MAS - Earnings call transcript Q4 2021

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Operator

Good morning, ladies and gentlemen. Welcome to Masco Corporation's Fourth Quarter and Full Year 2021 Earnings Call. My name is Renz and I will be your operator for today's call.

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

You may begin.

David Chaika

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

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

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

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

Our also metrics. financial statements include will non-GAAP

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

Keith Allman

to Masco XXXX. comments results and on turn then of another with some XXXX you, morning but Thank resilience fourth for globe. on our you our once view and the full Dave. our I'll our quarter: Good across morning, challenging the year, was strength this we've thank us today. XX,XXX everyone brief year I'll joining start and again, employees demonstrated and

results the This markets. line PRO continued led Turning and and the increased growth top exceptional DIY to business, paint X% our was to which share gain both fourth delivered Slide in quarter. in by our strong X,

as double reached Our operating commodity the and the costs higher digits. quarter profit to freight inflation in declined low due

in price was our our that Partially improved inflation expense of dollars quarter as discussed SG&A flat, of basis XXX have impact fourth we reminder, the lag in this offsetting third quarter fourth a XXXX. call the cost the would a in as As control terms on approximately was good greatest while in in percentage points. inflation quarter P&L of sales

share Our earnings quarter per $X.XX. the for was

in Turning to in Plumbing shower and X% through well the products, to in in our North segments, e-commerce Plumbing X% Plumbing. currency North demand we as and growth X% see local particularly faucets quarter our with International American Plumbing grew channel. continued American for good growth performed the

continued today's products Our In many in in key DIY to And paint PRO for segment, growth our mid its Architectural its Spa tremendous business with also paint. markets outdoor, and single over digit see homeowners. appeal a have and the to drove Hansgrohe growth oriented Plumbing, continued Decorative tremendous strong Behr China International XX% performance demand UK. in including that wellness growth

excellence for to continue both in this and market. challenged gain see paint operational supply share enabled demand good our and us We to PRO has DIY

contributed also expansion quarter. to growth businesses in Our hardware and lighting and bath margin the

turn full let's Please year our review to Now X. performance. Slide

normalized realization and For a margin high growth. to and full operating volume to personnel of an investments XX.X%. support grew total XX% increased by marketing XX% and with growth digit inflation, the and our single in operating company profit year, pricing Strong partially sales return was more offset

excluding growth led Watkins. outstanding Plumbing segment Delta, strong Our at grew Hansgrohe an and currency, XX% by

accounts full healthy was Decorative to the and business and of comp continue our to PRO a approximately for mid of digits DIY XX% year positioned with with momentum. enters its business. XXXX Architectural our backlogs. PRO XXXX X% single lot single brands, now Behr product growth Plumbing outperform is digits XX% down market business new segment, paint with enters leading our excellence, XX%. introductions, with mid and well grew Our operational [ph] as up against the In over

Our committed mutual partner are and to our extremely relationship we growth. strong channel with is

named research most brand Behr independent an recently Brand trusted Pink was party third firm. by the Our market

Our of with to of share further demonstrates such our growth and we the as exit as in competition. recently aerosols, drive business and exceptionally XXXX one strength which number sealants, paint the adjacent space paint categories have the customers. Dynasty And of and brand help and market PRO outperform continues our well. gain And paint to stains, all partnership a launched corks interior and performing [ph] will branded our in shelf we in is XXXX,

Turning allocation. to capital

position strong million We capital $XX $XX.XX times deploy dividend approximately our during cash we the $X in cash million the acquisition with an flexibility of Steamist us billion completed nearly net XX% per for generation X.X the This average and cash of in million us outstanding our shares. repurchased financial We of to ample stock of fire $X.X Our represents year price year. over and approximately at and approximately leverage $XXX annual increased shareholders. providing billion of paid allowed our X% dividends finished share. and to in $XXX and power. We

across chain to all these to of XXXX financial increase adjusted our We earnings and capital No our chain with achieved to summary unprecedented I'd of $X.XX challenges with through results. XXXX. and approximately deployment delivered flow Our the significant capital $XXX their these to employees ongoing cash we XX%, of exceptional deliver rate globe with on increased without capital would inflation, share free profit significant in resulted supply XX% an suppliers invested We working per and efforts exceptional despite tightness, return million thank mentioning of be us a who due of complete strong outstanding a the supply results. Once tremendous for challenges. XXXX operating growth, by throughout conversion approximately share. per combined again, want XX%. our worked in I thank inflation to like XX,XXX

have supply As improved. challenges we marginally chain exited XXXX,

However, remain increase to remain shipping and constraints through challenge. in high expect higher costs in single XXXX a P&L. as digit and freight and overall We experienced persistent labor inflation labor raw inflation our flow material, XXXX and delays to

