MAS - Earnings call 3 2023 | Masco Corporation

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Operator

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

the Investor to Relations. turn of Benedict, now and FP&A will call Renee over Director I

You begin. may

Renee Benedict

Thank you, today Jerry, David Relations. Corporation's President XXXX and CEO Chaika, good morning. Quarter and Treasurer Call. Welcome Masco's Conference Vice With and Masco; me of are President, Allman, Third Keith and to Investor Masco

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

call now, for can't Following call analyst [Operator our open remarks, (XXX) we question we Instructions] at take directly the your please will me If questions. XXX-XXXX.

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

Our financial statements metrics. will also include non-GAAP

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

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

Keith Allman

everyone, us thank joining you, Renee. Thank Good morning, morning. this and you for

Dave Chaika and accomplished team in and thank stepped our would support. into finance position finance new onboard fourth have an Rick years leading appreciate I who take also is we joined successfully serving XX several Westenberg, over into interim excited Before and during on organizations. look the to of him with opportunity to CFO XX. Dave as this forward experience, we We're to results, XX this our years months. Rick I like CFO, our greatly last February. the his time nearly get in led welcome the earnings quickly to quarter want this call more global to for to Rick participating Masco's transition, including take October than team executive

turn With our go top to challenging we favorable to Please of model was results. the power saw environment, down by of demonstrated despite partially Volume Slide offset that, In quarter third which and let's a line impacts decrease X. our quarter, our earnings ability business execute each. X% pricing actions the third and currency to XX%. XX%, a

cost quarter. $X resulted operating While price/cost sales were continued savings the $XXX favorable an down focus driving million and in in million, only of decline relationship a our on initiatives profit

of This operating resulted to margin strong and X%. in profit decremental expansion execution only of XX.X%, XXX a basis margin points

grew the Our per quarter share. X% share earnings $X per for to

in to plumbing, In declining XX% China, our the retail demand with soft expectations. our Europe American of segments. our with with plumbing stronger the markets currency remained channel. Turning North declined plumbing, local than international International in XX%. channels trends in Plumbing and each weakened key and and wholesale line demand e-commerce In American North moderately sales overall performing

single high our expect plumbing full international to market down for be digits continue We overall the to year.

our plumbing was performance we deflation strong This commodity significant and driven quarter. by in XXX Despite actions, margin XX.X% American line freight basis savings North the third plumbing to successfully decline, cost drove the points margin particularly top initiatives, expansion pricing in of and business.

and complements network. SaunaXXX, product acquisition Watkins offerings industry. of a acquisition infrared sauna, This our in our bolt-on dealer strategic the completed steam and expansive spa wellness business, expands wellness leader leverages the also We

strength the a low X-year of comp single segment. the Behr have digits we pro mid-teens XX%, Architectural of service. significant our the painters demonstrating is captured XX% Decorative comp our share basis, a through exceptional in sales in commitment our third market brand, our sales products paint DIY the to digits. and the to Sales Pro paint declined over quarter. declined XXXX. of double with against quarter quality Turning low paint On declined stacked pro

Together a opportunity paint grow the to market. continue The have believe significant our Depot, in share we we to partner, with pro Home

recognized The we a Additionally, honored The to Depot This as marketing Year. of creative our our Innovation are XX-year Depot. and Partner Home Marketing recognition that partnership Behr was the is XXXX testament campaigns with Home

capital allocation. to Turning

and We a continue flow the during free sheet. cash significant balance maintained quarter to generate strong

capital in $XXX buying balanced the through including returned million a shareholders for we deployment $XX XXX,XXX strategy to million quarter. share repurchases, executed result, As on dividends our and back and shares

our With share per me, to be execution, $X.XX guidance we excuse of outlook -- in $X.XX to from $X to XXXX. now Now share, per remainder for range our previous for our of XXXX earnings strong up $X.XX of $X.XX. to the turning anticipate the

lower near-term the remains controlling the remodel managing of volumes back our on XXXX driving focused stay can the what closely least to While we will demand each repair of costs, minimizing and for and market levels XX% at segment. in uncertain, margins by impact we

and and We market-leading geographic believe through products, innovation remodel stability low-ticket brands and our diversification cycles. positions our portfolio and us repair our of for growth

These when We over people we to look levels, the believe housing investing are include of high conditions stock to staying in the committed fundamentals we markets brands, remain in remodel longer homeowners of market and longer. growth improve. of strong homes repair supportive capabilities and the age our home their long-term strong drive term, As our and growth. equity and

our fundamentals, our and of continued growth deployment. with and execution favorable cash strategy, With free along flow successful capital disciplined the

our outlook, fourth we term. on the well updated long an view We over business are longer call, the as as our margin of well our positioned expansion potential creation the XXXX to drive quarter provide will On value for term.

