Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen. Welcome to Masco Corporation's First Quarter 2023 Conference Call. My name is Michelle, 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]

to Treasurer call and like Chaika, to now President, Vice Investor would turn over the David I Relations. Please go ahead sir.

David Chaika

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

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

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

Our materially statements statements performance, are our the from actual that about These which risks to our our and uncertainties forward-looking statements. today future will include subject could statements. differ constitute to forward-looking cause views results

described Securities in XX-Q our Exchange and Factors risks our Form in the have Form disclosures these uncertainties with Risk and our filed and other and XX-K Commission. that we We

also will include statements Our metrics. non-GAAP financial

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

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

Keith Allman

challenging. you Good for executing the X. well in for Dave. and our environment to supplier-partners and year remains thank employees of us morning, you, and turn everyone, our I'm today. Please Thank start joining with thank Slide pleased want that to an

costs in uncertain the the of new times. at on in by our winning launch breadth our products with economic time, are We the customers, managing these same to expand focused recovery continuing engage and our brands,

operating in future decreased offset volume, strong against Volume a down lower for primarily XX% first actions while slowing In investments profit partially demand, this and quarter declined volatile in period and quarter, our growth. continued the the due pricing the X% input XX%, to top higher was of comp. costs, line by of XX% macroeconomics

of margin decremental delivered execution approximately Our strong XX%. a

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

Turning Plumbing segments, further Plumbing North declined X% and the service and Both sales and currency launched leading strengthen International Delta XX% in to declining X% new Bath businesses shower as Faucet consumers industry American such industry to their respectively. local American customer Kitchen American brands, Shower, Delta each continue Plumbing Plumbing Shower the Sense North and products our and a at Steam customizable International with In North offering show, new development. more product and the experience. Shower, Digital Delta our

portfolio Watkins top These even Spa at competition challenging our experience redesign spas paired offering. products In show, business, our furniture Watkins sanitary product help business, International selling plumbing features their Plumbing enhance to with the In in its Wellness of ISH, a believe have Hansgrohe a market. launched bathroom new new the world's trade exciting including that faucets the HotSpring's and Highrise new ceramics premium outperform consumer leading of complete launched will we showers. and the

to and is brands, well development construction sustainable share. segment bathroom Additionally, to connect Plumbing of fixture gain their work. our innovative the need the the their environment With market our products. which Hansgrohe concept type to products, generation with any consumes highlighting they the of less energy, XX% global innovative in-wall strong major valve, introduced displayed that of a plumbing on diversity, commitment iBox water to for allows and positioned next and focus without continue study their also of a installers geographic

of declined space shelf into XX% In their in XX% paint the and for against declined of the in the Decorative digits. and Architectural products programs quarter high to paint comp a strong and aerosols, DIY tremendous launch expanded We comp. segment, sales continued XX% XXXX, a paint as caulks with mid-single sales stores. applicators such our categories digits and industry-leading sealants, our adjacent PRO services quarter and recognition declined Behr to received Turning against additional customer single these new interior gained quarter, as satisfaction. over stains,

Dynasty lineup rated of site capabilities sales the in loyalty by the to programs. increasing We people our for number expanding summer additional PRO line, the painting invest Exterior paint delivery we season, Behr Dynasty and to serve and launched better expanding one adding continued reps, capabilities and our job painter

in rating category in interior recent the paint exceptional and Lastly, service number products, and study, two Behr demonstrating in the brand, number Behr third-party quality paint, the a earned paint the our satisfaction of of our performance. the one rating exterior strength

our balance and capital through $XXX to repurchases X.X shareholders back million returned dividends we in for bought quarter. to we share flow with Turning and shares allocation, sheet, strong million the as free million $XX the cash

our our inflation, markets persistent rates, the remain we we consumer adjust spending. interest and results, solid to increasing turning outlook Now of as cautious XXXX XXXX, to and for in to while quarter remainder first expect softening trends delivered tighter demand continue

this lower and In margins environment, focused on volumes. impact from we adjusting uncertain costs of the our are minimizing

hiring We to investing of to have our win of plumbing one plant staffing reductions. the approximately recovery with manufacturing facilities, announced of our in new the balance select Spa reduced as delayed cost we down freezes opening we with closure enacted have We the and headcount and continue X% have year-over-year.

strong are we XXXX range for taking the our environment, to deployment be to we anticipate share. capital $X.XX per to uncertain to address continue actions continued share $X.XX of this in the dynamic and earnings per the macroeconomics, With

are conditions near-term believe remodel our challenging, of While fundamentals remain market the we markets long-term and repair strong.

