Good morning, ladies and gentlemen. Welcome to Masco Corporation's Fourth Quarter and Full Year Results 2014 Conference Call. My name is Laurel 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’ll now turn the call over to the Director of Investor Relations, Irene Tasi. Irene, you may begin.

Thank you, Laurel, and good morning to everyone. Welcome to Masco Corporation's 2014 fourth quarter and full year 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 fourth quarter and full year earnings release and the presentation slides that we will refer to during the call are available on the Investor Relations portion on our Web site. Following our prepared remarks, the call will be open for analysts' questions. As a reminder, we would appreciate it if you would limit yourself to one question with one follow-up. If we are unable to take your question during the call, please feel free to contact 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 Form 10-Q 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. These can be found in the Investor Relations section of our Web site, www.masco.com. With that, I will now turn the call over to our President and Chief Executive Officer, Keith Allman.

Thank you, Irene, and good morning, everyone, and thank you for joining us today. Turning to Slide 4. We are pleased to have finished 2014 with a strong fourth quarter. This performance capped of a year where sales grew 4%, an impressive result when considering the tough 2013 comparison we faced where sales were up 9%. We drove year-over-year sales growth of $350 million while holding SG&A nearly flat. This is a testament to our growth strategy as well as our focus on execution and cost containment. We achieved a 10% operating margin for the year. This is a 120 basis point improvement over last year and our best operating margin since 2008, another example of how our discipline around profitable growth and strong operating leverage is paying off. Our full year EPS grew 32% to $1.02 per common share and I would note that this is in spite of the challenges our cabinetry business faced in 2014. Our strong year was characterized by a series of significant accomplishments, as our business strategies yielded measureable results. Let me give you some examples. Delta and Hansgrohe reaffirmed their global plumbing leadership positions by achieving record sales and record profit levels for the year. Our innovative products outperformed in the wholesale and showroom channels and our expansion into adjacent products with Delta branded toilets has augmented our retail results. Behr continued its legacy of awarding winning innovation in the paint aisle with the introduction of its Marquee Interior paint. Not only was Marquee awarded Innovation of the Year by the Home Depot, it was also recently recognized as the number one rated interior paint by an independent third party. Behr’s focus on innovation goes beyond product. In late 2014, we introduced a new color selection center at the Home Depot designed to…

Thank you, Keith, and good morning everyone. As Irene mentioned, most of my comments will focus on adjusted performance excluding the impact of rationalization and other one-time charges. From a financial and operational perspective, the two themes that characterized our performance in 2014 were one, sales growth driven by customer-focused innovation and two, operating margin expansion resulting from cost control and productivity improvements. This resulted in our best financial performance since 2008 and our 13th consecutive quarter of year-over-year sales and profit growth. We had a steady fourth quarter as sales increased 3% or 5% excluding the impact of foreign currency translation and 4% in the full year as we recorded strong sales growth in four of our five segments. Despite a difficult comp, the sales were up 9% in both Q4 and for the full year 2013. Sales in North America increased 4% for both the fourth quarter and the full year. As the U.S. economy improves, we are experiencing growing demand for our products across all channels of distribution. As a reminder, repair/remodel activity accounts for about 70% of our total sales. International sales were up 6% in local currency in the quarter and up 4% in local currency for the full year, driven by the strength of our international plumbing in our UK businesses. Foreign currency translation negatively impacted our sales in the fourth quarter by approximately $32 million principally due to a weaker euro compared to the U.S. dollar. Our focus on cost control continues to payoff. As Keith mentioned earlier, we held SG&A dollars essentially flat despite an approximate $350 million increase in revenue as SG&A as a percent of sales decreased 160 basis points to 17.8% for the quarter and declined 80 basis points to 18.4% for the full year. In the fourth quarter,…

