MAS - Earnings call transcript Q4 2024

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Operator

Good morning, ladies and gentlemen. Welcome to the Masco Corporation 2024 Fourth Quarter and Full Year Conference Call. My name is Joel, and I will be your conference operator for today's call.

As a reminder, today's conference call is being recorded for replay purposes. [Operator Instructions]

the and to FP&A. turn President, Zondervan, now Relations Investor will call Robin over Vice I

You begin. may

Robin Zondervan

Thank you, Conference operator, CEO President Masco today Corporation's and and Keith of good morning, Fourth are Officer. Westenberg, and everyone. Masco; Quarter Chief and Full Masco's President Financial Year Allman, Call. Rick me XXXX With and Welcome Vice to

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

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

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

statements financial metrics. will non-GAAP also Our include

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

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

Keith Allman

products and the water leader on premium we're morning, innovative continue our and designs entered focused shower market Faucet, At sync products filtration increase Hansgrohe, start XXXX. We by introduced in Delta and across customizable morning accomplishments products At water segment. this by on water. Thank focused in categories. and offering for new joining are some thank both wanted to share product being market energy our new to with that Slide products the brands Good and key Beginning you, us categories. saving Robin. Plumbing to products you with we and reflecting everyone, and I for several today. Please and our X. a introduced turn businesses, of for quality on into

FreshWater test smart introduced to we communicates chemistry Wellness, feeling automatically recommended IQ, Watkins in system that natural monitoring clean water a water. maintain At your spa adjustments and the

Finally, SaunaXXX network. of launching schedule, Sonos into actively Watkins branded our we of existing and are our our is ahead integration dealer

of Decorative exterior our the brand. brands demonstrating interior Architectural continues was rated resonate share the paint, our Behr Behr and segment, our stain exceptional to generate third-party In a customers paint, of leading strength in study exterior quality #X strength our #X gains. in in and #X in with additional and

our share categories. to in over XXXX. investments now our in our services paint of which Our and In paint DIY increase the are to our over pro XX% continue our Pro annual upon paint successful the sales category, gains helped million, Depot, is Home have drive business expand an with both $XXX and partnership build since

with products and us painters the Our pro in market. on pro the to sizable resonate opportunity capitalize growth paint have enabled

we in Finally, sale of Lighting the [indiscernible] XXXX. completed

as we I continuous their transaction delivered in during core key focus are streamline strategic accomplishments mindset thank year. on for excellence drive our shareholders. all for focus employees will value to We execution, portfolio further on businesses. greater customer this these Masco's that the the to and confident our of initiatives their the their our that want improvement

Kichler. results, discussing on X%, an by margin the wrapped with to X. update turn I'll comments quarter, divestiture our brief and full finish primarily to our top Slide quarter solid our another and quarter fourth We some Please of make for up results. now In XXXX. I'll year decreased on operating of XXXX targets the line outlook due provide for XXXX then fourth our and that, With

volumes higher currency, cost savings of divestiture due drive XXX our our $XX to XX.X%. this segment. to profit margin million efforts the in basis Operating improved and Operating unfavorable impact across to quarter decorative Excluding continued the and points to increased due in efficiency sales our primarily increased operations. X%, profit

the performance quarter in margin expansion. in seventh of fourth marked row quarter a year-over-year the Our

With per our the X% strong per earnings share execution, $X.XX for our quarter increased share. to

America. to in Plumbing segments. trade our sales retail Turning currency. We lower in both X% and volumes decreased saw local in North

saw Operating While and sustained choppy was remains stabilization, yet profit growth. the margin China to improvement industry International it and as continues this to was operating Plumbing in pivoted the segment both slightly Europe our quarter basis for an despite of XX has million, challenging $XXX points. business market show we not environment. signs growth and again grew in of a XX.X%,

productivity, We benefits segment. efficiency on our cost of and Plumbing the see throughout initiatives continue focus our savings to

Additionally, investments. global these on our producing brands, innovative and are service will investments products, continue our customer leading we and results, to capitalize in

were to Turning inventory benefit from divestiture. our timing. Sales including X%, digits, paint Decorative Overall, sales up our mid-single primarily segment. decreased due Architectural a to

