MAS - Earnings call transcript Q2 2021

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Operator

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

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

You begin. may

David Chaika

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

quarter second to the Investor are on available and today site Relations. that under slides Our presentation release our earnings refer we Web will

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

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

also Our financial metrics. will include non-GAAP statements

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

Keith Allman

and per fourth everyone our growth. everyone consecutive and quarter is Good I'm double our extremely for of Dave. second growth. performed as of morning strong. this challenges products demand double thank successfully This entire enable I the and both numerous we and staying team well growth quarter of navigated consecutive safe resulted supply to expansion share margin our proud you us healthy. sales hope earnings digit and chain you, quarter, Thank in joining exceptionally sixth digit for today. in was We

quarter, XX%. sales increased the For

margins an XX%. expanded XX% XX XX%. to currency, leverage. increased XX.X%, acquisitions, principally due Operating volume basis sales strong outstanding and profit to increased share divestitures points and increased Excluding per Earnings

Our repair that overall both diversified channels, of and the professional. portfolio our products and across remodel serving lower geographies ticket, demonstrates the are strength the performance of consumer and

excluding excluding plumbing our growth exceptional segment, in North faucet nearly sales in as all its rebounded currency, Rainfinity as new quarter, American international to by and such of systems spa gains plumbing markets. to in increased businesses shower sales and sharply and operational Strong XX%, our these grew markets. currency, the and led Turning products from of business. share led International XX% Hansgrohe execution our shower Hansgrohe's many

particularly posted approximately another XX%, growth second launched Delta This of robust product design growth Barber Osgerby, One will led Hansgrohe's studio. with combining professionally-oriented continues of and excluding the New collection design strength collection an AXOR at innovative acclaimed year. digit Delta. currency, we in American in London-based introductions record quarter, plumbing continue was faucet designed and Wellness in the across all half XX% channel. strong of This growth functionality. leading double at the trade delivered with award-winning Watkins internationally legacy as contemporary industrial quarter by channels, growth second the award-winning the North by

the as Wright products. and collection We in Lloyd well. new design Brizo distinctive innovative commitment continue American ago, Frank by a products North brand's we to invest plumbing furthers two in introduced to And days that

second with products decorative residential against In our strategy. healthy beginning X% steam at leading quarter acquired bath manufacturer the acquisition bolt-on of is Lastly, that is of the our bolt-on segment, Steamist, for in comp offering for plumbing, X% strong XXXX. trade another and sales complement of e-commerce our will the Steamist Delta. and architectural we acquisition product a July, consistent declined

and and but nearly coatings second the our was lighting the chain in of sales flat overall from Because on channel for hardware, quarter, business, down issues lower inventories are cabinet during expectation sales impacted low-single expectation the to paint. our quarter. our our a demand as we supply digits availability in our grew DIY coatings sell-through full and availability these quarter. for all also and of operating during year. second products issues improve, material the While the reduced issues, than moderated bath better will declaration majeure other than sell-in Due expected DIY resin lowering were quarter that to persist Material propane slowly and were force under suppliers

our quarter, digit optimistic more high-single for digit However, we for year in saw with propane the full in the incrementally our are low-double raising expectations from the growth and our propane business business. acceleration we are to

and to new a This voice stain-resistant, Depot For pro launch innovation and respect example in deliver and excited X% the scuff the of VOC, the for an Dynasty paint mildew-resistant focus to are end professional. we Home fast line ever. third innovation the painters. expect and the teams yet to now growth segment low Behr the both certified, Dynasty of to the on anti-microbial paint our year. of leading and the Greenguard is range With to hide to is the to has products the X% value new full paint and for in consumer Its at overall, called decorative be DIY in continue for drying how decorative continue segment, of customer finish. innovation resistant, both our one-coat invest high we quarter LEED most durable, another in

allocation. capital to on Moving

buyback during We continued for share shares the $XXX X.X million million. our repurchasing quarter by aggressive

that repurchased the we This our repurchase repurchases and to will additionally July agreement now in anticipate the for quarter, $X our approximately approximately the year future, of Underscoring of share deploying shares the a the position account the in at shares XXX,XXX share for part year. total in million As executed beginning financial year and another we total X% receive accelerated that for bringing strong outstanding we $XXX year-to-date approximately during acquisitions of second million half full share billion. agreement, $XXX our XX.X is of complete million. of to the shares confidence

me we Finally, like are what I and chain last inflation supply quarter, let experiencing with an give you update did tightness. on

the the We segments, second year see tripled the achieve these all-in the and cost To across in digit be of low-double our this year. likely quarter. are cost our TiOX decorative both the mitigate freight, We're freight basket, our we most working including our nearly escalating we inflation, pricing and secured the the internal to and and to Inflation address the high-single plumbing for price with quarter. later fourth further in across still increases suppliers, inflation continue expect half be to year-end. implement business increased escalations. our continued neutrality in full offset teams further to coatings inflation costs. with during Despite also digit to in across will costs inflation, mid-teens in taking productivity resins, by range action for of customers now measures to these packaging. expect Inbound cost have price/cost inflation help both container We segments,

been also impacted clearly has has an business. availability material our inflation issue, cost While

to to of qualifying Our production to a new our environment and shifting customers. dynamic suppliers, substitutions, this tremendous done job serve teams adapt developing and material have

products over material the our strength ability continued our over anticipate $X.XX build to both on products per per these inventory to $X.XX of year, and of plumbing The improve our the that John? and expectations turn be increasing demand to many the previous share, of However, North John channels to raw to the of for year results. second limited have our on detail time. the and to levels half for range expect in With based for serve. second our of up earnings from the material slowly an to full We improved now availability $X.XX. replenish remains quarter I'll additional $X.XX inventory of operations, And we we with constraints American that, are to the we international our outlook in strong. of expectations our share call appropriate

