00:04 Good morning, ladies and gentlemen. Welcome to Masco Corporation's First Quarter 2022 Conference Call. My name is Mary 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] 00:34 I will now turn the call over to David Chaika, Vice President, Treasurer and Investor Relations. You may begin.

00:41 Thank you, Mary and good morning. Welcome to Masco Corporation's 2022 first quarter conference call. With me today are Keith Allman, President and CEO of Masco; and John Sznewajs, Masco's Vice President and Chief Financial Officer. Our first quarter earnings release and the presentation slides are available on our website under Investor Relations. Following our remarks, we will open the call for analyst questions. Please limit yourself to one question with one follow-up. If we can't take your question now, please call me directly at (313) 792-5500. 01:17 Our statements today will include our views about our future performance, which constitute forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We describe these risks and uncertainties in our risk factors and other disclosures in our Form 10-K and our Form 10-Q that we filed with the Securities and Exchange Commission. 01:40 Our statements will also include non-GAAP financial metrics. Our references to operating profit and earnings per share will be as adjusted, unless otherwise noted. We reconcile these adjusted metrics to GAAP in our earnings release and presentation slides, which are available on our website under Investor Relations. 01:58 With that, I'll now turn the call over to Keith.

02:03 Thank you, Dave. Good morning, everyone and thank you for joining us today. Please turn to Slide 5. Masco was off to a great start this year with our first quarter results. Our top line increased 12%, with growth driven by volume and pricing in both segments. Our operating profit declined slightly due to higher commodity and freight costs, as inflation reached mid-teens for the quarter. 02:30 Despite these higher costs, we achieved sequential margin improvement through pricing actions and expense controls, as SG&A as a percentage of sales improved 110 basis points to 15.9% of sales, even with higher marketing and growth initiative investment. Our earnings per share for the quarter was $0.95, a 7% increase compared to the very strong first quarter of 2021. 03:02 Turning to our segments. Plumbing grew 11% in local currency, with 10% growth in North American Plumbing and 12% growth in International Plumbing. This impressive performance was against a 27% comp. Our Plumbing business remains well positioned for growth with our market leading brands, new product introductions and healthy backlogs. 03:30 Furthermore, international markets, including Europe remains strong and customers report continued pent-up demand and a strong backlog of projects. In regards to Russia and Ukraine, Masco has very little exposure as we sold approximately EUR40 million of product into those countries in 2021, and had since ceased operations. 03:55 And our Decorative Architectural segment sales grew 17%, as Behr continued its tremendous performance with low-double digit growth in DIY paint and then another quarter of over 50% growth in pro-paint. Our paint business is performing extremely well, as evidenced by our strong results. 03:20 We continue to work very closely with our partner the Home Depot on our paint strategy and we are jointly investing with them to drive continued share…

09:19 Thank you, Keith and good morning, everyone. As Dave mentioned, my comments today will focus on adjusted performance excluding the impact of rationalization and other one-time items. 09:31 Turning to Slide 7. We capitalized on the continued healthy demand for our industry-leading brands, delivered in a solid start to the year with sales increasing 12% in the quarter against the robust 25% comp in the first quarter of last year. Net selling prices increased sales by 9%, the higher volumes increased sales by 5%. This was partially offset by 1% each related to currency and divestitures. 10:04 Sales grew 14% excluding the net impact of acquisitions, divestitures and currency. In local currency, North American sales increased 14%. This outstanding performance was driven by strong growth in both DIY and pro-paint, as well as faucets, showers and spas. The main drivers of this growth were increased net selling prices, which increased sales by 9%, the higher sales volumes, which increased sales by 3%. 10:38 In local currency, international sales increased 12% or 18% excluding divestitures. Higher volumes increased sales by 9%. Net selling prices increased sales by 7% favorable mix added 1%. Gross margin of 32.1% was impacted by higher commodity and logistics cost in the quarter. As we discussed in our previous earnings call, price cost had a peak impact on our P&L in the fourth quarter of 2021. We experienced a 140 basis point sequential improvement in the first quarter of 2022. 11:21 Our SG&A as a percentage of sales improved to 110 basis points to 15.9% due to operating leverage and continued cost containment activities across our businesses. Operating profit in the first quarter was $356 million and operating margin of 16.2%. Our EPS was $0.95 in the quarter, an increase of 7% compared to the first…

19:00 Thank you. [Operator Instructions] Our first question comes from the line of Stephen Kim from Evercore ISI. Your line is now open.

