing will our approximately expect XX%, be the to of previous approximately XX%. Plumbing be narrowed XX% our In XX%

we to from expect X% our We anticipate approximately to In to guidance to full XX%, in XXXX Decorative be down range be increased our XX%. range of of previous Architectural XX%. year down approximately sales the previous our the Decorative of Architectural from margin X% XX%, narrowed segment,

$X.XX to previous tax $X.XX. effective XXXX a our XXX year Keith estimate execution, share of strong assumes and per average to the from This mentioned to count up for $X.XX share, our now guide rate. a earlier, as thanks $X.XX million our EPS diluted Finally, XX% is

XX XXXX found assumptions modeling of can Additional Slide our for on deck. earnings be

to With for Q&A. like that, I'd open Operator? the call

John you. first of Instructions] Please Thank ahead. comes question UBS. [Operator Lovallo from The go

guys. my Good you Thank question. for taking morning

conservative outlook quarter in with given second the be like the half outperformance bit unchanged. here the beat first on kind you seem out, seems know The softening in it is one a quarter. called the of seeing little the improved is bit really keeps that more to just Europe. the magnitude maybe the more broadly, XXXX Keith, looks a by incremental second the what curious, some This in you driven that second little expectations I But side? conservative you're of

the North seeing driver, volume in main terms did in against an that. slowdown and you if expect Well, is see in and see Europe, John, expectations. increase, we're will, will, did performance America, we consistent We of clearly, if our you the in a to somewhat of

So saw in was we expected to our demand, as was I X%, has Europe, think bit first while and we lagging little a accelerate that down quarter to it in Europe come fruition. that that

into our overall the anticipated. a terms in about guidance, line, I'd it's think we couple as coming it expected, of top in of pieces. divide we as when overall One, So

was So than execution our performance no I you real our tell change stronger expected. would that and there.

coming through the so in performance And half. better we first had margin

of that, I better line, say, the components in it. And terms as expected expected We of kind a performance. are would than little so John, on of and -- the top bit our

add just of growth will continued on we to in weigh well expect additional the do would Similarly, investments. year volumes I the half on back that. John, as that as Hey, pressure margins

second will increases, realization in most the half -- very in lap cost as the will also we half. of price our We that diminish have price first strong

more what to compared up that's looks second So first the a put why little in half. conservative our half we

we anniversary-ing Understood. into you most a are segue across segments price you as my the second back are good into question. pricing increases. How opportunities it half? That's Maybe about of incremental thinking move the sounds like

thanks how value where commodities pipelines, ability depends demonstrated our the think I get our we across our Well, the to price, business consumer. on obviously strong we've service go. brands, we the that our bring And channels to to and innovation

where So it the really costs depends go. on

I where think in XX% gotten pricing. we've this price, at years, we last the look year, range gotten of over gotten we've when we've think I our the of couple

couple the cost we've obviously, we some significant, We've This in up. of years. to price really, and over on pricing we to gotten additional we spots had pretty categories as gotten in price some year in where neutrality time, where of forward, the certain demonstrated expect We've over plumbing catch go. already, terms and that go commodities last decorative pricing. continue. So in depend will for outlook But

Thank you, guys.

question of The Michael next Rehaut you. from comes Thank JPMorgan.

to morning, Good Thanks. prior circle get trying a question, Maybe everyone. point on to to just back finer perhaps the it.

like effectively like for that of back guidance second overall, the outlook changed year -- it half I a doesn't the the top terms quarter the like reiteration outlook, In top the doesn't of much. what look think and looks line line it's look the and in

performance like continue margin quarter necessarily margin performance that half. back the not into in second expecting you're have great it You effectively, the though. to looks And better-than-expected did

fully the So in correct. relatively the line to better-than-expected less what of more one, I'm number understand through second margin and with but if number expectations that different in that into what two, your half terms unchanged, is top on able in understand, And achieve trying perhaps the not the were given just sales you to the I that's might back performance? margin line outlook remains about came the quarter side, or on follow specifically

