MAS - Earnings call transcript Q1 2021

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Operator

Good morning, ladies and gentlemen. Welcome to Masco Corporation First Quarter 2021 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 playback purposes. [Operator Instructions] I will now turn the call over to David Chaika, Vice President, Treasurer and Investor Relations.

begin. may You

David Chaika

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

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

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

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

Our statements financial will non-GAAP also include metrics.

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

Keith Allman

and you, Good thank safe Thank healthy. hope staying morning you and for everyone I Dave. is joining us everyone today.

still being are a pandemic, While effects year felt. over well are this we into the

to outstanding keeping priority, serving exceptional resulted safe this by would other and to to employees start for employees The to our encouraged our line and the Please vaccines, safety top many continue robust had quarter. and we dynamic continue cases. growth. our one employees turn another delivered to and customers. environment all experience our in our our experience like highly are of We bottom a effectively in globe of I number Through we Slide strong for to navigate thank for XXXX, We remains around surge each ability but areas rollout our a the products, X. efforts demand and the the of

quarter, due reduced For currency profit principally an lower volume and increased sales leverage to million increased per XX%, marketing increased in Operating Earnings strong to travel, increased XX% acquisitions the form XX%. $XXX share expenses and the our XX%. and spending entertainment across outstanding of segments. sales excluding

our Hansgrohe, Plumbing at to excluding driven sales Watkins. Delta strong Turning segment, XX% volume grew currency and by growth

American in growth exceptional by showed to to QX of patterns their XX% decorative Europe as grew Architectural our consumers of strong comp International online. acquisitions demand recent quarter channels, two which many XXXX Central to our growth. and China. as grew XX% Decorative in of in XXXX. quarter another healthy plumbing growth buying particularly contributed to plumbing's from shift business, the markets of well double-digit led X% wellness delivered which North acquisitions Delta shutdown segment to a their plumbing with X% March and Our particular plumbing across performed continue strength grew continued e-commerce quarter with comp faucet our against our begin X% sales strength XX% to In strength contributed and all – the return to strong growth. experience

high Our it impressive the teens during paint of in facing bath is a XXXX. DIY double-digit comp considering the double-digit and quarter. lighting cabinet growth which and QX posted each was quarter, businesses hardware strong in grew paint

into the back encouraged business seeing a as move quarter, and to single this it propane in was positive quarter of we While the digits we the the half in as now growth are for faced XXXX, comp QX momentum return we're low did see we tough by down of a in QX.

quarter the for by we we million. Lastly, during full share on the actively or anticipate million guided towards approximately year repurchasing share shares fourth million repurchases for We our acquisitions $XXX $XXX X.X call. our as deploying continued repurchases quarter

In preferred as cabinet in approximately recently resulting I assuming expected. addition, their transaction acquisitions, repurchases the it from or addition to would closes be million these just million we which stock towards announced $XXX works for We anticipate deploy our to receiving intend share in that mentioned. funds $XXX

are right discuss mind supply me tightness. top let Now two chain inflation issues and of now, that

both plumbing full decorative inflation the mitigate third in offsetting and secured increases freight raw To in as in range significant in be materials, the well to likely single-digit and in businesses as raw year levels resin All our segments both seen material copper, inflation in and costs. with in have high these and plumbing for and namely zinc statements costs expect the freight quarters. have segments price we begin both impacts, We these for reaching up fourth mid across both our to costs. used single-digit increases our paint we

have price planned our productivity increases that to ability the to us innovation work to costs. while gives and channel our brands, costs. additional relationships rising further again, and have including and strong Timing We actions we demonstrated these with improvements offset suppliers customers continuing rising offset pipelines

addition the and call. we track we We businesses and due in plumbing in Texas full quarter year caused supply and our the to products our the chain both by expect in to resins provided expectations have tightness, by to respect to – been in price supply significant that severe With of that paint cost February. both on in strain disruption we demand, fourth weather impacted segments and experienced robust neutrality are continue maintaining this by achieve margin end record year our

reduced inventory continues of and and certain month constraint. ability output of during to products products. timeliness to the Additionally, availability spot This and other ocean our of has be coatings limited architectural container April certain temporarily build

taken key competitive certain leveraging working to purchasing improving However, the products clock teams being Masco in products and by to issues of our and per will inflation, products brands, customers. increasing suppliers savings we offset our power needs agility for continued around persistent is availability $X.XX these working additional the year first an the are done job portfolio. comes bond detail to I'll have from availability quarter With turn the with shows utilizing share once advantage results. be our and that our of the This full performance, innovative take availability John we now is recent demand size, $X.XX per previous the expectations container our the to adjust earnings our our have over by to $X.XX. our on John? our actions for and countermeasure range With interest outstanding of $X.XX and of – resins stronger up increase and the to that, of scale transaction for to by to materials to to share. our from again production meet our increase Masco's This part expectations of from of it strong and