Excluding this high operating low down single $XXX up Operating paint were million XX.X%, XXX was margin mid-single Pro an digits DIY paint down were points. sales sales profit benefit, paint digits. sales digits. the for and overall improvement and was were of basis single segment

per up on to divestiture allowed XX% and the XX Slide metric for executed every delivered capital a XXX XXXX. we expanded $X.XX repurchases of row, Now in of and to proceeds in Decorative basis X. year the XX review to our share year. return from our year margin return share, billion And to XX%. to improved to operating than points XX.X%. basis XX.X%. Gross a basis Please let's full in extremely Plumbing full points Masco from margin expanded the performance. second grew our XXXX. flows, dividends Operating the points in We to including margin more basis expanded strong cash points XX.X%. invested nearly XXX to share for Earnings margin improved turn XXXX. per shareholders us form well $X $X.XX share in X% per

per cycles. the innovation demonstrates the compound XX% target Importantly, and growth strength earnings over portfolio repair and our of we share the annual our X growth over lower-ticket EPS have last of service benefits products. delivering remodel-oriented brands, and This years, of on growth a focused on double-digit of achieved through

Turning to Slide X.

we are of recently to actions, profitable the we positioned through As impacts continued the any to margin China well The achieve do include not future but look market strong are future, from impact disciplined tariffs, we gains, the growth tariffs. deployment. capital and include XXXX net expansion mitigation estimates from providing enacted today share potential

new challenges unforeseen ability and that of we our quickly types previously navigate place We in from supply the tariffs, and tariffs. confident to have enacted the in plans these chain have right to situations past, we are demonstrated respond COVID to to to any teams

Moving I begin the to will assumptions. our for XXXX. market with following expectations

flat For to single global remodel aggregate, repair digits. down and markets, be to expect the low in market we

remodel American For we market North to be and repair the market, the flat. roughly expect

For we markets, international low to expect down digits. the aggregate in be single markets

Our expectations is to down digits. sales for XXXX single be low own in our

flat X% exclude of X%, impacts our However, expect we digits. if currency be approximately the to single divestiture sales we unfavorable up and low to roughly from Kichler approximately of our of

outperform our estimate we the includes will XXXX. to Our market continue expectations that in

operational to our initiatives we will Despite efficiencies through our assumption, innovative continue introductions, cost pricing, disciplined top margins across product line the expand and relatively business. flat savings

further margin execute dynamic across in business consistently in We and operating times to ability our plan to expansion demonstrated our have deliver XXXX.

margins Plumbing Masco and margins, of the in XX%. range of margin approximately XX.X%, of in resulting decorative XX% a expect XX% XX.X% the We operating also to to range in

allocation. capital to Turning

unchanged. remains strategy Our

marketplace. reinvest This we plumbing in the First, propane. to our and will positions in growth ongoing maintain in includes in channel, investments and leadership grow domestic wholesale continue initiatives gain to win our our the plumbing, to business and international share

a continue will maintain sheet. strong we balance to investment-grade Second,

payout XXXX, Third, XX%. share we dividend pleased marks that a to our our will $X.XX which share annual dividend our dividend I'm increase annual ratio approved have bring to a per for the XXth targeted and X% in consecutive increase. Board of

cash our million to we flow, And on $XXX XXXX. repurchases deploy will share to our deploy or projected acquisitions. expect share remaining we acquisitions finally, to in or available cash approximately free flow and repurchases free fourth Based

M&A Our changed. has strategy not

fit selectively Masco that top for right annual to over growth of continue long term. X% adding acquisitions pursue to X% return strategic line right the through goal review and the the We opportunities and with the have

per Based year reiterating and One expansion on anticipate for our XXXX on of expected earnings be targets those operating provided share share. to $X.XX are in our for we targets the range performance this and XXXX, deployment capital we per actions, $X.XX ago, call. to margin we

and our XX% industry-leading to in our up Plumbing brands, Hansgrohe, in XXXX. we to segment, For including from XXXX, margins with expand XX% Delta expect

XX.X% from to benefit in to DIY Kichler XX% XXXX, our in our industry-leading reflects For offset slower range to of XX% This initially partially segment, growth achieve than margins from Behr market. expect by in return up paint expected decorative by we XXXX. a our divestiture, the led the brand,

For from points expect basis XX.X% XX.X% XXXX. expand Masco up in to basis from margins overall, XXX in operating in XXX points we XXXX, and profit XXXX up to XX.X%

Homeowners term. and took repair upgrades we in discipline for XX While XXXX. remodel remain of and that XXXX. more by the anticipate we that improvements. we rates years activity I we likely in X% invest factors reiterating rates to incremental low in that can volume, remodels. operational but a remodeling prime to executing the XX market the through longer are return exercising will advantage in in increased stabilizing will ages to X.X believe want expect leveraging million pricing to growth homes old to to these its market XXXX, Therefore, X% long challenging of by on reach of the supportive and mortgage achieve margins historical mid- finish their homes remain structural of and

Home equity formation household rising. levels millennial are levels. high is and at record

well up are provide in coming All to on and as future business growth for from incremental tailwinds repair we our volume our to remodel increase strong confidence of drive productivity We believe market benefits structure structural capitalize a years. these forces our additional capacity, and efficiency, positioned set favorable are and cost for volume. the

our fundamentals, growth double-digit for of well With investors. initiatives continued the we to positioned execution strategic and the and these deployment, favorable EPS outperform deliver our capital are successful cycles disciplined competition our through

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

Rick?