I'd things, Mike. three point to

have the Firstly, as topline as continue in go mentioned we we to forward. question, Dave do pressures volume last to expect

and softened the North softness see has in if to expected, steady, continue Europe will, we you As America.

of it. volume is driver the biggest So,

that biggest -- put and chunks XXXX. Secondly, year-over-year in half pricing came increases get half and we the we in we that the lap that away of first go quickly enjoyed benefit as the we will price second fairly the in, into

at lapping big is that factor. So, price a the

we're to then in to as continue business. thirdly And about, talked we invest our going consistently

to carefully, Now, topline gain challenging areas. win committed to recovery we're making and to investing to but the some have watching we're continue these we when spend very and our in share of

our in regards Central So, Plumbing to paint, right investing in with getting business right build spot we capacity coming our continuing and our our investing and European continue to plant above-market new to in have Decorative sure online to in our our capabilities regards in capacity with PRO Architectural that's with that to the and drive making growth business facility Ohio.

be we're distribute said, out of And And liquids of as out manufacturing I we'll and that paint that. starting shortly, to building.

incremental in continuing So, as forward. we're to invest our business, and we some headwinds that's look

main being drivers So, those three main volume are with, for one. the the sure,

Mike, I'll Hey that. Dave. it's just to add

the into seeing second We as a Plumbing we're bringing we is probably for impact accounts in mix being negative That the which than in remarks, bit again viewed little then little originally coming international plant. greater bit mentioned here manufacturing And the we've softer. little second year, also, the a half headwind our also as online be will of European in the half are prepared a well.

Okay. helpful. appreciate I I color, there. guess, that that's No, extra no,

the of shift performance maybe paint to given And to in the me impressive to an in maybe step segment. PRO, was give particular, the back comp. I are. The just overview and in year-ago of you terms hoping take where is of maybe strength Secondly, a kind

you the the and XXXX, or little But you've as remind PRO bit growth opportunity you that I And think maybe DIY move million, forward bit just us similar maybe of business? a in above this I if little is the opportunities how relative there? that's a margin see less going are think, for if could business the business around last kind year, you noted $XXX paint following think a that year. it's where

I loyalty. you the is over drive Michael, significant market. to That's of loyal course, to we growth the at continue past the a three our full when years, And and, opportunity confidence have group. significant think look versus share gained

first and they're switch Net closely look either of with that made And for to or So, at monitor they we Behr very it's metrics satisfied trying the we Promoter that very product. the experience Scores when time. have with customer greater share clear our wallet other

we loyalty. to and continuing quarter-over-quarter, about really decade focused capabilities on stay month-over-month, frankly, the it's in the for So, our service improving as greater have, last generating

pick like options, work programs, can PRO outside more sales in loyalty, our buy The that we to up our loyalty an that the Depot so Home nature. to of continuing and expansion delivery things actual things online store, ways enhancing So, figure with of our closely better together force, at folks out drive

is of provide component us. capacity big in we for that's a a able of spite what happens we're supply that outstanding Our plus saw the as also in chain, delivery when to

the so in of Ohio. that's new rationale parcel And plant part for our and

So every The day services, identifying our strengthening focus Depot, with the Home that's new on PRO, story. enhancing capabilities, our the really relationship

our is additional the mainly on we inside of outside Keith PRO additional margin Mike, bit little loyalty programs lower the resources to service a as sales core margin additional store it, the because provide level that as painter have front, store mentioned. it and both And reps, business than well do PRO the people that the and behind demands

gap So And it continue to we'd little very is margin. to business, still that as of grow that, expect good a bit close. but lower-margin a we

Great. Thank you.

next ahead. Evercore. Please Stephen Thank go comes from you. The Kim, question

much, very guys. Thanks Yes.