driving our our I'd like with excellence to conclude and hard shareholders. and you delivering work their for to operational thank a to employees customers and dedication for

Dave? to detail. turn I'll results over outlook over Dave to third Now quarter call the in go XXXX and more our

David Chaika

good everyone. and morning, Keith, Thank you,

performance other items. will my rationalization mentioned, comments excluding adjusted Renee and impact As focus onetime on of today the

in excluding Sales decreased International X. XX% decreased and and, Slide currency. in both to decreased quarter the North currency, local XX%. American Turning XX% sales

helped XXX operational drive margin gross to basis efficiency on continued Our of expansion points XX.X%. focus

a as SG&A XX.X%. sales percent was Our of

decline profit down $XXX to Despite basis points sales, our volumes, XX.X%. resulting X% strong of million, actions, lower to operating profit share. XXX and and $X pricing quarter EPS third costs slightly was per by to expanded operating only performance Operating in offset due This growth in in commodity initiatives, margin year-over-year. was lower margin freight and cost-saving the

This a received impacted segment event in weather Lastly, the event we Products an in insurance to quarter, to for coating adjustment. paints to that has the products. necessary materials weather produce our ability the manufacture suppliers' raw significantly from in settlement our related certain results severe in as Decorative Texas This us excluded XXXX. Architectural and third non-GAAP our settlement been occurred other

volume in continued offset decreased decreased XX% XX%. selling International currency and to XX% American by currency, plumbing X%. in currency. Lower increased local markets XX%, X. quarter partially sales soften many excluding to Turning Slide sales by XX% net sales local China. North as demand in the and, decreased decreased decreased by European Plumbing in plumbing prices which sales sales

had to year-over-year, the third quarter was up by improvement actions, and late due in offset XX.X%. our SaunaXXX driven the pricing partially and lower costs impact points was profit Operating initiatives, XXX completion million third closing volumes. to basis operating minimal of operating by $X profit The million, lower acquisition our commodity and margin expanded on results quarter. Segment $XXX in freight cost-saving

in in digits third single Paint have with clearly the pro gained Turning With a for pro decreasing XX% sales third declined the sales over past and a share XXXX. X. Decorative we mid-teens high X-year mid-teens sales the digits of the Slide of X-year comp retained years. to X sales quarter. over Architectural low and quarter comp we significant single sales the XX%, comp are decreased demonstrating the paint against pro

and expanded Operating partially XXX basis $XXX saving profit was initiatives. operating profit points margin XX.X%. Operating lower volumes, impacted to by cost million by offset was

low expect in single quarter, in modest with paint digit quarter starting deflation fourth deflation to materials. low input see in digit certain these also are relief third raw costs we We on and the modest the single

for anticipate with fully digit basket inflation. year, full continue inflation material raw we half paint the half first offsetting not For to deflation our second low single

Slide to XX. Turning

operating sheet capital net as Working capital days balance end improved X.Xx net debt-to-EBITDA quarter XX with prior sales lower compared by XX.X%, $XXX year. XX a million, was this net $XXX liquidity. With working at year-to-date at strong approximately and basis improvement sheet days, activities working Our percent improved million to due remains to an and of of in from of improvement balance billion cash to $X.X points primarily capital, inventories.

for conversion to flow We full expect be free year. the XXX% approximately cash

us a shares for XXX,XXX the quarter, During of repurchases the completing repurchased lower SaunaXXX. acquisition as million. the approximately of in quarter were third we $XX Share result

and execute approximately deploying to the to on capital continue We for year. our million allocation share full anticipate acquisitions repurchases and strategy disciplined $XXX

acquisition the of year-to-date to deploy market quarter, share expect fourth year to up $XXX our million repurchases $XXX EUR of in repurchases share for for subject $XXX approximately XXX million to SaunaXXX With conditions. the full million. repurchases and approximately million, bring we approximately to This share will

the let's Now updated XX for Slide year. turn outlook for to our

For sales XX%. continue as and range to top expect developing largely we our in Masco the overall, to decline line is expected, of

from full our year we margins execution guide previous of year-to-date strong approximately with increase to now be our However, performance, XX.X%, and XX%. approximately expect margin

range X% segment, In XX%, down to to improved we our from down XX%. expect expectation XXXX XX% our to be in of Plumbing of sales the previous