John Sznewajs

everyone. morning, good and Keith, you, Thank

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

exceptional and we growth Turning to in quarter resulting strong demand, another X. consumer We Slide backlogs. continued delivered on increased as capitalized

XX outstanding basis leverage XX% this result, growth. margin net and volume North X% points in In performance. sales North growth increased up As we faucets, or a sales in In divestitures. and spas robust XX% American XX% led sales local increased with acquisitions as currency to local currency, volume XX%, quarter, or acquisitions, American the acquisitions. and Strong was each contributing showers currency, growth. strong the increased XX.X% international a excluding Gross excluding XX%,

to due XX Our points leverage. SG&A percentage sales XX.X% as improved basis a our operating of to

entertainment planned. and quarter, marketing, certain such increased headcount, expenses travel the and as During as

as We strong and $XXX of the or XX $XX last increase these We year, costs million, expect XX% of points expanding second million delivered normalize. basis profit in margins to percent quarters, to from as SG&A third quarter operating up a with sales XX.X%. operating fourth

to count. quarter, interest expense of was XXXX, lower increase second XX% compared volume EPS the in Our share to $X.XX leverage, lower the quarter due a and

acquisitions, million, demand higher such Germany, drive a digits North delivered initiatives, to and in all the strong With on American contributed another countries. expanded with to relationship this in across margins categories mix Turning growth. $XXX demand X% in the performance, points growth or quarter and currency travel markets and of backlog delivering market and grew with Hansgrohe’s strong partially recognition strong quarter UK another to XXX acquisitions. improve basis XX% offset divestitures. the the performance by this Watkins divestitures, key items XX%. to led in consumer numerous demand profit quarter. and China, robust was $XXX increased of growth X%. Segment other sales The initiatives. and to Slide digit and excluding local excluding and plumbing unfavorable growth X. favorable continues XX.X% Delta double productivity across all volume, or marketing Plumbing also sales in net Delta strong. XX% and our cost currency with sales quarter, channels. incremental strong up growth remained product as continues International acquisitions price/cost in growth accelerated operating robust entertainment, leadership, Wellness XX%, of local of by double as Currency million Hansgrohe or contributed to Europe and outstanding up driven increased and quarter significantly contributed an XX%, operating France, its brand spend both XX%.

we quarter, were During not a net million divestiture material. May on small the €XX of approximately and completed proceeds XX, in closed also based were business transaction sales HÜPPE, XXXX. enclosure This Germany. HÜPPE in the shower

our previous expect Given now in sales current range, demand the we our of for growth XX% from plumbing to guidance second trends, and be to quarter to segment’s XXXX XX% up XX% XX%. results

Finally, to our we due to full outlook, approximately increasing improved margin are our previous sales up guide from year our XX.X%, XX%. expectations approximately of

as Decorative the in to X. tightness benefit architectural declined DIY the the for was challenges. Slide double in region production by and first Texas high-teens against supply and demand to quarter excluding to the continued quarter second X%, resin paint material X% moderating plants in Turning comp digits from face healthy business declined affected acquisitions. Coast due raw Gulf storms quarter the the

want We customers suppliers job material for these our which qualifying with help digits new teams quarter our to headwinds these year. managing low-single are we thank anticipate full business of the and our done DIY and to through to persist these meet materials expect supply To third for an have working the I be outstanding sources existing our remains raw chain the challenges, challenges. now mitigate strong. down in to which paint demand

double homes. growth strong to consumers as quarter, the in Our delivered professional PRO digits paint willing allow their are in contractors increasingly business paint

paint this full low-double the expect now paint of order digit high-single previous digits year, up strong PRO for books expectation business We from the demand to contractors’ PRO our in and remain continue to as channel growth for anticipate grow.

profit in and offset in capitalize $XXX consumer margins quarter, on were partially Segment they and continue Our the builders' by to the as volume, cost increased lower quarter lighting demand. businesses was initiatives. growth delivered due to operating million XX.X% each productivity hardware operating

X% full persistent sales expect due now material For from decorative of X% expected to growth and X%, X% will second to range year lower down we than segment’s architectural to sales raw constraints. be XXXX, quarter the in

XX% We in help input continue approximately pricing offset of as margins to costs. productivity segment expect higher initiatives operating

Side to Turning XX.

recent debt acquisitions, percent includes as basis net approximately a Working with X.Xx. our Our balance including at $X.X with is ended of sheet billion of We strong quarter year. was over improvement to sales, of billion full of sheet balance capital XXX our liquidity, EBITDA prior XX.X%, availability $X the points revolver. which an

plans and our discussed our the and approximate As second liabilities $XXX terminated in final $XX of it million our we complete $XXX the business. benefit in defined cash sheet, this balance an plans will annuitized recent quarter, of million quarter approximately last removes approximately This pension our the contribution to and reduced U.S. qualified we had to $XXX activity. received the million Also, of redemption preferred million XXXX. sale our former stock benefit we starting by through cash cash from to cabinet flow contributions, related approximately from free

repurchased mentioned XXXX earlier, for XX.X Keith as in we million $XXX Finally, shares of as today, million.