of and as a factors such such believe We their structural follow. appreciation years in for age remain XXXX. to and will stock, in as equity will and factors, consumers homes remodel the longer, housing staying the home repair turnover, price cyclical drive headwind Those existing activity increased likely high home home levels

the to like our of model. and strength of power I'd of you remind Masco business focused the

market cycles. arguably stability the paints have Behr with KILZ remodel leading of repair portfolio building and with Delta products strongest and primers. industry in the products brands and plumbing product brands Hansgrohe provides and diversification, in industry Our geographic portfolio and We of through in and and and low growth ticket

found Our consumers to want products shop. everywhere are

are consumer satisfaction insights evidenced evidenced able execution the powerful margin our expansion operating volume and to leverage index leverage. customer and customer vitality look This Masco cross channels. we and drives and drive leading And our as numerous to through customer by innovation productivity through across by We as awards. all operating XX% service satisfaction of system,

products, quarter, of the low in our near to capabilities brands, long-term. in and demonstrated and will outperform to the As ticket value remodel cash in continued our first positioned on our flow for focus competition long-term. our executing deployment, strategy, both drive shareholder together With and and capital invest oriented we with to for the creation portfolio continue are the fundamentals repair and we our people, growth strong favorable free

to his we will at take invaluable his best him all turn selecting a thank investment of tenure the organization, moment John, the Board, XX John the the his will future over the but missed partner, our Masco. to I to I are leaving we me, not John to his successor. and May end wish and us be during call community wanted and in of years company. over the been for service be endeavors. has in He process only with an entire of to Before He the

and in to a candidates engaged have strong as external well. firm thorough conducting have search internal a assist We search

in M&A financial While with process, risk Investor our analysis, and Masco's Dave management, Vice the years' we has CFO. starting investor adding as President, and appointed complete planning been responsibilities and department, Chaika, Interim company, Relations, this relations. experience treasury, Dave Treasurer our XX has progressively additional and over including

to commercial Navy. the industry Vice Additionally, Masco, in and President Dave officer banking an prior in was a U.S. the

final to go John I'll quarter first and John? over call turn Now detail. the to outlook over XXXX time, for our in more results the

John Sznewajs

everyone. you, and Thank good Keith, morning

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

Turning to prices offset Lower by by selling XX% in quarter decreased decreased decreased sales XX%, volumes sales net X%. excluding of Slide partially and X%. X, currency the

strong is seven XX% resulted that expanded in now lower the American in XXX we have first cost significant North in basis execution in inflation local decreased years. This gross the past the points expanding gross as quarter are quarters Despite the over our X%. we XX.X%. we've recovering sales absorbed sales decreased volume margins margins International currency. time to our a two

was our to brand Our due as was SG&A higher meetings was sales million selling higher costs of $XXX sales partially profit and XX.X% of support operating marketing investments by margin prices. Operating impacted first and higher investing such input percentage trade our innovation. growth lower to profit in net offset a by brands, volumes, service investments as and and shows was and strategy XX.X%. growth quarter Operating in the

$X.XX. was in EPS our the Lastly, quarter

sales local This started demand volume, prices, slower decreased offset and in sales to and Plumbing lower fairly X, XX% the by XX%, sales decreased decreased against continued based experience partially by demand sales which currency Plumbing that increased Slide across by product quarter third decreased American to Lower year. excluding selling we net was The in of in categories driven count was quarter last the XX% North Turning X%. currency. broad the X% channels. X%. by

in an is demand X% backlog currency International European markets many now has sales as which through decreased and over for Our from in demand worked products. XX% segment, Spa comp the its XX% approximately local significant softened the That spike XX%. of business, against the generated China. Plumbing declined in

changes plumbing For significantly did our positions during quarter results. impact inventory channel in overall the not

lower was partially in prices. XX.X%. of investments, the impacted in by a Operating margin $XXX decremental and million resulted margin XX%. volumes, profit by higher Segment operating an quarter higher brand net was operating selling of marketing first This offset profit with

have remain levels, costs, declined from peak elevated. container overall input input costs particularly costs their While

digits Architectural high Decorative robust paint the in DIY of high XX% paint declining sales the digits to XX% Turning sales comp. sales the of X, single first quarter XX% against the strong decreasing Paint XXXX. against declined digits. Slide decreased mid-single over quarter for with comp single sales first PRO

Keith space interior such shelf our mentioned applicators. we aerosols, caulks sealants offerings and product adjacent and with stains, as gained

capabilities growing in along to we market. grow For large are PRO to share paint investing our our continue and with this in partner joint

operating our profit was was million XX.X%. Lastly, margin operating $XXX and

lower Operating costs, impacted by profit volumes selling was prices. higher net higher input offset partially and by

costs, in labor the remains we input seen input have such transportation continue and elevated. relief other overall paint input basket certain sequential to TiOX, and upward as experience pressure modest costs While costs,

disruptions Turning chains With XX-day at end working points million with With anticipate approximately improvement at of supply an quarter the prior $XX.X% declined expected sales to continue We in sheet XX.X% and XX, has balance as net sales this be strong quarter. $XX million of percent of as XXX volumes basis billion $X.X in at working sheet approximately remains we a net Working percent $XXX ended to of net capital improvement reduction. debt was with the X.X operating year, EBITDA year year. of a a Slide and our balance and the times activities capital to capital, and end. an to lower cash from compared less improve liquidity.

to repurchased million for During the $XX million, million shareholders we $XX first through returned dividends. quarter, shares X.X

discussed the second year. half we with anticipate As year towards we share acquisitions fourth full million more on purchases activity of quarter the the $XXX approximately to deploying our likely for call, or weighted