Importantly, fourth however, during except a occurred year we freight basis, in quarter. the price cost logistics neutral that additional for on exited the increases

have improved, actions quarter initiated in XXXX. to the cover We impact fourth price these price compared logistics price. additional The significantly with to of will cost be costs QX as

view XXXX, to of with to you compete. turning markets Now the like our we where I'd share

repair single For market the remodel expect in growth be market, range. the North digit mid American we the and to

single December, excluding anticipate and our correlation to over expectation in outperform of basis. that sales range and we remodel expectations remained low double single home with growth digits. to strong are we low environment. paint will a DIY existing X% continue leading assumptions, growth approximately market for robust. home propane has grow Home appreciation our price These digits and Repair Europe, of For Based a like improvement the and X% the to on for sales on digit Masco's Each XXXX. market all prior significant currency we X% gain price. the these lagged our indicators include was be strong in to markets compared paint expect share year. to market the XX% expect a market, grow the and markets, and increased And these principally market, international to mid we metrics across

a margin and margins from business recover to XX.X%, We normalization modestly in approximately to continue expect the as of expand significant headwind pricing we despite grow. to investments cost to

Turning to allocation, unchanged. strategy capital remains our

our meet for current products. First business our and future and demand to foremost, we the will invest in

and announced shower we expanding As production last Europe we for new plant Hansgrohe. in quarter, capability a are faucet our with

adding capital only above our Paint CapEx mind approximately normal Additionally, of expenditures XXXX. on growth. to average, likely just that in and Spa our keeping are level we support capacity of our distribution strong manufacturing to in to X.X% our businesses increase will investments about X% was These X.X% and sales to

deploy of we We'll to share to share, per at returning cash which XXXX. model based in of on per in least or Based XX% shareholders, or liquidity a repurchases on to quarterly our free cash million the our and terms $XXX our dividend capabilities, share Board $X.XX business bring annual a position, strength after generation $X.XX dividend and would to repurchases flow of share declared expect our dividends our acquisitions projected cash deploy strong flow, cash increase, XXXX. our to acquisitions. free In

no is change strategy. to there our Lastly, M&A

recover We at be in pursue range per expected representing costs, the deployment, continue With to and and continued and opportunities a growth, share of earnings strategic growth the to selectively review that $X.XX the the per fit share, to $X.XX capital Masco. XX% anticipate have to we right pricing midpoint. operating strong profit for right our return

in fourth John? more to John to over year call the turn and outlook go quarter, the full I'll XXXX over Now, detail.

John Sznewajs

on Thank of today everyone. my Dave adjusted the performance, you, items. rationalization impact excluding one-time mentioned, as morning focus and Keith comments and good And other will

acquisitions. last currency, currency X, In leading Slide XX% increased strong for demand to divestitures the Net excluding industry local minimal a in and to quarter XX% year. X% of robust. had We X%, acquisitions a X% quarter the healthy fourth finish the comp in increasing of and contributed year Turning or the sales growth to delivered sales brands our North impact. against American remained

of acquisitions sales XX.X% as both X%, currency, paint, execution increased and in In the and Our international and well showers logistics team's PRO outstanding drove impacted was and or spas. by faucets, gross commodity costs and divestitures, as quarter. growth excluding margin in strong DIY local higher X%

had on As fourth cost quarter. P&L call, in third XXXX our impact price quarter in the our we discussed on

basis of million, improved business. drive SG&A the of containment an activities $XXX continued quarter and Our percentage XXX Operating as was to to as a EPs fourth sales operating margin $X.XX. XX.X% XX.X% in profit points was across cost with we our

American XXXX, and year XX% In acquisitions XX%. divestitures local the contributed to increased Turning to contributed international full currency year. XX% Net increased and currency, X% sales growth the increased North sales over another and sales prior X%.

to of SG&A to XXX XX.X%. decreased operating profit points basis a increased sales Our $XXX XX.X%. margin percent as or million, of XX%, and Operating

want commitment in to work, to the another achieve XX% for their us to globe challenging increased year. to that and safety hard employees outstanding I EPS our Lastly, enabled our across results thank these $X.XX. dedication

to fourth had XX.X%. excluding this This and year. industry was Wellness XX% Net strengthen in performance minimal growth significant Delta's against International aided growth channel their impact. Turning to local were X% acquisitions. continued Hansgrohe and was strong to profit divestitures a their X% by plumbing excluding was experience currency Plumbing were contributor continued for UK. margins currency, currency the comp prices. increased X% fourth growth acquisitions in spas. a grew X% growing Slide and X%, strong contributed in or Watkins including acquisitions sales demand selling China the and million X% increased North operating leading divestitures. markets, their e-commerce was quarter Segment of sales a American quarter in X, during and local increased key to net the sales and and a $XXX many also they of as in last operating

discussed continued expenses as with call, we impacted grow our cost by creative Plumbing and relationship marketing As personnel invest price unfavorable on operating profit businesses. quarter was third an our along we to to

plumbing the acquisitions currency XXXX, $XXX or margin XX% and Full growth or Turning dollars, excluding of divestitures X%. and year XX%. to million currency, this XX%, XX.X%. local year was profit full million XX%, Net acquisitions. increased contributed acquisitions sales American grew an XX% operating In contributed plumbing sales outstanding divestitures. International $XXX increased sales another and or excluding Plumbing up and XX% North X% operating net of