19:32 Great. Thanks very much guys. Yeah. Good results and the exciting times out there. So we appreciate the guidance here. I wanted to see, if we could get a little bit more in the way of specifics around what you're doing with the PRO business that you -- you said you're up 50% again, raising your guide for the year in terms of the PRO-side of the business. You alluded to programs and services to retain those new customers. I was wondering, if you could give us a little bit more granularity around that, so that we can frame how this business is going to comp so strongly later this year?

20:08 Thanks for the question, Stephen. It’s Keith. Good morning. Our business, our PRO business is doing very well and I think it's important to highlight that it begins with the strength of the brand, with the achievements we've made with regards to the quality in the can and how the consumer perceives it as well as the overall customer satisfaction on the consumer side. So there continues to be real strong consumer pull-through the channel, based on the investments that we've made for a long, long time and the strength of those investments. So it begins with what we have to sell and we're selling a very good paint and the consumers and the PROs appreciate that. 20:52 I think with the strong execution that we've had in our supply chain and kudos not only to the Behr team and R&D and the folks in the factory, but our supply base has been with us for decades. And we're very loyal and they're very loyal to us and they've done an outstanding job through very difficult circumstances. So that is really the core of what's driven our success is strong execution and strong brand service and innovation. 21:22 In terms of our programs that we're developing and are launching to continue to drive the growth and to give us confidence in the raise that we've made in our guidance. I'm not going to get into the details for obvious reasons, but they are focused on rewarding customers who continue to give us more share of their wallet and that's really what we're targeting. We've had the opportunity to get Behr paint into a lot more PROs hands and frankly, they like that, and we're developing programs to continue to do that to get our paint in more PROs hand. And then to add to stickiness and to help us maintain as much share of wallet of those new customers as we can.

22:11 And just in terms of timing on that, Keith, can you give us a sense for, are those programs which you are currently rolling out now or are these -- when should we expect these to really be at full force? I would -- this year, like second quarter or third quarter?

22:33 As I've -- we've talked about frequently. I think the best indication of our future performance is what we've done in the past and look at what we've been able to do and this steady growth in PRO has been an evolution where we continually launch new programs, be it on and the execution side of delivery and job site delivery and high-speed tinting, and those types of advantages to programs that we developed jointly with The Home Depot to make the in-store experience better to how we service with regards to our technical representation and our -- in the field reps to what we do for loyalty programs and the like. So it will be a combination of things that are happening now and we will continue to roll out. There will be new things that happen and it's -- and we plan on continuing that as we have really since the start of the program.

23:26 Okay. Great. Thanks very much. Best of luck.

23:31 Thank you.

23:33 Our next question comes from the line of Matthew Bouley from Barclays. Your line is now open.

23:41 Hey. Good morning, everyone. Thank you for taking the questions. So, it sounded like your direct exposure to Russia and Ukraine is relatively small, but I think the investor concern is probably more related to the knock-on effects to sort of the rest of European demand. Just how are you guys thinking about sort of the rest of the impacts to the Hansgrohe business in Europe, just as a result of everything that's going on there? Thank you.

24:11 As we said in the prepared remarks, relatively low level of exposure as it relates to demand in both those countries, call it EUR40 million and we ceased operations there. Our supply chain and our supply base, if you will, does not have anything inbound or interrelated with those two countries. So really, I would say there is no direct impact. Certainly, we're watching very carefully with regards to the indirect impact we have seen, we believe some fuel, oil increases in price that were indirectly related obviously to the conflict. As it stands now in Europe, as John highlighted in a detailed remarks, we continue to see strong demand really across our main countries of Germany, France, UK where we do a significant amount of our volume and that's continued to be robust and the consumer traffic, the health of the consumer and our demand patterns continue to be strong. So at this point we have not seen any indirect knock-on effect of the conflict, but obviously, we're watching that very carefully and we will continue to do so.