Richard Westenberg

good joining. Thank Thank for morning, you, and Keith, you everyone.

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

but the Slide unfavorable fourth of divestiture Sales quarter excluding Turning to currency. and X% our in Kichler of decreased the XX. X%, impact increased

In International divestiture divestiture sales of driven X% by sales increased SG&A X% North the XX.X%. quarter excluding points percent in increased the quarter. the Our year-over-year X% by Kichler was American but in divestiture the the fourth currency, sales of in X%, local impact. sales of decreased in primarily in third as XXXX lower our local quarter margin basis XX.X% currency. XXX a decreased and quarter, to expenses. decreased Gross

was operating $XX at $XXX quarter fourth the profit million grew Our our to strong and margin XX.X%. for million,

driven by in margin was per lower executing Our on share. EPS to savings performance our resulted primarily X% growth . of This initiatives expenses. $X.XX cost and

XXXX. excluding the decreased with full net in Sales acquisition and net divestiture American activity the X% year. sales impact line unfavorable currency. the year local X%, of divestiture were international impact to as sales prior over or and of as or the the acquisition year well North Turning decreased activity X% excluding X%, prior In currency, and

of operational margin to profit percent of XX.X%. basis expanded sales XXX full increased gross Operating as year efficiencies operating to $XX and XX margin on driving points the year-over-year. SG&A focus million an of points expansion for XXXX XX.X%. was contributed basis XX.X%, a strong Our in

full Lastly, to our for increased per share. EPS year X% $X.XX the

pricing Currency sales sales driven channel In the X%, by Slide by international quarter offset and wholesale softness favorable in by and had XX. results. the quarter. partially in on dealers. the pricing impact the actions, X%. and channels. in decreased [indiscernible] local local X% quarter, In X% in plumbing X% each driven increased American in by mix. North partially a and decreased sales by and spa unfavorable Turning growth sales the by mix partially plumbing Lower currency, to volume of reduced volume unfavorable minimal offset currency, Sona offset the favorable at e-commerce retail specialty our fourth

by growth in X% primarily fourth up operating environment. operating and up This by European various freight driven million, slight commodity XX.X%, was XX and cost driven $XXX unfavorable profit offset points. partially basis volume mix, in profit operating margin market was This and by across China, was despite and lower initiatives and savings higher challenging was markets costs. performance expenses, and achieved growth a the year-over-year, Segment performance quarter we

XXXX. which acquisitions. or increased currency. third X% was X%. up impact acquisition volume to SaunaXXX year Favorable currency, year pricing year largely with of local our the by full and quarter the mix, growth were of XXX by in Plumbing sales excluding unfavorable offset prior plumbing from year to year. basis were last Turning the in And contributed X% plumbing profit with line decreased contributed This in unfavorable X% line of X% and North lower X%. sales the points sales sales expanded prior impact X%, operating in XX%. including increased In margin each American Full a international the

by the a Architectural and decreased of quarter. of currency paint an had fourth the total sales Kichler mid-single X%. Decorative impact impact in XX. by Slide quarter, X% The X% increased inventory to sales timing. favorable divestiture sales of unfavorable aided In Turning digits, lowered

an impact, year-over-year, was price was with sales total digits. paint single up Operating and the offset cost initiatives, timing profit million, DIY margin up down and operating sales performance by favorable relationship. in partially paint cost $XXX unfavorable high savings down were digits driven sales Operating low mid-single XX% fourth XX.X%. inventory pro incremental quarter single of including impact was and paint year-over-year Excluding digits the favorable volume profit this by

Turning to our driven divestiture single-digit and our decline Kichler business. low in XXXX. Sales decreased the year X% a full paint by

single XX up operating paint digits, down consistent Full $XXX and the to year was For expanded and million excluding margin the than income segment expectations. points operating paint XX.X%. slightly of DIY inventory our year, with basis sales impact better the benefit, the Pro sales high expected, were were in mid-single digits,

Slide to Turning XX.

of Our $X.X balance year-end. credit capital and Working with sheet divestiture with expected gross the XX X by days the sales impact sales. X.Xx improved related debt-to-EBITDA billion forward. normalize liquidity, including of includes remains favorable strong of and under going year or Kichler at at our XX.X% days ended cash We at XX% improvement This to is to of availability facility. the revolving to approximately

million, cash for Our driving $XXX our flow flow cash free the over XX%. was year conversion to free

strong our through of with to $X to over repurchase share our the coupled in divestiture, including were stock and performance, from Given million billion $XXX the able dividends return proceeds shareholders we repurchases, fourth cash quarter. in the

