MAS - Earnings call transcript Q1 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen. Welcome to Masco Corporation’s 2018 First Quarter Conference Call. My name is Regina and I will be your conference operator for today’s call.

As a reminder, today’s conference call is being recorded for replay purposes. [Operator Instructions]. the Investor to Relations. turn President, Chaika, now and Treasurer will call David over Vice I

You begin may your conference, sir.

David Chaika

Thank to Masco and Chief call. good and John morning. first of Officer. Vice and And are conference President Masco’s President today With you, quarter me Masco; Allman, CEO Financial Sznewajs, Corporation’s Regina. XXXX Keith Welcome

website Our today are to first will we refer earnings quarter on release under our slides Relations. and the presentation Investor available

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

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

also statements financial non-GAAP Our measures. include will

earnings are to website Investor measurements share our turn now references Relations. to release in over that, to Keith. and slides, these unless per We our profit operating adjusted GAAP will be adjusted presentation and I will earnings available otherwise noted. on Our which as reconciled With under the call

Keith Allman

And everyone. grew had us impact joining top-line for Good currency. the today. to you as Dave. start good a We of thank to slide excluding turn you, X. morning, the Thank X% our Please year

to Plumbing the price lag discussed segments. investments XXX cost basis Plumbing And our points a Our the last relationship and operating mainly our we in to growth Cabinetry. in margin due Cabinetry quarter and planned in quarter and decreased

and we that in margin expansions the growth second the will growth confident profitable year. are half leverage of to the strategies achieve investments these We

across improve all and in the price implemented we quarter. to relationship our second starting our price Additionally, cost we segments have increases expect

of earnings adjusted into I’d to to per due Plumbing. tax interest our per share decline performance, our the with lower profit operating recently insights to of provide $X.XX some behind benefit each starting drivers XX% reform. share our additional While the grew enacted the segments with and you like expense

from Kichler international Hansgrohe, Masco Architectural innovation aesthetics, XX% with Congratulations XX% led grew Plumbing in highlighting Plastics. growth both announce going on to Kichler led innovation Delta’s its and to Delta product fit Watkins currency. brand drive Liberty design [indiscernible] and team this Wellness, Faucet segment I local Mercury leading which leading and as Hansgrohe was Behr channel, North for March. Delta strong by they led on faucet channel. pleased both and strength and innovation, of focus and [indiscernible] re-launched closed receiving currency particular recently continued our Lighting superior channels showroom segment Plumbing our received in and premium integration growth line. shower American due that new X% to Wellness brands and well its Germany growth to Kichler Decorative increased surface. our for growth international grew or the Outside in in by [indiscernible] wholesale channel and Brizo the by Our our high-end spa business drove Watkins X% acquisition recently network performance dealer retail the acquisition, high-single-digit as Plumbing recognition in and local great North its well China Kichler am recognition. sales and early in the of X% continued awards offering distribution. product of the Kichler is with brand the their four growth business. expanded sales from in product through strong in and achieve its through ecommerce as leveraged existing operation America, their

Our strong of this Depot, we in pro and began with Home quarter the the initiative. another expansion paint sales experienced growth together

are additional continuing last store this hiring discussed invest outside we successful we As pro to recruiting quarter, programs and in our demonstrating program. hub employees commitment to and

Cabinets. to Turning

remodel of strong mid-single-digits quarter grew performance. delivering repair and Our another sales

We on new also launch confident fourth as the this annual million new run made XXX year. of over rate Cardell XX this by our executing business quarter by the reach are sales of showcased the great Initial business program stores we’ll we’re progress and of our resetting with Menards displays that sales brand. strong

grew Our of Milgard across markets Western its divesture for American Arrow business. window Western proposition leading to for value experience products dealers United led States, and our strong mid-teens Window strong the demand resonate its brand consumers. the XX%, the of and segment North its as Milgard, continued in impact with by excluding growth all

UK this window business cabinet. a Our portion due the growth softness in offset of to UK

by taken the Additionally, actions the bottom-line in restructuring impacted was quarter.

for We for accelerated in at also year. an this X.X activity, $XXX the shares to now or repurchases to continued million With expect share quarter buyback repurchase plan. share our for through deploy repurchase $XXX million of million back $XXX remainder we by share acquisitions recent million the least buying activity the

our Our line our in the with $X.XX track of expectation to to share. were expectations on our in per results and with are plan for quarter year. We range achieve the first we $X.XX affirm earnings

and John call I would over turn Now, to detail. over our operational who to performance in go financial will the like John?

