Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fortune Brands Home & Security Second Quarter 2013 Earnings Call. [Operator Instructions] I will now turn the call over to Brian Lantz, Vice President of Investor Relations and Corporate Communications. You may begin your conference.

Good afternoon, everyone, and welcome to the Fortune Brands Home & Security quarterly investor conference call and webcast. We are pleased to be here today to provide an update on our progress during the second quarter of 2013. Hopefully, everyone has had a chance to review the news release issued earlier. The news release and the audio replay of the webcast of this call can be found in the Investors section of our fbhs.com website. I want to remind everyone that the forward-looking statements we make on the call today, either on our prepared remarks or in the associated question-and-answer session, are based on current expectations and the market outlook, and are subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated. These risks are detailed in our various filings with the SEC, such as our annual report on 10-K. The company does not undertake to update or revise any forward-looking statements, which speak only to the time of which they are made. Also, any references to operating profit, earnings per share or cash flow on today's call will focus on our results on a before charges/gains basis as described in today's news release unless otherwise specified. With me on the call today are Chris Klein, our Chief Executive Officer, and Lee Wyatt, our Chief Financial Officer. Following our prepared remarks, we have allowed ample time to address any questions that you may have. I will now turn the call over to Chris.

Thank you, Brian, and thanks to everyone for joining us today. We delivered strong second quarter sales and profit growth that capped off our first half of the year that was even better than planned. We have developed solid momentum by focusing on profitable growth as we continue to leverage the market recovery and our competitive advantages. We are now positioned to drive incremental shareholder value, and we are well positioned for the second half of the year. Importantly, based on our strong performance, our continued positive outlook on the market and our efficient closing of the WoodCrafters acquisition, we are again increasing our annual outlook. Let me first spend some time on the quarter highlights, and then I'll discuss our increased annual outlook. For the quarter, sales were up 11% and EPS was $0.41, up from $0.29 a year ago. Importantly, for our 3 housing-related segments, we saw total sales increase 13% for the quarter, well ahead of the overall market for our products as we continue to gain share on our categories. Now let me give you some highlights by segment. Sales for our cabinets business were up 13% for the quarter. We exceeded our expectations as we gained share in all channels and benefited from both new construction and repair and remodel. The pace of new construction remained a key driver as we again saw strength with dealers and builders in our new construction lines. However, as R&R spending improved over last year, we also saw growth more broadly across a fuller range of our semi-custom lines. We are leveraging our structural competitive advantages, including our portfolio of brands, the continuous stream of innovation and our service-oriented operating platform to generate sustainable momentum. We gained share in both the dealer channel, where we're the clear market leader,…

Thanks, Chris. As Brian mentioned, the majority of my comments will focus on income before charges and gains, which best reflects ongoing business performance. Let me start with our second quarter results. Sales were $1.04 billion, up 11% from a year ago, with our home product sales growing 13%. Consolidated operating income for the quarter was $107 million, up 48% or $34 million compared to the same quarter last year. EPS were $0.41 for the quarter, up 41% or $0.12 versus the same quarter last year. Now let me provide a little more color on segment results. Our Cabinet sales were $392 million, up $46 million or 13% over the prior year quarter with growth in all channels. Operating income for the segment almost doubled to $35 million, up $17 million as we benefited from higher sales volume running through our improving supply chain. Our strategy of disciplined sales growth is working as planned, as we continue to exceed the overall Cabinet market growth while improving profitability. We are seeing broader growth in our semi-custom cabinet lines as R&R spending improved over last year. Plumbing sales for the second quarter were $323 million, up $41 million or 15% versus the prior year quarter. All channels, again, performed well with the U.S. wholesale, U.S. retail and China businesses all experiencing double digit sales growth. Operating income was $55 million, up 29%, even as we made incremental brand investments. And importantly, operating margin was 17.1%, 190 basis points higher than the same quarter last year. Windows & Doors sales were $176 million, up $17 million or 11% from the prior year quarter. Within this segment, the Door business experienced 15% sales growth, while the Window business grew 6%. Operating profit for this segment more than doubled to $10 million, $6 million better…

Thanks, Lee. That concludes our prepared remarks for the second quarter. We will now begin taking your questions and we'll continue as time allows. [Operator Instructions] I will now turn the call back over to the operator to begin the question-and-answer session. Operator?