while ability actions the sheet, our further or to demonstrate share confidence returning expect for an deploy to and commitment shareholders. our Collectively, business and additional strengthen these of acquisitions for repurchases aggressively balance our our We year. $XXX in capital million to remainder this our

our on Slide anticipate from robust for demand, XX% XX.X%, summarized Based our growth XX%. overall year operating and to XX% full sales from up quarter have guidance, updated XXXX on XX%, with performance to margins Turning up XX% approximately we we of of XX. second expectations our continued now to

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

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

Keith Allman

our quarter demonstrated as and strong our you, an all, by Thank by of driven most We our supply John. outstanding outstanding pipelines teams. people, had innovation our execution by second chain brands,

the products. business. Masco of improvement demonstrates portfolio and of Our a is ticket, repair performance Masco's strong strength remodel-oriented balanced diversified broad lower home and

geographies are channels both and broadly professionals. across Our consumers products for distributed and

in year-over-year a over our existing expenditures invest And strong in our their markets our basis. Both XX%. strong, trillion of Additionally, a strong, drive price XXXX. XX% the have and increased growth The nearly sales in an business savings expect over metrics up remodel with in home with to appreciation sales lag home fundamentals are and correlation consumer desire remain is on homes. $X with and of home and to we repair remodeling strong, May

are Lastly, well continue long-term we invest in to and for our positioned business growth.

free our shareholders flow, We deploy call expanding to acquiring bringing capital And to that, bolt-on market, fueling and margins are leading our in long-term in and will reinvesting companies up innovative and I'll dividends we share. now leading and business, new, questions. growth repurchases complementary with cash form to the to our strong our share products returning market cash continue of the Operator? drive all to With shareholder value. open to

Operator

would question yourself ensure limit Instructions]. In to and that to one to participate, asking session. request like Q&A a the order has follow-up we one chance that you during everyone question to [Operator

Your Bouley first question line comes Matthew from of the with Barclays.

Matthew Bouley

the the I everyone. could guess the demand reduction like morning, in questions. chain attributing taking sounded in so you're to supply change real for you than your start a It guide coatings. revenue outlook. to DIY I Good Thank on more

sell-through said was sell-in. you better think I than

just So specifically pulling in than could guess color if that on previously little or is more what is different well? you. expected than back bit you provide as not that that I the Thank that you more little you demand you really there found thought, DIY do think a consumer a

Keith Allman

I There in resins, under supplies industry, majeure affected were impact our a a more to comps. Really the this is But of addition for a challenges bit, nearly than at we really chain Coast storms operating region And, Texas in in explosion material mentioned, and force tough a limit us. but quarter. resin moderate a and of certainly, the phenomenon second other the resin, The that as the industry-wide an declaration who the role in availability supply did demand that in were suppliers but course, continue had acrylic say decline played would quarter. I Gulf our Matt, all we some the supply. and of expected. plant have supplier was that

in yet, quarter material third do then So to these while availability the slowly persist -- and not expect we issues expect we they're over do improve.

range now an to we be X% I reiterate supply expectation job, so. that sales mentioned, of expect, like from X% our down teams So to growth of the they'll X%, previous outstanding X%. I chain and to have our in to our would as do continue to done

Matthew Bouley

Understood, really helpful that. color there. for Thank you

build paint it have Thank around acute. one is paint beyond but you beyond It what a produce, were correctly. may if sounded constrain raw Perhaps Second like to could the a you maybe material outline able ahead your you. you catch really you most any on paint, ability just running similar of perspective? I But was topic, and where can from if broadly. else production thinking constraints you just I'm about up of inventory curious you demand did when of timing that kind think think been to heard color

Keith Allman

we're same inventory more of to, where in expect we channel year, our way to have positioned better all in It's it been think. channel job this think a more spas, and of our products spas there afford doing the getting in inventory had When front, half We're North very demand there's The We'd they belong. not in channel. to like some never inventory broad-based the but do about a the to be to We're But in could have the in plumbing. robust. put certain is we pockets directly. where real shape. our throughout yet. size have true the And in and to pretty I put we back good international American backlog continues back we

Matthew Bouley

for Well, thanks the Great. color.

Operator

of with Your from the next Goldman line question Sachs. Maklari Susan comes

Susan Maklari

everyone. morning, Good you. Thank

Keith Allman

Good Susan. morning,

Susan Maklari

chain in you that you give of are inventories XXXX mentioned continuing lean that are issues all supply us are those get My think Can obviously about we to that as your out you first fall this terms seeing some could back really to kind a now, the of bleed that of as around, of up? ability and sense are that headwinds potentially inventories result And early the means of into in the channel. what question is it something is some there?

Keith Allman

tell intend the a back inventory on our get we issue was There the you prognosticate more than half as seen to to of that would Texas But just we difficult in mentioned. that It's shape. Gulf We've had back resins. I in I explosion, the year plant over the future.