Thank you, John. 2014 was a transformation year for Masco and one in which a tremendous amount of hard work and organizational change took place. We’ve made difficult decisions and looking back, I’m proud what we’ve accomplished. We have a new management team that is aligned with our goal of driving incremental shareholder value. We have refined our portfolio and are on track to complete the spinoff of our services business by midyear creating two leading public companies. We’ve redefined the role of our corporate office by adopting a lean operating model, which drives decision making down to our business units and increases our effectiveness as an organization. We’ve returned capital to the shareholders through our increased dividend and share buyback program, and perhaps most importantly Masco is more focused on the customer now than ever before. We expect that these actions will continue to create value and momentum as we move into 2015. With this renewed focus, we will take full advantage of an improving economic environment. Particularly in North America, we believe that macroeconomic trends will support increased demand for repair and remodel as well as new home construction growth. Outside of North America, as we’ve demonstrated in 2014, our global businesses can perform even in periods of economic challenges. Overall, we expect to continue our trend of operating margin expansion and strong free cash flow generation, which will enable us to continue to generate solid returns for our shareholders. I want to thank all of our employees for their tenacity and dedication in 2014 and I look forward to our continued great execution in 2015. With that, I’d like to turn the call over for questions. Operator?

[Operator Instructions]. Your first question comes from the line of Stephen Kim with Barclays. Your line is open. Mr. Kim, please check your mute.

Sorry about that. Can you hear me okay?

Yes, we can hear you now.

Yes, Stephen.

Okay, sorry about that. I was curious about the cabinet business. First of all, good job in the quarter; very strong performance given a tough environment. I know in the cabinet business you talked about the fact that dealer and retail were challenging and you also mentioned that Merillat had some inefficiencies. I generally think about KraftMaid as your dealer business and since you didn’t mention inefficiencies in KraftMaid, I was wondering if that might give us perhaps a better look at how things are trending in the cabinet business without maybe the noise from the inefficiencies. So can you talk a little bit about the trends you’re seeing there? Are you seeing improving margins year-on-year or sequentially are you seeing improving trends in terms of the mix there? Anything you can shed regarding how that segment of your cabinet business is doing.

Stephen, 2014 – this is Keith. 2014 was a challenging year for us in cabinets. We executed difficult but important initiatives for that business and we fell short of our commitment in terms of customer service, particularly on lead time and fill rates. That was focused and contained in the Merillat supply chain. We think that that did cause some issues for us in the dealer business, but we put a focus on bringing back our performance in terms of fill rates and lead times to that dealer base. So we’ve fixed our customer service in that, but we did pay a price for that in the dealer business. In terms of the retail issues that we faced, we’re committed as we’ve talked in other calls to being a leader and resetting the promotional environment. We did that. We are a little bit too aggressive, I think, and we’ve adjusted that and we’re continuing to make adjustments in that or seeing good results. So primarily on the dealer side, our issues were focused around the Merillat issues that we’ve had. And again, we’ve addressed the customer issues. We don’t believe that we lost dealers but rather share of wallet as we were working on the fixes. We have the fixes behind us and now we’re driving to get the cost out and return this business to profitability in '15

Stephen, you asked some trends – I think piece of question there among – related to trends as well as some mix issues. So just to reset and make sure everyone’s clear. KraftMaid product, this holds both through the dealer channel as well as big box retailers. And our Merillat offering is sold through dealer network and principally to builder-oriented customers. And so as we take a look at the trends at retail, as Keith alluded to earlier, we did see a little bit slowdown in our retail business in 2014. That said, we have introduced some new products to address some of the issues and as Keith mentioned, we have recalibrated our pricing and promotional activity. So we anticipate trends to continue to pick up. Now that said, the other thing that we are beginning to see also is a little bit of a trend in refinancing activity recently, which historically is supported big ticket repair/remodel activity. It may take a little bit of time to play out in the marketplace but from a historical perspective, when people refinance their homes, generally that turns out to be favorable for us of our big ticket products. In terms of mix, a little bit of higher ASP or average selling price that we’re seeing particularly on the retail and dealer side of our business, but it’s been a trend that’s only been occurring for a short period of time. I wouldn’t want extrapolate that too far just yet.