Lastly, million today we on have matures loan the on retired our our borrowing revolver. by that remaining term $XXX

We borrowings quarter. third will during outstanding revolver the our repay likely on

and rising Now let's the the of yet in of and had believe we then fully rates, year; inflation consumer outlook out however, tighter to the a XX We review have the better delayed to planned for the economy. play start persistent credit our spending impact in face turn to lower Slide year.

full uncertain our maintaining the With we outlook times backdrop, year this are these time. at as

in with of Based margins sales on by volumes down planning be currency approximately are is partially this projected approximately our At minimal digit XX% a For XXXX decline range, on offset we this we Masco single to expect double have XX%. time, for pricing. the assumption, overall, to digit to low low impact XXXX results. operating

as levels below the pandemic. a normal during percentage SG&A trended of sales Our

a be to percentage for continued discipline, to our around business for invest back cost we to normalized growth, XX.X% to maintaining pre-pandemic level more we However, expect as future increase XXXX. this in while

As our costs we take to year always, as develops appropriate based the will on conditions. actions address market

expect margins be approximately flat at margins year selling XXXX in we costs In margins of range segment to offsetting will partially plant these favorable full XXXX segment, our XX%. volumes and We headwinds. pricing set Lower the decline the to impact XX% anticipate up will roughly XX%. plumbing sales with increases Plumbing with

In segment, to to our Decorative expect range sales Architectural the decline we of XXXX XX%. in X%

our PRO paint recycle XXXX. DIY growth growth, for propane high single digits anticipate digits our business to Looking specifically we XX% at mid-single paint in paint we as to currently XXXX, and decrease paint over decrease

our margin largely Architectural of actions Decorative dollar due the year approximately segment is in inflation. will XX%. and This amount pricing full to this recover to be typically anticipate We significant

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

capabilities coming We are impact our business, in quarters. in people also have in future a investment planning XXXX that growth to and in the on increased will greater PRO drive paint

Keith as EPS estimate Finally, remains effective average to count This mentioned for a tax a $X.XX. our $X.XX the year and earlier, million XXXX $XXX rate. XX% diluted assumes share

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

to is years for continued our bittersweet and in and conclude, and colleagues his friends I everything and a success. moment to thank I keeping company's my entire the look XX I want for forward of Masco XX over last partnership, with for growth Masco Before years. team to take the here Keith watching me. Leaving touch board the

Dave is a capable very executive.

together have together we have years, more won't team accomplished leadership everything CFO, best his and a of luck Masco under in for I new as know at that finance worked Interim the and We the and I'm XX a the wish in of than proud team miss future. role beat the steady

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

Operator

sir. come go Barclays. ahead. at will Instructions] you, from Bouley [Operator first Matthew Please question Thank Your

Matthew Bouley

Good Thanks along want morning for and my John. wishes questions best to I the to everyone. pass taking just

to implies of the sequential ahead full your across balance guys given for So the now mathematically you just guide spoken so guide, margins the margins the came overall year. improvement the had lower on previously and outlook, margin first in quarter of business, year margin the

sequential still lower? either segments just you. is improvement question to Is is, margins margin my So could is take conservatism? that that still there or something in out path there a Thank there

Keith Allman

Keith. is maybe I'll and could add this you detail. Matthew, off Hey, John, start some

in vis-à-vis range. think incremental you margin volumes volume, we've and are when And detrimental that volumes, we, about XX% our the when volume. XX% outlook, as XX%, think really talked I by it's performance to the driven around in past,

a is what's fundamental that our of So margins. driver happening to

I strike and thus to talked business. we uncertain invest in to costs that our managing it's remarks, prepared in my to a to continue demonstrated here as Additionally, of and these far do endeavor we've our in times, our continue balance also ability that, we but we'll that do important

continued So advertising. you'll in and investments see marketing

added to haven't terms two trade happened sales For significant example, this quarter, to getting material we our investments an had more years. that in for We're of when shows, many us which continue as drive. up together in organization meetings

top there's So investments volumes. headwind the on additional that we plan lower on from of experiencing

year. there's to and hopefully the taken then take, we driving here mainly into quarter. quarter, on bit what's then margins of anniversary so see that and the But we the of little we'll third counter that you our pricing second look pricing little a the those actions we'll as that a idea thoughts have gives an And bit in

John Sznewajs

to color, color Matt, of add just And further comments. Keith's to bit maybe a little

we would that every through improvement Our see quarter year-over-year was as sequential year. the go prior really statement we

convey and of cetera, QX of And what to year as rolled better last was this be than so, we year out. et that et intended cetera, would QX year, QX, the

know, so as at margins little bit And because margins comps get the the in the we, a get you look particularly of forward, the easier we year quarter. half back little, fourth a margins going our declined

get quarters the of the it be but in where think than we can at each we here lower And will we're so here, there yes, from subsequent for QX.

Matthew Bouley

Gotcha.

clarification that for John thanks Thanks thanks. Keith. and yes Okay,

mentioned little if detail kind finer I'm shelf you the load just impact curious adjacent color on in Any that was Decorative of Decorative or of your a you wins around kind a some in can that in there question, second put that. space So categories. were there in from margin business?