Susan Maklari

is right. in plumbing segment. all Okay, My next question margins the around the

about You've the in delivered can there will half things. we that guidance to on you fourth The year quarter color third though come the how down quarter the headwinds those But second in in some of understanding first and be down? should on about that XX.X relative or relative so some versus first half more and the got price/cost us half step you've implies any there. and there, some just thoughts trends? of And thinking that give

John Sznewajs

Maybe John. this take I'll it’s one. Susan, Yes,

obviously quarter the second then and right. very well. as of in We the you're first here year margins So half delivered strong in

Given our guide, the it does in year. a the half down margin imply of a little bit back step of in

money make We’re the pandemic. take calls, as pleased they’ll of million entertainment, going of far. travel and need investment I you we we said just the business delayed And mentioned, we as thought we but have calls, executed sure mentioned contain of we much as form prior previous of that do as XXXX form our may spend that some put costs in $XX in we with we’ve of in some investments. the appropriately form they'll growth as to through some so But recall may were initiatives. on how And we've into take the the also back to

improve significantly. And so begin we to see things here

continue to of that will spend that We return. expect some

initiatives. some we some I that make marketing mentioned started in spend return to As of and in to second my quarter investments as actually growth remarks, in the began

prepared the the spend come to are brands, that investment ensure in start additional some remarks mentioned of year. So Keith innovation customers that that his that in take the to leading of our And of lot and in a we in of will second that supply half back service believe full our our products. will in

the we the and going go headwind price/cost segment, better the At back future of And it's be will to so flowing in two-quarter remarks, lag. as we on contribute cost that meet a as to same time, a little to think to of We've of kind P&L. price of a also our bit year. the growth about a half business about always in of alluded through little our a customers’ there's needs. even we plumbing our bit In getting into general, talked in the lag prepared

piece second the back the in will the that the that's impact margins year. of so And half

bit then So that we incremental exit as confident also we'll price/cost are those neutral year. be lag. that That little two, price/cost and a said, we of the very an spend

Susan Maklari

color. Okay, luck. good Thank that's you helpful and very

Operator

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

Ken Zener

Good morning, everybody.

Keith Allman

Ken. morning, Good

Ken Zener

whether or coatings? perhaps or are there limited you in. So the to Could amazing coatings PRO? are then seeing to you to Is larger types -- reported. within guys your or a seeing availability those business, is that because DIY coatings of talk company you at supply/inventory quantify those for talk affecting of how constraints, of there -- because are constraints, all shifts of PRO way you environment channel And operating a you was it's obviously

Keith Allman

in Well, where I second on expect position down specifically -- inability fall that would I'm to going say what our impact half, we compared of had to the it, first have want we inventory to an our going short half quantifying revenue. say

Ken Zener

Understood.

Keith Allman

going But the inventory help that half. is in us back to think we

at -- a position at in talking look look is channel. now. having across a In and which we PRO channels. coatings But When ourselves our retail, a you're terms strong if we plumbing, we distribution shift, of have channel both pride on multiple consumer broad you very

as And in have Similar at where then look a have position the position as a strong in we story well leading principally mainly when a consumer, have DIY. there. we we towards PRO e-commerce, coatings, talk is We which franchise the PRO. leading trade, strong about we is always oriented which more

positioning we are So we of of like channel where distribution. broad our in terms

strong there are PRO I good, have particular So think trade, cetera, et covered. to been in address that to these we're to able or able to reason shifts, online we're have our it wants agnostic in shifts, addition why to be DIY that to issues, they environment, that's our dynamic if if teams to a it where quite and we perform kinds And customer this these happen. of significant buy

John Sznewajs

Ken, the our one thing over invest I years. we add the and to that's next business. PRO to PRO, Keith’s comment continue PRO invest channel continue driver We look grow paint the Home for think we’ll initiative. partner, is, really that to the to of growth the specifically a to strong several to And us Depot, in course

Ken Zener

stuff the to leadership one that quite really of that demand Thank Behr pull due the when like sticking primer Do you you and scuff paint just latest, I like paint DIY. it some compared seems like Yes, is you more these quality there competitors? seems is kind And have It -- from and describe then question. it’s higher the that described of initiatives, margins with might in the but was you I to know and And the these other to simple always in you. did be a a able perhaps scuff coating, it. think introduction. PRO think PRO versus them, on could PRO how

Keith Allman

Behr product research We're of development and development. teams, proud really the

primer of leading since started. a development in that really on edge been big have We Paint one one. the was company and

the work We sorts also commercial those colors being on it and of relates center color selection able as to development to and things. match

that of to ability or do, be is see. it. one Whether is dynasty primer of do. ever, demonstrated things is not to and we’ll the no as best have one, groundbreaking long of this going paint paint as another But and continue question our this we'll in introduction about a So line we to this

on terms that antibacterial the In those coatings we all of terms have of one-coat we hides of have, other in of and the scuff sorts resistance, mildew that things. and number

deal to is -- extremely it. I'm going do. continue this expect to also we And of we're also and very big And So a us. what for it’s I'm what proud

Ken Zener

Thank you.

Operator

Your of next Capital question comes with Mike from RBC Markets. the Dahl line

Mike Dahl

Thanks guess dec I a taking cadence side, that morning. thought I first, some you're talking XQ, of of my specifically supply because overall about Is that same little with flat and arc. asked the plus of lines then is just performance kind in and looking of more XQ to given about between XQ for to questions. to the seems Keith, follow was wanted John, XQ, ends bit quick constraints respect up Good the along margins the XQ that back expect a in a or we rebound segment? minus similar should a or even up like the it half expecting

John Sznewajs

Good Yes, Mike. question.

of last what through going the that supply on seasonally So, fall out Keith pretty even marketplace, a how as demand. talking based we on based look we're understanding performance in about just to it's things at the months, think across and the six back half we of terms the be was year, seeing in

back right like So it looks even a to now pretty us half.