XXXX. not net provided recently enacted include Now future includes Please let's to that turn guidance outlook does from being but Slide the note our XX any actions, impact review for mitigation the tariffs. today potential tariffs, of and China

margin For XX.X% low from Masco be overall, we to to expect up XXXX sales to expand XX%, down XXXX. single digits, in but operating approximately

assumption Our reflects to XXXX global the flat low aggregate down will in digits. repair guide be markets sales an that and single remodel

low by Our which XXXX expected will digits the by divestiture sales will impacted single year-over-year. to XXXX, X% be sales Kichler, reduce down in are approximately which of be

unfavorable Additionally, given we anticipate the impact stronger U.S. currency an will approximately dollar, have X%. of

to sales expect up Excluding be to year-over-year. we roughly digits these single low our impacts, flat

impacts with currency, half we sales our year. the the excluding the about of in first modest half year, divestiture of back think in the be of slightly expect down the to for the year we As cadence growth the and

for We to will invest maintaining continue growth, also business discipline. in cost future our while

As a SG&A of be with XXXX. result, percent a we in sales as expect to line

softer year, sales always, with to half. total XX.X%. sales Also, the year, as outlook we As be costs flat the the to -- the Masco based of XXXX to of of anticipate expected be show in relates on the as in low operating as actions year it expansion flat first the up will year trade a net additional approximately cost tariff second we our range conditions. full half we We first anticipate margin as with Plumbing digits. single year expect half QX to our Plumbing take market In roughly full the segment, to in margins margins, appropriate develops in well impact the address the will be in of will XX% timing

Margin the initiatives. flat excluding cost segment, be continued or Decorative by operational savings our digits sales expansion pricing year, be In driven with prior Architectural our we will impact XXXX of mid-single roughly down the and divestiture. expect discipline, efficiencies primarily to

to XX.X%, XXXX. DIY pro the digits We range margin approximately and architectural to well XX% our up decorative our the of digits. business initiatives. of be in the our XXXX We at our year low anticipate savings favorable mid-single margin as business in from paint specifically single impact driven Looking to paint cost our to business anticipate as full paint by decrease of XX.X%, divestiture, increase

per capital $X.XX from dividend approximately With repurchases $XXX and regards expect million acquisitions X% towards deploy approximately the up share to of or to we $XXX dividend expenditures to reinvest to through XXXX. share capital a pay million XXXX allocation, in

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

To As impact XXXX recently million represents China, guidance from enacted the $XXX on which XXXX. approximately China in approximately since mentioned provide import tariffs. update exposure, to includes expect the XX% we China from reduction our a XXXX, an previously, of our

architectural perspective, segment a in exposure in and our products resides XX% From products. decorative plumbing this

changing to confident our previous will costs additional Based sourcing proven our and As and mitigating the on planning ability all would the able an from China, annualized actions. our pricing, are we XX% on tariffs, XXXX. approximately impact footprint. million a as of suppliers the minimize proactively That actions be impact such imposed result, and newly to we these plans various of before imports said, results our have that longer-term have tariff mitigate navigate and these with impact in short-term $XX we been to negotiating

remains The overall environment highly uncertain. tariff

on becomes tremendous like operations. information opportunities more pursue our impacts to outlook to business further chain I while We have thank to our of managing managing as they They our our to costs XXXX and a moment available. to and exposure sourcing supply will footprint optimize a our for teams. provide take to updates continue the job done would our reduce

continue to fluid be to monitor this situation, closely We will respond unfold. the we'll as tariff situation continues and to prepared

on can that, of the deck. questions. financial like our would assumptions to up open I XXXX Slide call for found additional be With earnings Operator? for Lastly, XX

Operator

ISI. [Operator first Kim Stephen with question Instructions] Your from comes Evercore

Stephen Kim

an really, Yes, just talked to timing Appreciate sense to really this was about all us architectural, in operating either of going whether benefit decorative much that us, about that you you maybe XQ a I margins question wanted not for sales in or if think helpful have on and be there. the you the to both? . or could margin could may received color. quantify headwind curious the a the is a how for you ask inventory this you quarter results you timing, give

Richard Westenberg

Stephen, to I'll Rick. be that. it's happy tackle

as timing a we So the inventory the top benefit to comments, in fourth indicated mid-single-digit line. quarter for our opening about benefit was our

imagine XXXX, profitability profit expect speaking. of proportionally paint roughly business our the or anticipate architecture all be pertains of envision year digits. this the you're as to pro And expectations That Kichler, as kind be pertains go it equal and to for is the the to for as for will particularly the year, for be with equal, segment, -- early our divestiture that decorative up flat year into headwind we do segment, this overall that it being excluding anticipate else do that would an mid-single the right, we dynamic said, a consistent can You we our we to timing, amount.