Keith Allman

into get end We're very to margin not these going on load on is of specifics the good. the the

stores, caulks Home really that some as and it's partner, about fact it's us. that by Depot for it talked it's the and we're stains, working, the of We've rolling tribute on of a we've to to the evidenced out the think I good been the a Behr and main our working additional with products sealants, applicators, team Behr us. effort successful. so brand the liquids, Clearly execution, business is good portion and but good business obviously our the this the strategic out It's their for and it's in is at for and building. it's team and business been

Matthew Bouley

thanks Keith. right, All luck guys. Good

Keith Allman

Thank you.

Operator

Lovallo ahead. question UBS. next at come will John go from Your Please

John Lovallo

my the quarter above well year XQ the margins I quarter, are is downside for mean, questions. mean, dovetailing I only it thank in let's help but quarter, first first and sort off case that the frame demand you out? I you guys, first XQ the of flat I shake those XX%. mean, of we're mean, full just morning say and stays actually XX.X% where could generally through taking and Matt's and Maybe us there, outlook maybe relatively question today, margin know upside could where Good there. the the I if from is

John Sznewajs

Yes, John, feel in. Keith to free start maybe chime I'll and

because initiated, but the as year. the significantly pretty also you subside Keith you say really pricing starts pricing and So did will subside back to to through lot and I Matt's strong we'll as QX benefit just you a know, some John that year. benefit the Keith obviously X% alluded QX performance go of that's as the lot have half of helped, into this of answering question, in that mean, referenced. benefit price some go kind been the A deliver in we got

pressured expect do you away, also benefit impact know, that some margins. volumes on will So year. with that have that be to we this mentioned going Keith And

here back were in half the first last year strong think If against year. year half of softer about in up the the the comps the you we're volumes

down. continue we to So expect that

last, of So the are half specifically the it. to with portfolio, making. got entire mentioned to and will XX% very line initiative. kind in expense being the overall Keith the on I additional that and create that invest down, that some back we've the kind headwind investments couple initiatives weighs And up we're but the year in starting facilities then some that a our us. And we've across PRO paint of to top we're guide continuing got that the got we've headwind in of think programs is, fact

So that, of pressuring all those are things margins. kind

remain of that? know to there there could point. if flat there and Yes not upside question, be if Now Keith, don't that I your be expect but you… and remain model some to could at that's the volumes anything this we're forecasting be there's I flat, volumes

Keith Allman

got I Yes, it.

Just a to bit. little create

I think decline. the the could had declining potential upside we quarter. pressure nice volume We we where in that is if margins on didn't see volume the some see execution the

commodity done decremental that pretty Our typically would some dropdown range, a in that do potential we've job is we or if quarter, QX. and come we upside. when can continue be Really we good were down. XX% They costs There's where And in to that always that look of first that, this haven't deflation. opportunity at seen they to in for an elevated. remain

going think our in our costs. the invest and uncertainty the we giving right and given watching in brands and in So place while driving our watching, we're guide the the, we have continue driving productivity to to macroeconomics,

John Lovallo

sales Home level is a we challenges mean, sort about If know, And guys. here. you force? where dedicated bigger to enough what there? biggest effort paint there get competitive growth strategy point get, where complete helpful with there do what mean, we as PPG? Depot, are missing You do How, of how the specialty That's is shareowner I jobs? needed maybe in PRO more view? think to at of it, I do Are sort we to the it's of high products see your Okay. elements very a then sufficient the question the

Keith Allman

think tell PRO. in of would two I think growth I are as evidenced competitive XX% year we I stack you, Well, by

product You don't where our being is. I offering get that competitive. like without

strong right Now certainly we've have as points can make and there we price continue is offering, brand. to got we to the tweaks the very a but

in we happened base of prowess, when it's over been to, supply is painters. extraordinary really growth, at that get And chain what's last we've about the look able So our years couple had more customer because the hands the execution. paint when to we've of this our

regards very the And how view significant and to seeing customer with promoter total partner, it's satisfaction product strong. what and we're and scores and have both net Home the with our they our service data offering Depot,

to and and the the delivering. to continuing proposition right is our the and on price have continue to challenge service right So continue promise brand to execute, deliver

looking I what think think we certainly competitive So been do we're the the as challenge. it's has have by tough but to able we're and evidenced competitors, team to I forward

John Sznewajs

what you, point just cut maybe there. Yes, you I sorry to, John, add to and to also off can out

can a You this business. call $XX to sized, a a million $XXX look at We've that's market grown in the billion. business. take billion to It's $X it

we're the two front So a and strength -- powerful presence opportunity that the got future that everything of companies. in only of relatively grow like market, because runway $XXX combination the to done, a team the how small partners, product, quality lot years a the our this business, just growth great Keith I and Depot. that that Home along very said It's for channel positioned, we've to people, overall the though not the we of has it's us million Behr think the of what of we've about of the even with our coming with in is continue the the combination initiatives, over the a everything -- got

gives that opportunities lot us think growth of we for forward. going a so And

John Lovallo

so Yes, I you even as to just that guys. I have probably appreciate competitive, even, should Thank more color. competitive opposed said being