John Sznewajs

and Keith, you, good Thank everyone. morning

As other most mentioned, items. Dave excluding on one-time of performance, impact my rationalization focus will and adjusted the of comments

or excluding the performance to leveraged currency, completed additional X, in first quarter excluding margin well sales local a as increased and points strong start XX.X% volume Gross XX% the currency, X% up outstanding American X% volume. recently increased contributed DIY delivered North by increased quarter, as in driven This international was Turning spas, strong as North paint. or XX% quarter the acquisitions. faucets, XX%. In to we very an the sales XX% Currency XX XX% growth to local Slide and by increased growth. we sales three In in sales basis increased acquisitions American year was acquisitions. showers the as

XXX entertainment points, other and primarily improved Our of deferral the due operating the trade basis shows in This SG&A costs as and travel certain the certain percentage as quarter. marketing XX% such and and leverage, in sales a spend. decreases to was

expect costs future more additional increase to to service of as profit margins million million, of XX% $XXX percent We from We points first last in a XXX innovation operating up delivered our come with basis with XX.X%. brands, fuel along $XXX to a year expanding year or sales normalized investments the SG&A operating growth. back outstanding certain and quarter XX%; a throughout to

Our of first quarter was the the compared quarter to XX% in EPS and $X.XX increased XXXX.

temporarily the our mandated was X% the was and or offset in plumbing a in and XX% X%. in to XX% remain XXXX. Germany the and increased million a DELTA's quarter HANSGROHE International contributed marketing. million restrictions, strong contributed shut and we is to items wellness to double-digit demand excluding by as grew This profit XX.X%. categories acquisitions of channels. performance trade COVID Central another sales COVID and and in in currency strong. XX% backlog incremental relationship. acquisitions. local travel led by product in China. plants $XX markets of unfavorable lower manufacturing or XX% UK. double-digit benefited in consumer This up strong to all cost expanding cost on as both two acquisitions. delivered from shows last resulted Demand increases in in Walkins despite year. productivity growth growth operating starting Slide demand was and in in spend with remains the quarter their in most favorability across this or continue Turning in continued their sales both of basis an Operating quarter, year-over-year Europe first XX% And Currency they across the softer our XX% Walkins, X, excluding growth to continued performance partially Plumbing American significant was by their North are local quarter. initiatives with comp points quarter, see to increased the growth being volume, margins also contributor currency government driven lockdowns This $XXX was such also business improvement XXX price drive entertainment,

material inflation to quarter. segment in in third expect We raw the peak this

with in XX will an agreement HUPPE we sales our business divest into did it a our as determined XXXX. to proceeds During Germany, we Net the enclosure align be EUR not based direction. HUPPE's quarter, shower entered were not in million material. small approximately strategic business,

approximately from And rates, now Given anticipate we the segment our to XX% foreign growth, net the exchange by XX% or acquisitions to given plumbing sales $XX revenue be HUPPE. and organic XX% demand first of to in the currency for current trends quarter benefit favorably X% XX% million. divestiture growth current growth recent X% results to in we range plumbing the XXXX with expect then another

anticipate will continued be year We to approximately margins full XX%.

Decorative excluding XX% in acquisitions. was This performance first XX% the X. quarter, for Slide growth paint low-teens exceptional business. driven by to a grew Turning Architectural our

paint double-digit DIY high-teens pro our in in paint in pro positive for business first quarter first become also business the Our half of a continue the the XXXX. anticipate year-over-year declined against and delivered pro this with faced consumers in of year strong growth business, A the decline growth paint in comfortable high-single-digit pro-business low-single-digits to comp homes. the more paint back cap the strong full contractors Despite grew and their quarter quarter. for as

businesses lighting by on and by up an million, hardware the products each outstanding delivering costs incremental $XX quarter builders, increased initiatives productivity profit relationship. driven unfavorable or This as double-digit capitalized $XXX Our and Operating consumer performance demand. million cost programs XX%. lower was spend their growth offset was in and price volume, new partially

X% For and in acquisitions. outlook expect organic the X% and growth sales with X% from be X.X% XXXX, another range raising to are we of growth segment our architectural now to will X%

to margins XX%. continue operating expect of segment approximately We

XX. Slide to Turning

billion the billion with our acquisitions quarter capital percent of debt-to-EBITDA times. sheet includes ended revolver. balance we a balance sheet Working of of net XX.X%. liquidity, our availability recent was remains Our $X.X $X at strong with which as including approximately X.X full sales, And

of deploying repurchase In $XXX we quarter, by we continue transaction approximately In we focus shareholder shares. XXXX, a these on to mid-February, X.X first our and to billion. notes bond $X.X debt refinancing. our the XX-year completed million and value accomplish things. two aggregated XXXX This refinance combination During maturities, new significant seven-year, million billion XXXX this creation refinancing which totaling XX-year $X.X called our the