your it on on still Plumbing. some benefit guys. are I that. to or update late forecast to you I'm for of in of to market as as outlook, If price/cost. could wondering terms return see for just you price/cost improving in Plumbing. not Thanks follow-up here in your market outlook little commentary. relates a XXXX? growth general, margins sort Yes, an quarter us expecting like particularly in And you about very the curious including It much you're this whether sounds bit Sorry, if to price/cost a saw

to dip We're will going at offering XXXX point, we this this but point. sooner that first, I'll recovery up, of more not believe into this that not last to this our we're happen on get view that XXXX. But a short-term going part take is at be specifics and do relatively later, than Stephen.

you In benefit, are terms asking on question view price/cost question our really of your commodities? a on regarding

more like segment. the cost in of the price net just and Really Plumbing

improving pricing in by plumbing net about segment, But price/cost? for margins for Arch. you within talked in anniversarying curious Plumbing, I the think broadly the an in I'm of half outlook is back your already the view Dec informed

We're going the back the prices majority in of to half our year. of lap the

certainly, we increases of third an we'll the in quarter, quarter. of And first a netting the had year. given have improvement half. soon incremental -- we the late then And coming majority in or -- price seen that price really So the have, we've the in be in third here in lapping the couple increases another our

half. net a -- be is the in that we'll But to So bit have little the of of second impact impact. certainly price/cost going less

And helpful. staying second still question, about Plumbing, That's you effect. then Okay. with mix talked

your was in think negative this were mix point. last also you actually Plumbing. relegated quarter, to of -- started to a impact, I it relegated mix to My that bit effect little at recollection comments see is international

as in North So, in mix I'm -- curious if is Did spreading plumbing? it it is from intensifying we international? negative detail margin And should is a seeing. Is more well? around it a you as result of intensify any there could way bit in any that anticipate kind into you're America provide shift impact little it what

Hey that one. Dave. it's Stephen, I'll take

of a it's really international, On countries. mix the negative function in

Our markets, are products, to tend core international be some than more markets. a bit higher our of little price which European point softening

It it's down of might we're in geographic but side. international markets, on for geographic the European we So, of more trade most mix have impact. the of the part, more core seeing a bit impact that little our a have

lot not Here of trade seeing domestically, we're down. a

bit of as our little last impact have from price products we backlog. We work our pulling of mix a in a lower more mass function more business and year us on spa through or the our of segment retail-oriented point, really back

back here we've broadly got whole spa of other we bit in to our our turn the price as that, little spa haven't on so a had But categories. But or seen opening in trade of a portion North product business, the through speaking, our business retail lot America. impact of down backlog we point across

portfolio I items. you think really products, our mitigate think lower-ticket to of reconfigured may large helps I that bigger-ticket the see with swings in that

margin from Any Okay. impact mix?

but Yes, be not much. there will bit, a little

very Thanks much great. guys. Okay,

Matthew ahead. Please The go of you. comes from Bouley question Thank next Barclays.

down so still the Hey revenue quarter, you Thank reduced in you segment. taking morning it, little but low the digits in guide guide guys. only Apologies bit questions. year for if but you missed better previously, Decorative, full full I had year then your than a the single DIY for the

of spite quarter full speak Thank little So, outlook of drove in result the bit that? in what just a that sort what maybe DIY your changed you. just in and year

continue In Hey, categories think DIY we have XX%, higher year back in the other And our to softer at product with anticipate Matt, existing home softening originally of sales, home probably year being see expect back DIY that did when little turnover many and DIY it's throughout roughly of down in a half the continuing we we anticipated. being Dave. paint quarter. with correlation than we in the existing I the here look the the to business, you that of half tends a

business the our DIY for put to that full high So, single-digits. would expected in year, the decrease

new year? for associated I on next Thanks second start-up that. just half guess into there paint as that costs And that Understood. the with Okay. facility, one, are of any secondly, then well

longer-term that, additional it levels. paint level new sort for that of that improvement? Could of facility. expansion? you higher lead arise on you Where expectations Just just And if could Masco did to out Thanks. this service any shelf wins room speak see to additional might what or curious space does PRO of kind around for

the capacity. Keith second as the some this the distribution the the there we cost be I'll up little will the maybe back a take the Matt, part half, bit question. but probably of year, mainly really can the Hey year manufacturing the that But back and of in of costs cost half and side, start-up in on side take in half ramp first here

relationship you that provide goes we our in and customers innovation paint is Matt, down and Home to focus if about business, everything fact supply the success Depot to the around the our do and our service that And that that our the Home with point The we've had channel partner, to think ability have it really Depot, purchase of those and consumers that we focused customer really that Behr. sale. outstanding our is the chain on basis on Depot Home of and