25:27 Got it. Thank you for that, Keith. And then second one just to press on the PRO paint business in another way, obviously, competitors have spoken to gaining access to raw material supply again, the specific question is just, if we should think about any sort of competitive dynamics emerging as you've got multiple industry participants talking about market share and specifically, is there anything on the pricing side that we should be aware of on that front? Thank you.

25:58 Yeah. I don't have anything particularly to add more color to with regards to pricing, other than what we've made in our comments. When we look at our competition, I respect them, a lot. We have great competition, there is no question about it. And I think to a large degree, we’re as good as we are, because of the pressure that they put on us. So I welcome the competition and their strong, I respect them. With regards to how this market share shakes out as capacity becomes more realigned, I think you see our confidence in the guide that we've changed. And we certainly wouldn't do that, if we didn't have that kind of confidence and fundamentally that confidence is based on the fact that we have an incredibly strong brand. We've got outstanding quality. 26:55 We have a reputation for outstanding customer service and this is reports from third-parties. This isn’t just Masco's view on our own paint business. So we have strong paint to begin with. We've demonstrated the strength of our supply chain and our team at Behr and our team and our suppliers. So we've got a strong team with a great product and great recognition and when we have the opportunity to get that paint into more PROs hands, we continue to see that kind of feedback, it’s very positive. And thanks to our supply chain for being able to put us in that position. And our intent is to continue to work hard to keep as much of the share of wallet of those new painters that have tried us and so far, it's is working pretty good. So, very much respect the competition, but also extremely confident in our paint business as reflected in our guidance.

27:46 Great. Well, thank you for that, Keith and good luck.

27:54 Our next question comes from the line of John Lovallo from UBS. Your line is open.

28:01 Good morning, guys. Thank you for taking my questions as well. The first one on the ASR, which I think is very positive and I think it sends a very strong message. I just wanted to be clear, it sounds like that's fairly definitive, are they're going to go forward with that, and the timing could be near term. But I guess the question is what was sort of the factors that led you to that decision to go forward with that?

28:24 Yeah, John. Hey. Good morning. It's John. You're right. We are looking at this ASR obviously, we -- by the fact that we entered into that the one-year term loan yesterday as a pretty good indication of that. The way we're looking at this, we've seen -- and when it comes down to value creation, right. We've seen this share price retreat a little bit this year And as we look forward, we're just -- the way we're looking at this is we're simply pulling forward our future cash flows with the term loan to buy back these shares because we’ve repurchased $400 million to date and maybe we got this heavy working capital, at this time of year. That was a reason we took out the additional loan just for the liquidity, we needed for the transaction. So because of where we see the share price, the strength we're continuing to see in our business and we think is a pretty realistic view as to how we see the repair, remodel market developing even in this rising rate environment. 29:15 We feel it's the appropriate time and the right time to put our balance sheet to use to be a little bit more aggressive on share repurchases and further enhance shareholder value. And we've always said that our share repurchase program would be programmatic, but we also said that we would be opportunistic, if we saw a little bit of a dislocation and we think this is one of those times. And so that's why we really pursued this transaction at this time.

29:57 Yeah. That makes a lot of sense. We would agree. Okay. And then on the plumbing supply chain, we’ve seen a lot of the components are coming out of China. Curious, what the Shanghai shutdowns have done and what you see going forward in relation to the supply chain?

30:13 It's an important thing that we're watching for sure. As we -- both in terms of demand in China, we do roughly about $300 million of demand in China, as well as the source of products coming out of China. We've -- first and foremost concern with our employees and ensuring their safety and really, we feel good about that aspect of it. I'm happy to be able to say that, but we're currently our supply chain. While, it continues in general to be tough and to require extra special effort to manage really the challenges that have been going on for some time. We're going to do, okay. And we expect as Shanghai and Beijing come out of the lockouts that with the underlying growth in the market in China, that will be able to do, okay there. And to date, we haven't had while it's still a challenge. We haven't had significant issues coming out due to the shutdown of those two cities and we expect it to stay that way.

