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28-Apr-2015

Masco Corp. (MAS)

Q1 2015 Earnings Call

Masco Corp. (MAS) Q1 2015 Earnings Call

Corrected Transcript 28-Apr-2015


2 Copyright © 2001-2015 FactSet CallStreet, LLC

CORPORATE PARTICIPANTS

Irene Tasi Director-Investor Relations

Keith J. Allman President, Chief Executive Officer & Director

John G. Sznewajs Chief Financial Officer, Treasurer & VP

................................................................................................................................................................................................................................

OTHER PARTICIPANTS

Stephen F. East Evercore ISI

Tim R. Wojs Robert W. Baird & Co., Inc. (Broker)

Michael G. Dahl Credit Suisse Securities (USA) LLC (Broker)

Matt A. Bouley RBC Capital Markets LLC

Eric Bosshard Cleveland Research Co. LLC

Mike Wood Macquarie Capital (USA), Inc.

Philip Ng Jefferies LLC

Alex J. Rygiel FBR Capital Markets & Co.

Dennis P. McGill Zelman & Associates

Michael Jason Rehaut JPMorgan Securities LLC

George L. Staphos Bank of America Merrill Lynch

Susan Marie Maklari UBS Securities LLC

Nishu Sood Deutsche Bank Securities, Inc.

Will Randow Citigroup Global Markets, Inc. (Broker)

Keith Hughes SunTrust Robinson Humphrey





MANAGEMENT DISCUSSION SECTION

Operator: Good morning, ladies and gentlemen. Welcome to Masco Corporation's First Quarter 2015 Results

Conference Call. My name is [ph] Laurel, and I will be y our operator for today's call. As a reminder, today's

conference call is being recorded for replay purposes. [Operator Instructions]

I'll now turn the call over to the Director of Investor Relations, Irene Tasi. Irene, you may begin. ................................................................................................................................................................................................................................

Irene Tasi Director-Investor Relations

Thank y ou, Laurel, and good morning to everyone. Welcome to Masco Corporation's first quarter 2015 earnings

conference call. Joining me today are Keith Allman, President and CEO of Masco; and John Sznewajs, Masco's

Vice President, Treasurer and Chief Financial Officer.

Our first quarter release and the presentation slides that we will refer to during the call are available on the

Investor Relations portion of our website. Following our prepared remarks, the call will be open for analysts'

questions. As a reminder, we would appreciate it if y ou could limit y ourself to one question with one follow -up. If

we are unable to take y our question during the call, please feel free to contact me directly at 313-792-5500.

I'd like to remind y ou that statements in today's presentation will include our v iews about Masco's future

performance, which constitute forward-looking statements. These statements are subject to r isks 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 file with the Securities and Exchange Commission.

Today 's presentation also includes non-GAAP financial measures. Any references to operating profit, earnings per

share, or cash flow on today's call will be as adjusted unless otherwise noted with a reconciliation of these adjusted

measurements to GAAP in our quarterly press release and presentation slides. These can be found in the Investor

Relations section of our website, www.masco.com.

With that, I will now turn the call over to our President and Chief Executive Officer, Keith Allman. ................................................................................................................................................................................................................................


Thank y ou, Irene. Good morning, everyone, and thank y ou for joining us today. Turning to slide four. We had a

great start to 2015, with Q1 representing our 14th consecutive quarter of y ear-over-year sales and profit growth.

All of our segments contributed to top line growth in local currency, resulting in our North American sales

increasing 5%, and our international sales increasing 10% in local currency. We delivered this growth while

expanding our operating margin to 9%, our strongest first quarter operating margin since 2007. Our focus on

execution and cost containment continues to pay off as we improved our operating profit by $24 million, while

decreasing SG&A by $6 million or 90 basis points.

As a global company, foreign exchange cost us $0.02 of EPS in the quarter. Despite this headwind, our adjusted

EPS grew 43% to $0.20 per common share. This strong performance was augmented by several value-creating





initiatives we accomplished in the quarter. We returned approximately $135 million to shareholders through our

increased dividends and the repurchase of approximately 4 million shares of stock.

We announced an acquisition of Endless Pools by Watkins, a pr emiere spa business. This acquisition allows

Watkins to expand its offering into the aquatic fitness category, opening new channels of distribution and access

to a new customer base. The acquisition is reflective of a ty pe of bolt -on opportunities we will continue to pursue.

Additionally, the spin-off of our Installation Services business, TopBuild, remains on track for the middle of the

y ear.

Before turning the call over to John, I'd like to highlight how our strategies and execution are driving results. In

our Plumbing segment, our longstanding commitment to innovation and design continues to propel our market-

leading brands to new levels. Delta and Hansgrohe once again broke records in the quarter and both experienced

the highest sales quarters in their history. Behr's longstanding reputation as an industry leader in paint was

reaffirmed. J.D. Power and Associates ranked Behr number one in customer satisfaction for interior paints.

Y ou may recall that earlier this y ear, Behr was also rated number one in quality by a leading independent testing

organization for its interior and exterior paints, as well as stains. These awards established Behr as the number

one ranked paint based on quality and customer satisfaction and only add to Behr's brand awareness an d brand

equity . Milgard windows' history of innovation continues to drive sales with Essence windows and new multi -

panel glass doors improving our business mix. Our Installation Services business continues to benefit from a

strategic expansion into commercial construction, as well as targeted growth with custom builders.

Finally , Joe Gross was named President of our Cabinetry Business in mid -February. He and his team are already

delivering on their turnaround plan with improved top and bottom line results.

With that, I'll turn the call over to John, who will go over our operational and financial performance in detail. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP

Thanks, Keith. And good morning, everyone. Please turn to slide six. As Irene me ntioned, most of my comments

will focus on adjusted performance excluding the impact of rationalization and other one -time charges. We started

2015 with positive momentum from last y ear. As Keith mentioned, the first quarter was our 14th consecutive

quarter of y ear-over-year sales and profit growth. Excluding the impact of foreign currency, sales increased 7%

and we experienced sales growth in all five segments.