And so what costs it ability us consumers performance. this where capacity in ties delivery to provide industry-leading gives is the service. that it to in our new and facility to the really buy, maintain ongoing tightly It to hones does, us able and gives our be want to logistical very

guys. Great. Thank, Thanks, Good Keith. Dave. luck

Thank you.

Susan comes of ahead. Please next The you. question Sachs. Maklari from Goldman Thank go

how there. us morning, Good Can mentioned just My on some to plumbing, you retail as about color channels? the bit more sell-out question commentary the thinking the some about you. on weakness give wholesale in is across everyone. first second half? relative levels side any Thank you a on, versus in And that you're sell-in think saw the inventory you we of

closely There's inventory policies different Yes, pretty it's work how obviously very them. with they who their to want run various customers on And business. consistent, have we been based Sue.

specifically wholesale to has different on very based the idiosyncrasies some sell-in and wholesale now, to really but are talking the there sell-out. look wholesale But we when channel, across close broadly the customers. retail, across been both So

an do to not or we in expect or seeing. levels inventory any nor relative significant we demand shape, seeing think tailwind it good patterns terms destocking are headwind and the or restocking. pretty we're being We it's the changes inventory so And of in

mentioned next to thinking that the you starting relief how some input the Okay. about that And side cost and Plumbing and Arch, flow the Decorative through raws, and see are both maybe into commodity over Can the about how things. talk Dec may of then cost and Architectural on several you're year? your quarters next you on you just across

Sure.

would inflation, that and of second we say terms back in quarter since think sequentially it of peaked of I the it's moderated then. in kind 'XX,

deflation at much down point. costs seen and elevated. But peaks, not Certainly, helped that's remained, most have their costs say, have other come off freight. container would have I We our this

of currently. month. below have only average, but pullback terms the In the at down last say average. slightly below some Copper seen has That's that come really in commodities, Zinc specific we started XXX XXXX 'XX

not going P&L at point, probably see to into cost into roll and goods our we're this of that our through until So 'XX. sold

when deflation example, So cetera. we mean it call costs like as and digits think by And commodities all-in single well we I for low all-in, freight, the year. non-commodity as about et full for plumbing,

for So the low-digit deflation full year.

Decorative, In at sticky others, terms of have did costs for commodity example, TiOX, still example, in resins. But we second for And certain elevated like paint input have sequentially, moderated inflation it's levels. and the quarter.

raw deflation it. So our guide of built does not lot paint into have a

low single-digit expect and deflation year the low thinking inflation in second the that's full after for segment, we for we're the some about all-in Deco single-digit So, half.

for the total So, to at be we're all-in company. for enterprise, inflation looking the basically or flat Masco, deflation

with luck Okay, everything. that’s helpful. Thank you. Good

Thanks.

Thanks Susan.

go from Thank Dahl you. The next Markets. Capital of RBC Please Mike ahead. question comes

Keith questions. get I taking XX%, the think terms in and price/cost bit gotten levels, which better. Plumbing of for you're a for driving that less. you to the five, were of back in at somewhere if on kind Thanks a not business was years, six to XX%, you've done work XXXX seems or like more the It traveling least comment my Morning. little little above that on

pull far volumes higher? or do question to you really of or it come when just think to you there need a pull or that as back to Is as XX%, what get getting the other can do back drivers

always we're Year the as day-to-day mix basis, suppliers. from productivity, of you push to better wholesaler focused shows we're with a our And as Showroom to know, winning cost continue doing Supplier continuous proposition driving that a that. improvement Mike, profitable driving on significant negotiation on service we're our total just

the other strong with pull for and ability biggest doing that brands we're incremental But say, enhancement, basis down in, continue levers lever price and to on XX%, and a to day-to-day there's our innovation that. drive that So, XX%, to the get clearly, to . us is drop margin and volume.