John Sznewajs

And Thank everyone. good morning, you, Keith.

purchasing rationalization, adjusted As Dave inventory focus the on items. for mentioned, Kichler of one-time excluding will the of acquisition the step-up and impact other for most the performance, comments accounting my

the accounting adoption new of the Please page adjusted to XX In details. addition, the refer rules. and earnings for any the reference call presentation comparisons been pension to prior of recognition revenue reflect period has to

top-line and per slide reported X% currency. earnings a local delivered in growth sales to in solid X, On X% Turning or we QX. share increased basis,

Moores, of of and X% the local acquisitions and and sales Mercury increased in Excluding or divestitures the Kichler, Arrow Fastener X% currency.

price In million euro excluding as distribution dollar sales of and US demand local in the against quarter. the and North X% approximately X% Foreign all by repair quarter or currency, across increased the this the both American divestitures. decreased $XX international sales pound. in for currency Consumer channels In acquisitions favorably our the points currency, all our remodeling impacted performance. revenue X% and drove British local first translation across industry-leading weakened quarter products and

price the growth to of principally on year call. Moores, the and X% XX.X%, Excluding aggregate cabinetry. Cardell of again approximately our by last Hansgrohe. divestiture Menards, lag at approximately international million. cabinet first include fourth sales in basis we These and declined to depreciation increased investments the costs display as compared margins quarter costs to spending $XX discussed to related plumbing quarter driven due items strategic plumbing investments Gross points program as a The in launch increased and once in XXX the well

Our sales to making drive strategic basis achieved investments We’ve SG&A operating growth. while operating decreased to XX.X% of percent as to we as of XX SG&A with our $XXX XX%. points profitable continue of million profit leverage a to margins

$X.XX the XX% in first Our the improvement an to quarter XXXX. EPS compared of of quarter, was

a EPS reminder, rate. adjusted assumes our As calculation a tax XX%

the quarter. a investments into in leading XXXX. you the and If diminish year, to investments stronger of second These to look strategic the growth we QX QX anticipate will the will half continue of second some of balance

flow of was first million. EPS our with performance $X.XX our free our $X.XX cash of we in affirming estimate and our and operating consistent to are quarter the mentioned, $XXX Keith guidance As annual

Plumbing Segment another segment of X, sales slide XX%. Turning to delivered increased strong our quarter top-line results.

solid impact and acquisitions, businesses. increased the driven in This spa sales our and Excluding shower by currency of X%. performance growth was faucet,

$XX million by favorably approximately translation sales this in segment impacted currency Foreign quarter. the

strong Our demand North currency brands consumer-driven sales experienced in with for local we customers. our industry-leading American wholesale, retail, X% dealer large quarter grew as and in first

orders from in advance Delta’s QX into customers new of of million $XX early system ahead We also sales the launch benefited QX as ERP approximately in pull May. from pulled of

network, as our Additional to drive leading the innovative to competition outperform leveraged business Wellness new and brands continued growth. Watkins industry strong products spa its

Our on sales and higher growth margin markets in the results China strategic and X% plumbing increased local Hansgrohe’s to and decline yield mentioned our main as drivers growth $XX collectively with fully in continued on display dissipate second in roughly both The international but strategic operating we including QX and in in Germany. persist were strong Plumbing the quarter and focus quarter depreciation key lag These investments currency our will fourth higher into call, growth QX. and would to QX increased costs. costs in investments moderate items a pricing cost price then lag are The million. price actions We amount as containment realized. the anticipate of cost

incremental QX to related As ERP cost QX of there implementation. million be and will a each of in $X reminder, Delta’s approximately

will segment to improving While X% recently XXXX margins. when leverage will XXXX Plumbing relationship, coupled margins we in this expect similar our have made we operating investments these X% and to investments growth the in business, cost price with we with our grow

by to of quarter Products in in acquisition X, XX%. segment another strong Architectural our Kichler driven grew initiatives growth early slide of various and Turning Decorative March. pro performance This was

grew quarter acquisition reflect sales new comparisons in both The increased XXXX variable and increased and investments growth benefit of that Excluding this mostly and the of first the volume X%. offset rule, segment the other the of expenses. matched in by of And XXXX. recognition was and new revenue the reminder, impacted strategic quarter this as by Kichler, legal is rule all a income accounting application first XXXX. Operating

to pressure by in mitigate category, will amortization we impact the our million of And face a and this depreciation diligently to cost basis. We increase as the acquisition an approximately continue $XX remainder, on are working annual raw inflation. paint of Kichler the material expense

excluding continues new second to primarily in impacted XXXX, in declines lost the in sales in business business the Moores Turning to segment, business. second the to of build This construction quarter X% declined the here which will the In the anniversary quarter, decreased Cabinetry our slide be X. we of due by impact the quarter. X%, sales of divestitures effect of

Our repair to in performance in business growth our the well performed solid remodeling increased repair and quarter, KraftMaid business volume. mid-single-digit delivered model

In Segment related were and addition, and the profitability to approximate declined principally this [indiscernible] a to price our [indiscernible] win $XX cabinet the Cardell program retail the lag. of performance. with on initial is million and we by due million schedule program quarter investment $XX in pleased cost Cardell