[Operator Instructions] Your first question is from the line of Stephen Kim of Barclays.

So I just wanted to start off with a question about Kitchen & Bath Cabinetry. I guess, first of all, can you give us a sense for what we're seeing there in terms of mix versus cost versus maybe a reduction in promotional actions? Obviously, the margin improved handily. Just want to try to get some handle on how you would rate the improvement in profitability up into those 3 categories?

I'll start with just a little bit of background. I think, overall, we've seen promotion continue to decrease. As you know, we started back about 1.5 years ago being a little bit more constrained on that, and I think that's worked well. Across our channels, dealer continues to perform very strongly, and so we're seeing a good mix come out of there. And then on the home center side, we're also seeing strong performance in our in-stock category, as well as our semi-custom side. On the builder side, there's a lot of demand out there on the direct-to-builder side, but we also pick up a pretty good mix coming out of the dealer channel, and that tends to be a little bit richer even than on the direct-to-builder side. Lee, I don't know if you have anything else?

No, I think that's right. I think it's across the board. We're getting leverage on the volume and 9% operating margin in the quarter.

Yes, that sounds great. It sounds like it's pretty much strong across the board. I guess, if I could, ask another question related to what you're seeing in renovation and -- well, particularly residential larger-ticket remodel. You indicated that you were seeing some continued strength or some continued signs of improvement in that market. Is there anything in particular that you would point to sort of within the numbers? Obviously, you could just look at the sales growth, it would seem to suggest that things are picking up. But is there anything in particular maybe sort of swimming beneath the numbers that you would also pall out that gives you some hopeful signs -- or indicate the hopeful sign that we're starting to see an improvement in larger-ticket residential remodel?

Yes. I'd say the most encouraging thing is in the semi-custom side of the market, which is special order at both home centers and Kitchen & Bath dealers, kind of the heart of the market, semi-custom is really picking up. I'd say if we're sitting here 9 months ago, we're talking a lot about the value end of that market, which is still -- semi-custom is still designed for the project. But really it was much more pure value focus. Now we're actually starting to see a pickup in the higher margin product, kind of the richer mix. A lot of our innovation, frankly, is getting picked up on finishes, different wood species and so that's starting to improve. And I'd say the thing that's the most different is probably that, and that's an encouraging sign. It's not all the way back. I think we still have some headroom to grow. And in fact, on the higher-end custom, I think we're still a way from where we should be steady state. But we can see some momentum coming through.

Your next question is from the line of Dennis McGill of Zelman & Associates. Dennis McGill - Zelman & Associates, LLC: Chris, just on the Cabinet, the incrementals. If you look at the first half of the year, the incrementals, I think, are above what you've talked about that business maybe normalizing to and what you've seen historically. Any sense that you're becoming more optimistic that you can see better leverage than what you've seen historically with a couple quarters of growth kind of behind you and able to see what the business does and how the volume drops down?

Yes. It tends to kind of ebb and flow a little bit. I mean, we're, I think, certainly encouraged with the kind of leverage we're seeing, but I'm not sure that it's a straight line up because we -- some of it is mix, and so I'm not sure that you can just extrapolate it through. But I'd say we are encouraged, as we have talked about, that we should be seeing leverage between 25%, 30% and we should be moving toward kind of the steady-state margin in the kind of 14%, 15% range. And so, I think, we're encouraged that we're headed toward that. And you can see a stronger quarter. You can see it back off a little bit, but I kind of look at it over more of a kind of a rolling average. And on that basis, I think we're encouraged. Dennis McGill - Zelman & Associates, LLC: Would it be fair to say that the leverage you've seen in the Cabinets for the first half of the year is better than what you would have expected for that given level of sales at the beginning of the year?