to From million million our maturities $XX $XXX we of debt a Due interest duration this interest of our XXXX. interest compared transaction expense, final complete And all we two And also this in cash expense for in to benefit second, and starting to of be plans From contribution our be not interest XXXX. XX%. transaction targeted means lowered our from will million and reminders the quarter. million all to our our have $XXX the maturities. an $XXX this these annuitizing terminating net the share, second to $X.XX previous increase dividend taken XXXX. XXXX. an extended And effect the is maturity and it until out This perspective annualized U.S. It'll everyone; payout for dividend plans $XXX board second ratio have to our we be first, next maturity activity. approximate, perspective by guidance defined near-term our of previously in announced increase our at will quarter savings. approximately annual timing is the its to per secondly, approximately intention will million XX% First, XX%

for Based robust QX updated XX% demand the margins XX% XX%. on XX% XXXX products, approximately operating to have sales on anticipate overall of and XX earning We of our in current deck. expectations with for summarized X% to performance our now growth up from Slide

share midpoint for to the XX% Lastly, XXXX range. as of updated of XXX growth average count $X.XX a diluted Keith estimate EPS mentioned earlier year. assumes $X.XX the at our This represents the EPS million

found With be XXXX I'll turn XX on call back of Additional that, Keith. can modeling the earnings over deck. assumptions Slide for to

Keith Allman

Thank you, John.

that homes. lead our fundamentals strong leading and increased their repair in new continued our the remain stimulus up believe demographic continued invest remodel XX% factors healthy Both home estimated We with over and in have growth. built-up millennial lag a home savings housing of the along are to growth and markets metrics market large growth demand were even history these serve appreciation With consumers with long-term price these the drivers, basis. capitalize correlation the sales sales management call strong supportive markets. increased the With strong now to deliver and brands, from a existing of $X to Furthermore, will nearly for in money, innovation on well-positioned and Our and value our shareholders. consumer customers on we trillion continue over U.S. before the open are is Operator? I'll teams questions. up the of these of to Year-over-year March XX%. to with

Operator

from The will Instructions] question from Barclays. first [Operator Okay. Bouley come Matthew

line Your is open.

Matthew Bouley

for Thanks to I the it Good that guess to morning. the questions. which come on at margins, taking guide, trying or margin unchanged Congrats Would wanted XX%. better planned to for in to I XQ cost have Again cadence Thank say expectations understand full say results. balance on you I the year year the that your heard how the for you. mentioned. the QX specifically. tempered I'm versus you line? out I'm of you QX in start was just expectations. in all inflation cost peak if headwind is I changed they trying understand did than you guess may reflecting prior of plumbing XQ

John Sznewajs

morning. It's Yes, good Matthew, very John.

think are couple things we I year. that of through experienced the there a

a better inflation. things. we seeing two is I than One, little are you So as same we little guidance, bit little than expected. a the back we year about time, and volume to in about bit because But what quarter I you came anticipating do better expect look the anticipated. our the bit as top think think of raised we out a At margins, the probably line think are first we we guide to now more initially half

so what guidance on of the XX% causing kind offset our I other. And what's our us – two call. to that's we as And each margin at out called maintain QX think

Matthew Bouley

of broadly, guess that Okay, thank the to by I is with you organic And But John. that have for American growth year, single for the similar how QX year. the up this one talked you example, about point, low a for question digits itself. was much second lifting, it on your R&R, North driven more guidance guys

exactly home may the activity becoming now, comps in the a are late of question guys talked previously second shift doing Thank it Just maybe organic little half have the is the And tough the further might bit a to that not you in as what clear my April into is, that improvement about You get and consumers backlog overnight? similar outlook? comps there you. on question had spoken side. year, half. second do kind better of And tougher we

Keith Allman

there we've going continued Matthew, QX. on. real strong things strong seen that the One a – of couple in is demand is

look we demand we a the factor. strong demand, QX how than little a what this see are and is we quarter we had planned. initially continue how exited things quarter, the more to When at starting certainly bit So

tough But half. revenue and So what the and those in move them. the nothing really rationale still to when up going forward for expect we we the and was back that is demand both there, fundamentals, going on at quarter comps our side. lifting in the to us face how the They're we have look then guide is shaping

Operator

come will question Stephen Kim from from next your And Everscore.

open. line is Your

Stephen Kim

guys. much very thanks Strong results. Yes,

then Matt's on full in the contemplated idea also which to want question sounds had the it is And I debt, probably just on think previously the just you I higher that guide? whether throw if your before. I for what year-end, the costs an answer, had you're following $X.XX said, I neutrality input John, you up is that think, understandable. refinancing expecting But I get much wanted about heard you that totally about by of like been Just had your margins. it's pretty thought to which year. adds inputs, in

than And So previous as are in relative thinking way at margins through to for your we in get Is you maybe then, did kind trajectory to neutrality just that lower course, get thought of of but previous be then of should kind sense expectations, looking in the we well. margins the quarter of you a of as better the expectation? back? you XQ the the XQ arc the higher your had XQ to relative and previously XQ margins about