Okay, great. That’s very helpful. Thanks for that. I guess my second question relates to your corporate expense. It was a very strong performance there or good cost control, I would say, and yet when you know that there were some challenges in 2014 and so typically one might think that you would see maybe lower than normal kind of run rate in corporate when you look at the fourth quarter on year-end comp and that kind of thing. Can you give us a sense for what we saw in the fourth quarter whether that was affected with some quarter specific year-end type compensation issues that we should not expect going forward, or is what we saw in the fourth quarter pretty indicative of what we can expect going forward into '15? Thanks very much.

Stephen, I would tell you that the fourth quarter is a little bit lower than we would expect normally going forward into 2015 and beyond. We had about $21 million of general corporate expense in the fourth quarter. I would say we did experience slightly lower variable count than we experienced in 2013. And then we also had a little bit of favorable experience on the insurance side in the fourth quarter as well, which drove that number a little bit lower. So going forward, because of the cost reductions that we announced on September 30 that will impact the corporate office, I think you’ll see our general corporate expense average more in the $100 million range than the – at this rate, it’d be $80 million based on what we put forth in Q4. So, I think about $100 million is the right general range.

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

Hi. Congratulations on the quarter. Can you give us an update on where you ended the year in 2014 from a net productivity standpoint and if you had benefited at all from any of the planned restructuring benefits in the fourth quarter?

Mike, it’s John. Yes, we fell a little bit short of our goal on net productivity for the full year at about minus 6 million or so compared to we thought we’d get back to kind of a neutral position for the full year. So some good experience in Q4 and we really thought we could get there. We just fell a little bit short by driving some good productivity improvement in the last part of the year. What’s the second part of your question again, Mike?

Just in terms of any – the restructuring tailwinds that you discussed for 2015 if any of that actually came through yet in the fourth quarter?

Yes, you can see our restructuring tailwinds in two spots, one you’ll see it in our general corporate expense and I think we addressed that just on the prior question. And then you’ll see a little bit of that also flow through and favorably impact some of the segment because some of the folks that we separated with in September were allocated to our business units.

Thanks. Are you able to give any update on January sales trends?

Well, we’re starting to see a mixed bag when you look at it. We’ve had some regions and pockets that have been affected by a little bit of weather. We’re seeing a bit of slow down in the Texas market. But when you look at the overall market for us, we always see puts and takes on a regional or on a city-by-city or region basis. When you look at the full year, we’re excited about how we expect 2015 to unfold. We’re looking at from a new construction standpoint in the low teens increase. When we look at R&R, we still continue to think that we’ll be in the GDP plus 2 range, which should put us in about 4% to 5% growth rate. So there are a number of indicators around the fundamental drivers of our business that we like. Consumer discretionary income is up. There’s good job growth. We like the employment numbers. Consumer confidence is high. As John spoke, we’re seeing a nice pace of home refinancing, which bodes well for us particularly on the bigger ticket items. So we’re positive about 2015.

Your next question comes from the line of Mike Dahl with Credit Suisse. Please go ahead.

Hi. Thanks. Nice job on the quarter particularly with the margin performance. I’m wondering if you could elaborate on the comments around the pricing and promotional activity and was that a situation where you pulled back, you reduced promotions or increased price and the market held steady, or did you actually see increased promotional activity from your competitors?

As we’ve talked in the past, we strategically decided to take a leadership position in resetting and driving changes in this area. I would say when we look at the market by and large, there has been an overall reduction in the promotion activity. What we’re doing is getting creative to try to find the elastic point here and I’m talking specifically in cabinets. And I think in hindsight, we were perhaps a little bit aggressive. The good news is as we tweak our promotional strategies, we see good results. So we feel good about – as I said, we feel good looking at the year about how we’re going to drive the cabinet business.

