Good morning, ladies and gentlemen. Welcome to Masco Corporation's Fourth Quarter 2013 Conference Call. My name is Janice, 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 would now like to turn the call over to the Vice President of Investor Relations, Maria Duey. Maria, you may begin.

Thank you, Janice, and good morning to everyone. Welcome to Masco Corporation's Fourth Quarter 2013 Earnings Conference Call. Joining me on our call today are Tim Wadhams, President and CEO of Masco; John Sznewajs, Masco's Vice President, Treasurer and Chief Financial Officer; and Keith Allman, who will become President and CEO of Masco on Friday, February 14. Our fourth quarter earnings release and the presentation slides that we will refer to during the call are available on the Investor Relations portion on our website. Following our prepared remarks, the call will be open for analyst questions. [Operator Instructions] If we are unable to take your question during the call, please feel free to call me directly at (313) 792-5500. I'd like to remind you that statements in today's presentation will include our views about Masco's future performance, which constitute forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We've described these risks and uncertainties in our risk factors and other disclosures in our Form 10-K and our Form 10-Qs that we filed 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 in the Investor Relations section of our website at www.masco.com. With that, I'll now turn the call over to our President and Chief Executive Officer, Tim Wadhams. Tim?

Thank you, Maria, and thank all of you for joining us today for Masco's fourth quarter 2013 earnings call. And if you would please move to Slide #4, we're very pleased with our fourth quarter and full year 2013 results. We had a great year. As we have for the last several quarters, Masco's fourth quarter results showed strong sales and profit growth compared to the prior year quarter. And you might remember that in the fourth quarter of 2012, we had a very strong quarter with sales up 11%. Our leadership position in the building products industry and our focused execution against the housing recovery benefited all of our segments this quarter with all 5 contributing to our sales and profit growth. In North America, we continue to benefit from increased new home construction activity and from improving repair and remodel activity as consumers invest in bigger ticket projects, like windows and cabinets. In addition, our international sales and profits continue to increase as a result of a solid performance by our international plumbing and window businesses in a slowly improving economic environment in the Eurozone. New products and new programs resulting from our emphasis on customer-driven innovation generated a vitality index for 2013 in excess of 30% and helped Behr, Delta and Hansgrohe achieve record annual sales. We're seeing the benefit of our strict focus on cost containment, as well as our ongoing commitments to total cost productivity as evidenced by our strong incremental margins for both the fourth quarter and the full year 2013. And importantly, our installation and cabinet segments were both profitable in 2013. As previously indicated, returning these segments to profitability has been a top priority for Masco. The fourth quarter was a solid close to a strong year. For both the fourth quarter…

Thanks, Tim, and good morning, everyone. If you could please flip to Slide 8. Before getting into the numbers, I've been at Tim's side for the last 7 years, and I want to thank him, acknowledge him for his leadership and wish him a long, productive and healthy retirement. And as Maria mentioned, most of my comments will focus on adjusted performance, excluding the impact of rationalization and one-time charges. So we exited 2013 with sustained momentum. Sales in the fourth quarter increased 9% as we experienced strong sales growth in all segments. We posted this strong revenue improvement against a challenging Q4 2012 count, which was up nearly 11%. As Tim mentioned, the fourth quarter was our ninth consecutive quarter of year-over-year sales and profit growth. Looking at January, our sales increased mid-single digits percent despite the challenging weather conditions and a difficult comparison to January 2012, which was up low double digits -- I'm sorry, January '13, which was up low double digits. Overall, sales in North America were up 9% for the quarter. While we experienced the strongest sales growth in the new construction channel, we saw demand improve for our repair/remodeling products, including big-ticket repair/remodel products. And as a reminder, repair/remodel activity represented approximately 70% of our sales in 2013. International sales increased 7% in local currency in the quarter, clearly outpacing Eurozone growth with particular strength in the U.K. Gross margins expanded approximately 100 basis points compared to Q4 2012 to 27% due to improvement in every segment. And we delivered strong bottom line performance as operating income increased nearly 50% in the quarter to $153 million with operating margins expanding 210 basis points to 7.7%, the strongest fourth quarter we have reported in several years. Overall, this was a great outcome despite incurring approximately…