Turning Architectural for XX% XX%, to quarter, increased acquisitions. or excluding XX, fourth Decorative the Slide sales

business last grew comp quarter the quarter in against year. teens high fourth paint of digits DIY mid in the single Our the

paint PRO professional quarter operational business driven Our in XX% by gains. grew strong the execution, in demand pain share resulting more than and

as to We services. expect to strong demand remain demand for contractors PRO see growing paint their continue

by with We the and continuing customer. and to with our partner, Depot grow Home along programs anticipating increasing our the also PRO to retain PRO the new invest services penetration to

expanding $XXX quarter. in up Our the or business margins profit and XX%, million, million was quarter, hardware the lighting overall growth segment's to Operating businesses $XX in the contributed also with driven points incremental and business, lighting results basis offset improved by higher our performance net costs. higher in This XX.X%. commodity by to productivity initiatives, selling XX was prices, partially cost volume

sales income at outstanding did increase year increased the and chain managing gained exceptional XXXX, Turning our of market. or the XX.X%. job supply teams and customers to year full PRO paint X% XX for The by performance basis DIY driven effectively through operating Full paint throughout an businesses. X% our numerous points the in million to constraints expanding margins year share deliver $XX with to

We times. billion was sheet a cash XX% balance is XX, performance percent as at lower the $X.X ended working normal was inflation billion strong liquidity, is and strong This debt-to-EBITDA our flow yearend $X which net full of of balance Turning result of year. chain strong of includes throughout $XXX and our a our revolver. operating supply our Working the net to with adjusted considering adjusted availability of quarter Slide free when X.X XX%. With capital nearly approximately with than CapEx, investment sheet income. significant the capital million, representing disruptions on impact sales

XXXX, during XX.X Finally, for by billion. repurchased We $X we our annual XX%. million over more increased than shares dividend

review Now, for outlook our let's turn and XXXX. to Slide XX

we normalized the we more of of of impacted Operating growth X% of in experience XXXX. the Masco half sales For foreign level first as of will with as expect investments unfavorably in to operating the the be to margins range growth a overall, currency, impact compared excluding the first year X%, of XX.X%. profit half

segment, expect sales excluding be currency. X%, For the XXXX growth of to range X% we Plumbing our to foreign in

strong Margins of XXXX, of marketing rates, Given and first our the is Plumbing quarter, expected approximately year-over-year impacted will margins particularly margins expand year be first personnel comp currency to we plumbing unfavorably current XX%. to half expenses in half will exchange impact higher revenue full first by approximately XXXX. We as in the or the million. foreign $XX in anticipate X% by against

grow Architectural sales XXXX Decorative XX%. segment, the to expect For X% of range we to in

business business to anticipate at We single to mid be XXXX, Decorative Architectural Looking XX%. increase approximately and full anticipate PRO specifically our year digits, teens. growth our we peak margins to high for increase DIY currently

As previously the actions the recover segment, this of we pricing in have discussed, amount typically only dollar inflation.

remain profit actions cost recovery a from in As compression. margin result, dollars pricing equal, operating else all neutral results

in products drive segment During that increased for XXXX marketing will this anticipate growth. and we also investment future new

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

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

Keith Allman

exceptional dynamic you, We another Thank was it John. and well navigated results. year. XXXX delivered

is an X%. attractive average favorable Growth GDP with remodel remodel price to turnover, industry drive industry of such As demographics, continue trend is of repair long-term home proven The insights, fundamentals. poised XXXX, relationships, ticket, and and correlation stock, and how remodel are a and with innovation existing factors, we model to Masco's brands products, geographic broad through have scale, we low X% this operating We our enter and on market home leading Structural age appreciation, and execution. business remodel Cyclical focused and plus view products approximately stability leverage repair system high better. consumers increased repair diversification, of the homes Masco provides factors, and repair such as the housing make growth can also with our cycles. and drive consumer and and activity. diversification, their channel our to activity. businesses as

large next old demand three the XX to the million reach more the households ages expenditures. to entering years more remodelling cohort the millennial living million over spaces, X.X the and clearly homes pandemic housing market. edge and years. XX We which the for has the will And home forming increased has prime are on of $XX enjoyable leading of desire increased led remodelling COVID-XX

forces provide structural business. these of our All tailwinds for

to above of outlined, to X%, range capital result market to at approximately drive positioned questions With share expansion up free the and of the call shareholder As expect of X% of in organic productivity favorable is the continued our range we'll continued leverage, EPS X% X% annually. Together, together growth in and continue our per least plus each focus growth EPS Growth and from long-term cycles, open cash year we X% With to margin we we growth the dividend to previously of through returns and should executing buybacks this are on now in X% comprised deployment, X%. growth. to approximately deployment XX% X% with the creation for our cost year volume capital fundamentals, our through answers. outlook contribute value that, flow for acquisitions of in and strong long-term. strategy, form to to

Operator

question of Instructions] Capital the you. from first Zener Thank Markets]. Our line comes [Keybanc [Operator Kenneth

Your line is now open.