We pricing will are realized. actions our and the second cost expect this as control in lag quarter abate

quarter. impact X% Turning the our sales XX, currency to and of the increased segment in slide excluding increased Windows X%

in of divestiture Arrow grew sales XX% Fastener, X% or currency. the local Excluding

with currency favorable by growth premium sales performance across grew which shift positive $X in favorably and segment mix Milgard’s approximately channels a quarter. to decreased towards our UK to the in door strong percent balance approximately $XXX Foreign restructuring costs products And and in facility. was the volume, Milgard, divestiture the by due quarter pricing. million. mid-teens all was our This revolving increased as slide million, Segment translation availability window this impacted strong quarter driven profitability turning growth ended X XX, credit well in we full as Arrow operations. due of on to liquidity, million in million our the sheet largely Window $XXX

the $XXX percent of fund sales denominator. the versus During were added we due quarter, Kichler’s repatriated XXX prior working is increased million Kichler. largely to metric the Kichler acquisition of numerator Working capital points XX partly of of the capital this year total to acquisition. impact XX%, the to sales as the basis a approximately of but to only to the added days

of working Masco capital overtime. As the believe this lends significant the business capital, metric. itself this increasing metrics operating of throughout other sales of a is deployment there most an opportunities will higher levels further of such amount sales Kichler’s tools, our decline as Kichler to to than model of improve as businesses, while we working system Further, impact Masco’s percent year

by quarter, at shares valued repurchasing our we the value million. X.X continued approximately on creation focus During shareholder $XXX million

now investment I result am a recently a report Moody’s. Standard with with our & the three Poor’s, credit call Keith. credit that back to its as that, over investment rating action, Moody’s rating rating to to credit is And and now agencies, of grade. leading happy I’ll Fitch And Finally, grade our upgraded turn

Keith Allman

our with John. you, pleased team’s I am Thank execution.

up namely of our off for business start year-over-year, plan on driving and over in over strong. household their confidence are XXXX. Demographics, X% years good and appreciating, it’s and increasingly now the should we are spending stock is remain aging, highest is favorable large a boosting invest the the US in been to XX% millennial Home prices XX United repair housing group are homes And confidence consumers’ formations driver to We of years. and key years to in levels come. drive Fundamentals are a Consumer housing year-over-year, X% residential in up remodel with old. XX homes. States

strong our these behind at In while Decorative, we plumbing of growth We investing the brand platform, we our our capitalize to along In a across And windows, the Delta significant partner our and strong are in top-line initiatives Plumbing, paint repair fundamentals. our launch share drive business. business. executing Depot. and diverse Kichler, brand. our we And the Milgard strategies on leading about Behr are with are sales cabinetry, Hansgrohe. market particularly we the driving to growth are for increasing our are In in powerful continue lighting with future investing track remodel opportunities our continue program with Home with we to new and excited growth retail are new on pro

and a our cash buybacks fit now to for flow with will for robust strong open a Q&A. the to With generate you Our leading I dividends flow approach to right acquisitions balanced with and up a free that, brands cash Back shareholders. and return, value Regina. on and deploy execution disciplined call share we that create continue to will

Operator

[Operator Instructions].

from question Evercore go of Kim will ISI. ahead. first Our Please come Stephen line the with

Stephen Kim

you Thanks of the very was was out And you all lot in growth of I first think then was much, expectation do curious growth? or part had of strategic curious breakdown thought a but cost that I us with much in could strategic how color. I related changed segments also bit information lag. to ‘XX. that In to ask the about if price I you Plumbing, -- the $X the versus you’d wanted about in quarter. particularly indicated whether and guys. I was million specifically cost price And you strategic wondering for particular half gave little of a help that that as your not in would a appreciate

John Sznewajs

So yes, morning. Stephen, good

$XX that called big cost is launching think Menards of related that $XX chunk million you under a growth Cardell you the program million we’re that strategic spend for and and If obviously about out, recap to brand. price of the

the relates to you two are it the what there is the spend we really that display Plumbing of there. some segment, As One in pieces incurred quarter. highlighted,

principally in so but million about And piece globally third in, for last several then that. Cabinetry last that to [We the performed that $XX is XX investment that all we investing portion spend Hansgrohe, very in X other depreciation causing the each, million and depreciation to as several strongly tick increase in growth years. bit. recall, million display in as a roughly of I price and year affected is segment, The new last that And costs. little placed] the for over that well. Ireland, distribution out] last evenly achieving obviously And facility also the future and aggregate. cost. our may really [cost Plumbing in a you come is to bit we’re think a the center facilities them and our for a plating that’s the plenty split of I segment has And business, new up the of so in little Germany depreciation But which was funding have

Stephen East

XQ, believe that And when cost you with about the then improving in talk expression. price I Keith your beginning

what in positive XQ and or will that Just you us the you be wanted out, growth the lag, the XQ. flip sense, I investments, negative give clear on to could that. positive? so that lag, think But to do expecting actually cost a model anticipate laid point, are input you flip price diminish you’ve headwind I in we price strategic actually At mean can there simply

John Sznewajs

here. John Stephen,

look prices. across is the think actually put and market is at our we pricing recovering I it, doing we’re the just we in segments As what that

the market. the material the by think flush of raw in incurred with that second will I be quarter inflation So, we’ve end the