Operator

Mike will at ahead. Markets. RBC Your from question Capital go come Please Dahl next

Michael Dahl

seem environment and the we're seeing lag there's in to the the effect of questions. of some Good specifically, some, all I part that how that about second color you kind little uncertainty at whether customer the your plays a quarter, your your the evidence a Keith, stuff remarks more in whether behavior notwithstanding my across of trying businesses? the of there. seeing you're Can morning. little into significant comps, you're in us opening seeing Thanks you're month hedging for out a XQ a any comments out you've you're and what of start half. think give and on maybe in in around guide recognizing More the economic change bit caution seen, express more taking the

Keith Allman

Mike, yes Mike. sure,

that I'm As about a for there's if bit there if you know, new month-to-month and or where load quarter was reticent in a looked product talk in prior of little or the period as fewer to lot days a of variability there a those things. a had sorts launch

we in the coming tend consistent quarter. how exited quarter. stick out April, to tell of through the bit did and we see we So it's that that you the softening I will quarter little fairly a to with

the not pretty trying quarter what it's of something out is to we're we're So that than signal of really, came consistent. really seeing different what in terms

at in at how beginning doing opinion. informed about saying. volatile right one what a look lot we're we're of we'll, as second It's in guide and quarter more more of that period understanding and we're and quarter. look in-quarter an how quarter times the the or at we'll a the we all we're or volatile just sort and have It's in we'll That's quarter of at, the now. learn a that this extremely we'll any Nothing answered

Michael Dahl

get costs half, costs, terms then the lower expect inflation the you I the over And give highest pure in enough and XQ? terms of in as on that clear on to from the question, think of fair follow year standpoint, of you think little second some progress of I just carryover maybe cost a the a go sense. could the price makes commentary half through a that similar the us back would back year XQ of fades, sense then just out we somewhat and first in how more price in that's trajectory but then where Okay, price you

Keith Allman

the good some job a we mostly done I the anniversary We'll of that gave think price little quarter. in pretty we've recovering. -- in significant second

-- it. we've I there's will into significant volume. it margin is pockets that the an in relates we further we where evaluate second year our But as price the business and it of increases increases last anniversary come think the message continue dependency on is the we'll price Plumbing to gave need I fundamental really of the some taken the think that and half to

John Sznewajs

what year, would at Mike, we've to may it's it's I of from the are, guess And it's been I last Keith levels Yes. moderated the of in sticky, peak, kind add maybe quarter have moderated, comments while inflation, inflation moderate second than expected. higher

this And how that I so, than a last hovering price be should $X year, weigh it's about into pound. it's still time the still year. you costs, for higher to cadence copper, better while going you it's think yes around mean, ultimately look at

seen like cost stated of and paint little we've our TiOX. levels. pressure We're elevated prepared remarks, things we some of is, our like a especially bit Some inputs, in mentioned kind seeing some moderation of still

an flat is is which of be in we So, kind of higher. the for higher thought the I would about probably calling now XXXX, overall it Well, to say impact. year. what that's we're at inflation than, beginning here going And

because of like So remaining to costs transportation be labor inputs sticky, high other continue to continues be high. pallets,

be, said, implement in here we've going to still first we're the part, seeing probably Keith sticky fairly As it's selectively while inflation.

Michael Dahl

thanks and John. Keith. helpful Thanks, Very

Operator

Michael from ahead. comes at JPMorgan. question next Please Your go Rehaut

Michael Rehaut

the best you Great, luck morning And a in pleasure thanks. been and it's future. with working John, everyone. of Good

paint a questions zero bit guess to little my both that. of the on I wanted I are on question, First in centered segment. kind of

bit or of And getting possibly promotions when marketing, potentially more would a terms any of or you response little heard those backdrop. about investments even the or in We've the quarters, about If coming personnel that of could spend? talk aggressive. investments Williams in competitive fierce? other the you competitive is a if about to wondering in over any concentrated First, segment becoming types brand talk be Sherwin where more specifically lot overall I'm either potentially the backdrop

Keith Allman

paint, for too extremely response a well. was PRO, ago, also competitive in to, quite and not proposition competition We've and so to when We $XX solid stack, going think the since the really where it a very we're of the And so up two after. last DIY going is said, we aisle million I to as in we're we've particularly we've us going a million growth, mentioned plan continue have we that. that is as have painters continue investment we're that investments, that business about continue drive our XX% invest as in strong. PRO, in going to better. the set Certainly and it year PRO isn't to The good in we're fared but segment invest grown and Mike. And talk the Thanks long to we're you makes and in that much out that. this to $XXX John strategic about

I'm to today going number things and going continue get force, delivery like what done continue those. options site sales specifics capabilities not loyalty store, to things to to our the we've online, forward, Behr at net developing we'll in There's plans PRO expanding but delivery, Home to invest a ordering, more our of do. job our our do to already in at it of of programs. continue that promoter Depot. have and we're where grow are our strong outside continue we the buy certainly and Enhancing pickup expanding we and with done both What to we've into develop in going terms to service scores and

to in a we're business. to it's going and So share. to we're to invest faring expect it gain continue well, competitive continue and But