margins to to to in XX%. approximately previous of Decorative to the We down from full we and guide XX%. be XX.X%, segment, year sales also X% be In of expect increase approximately range anticipate the Plumbing our improve continue Architectural

improve cost-saving and of our due approximately approximately expect decorative XX% guidance initiatives. increase do margins we previous However, to XX.X%, our to from be

of EPS we effective to Finally, to as higher our strong year, for from slightly $X.XX, share $X.XX guided quarter. now earlier, estimate million up count diluted our Keith to This assumes share XXXX than tax is XX% XXX previous guide rate the average a million XXX which is our mentioned $X.XX. $X.XX execution, a last the to and thanks count

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

like questions. With open to for that, I'd the Operator? call

Operator

[Operator Instructions] Rehaut the line of question Our Michael JPMorgan. from first of comes

Michael Rehaut

the trying about we increased begun on trends to we look throughout material the benefits should into the as materials these raw the think benefits cost saving initiatives to with there's if of driven drivers any of you moved as zero cost little as guidance way really a to they've about on of in or carryover and accrue as saves and as any how bit And well about kind and to each perhaps margin trends. wanted the think specifically by think outlook start XXXX? either I XXXX, raw higher

Keith Allman

it's will that a we've of a and The XXXX talked into going variable are that. main margin momentum culture margin cost that that drivers in improvement small on execution continue. plumbing little the productivity, side. Mike, the to in We've about have, demonstrated past clearly bit we But So plant and about our do closed. really, cost continue of continuous that fixed we've

productivity So we've driving. got good initiatives we're that

XXXX. pull-through year. benefit And they we're price We've that's expect to that we of a executed had that to and us 'XX, the in lower year year benefit are now the course, for by full now of benefit as affecting where into if getting last stay into be and full that increases change that going or even of this full midyear of us continue. large some maybe side here would well commodities third quarter leading we've And year

us the there think and we've coming us, I look got is will be here we summary, in into that quarter, for 'XX. margin as momentum for some in through So benefits story this good

Michael Rehaut

of at so trends. was given be competitor existing Okay. point, given that's at expectations that thoughts if talk I in on we clearly, directionally it. still based something kind entering overall at had the point. characterize But at for early you thinking kind wondering matches noted, at how trajectory know headwinds home and of around expected. you've guess, appear secondly, current down depressed to we're play XXXX you've the in of be how about kind kind way kind I you're of seen XXXX market this as point out that demand largely backdrop. as the least of if has played appreciate again, far this to the out I about this turnover, and you a sale 'XX as least things last slightly and place night I the of shared XXXX some

Keith Allman

quarter on our Mike, call in fourth Yes, more we'll be a on February. as said, providing lot detailed I view XXXX

thoughts and assessment here initial that based sharing our would seeing now of of on in as In I market some we're the perspective like sit what terms we our 'XX of and on that our flattish order our to what of a to say in 'XX looks view terms looks is I'd patterns agrees experts it R&R. industry be going for flattish say, year most and economists, with -- us like today,

have think are little We low. consumers is up, still rates XX-year I stubborn getting being sales that, and existing pinched holding by what are a at home about a

the would So fully in R&R generally flattish environment, it's for view expand flattish. grow going and expect speaking, say, our market and to And of XXXX to that is be I outperform that we margins. in

brands and We Delta the leading have Hansgrohe. around globe with

better China, priced position gain and some channel have lower momentum new our in strong particularly is than wholesale leading holding our and in up in premium China. demonstrated our segments products have the share positions, We our with pipeline, which of innovation and

and our continue continuing behind we've we're that see pro that, to paint. because will invest ability So share demonstrated initiative. focused to and That we retain on in that you grow are

So a that line drop-down I volume, demonstrated in drive will in enhancement. outperformance environment story, margin think flattish our momentum, we're on together focused margin incremental margin execution. with strong with And top market our

Of keep on the to productivity, operations course, hallmark our culture. lean cost and we're execution continuing keen is out our which a of total focus

so that the as in market, a assessment outperform -- -- agreement longer we I and So in here think we in of today, 'XX, to we're flattish intend market. sit general with

we talked be is in pent-up spending rebound R&R a term, housing longer of We've these, the due normalize stock, prices, think and significant there equity strong demand importantly, to when what fundamentals. things R&R believe for the believe that home about we strong age strong spending. to I levels

So win in continue drive recovery. 'XX we're above-market growth it's on I to into think to it. a brands, ready to invest And execution, going our the go feel based demonstrated and service, good about volatile time. we're our to and innovation And in

Operator

next line question comes of Bank. Joe from Our the of Ahlersmeyer Deutsche

Joseph Ahlersmeyer

your margin but added know out. didn't call I you top the in dec first for arc line quarter I I wondering, at was you if where you directionally, quarter give, least price It in could like the price look if the to it and in disclose don't was the it wondering maybe segment, didn't quarter.