space. progress in So continued that

Stephen Kim

us be focuses you of helpful. I'm are architectural all lean to something I much in also your decorative us to modest is driver then you or you plumbing the give thinking That's particularly, should a -- more expecting wondering in are that sort where remind that that. term. sales And space. acquisition -- -- continues we could again to Appreciate are pretty that was thinking if expect longer the

macro acting what maybe Or for -- sense there? on out kinds back would kind things conducive that timing the of a you if more seeing us favor this of what And opportunities half these? is that the give is some environment, the maybe actually are something how of currently year? of the more -- you Just think

Keith Allman

is Keith. Stephen, this

for with paint As we prepared the our remarks, bolt-ons looking to changed. and plumbing. for of drive in strategic in strategy to Masco M&A strategy our said We're regards our right fit hasn't

say little that looking specifically a a deals at we're to overall So paint With soft, of that seeing, remains to significant in we're would question, maybe to not and regard both your a terms the but of plumbing. market, uplift the bit little bit it I change. be

about a fruition We're SaunaXXX we're acquisitions So in our the those where if And front past. our from or the what our talked more I'd finding the quantify think right for. take hesitate plumbing to would technologies half, specific looking come either Tuck-in -- the bolt-ons acquisitions, half is back or a channel in expertise fit. or good brands we've I as we think it's that or example particular to can patient, we leverage first acquisition. that the are can we of paint and really

what looks today. Hopefully, gives looking a us M&A what looking flavor what for you for at like the overall we're So for and market for that we're

Stephen Kim

guess, I you might outlook? you to something just mention didn't is that is that Keith, technology might which Appreciate it. be M&A the your helpful. factors one into thing the thought That that maybe degree very I

Keith Allman

we are than and I would mean as well. buy us more think of goes aspects where the for rather way there's grow Absolutely. own, would pipeline that at it we advantageous looking our other technology be M&A to our

target certainly brand. piece through channel in bag, overall our of our mixed is plays pipeline overlaying to . ability piece of and into technology but plays a shareholder factors create it that markets it's it, a of the all a presence and innovation expertise a in So value

Operator

from with UBS. question next comes Your John Lovallo

John Lovallo

offset of the could of would I positive? that mean, you margins volumes It of I million mechanically DIY at the Kichler. is like an you know years The this at mid-single-digit maintained DIY, first do so contributed XXXX EBITDA basis curious of despite sort several on margins. $XXX those Kichler just XXX by this improve appear been point? sale softer fiscal I mentioned sales comps one year think, think It's when points. about negative targets from, assuming could margin turn

Keith Allman

Well, in think it bit we the past We've believe recovered the the the forward historical happens we talked where below COVID compensating first that millennial what you forward about at we demand at look about And the way demand. of or factoring well course. you to that's age pull for a is when at even you of from housing in growth fundamentals. question, look of the of of it's we're to million-dollar deferred And pull demand. and look be the as formations when from when pull whether household or stock what a think about this the then line and market forward,

we're believe it consumer comes confidence. to we down and in fundamentally, -- So a state deferred

it the the in relates markets as our of operating the the team last overall proud over Very and able has of and And on efficiency. start and address have out what to trigger projects. to to deferred margins people able to certainly we capacity a improving confidence demand, and to the we going opportunity be that deferred come we So to have us. consumer pull for be mode change these we see as it's our depressed and been wonderful the increased in do place of couple years efficiency. think

that's and consumer of that it's saw we estimate of So inform fundamentally, we the our market. point-of-sale kind of we're prior seeing ability very you our and one have for we more the we in to the volatile manage we look to well But of continue to help XXXX is when the going of back. we Masco our the a the And what trends we that and think And businesses operating because to volatile out a information markets It's productive fact is execute coming the that that. portfolio, to have sat that I'll in of penny, in tell in where been down position us, market system drive demonstrated us because keys an that of stability that I these year. when for of that. than do comes happens, how to we're where

John Lovallo

Okay.

be clear, the headwind the So benefit, just . to DIY titular mechanical offsetting Kichler is benefit. the

Richard Westenberg

That's right.