Mike Dahl

capital It's great right allocation. that my broadly just just see on is does It seem I still shake an speaking, there's What buyback the been guide. and comment in you of are -- the your uptick in if second seeing for M&A. pipeline? guide Thanks. deals? there is some seems it seems lose. competition now assets what buybacks. mostly in on like terms in segments, be specifically like are about Okay. increased predicated question you to seeing may Because you like your that could was And wondering And the there

Keith Allman

for what team, doing a is new of deal broadly new compared under job, informs and in executing the pretty and strategy have cultivation to similar momentum that been to change Masco deals. understood where lot our and we is clearly, whole been of doing a high The bolt-ons I a What as development and terms what and seeing. was not year. and terms key have Mike, the as at I business well we they're on And still both here of team a of we that's have in historical of It's better averages. quite we're we Really, need the seen focusing seen what valuations, really part a think leadership, is to say, building have of we're driver we've now as moved John's good synergies. would

So the pipeline robust. is

through assets We’re moving in various terms of evaluation. that pipeline

acquisitions We see with said for that, our that like to are it side us, to look Work or that in leadership that. patient that the continues Tools right fit International with you e-commerce make will Kraus plumbing robust. we bolsters do sure continue And we're these channel. Having and in on the strategic

So strategy. team with this We've continue outstanding type going of an to expect it. with continue flow. And to we're got our we working deal that's

John Sznewajs

just of of year Keith’s. a we last couple are say end on I would comments acquisitions that maybe the to three all supplement extra that did Mike, the plan. at

So well, businesses the very working -- with teams have the gone interaction has well. integration the our existing gone

case. on they're so And the business right

bolt-ons better at very reason activity. the And Keith And value lower there's about, some of is The pipeline a maybe been there point. we've robust. of part pleased see so down playing this as those -- at talking at we're very, the was smaller the is results. we with -- lot And

robust very industry. mentioned, some that the Keith the been very, have As of transactions in pricing received in larger

the lower just end we now. right better middle of there's so value at And market think the

there. to continue play so And to we're down going

Mike Dahl

Thank hear. to good you. Okay,

Operator

next question Ng of Jefferies. from comes line Your Phil with the

Phil Ng

year? algorithm how certainly morning, looking that to year? do guess bigger in company overall see for have to mid-single do a about returning business range drivers. you a your picture next the you out lot XXXX, paint growth I everyone. DIY secular Hi. Do you of And think favorable tougher your next digit comps, back growth Good

Keith Allman

no growth really there's Well, the we changed returning haven't it. to algorithm,

Our that long-term into the through committed It's growth X% range us X% X% that growth, to X%. our dividend growth XX% the growth. to that buyback And in on cycles of of to acquisition same. plus yield X% We're to X% algorithm X% shares. puts is to of organic average, X% EPS

on So XX% XX% to name. return our

drop continue that do believe margins. before, basis not strongly We levels. in but from solid it of drives XX% return a flow in that cash that multiple the changing. expand our we of talked execute margins it that in shareholder our range, do going changed. to continue we that that reinvest hundreds free And don't a and the to both down and it call that very and will to have see of talking very we generate that points way So business we've And XXXX to strong believe to hasn't as And to that. our we're improvement, we'll businesses, in we we're and we XX% careful manner value. that continue in shareholder in And

tailwind millennial the entry the product for change real us. families it, to to continues strong. homes et as believe seeing our we're larger congested consistently cetera, a expect algorithm as we be no we're and and So continue. market into moving into form, of to growth deal a home out real that’s is the talked about our seeing demand continued and in in What and I've And cities more

Phil Ng

Any color for next year? outlook on DIY the

John Sznewajs

guess good Yes, -- of I I digit Keith trends fundamental low-single my for driven growth think of underlying demand trends. there's the Phil, these as a that that it perspective, DIY, do because I more out there, cited. by a think of just from

of is year. returning we so for for to what And low-single which we next expect growth guiding, DIY that kind were pre-pandemic, digit

Phil Ng

of And color might out normalization pickup a That's perhaps that pretty on strong super any how and some some there trends data wholesale. We've a be your helpful. channel performing? suggest points is retail then after seen in seeing year,

out you're that channels of in curious there diversified? and very for what Masco, Just appreciating the means seeing you're what terms

Keith Allman

channel Well, seeing you general, growth across Europe our strong we in plumbing, the our and China. that across seen in main retail our broad strong I'll in for strong in we've But board. Certainly, tell trade. maintain space, we're probably partners. international Central very International, and businesses, demand in question in good that's position leadership in a pickup our the markets particularly

strong. that's So

in demand terms channels, drivers, broad-based really of geographies. it's So

John Sznewajs

been the were most maybe closed. bit on our Phil, spread of if year, stronger little think you say, partly a Keith’s because growth of trade demand’s side I’d second our those Yes, about last to comments. quarter a more probably has outlets color strong, business, bit little

the second has here quarter growth that so And strong. been quite in

for So color you. maybe just little there bit more a

Phil Ng

guys. helpful, Super Okay.