Yes. I think, back to what I was talking about earlier, that the mix that we're seeing coming out of that core semi-custom is stronger than we would have thought at the beginning of the year and that's encouraging. And I think if that continues, we'll be on a better pace than we thought, so I think that's probably the most significant change from where we were in the beginning. Dennis McGill - Zelman & Associates, LLC: Okay. And then you mentioned double-digit growth at retail for the Moen brand. Is there any differentiation between shipments and POS?

No, I think it's actually pretty healthy. I'd look across both retail and wholesale and say it's pretty healthy that there's not a lot of inventory build out there. On the wholesale side, which is feeding new construction, we're shipping it in and they're selling it out, so it's a pretty good velocity return there. On the retail side, I think we've talked and I think the home centers have talked about they've been pretty disciplined about kind of making sure there's enough inventory in the system, but not getting too far out ahead. I'd say the most encouraging thing in our growth at Moen retail has just been our new products are really driving a lot of that. And the pick up on new products is encouraging because that tends to be kind of our stronger performing. Dennis McGill - Zelman & Associates, LLC: And just last question kind of wrapped into that. Are using, inclusive of new product, a favorable mix within the faucet category as well?

Yes. I think -- yes, it's good. We're not driving growth as maybe some others are in the industry by just selling in at a lower cost. We're getting a good rich mix come through as we'd hope. And so, yes, I think it's as we thought it would be and it's quite strong.

Your next question is from the line of Bob Wetenhall of RBC Capital Markets.

Just wanted to ask, and maybe this is more directed towards Lee. I was trying to understand how -- what's driving the increase in SG&A. It's like up $20 million -- $23 million, $24 million year-over-year. And I was just trying to think how much operating leverage is there to -- or what's your ability to leverage the SG&A line going forward?

Yes. Bob, when you look at the quarter, SG&A is up about $25 million, about 10%. If you look at just kind of the normal volume and inflation piece of that, that's about 4.5% of the 10% increase, so a very manageable level. What we have done in the quarter is continue to invest in our initiatives to drive future growth, and that specifically means Moen advertising. So we increased Moen advertising in the quarter by $8 million. So that's the other big chunk of that, that we did. And we have some M&A kind of consulting that drove it up. So I think net-net, about 4.5% of the 10% growth was kind of core things that you're leveraging. Those others were discretionary decisions to invest in the business.

Got it. That's very helpful. And if you could just give us a update on the WoodCrafters acquisition in terms of integration, and what you're seeing in terms of potential opportunities on a broad general sense, that would be terrific.

Sure. I'll take that. We closed the WoodCrafters about a month ago, and it's proceeding as planned. Everything is on schedule. It's terrific. They're a great group of associates joining us. Many of them based in Mexico, and so we've been working closely with them on integration and in working with our bigger customers. And it's terrific. So I think everything is on track. We're starting to develop the plans for kind of further opportunities, but the biggest concern right out of the gate is just making sure that it's as we thought it would be. And so I can report back, no surprises and everything's -- all systems go. It's terrific. We're very excited about it.

The next question is from the line of Dan Oppenheim of Credit Suisse. Daniel Oppenheim - Crédit Suisse AG, Research Division: I was wondering, you talked about the storage business and some of the repositioning, the benefits coming the second half at least from a revenue prospective. Just wondering if you could comment at all in terms of just how we should think about that in terms of any impact on margins initially as some of that helps the revenue there?

Yes. So within that business, we're doing a number of things in the beginning of the year to really launch some new products, better mix. And so some of that started to flow through the second quarter, but that's really positioning for the second half. That's a seasonal business and a lot of the impact comes kind of in the October, November point of the year. So we were setting up a lot of new programs to really give ourselves a lift there. So we should see some positive impact for the second half, and really, we saw the second quarter as really more of a repositioning quarter to set up that stronger second half. Daniel Oppenheim - Crédit Suisse AG, Research Division: Okay. And then within that point of business which then transfers the growth there, and also the margin front. Further room in terms of expansion in the margins there, I think, in terms of pricing power or how do you think about that?