On a reported basis, sales grew 3%. Foreign currency translation negatively impacted our sales in the first quarter

by $77 million, principally due to a weaker euro compared to the U.S. dollar. Sales in North America were up 5%

for the quarter. As the U.S. economy improves we are experiencing growing demand for our new home

construction and repair/remodeling products including big ticket repair/remodeling products. As a reminder,

repair/remodel activity accounts for approximately [ph] 75% (7 :20) of our total sales.

International sales increased 10% in local currency in the quarter, driven by the con tinued strength of our

International Plumbing business. Gross margins expanded approximately 20 basis points compared to Q1 of last

y ear to 28.2%. Our focus on cost control continues to pay off. As Keith mentioned, SG&A spend declined by $6

million in the quarter, despite a $53 million increase in revenue. As a result, SG&A as a percent of sales decreased

90 basis points to 19.2%. Our cost control enhanced our operating leverage as we generated a 45% incremental

margin in the quarter.





We delivered strong bottom line performance as operating income increased 15% in the quarter to $181 million,

with operating margins expanding 100 basis points to 9%; our highest first quarter margin since 2007. And our

EPS was $0.20, an improvement of $0.06 or 43% compared to the first quarter of last y ear. Foreign currency

negatively impacted operating profit in the quarter by $10 million or approximately $0.02 per share.

Turning to slide seven, our Plumbing segment sales decreased 1% due to the unfavorable impact of foreign

currency. The strength of the U.S. dollar masked the terrific performance in Q1 across our Plumbing segment.

Excluding the $71 million impact of foreign currency translation, sales increased 8%, driven by growth in faucets,

spas, and new program wins with trade and retail partners. As Keith mentioned earlier, both Delta and Hansgrohe

enjoy ed their best quarter for any period in their history. We experienced strong growth in the trade channel in

the quarter, as Delta and Brizo brands drive consumer demand for our innovative new products, and we continue

to take share in this category.

Our European businesses continue to outperform, delivering 10% sales growth in local currency despite a strong

mid-single digit comp from the first quarter of last y ear. Hansgrohe's record quarter in local currency was driven

by emerging market growth, as well as the strength of Hansgrohe's brand, design and innovation, all of which

were on display at the recent ISH trade show in Frankfurt. Operating profit decreased 7%, driven primarily by

unfavorable currency of $10 million and negative mix of $5 million as we further penetrate the emerging

markets.As we mentioned on our Q4 earnings call, sales marketing and trade show expenses due primarily

through our participation in the biennial trade show in Frankfurt impacted results by approximately $8 million.

This was partially offset by favorable price commodity relationships, nearly all of which was incurred in our

European businesses and increased volumes. We look at these costs in Q1 as investments for future growth and we

believe this y ear Plumbing segment margins will approximate the 15% to 16% that we experienced in 2014.

Turning to slide eight, in the Decorative Architectural segment, first quarter sales increased 2%, driven by the

performance of our new BEHR MARQUEE Interior product and growth in our BEHRPro business. As Keith

mentioned, we are pleased that Behr was ranked number one in the J.D. Power's 2015 Paint Satisfaction Study in

the interior paint category. This recognition, together with being ranked number one in interior paint, exterior

paint, and exterior stains by a leading independent consumer testing organization establishes Behr as a quality

leader in the architectural coatings industry.

Liberty Hardware contributed to the top and bottom line growth through the continued share gains from

successful new product introductions and program wins in the retail channel. Operating profit increased 9% in the

first quarter due to increased volumes, effective cost management, and the deferral of approximately $2 million in

advertising and promotional expenses related to the coatings business from the first quarter to later this y ear. All

of this was partially offset by some incremental expense at Liberty.

As we mentioned in our Q4 call, we expect to incur approximately $20 million of incremental investments in

2015, related to program wins at Liberty Hardware, and the investment in Behr's new Color Solution Centers in

The Home Depot. These New Color Solution Centers should be in all stores by Memorial Day , in time for the

kickoff of the painting season.

Segment sales were impacted by $3 million of these expenses in Q1, slightly lower than the $5 million we initially

expected as a result of timing of some of these initiatives. We still expect to incur approximately $20 million of

incremental investment related to these programs and initiatives in 2015 with Q2 impacted by approximately $8

million, Q3 by $6 million, and Q4 by $3 million in addition to the $3 million we experienced in Q1.

Turning to slide nine, our Cabinet segment sales increased 5% in the quarter due to improved performance of the

KraftMaid brand in the home centers and with dealers. The bottom line improved $7 million over the prior y ear





driven primarily by improved mix as our higher price point KraftMaid experienced strong growth, the reduction of

prior y ear's incremental spend and the benefits associated with other cost savings initiatives.

Turning to Installation on slide 10, our sales increased 7% in the quarter as a result of improved end-market

activ ity with the strongest growth coming from residential new home construction and commercial channels. The

growth in the residential new home construction was driven by strong single -family performance with both

production and custom builders.

In addition, TopBuild was recently awarded ENERGY STAR Partner of the Y ear by the EPA for the 11th time for

its home energy rating service. This reflects TopBuild's commitment to improve the energy efficiency of homes in

the U.S., and a recognition of TopBuild expertise in building science.

Our efforts to drive productivity and increase volume helped offset raw material price increases and wage inflation

as operating profit increased $12 million and delivered 2.2% operating margins. We are pleased that Q1 is this

segment's first profitable first quarter since 2007. And as Keith mentioned, we are happy to report that we're on

track to execute the spin-off in the middle of the y ear.