Operator

comes of next Fargo Your Securities. Raghavan question Deepa from line the with Wells

Deepa Raghavan

I'll with everyone. question. my out Thanks broad for Hi. question. start a Good taking morning,

last or or paced return any start post under your As in to you can half a We things start the especially trends so, there. to to expectations? that surprised normalcy or COVID, month and any markets perhaps the positive,

Keith Allman

And is solid and even we would robust expected. more probably growth nice to say I see. a than On the that of positive international little was really our

speaking, that So in was overall. of that broadly positive was the terms --

Deepa Raghavan

expectations? that your trends Okay. Any underpins

John Sznewajs

say, I'd things demand the for that QX. response course of there’s The has last into that couple continue here favorably quarters, trended the of Deepa, strong think been I over to continued several and consistently us. demand a

And continue plumbing we've Those strong our for like the business was got for to of American the then business. just e-commerce as year of mentioned, and good well. us. we balance extremely so a even strong North the very trade trends And look remain

much the So pretty businesses we're the quarter. here across how in very are performing board pleased second the with

Keith Allman

than the of terms expected. I little paint on a had that supply significant was than anticipate. our stronger was some think we lower But PRO constrictions thought. chain we we In was downside, the -- There didn't it

finish So at paint, we're when look mid to -- 'XX up to compared say in still we're teens. where we 'XX going

it little be. it’s I thought DIY strong, So demand would than paint healthy I -- would a say the but lighter is is

Deepa Raghavan

XXXX is how early there I like And would inflation into Got in inflation probably way? on Thanks. it. are How My we turns you're of -- much the price/cost? the in turn talking follow XXXX you lag? positive, thinking XXXX if Should Am snap about the you're into heading XXXX up right quantification much how you given going positive that a XXXX take line equation. price/cost inflation? think to is about carrying of price/cost into much on on that here the

John Sznewajs

we bit But of we that's into carry levels, If tailwind XXXX. current year. we as the on go a to possibility into of at requesting how specificity a much Deepa, 'XX, going that definitely look have moderated. next as costs see we indeed part just that the first they we probably Yes, you're little into go level won't to pricing your point, because of yes, general stay

Keith Allman

is the course substitutions main we'd our activity neutrality point improvements, will for leave price. have price/cost material drive at year. cost that actions down, suppliers to with with place make And the the and end by of I like of and to in we working think that, mean I

that end that of the have year we're that will at place currently the matches in the inflation We seeing.

So snapping point to year we’ll about line, the be end neutral. your at the price/cost of the

Deepa Raghavan

it. much. Got That's so pretty helpful. Thanks

Operator

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

Keith Hughes

kind you. and Within Kichler you any for Thank of architectural second products, just expectations could the or quarter growth in from the Hardware, them number seeing you're performance and comment just on half? Liberty decorative of the

John Sznewajs

Yes, the grew Keith, Kichler quarter. both Liberty in and second

So continuing [ph]. trend this will resume

the quarter. going laid we at kind growth year in Investor that We return end the to business XXXX on Kichler. exactly is for in through identified Day what's As XXXX, to and it out our particularly the for of that's second of

that. [ph] feel with we how that are So J business, and Kichler so good we're pleased driving about and

look quarter our the very quarter. may fact we the cite of that call in Liberty third year, back very, you the recall on year, last strong half did had we a As

against so Liberty growth. them That year. team continue half said, at the the as be business. some And going they're to to is comps pushing drive that they go tough of to back And up for looking into the we're down

continue know we'll in do out. quarter they've got a But to that see tough that third very the plays how comp coming up. we So here

Keith Hughes

in question, price up it's I seeing, talked dollars if pricing for [indiscernible]. about full know the you've final the lot, all now got, -- 'XX, going Okay. to And it the a raw on in what negative? add know sounds right expectations be all in will But we've be the inflation you you’re but 'XX rate, that I based price/cost your if run like the about year? material we

Keith Allman

to been we negative, the you be of will guide we year. would price/cost I because will end think we be Keith, saying, the neutral think as towards that we've

before bit the half of think to year we've that little absorb I position. in of So, back to got get the a we price/cost neutral here

so, the of price/cost in the be quarter, And because for second because full experienced year. that will what and we we negative

Keith Hughes

Thank Okay. you.

Operator

next comes of MacGregor from Longbow David Your the line Research. with question

David MacGregor

everyone. morning, Good

at You the with to period into just head all, mentioned support? channel and wondering the marketing. tougher compares, are if of expectations your product a regards I'm on promotional investment how of the retailer into DIY, into back level we as evolving,

Keith Allman

decision. compete of leaders as year. that that year is quality and and the made the categories. this finish ultimately, decision service about see those at partner. channel about Generally was channel likes speaking, same Again, I we're develop their last don't together. it partner obviously, three much. activity But same brand, and to our that support changing I we that's in on out our say that's all because by and a that And we will our it's would strategy promotional And

David MacGregor

new introduction should here. pricing got Okay. with product be how And substantial pricing, you've I just much a It sounds pretty introductions? just calendar product respect lined question then like new up to second achievable through guess

able pricing how Just on to legacy should get products? opposed much as the be to price wondering increases that, you from

Keith Allman

we terms range depends It's for full And it's I high-single new think or And products, digit if not of across differences. segment year, a the for where all in categories it from category. think price there's pricing that's so it it think really products. really in across really of increase. about be. And you new from But increases on of varies is, the much then year the I terms general our for value. a in It will a channel, price

very launching you in new good my a we’re prepared stuff a about maybe that with has let's high much, Brizo segment the high a remarks as there wouldn't where margin point in the we're Some price of price I be end that In talked and coming is other out That AXOR in will. with that [indiscernible]. leaner, it. if pricing, lower say, cases in segment,

have we varies. that moment, as it continue. play to our of that clearly, here in at lifeblood our all innovation. and drive we that introductions new product So is of system you will continue from heard the But the And

David MacGregor

Thank you.