John Sznewajs

to if your one specifically activity. decision. overall to in them the I'd been that price months, will that's direction decision, has it question the think say we weeks, or related the promotions competitive that's be our of perhaps of the one, see moderate the we partner promotional we over decision, industry elevating think year. we level we that in, to support similar we a decides promotions, promotion will and address extent don't but selective choose They're -- Mike, but last have our Yes. not our promotions, continue ultimately but to and they there component coming channel marketing To their that's product offer a maybe to their go, pursue in and fairly And whatever. to escalating

Michael Rehaut

you promotions I lower color helpful kind And view guidance for I and secondly in quite on as trying you've guess taking would of standpoint, segment be several years. on a I'm enough. your seen appreciate That's this than year maybe just what Fair just the the well. Right. a very longer term margin term matching margins that longer from the nose, that that anything be to just much the some from up versus say contraction actually dollar that's inflation of decline, triangulate, that much structural? of on XX% of to how let's the right from cost pulling consider a XX%, XXXX, might XX% here margin might average of XXXX how drives

given profile, of I'm lower higher has over a a In asking if the other and know about next example, we terms are in but there DIY maybe bit at near words, not, changed there's this, of or to paint how I'm margin should it's the that's investments the years? little think has five margins three if term, I for that in anything don't just the and smaller least than or business

John Sznewajs

Yes, take Mike, to this feel chime and Keith, start free a in. at I'll

the a some of would price for of margin of cited consider vast cost put got, course we've majority margin that over lead couple be you headwind said a amount that sales years. that if price have that in, the a the last about And a that you we pricing bring as relationship little double compression XXX the in differential a generation and contraction accounts There cited. of compression will look will the you in consider we XXX basis you to the the price there's on so the increase always that So because, be new you think and if bit sales force, take margin headwind as XX% results put Mike point that cost we digit at of it. ahead before, you we've and about that if to are of to you investments

a couple program cited because job the of would a people, in Keith and the other a things. those bit things not in differential that little we've So like ago. some investments the site margin a probably minutes There's PRO loyalty -- significant be, that of of delivery made there's capabilities,

create margin, the we've be headwind. there's bit that got. And headwind a to if of bit I so that and a But a anything will be Keith, it's going little recovery of a else? little bulk of relationship the price

Keith Allman

continued the PRO. investment volume price the dynamic, and the I think cost decline, in you recovery it, hit

Michael Rehaut

Great. Thanks much. so

Operator

question Adam Please ahead. of comes Zelman. next from Your go Baumgarten

Adam Baumgarten

good everyone. morning Hey,

of XX believe being quarter. margins, overall margin or still decremental all? around thinking the the XX% were about year Is changed that decremental and quarter that range last balance on the kind maybe low talking Just of you're at you that has how you're the I in piece, about, for first

John Sznewajs

Keith that were keep and on cost XX% our to remarks, our more our to the have on could control our and significantly mentioned on working keep forecasting, XX% focus year. around them keep we're hard level. decrementals prepared his this an to working as around or But decremental Obviously decremental Adam, than impact we're things we call could that margins you change in and deteriorate hard yes if on were volumes keep it.

Adam Baumgarten

the building think in we're thanks. price just so that Okay, Peerless, market, week not XX the price maybe increases products? I a that's was in speaking increases in hearing broadly then by ago, And given it and it, out being of accepted Brizo just or on got how wondering Delta, days lot in just a Plumbing, there

Keith Allman

it's the understandable were getting behind we've place, a think is what increases, and competition ever about it's in when And we've also but think to and experienced. price look pricing that bit quite I well. at little I all in hear done, the what we understands you no been inflation massive so through happy going channel the that it's one has

Adam Baumgarten

Hey Best luck. great. of a lot. Thanks

Keith Allman

Adam. you, Thank

Operator

Susan Your Please next from will go question ahead. Sachs. at Maklari Goldman come

Susan Maklari

wishes the environment. about question And cost first my is speaking morning. Good best John. add My to you. let Thank me

fairly a the make are take would investments? more set next to obviously of need You've you add cautious actions determine tone watching quarters. you confident to the But to there as specifically or what at business additional looking if incremental within what you're you couple

Keith Allman

and in there's U.S., fundamentally consumer order of China, terms GDP our really would of of at, we terms we rates. that more what see view internal at action increasing POS but confidence, incoming triggered Europe, look sales, home those by existing are prices that the externals in an and suspects equity we terms be look home think external the in better-than-expected an in I usual external and home Susan, data

that's So think time that's on look look we to it's we having maybe having on And the key, on plans those the rhythm flexibility. And based of would at that's really investment what those. key is what that activation at we hey, there's course, seeing. say, to I have -- market shelf different a points the and and

Susan Maklari

were And as the take about Okay. in when late then and well in as think demand? environment it approach banking you the quarter, consumer terms side and willingness in we March, the in the the some any through Plumbing outlook of as or about change retailers on thinking events inventories change the there seen dealers Paint to Have the there. that in the they're their any came tone how really obviously both to and from season the lending into