Got it, thanks. And second question relating to paint margins, I think that one saw kind of an unusual uptick sequentially in margins, obviously it’s very strong there even against seasonally lower volume. So was there anything that you would note as far as deferral of expenses or benefits that you may have been seeing from an input cost perspective or how we should think about that over the next couple of quarters?

Mike, it’s John. No, we didn’t – in terms of the comp compared to the fourth quarter of last year, you may recall in the fourth quarter of '13 we experienced higher advertising cost to the tune of about $6 million, which made for a relatively easy comparison although we did not incur that same amount in the fourth quarter this year. As it relates to pricing activity or commodity inflation activity, at this point no. As a matter of fact, it was still unfavorable for us in the fourth quarter and for the full year. So, no real benefit from commodity relief at this point.

Okay. Thank you.

Your next question comes from the line of Michael Rehaut with JPMorgan. Your line is open.

Thanks. Good morning, everyone. First question I had was just going back to cabins for a moment, Keith. You’ve obviously been in the CEO spot for about a year now, a little more and if I’m hearing it right, maybe I’m not hearing it right. It seems a little contradictory in terms of some of the comments you’ve made in terms of saying that you’ve worked out some of the issues with the dealer channel in terms of service rates but yet you still see challenges, at least that was the press release. You also expect some of these inefficiencies to drag into the first half of the year. So I was hoping if you could maybe provide a little bit greater level of granularity in terms of number one, what’s going on with the ERP implementation? Where you are with that? And why do you expect or why are these inefficiencies continuing into the first half? And maybe create a little bit of a path in terms of some of the putts and takes from a cost perspective in terms of why you expect to get to profitability in '15?

The increase in inefficiency issues that we’ve talked about are focused on the Merillat supply chain. We put in the ERP system and that was a rough implementation for us. And unfortunately we let down our customer with regards to providing the industry-leading lead times and fill rates that they’re used to. The management team made the decision, the right decision to focus on the customer and get back to those industry-leading lead times and fill rates and we’ve done that. So call it the reoccurring expense, if you will, or the issues that we faced going forward in 2015 are to pull out those cost that we have in the system that we put in to meet the customer requirements. So the ERP system is in, we’re back to our industry-leading fill rates and lead times. And now this year we’re working specifically with detailed work streams to pull those cost out. You asked I think for some examples, Michael, we’re working on labor efficiency. We have strong work streams on material usage variance and material yields. We’re working our scrap rates. There’s a full program management structure that we have to drive this business to profitability and we’re focused on it. This cabinet business represents about 10% of our overall portfolio and it’s a focus of ours to fix it. And importantly we’re also focused on extending the momentum of the other 90% of our portfolio that’s operating quite well.

Okay. I appreciate that, Keith. Second question turning to a bright spot in plumbing where you had a nice step up function now for a couple of years in margins there. And I think a quarter or two ago, you increased the let’s say medium-term outlook for profitability to be in the mid teens versus the low teens. I was wondering if that’s still the case and if we continue to see volume growth, you expect to continue to see a little bit of incremental – positive incremental margins and that mid teens rate is still achievable in the near to medium term?

I’d tell you I’m pleased with the plumbing performance. There’s no question about it. As we mentioned in the prepared remarks, we had a record sales and a record profit year for both Hansgrohe and Delta and we’re seeing nice mix where our targeted new products and introductions like Hansgrohe Select functionality and a number of new products that Delta has launched in the showroom channel. If you happen to make it out at the show in Las Vegas, you saw the buzz around the booth, we have some good momentum there. So I’m pleased with those margins. We also have some challenges as we go forward. We talked about the exchange rate out there that could give us some potential headwinds. The commodity basket for us there is really it’s too early to tell how that is going to shake out in the year. So net of when I look at the segment, I’m very pleased with the margins. The mid – maybe mid to high take on this segment is probably a good place to be, mid to high teens.