Operator

Your next from Loop question Shmois of the with Garik comes line Capital.

Garik Shmois

segment just letting question. and a is back there is pandemic little qualitative, year their the given my paint Great. Thanks the to that side. Maybe of taking last curious a “normal PRO contractors [indiscernible] for homeowners that I'm on constraints homes? levels,” more sense but into the

Keith Allman

It us, normal at like see to to to like is that we'd business. it's grow. Yes. what Garik, of continuing feels That's out levels and

invest the continue like in contractors with growth with to street, to feel we're as getting wall continue feet in of we business, good we share contractors. of so existing more and that the position in really relationships And the on

about how So here. really that developing good growth is feel we

Garik Shmois

then and had the Okay. the the the quarter. just we in Thanks. last regulations given due there production government to strength just that place putting headwinds COVID. of was some saw in Watkins, issues in Mexico the given I And year, on know that you the

the given and Just in are, what plan the any there, color and normal, seems capacity if like you the you're back to the just Watkins it in business? just strength is

Keith Allman

strong. output. to definitely at our continues levels. be system our continuing to we're backlog feet. boy, to and starting is demand back get And Yes, the on record our increase is we're But production in dialed And

is as and physical, population clearly we more population health, the it aced a mental America wellness, this aging have a in really as tool in think emotional relates to tuned that. overall that I both and

And capacity there's here. expect we capacity look we would here. be and expansion, do at adding entire as business, that So our we will and tailwinds capacity some I think fundamental across we

Garik Shmois

Thanks, again.

Operator

question the line with Baumgarten Zelman. comes Your next Adam from of

Adam Baumgarten

questions. Hi. taking Good morning. Thanks for my

callout be And XQ? to back this that higher Just of think the brunt It wasn't half it is going where way increases? side paint with impactful the the about the raw major in feel the were materials raw to How a curious on quarter. you is materials.

Keith Allman

Yes.

back felt of modest the in be that is of QX, the the Adam, impactful year, a So half will more headwind part one. relationship the in there on price/cost but

up. we're has think been transportation in and on packaging but logistics costs, see and I TiOX in escalation to and going only not side continuing resin the

price/cost will level. to can continue a do that do at have seeing we there. we of neutral they the pricing continue lot we're But to think we So believe exit as there's say, pressures and cost year we a conversations

Adam Baumgarten

paint, last up Got XQ just with was then teens. DIY in And the it. in you Thanks. sticking quarter gave

of digit declines can year-to-date, kind give kind that of XQ. you double like looks what we so just us half? the about in talked for forecast You back Can

Keith Allman

know those numbers don't fingertips. got I if Year-to-date, at I've my

John Sznewajs

thinking We're down about low-single digits year. the for

Adam Baumgarten

Thanks. Okay.

Operator

of Eric question next Bosshard with Cleveland the line comes from Research. Your

Eric Bosshard

could the curious comment expectations year? architectural I don’t decorative segment, you In thought on half sell-in the the progress if in back of demand in do is know link in bring you the more? back And ship to expect between to that from your and ability how the on retail but half, your -- does more the inventory? customers if in you'd that you inventory make

Keith Allman

the capabilities. the the will our of course retail able That's these directly believe It's channel. get and as be the the the relieved we'll POS and to build we in relationship And between over challenges year, inventory production demand linked.

benefit load the in. going We’re from dynasty to

Eric Bosshard

to those for net that that in terms you the mean of you sell-through year to the make less was in relationship year, that the that two? back or what -- the reverse the between the we you're back of half the the the commented of quarter of up or half that sell-in than second in [indiscernible] for expect So should in

Keith Allman

Yes, do that’s half. right. inventory in the We expect back to build

Eric Bosshard

should in of looks improves terms How that about in the of Okay, that’s that? we experience it XQ? relative of helpful. the the that momentum half to is think for secondly XQ year, then the to similar or back paint expectation And this sell-through it

John Sznewajs

be it think the a little a market. right from Eric, would little up Perhaps similar now seeing second better bit QX, in what maybe to I the even in we're half. Yes, bit,

Eric Bosshard

Okay. you. Thank

Operator

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

Stephen Kim

to thought you Typically, respect with provide. DIY want than you've in what actually sell-in. on that clarify able guys. and a thought. about the to got shelves, that inventory sell-through there's is But demand materially had you sense bit had that better when just Thanks, to shortages weakened being Yes. said were lack I a you you demand one more than thing of your supply better little comment than

to to that? how more know And like the actually did And more sold was didn't as enough you have product. so sell? if demand you curious you actually could How feel have had moderated you product if you you I know so

to decline expectations? seems And trying little a you in some just didn't to challenges. it two. like trying SKUs bit the it your buy like those better? undersold customers product? that your then chain reconcile in Just had these you Just actually you understand industry-wide severe an particularly Because categories, think are bought simply they popular where but inventory if supply Was most your other that