Turning to slide 11 , our Other Specialty Product segment sales increased 7%, driven by a low double-digit sales

growth in our North American window business. This growth was driven by volume increases and the continued

benefit of a favorable mix shift toward our premium window and door product lines. Excluding the impact of a

negative impact of a stronger U.S. dollar, our European window sales increased 5%. The segment's operating

profit growth in the quarter can be attributed to increased volumes and a favorable price/commodity relationship,

which was partially offset by approximately $2 million of cost related to ERP investment in Milgard and the

timing of advertising and display expense.

And turning to slide 12, we ended the quarter with about $1.8 billion of liquidity. As a reminder, this number

reflects the $500 million 10-year bond we issued in March to pre-fund our upcoming June 15 $500 million

maturity. The issuance carrying cost is approximately $5 million, nearly all of which will impact the second

quarter. And we continue to have strong performance in working capital. Working capital as a percent of sales

came in at 12.7%, a 60-basis point improvement from the first quarter of last y ear.

And finally , turning to slide 13, we continue to take initiatives to unlock shareholder value. One of these initiatives

was to increase our share repurchase activity. As Keith mentioned earlier, during the first quarter, we repurchased

more than 4 million shares or approximately 1 .2% of our common stock. It is our expectation and we will allocate

in total between $400 million and $500 million to share repurchases in 2015. and we are well -positioned to retire

between $300 million and $500 million of debt in 2016.

That concludes my remarks, so with that, I'll turn the call back over to Keith. ................................................................................................................................................................................................................................


Thank y ou, John. We're really pleased with our strong start to the y ear and our continued ability to execute

against a backdrop of strengthening demand for our industry -leading products and services. We started the y ear

well, we have good momentum as we move further into 2015, and we remain confident in our outlook for the y ear.

We look forward to sharing more of the Masco story and our growth plans with you next week at our Investor Day.

So with that, I'd like to turn the call back over to Laurel for Q&A.





QUESTION AND ANSWER SECTION

Operator: Thank y ou. Ladies and gentlemen, in order to ensure that everyone has a chance to participate, we

would like to request that y ou limit yourself to asking one question and one follow-up question during the Q&A

session. [Operator Instructions]

Y our first question comes from the line of Stephen East with Evercore ISI. Your line is open. ................................................................................................................................................................................................................................

Stephen F. East Evercore ISI Q Thank y ou, thank y ou. Good morning, guys. Thanks for the detail on Plumbing in Europe. I guess if y ou could talk

a little bit more about what you all are doing with the emerging markets in Europe, just trying to understand

where y ou're going with the business and what percentage of Europe is Plumbing for y ou all? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A We have a, as y ou know, Stephen, a very strong global brand in Hansgrohe, and our plan for that brand is to

continue to invest in it. And we have a substantial amount of ups ide as we look across the emerging markets both

in Europe and outside of Europe. So, in general, our expectation is to continue to invest behind that. We see good

returns on that. The business has good margins, and we feel really good about emerging market s.

Y ou mentioned Europe, in particular. Of course, we continue to have challenges like everyone does in the Ukraine

and in Russia, but we're committed to the European market and we like the results that we're seeing. And we'll

have more detailed information at the Investor Day as we outline more specific growth plans and milestones. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Stephen, may be just to give y ou a little bit of color. International sales represent approximately 40% of the

segment sales. ................................................................................................................................................................................................................................

Stephen F. East Evercore ISI Q Okay . Okay . And within – embedded within that, I know y ou gave us the top line FX impact. The op margin

impact would y ou mind giv ing? And then my second question revolved around Behr. It was a fairly ea sy comp. So,

I'm wondering did the Lowe's paint rollout sort of disrupt the market, what do y ou think is going on there? And

then are y ou starting to see any raw material tailwind from oil costs coming down and the derivative products off

that? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A So, Stephen just to answer y our first question, the operating profit impact of foreign currency was approximately

$10 million in the Plumbing segment in the quarter. ................................................................................................................................................................................................................................





Stephen F. East Evercore ISI Q Okay . ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Coincidentally that happens also to be the impact for the company in total. ................................................................................................................................................................................................................................

Stephen F. East Evercore ISI Q Okay . Thanks. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A As it relates to Paint, Keith do y ou want... ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Y eah, on the Paint side, as we mentioned in our remarks, we have good strong momentum rolling with a lot of our

awards rolling our way. And we're investing behind that. We have a new Color Center that we're launching and

that will be rolled out in the end of March. We really feel good about that. We have an advertising campaign that's

coming in consistent with that.

And we've also got new products that we're rolling out where we've rebranded KILZ PRO-X to BEHRPro and I

think that's going to be very productive for us. We're rolling out Textured DECKOVER. When y ou put that all

together we feel confident in where Paint's going. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Tim Wojs with Baird. Y our line is open. ................................................................................................................................................................................................................................

Tim R. Wojs Robert W. Baird & Co., Inc. (Broker) Q Hey , good morning everybody. Nice job. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Thanks, Tim.<Q – [06QHTD-E]Tim Wojs – Robert W. Baird & Co., Inc. (Broker)>: I guess I just had a couple of

questions on the EBIT. I was wondering if y ou could – I think in the past, y ou've given us an EBIT bridge y ear-

over-year. I'm just wondering if may be I missed that, but if y ou could kind of go through what the price

commodity was productivity, those types of things? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Y eah, Tim, we're not giv ing out that information any longer. So – but suffice to say , if y ou think about the volumes

– we had pretty good volume growth in the quarter, obviously offset by a fair amount of currency headwinds and a

little bit of pricing in there as well. So, I think I've got – I thought some of the segment detail that I provided was





probably more useful than giving it in the company overall. So, take a look at the transcript and then if y ou have

more questions we can perhaps circle back after the call. ................................................................................................................................................................................................................................