Your next question comes from the line of Nishu Sood with Deutsche Bank. Your line is open.

Thanks. First question I wanted to ask was on the share repurchase program, exciting to see one of the major planks of the strategic restructuring coming through now, 5 million in the fourth quarter and you mentioned that that pace will continue, so a pretty significant allocation of cash. And my question around that was how should we view this going forward? I mean there was a period in Masco’s history during the last housing recovery when a lot of – the excess cash was basically swept to share repurchases. It really accumulated over the years and was a major plank in cash distribution. How should we view this as '15? Is this an effort just to – because there’s excess liquidity right now that there’s an opportunity here in '15 or is it more like that earlier period when excess cash will continue to be swept over the next few years into share repurchases?

We’ve talked in the past about our capital allocation strategy and we haven’t changed that. I mean first and foremost, funding our business and investing in brand innovation and growth. We’re going to do that. We’re going to continue to do that. We’ve talked about paying down debt in the range of $300 million to $500 million over the next couple of years, we’re going to do that. And of course we’ve talked a lot about returning capital to the shareholders with our increase in the dividend and our share buyback program. We expect to spend in the range of 400 million to 500 million in 2015 in share buyback. And then we’ve also talked about smaller acquisitions and we’re looking at that. They’ll be bolt-on acquisitions through our existing platform. So given the strong cash flow of this business that it’s historically had and certainly we intend to continue to have, we can accomplish all of these strategies. So it’s a balanced capital allocation approach is how I’d characterize it.

Got it, okay. And second question, on the Pro paint initiative in Behr, certainly something that we’ve been hearing about in recent times from you folks and an exciting initiative for us. Obviously, a big effort at the builder show recently. When can we expect to get more detail on that number wise? How big that’s grown on the growth rates? What you might be targeting on that? Is that something we can look forward to at the Investor Day perhaps or when will we get more detail on that?

That’s surely our intention. In the Investor Day in May, we’ll be giving more detail and talk more about our strategies and the milestones that we expect to hit as a result of those strategies.

Okay, great. Thanks.

Your next question comes from the line of George Staphos with Bank of America Merrill Lynch. Please go ahead.

Hi, everyone. Thanks for all of the details and taking my question. Congratulations on the year. I guess my first question, Keith, goes back to cabinets. If we move from Merillat to – it sounds like on the retail side you said you were trying to be a leader on promotion and pricing, you felt you did a good job of that, maybe you were too aggressive, you tweaked your strategy and you’re happy with the results I think I’m paraphrasing that relatively well. With the tweaks at a margin level that was sufficiently profitable for you or will the tweaks in your promotional activity require you to find other costs within the retail portion of your business to get margins to an adequate level? And then I had a follow-on unrelated to that.

As you know, we don’t talk specifically about margins and pricing in specific channels, specific customers but I’d tell you that the tweaks that we’ve done in this channel are productive for us and they’re profitable.

Okay, I appreciate that. And then secondly in Decorative Art, can you talk at all about the implications from the $20 million investment, what it means perhaps as we try to think about margin trends either percentage margins or dollar profit margins for '15 versus very good performance in '14? And how important is the new, call it mixing center relative to the Pro initiative? Is it purely driven by the DIY consumer? Thanks and good luck in the quarter.

Thank you. Our paint strategy is to have the best product, the best brand and to deliver it to the consumer with the best customer experience and we’re doing that. We talked about the product and the recent awards we’ve been given both by Home Depot and an independent third party. Clearly, we have the best DIY brand in the industry and on a customer experience and merchandizing perspective, we’re working together with the Home Depot to invest, so that experience in the aisle is good as it can. I’ll tell you on the color selection center, as we’re launching it, we like what we’re seeing. Behr’s representation in that color selection center has gone from 18 feet to 24 feet, so that’s real powerful for us. In terms of the margin in this segment, we continue to think about it as high teens. We’re working together with the Home Depot to grow the Pro paint segment and you have to really look at this – at least I choose to look at this in totality in the segment and all of this work that we’re doing to build the brand, to build the customer experience, it all helps with our Pro initiative as does the 140 Pro reps that we have out in the field that are driving this business together with the Home Depot.