31:18 Great. Thank you, guys.

31:22 Our next question comes from the line of Mike Dahl from RBC Capital Markets. Your line is open.

31:28 Good morning. Thanks for taking my questions. The first question, I mean obviously, alluded to kind of the some of the potential puts and takes with housing and how home improvement evolves. So I'm wondering, if you're seeing anything whether in -- something more discretionary like your Spa business or anything in sellout trends. Could you talk about how you're looking at some of your kind of leading-edge positions in terms of evaluating whether or not you're seeing consumer softening come through and maybe what else you're watching most closely in this environment?

32:10 I'd point to a couple of things, Mike. We -- as expected are seeing some tempering of the call it, white hot demand we've seen in the last 18 months. We've talked about that last quarter and while demand this quarter was a little bit better than we expected, there is a little bit of tempering from what we've seen in the past 18 months. However, it's still strong. We are not seeing really any sort of evidence. There's a little bit of a mix shift but nothing material, where the consumer continues to be willing to spend as driven by the overall change in the view of the housing -- the home in our view driven by COVID. And we're seeing strong sales in our spas that backlog of our spas, a very expensive discretionary item, but in the right spot as it relates to the whole wellness trend and that backlog continues to be in that 30 week range. So that's strong. 33:15 Hansgrohe and our higher end shower systems continue to sell well. We're seeing our shower doors, which are relatively expensive continue to sell well. So, no real mix down, strong traffic, good backlogs and again, this all feeds into why we've decided to change our guide in the first quarter which typically we don't do because we like what we're seeing and the strength of the consumer.

33:44 Mike, what I would just add to Keith's comment is, in terms of sell-in and sell-through, I’d say it’s pretty balanced during the quarter across all product categories. We didn't see any significant change in that whatsoever through the quarter.

33:58 Okay. That's very helpful. Thank you for those comments. My second question, just wanted to ask for clarification on price cost certainly understand your comments around Dec Arc and that's always been dollar recovery not margin percentage recovery, but when we look at the new full year guide for margin, both on a consolidated and segment basis. Is there an expectation for price cost neutrality, price cost favorability and how should we be thinking about that in terms of cadence, i.e., are there incremental headwinds in the second quarter because of what you've seen, but then you catch back up in the second half? Just a little more color on that would be great.

34:46 We exited the quarter price cost neutral and we expect that to continue in the second quarter. Now, we don't have a crystal ball for where commodities are going to go, but our intention and our strategy hasn't changed. We think we have the right to drive price increases as needed. Obviously, our first choice is to work with productivity and with our supply base and our customers to minimize the impact, but to take price where we need to, as we see inflation and we don't know where that's going to go, but we continue to monitor and maybe John, if you could give a little bit of color on that.

35:26 Yeah. Mike, maybe give you a little more color just on what we're seeing in terms of inflation across the portfolio, we continue to see some inflation across our cost pass particularly, in terms of freight inflation. In terms of the raw materials, copper has been pretty stable over the course of the last quarter, so but zinc has increased since the start of the year. In paint input costs, including resins and TiO2 continue to escalate. And I'd say that inflation is kind of in the range of 20% plus. Like, I mentioned freight packaging pallets and fuel continued to remain high, so that inflation continues. And so that impacts a little bit of our margin guide that we gave for the year. So we think we've got cost recovery coming, but then mainly in the back half will see particularly in the plumbing segment, we think we see margin expansion in the back half of the year. But that will -- the incremental inflation will weigh a little bit on because of cost recovery in the paint, will weigh a little bit on our margins.

36:39 Okay. Got it. All right. Thanks, Keith. Thanks, John.

36:44 Our next question comes from the line of Michael Rehaut from JP Morgan. Your line is open.

36:53 Thanks. Good morning, everyone. Thanks for taking my questions. First, I just wanted to dial back to the demand backdrop and I believe you said earlier that sell-through is kind of consistent with sell-in, which is always a good sign. I was curious about during the quarter, we've heard different noise at parts at points over the past couple of months around either demand remaining robust or may be slowing a little bit different chatter out there anecdotal. Wanted to kind of get your take on your experience around demand trends January, February, March and if there's been any differences in April across plumbing and Dec Arc?