Tim R. Wojs Robert W. Baird & Co., Inc. (Broker) Q Okay . No, I just wanted to make sure I didn't miss it. And then I guess, just as y ou guy s stand right now, I know

it's early , but any change to how y ou're thinking about the full y ear with on e quarter under your belt? And then

just a housekeeping question. How should we think of the FX headwind to revenue for the full y ear? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A No change in our outlook for the y ear. We're excited about it and we continue to be positive about how we see

2015 shaping up. When y ou look at the fundamentals and the indicators from a macroeconomic standpoint,

they 're shaping up well. Consumer confidence is good. Household formation seemed to have spiked. Existing

home sales are well-positioned and credit's easing up.

So, from a macro perspective, we continue to be very positive. When y ou look specifically at the demand drivers,

in terms of new construction, we talked last call about how we felt that Blue Chip was may be a little aggressive at

$1.150 million they've since come down. We think they 're still a little bit high. We're looking at about $1.1 million

is how we're thinking out at it in terms of starts, so that's a good healthy 10% growth for us. And we're seeing

indications of that growth importantly in the markets. Carolina's very robust. Florida is robust. Dallas is doing

well. So this is fairly ty pical of what we see where pockets start to have that kind of heat, so on the new

construction side, we feel good about it.

On the R&R demand drivers, when y ou look at, in addition to the macroeconomic indicators, y ou look at how our

businesses that are more skewed to R&R are performing, y ou see good signs. Plumbing is a strong R&R business

for us and that's doing very well. Milgard windows is principally an R&R play and that's doing extremely well. And

in Cabinets, we're seeing KraftMaid, which is in the high end, more or less, in that space doing well and starting to

grow which is indicative of a move towards that bigger ticket.

Our channel partners as they announced a month or so ago had very strong comps. So from a macroeconomic

standpoint, a new construction demand driver, an R&R demand driver, we feel very good about the y ear and

continue to be positive. And I think importantly, we have the supply chain in our company set up to handle it

without a significant capital expense and the inefficiencies that can sometimes come with that. So, we're positive

for the y ear. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Tim as it relates to y our housekeeping question on FX. FX will continue to be a headwind, particularly for the

second and third quarters because of the way that currency developed last y ear. If y ou think about in the fourth

quarter, we had about a $32 million headwind in currency in the fourth quarter of last y ear, so the comp will ease

as we get into the back-half of the y ear, particularly the fourth quarter. So if y ou take a look at where currency

rates are today versus where they were over the last y ear, order of magnitude of $300 million, so headwind facing

us from currency this y ear. ................................................................................................................................................................................................................................

Tim R. Wojs Robert W. Baird & Co., Inc. (Broker) Q





Great. Appreciate the color, thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Mike Dahl with Credit Suisse. Please go ahead. ................................................................................................................................................................................................................................

Michael G. Dahl Credit Suisse Securities (USA) LLC (Broker) Q Hi, thank y ou. I wanted to go back to the Plumbing discussion and actually focus on the margins. I think y ou had

said y ou expect full y ear margins in the 15% to 16% range, clearly a lot of the headwinds in the first quarter. But

also seems to imply that any benefits that y ou're getting on the commodity side are likely to be offset by maybe

currency and some of the spend in the near term. Just wondering how y ou'd think about that and going forward is

this – I think y ou've talked about margins that could be a little bit higher in a normal environment than this, so is

there any change there or is this just more of a temporary issue? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Mike, there is no change to our mid- to long term expectations for margin in the segment, mid-teens. And

specifically in the quarter, we incurred about $8 million of expense related to advertising, marketin g and trade

show expense which happens every other y ear at ISH. We believe this is really good spend for us to make, this is a

productive segment for us. We have strong brands with good growth potential. So, this is a good place to put our

investment.

And for those of y ou that were at the ISH show in Frankfurt, y ou were able to see the power of the Hansgrohe

brand. I don't think it's say ing too much to say that we were most definitely the best position in the entire fair. And

that's a fair that happens European-wide every other y ear. So, we feel really good about the investment in it and

we really don't see a change to our margin expectations in this space. ................................................................................................................................................................................................................................

Michael G. Dahl Credit Suisse Securities (USA) LLC (Broker) Q Okay , great. And then shifting gears to the Cabinet side, just with the leadership change or the new leadership

coming in, can y ou talk about just what some of the specific initiatives that [ph] Bill's (26:02) been tasked with are

– as far as kind of day one, first few months and then longer term, what's he y ou really coming in to do differently

than y ou guy s had been doing? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Joe Gross is the right leader for this business at this time. We brought him in because of his experien ce. And he is

steeped in turnarounds. He's spent a good portion of his career in private equity working for Cerberus and he's

run and turned around and helped us in significant businesses here in our portfolio.

In terms of the specific initiatives and his plan of attack and what we're doing with this business, we've talked

about our objective is to drive this business to profitability in 2015 and we're going to do that. And in terms of

specifics, we'll talk about that next week and y ou'll get a chance to m eet Joe. ................................................................................................................................................................................................................................

Michael G. Dahl Credit Suisse Securities (USA) LLC (Broker) Q Okay . Thank y ou. ................................................................................................................................................................................................................................





Operator: Y our next question comes from the line of Robert Wetenhall with RBC Capital Markets. Y our line is

open. ................................................................................................................................................................................................................................

Matt A. Bouley RBC Capital Markets LLC Q Hi. This is actually Matt Bouley on for Bob. Thank y ou for taking my questions. So, just in Paint, on the raw

materials side, I'm wondering if y ou can update us on what y ou're seeing now in terms of the Paint feedstocks and

what y ou're expecting in 2015. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A We really have seen modest deflation in Paint so far. We expect to see a little bit of favorability on the Paint side

coming in in the next quarter. How long that's going to last remains to be seen. If y ou look at expanding it to our

entire commodity basket, there really is a mixed bag. We're seeing copper in our Plumbing segment come off its

lows, again how long and how high copper pricing will go remains to be seen.