Stephen East

your Okay. costs that, And as it sort continue are just to are or input now? anticipating part to of we that of in inflate expecting you here are is right from you outlook where

John Sznewajs

businesses. our portfolio of across Look

have relatively copper second on been metals second been year. base in then. since early then they the narrow last is trading zinc And quarter of starting rose quarter think I and the -- have

or in copper movement not zinc. either we’re anticipating So, significant

that The now to product the across costs close relatively into through think $XX think I year. categories, I most eye of will be be So, on, that we one the barrel for the approaching the And other stable. a keeping paid. will our affecting balance should part go paint. stable as input to and All-in-all derivative

of and paint inflation We are think in both go well that input be to into moves that engineered as in move resins costs XXXX. out the CIOX year close keeping mid-single-digit eye to realm of on we how as said and possibility paint, earlier the would I here as

Operator

comes of ahead. with [indiscernible] Barclays. Matthew line next Your Please from question the go

Unidentified Analyst

where shifting of just new Plumbing displays help of Is and I that as mentioned and through of talking Keith things. guess these across some kind heading some the some see of timing maybe all growth John, to investments investment? to just of there then of of And the kind just the the maybe next do understand that in about of move into investments Hansgrohe. making you way elaborate a us the you’re on the we side you fruits growth with year Thank year? segment you. in

Keith Allman

the you the earn you in these as space be business center in quicker obviously that but in base delivery higher Germany e-business But is leader we’ve supports also your which growth et [and] you As investments business. with the invested made fill Matt, that’s key requires to we cetera. to leverage logistics Hansgrohe which when a in a support investments the new rates certainly endeavor our we’ve way subsequent often some case as make with in them periods of growth case and the

also for investing and our in pro comes drive what made to question people and to investments of some the overtime. your start the to where plumbing [field but their these leverage specifically investments, productivity paint in are segments, we’re many looking is industry] half in example, at plumbing, of into we year. back to Really We have across on revenue

performance. think margin, to year So, that about expectations we to we changed, with into last last growth year we for putting about our are all full we’ve full -- that year we ‘XX. And it’s versus versus costs that’s pretty in think that seen the and ‘XX when similar growth, while year pressures the hasn’t think investments we going be that good think segment, price this the

Unidentified Analyst

for to ask going question, the you that. still to about next some the with meaningfully new I Thank you. alongside you Thank more something move we’re to expect this Menards, that through did cabinets, we spending from My during as recognize wanted it. is that business of the that quarter or investment year? Got impact revenue actually top-line

John Sznewajs

the Yes, it of year from an come revenue revenue of progresses, think you to $XX see you’ll about recognize rate We Matt. point, little a It’s bit here QX. annual program John. greater that that run million begins its see and approach greater as to will in did I on But basis. your what as

Keith Allman

us. good rate and worked segment. hit $XX as meaty, million year. run a its the to objective John it by of And chunk program we our supports expect will growth of the for to a capture end We’ve our that hard be this program It’s profitable in It business. mentioned,

Operator

Bank. line Please go with next Nishu question from Sood ahead. Your Deutsche come of will the

Nishu Sood

you Plumbing come in are of for able talked in normally a for get the to to commodity price I increases about about it I think the time you most back effects quarter of the folks two going price ahead you. quarter, that. the and think in cost past, Yes, as it even fourth through have to quarters takes minute, Thank first

the forward quarter? if in -- understand just have why could implementation, just I here, shortness I the a don’t confounding that do you I ahead know what first to was in bit to of So mechanism, to pull factor And ERP the if a it does talk this mentioned sales with I that -- you think was effect please? wondering heard wanted right, some was

John Sznewajs

Sure.

XXXX. that commodities price As element, second in to elevated it the commodity recall starting quarter relates of

don’t P&L the as quarter. hit customer we time. obvious to pricing income pricing, statement exactly in get the as would we our first every so, And in in the we impact your point, And get same anticipate at out

lag So, of there bit a marketplace. little putting was price the a of into

our activities are they to actively feel team's about we the both and really their offsetting as containment reacted with within so, how commodity own we And good -- offsetting where as inflation well price -- price, are inflation how with operations. cost

the our the hand that that really relates it to forward million really ensuring affected Delta, I through more inventory as XX That all. price is implementation. think effective costs As in don’t go the no take forward, compounded we on pull or customers to pull ERP

Keith Allman

Nishu, Keith. this is

investment if And look the ERP QX that’s I recall think about and the had real continued spending at spend about. last QX, into continuing talked as we when you you think display Delta. of impact strong as then we growth And some you year, margin depreciation performance. if --

So, I north think of XX%. it was

be down in leverage Plumbing last degree expect that thinking So, about same as But will down to growth begin expansion they likely the particularly we were margins, there quarter second definitely to investment. quarter the the the in third year. our

mentioned we’re We expect to last the given think So, the the similar money full performance. we we that’s work I year, costs. be way year. And to spending as margins good for price growth to and and the Plumbing handle on