Your next question comes from the line of Philip Ng with Jefferies. Your line is open.

Good morning. It appears you’re addressing the issues around cabinets, which appear to be waning but can you give us a sense how you’ll be tracking relative to the market in 2015 going forward? And do you expect incremental margins returning back, like a mid 30% range in the back half of this year?

Phil, as we work through the inefficiencies as we talked about earlier and get the business back on track, we do expect this business to drop kind of the 30% to 35% incremental that we’ve experienced historically. Obviously, we did much better than that in '13 and as we’re going through a growth phase and coming off the bottom, we pulled back a little bit on that in 2014. But there’s nothing fundamental to this business. It’s changed the margin profile of the business and its contribution margin.

Got you. And when you think about price cuts in 2015, especially with this pullback in energy prices, can you quantify what the potential tailwind could be especially on the Decorative side, just looking back in 2009 when petrochemical prices did rollover, you saw a pretty nice uptick on the margins front for your Decorative business?

Yes, so it is a little bit different environment. As we look across all the commodities that we buy enterprise wide, there are a fairly number of puts and takes, as Keith alluded to earlier. On the plumbing side, we’ve seen some of the base metal; some are up, some have softened a little bit. Hardwoods has definitely experienced some inflation there along with installation. On the petrochemical side and the impact it has on paint, there’s really over the course last couple of years been a disconnect between the price of crude oil and the price of natural gas. As I mentioned, natural gas has a big impact on the inputs to paint as well. And so while we have not seen really deflation in our input costs at this time, so it’s really hard to say how this is going to play out throughout 2015 until we see where oil really lands for the year and if the feedstocks that go into paint actually do come down in price.

Okay. Thanks.

Your next question comes from the line of Keith Hughes with SunTrust. Please go ahead.

Keith, you might be on mute.

Your next question comes from the line of James Armstrong with Vertical Research. Please go ahead.

Good morning. Thanks for taking my question. My first question is on the international sales side. I know it’s only about 19% of your mix, but could you help get a better handle around the sensitivity to the changing currencies, especially the euro? And could you give us a little more detail about how the international regions are doing? In order words, where’s doing well and where isn’t.

Sure, James. So a couple of questions in there. Just in terms on the top line, what’s going well? As you’d expect Western Europe for us that include the UK, Germany and Switzerland and France, they should perform reasonably well for us and this was a big part of our sales originally. But then as you look at the various pockets that we see, we’re seeing some signs of life finally in Southern Europe but that’s coming off a very low bottom, so not hugely excited about that growth opportunity but at least it’s not declining any more. We have seen a little bit of pullback as you might imagine in Russia and the Ukraine just given the political environment that’s there. We’ve seen very good strength elsewhere. The Far East has done very well for us, Middle East we’ve performed well. So a lot of good other areas of the world outside of Russia and Ukraine. In terms of the impact on our profit as a result of currency movement and this is really principally the euro as the biggest impact on both our revenue and our profit. If you think about a $0.10 movement in the euro, that’s roughly $15 million, $16 million of impact from an operating profit perspective.

Your next question comes from the line of Garik Shmois with Longbow Research. Your line is open.

Thank you. I have a question on the installed business, good operating leverage in the quarter. Highlighted a couple factors is driving top line growth, commercial was highlighted as well as maybe your resumption in demand from production builders. Just wondering if you can provide maybe a little bit more color just on the incremental margin growth in that business in the fourth quarter and just how sustainable that trend is as you look out to 2015?