David Chaika

specific we're price. not to discussion going any Joe, Yes, on get

flattish more was in little overall price So Masco a for around X%, decorative. in plumbing, roughly

about As cost price we've in we neutral many over be times, time. tend to decorative talked

fourth material bit have seen We price some Likely, headwind sustained raw a in profit of deflation. could little the be dollars. but maintain here quarter a

Joseph Ahlersmeyer

Right. That makes sense.

as so a the XX%, I Because mechanical on the giving that getting And back down, to the deflation as suppose, way the that's price. plus right? benefit follow-up, includes, you're about back talking margin

David Chaika

But is of to we I back the driving If think it's I things. driving that up XX%, on margins the when from to side about more could initiatives, about a and help. XXXX improving you levels there think more growth. margin cost price, talk growth -- we're giving cost focused driving savings relationship end deflation productivity getting of inverse we about if back do and -- really

Operator

line comes Reid question the Wells of next Sam Fargo. Our from of

Richard Reid

though of wanted dig of force. next this thinking And are your I and paint. paint guys, job us leg pro engine a you bit little from terms there's the on here? delivery you give been what year. initiatives, to on maybe little a an your on of maybe site of update I'm been great out where is building touch growth a sales in back It's some bit for in maybe Can you pro get understanding growth specifically.

Keith Allman

with we that now it's have the we for long now. and really the is focus business, it also market a a we terms we the hard paints aisle around are that's our start when at paint our has material. piece we already us. quite important of think contractor think of we story started. put pro our today cost question, story proposition a that really paint And when of to Home quality look Depot. And to small that Sam. the on and can, when story about that the the just was been at that and half a is We And that total and volume, segment really too things -- Thanks for innovation other value paint that wasn't And it's grown when the our The has and great in our and are with decade think I works. in shopping And contractor. who lot of overall and our It competitiveness, work Yes. we've in you and story be it's just brands a Pro where does focused couple for this of business. in getting we a the strong been very ago -- staying for

small relatively a for. that share that the market of focused have going We we're part of

that go some The the today's Promoter based that the So are Net closely. with paint we've to look very had pro space resonate date success nice there's to at to success that on Scores white after. and we continues

making a benefit share It's holding it's the about benefit. an And experience that It's it service. for So the continues. the a that pro reducing we're go to to has these it's on process about not and to contractors focused because value through. an easy painter friction onetime easy and

focused and is is a big -- the service. on we're drive significant silver spend benefit. doing bullet hope are of to we looking amount staying that the It's or So more money to think that same is going going -- there to no and of we

We to pro picking significant ordering. includes of includes Behr still So delivery. up room Depot. have options It the expand our job course, our sales expanding at at delivery online which, store yes, sales and both force, that outside in site and Home includes buying

our We programs. continue to The enhance goes on. loyalty list

fundamentally on tackling to the blocking service opposition really [ it's So prop and delivering contractor targeted and the ranks ]. about a

In mean, we that getting we have terms are look when early of today just the share it's I we buildout, the rolling. we're share where you innings. at the have, think in that and we potential

Richard Reid

paint, one backlog on helpful. here. maybe touching on No, that's more And more

you sizes those sizes. but So pro relatively do And sense customers? to another pros a on have little that sit smaller finding a project that keeping still just paint your bit just Are where for mixing as then maybe busy? you one backlogs maybe are project

David Chaika

that the at in worked through on normalized Sam, backlog, backlog of probably the really we'd say past couple painters It's Still pro but the much more a at a normalized demand decent backlogs level. general significant a years. level. over more

little project to don't In difficult on, hard terms a little But up stat data of early for have handle a back can't size, this that. probably at bit. get a that's you really point, -- a maybe anecdotally to that

We a significant size. haven't ticket really in seen change our

Operator

of the comes Bouley Our Barclays. next question from line of Matthew

Matthew Bouley

expectations. It Just a markets. your further? those be Or that was one guess on there question risk was My I weakening in the a do there guidance But with found is, kept bit weakening line international correctly, And you some already in like markets those sounds you unchanged. would you markets here? those heard think if I market. trough to have international

markets And play on early how next some out you just R&R year. thoughts international you any if color since into may into gave curious those have on 'XX,

Keith Allman

you're the Yes. to stability. coming up volatile we are a period or where time terms bottom tell of Matt, sure. you're in on it's for if It's always tough

a economy In softening Europe, in pressure. bit seen international. under have Germany's We little is of Central

the we in we've understand soft I expect to continue. and Of talked do be expect China QX. should happening about we it say, do We softening what's to course, there.