Keith Allman

not all. really No, at

want think was seeing we pretty inventory, I we selling point. Plumbing inventory. bit had inventory restocking of think a our little for this we the level our business leaders season to for be across when positioned good say of look that demand I'd -- spring ready in the small. of think we're put and Certainly, channel at was position, we're it I our wouldn't segment actually little bigger wholesalers but terms In I some we in material, more where say it a in

of as to inventory. some down hesitation it turn anticipation no or real in relates sort So event of

John Sznewajs

I What to through there is and be a only little way to ripple kind event. and event going caused Susan, so us unanticipated some stance our -- caution that probably outlook we the also of bit would be to unforeseen going forward that's economy the that digested more or add is say, did because could effect our there's that

Susan Maklari

Okay, you luck. Good thank much. very

John Sznewajs

Thanks.

Operator

go Your Please Truist. next question at will come ahead. Keith Hughes from

Keith Hughes

Plumbing. on Questions you. Thank

and Spa categories subproduct the out in called decline business or the size, it's quarter? and there channels in outsized the volume quarter. any You affecting other are the in declined that Are

Keith Allman

question, say you of a You The again? bit, there your other little broke are just Keith. any Could last part that up channels...?

Keith Hughes

the first products in in their or Plumbing the are of that business terms Yes. the in outsized Any of quarter? in channels fall decline the

Keith Allman

showers, pretty some XX% the product some When quarter we say But you're right, at bit were been retail some of for in exactly pretty the quarter would broad-based, Keith. of held projects, through some the run as I But backlogs it's maybe look we that of experienced Spas, working bathing earlier to growth. little a better that's the categories it's and three-year from to in but to after we been fixtures, bigger on a now XX% consistent. decline have Spas, and trade and in accessories consistent taps pretty consistent trade, up

a and new our real Spas Spas refresh of it's in new line I just been the it's best-selling So the period total strong of growth. fabulous. of launches And think

really us going that's challenging relates decline. consistent to it environment. pretty Spa help been business this but compete for think as the in it's I to But

Keith Hughes

we a really even units? that's hearing if notably that, not for ex unit across in the of notable why tough rest business the even channel Plumbing pretty still pretty Spa, on are the lot periods. in question industry in of second And it's known What decline a has in out fallen of cyclicality the the off you an

John Sznewajs

a the significant comp I the of last volume. year, said, kind Yes. I to degradation that comp would the of up in you a fact beginning, point in first is against for quite from quarter That mean, segment. we've pretty some Keith, were X% this we seen strong

up the big that just into decline so, last from quarter the of the the number think in year. year, some volume that against plays of saw I And we first

Keith Hughes

thank you. Okay, alright,

Operator

Evercore will from ahead. at question Kim next Your Stephen go ISI. come Please

Stephen Kim

you. we're But a margin lot, John, followup best your little to to on And luck. of going a commentary. Thanks miss I bit guys. wanted

sequentially improving Delta crystal year-over-year the a that year-over-year that on through year. basis, I about think think basically, margins talked the just be clear, to you I really

a saying. So I XX.X%. across margin that you're year-over-year both want this understanding kind that seems of also, make progression hold than And operating will sure better just to I'm imply to XQ segments? true what

John Sznewajs

would go so year. cadence could sequentially we the segment. the of commentary back of Stephen, the by we year-over-year -- the I is a I because a the QX of what that, of expand better margins in back said be the ability might in into improved us. be gets We about margins your specifically challenge bit year-over-year we But year, because last commentary half mean, just half right. sequentially, as say that didn't give we the bit company is to softer for a a by things of posted on basis, total,

Stephen Kim

that XQ? saying XQ you're have comparison not So you better in may versus a year-over-year

John Sznewajs

played Yes, hasn't the but could quarter that case. the out, be

Stephen Kim

Okay.

things than extending is is I into would are longer maybe about there talking -- on? envisions which we or duration maybe commenting of longer that duration previously about outlook, had fourth the So Second, a be environment? worth anything your a some guess, anything thought about challenging the you quarter,

Keith Allman

seen. of be There's remains a that volatility to lot

as into this next and enter is certainly to seen. remains exit we year current year, Our we'll be that growth go that but thinking to

Stephen Kim

Thanks Okay, much. so prefect.

Operator

next come will Your Baird. go ahead. Please at Wojs from Tim question

Timothy Wojs

an that if getting good pretty going kind on second kind quarter of Hey everybody just kind chain? kind know supply about John, on everything. back year you good of Keith, the the talked seeing an what's I update have through just the and that there? on going of better update the side, and visibility of Plumbing in on and morning, of half on having the Maybe may us what give you're good luck be on on you can just

Keith Allman

frankly around, there's better the Yes, say than still executed in chain some that do. would as we've first quarter, has come supply to Tim. work expected the I

I'd base. better getting pockets in of all We with the have say it's But supply all, a the eased have volumes bit. of as little tightness some

improving, are et rates cetera. delivery Our productivity,

So I getting it's would say, perfect, all in, it's not while better.

Timothy Wojs

Okay.