Yes, I think it's really mix driven. So I think as long as we continue to see the strong mix out of our wholesale group into new construction, which has been good, and the mix on the retail side to extend its supporting new products that tends to be pretty strong, too. So those are the 2 real big drivers in the business. And we have a steady cadence of new products that are going to continue to come into the market, so I'd expect that will continue. So it's really as long as the market holds up, we're set to deliver against it. And, yes, it's performing quite well this year.

Your next question is from the line of Michael Rehaut of JPMorgan. William Wong - JP Morgan Chase & Co, Research Division: It's actually Will Wong in for Mike. So my question is on the current M&A environment. I was just wondering if you guys could talk about any potential areas where you could see a potential M&A, and just what the market looks like currently?

Yes. It's -- I'd say it's starting to wake up, and we get to see a lot of things. I mean, we're one of the most obvious strategic buyers for a number of different companies out there. So we're looking at a number of different things. I don't know that -- I mean, given that we just completed one, I don't know that anything else is imminent. But we're pretty deliberate. We're really trying to drive shareholder value here, so we're disciplined in terms of how we look at everything. And so, yes, I'd say the environment is picking up. I think there's more to come. I'd look out over the next 12, 18 months and say it will probably pick up even more. There are a number of companies that are family-owned that I think as they start to see some of the benefit of the recovery, will then think about maybe selling some private equity-owned companies may be out there, too. So I'd say we're going to take our time. We're going to continue to be disciplined, and really focus on just building the best company and driving shareholder. That's kind of the key to it all. William Wong - JP Morgan Chase & Co, Research Division: Okay. And then you've talked about the Storage business in terms of repositioning in the second half. Now just longer term, what is the future plan for tool storage?

Yes. Strategically, the category hasn't been that strong. We're looking at further opportunities to expand into the garage. We do have a line of garage storage cabinetry and other organizing type products, and we continue to look for opportunities to grow in that category. The core category of tool storage is in a very slow decline. So we're managing it today, really, for profitable growth and focused on cash generation. And so we'll look at something like repositioning the line to generate greater cash flow in the second half, and say that that's really where the business sits. And so that's -- it's kind of where the business is within the portfolio.

The next question is from the line of David MacGregor of Longbow Research.

Can you just talk about wood price inflation in the Cabinet business, and, if possible, can you quantify the impact on the second quarter results?

We would say that we have seen some inflation in the wood side. Remember, we're more hardwoods than we are just the lumber to build homes. But -- so we're seeing some inflation, of course. But I'd say, overall, it's been very manageable. With our brand strength and our service proposition, we have the ability to take price to offset those. So we feel very good about that, that over time we'll manage any inflation. But I would say, then, overall, general inflation for our company has been pretty modest in the quarter.

Is there any chance of quantifying that for us? Was it neutral or was it a small inflationary influence or...

I would say that in the quarter that we basically offset any inflation with modest price increases.

Okay, great. And then secondly, you talked about share gains across your various businesses. I wonder if I could just get you to elaborate a little further on that, maybe talk about where thought you gained the most and how you see that going forward?

Yes. We can go through by business. I think we're looking at -- if you look at cabinets, we're looking at sales up 13% for the quarter. I think that category is probably high-single digits, so there was some significant movement there. Within that, I'd say dealers are strongest. We're picking up individual dealerships. We're expanding within dealerships to multiple lines, and we're seeing more activity there. On the home centers side, we're very active at selling directly into the designers. And that's something we've been really focused on over the last 12, 18 months, and moving away from just that heavy discount promotional environment into the more closer collaboration and that paid off. So those are the types of things. As you start to get a little bit of market momentum, frankly, you start to see the benefits of a lot of the position gains that we made over the last 3 years or so. You've seen some volume flow through there. With Moen, I think it's -- we've got a heavy representation with the large builders and within wholesale, and they're disproportionate, I think, winning relative to the overall market. And then on retail, I talked about some new products that are really helping us along there. Windows & Doors, I think the biggest thing there is we worked hard over the last 2 or 3 years to really expand distribution. And we're underrepresented in some regions across the country, and so that was pretty deliberate. And again, now you're seeing some volume flow through that market. And so you're seeing the share gains that are really the result of extending distribution deeper into the marketplace. So those are really kind of the highlights. And we've always grown a little bit farther ahead of the market. I think, as you see volume coming through the market, it tends to extend that out a little bit.