John Sznewajs

a of questions couple so Yes, Steve. there,

those. try to me address Let

this $X.XX, it's about of $X.XX savings, the XXXX. respect given year, first that all, benefit with probably the So I a interest in timing for of think to transaction,

you remarks, heard said, our the to have talked that income also in guidance receiving reflect contemplates That we some to – need about proceeds cabinet investment. that we that will of from from Now interest be works. update may getting we not fact sale Keith's then the

net think benefit $X.XX. I So is, $X.XX, the it, call there

well, I on want sure just So – to clear make we're that.

about So impact B+, quarter both as the you net of year. first for rate, our it's interest the the think

correct. with neutral. of question part Now exiting to is you're neutrality, the being your second yes, respect your at price/cost year price/cost about What we're committing to

the plays course having customers. In terms of with how year, we're through that the out of pricing our actually conversations

good are all really as P&L. And flow to the clear those going you and to can't so give when signal a through hit

So want going I exactly not not clear because guidance – I'm those to to – to we're QX, don't how through that give going QX or fluid. give conversations are on flows QX,

Stephen Kim

very that's Great, John. helpful. Thanks,

bit Second question Does surprise like make persist. mean sure to in things sounds It you to think us. relates of And provide probably very would that broad-based. certainly just it plumbing that And it look a that of a attribute sort to just February I'm beat sounds could a if the strength of surprise as kind to it. want that's It really of that It continuing that Because little a you sounds just like March? at I you. as you came what color to inclined April. here as to? in bit came welcome sales. it's intensified to and was Exactly massive going in it like correct. is

provide little around a context could you would more that just great. that be if bit So

Keith Allman

Keith. is Yes, Stephen. good morning, This

we of you growth, talked across really strong have is demand channels. back stronger about Plumbing in And American half when segment, we North look seeing we also feeling about, as we're better the year. expected And than quarter. all across that the are the We and the

very do retail. well strong. in component is We DIY continue Obviously, the to

China in business recovery believe North and in strong is Europe, And U.K. growing nice plumbing as maintaining Our be nicely so The then our in board a better, e-commerce, is strong, to starting continues and we're Central the nicely. across Europe. we're get to and talked we quite leadership really we trade about, growth performing America. particularly seeing in

look we half. but gives coming both also So confidence into now what broad-based, second the as quarter, very been we're it's the at and seeing it us into

Operator

come of question Lovallo next your And will Bank from from John America.

open. is line Your

John Lovallo

you cadence expecting taking contemplated during $XX Good morning one is, previously guys And and outlined that back of in? is the this my if, accumulated million that thank through I you're for the think that what you is in COVID. I'm And questions. coming sort you're kind the of that the XX% of investments of of about curious, fact, delayed SG&A had that expecting year? in the remainder spend first

John Sznewajs

Yes, start it's what in we're that probably the that market. rate half temper is $XX with and that that to back of depend investment depend it – sudden If to – expect million the to aligns will all to be that And market of out going the a more loaded. still John, again, seeing on it's contemplated we're we'll see. ensure all the – contract, investment we we'll growth that

John Lovallo

Understood, just okay. maybe raw freight on mats headwind. And then the

you guys the inflation? about and just out actual between versus parse of inflation the the Can freight the mid-single-digit you range in raw talked kind difference think for digits mat single full help and I XQ. year XQ high

John Sznewajs

So…

Keith Allman

Maybe I some can start of will and the get specifics. you into John

related that neutrality quite kind cost relationship reach costs which was force It's supply sort – is a commodity this to our really as our changes. to part certainly garden-variety well and And demonstrated demand. communicated, while majeure kind tariffs, no changes to of is in spike through we I consistently ability the business. think, more strangers commodity business And John, of we've significant changes of terms occurring are importantly, this we able price/cost of of quickly, and normally cycles. and see of to we in And as don't this our In were cover. this between included included spikes

they and well-developed customers neutrality programs value investment in well and our our underpinned and recognize. that our had customer really our consistent like, and brands innovation cost ultimately the is by to productivity capability to and total So consumers this as we've price/cost that to ability deliver as drive

as going commitment, we're we we So neutrality with price/cost reach and this year. this exit will continue to

to Now the the we're that hit maybe want in on and little you John, spikes specifics, bit a terms some commodities relative of of seeing?

John Sznewajs

Yes, sure.