John Lovallo

in then elsewhere, some Okay. are there second you X X is you to believe? facility Curious any to the is tariffs that I that question if of mitigation relation And the Got anything it. can there do on Is facilities, product China efforts tariffs. it's mentioned recent Mexico, given resource there. there walk-ins of

Keith Allman

our in do Mexico Yes. have We a manufacturing plant for spa business.

we course, Of have facilities States. significant manufacturing in United the

think have States United we in and country. the throughout centers some manufacturing facilities I the XX distribution XX

in Southern into border -- here do and States, manufacturing footprint the Watkins is significant Cal in far And Mexico So North opportunity San area is. headquarters the near our down away, America. biggest from Diego we in have where the to the United product resource

So . is products there Mexico. a move from to capability

Operator

Your with Citi. next from question comes Pettinari Anthony

Anthony Pettinari

of guide plumbing to could offsetting if wondering pricing assumptions and kind little speak talk bit considered that was a be kind if any 'XX of could you maybe can the in in the embedded the I and cost DA. about inflation guidance actions you more

Richard Westenberg

Sure, Anthony. It's Rick.

go headwind XXXX. we we headwind expectations as commodities, from we our dynamic expect their costs. still so is a freight with plumbing year, So Commodity to the we into bit regards are a That to we down do peaks this and said, go offset into our to into we mid-XXXX, and than expect inflation, entering cost therefore, and on year. have they XXXX low commodity and calendar are but XXXX expectations be elevated a our freight of and this that includes remain into positive that more single-digit as in commodity for pricing -- price costs as as go calendar to

are our do partner we As of we price seeing seeing some pertains our we're overall regards sorry, not with to to it we've a material pressure neutral an some With as headwind, mentioned of as pertains and products, we -- TiOX dynamics. it see and a yet, quite resins raw inflation, pricing, bit -- to inputs pressure of our to have we decorative architectural do upward are arrangement with some regards but in terms channel calling it previously, there. cost inflation

we assuming a in from flat so for cost And DAP price are XXXX. price/cost a perspective, dynamic

Anthony Pettinari

margin this And something year? think initiatives cost just would helpful. of savings savings Would be is up margin -- this as amount wondering, dollar as then that I kind of or 'XX. about very that or year, mean, be you That's in as similar a goes on. the cost you would down I'm of benefit initiatives company-wide, cited or the you Okay. year driver the smaller maybe dial it greater, expansion

if wondering you that. Just frame can of kind

Richard Westenberg

Anthony. Sure,

to So savings with regards operating to Masco And leveraging those continue of efficiencies We're of throughout regards to drive priority. our Keith as each a drive had the and performance. operational that's those going success to a our articulated, last business. huge years businesses. that overall continue initiative our we've margins system efficiencies, our us to lot to of expand initiatives allowed to driving And couple be with cost and

are the our modest. rather for articulated, we've the for XXXX market expectations industry and As

years. going so to efficiencies previous continued And we're order as in savings and margin the operational we've drive deliver continue done in cost initiatives to expansion, to

Operator

Your next with question comes from Wells Reid Sam Fargo.

Richard Reid

confidence macro, give you on Is your to you to XH the based kind of can it? then dynamic Just help might embedded et frame you gives us think growth that relative And some XH. growth improving in I industry on in XH in that that that growth be about underlying that assumptions when second you us of Kind just versus cetera? outlook, to, it talk the half. can what XH wanted accelerate talked to outlook.

Keith Allman

And confident to correlated first all, R&R as at stacking fundamentals here, demand. day, about talked Well, very that I've really in metrics but for you stock they equity you the millennial of in at that the a and at, before. look home, well of about the think look homes. of think really then the the the an prices, is are favor age stock, asked we average the of some significant being consumer up the And metrics, repetitive of that and market. end about age their are formations, the it's bit it you household when are investing improved home When in about things those key we quite

to just things all tailwinds are I So that. mentioned . that

we're broadly the it at year be look the finished growth in and will and out down that last in the and speaking, is how half. modest how it, first slightly while half second versus Secondly, year we year. And estimation entering our call this

job manage calling our as that XXXX out fantastic a called it and and able Our going focus during for. return to my not our estimation margin being that interruptions, did forward. most share to And COVID, be but in that business we're And sorts weren't volatile happen I share XXXX. this supply significant of terms with at will times in terms industry on all chain laying we consistent in in curveballs that's mentioned us, to how gain gained that's manage well, freezes, able explode, our things of consistent manage and when times, particular necessarily that only in growth prepared expansion, a it were is as dynamic it plan Texas plants we remarks, thrown of changes those were colorant

Richard Reid

right bit down inventory December any of of see expectations And thinking ramping a in up in more the the any late just tariffs that? there inventory distributors did when kind gears, And of the where early stock of curious election you No, narrative, likely of ahead specifically, after was period for step-up that specifically kind ahead the maybe retail potentially kind tariffs tariffs November, then plumbing that touching there switching perhaps activity then helps. on a was in more. plumbing drilling

Richard Westenberg

Rick. material did No, any didn't in inventories in we not. it's We Sam, change see channel QX. the

So channel. planning, but we you're I in to meaningful terms way, that of our know at contingency in what terms didn't see least in of any referring some

Operator

Your with next question comes Bouley from Barclays. Matthew

Matthew Bouley

So with sticking the of topic tariffs.

the incremental terms went in are of Or growth that of of question thinking it, impact, or the if If kind there's the don't a if year. of it? bit I any quantified that's to a how through? maybe how way announce mitigating maybe mitigation. of about mitigation if that's on you of impact tariffs side you think I detail of Did sourcing kind little any you your that's that? little is more did and or $X.XX than mainly and assumption guys that or operational around My since price incremental you are China thinking price increases bit Just kind cover price a quantification sort know more initial it?