And so if I could just add on that last one. Within the Windows & Doors business, is your private label business in Doors expanding? Do you feel you're gaining share through that franchise?

I think it's really fine. I don't think it's growing any faster than the overall market. It's kind of keeping pace. I think the real piece there is the Tru 2-step wholesale distribution, the Therma-Tru branded door. We're the leader in the fiberglass at the high end. And that is doing quite well, and our distribution is very strong. And so that's just really setting to mark out there.

The next question is from the line of Eric Bosshard of Cleveland Research.

2 questions for you. First of all, on the revenue guidance, can you go back to how you would break apart the remodel and the new construction within that? I know you've talked about remodel up, I think, to 4% or 5% and new up 25%. Within the updated guidance, any change in the mix or growth rates within those 2?

Not really. I mean, it's about -- I think, overall, we roll out the guidance to just about 8% to 10%. R&R might be a tick higher, and new construction might be about the same. It's not certainly any higher there. So to the extent there's any incremental on the marketplace, it's probably just a little bit better on R&R. Like for us, it's combination of, obviously, bringing WoodCrafters in, in the second half. And then there is a little bit of improved mix, obviously, we talked about especially on the Cabinets side. And then the second quarter, we outperformed where we thought we would be, so if you roll all that together and that really is the underpinning of the guidance.

Great. And then secondly, the incremental margins in Cabinets, I know were, again, ahead of what you've guided, but were a little bit less than the big numbers that you saw in the 4Q and 1Q, and I appreciate the comments that it kind of ebb and flow. But any guidance or thought you'd give us on why it was a little bit less upside on the incremental margin this quarter than the prior 2 quarters?

Yes. To frame the whole discussion, it's always -- we talk about 25% to 30% increment on an ongoing basis, which gets us back to that 14-plus percent total company operating margin. Recall the first quarter, overall company, I think we were at 45% incremental, 55% in Cabinets. But that was on a very low volume base, so you get oversized leverage against the fixed cost in that first quarter, which is our lowest volume quarter. In the second quarter, we saw overall leverage at about 33% and we saw Cabinets at 37%. And we always kind of think as we leverage cabinets, is they'll be at the high end of that. So they were at 37%. That seems pretty reasonable to us. I think we also said on last quarter's call that we'd be probably closer to the higher end of the 25% to 30% for the full year, and I think we're kind of tracking there. But it does ebb and flow, and you can see it's coming down from, in Cabinets, 55% to 37% in the second quarter, getting much more kind of reasonable.

The next question is from the line of Jim Barrett of CL King & Associates. James Barrett - CL King & Associates, Inc., Research Division: Chris, I have a question on WoodCrafters. I mean, it appears to be a very strong high-quality acquisition at an attractive price. Given your acquisition pipeline and the quality of the companies that you are evaluating, should we think of WoodCrafters as a top-quartile type acquisition in terms of fit and brand quality, or do you see other acquisition candidates of similar quality out there?