it. Got

just the And acquisition, color Okay. but color can little SaunaXXX? on with new more products, you a relative Plumbing, on little geographies, size, profitability? then just more give maybe sticking us a sounds or It European-based,

Sure. we in team. in as it better America a health because we particular believe of an brands, relates of done. by and in has brand, like it business. saying have get our and like wellness tailwind have we believe set that and living it globally, We North have great physical here, outstanding begin in inherent utilizing a and but great to wellness an I'll aspects to that mental brands machines we the and It's

space. So, we like the

And is capital that. our smaller consistent and allocation in have just where bolt-ons plumbing bolt-on small and drive our strategy paint to and acquisition. this this It's we acquisition can leverage, with does a

sauna that production our based continuous not Finland. North a in system, network company The intend Watkins in leverage fundamentally, to improvement million. and we of we cost for but our capabilities have in operational €XXX The this It's was dealer is use, that our only America.

went tubs, went we originally as to in and the when this a now swim into then ability into, we And into saunas. with spas, we've we frankly, demonstrated and when to ventured different hot brand do

we're with improvements of growth than about of our haven't multiple. to can bolt-on. it add smaller nicely and very going the small. bring closed going sell cash a strategy guidance about We hand, continues handle to team this It's business. how about and fits It's keep we with to not capabilities dealer the our It's It with this talk our bit We're network, on yet. modestly so this it to to Masco's overall, overall us of very is maybe pay X% in we accretive a in it But things and short-term how fund less And and our forefront will out EPS. since excited can the And to that leverage borrowing. brands. well. little build to

Great. Thanks, Keith.

comes of ahead. question Thank Please you. Research. Patterson Truman The go next from Wolfe

Hey, good for questions. Thanks my taking morning, everyone.

Truman. morning, Good

was margin margin in been really understand of better much kind of I morning. pricing good initiatives segments a line year. know, you look What better some in right, afflation first big is trying or the expectations investments of that? driver of start with your each to half just lower bit Hey, Was your it to maybe cost-out When but I'm revenue your the being at accelerated etcetera. what's op little some the drivers this were environment, performance. cost performance,

Hey, out, operational Truman. the of four. one our The think as that three deflation. hit improving better efficiencies. It’s yeah, better David. as and It I really price significant expected was we realization, really wasn't cost on was you

seen that wasn't but length our have expected, the especially when we deflation, visibility. we some Keith you what of really chains As above mentioned, consider and supply

impact be You know, a pretty good the in might second had of of understanding deflation what the we sort quarter.

that So came in the drove productivity improvements it and realization better the strong really performance price down to XQ.

There's nothing couldn't internal one those nature back time kind into of there? improvements, continue a half in year. on productivity they the Is where

got of bit there's say half No, nice nothing a probably timing little the year well. I one second probably pushed time, know, in improvements. out the really of as you expenses on that would

one-time performance strong did but going contribute the XQ. it to that in So to I'm call event, a

of of Okay. heard of U.S. Got second you. certain, categories bit in a the And little we the we heard the then, back in part in know, specifically, demand you improvement quarter. of

all any of sort to stability saw channels trying if or US Just categories, any across in you your kind improvement. the understand or of of product

It was pretty quarter. throughout the pretty, consistent

Okay. All you right. Thank all.