Kenneth Zener

everybody. Good morning,

Keith Allman

morning, Good Ken.

John Sznewajs

morning, Ken. Good

Kenneth Zener

help that But you cost given but because pressure it with you there's high might pretty have volume dynamic us price can the think talked there. and of be there's But bit, with all narrow of COGS obviously it? guys you're some like an it's volume. it's and of can a environment I the faced inflation, You it's more, that's the that a where not to PPI of pressure, manufacturers seem if to price issue you, teens, you the seems because ops really like extent little It but talk actually comfortable, dynamic of the we think there, between little if -- obviously we're appreciate much also paint in just could feel understand absence getting could on inflationary -- discuss architectural, right, doesn't expand percentage lot a so you you in would have given margins, such business we units in warranted? good I low in, the other

Keith Allman

doubt can to the the go let crack me I the the price this. a take in contributor growth was Ken, Yes through as question price and a and volume a at maybe healthy John part contribute of Without quarter.

say let's comps in the implemented that As that the to frankly raw despite offset, as in volume has you after to we experienced volume and many from significant we XXXX know, tough material into expect we've increased you QX QX. as we've that trend continue continue And inflation decline, segment, mentioned, to others and XXXX. a price had feel, for

So the the price will increase mentioned in when impact. cover out, of that get of we've get we point dollar cost priced however, baskets I we consistently, and this to typically, terms

So represent experience this to that. margin for that continue and does some will year, headwind we us

price So into our we put costs. covered market have and the

expect margin some consistent We headwinds, what about. that's with so talked we've

However, we to some expect that improvement, to occur. and volume seeing we are continue

John Sznewajs

one would only and fourth are with comments add And fourth in the two the I quarter, for the then Keith's thing to kind then the specifically XXXX. one respect Ken, to performance and specifically in of quarter,

last at good that look you the They of significantly attributable performance year. paint, quarter, the for here in And and fourth we're we results will continue chunk if quarter. a Kichler improved is to inflate. emphasize So well to to improved expansion to maybe in fourth inflation inflation said experience the quarter one the margin just that experienced we XXXX the Keith experienced XXXX paint what further compared as of the continued comment about think we as of to another to going in during

And go to continue we position. challenges so, those we through our confident we'll work have but as to XXXX, in through feel

Kenneth Zener

sticking I And side you've industry. better your on your you would it flip is, that Right. that obviously can like sound you. you've your constraints, category, doesn't gain obviously, expand you not can today why relationships expand? paint I give cracked believe. with but really on in with the us had of the just success I you supply much the there, confidence, access sense in enough the great You've that's that And had and the as if is share case, PRO such appreciate PRO if you success Thank as giving that's just it material paint, perhaps supplier, guess that. have you of a

Keith Allman

the our business a I single to research relates an really tough that to on department think you no inbound and work there's in point been one changes outstanding in take and in several. suppliers. as challenges able supply have able I development it's, coatings would doubt to through has different it there's as thing being past, I been we talked There's, It's without and know, to,

and long-term I'm to continue supply and things a have do tremendous things. that for have with, XX relationship phenomenal companies have We and years us plus the phenomenal base talking done those we

far been chain good crisis. perfect, to supply have and enough. then hard our in to mean, folks So And company really I done put manage really can't thank are through and pretty of our thinking how from And this but and I the they businesses its without it's it that hasn't we've worked course, well. -- challenges. throughout our incredibly we're

day, past I at our we've good end paint And get professionals hands -- the quarters. system the that demonstrated the for us couple we've and what of it's into operational when of operating it's more to of happens, and afforded Masco the these think opportunity excellence do more us. can

accolades As been nice I recently said, we've around service. again, some awarded

cetera. the You're awards quality, in and of we've net that our well received experience, terms promoter our of aware scores and our et

our a product like very able and about get as pros be XXXX. we competition, supply it, our try us -- PRO confident our outlook excellence base to growth tend more for question have to teens of beneficial in mid in no it. to to and And chain supply there's And it's they leverage people So paint try when I good our to I'm and very been for against said, but we're up it. it, it's tough people

Kenneth Zener

you. Thank

Operator

Thank you.

with Morgan. is Please go of question next J.P. the ahead. Michael line Our from Rehaut

Michael Rehaut

just around -- you've top be from now first given first tougher this sales the and on sense the about in congrats comps had quarter margins, the a half? should of and everyone and in that the couple the covered we give declines, might at sorry continue morning, get marginal thinking Good line I'm comments the that quarters for of cadence, I’m growth cadence and question sure margin growth least cadence thinking Plumbing results. a of, the year-over-year segment two, any first earlier, One you've specifically, not if sense of any to the type or perspective Thanks. a and year if throughout