Well, we always aspire high. And so I'd say if we could complete others with the profile of WoodCrafters, we'd be delighted. It's a terrific company. It fits very nicely within the Cabinet business. It's a segment of the Cabinet business and Bath Vanity that we were in, but it greatly extends our product line and our reach in that part of the market. So it checks a lot of boxes in terms of criteria, that's why I'd say we'd be delighted if we could check all those boxes every time. I think it really speaks to our discipline. We will look for things that look more like that than not is the way I'd say that. And so might you pay a little bit more for something different? Yes, you might, but it would have to maybe check a couple of different boxes, and add some value in some other ways. So I think it's a good representation of: you buy business, you're cleared going in about where the opportunities are, where the synergies are and you get executing on it right away, and in the end it should flow pretty nicely. So I think those are the types of things that we were looking for and looking at. And as the pace picks up, I think we're going to see a number of things that look like that. James Barrett - CL King & Associates, Inc., Research Division: And your general sense of competition for assets like WoodCrafters?

I think depending if it's a really tight fit with our business, then we're going to probably have to best look at it. And I think if it's a pretty general asset, then a number of others will take a look as well. So it's hard to say. It depends. I mean, I can -- you can never know who's looking at what, but I can say we're seeing a lot of things and don't really know beyond that.

The next question is from the line of Ken Zener of KeyBanc Capital Markets.

Gentlemen, can you perhaps describe a little bit how the dealers, I'm talking about a cabinet dealers, how they're describing the shift at the higher margin semi-custom product, which, in the past, you've talked about as actually being kind of a later cycle but a very margin accretive product. I mean, are they seeing more people coming in? Are they setting people to getting home equity loans? Could you give us a little sense there, because some higher-ticket discretionary items like cabinets had big -- not cabinets but appliances had a very big inflection in the second quarter? I just want to get a better sense of how that you guys might be picking that up in terms of backlog before it shows up?

No. I think we started to see in here over a lot of shopping, really, I'd say in the 6-month leading up to the quarter. So if you go back last fall, there was a lot of talk over a lot of shopping, a lot of proposals being put together and so you could kind of feel that there were consumers out there in the marketplace. I think we're starting to see some of that convert into orders. And again, I'd go back and say it's kind of heart of the market, the semi-custom, so it's not really the high end yet but it's not value. So it's kind of the middle of the market and it's the heart of the market. And so that feels pretty healthy because it isn't -- that doesn't suggest that there's -- it requires a lot of borrowing, a lot of leverage and you may need to borrow something or you maybe have to put on it credit card, but once you get into the kind of the -- if you look back to 2005, 2006, it's a very high end of the market. There, you saw a lot of leverage and people doing some extraordinary things. So I think you're still a reasonable mix come through, I'm just highlighting that it's kind of the middle of the market, as opposed to the lower value end of the market. So that's encouraging. I think the dealers are encouraged by that. The dealers are also benefiting from new construction business that's flowing through their dealerships as well.

Okay. WoodCrafters, and there are some other private cabinet companies out there that have very different margin profiles right now than the larger public companies. Do you think there are -- this goes to the earlier question in terms of pipeline and, perhaps, the characteristics, but are there -- do some of this private family companies that have products in similar categories as the public guys are actually performing better? Is that the -- what we could kind of expect, I guess, from what you're going to be targeting. I know you guys don't want to buy a fixer-upper, but I mean, are there quite a few companies that are outside the public equity domain that you are looking at and vetting? And what might be market cap sizes that might limit you or regional components?

Yes, I wouldn't characterize it as -- we're looking at many, many companies right now. I think that there are opportunities out there and it could be across Cabinets, it could be across our Plumbing segment, it could be across Window & Door, it could be Securities. So I think it's a sampling of those, but I don't think it's that heated, as your question might suggest that it's a heated market and that there's a number of those folks who are coming. I think that they could be down the road. I think we'd look for quality businesses. From a major geographic standpoint, it could be in parts of the country, maybe, that we're not as strong. So we've got a strong national footprint, but there may be places that we'd like to add more than others so that would certainly play into it. And I think we'd look at a product line and say it has to be healthy. You're right, I don't really want to be fixing up or trying to drive this margin improvement because there's something fundamentally wrong with whatever business that we're looking at.