So referenced, think the material our logistics. this about And we're that John, the into resins paint have raw across seeing how obviously, impacted, up in we're really as – and and pretty being well significantly. as transportation copper, inflation if go enterprise both you packaging you as been zinc baskets, and

As apart you material – to specifically, the or statements you on get from majority as the comes break question raw to the transportation vast logistics, of impact impacts your and either financial materials raw basket. from the

you going going shy offset secured to suppliers increases continue kind inflation increases segments in continue inflation relatively price for to year and experiencing. can of distribution enterprise for We're to, the we're continue part product try I digits digits this to We work plans If inflation. to about alluded been both we've across your mid-single as cost think be overall to up and That and Keith said We implement it's That expect guess our small categories. persistent of our logistics, high year. a then structure. and the that customers cost away. I to do to – not to productivity further have repeat our in the do And second single full across with we've of the price said, well to and half the offset up statement. as both improvements

be to XXXX. So as we as exit we neutral we response to price/cost said expect earlier do question, in Stephen's

John Lovallo

thank Okay, guys. you

Operator

from Michael J.P. Your will Rehaut Morgan. from question next come

Your open. is line

Michael Rehaut

differences to here, thinking my questions. just make because earlier, and of Thanks about you wanted trying offset about seems I have timing the taking – – cost everyone. right. should morning increase it's said, higher you net that net inflation? horse a inflation, expected as In to we I'm you're increases higher Are like you for thinking Good volumes sure a in the sure make higher other wash. through price/cost that the mind but we're of incrementally sorry margin of but saying be dead with kind are Thanks. I appreciate price by to just it offset investors. perfect volume take and And inflation, the side, I'm increases? beat a that from – around if to think to sorry, – you your basically putting Are higher world, words, okay, top we're it price had that,

So the And Is you that you're to the – maybe stable, tailwind going and incremental word? catch there's are lag then this price/cost continued a still we fully extent about turn the in the chasing get into of could that in potentially, inflation that XXXX, you price benefit the backdrop to wrong way think fuller as this up that the remains itself, an in a increases actually that to is extent it? take to that inflation? that right to of

John Sznewajs

Yes, thinking Mike, I think right you're about it the way.

Michael Rehaut

All right, perfect. And environment. line then just more on top the overall

what broadly have that that been in able Has levels, And go or so to in is bit be this extent production? point-of-sale necessarily inventory in is from point? the the been quarters for to you – the that you're we've just that that would levels your so robust something haven't to heard to industry constrained. remained the so that any at restock around coming demand little you of happen robust the perhaps quarter case able been increase to first far and the kind has continue into could continue that you or a to businesses increase If backdrop competitors inventory expect

Keith Allman

There's – regards disruptions. feel and categories. be operation good things. to position, and about strengths team to and to had hats tight. the across world teams to sorts around no and the With Yes, to to our to move and inventory the our strong. the We've the clock to Michael, mentioned, production quarter, if really, it's the POS. also really been relationships POS I leverage be across and and And the of around our demand production off, work supply it. able quarter specific most, as we of those through strong has frankly, And match to the that's exiting really our And chain question is about not all

So we're think to up we And they've the probably the said them to a job. we'd about and start some I of be. phenomenal QX catch through a done tightness. channel then will aren't and working would it say, perspective that our where from that, like because in inventories replenish still Having sort inventories

some I the the right inventory to yes, think think is fill upside So about back way to it. in half

Michael Rehaut

you. Okay, thank

Operator

will Ken question Zener KeyBanc. from next Your come from

is line open. Your

Ken Zener

morning Good everybody.

Keith Allman

Good morning, Ken.

John Sznewajs

Ken. morning, Good

Ken Zener

to we versus if about relative bit you're little at Wonder the plumbing retail what a talk could seeing the wholesale new in construction. the demand business versus

of as trying renovation kind DIY plumbing out, the I as able opposed get do benefit think to are think about able Trying and DIY professionals more to house pro, people for points parse projects? about to – in U.S. please. the and price to which could is the and that will opposed to – you larger as this If think plumbing

Keith Allman

our it, wholesale – that know mix terms accurate Over excuse the kind do When in towards you is have plumbing pro more have think that nature plumbing. and DIY we about not two me, of But DIY. in wholesale call to some retail market of of of because pro it's wholesale – terms plumbing and of fact component to get in hardest and and of the of we does in and that our that than in of, to segments, teasing half just do DIY that. it, a that's DIY skews out strong data the the the channels we wholesale, of certainly possible business

DIY improvements people real of out. We comfortable that in all about And mix or there vaccinations homes being to we in as back DIY. their side. are to more the side the on of of know pro pros as business, demand, terms good feel strength having on we come pro be the expect it to catch in start the the about So roll

Specifically position. of wholesale terms to of it been continued demand, in your and question across share the has we where channels. good as both e-commerce in strength strength shelf all as in broad-based lead retail, well Real really plumbing of

and understanding that for there But in, China really our the our nice So in it's our very level talked raised all a doing pretty growth about that's story. in into comp there. Central there, Europe. we been a good broad-based, guide. been was why well, easy feeds is And confidence relatively all is we've that strong international position International, rate us.