Hansgrohe is resilient. very

in share gaining Europe. are We significantly

conditions, team Europe, higher to of in has work China choppy some doing fine markets. and gone but So market in combat also to growth continuing penetrated to our a holding those the grow up really just and in only not job

favorable I'm down and coming signs positivity. in it beginning of see where 'XX, that terms we more basis, we out a of some calling of going the gives lot the see into to but not In region-by-region Europe, to demand terms of of steady on get specifics me are

David Chaika

Matt, I'd We did the just right. markets you're declining. add, anticipate international

of in stabilization. but our little are Keith's XQ that deceleration saw or here expectations. it a stabilization. signs there in it's certainty the with a call So a too there roughly And point, signs are was trend, line yes, I'd of early definitely to we say to

Matthew Bouley

it. Got

there? Okay. second curious weaker means seeing on And promotional It of terms on that like What it your might of activity. paint deceleration in you a level for might Clearly, DIY sounded little what then that one some to in side, at to impact the relative plumbing have bit. that of out kind address the trying margin kind you are decelerating channel. how of retail seen retail have a outlook? might And wholesale. I'm the been

Keith Allman

Right. today, our it's say applies Where sit it's around fairly in that not only also have to some what would plumbing sales paint, do periodic that past. business the been been we but holidays. meaning we with to consistent And I

We some in we any large, has low by the spots. But new really it not -- significant in and environment. have promotional price change not seen have

we we funding choice. don't. and we choice. customers. participate that's the in sometimes in that And really, is Obviously, strategic their others And partners with then But are our a

really time change of that's all at seen really this in promotional up to we So at this environment. them. haven't much And the date, a to

Operator

the Our of Lovallo from next question comes John line of UBS.

John Lovallo

Was mix still you headwind The in terms is, of And see in I did the it mix? then X% geographic through first first pricing, was internationally? one plumbing half. terms plumbing of think a what

X% in you quarter. the it further Are move into think expecting as tapering third fourth I we the quarter? was

David Chaika

but quarter. are price further that do now some take we in We head the continue analyze selective our increases. year actions Yes, we annualized this price fourth the let into the earlier tapering larger through, the quarter expect increases me we our Yes, fourth of take majority plumbing as as in will John, pricing. majority the did of

smaller saw a bit but of what we little XQ. a be in will benefit than it So

Keith Allman

some impact, mix not seen real but a mix business. in mix have our the material we geographic On mainly international impact, side,

are we China. resilient that's in a premium to our it And We like position more We player So Hansgrohe and more the brands. AXOR think feeds strength position, be consistent in. a into that of position.

international is in gives a be little China [indiscernible]. pressure when geographic nor in But little to that And particularly under bit bit general, more us of market overall we bit quarter a the the it's than expect year. throughout do the little A not mix. material it

John Lovallo

Understood. was XX%. What And paint segment sales hardware down sort down revenue drivers down there? coatings then and there? the high business of single digits were what was declines and seeing much were and the we're total How of the

David Chaika

Yes.

the Our digits bit down businesses a to little more be segment, type little John. were than products. hardware lighting a double more DIY-oriented tend They and

bit a coating aggregate. more our back products pulled than paint they So and little in

see did we softening here lighting softening, hardware sort and we businesses. XQ in of more -- the on So but consistent did softness the see

Operator

of line Adam of Zelman. comes the question from Baumgarten next Our

Adam Baumgarten

backing sequentially, kind margin think fourth or into of quarter big seasonal. maybe bigger Just down typically of kind Pretty maybe I step the guidance. than

on kind anything note terms in the margin headwinds there of Just side? of to

Keith Allman

But some No, see our color Plumbing talked really international that. we've to provide as such have bit that thing. maybe can the more of on various mix fourth We have some little beyond perspective. that could you accounts That from add We typically costs slowest a can and we've quarter compensation more segment in true headwinds. what sort nothing may on headwind. Dave, in accounts, quarter do our a of fourth up the a about. little that -- seasonality come bit is

ramp factories. of bit bring little and new we our -- a started got more We've up up aggressively to

plumbing Ohio Columbus and plant We have outside have paint we facility Serbia. new a a in new in

little full as be the -- on going earlier the about that in expenses 'XX, to there then our you 'XX I've year it's strong driving will that I think it best incremental and share be talked think margin it's this when and call think to But there to margins relates more a headwinds. we're where think and growth. I So about about