And then I guess to find that perhaps a weak spot in the [indiscernible] quarter. China, with the slowing GDP, financing, whether it's formal or informal out there in terms of new construction. I know you guys have obviously had good growth rates, and you just kind of -- I think you said it, but if you could just restate it between the U.S. and China, what the growth rates were? But could you just give us what would be a bad scenario? I mean, if China were to have had a very hard landing. I know these flats, apartments, aren't done, finished so you'd still have some lag there. But I mean, if there was really some type of big deceleration, I mean, how will that flow through your production channel in terms of the falling volume versus the improving U.S. market?

Sure. China is going great for us, so I wouldn't characterize it as any sort of a dark spot on the quarter. It actually was quite strong. The thing about the China market is a lot of the housing is built and it doesn't have plumbing installed. So the fixtures aren't installed, so showers, faucets, sinks are not -- they're roughed in, but the consumer has to actually, once they acquire the unit, then go into household shopping malls and select what they want installed. And so it's after they acquire the property. There are also a lot of properties that were acquired that haven't been lived in that once they're sold, somebody is actually going to move in, is a source of demand for us. So we, in many respects, would lag the general construction market. General construction market continues to move along. And we all read about the parts of the market that are overinflated, but still building a lot of units throughout the country. We're still seeing strong flow, same-store sales, as well as the new units that we open up. So China, at least in our category, continues to be strong. There's also some emerging R&R, where you've got consumers maybe moved into unit 7, 10 years ago and putting more commodity-like, lower-end faucets, showers are now coming back and retrofitting and putting in a premium brand like Moen in the market where they're the #3 faucet in the market and very much perceived as more of a premium faucet. So well, the newspaper reports certainly would show China having a lot of issues. I think our business is quite healthy there, and we're quite pleased with the progress that we're making in that market.

The next question is from the line of Keith Hughes of SunTrust.

Question on Windows & Doors segment. You have highlighted the difference between the 2 products in terms of growth in the quarter. Can you make some comments on profitability in the quarter between those 2, as well?

Yes. Obviously, when you have 15% growth in the Door business and you have premium product, your margins are very good and your mix is very good. With -- so it's better profitability there. But Windows actually had a fine quarter. We grew from $4 million of overall profit in the segment to $10 million, so we more than doubled, so windows did fine. And having 6% growth there -- and remember that the window business is more R&R driven.

Our Window business is predominantly R&R, a big-ticket R&R, so we looked at 6% as being an encouraging sign in a category that has been a little bit kind of still asleep that we're trying to get to wake up. And it woke up a little bit in the second quarter, so we're happy with that.

So profits -- both pieces of both businesses, profits were improving. Obviously, Doors is a little bit better with the 15% sales growth.

And pricing, specifically in Windows, is -- have you seen any movements in a positive direction there, given the R&R improvement?

Not so much. There was a little bit of pricing that came through to recover some commodity cost early back half of last year, going into first half of this year. But I would say given that it's kind of slowly growing, it isn't yet where a point where there's a lot pricing in that market. So it may come down the line.

Your next question is from the line of Peter Lisnic of Robert W. Baird. Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division: On Plumbing, the multifamily initiatives, you talked about some opportunities there. Can you give us a sense as to where that business is, and the opportunities there and how you're kind of focusing on that piece of Plumbing at this point?

Yes, it actually -- and go back 4 or 5 years and we really invested in that sales team on the multifamily side and they have had a steady cadence of -- and spoke new construction but also in multifamily, there's a lot of churn in that channel. As you get a lot of tenants coming in and out and occupancy rates are pretty high these days, and so there is a lot of movement. A lot of times, you are churning faucets out of those units as well. So it's a combination of new construction, as well as the churn that we see in that category. So I'd say it's really the benefit of the last 4 or 5 years investment in there and in that sales team and that focus. And then we also have a product line, CFG, which is really dedicated to that, so we've got kind of the right product at an attractive price point going to the channel with some investment we made on the sales team. So with some volume coming through, that helped us in the quarter. Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division: But is it safe to say that there is still a pretty substantial opportunity to penetrate that specific piece of the marketplace as you look forward?