Ken Zener

really nice though – tracking very it's home which Right. sales prices, seems rate high is your of homeowners to It Yes, as it's homes. are a you mentioned with me, and of equity. guys appreciation

Keith Allman

correlation strong it. price existing Real between about home home no sales, question and

Ken Zener

seems that prices me – to high maybe demand little – Keith, up. for a is context, because it give And us are could you Right.

a higher certainly guidance of to Otherwise, out some seems you're higher. give could be sets is it lead a you like demand be the it context pass-through Yet this the of if What But to volume might down we do costs? cost-neutral and perhaps asking usually the to Texas because prices type on of all be that it next it Assuming not your from seems when XXXX. seems which these costs back bullish there's look adjustment usually you'll as abating high, the I'm we year, lag able margin end the for the growth know holds, road input happens you as related by – for are cost, FY year. storm prices.

Keith Allman

comes raw that. of demonstrated closely. to through improvements. we've that get our part it cost watching material cost as sort real down in maintained inputs commodity when on needs cycles course, any price And of nature that And we relates fundamentally, and you fluctuations neutrality and – solid price spend of But of hit look the and from of and total the It through before it from commodity we really flow very up decreases P&L. to is longer-term have depending neutrality varies change productivity the cost. us those or increases Yes, to inventory comes

year focused year Now, or to and or in into what drive cost to. that's price this environment. rather next to terms of could What on going committing delivering on we're the how say continue we're impact we the of play deliver next to on this real future that and neutrality quarters ensuring exit volatile it's is year, we out, on a in of we're what

Ken Zener

you. Thank

John Sznewajs

job Ken, in out because does I'd slightly good one we're that with our just increases. a going HANSGROHE annually is, international favorable plumbing, of given time, say, thing price over business, price out probably I would point

Ken Zener

you. Thank

Operator

Keith from come will from question next Hughes Your Truist.

is line Your open.

Keith Hughes

in is Question you. Thank know on propane. was quarter. the it weak I

was about on you And think the would then April talk well? what acceleration? view any what's in you something that If going and on of caused quarter as kind could helpful be

John Sznewajs

Yes.

So about Keith, sorry that, it's John.

fact So comp faced part quarter of had some – feedback. yes, quarter. little we difficult half bit that little in the – you're We we weak positive back did getting in the of I'm saw right talk the a propane growth the first was the a about the

pent-up more contracts, well probably do as with a the believe there's fact of quarter. getting are So the demand, people weather bit we little we there that do and was a in think impact there a comfortable pro

as in storm moved in Texas the that business. country mid-February, better so the of that through and to passed, soon much we started we and see saw growth As as

we of see And contractors so more home continue the to getting do the do full, at we consumers single jobs. really that and as as we the growth look and larger more these to coming having digit half year, believe should high comfortable are paint back to

Keith Hughes

years, quarter, at cost peak Okay. towards We think lot peaking a at will fourth talking talked you Thank price/cost, we Any you're your about head you If quarter? And third then look about third help. If in when quarter, would quarter. that in final question. we look parity price/cost, second you. do view negative the cost. the as

Keith Allman

that conversations it to again, have, peaks it update on My we'll on pricing depends in third our calls. subsequent and the guests, quarter, we continue and that some Keith, all the of probably

Keith Hughes

Thank Okay. you.

Operator

from question Jefferies. will next come your Ng Phil And from

Your line open. is

Phil Ng

quarter. Congrats morning good very Hey, everyone. strong a on

curious chain dynamics to worked shortages in supply impact that in out, of you from perspective Asia you inventory really you that on so quarter impact you're of from that your you second it as great may I'm of of at revenue from and Given importing that products any impact kind the more an a particularly have, will the all any didn't where say have you much on resin? exposure called XQ. down, be that But, seeing

Keith Allman

matching terms and of tightness to and better. that we and production, those demand of the and it think we really in about, it's what terms hard to we timeliness need it's better. like sorts about feels getting to We're we of aside output comps yet demand getting it's little inventory of expect, as in do matching talking and work all things. disruptions It talked not Putting a getting but better. in of through containers bit terms just Still

Phil Ng

do a That's and price power pricing an for pricing appreciation traction Okay. from have then product that you're and little we And just your Kichler And in in if a competitors But have because standpoint, all XXXX matched, there great. more of anticipate you with your you paint well Kichler? in plumbing business. as have price/cost as neutrality was exit the in front. XXXX, core challenge your you curious seeing if kind

Keith Allman

continued positioning the demand. doing business well. board that Yes. XXXX. to in committed We're as well. it Yes, to that's believe with that of plan, seeing we're team's The and is solid to something that growth team good We're we that of doing be Kichler to is true – and well. driving Yes, working across we the that would Masco. return Kichler ahead

the cost fruit Our calls past a job. about bearing new is alignments are structural that and the nice well, products doing in team are doing and we've talked

Phil Ng

Okay. Super that's really helpful.