Nishu Sood

also outline strong, strong but then outperforming Obviously, the pro has of has paint. side. in volumes And very there on been the performance market the soft, been on kind

first a of Just you in the give paint momentum in and pro the could trying, quarter? volumes sense if DIY us continued how

Keith Allman

growth, low-single-digit flat will that in our we’re really all-in We where think, We low-single-digit. opinion haven’t and that market and come fall out. DIY really for changed we haven’t the overall about out DIY

are continue more to and segment In into pro, that we terms in continuing that. even of we strong invest growth

in BEHR levels. it’s performance with we paint brand, we think quality Depot and partner service the when versus overall, at So our outstanding that market, good you particularly, think strong look and the our about our pretty market when

Operator

come the Please from Michael Your line will ahead. of Rehaut JPMorgan. with go next question

Neal BasuMullick

for BasuMullick Neal It’s Mike.

continuing guess on [page a you I So, talk on you’re right bit cost? can you what But this. little X] touched on price doing a bit about

Keith Allman

Well, the what them, decade. through a doing price over to the like the able go and cycles we right part those and commodity, on We’ve as overtime. is And we while, is both think is side that. there come over that been of I better perform leads we’re out to continuing demonstrated lags over impacts commodity flush mitigate of

think, in we’re I segment invest really and for segment together to is working this this growth doing well our with paying and and what these keep extremely to strategically partner to Home pressures Depot that’s in balance off.

overall think relationship stronger our well well. And doing our pro. Depot point both as and as to as DIY been I by with that I’ve and I evidenced something has never think performance we’re

Neal BasuMullick

pace guess of see that what the do I through kind of margin year. then as And factoring recovery you

can how much Specifically, do you think, pick-up you in QX?

Keith Allman

the important it’s accounting affected been by any segment revenue our as decor than more to other mentioned John recognition note standards, segments. has the that Well, of

for they Their margins our last high XX% lower we’ve than far year the quarter. in this of was big experienced recast low double-digit acquisition. this Kichler’s you segment. when range, and teens away are in and decor, were XX.X% quarter that, margins that that So, the A driver typically -- prior

average XXX points per call So, it recast basis on quarter. that Kichler is XXX, acquisition

store we’re to and of hub taken initiative, good. of additional So, reps pro erosion look outside and the all price cost business we’ve that’s inflation and full state plus expecting continue the the experienced commodities, again, investments And actions are year. pro when for to at drive expansion we’ve making plus modest improve at employees our relationship, base the rods, in you our that volume, with the the the when we pretty margin the the to we paint look

Operator

question Sachs. with Your next go will ahead. Samuel Goldman the Please come of line from Eisner

Samuel Eisner

morning, Yes, good everyone. much. so thanks And

sticking your modest Keith the on the comment margin maybe on Just just erosion.

obviously was the Kichler that price you acquisition XXXX prior than that margin comment degradation expected headwinds the had before less would that the I levels, Kichler cost think made to a you given transaction.

your the expect as wondering may just you I would just greater margin we clarity out, year, Kichler kind be parse was helpful? base if business see what So, still inclusive of comment still can this of of do kind well, any there to core compression be prior

Keith Allman

of With with -- end in restated we changes, we’ve what prior that Kichler range that to regards are comment been at revised margin referred XX.X% accounting business, a Sure, ‘XX. our expect XX.X% that the to. base continue operating to expectations Sam. for through and to With and long-term that’s decorative the my higher

We base are expecting modest erosion business. in that

Samuel Eisner

going then just you own That’s this to forward. your Kichler in? two have two overall that positively a Maybe update for you maybe and business Kichler little an now just where but recognize guys what it’s business I you on maybe driving opportunities that the helpful. given now stands And hands are question bit of it, on at that can months about on for kind your going Maybe months. it's be expansion how a there looking negatively for margin about surprises you the fact both talk

Keith Allman

that The been a consumer surprises really they trends the were cycle, positive. the whatsoever. were ahead on for the product positive we understood being and focused driven short diligence that’s negative have through side. and in very No going development knew due of I impressed has they had me me and particular a actual been trend the that realized surprises really and

In smooth, terms smooth. of very the integration process, very

management treasury, We legal. risk have integrated and

part the very are and and be eager been We system the out operating to to of receptive introduction team. they’ve rolling Masco very the

fits ways of and seamless. of terms Plumbing in influencers overlap. the and to the us. in met with many It in of significant and associates key the very been number with that for have the It this fits business customers we which a showroom This in transition paint. work and We has do regards a channel the aisle and is good we is importance and close purchase to what designers in in of lot do terms of a journey

about to excited So, learn And Kichler. add as able honestly, from well. we’re being able value to we’re to being about them excited

integration. positive very So

Samuel Eisner

sneak just your the What more cost just a on that? quarter you’re percentage cost relates Thanks. the kind in year. one price discussion for or thinking update of as can COGS I overall to How about freight just If on is freight of John this getting earlier? you’re that an