John Sznewajs

feel free John. and it's I to Yes, Mike this jump I'll take Keith mean, at a in. crack

strong to way in much like you year, that that go fact given if first you half margins out see and margin the significant through with we in comps impact the we the our XXXX, a kind faced from image first bit XXXX, the the the should costs to first of offset But the too the the more but So, lapped year. P&L and compared the half margins we a the is into year half to that impacting leads that half see believe recover not the XXXX, P&L to inflation just year. ’XX back that we as going more much as mirror the meaning inflation, inflation of think it back and the expanding of XXXX of pressure really that if rolled to for about then back us year in of half being we half of the little year, the in in

top balanced point. through In at and significant pretty second Mike, difference cadence, fairly year, terms of it’s this not line straightforward the between feels of a think I it year, the half, first

we’re So, where we positioned. like

the mentioned good we’re prepared seeing domestically As internationally. in both Keith and remarks, growth

about feel expansion would positioned where in Plumbing we is So, expects margin good XXXX. in here,

Keith Allman

expectation what Mike, growth price, low is our and our think international terms then that market overall digits we're is single and environment and probably America, expecting talked, as we’re those. and North of at I to that's outperform of including market type Yes, for growth in in digit looking mid-single in I

John Sznewajs

should we improvement just Plumbing we into one, QX. do we one margins think that then piece, see bottomed in our and sequential QX go Mike out as last margins in

Michael Rehaut

secondly, rate maybe addition appreciate by a you know two directly, probably Maybe you double question the on an Home had very competitor's paint PRO announcement this it you’re that just have the for do been in you've a guys. last on impacts about going why for still for the talk, hoping PRO forecasting Depot paint, adding just that broader but of talk and how market like to XXXX. stronger at I growth your can any if and been to and competitive the kind been quarters, yours, own to that more side? either expecting Depot you I plan able Home if thanks. of extent paint helpful that’s of product game you Okay broadly, frame growth digit Obviously, impressive or of quarters, in couple don't extremely continue more dynamics, dynamics for a to next Thank kind it. that's favourable you're of to couple announcement now and has competitor you. obviously, to quarters PRO availability to, was just share that last to with the That's -- the

Keith Allman

Mike start. or Yes, The any our in doesn’t way. announcement outlook change strategy I’ll recent

ever our really partners We're with is relationship mutual strong, channel Our extremely hasn’t been better. to committed growth.

We that significant to now discussions how around our going strategy we’re drive and have continue to together.

a aisle is shelf space. mainly issue. ours, it's We're not relationship any so news strong. really the shelf the of not not The losing So, space in recent is switching out some replacing products other

get force paint for confident an business supply good pitch us, that’s that quality, there. and ability and you about. we sales brand, the more your it and our best we best through the When have out sales have the hands talked in service, a best we’re the into outstanding and and for to in reasons So the chain

both reasons some So that, and adjacent of in plus us and the strength like corks and and the demonstrates our cyclical thinks the the shelf categories aerosol, about our additionally about I sealants our space interior that. fundamentals to business. further the and consumer which we stains, stuff of then structural, give plenty well what And quality market, paint like, it. feel good of mentioned, very want Things as as brand

paint do. and So business good about there's we of plenty feel to our reasons

Mihael Rehaut

you. thank Okay,

Operator

Thank you.

Please is ahead. Associates]. of question next from the go [Zelman Our line & Adam

Adam Baumgarten

everyone. question, my taking for thanks Hey,

mentioned your by helpful? digits are in would on Just and the I you the up in was inflation piece, guidance XXXX double quarter. assuming you be it low fourth know What maybe segment,

John Sznewajs

a inflation single at XXXX for that Overall, kind take digits. was that, me think of high crack I let Sure, Adam.

we As specifically to year. of so it of do in digits for from the first first could look we double we we be first be [indiscernible] up ramp do modestly at to look into It paint, half XXXX, part XXXX, the could XXXX. think the if That of the you XX% low half XXXX. said, impact expect up the

the So, to continue inflation we at the are this of first in part least expecting year.

Adam Baumgarten

Got it just those margin Kichler if just you thanks expansion are paint down Decorative then and overall, quarter? year-over-year margins isolate we the driving about in the talked fourth and

John Sznewajs

not margins paint year-over-year. No, down were

Adam Baumgarten

it. Thank Got you.