37:49 Well, we've not keen on talking about in the month changes in April. I'll tell you that we exited the quarter strong and that remains. In terms of different channel breakdowns of where we saw our demand broad-based and strong demand in North America and international. In international, we saw growth across really most of our geographies, but particularly in China, and Germany. And we've talked about our PRO demand being very strong and that continues. Continued strength in pro-paint in the quarter and feel that that's while we consistently say it's difficult to pin down the size of the market in any one quarter. We think that's indicative with those high growth rates of share gain. And our outdoor spas and fitness systems remaining historically strong. So the demand was pretty steady through the quarter that we just finished. We've exited strong and that continued.

38:52 Yeah, Mike. The one additional color point that I'd give you on the quarter is, if you think about how the quarter evolved just from a COVID perspective, January was a little bit more impacted by COVID and as people were coming out of the year-end holidays and so, perhaps a little bit less activity in January, but things got stronger, as the quarter developed so, into February and into March, so that maybe be help you out a little bit in terms of color.

39:21 No, that is very helpful. I appreciate that. I guess just secondly, with the different moving pieces, I'm kind of shifting to the margin front here and kind of appreciate that, obviously, you're offsetting the incremental inflation with more pricing dollars keeping the price cost neutral on a dollar basis broadly speaking, but sequentially, any type of thoughts when you think about Plumbing and Dec Arc 2Q versus 1Q? Should we think about perhaps -- I would think, all else equal given there's typically that lag in price against cost inflation. Should we be thinking perhaps of 2Q margins across both segments being slightly lower than 1Q sequentially, and then obviously, the catch-up in the back half or I know you don't want to get too much into that weeds on the quarters, but I think given the environment, it would be helpful.

40:33 Yeah. Let me give you a little bit of color on plumbing, I think that would be most helpful. As expected, we saw a significant sequential improvement in our plumbing margin in the first quarter. In the first quarter, we did see higher commodity and supply chain costs flow through the P&L and call it, a more normalized spending level of investment in such things marketing head count, growth initiatives, et cetera., and this was partially offset by our pricing actions. So as a result, as we expected, our price cost relationship improved nicely in the first quarter, I’m talking about plumbing here, and that will continue to improve for the rest of the year. 41:15 In terms of how we see the year playing out going forward in plumbing, the relationship year-over-year in plumbing will improve each quarter going forward. And we do expect to see margin expansion in the back half of the year in plumbing and hence, the guide for 18.5 to 19. I think when you look at Decorative Architectural, the main story there is the relationship between pricing for dollar increases and the margin impact on that.

41:45 Mike, the other to think about, if you think about sequential Q1 to Q2, is generally, Q2 is our strongest volume quarter. So while we may be facing some headwinds in terms of margin from the price cost and we do generate a lot more volume in Q2, which should help on the margin side as well.

42:08 Great. Thanks guys. Appreciate it.

42:12 Our next question comes from the line of Susan Maklari from Goldman Sachs. Your line is open.

42:21 Thank you. Good morning, everyone. My first question is, just kind of building off of your last comment. When you think about the year and the sequence of the upcoming quarters across both the segments. Do you expect that we will see normal seasonality, even though it sounds like we came into this year with quite a bit of strength across your business?

42:43 Yeah, I would expect that there would be, the traditional seasonality Susan with Q1. I'm sorry, Q1 probably being our softest quarter and then Q2 and Q3 being this seasonal stronger seasonal selling. That said, obviously, we're up against the comp issue and so we faced a pretty tough comp in the first quarter of this year. A pretty strong comp in the second quarter of last year. And then, obviously, the back half of the year, we were up against the tough comps of ‘20, -- the second half of 2020 which reduced our sales growth in the back half of ’21. Factoring kind of the anomalies of how the pandemic played through the financials over the course of last couple of years, we would expect that traditional seasonality to apply.