Thanks, Truman.

comes question Bank. The from Ahlersmeyer of next Deutsche Joe

morning, Yeah. everybody. for question. Thanks Thanks. Good the

in Can your talk the item. each of you housekeeping year-to-date first quick of performance quarters lighting couple a the in or either year? maybe about hardware of Just and

the have our down XX% by These say in really range. that market of been for that they businesses were all QX, I'd as businesses softness have. impacted

as -- to they've decline working portfolio. low line in entire price. perform expectations We're double-digit would we cost taken R&R on are actions expect We them say our these businesses across market. with to of expect that the volume the I roughly

the just looking the third a likely likely more margins then quarter those year-over-year, relative fourth to that is about than at little hit the And your be to Thanks. Understood. half thinking quarter? quarter back more down margins guide, second

Dave. it's Joe, Hey

I tends a with volume. see typical general to margin compared think lower lower you're QX. seasonality quarter QX more stronger to to QX in in margins likely the be margin

in we in of do in saw here considering year-over-year we terms expect QX expansion more year-over-year modest XQ from of think expansion I little year-over-year in our XQ. XXXX, less expansion comp probably Then bit probably in what year-over-year, a -- more clearly QX.

both the quarters consolidated expansion on So, level those at of in operating margin?

Correct.

Okay. Thanks a lot.

Thank you. ahead. from next question comes The Philip Jefferies. Ng of go Please

quarter. Congrats a Hey on guys. strong really

Hi Phil.

out business off? because how some difference some driving I on relative color you the kind kind tougher question, channels? what's For destock? you Plumbing I the any on if home the have two comps performed, potentially spa of guess, the of first color channel. in versus Can business some Keith center flushed I you When America, the you weakness me, does little think and relative in give the believe more level a PRO called that North out

that, little if misspoke. bit say, probably said I I a I stronger. If would anything, Yes. was

better -- maybe system. heavily its that has with think slight But a some project DIY. wouldn’t versus to I working I enter the to do in not just that, performance backlogs through PRO mean

to the you, I that ask that. Phil, want clear part of question? me So, second Could

The on you remind little ex headwinds business? that first was think did color performed part Plumbing what spa? the challenging. be lap North a really was business comparison Because more American spa to It kind helpful I part us those on would any that more of, the how guys

the saw down. we volume saw you Still seeing North to start in we know turn really earlier America, -- --

started only as So, then about topline down accelerate to expected. Europe Europe. volume challenged in X% QX in and and was

realization, the very challenges. and So, good providing in driver. experiencing cost in price/cost efficiency. I solid both real tune would say a levels and our back Europe productivity really execution. the We're service supply and chain we're Plumbing, we're That driving North and was getting in volume America

plumbing our cost, performance where of better got great America expect Europe. and and both than job about the driving call, we’re performance the think to we in our quickly we after productivity, when earlier kind So, We in but be, it a the is versus we particularly as expectation not expected. in said North team is doing

back for fading first perhaps half. bit maybe Okay. That's of a half the helpful. mean, on in on the versus question the margins, And Dave. a I performance relative today little questions lot a

and maybe out pushed expense appreciate those Can you You funnel out to getting the of getting help some the year? some for pushed some through called better headwinds the margin investments modest size account expense half through. progression back that that out, will in we should

Yeah. of size the compared in little a on be in PRO representatives growth enough as margin I'm to a performance but could not half the bit side. first contribute to to talking margin investments for we're paints. of beyond the additional to first second But half, to bit them little up, It just bit just Phil, little lower going a a headwind half. marketing compared that,

the Appreciate you. color guys. Okay. Thank

Thank comes from Adam of go & you. Please ahead. Baumgarten question next The Zelman Associates.

everyone. Hey, good morning

paint Just guys is a materials, low side, of are at the your and you inflation. on competitors expecting raw looking one single-digit decline high in out large single-digit

on a Just what more color be curious little formulations, or timing it's if maybe just may give the that? if difference different could you there

cost inflation, basket. low talk all-in, includes When about that in we everything, the

are different Specifically that raw's, used. your vertical to that question integration, some yeah different levels supply chains of there's on

structure a distribution manufacture go to there's differences market. how in cost the difference how and to we we and certainly So

differences big there. of couple a there's So

Yeah.