Operator

Thank you.

from is the Mike next Our question of Dahl RBC Capital with line Markets.

now line open. is Your

Mike Dahl

shelf line think stains, impact? think taking having standpoint? could top And and these whether on in but aerosol, what know about be you magnitude now differently keeping questions. from paint adjacencies Keith, you it's of the to comment remarks corks. from that the impacts margin impacts, neutral not said you couple stick wondering for in of about having profile Wondering times about Thanks mind wanted opening if the my will sense with are if I when dollar we that comparable cost or little margins an on margin bit any give a your that’s a should we inflation, margin a paint. of made space within getting some guidance and those some I us a sort in wins

Keith Allman

and at it's strength momentum us it. not that brand, spaces win of more serves to getting really brand. for going highlights builds to these paint overall compared Billboard not I'm aisle margin now, about of of of these least as we're additional Behr overall it to business, into our specific wins, most and the into the really What big excited in it that Honestly, a I'm get of a is the regard the overall what and in terms with of for the breakdowns the size

for of little not as back of kind getting a the recovery costs only, price that, you to margin, X% cost the just the math, to but about only to XXX on In terms a price margin erosion. bit the it of envelope relates equates points of basis of we cost increase give cost margin not in recover relationship where

the compared for the kind for very mentioned. challenges new dynamics looking gives reasons the they're that I that we're you now, that we think for positive large of wins, So flavour in but a I the not The to segment overall us have. at

Mike Dahl

that it investments step Plumbing get investments investment those is year-on-year it's Okay, a in sense, like other us quantify décor, marketing. sounds great, on segment? thanks. and think kind whether yes personnel the side, from help we investments Can up and by second makes when look of standpoint there’s around how both My or question you about

John Sznewajs

one, that continuation back of on Mike back Yes, putting it’s that of just pulled XXXX. the into on the business during the some investment

about I $XX actual the in back So, terms the Most -- to XXXX modest of from in in investment and its room made but XXXX, the business. say into going Plumbing of some looking I'd as go here. for be terms to segment, I’d of of that is the to talked along million in investments, amount, we we're into and go we saw we lines. we of terms significant progress it's wouldn't put ongoing the dollars a dollar say investment say, those as from

Keith Allman

to make have the for Yes. in return We're back these keeping getting as end Mike, the on sure we're a investments them. we eye, close

XXXX, So on up it's still a sales simply SG&A XX%. increasing as I historical in our we're we SG&A spend percent around we're in keen like should would that while to hover back of think the about levels. area just not our jumping

of investment terms a going. bit -- I you about about where In think you asked talked little is capacity, that

revenue. on end of that and Our CapEx number We've been the for typically X.X% lower a years. averages of of between X%

they that capacity For our but period, side priority one as least come that online risky The the we the and have the projects for in. couple return that probably years, announced will of range. we'll our business. probably XXXX It's to be that large next have on one in the high time of in said the us capital we reinvest most we've best confidence number it's is That's get. allocation always we

So the be and it's coming over the years, put couple will a these should -- the said, end investments -- as us will next towards capital these higher of be spaced for range years. of I

Michael Rehaut

John. thanks right, Keith. Thanks, All

Operator

have from line of ahead. Lovallo we one next the John The go Please with you. Thank UBS.

John Lovallo

Good and my you guys thank for morning questions. taking

of just or sort And million reaching normalized you're speaking incremental you off clear, of, there anticipate just Mike's, on that? the that SG&A first contemplated $XX they to to are in of run investments top that is one, when be The dovetail of would that rate?

John Sznewajs

top probably probably that the half be incremental still XXXX. it. that we'd run not in year. how going no, meter of see in demand just And -- back John, the investment to of on say we up that's Hey rate I'd be going we're on to for we're as shapes

John Lovallo

helpful. we at the the of year, coming That’s margin which in, strong how of the think that with very through? the should it. potential the with plumbing of end flowing Watkins sort benefit to backlog got Okay, backlog And is then

Keith Allman

our right around for point I'd guide XX%. you to that think, overall the I Plumbing

John Sznewajs

point that of you through than I that you XX% business, John, I your Yes, pretty year. XX%. volume yes would that closer flow the to consistently Plumbing, look through just given expect business, it look say if that strength maybe as at to the correct at And the will would

be just north us I'd us margin, no -- to that there's So of -- XX% but say achieving going that that a to it's to backlogs. given going it's well not drive those strength contributor to of it's

John Lovallo

Thank it. Got you.

Operator

The the next Maklari have you. Goldman one, we with line Susan of Sachs. Thank

is line now open. Your

Susan Maklari

come you. supply continue backlogs ability any the in backlog? Thank and but give as My of of chains us oftentimes sit can everyone. color up inventories recognizing where Good operations, share sort most your first extended this improve? just to the as the And across business is, into question the have don't that these commentary on some the year you thoughts you on you morning to of catch

Keith Allman

made a of mixed We've say, a it's bit improvement, bag. I'd little Susan, but

and bit we're so for close say different the upside, geographies, we're we little a little I want getting to speaking, say. the a across tailwind there's fairly but really, would still of represent But generally that us. of look little channels you that where a bit would bit back I light, If might be, products, to