43:39 Okay. That's helpful. And then my second question is on the DIY paint side. You also increased your guide there to. I think, low-double digits from high-single digit growth for the year as you sort of look out and you think because that's coming off of a much more established mature kind of a business there, but as we think about the underlying housing trends that are coming through people especially, younger people continuing to enter homeownership, does that suggest that, that is a business that can sustainably operate at just a much higher volume level? And what does that mean then in terms of the pricing and the margin trajectory across paint?

44:18 We definitely believe that in particular with the point you mentioned, as it relates to the millennial cohort coming in and being first time homebuyers and entering that market. And knowing and seeing with our research that they are DIYers. And that's an extremely helpful component to this DIY business. We think it's -- that it's stabilized and we think it's stabilized at a very good number for us, as it relates to the overall size of the market and the demand. 44:50 With regards to your question looking forward on margin, really that hasn't changed, with regards to our approach to margin in an escalating commodity cost environment that puts pressure on our margins that we've discussed that thoroughly. Conversely, as we -- as those commodities begin to abate that would help our margin. So I think, if you look at our guide for margin that really is right in the range of how this business is expected to perform with those dynamics of the pricing.

45:23 Okay. Great. Thank you very much. Good luck with everything.

45:26 Thank you.

45:28 Our next question comes from the line of Deepa Raghavan from Wells Fargo Securities. Your line is open.

45:37 Hi. Good morning, everyone. Thanks for taking the question. Nice increase to the volume guide. Just curious what's driving the full-year volume higher? Is it mostly price or is there some, I'm sorry, not volume the full-year organic growth higher, is it most of it, price at this point in time, is there also some volume in bulk in there? And if you can provide us with the split of volume versus price in the full year guide that would be helpful?

46:12 Yeah, Deepa. It's John. No. In terms of your question, you're absolutely, it's both a combination of price and volume that's driving our organic growth for the year. In terms of the breakdown of price and volume, as you might expect in this inflationary environment this year, it's going to be more, more price than volume, but we do expect volume growth across both our segments for the year. At this point, we're not going to get into the specifics of the breakdown of the two components of price and volume.

46:50 Okay. That's fine. In terms of margin guide, just to clarify, you're baking in only the inflation you're seeing so far, correct? Is there any future inflation also that you're assuming, just trying to square that lowered margin guidance and see if inflation continues, is there further risk to the margin or are you baking in some cushion within?

47:22 Yeah. I would say, Deepa to that question in terms of the – inflation I'd say the guidance contemplates the inflation we've seen here in the first quarter and what the foreseeable inflation is that we are experiencing if there is something that materially changes beyond where kind of current market conditions change that is not contemplated in our guide.

47:45 Thanks very much for the color. Good luck.

47:52 Our next question comes from the line of Keith Hughes from Truist Securities. Your line is open.

47:59 Questions on inventory, the inventory count was up a good bit year-over-year, if you could talk about what's much of the inflation, what units look like year-over-year? Just changing any kind of view of production schedules for the remainder of the year?

48:17 Yeah, Keith. In terms of inventory here, there are number of things that were touched upon inventory, you're right, you hit on one of them. Inflation is clearly a component of what drove the inventory levels higher. We are carrying higher levels of safety stock at this point because of the some of the tightness we've seen in raw materials, particularly on the input side like paint for instance, if we could procure or secure more of that product we were, we'd be -- we took advantage of the opportunity to buy more inventory and there were still been a little bit of supply chain, there was -- that caused our inventory so more time on the water for our products. So we feel like we're in a good position from an inventory level in terms of how we're producing or does it change has any changes in our production. No, not really. Not at all. 49:13 And as I mentioned on our prepared remarks, while inventor is high at this stage of the year, we do anticipate driving that inventory down further as the year progresses and we do think we can get that to a much more normal level as we exit 2022.

49:32 Okay. Thank you.

49:34 Our next question comes from the line of Garik Shmois from Loop Capital. Your line is open.

49:43 Hi. Thanks. Just a follow-up on the inventory question. Do you think there is any opportunity for you to participate in any channel fill with your customers as raw material supply improves?