David Chaika

uncertain think Yes. I remains summary had market. Adam, Keith good It an in a general.

as faucet our caution center both in paint So manufacturing but startup fourth bit we probably continued Heath, shower as potentially decorative well as anticipate online. in there quarter coming and our in from and pressure negative costs as a European some and do the well plumbing, of little distribution plumbing online side, we volumes, on have planned in coming margin with mix facility Ohio is lower the

Adam Baumgarten

That's Got then POS quarter and at on retail into that. throughout if willing the you're it. Okay. share just helpful. And touch to maybe if trends October, you can maybe

Keith Allman

to Yes. of and in we're We there's from respect certainly as the quarter to varies. and don't that load other within break it sort down of like really and lot variability comps products a thing, terms I'd With in POS, new trends. some it of say seeing fairly good

Operator

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

Susan Maklari

the a of X would in step rates business? lot of to been look last higher, obviously you focus How across consumer their the taking on and back, My thinking and the about move kind or is, ability first the a maybe as there's month characterize today spend as question housing you

year there, either that? could up what next positive kind come could or for together maybe are that suggest for that we with where and shifts about on thoughts to negative rates as down potential the any or And change, and of either think things

Keith Allman

look When mixed we degree driving in did fuel it various that's we as heating last anyway, it time than I'd to Central was consumer, to been relates a -- Germany. Europe, systems clarified, pullback now more nonfossil we characterize for in talked legislation by Susan. it's Europe a noise in it's with bag, there there's some the a and it saying see and

bath that's like protracted say, to what out And thought with be on, that's they willingness taking of in legislation. as sort the XXXX. for to they're going that was to concerned now consumers' spend away systems heating looks some greener of It projects remodel pending and putting thing

So that to to consumer start we expect come back.

the in So is and later coming the will, a pullback, the Europe, little in consumer was you game kind Europe. now if as back to and of

up holding us. U.S. the fairly In well for

say. should expected, As I

slowdown to is I where pretty of And accelerated whatsoever. your there's and will, bang sees large, a impact And the good a holding the if driven for us think, out for in light any and in it's the seeing not our still in painting we're the that you faucets changing a buck, of investment is consumer. and I -- in yet uncertainty, seen consumer full and by I lot volatility But in relatively that's inflation, So products. the consumer by inexpensive room fixtures, think and again, the home. in think be it's

where to from that's on if the to want. puts more expensive and with that everybody the do can I it's work tear working back to you And wear do DIY, paint. And not a fully in and that go it. think not home, office, going you

I that has us. think combination So helped

David Chaika

would I of significant in clearly been I increase now have There rates mean, That have consumers was in it. they resilient. ] been years. [ and precaution to add couple inflation consumers the they resilient. are over since have past Susan, there demonstrated said,

their feeling home you at very about they're When home. look good levels,

a do intend on. that do consumer think remodeling when that do to, things stabilize will nice as in alluded be that, And there will we fully homes. their think to that demand capitalize be we interested pent-up we So very Keith

Susan Maklari

the color. acquisition And helpful That's I quarter. capital thinking know allocation, closed you that about then Okay. this

the you of about together maybe quarters? cash on think how over that and especially As any thoughts the could couple side, come buyback next priorities for on

David Chaika

of free our after philosophy to cash or is flow acquisitions. share allocate Susan, to our dividends all repurchases typical

we do significant So $XXX share pausing our third share the allocating million here the talked towards tend flow quarter, of in repurchases. to repos and fourth cash our aggressive in be fairly quarter, likely we about and with

basic allocated you look of repurchases 'XX, next you'd ballpark on dividends that if free year. cash thinking of follow the in we're the for I excess flow about formula or cash to at right repos after flow be share think free acquisition, you share how If

Operator

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

Garik Shmois

the single paint, versus low quarter. I just to Question in down the low on teens digits, DIY down year-on-year move second think,

was on year-on-year that basis. curious, a Just sizable change a

there. Just sequentially curious trends how performed

David Chaika

XQ. paint, DIY see softening XQ continued Yes. actually in did softening On in we and here

home existing at to low. a sales which are I think look level you low have XX-year the

of this the haven't since We XXXX home seen at housing the end level sales crisis. existing

is that sales. affecting So we paint DIY think

softer So coming our revised of out in here with XQ, roughly that market line is XQ. in expectation