We're seeing some slight inflation in hardwoods in our Cabinets side. And of course, a month or so ago, there was

an announcement of a 10% price increase in our Installation. We are seeing a little bit of favorability out in

logistics – in terms of logistics costs as the price of diesel starts to come down. As we talked earlier, we really see

no significant change in our margin expectations particularly in our big segments around Paint and Plumbing. ................................................................................................................................................................................................................................

Matt A. Bouley RBC Capital Markets LLC Q Got it. Thanks. And then back to Cabinets, just given the recent consolidation in the space. So, I'm wondering if

y ou could touch on maybe the competitive dynamics y ou're seeing and particularly in the dealer channel. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A We really don't see a big change in terms of the competitive environment. We've competed against Norcraft for

y ears, and we're going to continue to do that. We have strong competitors out in the space. We respect them for

sure and we're focused on our business. And Joe and the team driving the turnaround and getting our Cabinet

business back to profitability. But don't see any real fundamental changes in the competitive environment. ................................................................................................................................................................................................................................

Matt A. Bouley RBC Capital Markets LLC Q Great. Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Eric Bosshard with Cleveland Research. Please go ahead.<Q

– [05QY C6-E]Eric Bosshard – Cleveland Research Co. LLC>: Thank y ou. Two questions. First of all in the Paint

segment the margin performance obviously quite good. But from a revenue perspective it sounds like the

Hardware and the Paint both showed growth. I'm curious in how y ou think that growth compares to the market in

the first quarter and how we should expect that growth to behave as we move through the y ear? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A





Y eah, Eric, it's John. Y eah, we, if y ou look at some of the others that have reported we're consistent with some.

The one company's a little bit higher than us but they had a load -in going in in the stores. So we think if any thing

we are holding if not picking up just a little bit of share in the marketplace today. ................................................................................................................................................................................................................................

Eric Bosshard Cleveland Research Co. LLC Q Okay . And then a similar question on the Cabinets side. You know the Cabinet growth is I think a little bit better

than prior trend. As you look forward in that business and y ou can get a little bit of a forward look with

measurements in traffic in that segment, but curious what y ou're seeing and expecting in terms of the revenue

growth opportunity there. And also the market share opportunity there, how that experience is playing out. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A We're seeing some good traction, particularly in our KraftMaid brand at both retail and the dea ler segment.

Market share is very difficult in this fragmented market to report, particularly when y ou're talking about a

quarter-over-quarter of variance. But we like our demand trend and we think we're winning with KraftMaid both

in retail and in dealer.

We remain challenged in the dealer segment for Merillat, as we recover from some of our execution issues that we

had last y ear, frankly. We have our deliveries and lead times back and we're starting to win back that, the trust of

that segment. We have the leading brands in KraftMaid and Merillat in the R&R and the builder segment

respectively. So we're going to continue to drive that demand. ................................................................................................................................................................................................................................

Eric Bosshard Cleveland Research Co. LLC Q Just within that, again the underly ing demand, I appreciate the progress on market share. The underlying Cabinet

demand, especially on the R&R side, how is that behaving relative to your expectations and how do y ou think

about that specific category this y ear, R&R Cabinets? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A I think it's robust. I mean, when y ou look at the pent-up demand that we've seen over, lack of spend in prior y ears,

when we look at the indicators in terms of new home values, we look at store traffic, the fact that KraftMaid for us

has momentum and it's on a higher end of the price continuum, I think that bodes well for the overall R&R

dy namics. ................................................................................................................................................................................................................................

Eric Bosshard Cleveland Research Co. LLC Q Great. Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Mike Wood with Macquarie Capital. Your line is open. ................................................................................................................................................................................................................................

Mike Wood Macquarie Capital (USA), Inc. Q Hi. Good morning and thanks for taking my question. First question in Cabinets, I'm curious if y ou can gives us

how much ERP inefficiencies where in the Cabinet segment in the first quarter? And some of y our competitors





have gone through the portfolio and exited recently some unprofitable markets in Cabinets, regional builder share,

have y ou gone through that y our portfolio made that decision yet as to whether or not you can exit certain

underperforming businesses? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Y es. Hi, Mike. As it relates to the ERP inefficiencies we experienced, it was about $3 million in the first quarter. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A In terms of the strategy of the team that's in place and the leadership of Joe, we are definitely applying

segmentation to customers, markets, geographies and channels and we're looking at that as a factor without

question. And again, at the Investor Day next week, we're going to go into more detail on that . ................................................................................................................................................................................................................................

Mike Wood Macquarie Capital (USA), Inc. Q Great. And was the – in Paint, was the deferral of that spending just more of an execution timing? And if y ou

could also just comment on the Pro initiatives, it was mentioned in the release, just wondering how large that

business is? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Y eah. So, Mike, the deferral – it was more due to the fact that we had some inclement weather, [indiscernible]

(33:16) the advertisement people are painting, so we just deferred it into second and third quarters. As it relates to

the Pro business, they continue to have nice growth and we'll talk more – Jeff Filley , the Head of Behr will talk

more about our Pro initiatives next week at the Investor Day . ................................................................................................................................................................................................................................

Mike Wood Macquarie Capital (USA), Inc. Q Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Philip Ng with Jefferies. Y our line is open. ................................................................................................................................................................................................................................

Philip Ng Jefferies LLC Q Good morning, top line in y our Cabinets were pretty strong, have y ou been able to regain some of that lost y ear in

home center, the home center channel. And the high-single digit growth in KraftMaid is better than we would

have expected. How does that stack up to y our expectation and did y ou have to cede some price to regain market

share? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A It met our expectation. We planned on as we talked last call of recalibrating our pricing and promotional

strategies. We're leveraging the brand and the designer advocacy that we have in KraftMaid. So Philip I'd say it

was on plan and we do think that the growth that we showed was a share gain for us. ................................................................................................................................................................................................................................