John Sznewajs

inflation. a freight for of most runs. products logistics expecting sent the much incurring terms distribution on distribution around And not In are standard or our of we’re incremental part, lot costs,

are We on hoc tough we short-haul more the that inflation is of some seeing a runs or of just make. ad

that if on in and right this that year. of but good the the the control. point that think, pretty we now, I so, And over really it exacerbate game, impactful close got it’s course us. of doesn’t But make eye in it to we not at certain to Keeping

Operator

the Credit next Your Please Susan question with line come go ahead. will from Suisse. Maklari of

Chris Counihan

This on questions. Susan. Cabinet taking is mention Thanks Chris you sales… Can my for for

Keith Allman

could speak up touch? just Chris, you a

Chris Counihan

Yes, sure.

lower to that before and left channel expect due do direct that So, you mentioned you you your expect growth your efforts margin your to exiting sales do positive impact, Cabinet Once business. to to XXXX? run growth rationalization quickly return what rate to in and that build you be how

John Sznewajs

X% this we divestiture [indiscernible] full range. year expect the for of in Yes. at growth XXXX the coming [ph] the X% segment to Moores, top-line excluding

behind to further quickly. so us. pivot get And growth we [indiscernible] anniversary Once business loss of the this can we

Chris Counihan

Milgard overall And strength just just and walk business? aspects turning the pricing at the driving you that of you us favorable to of environment I the seeing mean you’re Windows, through performance the on some strong Can had side there quarter. this

Keith Allman

affects And we has brand done we new there. productive leader do very and in That new in we’ve dealers, that’s and the by with well focus we’ve really with well a dealer problems dealers both do strength was choose for and and when the stub value build there lead of and toes proposition a found year proposition. out resonates out a of growth rates. well terms that us. outstanding also got that don’t driven ago, a box we and business is Milgrad's growth. regards value the to had fill their an we’ve that exceedingly what’s business network and business team to times so and got that Really, big leadership us. some driven got us that our their And clearly We’ve This behind

Milgard the driving really growth. that’s proposition it’s the So, value

John Sznewajs

thing you. point to other Chris the And that I

comp recall the you that to did in have of midst and last going relatively the easy say last little we bit to a year difficult. were a QX this in of and more time we be QX year. the we’re In compared I’d As turnaround comps

not might the deeper into same go out you you as see XXXX. of Milgard mid-teens growth So,

Keith Allman

very margin in will that, X% going full the we’re I we X% some to range excluding remind the expense. Arrow on we and I’d ERP are that. And growth the we’re continued would do divestiture going And year but say implementations expecting on well sales expansion, you ERP side, see ERP to that of have have expense. continued

for we year, margin are that make the while won't that expansion expecting we for XX%. So, probably long-term guidance XX% it to to

Operator

from Your with will the Associates. go McGill ahead. Zelman line come of Dennis next question & Please

Dennis McGill

guys. morning, Good Hi.

question on cabinets. First is

that and split you then and promotions? in just growth repair Can also price and if variance discuss talked You on are remodel. centers dealers you mid-single-digit and between any seeing points what home to

John Sznewajs

our stands questions obviously, we not dealers again both home of across of terms and centers and and channels that the between really couple positive. a of in growth are breaking both remodeling distribution, out traffic various so Yes, are

how feeling in so, And the that we are performed good about quarter.

Keith Allman

was We lot. for year just whole slight but QX a but elevated the little expect a would touch. promotion year-over-year environment retail in a increase in I full really a bit be promotions the may think not

aisle this so support who know us. where and their them we add-on as that’s this promotional profitable think of obviously and lucrative a their And retailers makes I something sales you sense has them. class, the schedules it think obviously is growth Dennis, for set they for I lot price view that

So, the pleased with promotional levels.

I think competitive where we are [indiscernible]. it's at

Dennis McGill

then the price plan And part the my as cabinet far that business? other as on three-part the question ‘XX, anything within stands there out of was

John Sznewajs

you the doing a look higher piece obviously semi-custom at market the market data is data with Our but well. to semi-custom end whilst worth know is tough of And product doing as and a on of real the couple that’s when on well you judgment the take of the -- of with a bit a month's continuum. it’s

gaining We’re outperforming the market share.

space that pretty for areas that is compete the in say we would that I strong. So, semi-custom

Dennis McGill

Okay. And Keith then for you.

in bit just how or little implemented as be think the your within windows ERP I confident for across guys disruption business that without are the [indiscernible] implementations, you well, Delta, On the drove a the this ERP you it can disruption customers?

Keith Allman

I am really confident in our preparation.

We have moved talent a there. at high this for potential been of over some long Delta time. At have we our

well come people highlighted as have program management quality. external as to We in in, excuse me both -- hired

Milgard our going while you our it one and bit -- planned mentioned a plans had I you tell issue While well that two of last did. implementations, we on implementations recently will are that little was very initially we biggest Milgard,

with systems. risk team. am Delta always there’s in really So, confident inherent I the ERP

Dennis McGill

of a very done ERP and to preparing of confident the this. in the we learnt prior their we’ve Keith’s job Yes, lot lessons just to tremendous point ability implementations. Delta incorporated team The has for are And execute. on a

Operator

the Your East with next question from Stephen go line will of come Wells ahead. Please Fargo.