49:55 As we talked earlier there, we see the sell-in roughly matching the sell-out the POS. So we think the inventories have been relatively stable in the channel. Now in spots, we've been able to catch up and others frankly, I think we'd like to have a little bit more inventory in the channel, so it's getting slightly better. And I would say that that represents maybe a little bit of upside for channel fill going forward as we're not quite where we would like to be.

50:28 Got it. And then just a clarification on the ASR, is that separate from the $900 million that you have for buybacks and M&A in the guidance or is that included in the guidance?

50:41 No, that's included in the guidance, Garik, so the -- if you think about the $400 million or so that we purchased -- we repurchased year-to-date and then you contemplate the $500 million ASR that comprises the $900 million total that we're talking about.

51:04 Got it. Thank you.

51:05 Our next question comes from the line of Adam Baumgarten from Zelman & Associates. Your line is open.

51:13 Hey. Good morning, everyone. Just a question, you mentioned a little bit of a mix impact earlier in the call. I think there may have been a comment around potential trade down. Can you just elaborate on that?

51:25 Yeah. Adam perhaps we misspoken, if anything we've seen a little bit of mix up in the quarter. And I think with the mix was perhaps most favorable in our Plumbing segment. We've seen pretty good growth in some of Hansgrohe's higher in lines over in Europe and some of it has to do with the fact that as you may recall, we do a fair amount of international projects and some of those projects spec in higher priced products. And so that's one area we did see some favorable mix also I think in the Decorative Architectural segment and some of our other businesses, the outset of paint so Liberty Hardware I saw some improved mix, there selling some more shower doors and things like that, which shows some favorable mix.

52:11 And just to add on, and to be a little bit -- to be clear, we really don't expect a significant impact either way, with regards to mix as we look forward through the 2022.

52:23 Got it. Good to hear. And then just switching gears to plumbing on the margin side. Just curious how much of a margin headwind some of that variable spend was in the quarter and what that should look like for the full year?

52:36 It wasn't much of a headwind, Adam. In terms of that incremental spend some of that, with the growth that we've been experiencing we're just putting some investment in to sustain current levels and actually invest in future -- for future growth. And so I don't think that will be a significant impact, either in the quarter or for the full year.

52:57 Got it. Thanks.

53:02 Our next question comes from the line of Phil Ng from Jefferies. Your line is open.

53:08 Hey, guys. Congrats on a really strong quarter. Appreciate the update on the guidance. I mean your business certainly, smaller ticket nature should be far more resilient, but just given all the inflation we're seeing and potentially lower housing turnover. How do you kind of see the demand profile shaping up in the year pretty steady. I know there is some comp nuances, but at least, we're hearing maybe some softness with some of the consumers out there?

53:35 As we've consistently said through this call and last quarter demand remained solid and strong and that is broad-based across our geographies across our channels and across as we talked about with regards to mix, our price points, so continued steady confidence. As it relates to your comment on existing home sales, it's still a strong number. And that's a number that's a very productive for us and when we look through this year, our backlogs remain strong, international markets are performing well, spot backlogs at 30 weeks, pro-paint is doing extremely well. And we've been able to do that, while getting price to offset inflation and driving productivity and managing a complicated supply chain, the set of issues. The home price appreciation, the consumers balance sheet, all those things really are that we would call cyclical factors that are tailwinds to us. And then you add on to that the structural factors around age of the housing stock and the millennials coming into the market, we think this is set up for a very strong several years of demand for us. So we're looking good through ‘22 and we like the backdrop.

55:03 That's great color, Keith. And then from a raw material standpoint, just curious, perhaps John, how that kind of ripples through your P&L just appreciating that some of this, the movement in commodity there might be a lag because you're buying component. So help us understand perhaps that ripple effect through your P&L? And then when we think longer-term your ability, call it, in 20 to 24 getting your margins back to where it's been the last few years appreciating there is some noise right now with inflation?