Philip Ng Jefferies LLC Q Okay , that's helpful. And can y ou give us a little color on how – it sounds like y ou're generally upbeat about the

outlook but can you give us some color on how the start of the spring selling season is progressing and any sales

trends y ou've seen in April? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Y eah. We like what we're seeing, the demand is rolling along as expected. As I talked in some of the earlier

remarks, the macroeconomics and what we're seeing in specific markets, the foot traffic we're seeing in retail, the

movement with KraftMaid indicating that the buyer is moving up in terms of the price continuum, that all

supports a nice spring selling season. ................................................................................................................................................................................................................................

Philip Ng Jefferies LLC Q Okay , all right. Thanks, guy s. Good luck in the quarter. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Alex Ry giel with FBR. Y our line is open. ................................................................................................................................................................................................................................

Alex J. Rygiel FBR Capital Markets & Co. Q Thank y ou, good morning, gentlemen. Looking at the Plumbing margins that expectation of 15% to 16% this y ear,

is there any way you could sort of quantify the negative headwinds this y ear from emerging markets, tr ade show

expense and foreign currency? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Sure, Alex. Well, that impact comes over a period of time, we've introduced a lot of new products at those trade

shows and particularly the one in Frankfurt. And so, we will see the benefit of those sales really from in 2015 and

2016 because a lot those won't hit the market until later this year. But when they do because they're new products

and they – we've priced them approximately because of the innovation that's in these new products, you will see

that the margin benefit at that time. ................................................................................................................................................................................................................................

Alex J. Rygiel FBR Capital Markets & Co. Q And then secondly, can you go a little bit deeper on the double-digit growth in windows in the quarter? Was that

market share growth, price or market share gains? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A It was probably a little bit of share gain along with some improved mix in the quarter. We've seen a lot of nice

upward pricing – or price point driven demand from the consumers in the Western U.S. So, think of our Essence

windows as we talked about or Keith mentioned it a couple of minutes ago, some of our paint and v inyl products

are doing particularly well. The sliding glass door/glass wall product that we came out with last y ear are all

resonating very well with the consumers in the Western U.S.





Alex J. Rygiel FBR Capital Markets & Co. Q Great. Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Dennis McGill with Zelman & Associates. Please go ahead. ................................................................................................................................................................................................................................

Dennis P. McGill Zelman & Associates Q Hi. Good morning. Thank y ou guys. Just wanted to go back to Decorative Architectural segment. John, are y ou

seeing or did y ou guys see any difference between point of sale and y our revenue recognition during the quarter? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A We did – y eah, POS was higher than our revenue recognition. ................................................................................................................................................................................................................................

Dennis P. McGill Zelman & Associates Q And what was driv ing that? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A I think there may have been just a small amount of inventory balancing there, Dennis. ................................................................................................................................................................................................................................

Dennis P. McGill Zelman & Associates Q And is that across the Hardware and Paint segment or more Paint? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A I'd say it's solely in the Paint segment. ................................................................................................................................................................................................................................

Dennis P. McGill Zelman & Associates Q Okay . And then just going back to Cabinets. Y ou touched on this a little bit I think around the Merillat

performance, but can y ou speak to may be a little bit more specifically the trends you're seeing in the home center

versus Merillat in the dealer channel? How much of a drag is that for y ou, guy s, right now that y ou're looking to

reverse? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A We're performing well in the home center dealer channel with KraftMaid. The challenge that we're facing to give

y ou a little bit of color on that from the Merillat side, as y ou know, last y ear we had delivery and lead time issues

associated with some execution problems we had with our ERP sy stem. We've put that in the rearview mirror. We

have our delivery and our lead times back. But there has been some hangover with regards to our ability to serve

in businesses that those dealers go after. We're building that confidence back.





We haven't lost leaderships but we did lose some confidence in them. And we're working that back and step -by-

step, we'll continue to do that. So, directly to y our question, Dennis, we're seeing some good strong retail and

dealer business in KraftMaid. We continue to be challenged with regards to the demand side at Merillat, but we're

getting better. ................................................................................................................................................................................................................................

Dennis P. McGill Zelman & Associates Q And I'm sure y ou'll touch on this next week, but as far as communicating that message to the Merillat dealers,

what's the primary focus that you're communicating to them right now as far as why they should stick with y ou? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Well, really , it's not so much, the communication isn't orie nted on why to stick with us, it's why y ou should grow

with us and why we're going to be dependable. And fundamentally, we do that with our numbers and our

performance. ................................................................................................................................................................................................................................

Dennis P. McGill Zelman & Associates Q Okay . I look forward to next week. Thanks, guys. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Thanks, Dennis. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Michael Rehaut with JPMorgan. Your line is open.<Q –

[05P8K5-E]Mike Rehaut – JPMorgan Securities LLC>: Thanks. Good morning, everyone. First question I had

was on – just going back to Plumbing for a moment. The 14% margin in the quarter y ou mentioned, obviously,

impacted by the trade show and some of the spend. And I believe you said last quarter the trade show itself w as $3

million, so I just wanted to make sure that was the case. But getting to the 15% to 16% margin for the full y ear,

from the 14% y ou're seeing in the first quarter, is that a function of most of that $8 million dissipating or is there

sort of incremental profitability that y ou expect as well from volume growth or price mix? If y ou could go into a

little more detail in terms of going from the 14% to the 15% to 16% for the y ear. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Sure, Mike. It's John. So the trade show actually costs us $4 million, so a little bit more than we expected than the

$3 million. But in the $8 million there's some embedded incremental advertising and marketing expenses that we

referred to. So, that's how y ou bridge the $4 million to the $8 million.