Stephen East

rate as turning Kichler do -- over, years Could source And growth and tariffs China. you believe any maybe you think would I impacting alternative what the Steel normalized have opportunities then, back you for so all? you for little bit. is an tell or X you to you? you for tariffs, from And next sourcing? Keith rate be call do primarily up-margin you look a it,

Keith Allman

-- Well, questions couple there. of there are terms a in of in

class. because in the drive we’ve sorts and value is from tariffs, added in talked And overall tariffs we’re the it’s opportunities then this and about past point some regard continue working that we’re not any costs seen products. commodity that on margin capital We being procurement margin those primary towards around area, low-double-digit or gross of the things. but obviously levied of tariffs of areas also to side, really haven’t steel the targeted the support here up. going that to at in are With see not terms to margin In synergies only the

there similar I would very decorative good a we’re and lighting that, tell you model. far, in so shape industry, So, when the it you follows fixture at look

or excuse So, any in should we’d be competition. with all cost me be pressures, our of soup the there price

down supply to management to et cetera. chain vendor really So, development comes it

into ability in areas. the we those start those, And So, our as more compete in opportunities we’re see we to pretty to business. improvement confident get

John Sznewajs

the as to overtime. relates growth Stephen, be the similar think very growth, overall of segments Kichler to we it to will growth X% X% of

Stephen East

other in sector channel you X%. this All paint all helpful. year, side, over in to for news And quarter as the the the is, of this Do into think of you X% you at we’ve DIY of the second in Lowe’s. right. Okay. lot question had then get the year this had spending a I That’s half first increases? promo

Keith Allman

last not some I significant characterize launched different that way. as the any seen products particularly are increase in normal. brands different we’ve it and I promo. promo mean, increase No. wouldn’t and expecting But that's quarter in I’m

across If the our you industry, partners the best some look think of discipline. players demonstrated in I different the

Operator

comes Your John next question go ahead. Please of of Lovallo from the Bank line with America.

John Lovallo

of couple it’s year-over-year. I a one, think of Hansgrohe, it the like, looks slowdown on seems bit X% First it a a over That past was quarters. like,

of I you Anything high-single-digits. it’s running kind could in point think there? to the been

John Sznewajs

our in growth prepared and I remarks. good mentioned in Germany China saw as Generally, Yes.

slower as and growth. of see in the growth softness experienced So, growth we we But bit the little UK Southern now prior countries in a stronger some in bit did little European a the quarters.

markets, some little done some out well has emerging has country of just market growth been and of bit in So overall, just pullback core but their there, home a their Germany of terrific. a their

Keith Allman

and seeing solid a think me in price have the better mentioned from good think always good performance of continuum good, around seeing as of well actual -- terms when we segment good you better, the as ends market higher growing. And best. brand we’re of and growth as we’re And both I our that’s I indication

John Lovallo

helpful. to that’s then make be, I question correctly. would second sure And want I understood Okay, my this just

In in of think pricing on going side, still the segment a quarter up terms material really anticipate impact dynamic, the by you’ve the would of the that negative to you is quarter, pricing XQ? I raw second you’d mentioned end catch

John Sznewajs

through in will as QX I think improve modest be the and there will impact go quarter. we

Operator

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

Unidentified Analyst

expected. is Stephen on the Good I would balance I guess Plumbing, morning. less you the little margin Kathryn. it than the margin This can maybe am the surprised with in for figured impact. be in strength I decline lower Watkins, came mix than was?

Keith Allman

bit a assets investment growth new by in line, put a really into some a lag. displays The we price about and talked over commodity of new support center margin those driven was we of We in distribution that Hansgrohe. as our in depreciation little plating had growth,

as mentioned those John So $XX about together million. are

John Sznewajs

of of not mix at much little a bit much all. mix Not we have impact the quarter, but in a

Unidentified Analyst

view. in see point back one maybe then to the continues Thanks. than acquire lower on portfolio And throughout more this to your homes strength segment Alright. stepping a with you or If you volume in need do price expect or to gaps in year, higher-level another? starter benefit invest side more you any trend product do that

Keith Allman

sure work and procurement tend as cost variable shop as make that have to not years spread there generally as the both as productivity. and and have margins. whilst does was are applicable on over the productivity we They low lower a price opening attention bigger particular paid not We’ve point assortment to we a once broad floor as where as

So, I’ll in are leader spa good of that end. Watkins -- and world performance a pretty we And through in go I that’s for couple stand shape. space me, the think with that evidenced them strong by very in out high our business,

well. We to And priced have online. level we also worked of more can going very to that’s get come sell good that product in reasonably

brand point with up well ability and having in positioning as and some the land our a our is When outstanding value We taken the look Menards, brand at engineering regards getting brand packaged piece. to have that’s profitable an Peerless and on semi-custom opening in on plumbing we price re-launched that which good positioning growth point as very required opening the shelf. to recently well is price

be are to need customers as perspective channel So, our mantra and perspective buying be performance we we our where well. they obviously e-business which is where buying a from from need a is are to

years. work of lot put a happened we So, over this -- and is this several

Operator

come the Rygiel Alex of Your go Riley FBR. B. Please line next question ahead. will from with