Yes, I think, our penetration there relative to single family isn't as high, so we can continue that momentum. I think we've made, obviously, great strides over many years on the single-family side. And so we're performing well in multifamily, but I do think there is more headroom there, yes. Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division: Okay. Any chance you can give us an order of magnitude as to the quality or depth of opportunity there?

No, not really. Sort of [indiscernible] a little bit. Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division: No, I got to try, right? And then just to go back to the China question. If my memory is correct, your store comp there I think has about doubled over the past year, maybe 18 months or so. How do we think about that store count number and the investment associated with it when we look to China over the next 1 to 3 years, assuming that things continue to kind of roll on there from a macroeconomic standpoint?

Yes. It's probably doubled over the last 4 years, more like 3 or 4 years, but it has been a steady clip. And we're adding, we're continuing to add -- I think you'll reach a plateau point here, and I don't want -- I'm not really to call it because it will be very much dependent upon the market, and really the expansion of the market. We're well penetrated in the Tier 1 cities, and we continue to look at that footprint. But it's really the expansion of the 2 Tier -- Tier 2, Tier 3 cities. It continues to expand and they're building more. In those markets that we're in, you could add multiple locations in those markets. And once you're pretty well serving the geographies, then it's just a harder focus on same-store sales and increasing the velocity in those locations. So we watch it. We really do review it a couple of times a year to make sure that we're at about the right pace. I wouldn't say the investment is extraordinary per location. But if we stop expanding locations in a meaningful way, you would definitely see the profitability increasing. Peter Lisnic - Robert W. Baird & Co. Incorporated, Research Division: Okay, all right. And just to clarify, did I hear that number right? Around 900 stores; is that correct?

We're over 800 right now. We're trending toward -- we could be near that number, 900, toward the end of the year or early part of next year.

We have one more question. Your last question is from the line of Stephen East of ISI Group.

Chris, I know we sort of beat the incremental op margin quite a bit, but I have just one more question along those lines. With semi-custom coming back a bit faster than you thought, I'm interested to see: One, how much benefit does Plumbing typically get from that? And does this faster pace mean -- has it changed your thought process on what's a sustainable incremental op margin?

I think it says our perspective on what's a standalone incremental op margin is, I think if you're asking does a stronger kind of heart of the market R&R Cabinet market translate over into better mix on the faucet side? Yes, it probably does. As to the extent folks are starting to do bigger projects, you're going to see a better mix and greater volume on the faucet side as well. So yes, kind of those 2 things are correlated over time. Lee, I don't know if there is anything else on the margins side that you want to add?

Yes, it's always been -- in the first 2 quarters of the year are pretty consistent. They were 29% operating margin in the first quarter, and there were 30% this quarter. So at the higher end, as we've said, but pretty steady for them.

Okay. And then just looking at your free cash flow, you've got strong free cash flow generation. If you sit here and run, say, for the next year or so without finding meaningful acquisitions, do you continue to sit on the cash? How would you likely deploy it if that were the case?

Our goal is to drive shareholder value, and we will evaluate the environment we're in, whether it's M&A or increasing a dividend or buying back shares. By year-end, I think we've said that we'll probably -- our net debt-to-EBITDA by the end of this year would be less than 0.5x. So we will have a lot of cash. We will do whatever we can do to drive shareholder value. But we'll be patient and thoughtful and very analytic on how we approach it.

Yes, and I think we've talked before that we're not going to stockpile cash. We've got a very lean operating structure and we don't have a lot of leverage on the balance sheet, so we can be very efficient. And if acquisitions aren't materializing, then we'll be efficient in the other ways that we highlighted. But we don't intend to build a war chest. We're all about just creating as much shareholder value as we can.

I will now turn the call back over to the presenters.

Thank you, this is Brian. We'd like to thank everybody for attending our quarterly call today, and we look forward to speaking with all of you again very soon.

This concludes today's conference call. You may now disconnect.