In terms of the growth – the profit growth going forward from Q2 to Q4, clearly a big part of it is just the expense

that we incurred in Q1 we don't expect to repeat itself in the following quarters. At the same time, we do expect to

grow this business, so the balance of that relates to the volume drop that we expect to have in the remaining three

quarters in 2015.

In terms of mix, we do probably see a little bit of improved mix over the quarter, but we did have kind of some

crosswinds in there in the first quarter, just with the strong growth in the emerging markets that we experienced.





Michael Jason Rehaut JPMorgan Securities LLC Q Great. No, thank y ou. And just a second question on Cabinets, y ou had a $7 million profit im provement off of $12

million in better volume or I'm sorry, better revenue. So, it would seem that a portion of the profit improvement

was just from incremental margins. And I was hoping y ou could explain the other portion if that was may be

lapping some ERP or costs that y ou're not incurring this y ear, if y ou could kind of walk through the drivers of the

profit improvement.

And in terms of the new management, I was hoping just to get a sense for – y ou kind of referred to the fact that

the new leader, and I apologize for not catching the name, I believe, [ph] Bill Gross (41:49), not – coming from

private equity place but if there's also – if could just go through his background in a little more detail, as well as if

there were any other major changes to the leadership team I think we've discussed in the past. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Y eah. We've – the improvement is a combination of some favorable mix that we've seen and KraftMaid growing.

We certainly are performing better on the operational side and getting over some of the inefficiencies of ERP.

We've also taken some costs out. So it's a combination of the usual suspects with regards to the improvements.

With regard to Joe Gross, he's not a bond guy ; he's Joe and not Bill. He's been with Masco for quite a number of

y ears. He came from our Tool business and then was moved into a President of our Rough Plumbing business and

all along the way he's done a tremendous job. He does have significant turnaround experience as I mentioned, he's

worked in private equity for a good portion of his career. So he brings a very good perspective in this business, and

as I said, y ou'll get a chance to meet him, to talk to him, to have Q&A et cetera at the Investor Conference. ................................................................................................................................................................................................................................

Michael Jason Rehaut JPMorgan Securities LLC Q Great. Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of George Staphos with Bank of America. Your line is open. ................................................................................................................................................................................................................................

George L. Staphos Bank of America Merrill Lynch Q Hi everyone, good morning, most o f my questions have been asked but I'll give it a shot with these two. First of all,

can y ou comment at all or affirm what y our v iews on the incremental margin and incremental profit uplift should

be for Cabinets this y ear. I seem to recall there was a $25 million or so built-in benefit given last y ear's

inefficiencies. And then, Keith, I remember still a goal of 25% incremental margin. Can y ou confirm that that's the

outlook for 2015?

And then question for y ou, John, just on FX, can y ou comment at all on sort of how y our debt is allocated

regionally? I don't recall on whether there's an opportunity at all to use that as a natural hedge for FX going

forward. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A





So, George, with respect to y our incremental margin question on Cabinetry, y eah, we do expect that there should

be a $25 million tailwind from just the lack of the incremental expenses that we incurred in 2014 that will benefit

2015. So, above and beyond that, in terms of just the volume benefit, we should expect about a 30% dropdown on

a contribution margin on incremental volume in the segment. So, that's how to kind of think about profit growth

in 2015 and beyond in our Cabinet business.

As it relates to FX, right now all of our debt is U.S.-based. But to y our point, given the attractive rate environment

that we're seeing over in Europe, as we have upcoming maturities and we have that significant maturity that's

coming up in 2016, if the rate environment stays similar to what it is now, we would definitely consider taking a

look at perhaps doing some euro -based financing for that refinancing activity later next y ear. ................................................................................................................................................................................................................................

George L. Staphos Bank of America Merrill Lynch Q Okay . Keith, just one quickie, and not trying to be too short-term, in answering a prior question y ou were certainly

espousing y our optimism, your confidence in the way the quarter is developing. Is there a way to put a number or

a range on the sales comp y ou're seeing thus far in the quarter? Thanks, and good luck in the qu arter. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Y eah. I think we're – I'm going to stay away from giving a number. We're – our outlook has not changed. We feel

the same way about these businesses now as we did coming into the quarter and continue to feel good about the

outlook for 2015. ................................................................................................................................................................................................................................

George L. Staphos Bank of America Merrill Lynch Q Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Susan Maklari with UBS. Y our line is open. ................................................................................................................................................................................................................................

Susan Marie Maklari UBS Securities LLC Q Good morning. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Good morning, Susan. ................................................................................................................................................................................................................................

Susan Marie Maklari UBS Securities LLC Q In terms of the pricing environment and promotions, I know that y ou made a big effort towards the end of last

y ear to sort of reset a lot of that. Can y ou talk about with the improvement that y ou saw during the quarter, any

changes there and maybe any abilities to sort of get more pricing as we go through the y ear? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A





As we talked about – as I talked about last quarter, our intention was to adjust our promotional strategy and

pricing in Cabinets. We got more aggressive than I think the market would bear, as we've talked about in the past,

and we made some adjustments to that. We're competitive in terms of where we are in our strategy right now, and

we saw good results from it. We're committed to driving this business to profitability and we're seeing some nice

signs as Joe and the new team start to get traction. ................................................................................................................................................................................................................................

Susan Marie Maklari UBS Securities LLC Q Okay . And then in terms of y our working capital, the improvement was really impressive there as y ou saw things

take off in the quarter. Can y ou talk a little bit about how we can expect to trend during the y ear, and is there may

be any thing significant that y ou can do there? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A We continue to work on working capital, Susan. And as y ou highlighted, just great outcome that the team fro m an

operations, finance, and supply chain execute upon. We do incentivize all of our employees across the enterprise

on working capital performance, so there is incentive to continue to improve that.