Back to Tim before Keith. Thanks, John. And if you would please move to Slide #16. As John mentioned and as I think all of you know, this is my last earnings call. And I want to thank all of you for your support and interest in Masco over the years. And I wish all of you continued success. I believe that Masco is in a great position to drive additional shareholder value as the recovery in housing continues. I'm very proud of our performance in 2013, and I want to thank our employees across the enterprise for their commitment and dedication. Keith has an outstanding team to lead, and I'm very excited about Masco's future. And now, I'd like to turn the call over to Masco's new President and CEO, effective this Friday, Keith Allman.

Thank you, Tim. It's been a privilege working for Tim over the years. And I think I can speak for everyone here at Masco when I say we will certainly miss him and we appreciate all that he's done for the company. I'm humbled and excited by the opportunity to be Masco's next CEO. And I look forward to continuing to execute on the strong strategy and foundation that Tim has put in place. Please move to Slide 17 for a couple of comments before we go on to Q&A. The underlying fundamentals of our business remained strong as evidenced by another quarter of sales growth and margin expansion. We expect that the positive trends in new home construction, repair and remodel, home price appreciation and an increase in big-ticket spending in North America will continue. We anticipate new home construction and repair and remodel to improve in Europe over the coming year as well. I should note that despite a fairly flat European market in 2013, we fared pretty well with international sales up 4% for the year in local currency. Having said that, we recognize that there are macroeconomic factors that will challenge us going forward, including the pace of the global economic recovery. Despite these factors, we are positioned to continue growing profitably and creating value for our shareholders. Please move to Slide 18. Over the next year, we will continue to focus on execution, maintaining the positive momentum that started for us in the fourth quarter of 2012. We are well positioned to grow our key brands and we'll accelerate our emphasis on maintaining a customer-focused innovation pipeline, improving our enterprise leverage, further penetrating international markets and focusing on continuous improvement across our enterprise. Cost containment remains a priority with a particular focus on SG&A cost. Also in 2014, we plan on positioning the company to reduce debt by $300 million to $500 million by 2016. As a reminder, we have $1.5 billion in debt maturities between 2015 and 2016. Improving our credit metrics will remain a top priority for us. I look forward to sharing more with you in the coming months as we deploy our strategies to deliver value to the shareholders. With that, the lines will be open for questions. Operator?

[Operator Instructions] Your first question is from Stephen East of ISI Group.

Tim, congratulations. If we look at the current trends, you talked about some about the current trends with the new construction and the remodel/repair. I guess, we could dig in a little bit more on the remodel/repair. Are you seeing -- how much of it is volume versus starting to see some mix shift up? And are you seeing any change in that combination over the last couple of quarters and maybe even what you're seeing year-to-date so far?

Yes. Stephen, it's John. I think we are starting to see some improvement in volumes in repair/remodel activity. I guess, the evidence I would point to is, as I mentioned in my prepared remarks, sales to our dealer channel in cabinetry, which is largely a repair/remodel-oriented channel, were up mid-teens percent in the quarter. So I think that's strong evidence. And if you look across our other big-ticket item that we see is windows. We saw nice repair/remodel activity there in the fourth quarter as well. So that complemented with our plumbing business, which was up 8%. And that's largely repair/remodel-oriented products as well. All leads us to believe that volumes are continuing to pick up.

Yes. Are you seeing -- within those pretty big numbers, how much of that would you attribute mix shift versus pure volume?

In terms of mix, we're not seeing a whole lot of mix at this point. If anything, mix in the cabinet segment was a little bit negative just because, as I mentioned, sales to production builders grew at a more accelerated rate than sales on the repair/remodel channels. We are starting to see a little bit higher average selling prices in some of our cabinetry products, which is indicative of consumers willing to trade up a little bit within the segment.

Okay, fair enough. And then on the incremental margins, your plumbing and cabinets were strong. So I'm interested in your expectations for sustaining those moving forward. And then the install, paint and other specialty were a bit lower than what we thought, and I guess, your -- what was going on there and your expectations for those?

