Masco Corporation

Good morning, ladies and gentlemen. Welcome to Moscow Corporation's first quarter 2024 conference call. My name is Ludi, and I will be your operator for today's call. As a reminder, today's conference call is being recorded for replay purposes. To ask a question, please press the star, then the number one on your telephone keypad. To withdraw your question, please press the star, followed by the number two. I will now turn the call over to Robin Sondervan. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to Masco Corporation's 2024 First Quarter Conference Call. With me today are Keith Ullman, President and CEO of Masco, and Rick Westenberg, Masco's Vice President and Chief Financial Officer. Our first quarter earnings release and the presentation slides are available on our website under Investor Relations. Following our remarks, we will open the call for analyst questions. Please limit yourself to one question with one follow-up. If we can't take your question now, please call me directly at 313-792-5500. Our statements today will include our views about our future performance, which constitute forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We've described these risks and uncertainties in our risk factors and other disclosures in our Form 10-K and our Form 10-Q that we filed with the Securities and Exchange Commission. Our statements will also include non-GAAP financial metrics. Our references to operating profit and earnings per share will be as adjusted unless otherwise noted. We reconcile these adjusted metrics to GAAP in our earnings release and presentation slides, which are available on our website under Investor Relations. With that, I will now turn the call over to Keith.

Thank you, Robin. Good morning, everyone, and thank you for joining us today. Please turn to slide five. I'm very pleased with our strong start to the year as we reported another quarter of operating profit margin expansion and EPS growth compared to the prior year. Our results were driven by improved operational efficiencies, solid execution, and the strength of our repair and remodel product portfolio. We remain focused on growing our market share by engaging with our customers launching innovative new products, and building on the value of our brands. Turning to our overall company performance, our top line decreased 3% in the quarter, which was in line with our expectations. Volume was down 4%, partially offset by pricing actions of 1%, and the impact of our recent acquisition of Sauna 360, which we finalized in the third quarter of the prior year. Operating profit improved in the quarter by $10 million to $322 million, and operating margin grew 90 basis points to 16.7%. The improvement in our operational performance was primarily driven by cost savings initiatives and a favorable price-cost relationship, partially offset by lower volume. Our earnings per share grew 8% to $0.93 per share. Turning to our segments, plumbing sales declined 2% overall and 4% excluding acquisitions. In local currency, North American plumbing sales decreased 1%, including the favorable impact of acquisitions. In international plumbing, sales decreased 5%. Operating profit for the segment was up $26 million to $228 million, and operating margin was up 260 basis points to 19.1%. In addition to our focus on operational excellence and continuous improvement, both our North American and international plumbing businesses remain focused on developing new and innovative products that serve the needs of our customers. In North American plumbing, for example, Delta Faucet showcased several new and award-winning products at the Kitchen and Bath Industry Show held in February, including a multi-leveled offering of steam showers, headlined by the Breezo Mystic Steam Shower System, a tankless reverse osmosis water filtration system, and several Krause expansions in brick-and-mortar retail and in the bathing category online, all of which are launching later this year. In our spa business, Watkins Wellness launched Freshwater IQ, a smart monitoring system that automatically tests the water in your spa and communicates recommendations when adjustments are needed to maintain clean, natural-feeling water. This breakthrough technology provides our customers with a superior ownership experience and continues the legacy of innovation that makes Watkins Wellness an industry leader in the spa market. In our international plumbing business, Hansgrohe's Axor brand recently presented a variety of new products at the Milan Furniture Fair, including the Citerio C bathroom collection, customization options with Axor signature service, and the Axor Shower Select ID temperature control technology. These products continue to demonstrate Hansgrohe's innovative bathroom solutions, which offer premium design while simultaneously saving energy and water. With our strong brands, global presence, and innovative products, our plumbing segment is well positioned to continue to gain global market share. Turning next to our decorative architectural segment, sales declined 3%. Pro paint and DIY paint sales were both relatively flat year over year. Operating profit for the segment declined by $8 million to $125 million, and operating margin declined 60 basis points to 17%. In our paint business, we remain focused on working closely with our partner, the Home Depot, to drive further share gains with both pro and DIY paint customers. During the quarter, Bayer continued to invest in services focused on meeting the needs of the pro painter, This included expanding the pro sales force into additional markets across the United States, increasing job site delivery availability, and providing exceptional brand loyalty programs. Additionally, in a recent third-party quality study, Bayer was rated number one in interior paint, number one in exterior paint, and number one in exterior stain, demonstrating the strength and exceptional quality of our leading Bayer brand. Moving to capital allocation, our strategy remains unchanged. During the quarter, we returned $212 million to shareholders through the repurchase of 2.1 million shares for $148 million and a dividend payment of $64 million. Now, turning to our outlook for the remainder of 2024. With the year beginning largely as expected, We continue to anticipate that 2024 adjusted earnings per share will be in the range of $4 to $4.25 per share. While we expect a relatively flat top line for the year, our focus on cost savings initiatives, disciplined pricing, and operational efficiencies will help us continue to drive operating margin improvement and earnings per share growth in 2024. For the remainder of the year, we remain cautiously optimistic as we continue to monitor inflation data, the likelihood of current year interest rate cuts, and changes in consumer confidence levels. However, we continue to believe the fundamentals of our repair and remodel markets are strong, and that structural factors such as the age of housing stock, consumers staying in their homes longer, and higher home equity levels will drive increased repair and remodel activity over the mid to long term. We believe these favorable fundamentals, our portfolio of low ticket repair and remodel products, our focus on operational excellence, and our disciplined capital allocation strategy will continue to drive shareholder value creation. Now, I will turn the call over to Rick to go through our first quarter results and the 2024 outlook in more detail. Rick?