Susan Maklari

longer-term right, can bit little all continue can we as housing with where trajectory feels go helpful. we terms a a the term through. about are businesses, you about we the as margins, like you of certainly overtime? then the stronger It talk that’s longer the backdrop think go of in And business to over sitting especially Okay, think the

of time a How can will those and You're obviously do kinds lot go? that mean company-specific of efforts. what new we for where think products, over around doing about you initiatives things

Keith Allman

very liquidity to austerity keep year last beginning a have some point initial what throughout the a willing the of you much time demand, years to spike will, the that where look fairly strange first in where back where couple and their inflation they a I'd really them their sharp to this of program eye had and a and how what these or were they if in the at say invest people meant we cut the with pandemic been pandemic home of with and times, view over to -- to different wanted significant to on home obviously, COVID feel.

has couple been for So obvious. it strange sure of to a past the stating years

in good, base talked we've will points ahead is we in volume that to drop growth. growth, a the those then improvements XX% about As margins like over and of in past, in business, cases, for It in look come that rather the going continue on into we're we our to and earn our hundreds But not some the of have forward we investments, way invest come continue them. And come down to XX% basis improve the And to that. time. improvement fundamentally, to modest but are pretty chunks. our in mantra will

drop the to move our think So about we years. about we as the incrementally forces, about think need through the improve to the in we're invest as -- committed future we value expansion of think down, growth, competitive margin slight we

Susan Maklari

Okay, Thank helpful. good you and that’s luck.

Keith Allman

Thank you.

Operator

the with one, Jefferies. of Ng Phil next The ahead. you. Thank we line have Please go

Phil Ng

start some kind Plumbing. on back to the you're how XXXX, to look back, and an time? to to inflation seeing of stays really pull the were Any the give you we kind appreciating think John, us progression on out get of a steady more margin is range year? And lot handholding to then over segment, opportunity XX% about there guys. to on when that DAP color trying assuming Hey probably inflation that not

John Sznewajs

of the the faced think just of second and QX. I better to a couple year about, year, in Texas Phil, XXXX half both the some as the some soft Decorative in to obviously going you our things. freeze for in line had the impacted as the as we look One, largely you half that cadence last pretty from you comp of XXXX, at growth as tell line I'll the in top well during the we bottom our our you're challenges quarter progression obviously, of compared in of headwind than and for first back in as we the in that quarter, year, the But given XXXX of our put the Architectural so significant pricing due second QX see that's year to relatively XXXX. XXXX, think of that the we as the look segment at

the it's to cost comments about some recover the of we that inflation, going progression that you again, of as for recall the As impact I in think margin. dollar XXXX, both the about, margin Keith made and

go would don't as we segment, to better And through of compression, probably think so the half depending more really margin talk really I half, inflation the be the much and we weighted that first see than mean, year. where expect we it'd about that see I probably I openly all back will be getting -- really a with impacted very on goes. more

recovery given seeing price we're we margin a we of how bit little on see we're the probably that's cost that about talked action that the we though did very with it side, And quarter, confident the -- So as compression XX% about think earlier. paint now in just margin. fourth

Keith Allman

is static environment. would that Phil, you tell this a I not

first have be, price/cost our quarter going fourth the plans and think to alluded in come we based quarter, be things, static. a get And in where I John to inflation XXXX. to we commitment the we certainly we of that, going quarter. the that and those in in to material is fourth it's ability I as the all still demonstrated XX%, high have view overall and inflation had and mid to back we not to the of the here teens neutrality the on but mean, think raw that's we've

and So continue here, need some there through them. we work moving parts to are to

Phil Ng

Keith how When through be in about the for your the you're little you're of fair. managing year, rate inflation, mean markets, parse Yes, think how thinking a business? more kind versus sales think much full I that's to is seeing your volumes? price guidance insulated? And way Curious lot a of we your that certainly should that. equity lot any out of you volatility so business a hikes, about impacting

Keith Allman

you on hit nail the head. Yes, the

peak. trough, of and reduced resilient, the made less we to Masco, distance peak cyclicality So changes less cyclical, peak time, to significant by less have more design have

the really So we've that is for. what changed and portfolio built

interest So price debt. we with believe versus particularly existing the more repair mortgage the and home and it's demonstrated appreciation, market and remodel correlated with many consumer projects rates, like that home R&R turnover, not with confidence financed is

there's of think good factors. So homes, were are from demographics years insulation concerns believe dynamic the homes, provides the you those you but about to And then back to starting alone age of to age X.X, we of remodeling pretty we the about some that, X.X to period building occurs. that now think structural significant time million where number XX XX to rates, XXXX juicy that when and XXXX that kind

their that impact in, viewing COVID how in I talked structural the house, millennial about. So and as plus cohort people are of terms aspect coming the

the So and in pretty terms interest consumer in we're that depends work now our rather rates the good portfolio through on we than feel designed of portfolio that what shape. that on

Phil Ng

Any out parsing color versus volumes? on price the

John Sznewajs

will both say in environment growth, inflationary I'd in XXXX. this I'd Phil, to Yes, say contribute

Keith Allman

John are still the it. be segments, majority said, of volume we But price looking yes, both as but across will at

Phil Ng

really color appreciate you. the Okay, I thank guys.