Alex Rygiel

very positive either maybe action the you’re negative you or taking with on X opening on-plumbing or Keith the in in an aggregate. on your you you’re comments, mentioned Could that ago that quarter three quarter pleased and months you today? X anticipate comment didn’t surprises

Keith Allman

as expect [ph] to we that knew integration got manage that there I for driven their that. we knew a didn’t exceeded be the a logistics I expectations. lent be, that little of would be I the to as over how road lag, I pierce would to well, manage and started And probably and able north bit more my a would cost it’s I of that cost you, ready speak, of we time. so bit than the expected, expect up Oil bit. quite rules tell little some relates the Kichler a we And a truckers go headwind wasn’t price that there expected. would to that’s little a

some I but been we’re average, there’s ready So, the in expected, basket, cost think lower-than-expected on than higher for it. about

think, on surprises. So, characterize would plan that significantly quarter I as I more I would this

Operator

go Keith SunTrust Humphrey. Please Hughes from Your Robinson from ahead. the comes question next of line

Keith Hughes

the but quarter, questions a share what in the the with been share of is Most count? repurchase heavy ending have answered,

John Sznewajs

think around I X.XX, it’s Keith.

Keith Hughes

what And you first prepared repurchase we highlighted the share in to addition in number. in quarter? texts, another the that saw Is

John Sznewajs

either our Yes, M&A to we wording million or XXX of share of there. with the either We either, throughout careful XXX additional balance were again, year. that repurchases was million said the

Operator

comes line Please go question Phillip Jefferies. from the next Ng of Your with ahead.

Phillip Ng

pieces the Given decorative. moving in

of side kind offset on in more a some that are should quickly then full year side about How material that Is curious, through? cost price environment. margins think headwinds rising and Just raw you to can you for to seeing. these and pass we how of the the

Keith Allman

acquisition middle we’re the margin little modest margins, erosion, from in reduction. Kichler point XXX about because business, talked XXX would the base When before erosion segment you you the The this about acquisition. a characterizing As of of that how margin would range a effect on about Kichler to the that, we’re think think slight bit the it. we be is separate expect business in we base now Phillip, basis

Phillip Ng

of kind is a And through standpoint quarters? should that then we think quarter lag, it pricing like your about in that? from of ability terms X How a pass to

Keith Allman

have a concentration. We significant customer

my there. commodity So, And in go we I pricing comment about long-term actions flush. to over don’t tend the price stay to fluctuations specific back prior of we talk

Phillip Ng

that’s encouraging The top-line Okay, other market last me some from companies perspective, pretty light helpful. a some nervous strong about. the start of rates. issues, for one weather-related in talked And just have about one of the higher obviously

selling reads how curious season? any business and spring the your early Just Thanks. on inflated is

Keith Allman

The We of Mortgages don’t put a rates stop. full rising basis housing, on believe level that points have break XX-year that XX XXXX. rate is interest since about is year-end. bond going about and up to are X.X% we

repair there almost less not, is the and to rates. interest of if significantly sort We remodeling which than XX% almost are

our small real a part are home financing the all lending equity those consumer home appreciation, very is The price of R&R expanded and wage growth confidence, opinion Our in driver biggest our positive. nowadays. market

particularly when affordability, good. you look still at standards, Our historical very

more market that’s that to a gradual around tax rate a is can a digest that as view decision. or is spend lifestyle decision model interest and recurring the a say decision in interest Our rates increase steady an opposed

in and good well generally So rising rates, do a economy we signal economy. good

rates. interest we a So, relates expect rising or ‘XX as don’t break it in ‘XX to

Operator

of line with ahead. will question final KeyBanc. go Our come Ken Please from Zener the

Ken Zener

is if discern when Could much. about more would? which tied up which very rising morning, are you by you points, bit rising homeowners categories how are cabinets, about I basically guys, comments little prices you obviously rates, stop, rates R&R full it price equity, which think versus if so the think renovation. susceptible would with have we last realizing tied view faucets XX% cabinets heard categories, paint The the you be you of question favorable though, just to might to Thank a price interest under going R&D and Good more point gentlemen. be without you your

John Sznewajs

is construction so I variation new price don’t it it’s as think continuum much versus R&R.

impacted the more it’s and the the look by capacity in new around it’s that. get new construction as -- more being issues I to the segments I market new the So, am not out the skill rate, more construction, I would look potentially ability jobs as to completed. But and at higher trades and

maybe my go of continuum would said a answer on we’re as than more it’s not and about a new R&R. So, discussion, a price twist I I construction impact XX%

Operator

and now will you all Thank may for Ladies you today’s this call. disconnect. and gentlemen, conclude conference joining

Masco (MAS) 24 Apr 182018 Q1 Earnings call transcript