Masco Corporation (NYSE:MAS) Q3 2023 Earnings Call Transcript

Truman Patterson: okay, perfect. Thank you, guys.

Keith Allman: Thanks, Truman.

Operator: Our last question comes from the line of Phil Ng of Jefferies. Please go ahead.

Phil Ng: Hey, guys. thanks for squeezing me in. I guess for you, Dave, you kind of mentioned price cost was a huge driver for margins this year, particularly plumbing. Your products have obviously resonated with consumers and shown good pricing power and your competitor has actually alluded to taking price next year in plumbing. Do you have any pricing actions geared for 2024? And when we look at the pace of price cost spread widening this year, do you see that spread widening, the pace of that spread widening even faster perhaps next year?

David Chaika: Again, we’ll get into our detail for ‘24 on the next call. We’ve taken some targeted price in plumbing this year here in the third quarter and our demonstrated ability as you mentioned with our pricing power is to stay in front of it — to keep price cost in our sites and go after price through our channels when we need it. We tend to keep it and hold on to it longer in plumbing than we do in decorative, given our relationship with our significant customer in coatings. So, our pricing power is pretty strong. It’s too early to say if we’re going to take price next year. we’ll have to see what that means in terms of our innovation pipeline and our new products that come out and where commodities ultimately end up. So, too early to call whether or not we’re going to do any price in plumbing in ‘24. but certainly if needed, we’ve got the capability and the pricing power with our brands to be able to do that.

Phil Ng: Okay. Keith, just to clarify, you meant 3Q price increase in plumbing. That was last year, right? Not so much.

Keith Allman: Right. We’ve taken some targeted — that’s correct. Sorry about that. We’ve taken some targeted price here earlier in the year as well.

Phil Ng: Okay. makes sense. And then on the DIY side of things for paint, any color on where volumes are shaking out right now has a fourth quarter in terms of your guidance relative to pre-COVID levels. And Keith, you kind of mentioned that you see good momentum going forward long-term on DIY, just given the millennial cohort. Do you see that kind of flipping in 2024 in terms of trends in DIY versus wholesale? The pro channel has definitely held up much better than DIY this year in the retail channel.

Keith Allman: Yes. the DIY market during COVID was a bit of a roller coaster, where it took a significant improvement, if you recall, when folks were reticent to have pros in their homes. And then when that kind of fear of COVID relaxed a little bit and people were more comfortable with pros coming in, pro took off and DIY went down. And that, I think, is — it speaks to our diversification and our strength in pro for that customer that we can handle that variation and be there to catch that and grow share. But it has been an up and down market. I will tell you where we sit now in DIY, that absolute volumes are lower than our pre-pandemic, call it 2019 levels in DIY. with respect to, if I think, as I said, we’ll get into more detail about next year on our fourth quarter call. I’m not so sure that the millennial cohort will be enough to really drive significant growth overall in the DIY segment, but we’ll talk about where we see DIY more in detail in the next call.

Phil Ng: Okay. Thank you. Appreciate the color.

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