So there's a variety of things that we're working on, principally around inventories. We think there's an

opportunity to continue to improve. That said, I think given that we're kind of at record low levels of working

capital, the improvement from here will be slightly incremental. Don't expect major step -change improvement

from working capital going forward. ................................................................................................................................................................................................................................

Susan Marie Maklari UBS Securities LLC Q Okay . That's great. Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Nishu Sood with Deutsche Bank. Please go ahead. ................................................................................................................................................................................................................................

Nishu Sood Deutsche Bank Securities, Inc. Q Thanks. So, Keith when y our tenure started and y ou talked about portfolio restructuring, most of the investor

focus was on what might be divested. But y ou folks are fairly consistent in talking about potential bolt -on

acquisitions happening as well; so the Endless Pools' acquisition. First, if y ou could give us some sense of the size

of that, sales, may be EBITDA? And also if y ou could give us some sense of how it fits in to the acquisition v ision

and what it might tell us about what sorts of future acquisitions y ou're considering and might make as time goes

on?<A – [06VRJK-E]Keith Allman – Masco Corp.>: Endless Pools was a small acquisition for us. It was about

$25 million. In terms of how it fits into the overall strategy, we're focused on bolt-ons, rather than per se another

leg, another platform for us. We v iew Plumbing and Paint, North American and Global, and that space is where

our target is. We're targeting in the range of $200 million to $300 million as the kind of acquisitions th at we're

looking on.

So Endless Pools is small, but it's consistent in that it's in Plumbing, it's where we see the potential to leverage

either our technologies or our access to markets. And that's what we've brought onboard a new VP of Strategy and

Business Development, and his role is to help manage our pipeline and we're working with our teams to do that.

So it's – while it's small, it's quite consistent with what we're looking at in terms of our ongoing acquisitions. ................................................................................................................................................................................................................................





Nishu Sood Deutsche Bank Securities, Inc. Q Got it. And y ou mean up to $200 million to $300 million in the acquisition value? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Correct. ................................................................................................................................................................................................................................

Nishu Sood Deutsche Bank Securities, Inc. Q Got it. Okay . And a second question, the Investor Day obviously, we're looking – everyone is looking forward to

that. Y ou've mentioned we'll be hearing from a few of the div isions, Cabinets, [ph] ProBuilt (49:49), Paint. Are we

going to be hearing from all of the different div isions? Is it going to be a pretty sy stematic review of what's going

on across Masco? What – may be – are there going to be some themes y ou're going to be looking at? Obviously,

we'll – I'm sure we'll get all the details, but may be if y ou could give us a movie trailer version. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Y ou're not going to hear from every one of our general managers, but clearly y ou're going to have people talking to

y ou about every segment. We're going to go through and put the business leaders in front to talk about their

growth strategies. We're going to talk about specific actions as well as performance milestones, and we're going to

talk about expectations. ................................................................................................................................................................................................................................

Nishu Sood Deutsche Bank Securities, Inc. Q Got it. Okay . Great. We'll see y ou next week. Thanks. ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Thank y ou. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Will Randow with Citi. Y our line is open. ................................................................................................................................................................................................................................

Will Randow Citigroup Global Markets, Inc. (Broker) Q Hey , good morning, and thanks for taking my questions. I was curious on the Cabinet side. It looks like y ou guys

introduced the Merillat Express, five days ship business along with recently purchased the Cardell trademark, and

have been making some waves in Cabinets. Where's the strategic v ision behind some of those initiatives? ................................................................................................................................................................................................................................

Keith J. Allman President, Chief Executive Officer & Director A Well, Cardell was purchased some time ago. And, really, what we're focused on is try ing to give our cu stomers

what they need to drive foot traffic and to be profitable for them and for us to be profitable. So, our strategy is a

combination of market penetration with the strongest brands that we have, as well as getting our house in order

with regards to performance and cost.





Will Randow Citigroup Global Markets, Inc. (Broker) Q Thanks for that. And just one follow-up in terms of the pace of the repurchase program with about 4 million

shares in the first quarter. Is there any room to accelerate that? And are y ou looking at this consistently on a free

cash flow less share purchases neutral basis? Thank y ou. ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Y eah, Will, there is alway s opportunity to accelerate or decelerate this share repurchase activity based on where

we see the share price go. As I mentioned in my remarks, we are – we did reaffirm the fact that we would purchase

between $400 million and $500 million worth of shares this y ear. And so we'll continue to evaluate opportunities

to accelerate repurchases based on where the share price is at. ................................................................................................................................................................................................................................

Will Randow Citigroup Global Markets, Inc. (Broker) Q Thanks again. ................................................................................................................................................................................................................................

Operator: Y our next question comes from the line of Keith Hughes with SunTrust. Y our line is open. ................................................................................................................................................................................................................................

Keith Hughes SunTrust Robinson Humphrey Q Thank y ou. My question's on Cabinets. Y ou had discussed mix being a positive in the quarter. Could y ou give us a

v iew of where volume was in the first quarter? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Y eah. So, volume was up just a little bit, Keith. Pretty good volume in that we saw as a result of the mix though. So

KraftMaid really led the volume charge in Q1 as Keith mentioned earlier, both at retail as well as our dealers. So,

that initiative has gone very well so we're very pleased with the volume growth at KraftMaid. ................................................................................................................................................................................................................................

Keith Hughes SunTrust Robinson Humphrey Q Does that mean that Merillat volume was down year-over-year? ................................................................................................................................................................................................................................

John G. Sznewajs Chief Financial Officer, Treasurer & VP A Y eah. It was down slightly year-over-year. ................................................................................................................................................................................................................................

Keith Hughes SunTrust Robinson Humphrey Q Okay . Thank y ou. ................................................................................................................................................................................................................................

Operator: Ladies and gentlemen, that's all the time we have for today. Thank y ou for participating in today's

conference call. You may now disconnect.





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