Yes, you're right. Stephen, you're right. Incremental margins were strong in a couple of segments, both plumbing and cabinets. Cabinets -- just to refresh everyone's memory, we generally drop about 30% to 35% incremental margins across the company. Our manufacturing segment tend to be a little bit higher, closer to the 30%, 35% range. Our installation segment tends to be a little bit lower, closer to the 25% range. And so yes, indeed, we saw about a 62% incremental margin in cabinetry in the quarter. Some of that was driven by volume increases. And we saw a -- but also some of it has to do with the fact that we've seen some reduced promotional activity on the marketplace, and that helped supplement what we normally see in terms of drop down. On the plumbing side, again just good volume leverage across the board. On installation, you did reference something a little bit lighter in that segment. That, you may have heard, was impacted by $5 million of insurance-related expenses in the quarter which, if you factor that out, they would have there kind of a normal 28%, 30% incremental margin there. Our paint business, as I mentioned, was impacted by about $6 million of investments that we had related to advertising, promotions, international growth. But beyond that, I think we are in generally pretty good shape in that segment. So I feel pretty good about our incremental margins. Overall for the year, we were up 33%, incremental margins. So I think the company is performing as we expected.

Your next question is from Eric Bosshard of Cleveland Research.

Two things. One, can you talk a little bit more about January indicator was up mid-single digit? Can you, I guess, give a little bit more color on where December was and how that has translated into January and how we should be thinking about what you've indicated for January?

Yes. So Eric, December was up high single digits. We previously indicated that October, November were up high single digits and so December has continued that trend. As it relates to January, a couple things. We saw a little bit better business in Europe. They're not experiencing the harsh winter that we're experiencing here so that was some strength. And then the other area, just generally speaking, where we saw some strength is in those segments that serve the warmer climates in the United States. Obviously, the Midwest, the East Coast, Northeast, little bit more impacted by the more difficult weather conditions.

When you sift through the information there and you think about where things go for '14, can you isolate enough in January to see that it's weather or is there more going on that's influencing the slower results of January?

I think it's hard to say. Again, remember, Eric, we're up against a pretty tough comp. We were up low double digits in January of 2013. So feels like -- we were pretty happy with the results in January, just given what's going on in the environment today. Remember, January is our -- probably seasonally, our slowest quarter of the year.

Okay, that's helpful. And then secondly, in the paint business, you've obviously made some investments here for the last couple of quarters. Curious in terms of how much longer the investments continue, when we should see a return to profitability improvement or better incremental margins. And then a little bit of color on the payback you're expecting from the investments that you're making, what that should look like.

Yes. Eric, a couple of questions embedded in there. But in terms of the investment going forward for 2014, yes, we do expect to continue to invest in international growth in our Pro business. So I would expect some incremental investment, and we'll call those out as we make those investments every quarter. In terms of one of the things that we're focused on, we've always said that yes, gallon growth is a priority here that we're focused on, particularly with our channel partner. And so as a result, we're willing to make these investments because they'll lead to high -- they might not lead to improved operating margin, but they definitely lead to a higher ROA. And we're trying to grow absolute operating profit dollars in addition to that. So I think that's our goal for this segment. And so I think we are accomplishing that. So we might take a little bit lower margin to drive some of these other activities. And I would still expect those to always be a high teens margin business, though, Eric.

Your next question is from Mike Wood of Macquarie.

Just touch on decorative, you mentioned that paint gallon growth was high single digits, builder hardware was up high teens, yet sales were up 6%. Can you talk to sort of what the puts and takes were in there?

Yes, so you hit on a couple of the highlights. The other thing that's impacted us from the quarter is that we did have a negative price/commodity relationship in the quarter.

Okay. And then just on the incremental spending, we went from $10 million in 3Q to $6 million in 4Q. What should we expect going forward?