difference I as We're for others, Masco. how to integrated here more little accounting actually are we of well vertically all inventory, on overall Life and FIFO practice compared inputs as bit FIFO. formulations. A to are could in think probably what depending at of it's a function the compared the timing be accounted buying

this it. given then in the got the That's maybe environment just helpful. any just promotional in Okay, softness update the And paint DIY? aisle at point, on

similar promotions In somewhat been general, I'd say the moderate to Yeah. and level of has industry-wide last year.

on certain bit promotions decision think and a I partner say profitable obviously, work environment. channel But but spotty more will on that some events bit the bit help little with seeing promotions in imagine in We events to partners' similar and more, it’s ultimately, I’d our specific on promotional a it's we and But our cases promotions essence as We, drive little maybe items. are selective terribly. sales. not a little

Okay. Thanks. Best of luck.

you. Thank

go The question next Thank Shmois Capital. from ahead. Garik Please you. of comes Loop

more could talk you the I what was hoping consumer. a little just bit seeing Hi, you're thanks. on from

mentioned you're DIY shallower the of be lower you downturn a a because softer of to also expecting just I anticipated, that little to previously housing turnover. is expected levels bit the but be then think than

this have So any consumers would be additional point color on where great you at think the

is of spend industries other at in to industries, probably home little pick spending and seems read you it's a industries spending seen look has up be Hey, and when travel choppy. pullback pinched Yeah, be Garik, seems little sort The a Dave. Clearly, it's risen. I'd have year, as in this rates say -- little consumer been leisure, to consumer the affordability strong. our a those as improvement such bit significantly you've more as across

remain and to consumer the but think, healthy. bit pretty the pullback. a very seen a as So of their it homes, as levels little in interested be we bit still think we home still is equity have characterize bit And choppy consumer, overall, a a seems in I'd high, investing but especially uneven

is just the it. M&A Follow-up question on GOT Okay, environment.

that at any chunkier with and there has opportunities consistent theme other the broadly, announcing are in SaunaXXX changed more pipeline maybe in the acquisition, all? out Just or there? You're deal. opportunities Are size

talked our slower coming Sellers has earnings. the M&A or see less Garik, Clearly, don't potentially not not market. pipeline as past I'd been pulled to the definitely say has opportunities they to back, the changed. changed, plus off that has some sell environment about, over might so, competitive, weaker buyers we've so want clearly -- be they as year

has to and M&A not outlook opportunities. our continue slower and we our bolt-on nice a definitely changed, focus but on cultivate some environment, acquisitions So

Thank you. Understood.

Thank you.

last Our Please at ahead. Securities. Hughes Truist comes Keith question from go

Question you. on PRO Thank paint.

or more step the the there in PRO services prepared had is with PRO the gaining had a you where You've kind a tremendous this? guess, PRO as and offer expect share paint. on next can Is of little a just tremendous what's here you I paint?? bit. leveling to said, Home – statements Depot products, you do in go you partner paint, and with your out more And

painter. we started we a of could when years we XX ago that improve this, the about the for the Keith. It's made service to list things do It's really PRO service,

tweaked points channel. We've price believe the the be the and brand fundamentally, have but to in cases, the we have got in what's We distribution light terms successful. some partner right can, in we of innovation great and a the

service. about it's So really

sure So it's what up about making scaling that we're needs PRO understanding the the and that entire across market. and delivering

they continuing doing more service, and improved So on to of it's mentioned that delivery lot COVID worked. to what the we drive And our builders. and Scores, options better programs, supply we've a in loyalty a like, different situation ability the of got Net tremendous so it. been saw Promoter I've it's hands to like and before, lot as they It's certainly it, our keeping more product --

drive in So it's greater and continuing a staying market. to grow the focused a matter clip and improvements continue service incremental at to of than to

Okay, great. Thank you.

That thank morning today's to like and We'd us the call all Masco. this concludes your you call. for joining interest in Thank on for you.

today. you for your ask call conference the that and you conclude does participation for this gentlemen, disconnect thank and your lines. Ladies please We