It was a little bit higher than we would customarily expect to see in that segment. Typically, we see incremental margins in that segment in the 25% area on a quarterly basis or on an annual basis. And it did benefit from some productivity improvements clearly that they saw. They also benefited from a little bit lower insurance experience in the fourth quarter as well. That’s really what kind of drove the incremental there and we did have a little bit – there was some price increases that came through from the installation manufacturers and they were able to get a little bit tailwind from that as well.

Okay, thanks for that. And my follow up is just around the comment earlier around recent trends in the state of Texas just starting to see a slow down. Just wondering how material Texas is to the U.S. business just given that that state has been so instrumental to driving at least the initial phase of the U.S. construction recovery?

Texas is about 16% of total starts in the United States and it’s kind of an unusual state because if you think about those single-family, multi-family breakdown of that state, unlike kind of the 30%, 35% single-family as a percent of total starts, Texas is closer to 45%. And so it’s driven much more heavily by multi-family and lower end homes and then there’s kind of a bifurcation. There are some obviously large homes as well. So, we feel that even if starts went down 5% in that market, that’s really only 8,000 starts, not a significant impact on the overall business.

I think of it in terms of our segments and when you look at our two big segments of plumbing and paint, those segments tend to be less sensitive to the regional variability that we can see. People in Houston are still painting their houses or still replacing their faucets, et cetera. When you look at our window business, we have a new factory and we’re developing that market, we’re growing very nicely down in Texas and we’re going to continue to watch where that demand goes and insure that we ramp that capacity up consistent with it. And installation, as John mentioned, we are tied into new construction there but at 160,000 or so starts in Texas with a good portion of those being multifamily in the grand scheme of things, we don’t see it as being particularly material. Again, looking at the full year across the market, we’re positive about 2015 with new construction growth in the low teen range and R&R growth in that 4% to 5% range. And I think importantly, we worked our business and have our capacity in line to be able to meet this demand without a significant injection of capital. In other words, we don’t have to put in capital and we’re not faced with inefficiencies that can sometime arise when you make capacity increases. So we like how we’ve positioned the business and we like the macros.

Your next question comes from the line of Dennis McGill with Zelman & Associates. Your line is open.

Hi. Good morning. Just continuing on that, if you could go back to the comment about seeing some weakness, can you just be more specific on it, Keith? Is that in new construction or model site and what specifically are you seeing that leaves you to call that out?

Yes, just a little bit of hiccups as they talk to our guys that our down in our branches down there that it slowed down a little bit in the new construction side. Again, I think it’s over a short period of time and as I mentioned, these pockets or ups and downs occur across the country. We’re focused on the total market.

So that’s coming from your installation services branches?

Yes.

Okay. All right, that’s it. Thank you.

Thanks, Dennis.

Your next question comes from the line of Robert Wetenhall with RBC Capital Markets. Please go ahead.

Keith, nice way to cap a great first year. Wanted to dig in a little bit on paint. I think John had said that you had 8 million of promotional investment in the fourth quarter and I wanted to see if that money was spent or deferred because you got very good performance?

Bob, a portion of that was spent in the fourth quarter.

But the full 8 million or --

No, less than that. The number off the top of my head is closer I think to 4.

Okay. And then on the raw side and I think some people have touched on this. Could you talk about your hedging in the pain and decorative architectural and also when do you think you would start to see the benefit of lower raw costs and how that will flow through the P&L?

Bob, we don’t hedge input costs on paint, we only hedge on our plumbing products, so copper and zinc is where we have our hedges. As I mentioned earlier, we have not seen any benefit yet from lower raw material input cost in the paint as of this time. If we were to experience that, it would take about a full quarter before that impact would flow through and hit our P&L. Just between – we have an inventory in between the supply chain that we’ve got, it would take about that long to hit the income statement.

And obviously you guys have spent a lot of time investing behind the paint business. How do you think about gallon growth heading into 2015?