Keith Allman

shown for that's regards the a we've would to are still Millennials we've into viewed. say project, is it's but the And fundamentals with you single is market. DIY that thing not And the how about as for as And are with particularly favorable project, only DIYers. paint, such I DIY our of if that research housing paint, a is basic Garik, return fun going positioning supportive the done and Millennials that think that when us. DIYers -- there they're

Garik Shmois

Understood. question A follow-up costs. just on commodity

in you think beneficial walk I mentioned now side, right particularly into material to you would you If raw some you're through look relief be are of finally see starting if the started any that great. Maybe can the early quarter. baskets here. fourth 'XX some -- the that on there's

Keith Allman

has with Well, helped container freight. peak costs That off their have levels. certainly down come

as I such think, now. $X.XX high. at metals Copper, is $X. pound is zinc a to our was XX high off the about closer Some of XX

So that's come off.

through that All the single-digit our because would a on 'XX the time call us. it, the let's the low P&L inventory, of for the really haven't we of deflation flow-through seen tailwind for be water on and that plumbing, year. but roll Now then

not paint, enough first little deflation little -- not a see In still going moderate a bit. to to a half. the be in It's inflation based on believe, resins in have we full We're the inflation but moderated. input seen bit quarter, starting the costs third year. to certain we cover of saw We've

So half back of that costs seeing in last in And of end the company for 'XX. here us we're the benefits would commodity full for the call approximately all year. reduced it year then total the the be the for let's in

Operator

Our question Evercore. from line next of Stephen comes Kim of the

Stephen Kim

the percent all first color. to appreciate you're guess I close is segments. your related operating targeted margins, pretty both question my in XX-plus I

or hardware true? dec than in whether not or painting maybe a particularly or little further away or further there's And But where as from you a is Basically, lighting, sorry, paint. you're arc, away? I'm in hardware that is to a are either -- target curious your lighting subsegment,

your worth again your levels? plumbing is out from targeted maybe Plumbing, couple areas calling or within away little portfolio, a also there subsegment further within a then of And where you're a

Keith Allman

you in the segments, margin. When Steve, segments everything our is Yes. look not across, same and within

lower we're is you margins. And where of when to distribution that a than hardware, improve. is there think And looking is area about paint. So margin hardware an

be I And call I targets remarks, drive to to we room even higher. on will in tell significant you quarter. now, talking for but next that shooting that see about prepared my XX% is And the where we'll target that mentioned long-term margin some we're think as have we continue our we

talked platform. to we bath the margin And that pan install components, and shower a less kitchen broad business. plumbing, decorative about bathing how a would of platform some plumbing that of there's we've continuum our the jewelry plumbing of the plastic beautiful and Within say, in chrome-plated in from we a have before in

So margin. there is in variability

be share the think the with where is demonstrated that drive ability focus I'd on like and and Masco we takeaway I it And our with to we've to key system margin, execute operating efficiencies. play to you with drive our

tackling of but So segments. there's whole yes, we'll the across our variability, be course, business,

Stephen Kim

So within further something let's within country -- price point plumbing, or say, it, that from out that, a a not or subset there's goal of sort maybe talking of bit that little where segments by away your or you're way like segment? about particular

Keith Allman

whole at variability makeup the geographically. based component at not a variability across things. channels. on variability at lot the there's We on look margin when And basis. margin these Well, of we look margin look We we a We of look product-type raw products. at look all variability

as our components But to improvements. talk we not specifically of it going that So break all we're drive we by operating part system use those to here. out that's

Stephen Kim

fine. That's Okay.

talked a also called initiatives savings Regarding those, other just little a talked about and you overall as think productivity as sort of then margin, your you've And I some to out you improved there's freight, you starting you benefit. which raws But have highlighted and of about to you come well. are that cost of bit so forth.

look So quarter. let's into, say, I'm curious the fourth as we

more raws, If I efforts is XX to understand -- you the cost-saving you it put basis out like like what want of in if point the to adding or would those you here related if fourth full sort made? help say, talk have or segregate of how range in overall? just some I been are you freight were us can would of are whatever. initiatives year maybe permanent quarter price the to mean, mean, Or things XX sort expected add you've that to you that that much and is, things productivity, to over