55:32 Yeah. Phil. I mean, we give you just refresh everyone's memory, in terms of how commodities flow through and hit our P&L. It’s a little bit of difference between the two segments. So, given the length of our supply chains in the Plumbing segment, it takes about two quarters for any inflation to kind of ripple through and directly impact our P&L. And you kind of saw that in 2021. As particularly copper and zinc inflated last year and saw a little bit more of a margin headwind in the back half of the year. 56:01 In terms of the Decorative Architectural segment because supply chains are a little bit shorter, the timing to -- for that to flow through and hit our P&L is a little bit shorter as well, and so I'd say that's kind of in the order of magnitude of 90 to 120 days or so. So we feel good about that. As we look forward and get beyond this inflationary period, as Keith alluded to earlier, there is a dynamic in our paint business, it's a bit unique as we see commodities rollover, we could potentially see some margin expansion in that segment because of just the way the math works on that. 56:43 In the Plumbing segment, I would say, longer term, there has been the ability to recoup margin on inflation. This inflation will perhaps a little bit different only because of the amount of inflation that we're seeing right now. And then in particular, some of our bigger businesses over in Europe put through pricing on a regular basis and then contemplate maintaining margin on that. So, we might be able to see some of that take place as we get out of this inflationary environment.

57:16 Okay. Thanks a lot. Appreciate the color.

57:22 Our last question comes from the line of Truman Patterson from Wolfe Research. Your line is open.

57:28 Keith, John, good morning and thanks for taking my questions. First, John, I was hoping you could just give an update or state of the union on the supply chain in the United States, specifically, I realize there is some moving parts in -- with the China shut downs, but hoping you can give an update of the supply chain versus either late ‘21, early 2022 in the U.S. regarding labor raw material availability, transportation, et cetera.

58:01 Sure, Truman. In terms of those aspects of the supply chain. I would say, the things on the margin in terms of supply of material are, we're starting to see -- we're seeing improvement. Again, it's on the margin and it’s not anywhere near back to where it was pre some of these supply chain issues taking place. Labor is depending on location. We either -- we're seeing the tightness or good supply of labor. So, depending on which we are plans they happen to be. It's a little bit variable, but it's something that we're continuing to -- our ops teams are continuing to drive very closely -- look at very closely, but we think we're in pretty good shape from a labor position. 58:53 I would still say that shipping and freight is tight in North America. Maybe we’re seeing very modest changes, but overall, that's the one area that we're probably watching most closely is both inbound and outbound freight./

59:11 Okay. Thanks for that. And then, final one, you all imagine you have a pretty long history of Delta Plumbing operating margins. I'm just hoping you can maybe compare and contrast 2021 or your expectations of 2022, compared to prior periods of elevated inflation and how margin has performed. Have there been any notable structural shifts that may be, make the current period relatively outperform prior periods?

59:47 In terms of historical periods, obviously, I mean we haven't seen an inflationary environment like this in, in-base metals in a long, long time, right. I'm not sure. Yes. It is a true apples-to-apples comparison. That said, what I would tell you is the team that we've got down to Delta is a terrific team there on top of this, they are driving their business both from a volume perspective as well as they are taking the necessary pricing actions, we’re all while balancing the supply chain issues and we talked about in your prior question. At the same time, driving innovation and driving the brand and so Ken and the team down there are just doing an absolutely terrific job of Delta’s tradition of a leading the company in terms of driving both sales, profits and future growth. So Keith, I don't know if there's anything else you want to dive?

60:43 I think, this is a unique situation for sure, both in terms of the magnitude of the cost increase and the speed at which the cost increase hit us. And our strategy to deal with this remains consistent which is to first and foremost, focus on our safety of our employees and then work together with our customers and our suppliers to make sure we're delivering the best products we can at the best price. And sometimes, and particularly in situations like this, it requires, obviously, some significant price increases and we're going to continue to operate in that method as we have in the past and continue to drive above market growth. And the team, as John said, set up to do that.

61:33 Yeah. I guess so I would tell you is that once we get outside of this inflationary environment, I would expect it, the team would drive margin expansion through volume growth and our typical productivity initiatives that we're driving across our businesses. So this might be a little bit of an anomalous period, but once we get outside of that, I think we will return to our normal cadence of activity.

61:57 No. All right. Thank you, two and good luck on the upcoming year.

62:02 Thanks.

62:06 Thank you.

62:05 This concludes today's conference call. Thank you for participating. You may now disconnect.