As I referenced just in the last question, we do expect to continue to invest for the full year 2014 in some of these additional areas, such as advertising, promotions and international Pro growth, things like that. For the full year 2013, we were about $16 million, $17 million in spend. My guess is we'll be something less than that in 2014 but somewhere in the neighborhood of about $10 million or so.

The next question's from Garik Shmois of Longbow Research.

Raw material inflation in installation in the quarter, I was wondering if you can quantify that for us and talk about your confidence and your ability to pass that through.

I'm sorry, Garik. I missed the first part of your question.

Yes, sorry. The raw material inflation in installation you called out, I'm just wondering if you could quantify that for us and talk about your confidence in passing that through in 2014.

Yes, sure. A number of our installation manufacturers from time-to-time have passed through price increases, and we didn't take -- there was another price increase announced that was effective in the fourth quarter of last year. We did -- as you can see by the performance of the segment, they've had posted some pretty good operating results and incremental margins. And as a result, we are working hard on passing pricing through when it's required. At the same time, though, we don't just try to pass price through, we also always work on working with our suppliers, looking on productivity improvements in the segment to try to offset some of those price inflation as well.

Okay. And then just switching to cabinets, a competitor of yours has announced plans to add capacity over the next several years. Just wondering if you could speak to, I guess, first off, your utilization rates in that business and your plans, if any, to have to add capacity over the next, call it, 2 years.

Garik, this is Keith. I'll take that one. Our capacity position in cabinets is in great shape, and we expect our current footprint to be able to support 1.5 million in starts, so we're in -- and the commensurate repair/remodeling uptick. So we're in good shape there. And that goes across all channels. In the builder direct channel, for example, I was just out in Las Vegas at the builder show. And clearly, the #1 concern from the big builders was, "Are we going to be able to supply on time in great quality?" And we most certainly will be able to do that. And when you look across the competitive landscape, we've seen some of our biggest competitors actually pull out of the direct-to-builder channel. Out West, we've seen another big competitor stop bidding out there. And we're not approaching that. The team -- in that way. The team has done a great job of getting us ready for this uptick, and we're prepared.

Your next question is from Adam Rudiger of Wells Fargo Securities.

With cabinets, can you talk a little bit more? You talked about it being a less promotional environment. I think you said high teens to the dealer channel and the big builders grew even faster than that. So that would to me suggest a little bit better margins, say, relative to the first quarter when revenues were somewhat flat. So can you just talk about maybe what I'm missing there?

Yes. I think, Adam, one of the things that you have to focus on is the fact that we kind of led the pullback on promotional activity in the fourth quarter of last year. And so some of the benefits that we enjoyed last year anniversary-ed in the fourth quarter of this year.

Okay. And then just to make sure, I'm going to try and get a clear picture of margins. The insurance charge, where was that in the consolidated income statement? And then just to be clear, that was also in installation segment?

So on a consolidated basis, it flows just generally through the P&L. And then we pushed those costs back down to our segment levels. It's in SG&A in the overall consolidated P&L, and then we pushed it down to several segments. One, the biggest one, obviously, was our installation segment, which we mentioned. And then we also had a little bit of expense in our decorative architectural segment as well.

Your next question is from Stephen Kim of Barclays.

Earlier in your remarks, you had mentioned about $150 million improvement in profit in 2014 from '13. I assume that was just the net volume/mix, which would sort of compare to $148 million in 2013 versus '12. I just wanted to...

No. Stephen, it's a little bit different than that. Every year, we talk about our profit improvement on a gross basis. And so in 2013, we realized about $165 million of profit improvements gross, and that netted down to the smaller number about $19 million or so. So in trying to foreshadow that same profit improvement on a gross basis would be for this year, I indicated that it would be approximately $150 million, about the same amount that we've averaged over the last 5 years.

Got it. Okay. So that was related to your productivity? I just want to make sure.

Exactly. You got it.