Richard Westenberg

Matt. Sure,

mitigation our been actions, we've we're preparing over last to pertains for really it mitigation months. several the as -- So

as it's And a we've a footprint. both imagine, the while, in managing litigation been here the regards XXXX, to our XXXX, Masco frame. a my and would in of very has supply telegraphed our a you opening we've efficiencies. preparing and time by did I combination chain a sourcing with we a number sourcing China team operational levers And XX% in is really short-term work that at long-term cost preserving And comments, exposure change by actions. XXXX, successfully while mentioned in really of like since to methodical reduced As way, and combination this for of the footprint, XXXX been excellent

regards indicated as the actions exposure And impact tariffs we've in that net will the of minimize our we mitigate we addition, We're some -- guidance. those In specific Those that partial the to opening in our in we having of those XXXX. as all not the combination are discussions components in of with the the of flight well pricing. suppliers to our mitigation factored but as impact our do quantify going significantly offset action. with terms here, in to comments XXXX and are believe in

all place thing we on through components the note went that inventory. well regards they way some know, of perspective, will X. a U.S. is into from to terms are tariffs our in One our as they is when as to delay their as to there There February on and parts flow timing the with is into -- roll

time, in will be we'll some will be will Our actions and impact have over delayed. and some layer will mitigating concurrent tariff with the

little of the the half And profit so our in margins being second a our increasing and operating year into half the first year. factors of the in flattish bit of cadence of that

So color. additional hopefully, that provides some

Matthew Bouley

then Very Pro reasonably DIY guiding to over jumping maybe paint that's the of up a trend mid-singles secondly, kind Clearly, and XXXX. Yes. And side. of a helpful. singles it. you're long down in continuation Got low here.

So the question is on kind of are where DIY. we

deferred kind this thinking kind do of harder it structural return the for I maybe back do more to and it's that of me. we to And you in to sense the it longer industry of the get just going mean around slower-than-expected start on something makes this, push state to of You demand more mentioned growth sense, kind side. into there. just Pro just

are you to DIY thinking eventual about return the just on how growth So side? any

Keith Allman

Matt, there of structural a was bit explanation. think a I

kind weighing the that side a do-it-for-me on some we're I about in that and older, and baby being cohort or household those seeing to As you tendency structurally, -- that baby other the and degree are cohort. getting millennials. think DIY a switch think the they to of as a is going there combating is a boomers the formations, And of back And for boomers years clearly. model few significant the some to that

relatively just our also or you where percent And obvious. it's architectural project project a at with to cost. when of I and product they're single seeing portfolio we of not costs think it's But you total are coatings in paint, low at look rather that regards [indiscernible]. case particularly [indiscernible] and the there look as we're a cost when the

a terms it very something buck home a a the do. perfect of on it's relatively do in cost a couple a makes something for it's with a -- children bang a It's in person's combination easy that around. it's small low makes can their to practically DIY It's change that's It the product. and So product. big for the

a our So it's dynamics. outperform good those couple a -- to expecting you And for the that I project that a think us. of perspective, structural to it's from remind in we're market. I are would business

adjust So plan Deco being x flat in our relatively we when divestiture, segment. on we for

Operator

Trevor Wolfe with from Research. Your next question comes Allinson

Unknown Analyst

the [indiscernible]. want to on targets I both reiterated First, and margin follow Plumbing up XXXX for

volumes in anticipating volumes there. perhaps but what's margin that the talk plumbing, presumably, unchanged the than still the offsetting are of retaining on than coming you XXXX that's color the volumes guidance, previously better you of initially some provided Can what you're [indiscernible] offsetting weaker guide, about when softer some laying maybe divestiture out some tailwinds. just expectations likely expected also You On you Kichler were of softer there?