Operator

question from Goldman will Maklari And your Susan Sachs. from come next

open. is line Your

Susan Maklari

exposure you give quarter. is, on morning. e-commerce you highlighted Good the saw a the Can in question you you're channel how of kind exactly and seeing color channels positioned in little you. more us sales plumbing Thank My taking strength those your first that in that there? there? you're you're to what kind And that And forward? of drive increase your to anything going

Keith Allman

Sure.

we're We believe build more we to as in to the comfortable a things we've with is offering, share. leadership, in in to expect Susan. grow, also consumers the continue continue online We leader market. of become space. e-com And our plumbing to on continue to worked obviously, purchases expect that more And rather that one. Product and obviously, and to number maintain gain

have put our on and We best talent brightest this.

the our faucets leverage takes sharing across of and to first the company I them, space, IT makes, that understand platform stuff to hard to third We leverage of second to to what sinks learnings of a and very business management as and Kraus. the say, a and unit and drive we're be ratings And that there. investing working be like. digital doing We're acquisition leading get to product click. And are content like hard leverage working learning really brands all and one them an and to We how be We're quickly, to it digitally-native that reviews from on page XXX-degree helping also, a is understand we're modern they spends. And well. capital. more can ton in made of and lot would design we're Kraus data

and paying of been now deployment, we've a is this et cetera. us, working capital So combination at talent, off. important for leverage, years. And for hard IT, it's five products, This

Susan Maklari

about that how And just seeing? potential think the about color. us that Can think next of trends you longer-term That’s of these the to business? the ahead those you're longer-term when Day. helpful you're Investor talk at at some is, the question sustainability of Okay. margin targets the we margins gave are My business, that operating you obviously you of

Keith Allman

We're of XX% outlook where in spend changing our should lot XX% our the cetera. long and for dynamic Yes. in business really SG&A times. creation variability around think and et margin maximizing normal growth to that value not continuing these term. of for We this There's brands, invest to a is be our

volume. drop outlook point. and incremental demonstrated we So no margin down this demonstrate on certainly, But our to solid our have will to continue at change

John Sznewajs

related that, assumed that We XXXX lower Yes, Investor Susan, in we was for would Day the to assumptions very much – the you it. It gave and out information lot our different that growth our environment. very had different I remind of period. a a

long-term as not it guide was for would consider our the I business. those – of So the current

Keith Allman

our I'm I I this was too. that, about sorry margin if missed guide talking year.

John Sznewajs

of continue market to is our and expansion. basis We And grow Yes. of above way continue to margin businesses basis have rather hundreds about margin to year. every again, now, we articulated think tens challenge businesses think we but our – call it's I expand expansion, QX the points of our this margin Susan, it again, that, not of points on

Susan Maklari

Yes.

luck. That’s Okay. helpful. John, thank you. Good

Operator

come Patterson will from from Wolfe Research. question next your Truman And

open. Your line is

Truman Patterson

Hi. Good my morning, questions. everyone, and thanks for taking

the First, like Decorative Architectural you DIY if expecting parts update? call just a you much far the seeing trying remainder in not there I'm just with the the little Are it I'll what DIY parsing and moving or to looks in put in? pretty be seasonally? demand. an are you has And on especially give pretty of I down some the there it understand side, to to line the of optimistic, been commentary just so on But whether – guidance, of year. dig April kind the all the deceleration of maybe built or expect wanted out Could bit conservatism you'd is any

Keith Allman

actual the of as And half Well, interest interest the homes. tough being And at that switch environment we're question we of year. clearly, cohort the homes. relates a or amount has and the it. has rollout we in vaccine the continues got comps pandemic Certainly, people as spending the don't we've shown increased cohort, demographic DIYers, the in that in it DIY we demand are from the the the look continues relates millennial and continue. strong. first time look work-from-home about to of people's in the as be Obviously, that be flipped terms work at no strong. that view back from to seeing, up to the is necessarily and their of coming that – to home we the demand demand, There's time expect But it

we strong. about tough but comps some coming it, no question demand remains have up; yes, the So

Truman Patterson

Okay.

operating could constraints that discuss how is also to you the But capacity? then said looking? Could somewhat have order And backlog Mexico. that. nice you all just full expect for line business, just mentioned double close in backlog digits, supply or chain a you And be when believe the give growing at us all throughout improvement I time was the there. you spa Thanks Okay. – it you so

Keith Allman

this this to our that selected And solid short-term the we robust, require degree more will, business some output changed. on from bringing Yes. were there capacity, as we that. resin, certain But to of and units extremely around the then these getting starting production. production We're to issues resin there's vortex that not the if type we we had and and you better, as approach tightness and that through has missed Mexican And greater capacity labor were be we – full some a there. in and force getting have we've Texas approach blip get blended That continues demand polar resins. tightness, a here stated will very start backlog. in quickly from to But

Truman Patterson

luck Thank that quarter. you on all and Alright. good

Keith Allman

you. Thank

Operator

Thompson Steven will question Research. Ramsey from next from The come

Your line open. is

Steven Ramsey

spas follow-up One full the the do have at business. Hi. spa In year? you on Good quick margins full generating year full for guide, production the operating and morning.