Got it. Okay, got it, got it. Okay, that's great. That's very helpful. And then secondly, I was wondering if you could talk a little bit about what you're seeing in terms of cabinets. You mentioned, I think, the dealer up high teens. And you also said your windows were strong. I'm sorry, I didn't mean cabinets, I meant R&R, big-ticket R&R. You pointed to cabinets in the dealer channel being up strongly. You said cabinets x countertop, up 10% and dealer up high teens. I'm curious as to whether or not those numbers are influenced by share gains or something like that. If that sort of high teens type number is, in your view, representative of the move towards big ticket or if there is something else that sort of influencing that number that we should be considering as we think about the market overall.

Yes, Stephen, it's not just one factor that impacts us. So there's a number of things baked into it. So some of it is, to your point, could be things like higher volume. It could be things like some higher selling prices. We did -- we are realizing some higher average selling prices out there. We have picked up -- we do think we're doing well in terms of some of the new product launches that we came out with, the innovation that KraftMaid came out with in the first half of 2013 seems like it's really resonating in the dealer channel. And so it seems like it's driving more dealer traffic. So there's a number of factors that go into it, it's not just simply one factor that drives the top line growth there.

Okay, great. And so if you had to take a stab at what you think sort of big-ticket R&R has done over year-on-year, would you estimate that it would be somewhat higher or lower than that high teens figure?

I would say that we saw growth each quarter during the year. So it was strongest in the fourth quarter, weakest in the first quarter of last year.

The next question is from David Goldberg of UBS.

I wanted to talk about in the installation business, the comments around the increased take per unit and upgrades. Can you talk a little bit what's happening? Is it the kind of grade of insulation people put in, the amount of insulation? Or are we talking about more ancillary, kind of add-on kind of services people are taking? Could you kind of just give us a rundown of what's driving that commentary?

Yes. I think there's a couple of things that are driving that comment, David. One, we're seeing increased square footage of homes right now. So that helps drive increased take per unit. We're also seeing, as I mentioned earlier, consumers upgrade some of their products. So they may be adding a second or third fireplace in their home. So it's not necessarily, to your point, always insulation that's driving that trade-up in the installation segment.

But it's not necessarily code changes or anything that are driving higher requirements for...

Good point. There are some code changes that are taking place that are driving it. Particularly on the Eastern Seaboard, we're seeing some code changes going to affect that are driving some higher insulation usage in homes.

Great. And then just as a follow-up question, I understand the desire to pay down debt in the coming year. And obviously, great job deleveraging the balance sheet this year. When you start thinking about returning more cash to shareholders, as you look out, especially since you know obviously the business is headed in the right direction in terms of the cash flow generation, we're probably early in the cycle here. When do we start thinking about maybe other uses of your cash flow generation outside of paying down debt?

Yes, David, good point. As we think about capital allocation, we think about a couple of things. One, first and foremost, is to always invest in the business. And as you've observed, we're not a particularly capital-intense business. CapEx generally run about 2% of sales. And so we'll continue to make those investments in the business. After that, as you assessed, we'll probably pay down some debt here in the near term. But following those first 2 priorities, I think the next thing was that we'll be focused on are both small acquisitions, tuck-ins like we done at our U.K. window business earlier in 2013. But I think we also have to balance that with some shareholder-friendly activities, probably leaning more towards the dividend first rather than share repurchases. But we'll keep you informed as we refine our thinking around that.

Your next question is from Keith Hughes of Masco (sic)[SunTrust Robinson Humphrey].

Questions on Milgard. The numbers you've been putting up in window just appear a lot bigger than what we're seeing in the overall industry. Can you speak to what's going on there, why the numbers have been so good?

Yes. I think we've done a lot in the share gains in the Western U.S., Keith. One of the things that took place that we observed during the downturn is that we saw a fair number of competitors fall out of the marketplace in the Western U.S. in 2009, '10 and '11. As a result, if things are starting to pick up out there, the Milgard team has just done a fantastic job of understanding the market, delivering really good, relevant innovation to the marketplace. As a result, taking a lot of share out there. They also have expanded nicely into some new geographies, particularly Western Canada, as well as Texas. And they've come up with a couple of new products that we're pretty positive about. The Essence window, it is a fiberglass window, a higher-end window than their vinyl offering. And we think it has got a lot of opportunity out there.

Is that a business, when we talk about bolt-ons to an earlier question, is that one that you would look to bolt on to?