And most mean, the then the comparison. think about QX the the Plumbing business change the year? how thought, business over thinking course I was reason And difficult have you're I I on actually performed any it than International maybe is, I and good. within of better Okay, would that just the business, to ask

competitors So business, your just kind you're may then and how kind cyclically thinking some that competitively Europe of there? of both in with of about be

Keith Allman

It's is a there but been in will expect look change thinking business, the held that more hasn't up to than it declined we strong of -- we're thinking XX% tell far. about what we've have comp. volume the X% I pressure as There's end a year we I it nicely. the through International really experienced to you way against that about how the are so we really think And

kind that for this how environment, digits. really we strong. So of in single high about year looking the think that's at overall When to we're down full is be

But top far. are there experiencing that's experiencing are expecting so what -- our thinking. a experienced we've than not -- line we are environment tougher little a we change not So in

Timothy Wojs

Okay, okay good.

John Sznewajs

terms doing taking outstanding team competition to well share. most had is of we asked doing you are the relative job. We're Europe, Hansgrohe definitely in very competition. an and in Tim,

Timothy Wojs

great hear, Thanks to to hear. great that's That’s guys.

Operator

question next Wolfe Please at come Research. Your Truman go from will ahead. Patterson

Truman Patterson

those might any you are I that think you over mentioned kind costs the cetera. stuff on to half some in back the And marketing embedded brand investments, able and of then might there behind investments, at way of is this quantify some margins have you the weighed working I'm that with operational been that think great it's years, in Plumbing you over op the the a labor, pretty Hey, sequential good ramp in quarter-over-quarter, been nice past the you discuss and future. transportation, of there's can John, good years, of margins the everyone. luck be largely be et that point? plant Do some morning hoping of all you couple the some ramp. year? chain supply inefficiencies

Keith Allman

So job order. the good getting efficiencies our a has done of team in

and volumes of on to effort period go, shifts the that a an volume variable as in depending balance run. know, that well is our you how costs our work where we declining ongoing As

we've years team volatile experienced fixed last the got quicker like behind is they So the associated would honestly that amount say couple a you're after environment inefficiencies done it's and our and a the work that in -- when I would. are than of little significant with of thought never the this. us But I

the was positive a that So in quarter. nice

a move spend continuing the In start-up new that our plant will we're There specific in terms have, of we'll we costs forward plant start-up. some be with. European -- that have moving to

of drop volume that a of So down would that And little the the and a reduced driver. is main then headwind. be bit the

Truman Patterson

and year there the believe Okay, than way you this said perfect. a flattish, And months you John, were segment? Any Plumbing break materials quarter, were expecting closer of higher bucket might you you help that? to like be ago. deck believe But then, inflation should that can little three raw think to any expecting kind to by out you flattish. what through last us be be digits art down bit low is it I single able overall way I

John Sznewajs

but I Yes. levels high like hasn't I'd Copper we're copper still say on thought. that seeing prices. continued, of guess, come down we moderated

there hanging thought might still it's a $X. We it little retrace in more. So bit

upward than is have on this with bit the pressure. well at higher The you other are expected TiOX would I side. Those a facing thing turning little we would paint point tell as input

little forecasted a stickier bit the side more would the Plumbing And paint having perhaps things of I ends, on like we months on ago, side. some than on segments, so on think both seeing I say, pressure being on should both Truman, we're the TiOX initially upward inputs three

Truman Patterson

the Good in you all. Thank quarter. Perfect. upcoming luck

John Sznewajs

Thanks.

Operator

Your ahead. final go Ng Phil come Jefferies. question at will from Please

Philip Ng

thanks fair question the the the for Hey R&R, sounds spring congrats not there's has months? Dave, and in construction a guidance John, guess in guys. on in well been on the your demand I new it, amount the my necessarily on and appreciate all least in if And largely see how congrats, excitement the, view year factoring a to as the at for demand perfect the as in you, is you, and progressing and partners' season, role. help back all appreciating you're you last me of squeezing like for Curious Thanks and perhaps of help, much the do selling Keith, read-through, on but year year. outlook kind this perhaps this few side? it call demand changed half step down your of new channel

Keith Allman

year at you fared, much. guide compared when changed it's both QX really It hasn't our segments. across Yes. And consistent look to full pretty how

So quarter X change, we're really. I'd in. say not lot of And a again,

Philip Ng

a out? mix little And end could anything we're if standpoint, have on to the helpful. back you Okay, curious the maybe in and more call mean, hearing half high macro least at the of want impact nuances then of the any in up mix from what is better. mixed market I the holding a potentially? of you're margins, seeing backdrop that especially year kind on But

Keith Allman

really doesn't either. really guide material, any that down little impact material, mix slight They reflect anything but the bit Europe Plumbing. Phil. down, in our net and trade haven't in of or not a we that, trade seen for beyond A But maybe company, significant seen haven't

Philip Ng

Okay. the guys. help I appreciate all

Keith Allman

you. Thank

David Chaika

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

Operator

Ladies this you lines. thank conclude and everyone does ask please to this gentlemen, for that would conference like call and your We disconnect for your participating morning.

Masco (MAS) 26 Apr 232023 Q1 Earnings call transcript