Keith Allman

double-digit Watkins in XXXX. We're growth strong for expecting

Steven Ramsey

to such price/cost And surcharges then on be pricing products? a resins? and contemplated about neutral. expect are for do thinking neutral being Great. of Okay. part by for that? to I getting you And Is all price/cost product, then price/cost as guess, that

Keith Allman

we we of and some those can number So sit of improvements as surcharges past, that in cost the pull contemplating we do levers have a and neutrality. to using and we're price/cost We've certainly drive here used today. in

we product, product inputs, specific every you that exit price/cost business, on type price/cost in in this will neutrality. say there's just depending across saying such that. year be of will I our variability look of and won't cost terms the In But when neutral,

Steven Ramsey

Excellent. you. Thank

Operator

Bosshard Cleveland question will Research. from your Eric And come from

open. Your line is

Eric Bosshard

Good morning.

Keith Allman

Eric. morning, Good

Eric Bosshard

Two things.

to that give this for retailers maybe a part regards what a $XX across your What deferred also your on First so you're marketing insight? curious, And promotional seeing asking are I that investment or up on about. part. of that doing you talked business, related the of? can in go promotional made The activity? you're all, is spend, of year? And think, million bit us What little to is more you've

John Sznewajs

Eric. Yes,

basket big a it's So marketing. into of things that go

of them come back people advertising. some are as is that it online back have like some shows beginning to and get we pulled and obviously trade would back been things So now of

is it of personnel. Some

investment in Some e-commerce referenced response an of it to in that is question. Keith earlier

So that initiatives. growth a there's some there's of some also And goes into there's activity your that that well. go as promotional point, variety bucket into. To things

it's So of basket things big go segment. that entire a across the

Eric Bosshard

follow-up. Okay. And then a just

strong, should terms be But Your which the is DIY, continuing clarity helpful. in great business and the to – path is appreciate on very hear. from On I that was propane to here now of business forward? expecting running out growth the these we that DIY what tough of in terms comparisons, against as that business, the we move be you're growth of of the

Keith Allman

flattish year of for last for think to – the the probably I'll that in year the year. it range

Eric Bosshard

Thank you.

Operator

Dahl, Mike Markets. And for RBC question Capital day your final will the be

line Your open. is

Mike Dahl

Hi. balance? much high cost. color some for productivity, a One any a the also side, be, you but I And Is steered second would towards there. squeezing to Just through returns. of the part generate productivity. is appreciate in. pricing price covering just are at going question about on costs the level price eventually you've but around the me more Thanks sensitivity talked when anything more cost pretty versus productivity? Is around qualitatively think about it it the some continued price? you've ways already How

productivity. elaborate that on great are you've on more Could mentioned bit little done you've obviously – a job just levers a the left. So you –

the coming is productivity where incremental Just from?

John Sznewajs

Sure.

So couple Mike, questions. of a

and given that than price price/cost in it's rapid the be nature to price offsetting versus of the productivity or naturally inflation, about think increase productivity get we're to more to the of inflation you going to that the of As seeing, weighting and – amount offset just neutrality.

maybe measures, it's plant in our our ways. the challenge And But in floor. have of start It's to driving productivity to operations. years terms efficient our also more Keith over the clarify. our part on In to And get teams within of multiple and administrative great a the productivity a I'll we year job teams over done it every of not of just operations. variety kick

want goals some have examples? to Keith, you And businesses. of our each every give for productivity – for do so we goals total TCP do cost

Keith Allman

Yes.

from conversion very volume direct to and our leverage. the and closer at Plumbing steady is greatest repeatable when look the us. a dollars to you XX% comes And cents think for efficiency That and I it's perspective, consistent drop productivity. segment. from down, volume incremental maybe productivity in Obviously, labor there's in and say helpful Deco XX%-ish

a work, injection value our systems substitution We lot molding, more We're how those material that of and engineering and productivity. two- people. have become sort for a naturally with looking hired and constantly machine familiar And and drives people to can or we four-part thing. part of it make as a consistently where assembly that take

So customer labor with or of we way productivity, and the and we our have combination floor want it's sure requirements. to really so that cost-effective meet customer suppliers any shop don't working making to most mess a miss requirements,

So it's a and with parcel really all the good leverage. Masco of operating system part of dose volume

Mike Dahl

I’ll leave Thanks. great. That’s Very there. helpful. it

David Chaika

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

please to Thank feel free XXX-XXXX me always, you. if you As contact further questions. at have (XXX) any

Operator

today. joining conference today's Thank This you, everyone will conclude for us call.

You may disconnect. now

Masco (MAS) 28 Apr 212021 Q1 Earnings call transcript