To the extent that it extends our geography in the right direction, Keith, yes, we probably wouldn't go all the way across the country to the East Coast and look at a transaction. But something that was complementary to our existing footprint, that might make some sense for us.

And final question, we've seen some wobble in the home builder orders in the second half of the year. Can you talk about what kind of your [Audio Gap] for the installed service business in regard to that?

With the softness -- I'm sorry, in terms of just housing starts taking a bit of a pause in the back half there?

Yes. How long will that impact, how much, anything you're willing to give us on that?

Yes, well, we're still seeing the lag in our business, the 90-day lag and depending on the market, it's still a little bit elongated over the course of the back half of last year. There's also an impact that we have to take into account, there's increased multifamily activity in the year. And in particular, that's going to impact us in the first quarter because as I look at the starts composition in the fourth quarter, I think we've got about 37% of all starts are multifamily in the fourth quarter, which will really impact us in the first part of the year. So that will have a little bit of an impact. But what we're hearing, as Keith mentioned earlier in his discussions in Vegas with the builders, it sounds like they're optimistic about the spring selling season. So we'll see how that plays out.

The next question is from Sam Darkatsh of Raymond James. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: And Tim, I wanted to also say best wishes on your next chapter. And Keith, congratulations on the new role and the new responsibilities. Most of my questions have been asked and answered, just a couple of housekeeping questions. The insurance costs, John, are they ongoing? What specifically happened in the fourth quarter? Was it just some sort of a reversal of an allowance? Or will there be some ongoing impacts of these unplanned costs?

So it was a discrete onetime event that took place, Sam. And they were large enough that we thought that it merited calling them out. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Okay, got you. And then I guess, my final question. Help me understand why the importance on a gallon focus as opposed to, I guess, total sales dollars because it seems as though maybe paint pricing was off or at least price versus commodity was a negative impact. So why does gallon growth lead necessarily to higher ROA? Why wouldn't you want to maintain price as well?

Well, we absolutely want to do everything we can to grow this business, Sam. But as we think about incremental growth from where we're at, we've got a very good solid core business in our retail paint business. And as we expand internationally, as we expand into the Pro, those will -- there'll be more competitive environments that we're anticipating in and we'll need to have sharper margins. And so as a result, we want to continue the growth, but that just drives lower margins. But the return on assets, as I mentioned, is high because, really, no incremental investment other than working capital, we need to put into the business to grow that. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: So the inference being that paid margins right now are pretty much going to be here or perhaps pressured going forward, but the returns on capital will be enhanced?

That's right. I would say, as I commented earlier, I think we can still maintain our high teens margins in this paint business, but our return on capital should improve over time.

The next question is from Michael Rehaut of JPMorgan. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Tim, best of luck. Great working with you. Just going back to the paint question before. Can you give us a sense, John, of what a Pro and international sales represent as a total portion of your revenues there? And how should we think about that percent growing over time?

Mike, right now, we've been investing in those programs for the last year, 18 months or so. And those businesses are -- we have not broken out the specific dollar value of each of those programs to this point. But I'll tell you, it's small but growing. We're crafting our strategies to penetrate both of those markets, and you've seen some initial success. And so we look forward to continuing to share with you the progress that we're making on those. But at this point, we're not going to break that out. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Okay. And in terms of the margins, appreciate the kind of bifurcation or discussion around margins versus returns. But from a margin perspective, that high teens, you've done 18% now for a couple of years. Given that you expect to continue to do the investment, maybe a little bit of a negative margin mix shift within the business over time, that 18%, 19%, so that's kind of reasonable going forward for this business?

