Masco Corporation (MAS) CEO Keith Allman on Q2 2022 Results - Earnings Call Transcript

Masco Corporation (NYSE:MAS) Q2 2022 Earnings Conference Call July 28, 2022 8:00 AM ET

Company Participants

David Chaika - IR

Keith Allman - CEO

John Sznewajs - CFO

Conference Call Participants

Stephen Kim - Evercore ISI

Matthew Bouley - Barclays

Mike Dahl - RBC Capital

John Lovallo - UBS

Susan Maklari - Goldman Sachs

Deepa Raghavan - Wells Fargo Securities

Keith Hughes - Truist

David MacGregor - Longbow Research LLC

Adam Baumgarten - Zelman

Phil Ing - Jefferies

Garik Shmois - Loop Capital

Kenneth Zener - KeyBanc

Rafe Jadrosich - Bank of America

Doug Ward - JP Morgan

Operator

Good morning, ladies and gentlemen. Welcome to Masco Corporation's Second Quarter 2022 Conference Call. My name is Bailey, and I will be your operator for today's call. As a reminder, today's conference call is being recorded for replay purposes. [Operator Instructions]

I will now turn the call over to David Chaika, Vice President, Treasurer and Investor Relations. You may now begin.

David Chaika

Thank you, Bailey, and good morning. Welcome to Masco Corporation's 2022 second quarter conference call. With me today are Keith Allman, President and CEO of Masco; and John Sznewajs, Masco’s Vice President and Chief Financial Officer.

Our second 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. [Operator Instructions] 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 describe 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'll now turn the call over to Keith.

Keith Allman

Thank you, Dave. Good morning, everyone, and thank you for joining us today.

Please turn to Slide 5. We continue to execute in this challenging environment, and I'm pleased with our performance in the first half of the year. In the second quarter, our top line increased 8%, with growth driven by pricing and to a lesser extent, volume in both segments. Our operating profit was impacted by higher supply chain costs, planned marketing expense increases and unfavorable foreign currency. Commodity and other inflation was mid-teens in the quarter, but we expect this to be a peak level, as we anniversary inflation that began last year and we are beginning to see declines in certain input costs in the spot market. Importantly, with our continued pricing actions, we have begun to recover the price cost lag that we experienced in the back half of 2021. Additionally, we continue to leverage our SG&A as SG&A as a percent of sales improved 90 basis points to 15.3%. These actions contributed to sequential margin improvement of 140 basis points to 17.6% for the quarter. Our earnings per share for the quarter was $1.14, which matched prior year's earnings.