Keith Allman

conditions. lower were was a sales Yes. due There slight don't missing inventories. to a think But I sales we to of out impact lost stock of due ton

my It's a inventory an tag but sell-through was on of inventory there point whole to lot. lower more some of inventory I'm opportunity is not onto so the us a build mismatch whole better Certainly, we of have sure. there's being inventory wouldn't service, for lot that, that and So an than but to I lost want. sales the position. not

Stephen Kim

Thank may a one particular clear. how And on may if it of price Do housing of give you you're we've already. the appreciation, ticket? it large think magnitude? that's into But you has market certain could Okay, more the think seen And historical a smaller about impact versus wondering quickly? broadness how think you there's I'm bit there's talked home metric or end for that home about rapidity to you to that any price clearly, R&R it may as Just little at manifest that abruptness magnitude R&R of thinking the now? appreciation it, lag be secondly, curious itself and high color the some you if manifest away is Do you historically demand. Keith, itself on result that how the blown any in this the in then different as the that. more it completely us comp, ticket a

Keith Allman

think a things. couple of Well, I

remodel home it. to is to likely they're more when a asset more, spend sure, For their family worth in

environment the while the and their is there their look is impacts is that staying. there XXX% believe their are some away, impacts waning And go not that be here that that they're are I them certainly work. different. People we home, more the will the in differently, in spending COVID of you viewing when doing a doing are they're effect home, of think Now will And more how to home consumer time really at is there some things home. and return that

happy projects, So with we're here we Europe catalysts, how that and we penetrated these think part large there's where are regards of lasting the off, price it we're We're we're our we've a things couple and that enjoy do point so here to portfolio small the done in the positioned and reason falling projects are in North well that in by are obviously with our professional. part and robust of why in yourself, so America. clearly markets

is robust a market, DIY as indicator So the price it their very home. of consumer appreciation purpose of of view strong home changing is relates the to the as a the

Stephen Kim

Thanks, appreciate guys. Great. I it.

Operator

Your JPMorgan. line with the last from question Michael Rehaut comes of

Michael Rehaut

the to closer obviously of of Hi. paint? and to call, this progressed in. focus an if side. the to get retail, trends that I how and the lot you've interesting you talk comparing trends spectrum could plumbing I it quarter. Thanks. the missed wholesale a the business, hoping I more have seen -- I appreciate you was there, versus little curious, DIY channels, in earlier in to on the if was paint Clearly to a maybe breakout squeezing maybe North apologize things DIY me the bit I and talk PRO American in

Keith Allman

for business pros that with to quarter People into this comfortable time. trade their Well, coming are strong more and real for continue. we home us expect longer past

So we're flows not certainly in repair in our a And channels. you the principally, But a through appliance throes person changing. remodel. an repair. Maybe of That's trade totally, want you'd principally someone but for in for wouldn't pandemic. let quick major the that

trade really pros spoke is continues foot well. the in very to that. continued of invest our -- dynamic very said real. Certainly going do nice retail good in we're about We've Having more the e-commerce a in buying John and in that, is retail more acquisition, as seen to our and business And So well. traffic Kraus seeing channel. pickup

offering utilizing For That's example, well. launched brand. online, with that's we Kraus' Delta just real leverage. Delta the going the sinks And branded

remarks, trade, really We're prepared as all growth; market said So international, domestic, e-commerce. broad-based I we are cylinders. my on solid seeing in retail, in demand hitting

Michael Rehaut

plumbing be the to to take e-commerce particular, I more the Okay. the percent for step could in But segments. a revenue heavier just product, I take possibly paint, years. question three sense difficult or as business side, think segments, maybe lends you a you that. the Maybe just appreciate you lot of and where ship. maybe as both to give us where decorative might the across over in of and different itself state a next are just your two Obviously, able hoping give you was us more a a a to second two of it maybe back,

John Sznewajs

good actually last significantly. And you’re a the has Yes. years. vehicle of us growth Michael, been several grown over And it's quite it's E-commerce John. right. course for

We and than our your were channel. XX% by XXXX, we that little team break down expect, paint investing on the the if and as product and of challenge say percent lower Color were total all e-commerce I online, distribution in And done job -- the plumbing think architectural in roughly you X%. cited. alluded you though to sales about segment, question, a a e-commerce nicely. would bit because kind Behr selection’s at to our of about a sales of if or order have you And grew So people nice segment, that things in finished in of for that do decorative XXXX XXXX, shipping fulfillment. as our you a X%, platform has And still you X%. about sales roughly might

consider -- to online the be their packaged e-commerce we're that's [ph] selling forward, the we well as ability than products, faucets online. consumer ship perfectly limiter a you consumers to presence, think they're our of to so look color And to to else. anything transact more online. positioned we going our order they not onesie-twosie because or to to select It's grow as choosing to continue showerheads And if

The a so have Delta to at think a fulfill online. And great job capability distribution that. we done great do folks center we're position to to adding in down of the Jackson

forward. to well to serve the we positioned paint online, the And good were continues as more we So to growth to plumbing become really extent going that about continue set to feel how sought fulfill well. we're there

we're North to So continues how grow up set as like we America. in this trend really here

Michael Rehaut

Great. Thank you.

David Chaika

us I’d the for like thank Masco. call continued you Thank of your to on interest today joining all call. This for concludes in today's and you.

Operator

may disconnect. you now gentlemen, and Ladies

Masco (MAS) 29 Jul 212021 Q2 Earnings call transcript