Yes, I think so. Mike, what we try to do in this segment is really drive innovation and drive customer value innovation. And that's evidenced, Tim mentioned that we were recognized recently by a third party as the #1 interior paint. I should tell you, we're also been recognized by that same party as the #1 exterior paint and the #1 exterior stain. So we've got kind of a trifecta going right now in terms of quality and value in that. And so really good outcome for us. And that's really what we're focused on in this segment in terms of driving value for our customers. Michael Jason Rehaut - JP Morgan Chase & Co, Research Division: Okay. And just one last one on the plumbing side, you did a nice -- had a nice year this year in terms of top line growth, incremental margins. You're back at around that 13% level, which is kind of, over the last several years, really the high watermark with the exception of about 10, 15 years ago. I think we've talked about a more normalized margin, this low double digit range, 12%, 13%. Is that still the case going forward? And if that's the case, how would you reconcile that with the incremental margins? Are there just other costs to running the business as in promotions or other types of spend that would kind of, again, keep the longer-term run rate, margin run rate for this business around the 12%, 13% level?

Michael, this is Keith. I think that, that range of 12% to 13% is a good way to think about this segment. We do have some upside on the incremental as that drops down in the typical 30% range. But we also have ongoing investments that we're going to continue to make to grow the core faucet business. And when you look at the category expansion opportunities that we have, like we have executed already in toilets, those products tend to have lower margins than the base faucet and fixture market. Having said that, again, similar to our strategy in paint, the ROA is good in that product and it's an outstanding program for us and the customers. But I think that's a good range to think about the segment with perhaps some upside.

The next question is from Nishu Sood of Deutsche Bank.

So my first question is on the CapEx guidance. Now Keith, you addressed in your commentary about the cabinets business, that capacity is good for 1.5 million housing starts. I think you might have extended those comments from the other divisions, too. So it was -- there's a noticeable uptick in your kind of CapEx guidance, back up to the $200 million range for 2014. So I just wanted to dig into that. If capacity is all set, what is driving the increase in expected CapEx for '14?

Yes. Nishu, I'll take that question. A couple of things that, I think, are driving that. So I'll tell you that, one, we had the ERP implementation at our Milgard unit that we talked about, which will have a fair amount of capital associated with that. We typically have higher capital in our plumbing segment. And Hansgrohe is launching some new products, so there will be some higher CapEx associated with that. We also have some -- a little bit of a higher incremental CapEx in our cabinet segment related more to finishing up a little bit of some IT implementation that they're working on, a little bit of finishing equipment. The other thing I'd keep in mind, Nishu, is on this call this time last year, we told you we have $165 million of capital. We came in at $126 million. So if anything, I think probably $200 million is a little bit on the high side. Offsetting that might be -- we're taking a look at displays on the marketplace, and there might need to be some money spent to refresh some of the displays on both the paint and on the cabinet side of things.

Got it. Okay, that's helpful. In the installation business, you mentioned, I think it was 15 new branches that you added in '13, you expect in '14 as well, all greenfield sites. Now historically, acquisitions has been the main way of adding branches in this business. So I was just wondering if you could discuss that. Is there some shift in strategy-wise or is there some shift in what you're seeing in terms of the market, making greenfield more attractive than acquisitions? If you could maybe just give us some more color on that.

Sure. I think it's the way the team is looking -- the new team down at MCS is looking at the way they're growing their business. And so they've done a very thoughtful way of making certain that they've got costs in line with sales as they grow. So there's greenfield locations start out as unmanned stocking centers. And as a certain market grows to the appropriate volume, then they'll start to man those centers. And so they're very closely monitoring their profitability and making certain that they have their costs in line with expenses. So I think that they have just a little bit different view on the marketplace.

Does that mean that they've really deemphasized acquisitions then? Or is this just current conditions, that's what it merits and maybe that will change going forward?

Over time, could they look at an acquisition here or there? I don't think it's a huge part of their strategy going forward. But if there's something, in particular, that it's a long distance away, where they could not establish one of these strategic stocking centers that gets them into a new geographic location, they may look at an acquisition there. But it's not what's driving their strategy at this point.

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

Thinking about pretty strong end-market demand, so I'm assuming somewhere around $700 million of top line growth in '14. And I was curious, what gives you confidence that you can keep spending on general corporate expenses flat, given that pace of sales growth? And for Keith, how important do you view cost control on your list of 2014 priorities?