Operator

line have of the you. next Evercore we one, Kim with ISI. Stephen Thank The

open. now is line Your

Stephen Kim

here. related then I so Yes, million mentioned I to appreciate if up make believe to just it. paint, sure of just in was by I that was that thing comps goodwill what to understanding you just want much, impairment $X One want to? I wondering sequentially clean that a was and things I thanks I couple here,

John Sznewajs

expect yes, Sure, we inflation, you're terms right, of do Stephen, additional in here. placement from

see We to we dioxide inputs, continue resins enter XXXX. and are to inflate titanium both as continuing

that continuing expect in increase do to be we to So XXXX.

to relates out goodwill to the Kichler. that took charge it was we As related impairment

it performed. that and impacted and the in enjoyed has the tariffs then While had in and the inflation inflation impacted growth both improvement both in is profit XXXX to the the result as business year. Kichler charge improved how a We XXXX the noncash nice, determination productivity some took and the team with business, like it returned like evolved appropriate business business, the has was we place actually with But overall value made how that in XXXX in performance the to the fourth quarter. what of initially and the of starting the with lower This carrying the standing today. we how said, took

much we better positioned. business so how this feel And is about

Stephen Kim

this point? Okay. at Is Kichler in goodwill remaining any there

John Sznewajs

There's of amount a remaining, goodwill small that's Stephen.

Stephen Kim

Okay in great. year a trying could in increase, at stack backlog the multiple on to and looks have your it pandemic like then but kind of in top a cadence, related Plumbing, pretty also cut look wondering, in -- when your you through business, think I line, seasonality year-over-year year-over-year sales fourth through the you we quarter could nice basis, particularly just I to walked gyrations, the too. growth normal that there's some And was were

plumbing? be that in the the that there made in organic terms we of think, bit throughout year? kind growth you think stable And the looks of that anything like, there it of QX. curious, little growth, I should would of sales particularly chunkiness kind be pretty like sales in a will just in So the case Is

John Sznewajs

second meaningful be there's should stable little I back better year think the pretty maybe Stephen. year, half But new, It first bit there's throughout half, in huge a make with driver a the don't a anything between of distinction half. the to not

Stephen Kim

helpful. that’s Okay,

much. thanks Okay, very

Operator

with the Thank ahead. you. we next Shmois one go Please line Garik Loop Capital. of have The

Garik Shmois

question first, my just inefficiencies related if and absenteeism COVID question. short-term taking you're pronounced XQ? or for could any that to seeing here the but XQ focused impact thanks wondering for any production Hi, impacted Apologies if there's

Keith Allman

the and the just so it's the increased to with an And the that. that with struggling data, our in still seeing the base see. elevated wane, it towards remains I that year fairly we're is challenge. recent our absenteeism ongoing but half and factories, what some happening at it's in looked typical variant, that of well, are But of as supply starting back of Omicron appears we'll Yes, country would has rest we and seeing. say, I

that to of ongoing our to think manage approach type our there's but it, that out got this, best it's figure we've is -- ways absenteeism this challenge, approach to and I continue, I no expect an yes, question. know

John Sznewajs

comment more comment. was a that Garik, QX a QX of than

Garik Shmois

for on pricing. question Okay, clarification. is great, Follow-up thanks the

You talked offset about some costs. putting through recent to pricing transportation

increasing drive you enough about wondering particularly additional does through your the guidance the assume or for paint. from pricing to that I'm that inflation, talked already You margins if need outlook? just your in here assumes put all actions the in also pricing is going be to

John Sznewajs

particularly XXXX. inflation likely but mean, the in need need we continues. Garik, we're looks we'll into I that price Yes. pricing actions put It like go to the further we as mean foresee for to what I date, seeing, some of we've of with lot a --

Garik Shmois

very much. you Thank see. I

Operator

Thank you.

Cleveland We have last question, and one time would be with from for it Research. Eric Bosshard

open. is Your line

Eric Bosshard

a what American Plumbing think in year. slower North I in was Curious you. was than Thank the growth seen the strong segment, in we've XQ

channel and or mix Just on into what specifically business? curious of fill XQ seeing that in terms consumer product demand you're business that XQ, in in go or in

Keith Allman

it remain continues to Yes, strong.

down significant seen, rate, markets. mix not we to reaction into the us have will, put order our you a And as relates have it and if importantly, the that incoming the in others are solid. backlogs a Our trade price to

So where we sit pretty it's stable. now, right

Eric Bosshard

That’s had. you. I thank all Great,

David Chaika

the in today's Masco you this continued joining on and your call. That call for concludes morning. Thank us interest

Operator

This concludes for today's conference call. participating. Thank you

disconnect. You now day. Have great may a

Masco (MAS) 8 Feb 222021 Q4 Earnings call transcript