Keith Allman

based a been on confidence lot the I've we've of able do got in to past. what

pipeline. very moving a is it relates through system production Our mechanical to as projects

have long to pipeline or we have through move on how data our batting productivity our the the it and pipeline, So size on you visibility also is average of our of will, takes our rate, hit we what product. if and

to and confident continue more our getting productivity. just are we So ability grind to in drive continue to

piece towards more incremental and that, is profit improving. then a of on confidence that have that's Certainly, our we're that So feed volume, strong incremental getting and efficiencies it. we in

in extremely space. word, plumbing is this our in well. a But say and So it's combination. running a the I'd feel about momentum momentum. We good business

Unknown Analyst

encouraging. been from to for higher then I to moving move and exposure, supply even chain very forward. China back second, threats there's That's mean, Understood. And tariff Okay. rates going clearly, here

do XX there look driving perhaps here but look guys progress any As appreciate you've out lot China that continue could supply you expect a months, even of XX made your exposure help you to out chain And months you now, where lower? go? I already, on from

Keith Allman

expect We do by and We're we're our do Yes. carefully. it and working base large. to that. that, supply with doing continuing We're existing

and and with we've over innovation protecting delivery and our And we've with we're us business. aspects for fill in involved are We're well our our rates. suppliers a work our worked we're decade with working pipeline protecting of in quality. So that all

partners. they're So true

shift shift, that well. continuing on lever you a if We're anticipate to sharing continue benefit. suppliers. we from can would We're have to where away create of course, or China. working with we on not engineering also do continuing our And with our working costs as out create cost we drive So prices customer to will, value

Operator

Goldman Maklari question from with Sachs. Your next comes Susan

Susan Maklari

a talk year index vitality the pipeline on you that's these a headwind have, And over those potential the next you products, should new of elasticity can two? offsetting comments up thoughts there how that could of about your the any operations. bit that how and and we or price any thinking on some Building in the innovation R&D be be perhaps about

Keith Allman

Yes.

pipeline Index products Vitality new. that right of XX% months less XX steady around at Our were old has our fairly than

drive So We steady pain points. at it's it. solving as look think I goes, effectively and we're to continuing she customer

for the sake. we necessarily particular we a approach. technology Rather, So target technology a don't customer with begin back

example, paint of people returning sooner things with a window sorts use like in tighter like care weather, shower to to to and the able service filtration, painting, have in terms after to good for the of solutions ease regards what about sunny things intuitive you you're things. product sync, when those being So in water of both

is interested So we in. and mines that process things a are looks and at pain have points out, customer customer the defined you if will, that

other pay that in we business. our that places something being up up And some in willing with doing for to ultimately that for ends experience might so, the ends inevitably, headwinds making up that they're margin and respect to helping in

architectural . our have a both great strong internationally and job. in innovation are North people in decorative in America, both we and the pipeline plumbing a and who very are So it space, executing doing

Susan Maklari

working sales. through. How should the around you about of there, productivity XX% come year. bit helpful. realize suggests the these That's Can as efforts perhaps normalize at cost capital in some XXXX the level you then a about working see And you savings targets especially sales to a that that that to you you we up of think another in about upside? expect capital Okay. efficiencies, can and plugging And to talk mentioned high efforts this could step

Richard Westenberg

that's were down to closer and regards the With to Rick. calculation benefit of we It's Susan. really working in a capital, Kichler for did at XXXX, why we see Sure, XX%. divestiture the

XX%. remarks, capital As our indicated very on being that really we're chain. working in supply with to opening normalize around throughout to my would we regards disciplined expect Obviously, focused

percent a of continue business, XX% that as drive fair working think with productivity, for we scale through of we cost terms I the sales. benefit our that to working our would at and in initiative, estimation sales will or flow projection to it's the capital about as that of assume stay around purposes, so will And as see savings but of efficiencies capital,

Operator

Baumgarten question Adam Zelman from with And Associates. your . last comes &

Adam Baumgarten

Just PPG in architectural months of a paint, it's since closed. divestitures the couple been

or Just if curious noticed the if any [indiscernible] Depot you've Home any going forward? changes expect you at in

Keith Allman

haven't really we No, typical. fairly Adam. It's been

Adam Baumgarten

impact Okay. Got of clarify the on the it. And net factoring in just lastly, then China just of the to incremental tariffs.

a to you're you embedding in but Just know didn't negative be clear, 'XX? that is I modest impact number, a give

Richard Westenberg

Yes, Adam, it's Rick.

-- chunk guidance in mitigate this through, of way, would with it that minimize me that to large the let a the our and depends we So and to the with factor timing as we'll flowing mitigation that's we're the our We're But impact -- XXXX. really regards we to expect the of flow-through. regards executing on terms speak, within we net put in it range, impact, actions and obviously minimizing impact.

Operator

this to no are Zondervan remarks. There over questions at I for Robin the will turn time. further now call closing

Robin Zondervan

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

Operator

disconnect Ladies for this please gentlemen, and concludes lines. that for you you today. ask call your your We conference participating and thank

Masco (MAS) 11 Feb 252024 Q4 Earnings call transcript