Yes. I'll take the question on general corp expense, Bob. So the $130 million of general corporate expense that we roughly experienced this year is about $134 million, I believe, versus $130 million that we have given you some guidance. A number of things. Obviously, we're focused on very tight cost control here at the corporate office. We did do go through an org alignment process in the fall of 2012, and we're starting to realize some of the benefits of those savings. And so that's really what gives us the comfort, Bob, that we can hang on to some of the cost takeouts that we've done over the course of time. But I'll turn it over to Keith for his view on cost containment broadening.

Yes. Bob, I would say that our #1 priority going forward is to deliver on the macroeconomic rebound here in North America and to drive our businesses to their full potential and to leverage our brands. So embedded in that certainly is a strong dose of cost control, both from a conversion cost standpoint in our factories, as well as in SG&A. That's an area that I have experience in and have done at the various businesses I've been involved with. So I would put that as a premium priority for myself and our team. In addition, we're focusing on leveraging across our businesses. There certainly is a revenue component and a cost component to that. We view areas like logistics and our material buy as prime for continuing to drive cost out in that area. So it's tough to say what's 1 and 1A when you have 4 #1s. But certainly, cost control is a priority for us.

That's helpful. And I just wanted to get your view kind of on a 3-year basis. You had 600 basis points of improvement in cabinets in 2013. You had over 400 basis points of improvement, installation, in that business. So that's a lot of improvement in a year. Do you think it's realistic for us to expect that both cabinets and installation can get back to double digit operating margins within the next 3 years?

Yes, Bob. In terms of getting back to double digit operating margins for both those segments, I think there's the possibility. It all depends on how the end markets develop, both in the new construction side, as well the repair/remodel side. As we've talk about incremental margins, generally dropped about 30%, 35% of the cabinet business, a little bit less than 30% on the installation business. So if you grow from the kind of the 920,000 starts in '13 to 1.5 million starts, the long-term average, and you think about the incremental revenue associated with that growth and associated lift in repair/remodel activity, particularly for the cabinet segment, and then you consider the operating margin drop down or the incremental margin drop down that we get on those businesses, you can paint a pretty clear picture of getting to clearly, if not high single digit, low double digit operating margins in each segment.

Bob, on the cabinet side, we're confident in being able to drive that business to low double digits. We have the best brands out there in the marketplace. As we talked about a little bit earlier, we have the capacity to take the growth as it comes. And we've structured that business to have a balance across all channels of direct-to-builder, repair and remodeling and dealer. And we're making improvements on all of those areas, and those are things that the competition can't necessarily say. So we're confident about the cabinet business, understanding fully that we've got a ways to go.

Your next question is from Dennis McGill of Zelman & Associates. Dennis McGill - Zelman & Associates, LLC: I guess, the first question. With respect to weather, aside from it impacting ability for customers to get out and shop, are there any impacts on the operational side of the business that you'd flag or that we should be aware of?

We've had some very slight interruptions in some of our factories. We've had to take a few half days off here and there, but nothing material.

Yes. And on the installation side, we had a couple of branches down in the southeast last week during the ice storm. Dennis McGill - Zelman & Associates, LLC: Okay. So assuming the quarter plays out weather-wise in a more normal fashion from here, absorption pace or anything like that shouldn't be impacted?

That's right. Dennis McGill - Zelman & Associates, LLC: Okay. And then secondly for maybe Keith, it seems like you guys might have reentered the RTA business on the cabinet side. Just wanted to maybe understand the thought process there and how you're thinking about that relative to your exit previously.

Yes. As we listen to our customers, it's important for us to have the right assortment for their needs. And we are looking at some product offerings that could address some of those needs for -- particularly for multifamily. So there are some new product launches that we're contemplating, but we're not looking at significantly getting into the RTA business. Dennis McGill - Zelman & Associates, LLC: Is it structured differently from a cost standpoint than it was previously?

Most certainly, this would be more of an import model with a combination of different features that address specific segments, like multifamily, as I mentioned.

Yes. I want to thank everybody again for being with us today, and appreciate your questions, and have a good rest of the day. Take care.

Thank you. This concludes today's conference. You may now disconnect.