David Chaika

that a to Steve, the made in price/cost had of we getting particularly have our terms should of. it plumbing biggest clearly job Thanks. is driver nice line. on top on of bucketing, very we very inefficiencies Recall, improvements in the I'd and nice throughout getting in half where we've this done productivity be back year. some relationship say 'XX the back

we've cost So since year it last year. very a had recovery a nice bit we lag did this

productivity the to recovery. is a that's the bucket but that, is help So biggest bucket. The tailwind cost biggest with price nice the

Operator

of the from Truman Patterson comes question of Wolfe line Research. next Our

Truman Patterson

follow-up. to wanted just Keith,

and inflationary single-digit as kind down kind sit the You we of likely better down of the run mid-single-digit fourth the range brass is the that assume quarter percentage first in mentioned that in year Should maybe trending quarter, deflation we low percentage. the perhaps for should today? in was or

Keith Allman

right. Yes, that's Truman, about

David Chaika

what I'd add close too. have averages. around, gone to have 'XX bouncing down just They've are gone levels been and to they Truman, zinc copper back the down up these but

through -- be will consistently like I wouldn't does it So but this point, bit a and of little 'XX it a at benefit. look that run

Truman Patterson

I'm up both quarter? the Okay, is a as there year-over-year versus any investments are we third both Or you understand the the in hitting light okay. way then in on kind relatively frame given perhaps in your your expected much that if of at in Got you. basis, have look performances? to margin just XQ? in performance really of segments margin And could these how fully stepped expectations it might trying businesses quarter fourth some been was costs your

David Chaika

plan our investments continue with say We business. I'd XQ, were maybe to Yes. we in a what anticipated roughly bit invest little in to line do in light.

roughly but well the be. on we've As margin about, the with productivity bit probably it quarter, much talked relationship in the about as talked as as back -- our of fourth to Keith impact line improvement where the we improvements it saw a in will price/cost more getting I'd XQ. say what little is should

Operator

the from of question last of comes Phil Ng Our Jefferies. line

Philip Ng

for huge a kind year, you, this for of driver particularly guess I margins Dave, you price/cost mentioned was plumbing.

plumbing. power, for obviously competitor pricing have alluded Do geared have your actions showing consumers price XXXX? products any actually next to in good Your year taking and you resonated with has pricing

the perhaps that spread the of see of pace look this year, when that year? faster spread do And next widening you we widening pace at widening price/cost spread even

Keith Allman

it. decorative in our significant than We in the Again, is we longer And We've in front we it tend in next given -- year targeted taken as sites pricing 'XX we'll in our price/cost get this of power keep our need to our third stay into go after customer do for channels relationship detail to and mentioned, in when on some our with with ability, quarter. coatings. you to the plumbing through to price a on and here keep call. hold in plumbing price demonstrated it

that pretty where power our ultimately to price year. pricing going out strong. too early is if pipeline up. of and our in say So products we're have to innovation new and next terms We'll our come to means what end that It's take commodities see

too to the brands pricing our needed, not with power be the So certainly, capability able any to and we're in do whether got But early if going or to call plumbing 'XX. to price do that. in we've

Philip Ng

That Not was XQ meant okay, you that's clarify, in to increase plumbing. price just so -- last right? Keith, you've much -- year, Okay. helpful.

Keith Allman

some -- that's correct. target taken We've

about well. in We've Sorry this year price as that. taken targeted here some earlier

Philip Ng

color DIY to on shaking are where the And of terms in then of fourth paint, Okay. now on any right sense. quarter levels? Makes of things pre-COVID volumes relative guidance side out your for as

has in going And definitely channel versus DIY you Keith, than term in in that wholesale? see that kind see retail up Do better of the DIY of pro cohort. momentum this held channel. The you forward mentioned DIY given in just of flipping long XXXX you millennial terms much trends the good on year kind

Keith Allman

a of significant was DIY where The a bit took it COVID Yes. a roller market poster during improvement.

share. then recall, coming of have more to DIY when reticent And COVID comfortable that handle that bodes took it in homes. I and fear bit that be kind for with when our And little their people down. you pros intro speaks in, that there we variation strength a to and of were can catch and think diversification grow and our that that to are went If off and customer, folks pros pro relaxed -- it

sit more market. to in you where volumes talk the so more But overall pre-pandemic we'll fourth our where and COVID enough detail than down get levels lower on DIY, said, into With quarter in if in absolute it has sure DIY. cohort an -- been about will we not I I next as we'll that about growth -- that year our are be the tell millennial in now XXXX segment. I call. we But will I'm next the call. up see respect drive detail to on DIY really think significant DIY

Renee Benedict

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

Masco (MAS) 26 Oct 232023 Q3 Earnings call transcript