We feel good about it. As I mentioned, best product, best brand, best merchandizing, those are all going in our direction and with this new color center, we feel real good about it where we’ve rolled this color center out, Bob, we’ve seen good performance. So on that side of the house, the core of the business, feel very good. On the growth side of the business, we’re growing very nicely with the Home Depot. We continue to invest behind it. As I mentioned, 140 plus reps out in the market driving that Pro business, so feel going about it.

Cool. And if I could just sneak one more in. It looks like you’re sharply increasing share repurchase activity. How should we think about year-end share count and what’s kind of driving the decision to accelerate share repurchases? Thanks and good luck.

In that regard, we’re buying our shares back a little bit on the opportunistic basis. As the share price moves up and down, we need to go in a little bit heavier in the market or pullback. Right now, we have not given any guidance in terms of what we think the year-end share count – I think for modeling purposes, I would just assume a pro rata purchase across the year.

Your next question comes from the line of Tim Wojs with Baird. Your line is open.

Good morning, everybody. Just I think, Keith, earlier you mentioned low teens new construction growth and about 4% to 5% repair/remodel growth. Just given some of the comparability relative to last year with the weather and in Q1, could you give us a little bit of color how you think the pace of that growth materializes through the year?

Historically, our business has been softer in the first and fourth quarter a little bit and in the middle of the year is where we tend to see a little bit more robust volume given our space. I think that will continue this year. With regards to – we certainly had very difficult weather in Q1 of last year trying to peg how material that tailwind will be is difficult. As I mentioned earlier, I believe we’ve always seen some incremental weather here. We’re experiencing some more as we speak and I don’t know what old man winter is going to deal us here in the next six weeks. So, it remains to be seen.

Okay, that’s helpful. And then I just want to make sure I understand just the cabinets, the level of profitability maybe in 2015. So, there were $35 million of ERP inefficiencies in 2014. I think there should be about 10 million in 2015. So net, that 25 million, does that go away and then I guess should we layer on top of that just the normal 25% to 30% incremental profitability in the cabinets business for '15?

That’s where you should be thinking about that segment, yes.

Your next question comes from the line of Eric Bosshard with Cleveland Research. Your line is open.

Thank you. In terms of the cabinet sales momentum and market share momentum, I understand that you’re managing or tweaking your promotional efforts but could you talk a little bit about how you think you’re performing from a market share perspective and even how orders are behaving and the volume outlook looks in that business as we go into 2015?

It’s really difficult as we’ve talked in the past to peg the size of the market particularly on a quarterly basis. We believe the market is going to grow with a combination of the repair and remodeling tailwinds that we’ve talked about and certainly in new construction. Eric, what was your follow-on question, I’m sorry.

Just trying to understand even as you’ve managed, we saw some promotional efforts as you’re managing through that at 4Q, if you’re seeing any benefit in terms of orders as we move into 2015 in that business? If there’s anything notable going on, on the order line.

From an overall industry order perspective, it’s what we would expect. There hasn’t been a material change from how the industry has been performing, what we’d expect given the seasonality. In terms of the productivity of our tweaks and our promotion, they’ve worked out very nicely for us.

And then secondly, just to dig, I understand your comment on January and 1Q seasonally as a slower period, but is there anything you’re seeing in the business, the 5% organic growth in 4Q is a pretty good number. Is there anything that you’re seeing in 1Q or we should be aware of in 1Q that would materially change the overall growth rate of the business?

No, I think it’s right in there with what we see historically when you factor in the seasonality on a quarter-by-quarter basis. And importantly for us, we’re looking at the full year and we’ve measured it – we drive this business on a yearly basis and we’re very excited about '15. The macros that we have in new construction and the good traction of R&R and all the signals we’re seeing and the indicators are the fundamental driver for the business, so we feel good about '15.

Ladies and gentlemen, that is all the time we have for today. We thank you for your participation on today’s conference call. We have now concluded. You may now disconnect.