Matthew Bouley: Good morning, everyone. Thank you for taking the questions. A couple of questions on the margins. I think you again spoke to a total company operating margins being sort of flat year-over-year in the first half. Obviously, Q1 was quite — was up year-over-year. So I guess my question is for the second quarter, does that imply margins really need to be down as soon as the second quarter here? Kind of any point on how should we think about that margin here in the second quarter? Thank you.
Rick Westenberg: Yes. No, Matt, I appreciate the question. And we are pleased with our performance. It was a strong performance in Q1. And we’ve — as you indicated, we’ve reiterated our guidance for the year as well as our first half and second half performance. I think it’s important to note that we do still expect to see overall margin expansion in each of our segments in for Masco, overall for the calendar year. But when you look at a quarterly performance in this particular case, it’s really — Q2 is really a comparison to a strong comp last year. So 2023, Q2, we had very strong margin performance for Masco overall. I think we had 19% margins. So it’s really a strong comp year-over-year comp that we’re looking at. So yes, it’s fair to say that we do expect some margin reduction year-over-year in Q2.
But we’re expecting flattish margin in the first half of the year and margin expansion overall. But we still expect to see a solid Q2 and sequential increase in margins from Q1 to Q2 as well.
Matthew Bouley: Okay. Got it. Thanks for that Rick. And second one, just zooming into the Plumbing margin specifically, 19.1% margin in the first quarter. You kept the full year guide unchanged. I guess it would be helpful if you can kind of outline how price cost is playing into that. You had the benefit in Q1 and maybe when copper prices increase here. So how is price cost playing into that? And was there anything else kind of beneficial in Q1 that sort of not continuing for the year? So yes, just kind of what the reason behind holding that guide unchanged? Thank you.
Keith Allman: Not a real big impact in price/cost in Plumbing in the quarter. Again, as Rick said, we’re pleased with the margin performance. The team has done a real phenomenal job of lining up a pipeline of productivity initiatives, and this is something that’s been going on for several quarters now and part of the reason why we have the confidence of the overall margin increase year-over-year. So it’s really not a question of what’s not going to continue moving forward. We’re holding our guide. The business performed well, not a whole lot of impact either way from the price/cost relationship. It’s just good solid execution, and we expect that to continue.
Matthew Bouley: Great. Thanks, Keith. Thanks, Rick. Good luck, guys.
Operator: Your next question comes from the line of Mike Dahl from RBC Capital Markets. Your line is open.
Mike Dahl: Good morning. Thanks for taking my questions. Keith, just to follow up on that. It does seem like the progression in Plumbing has — is — it’s driven by some sustainable things that you expect continue. You have articulated a medium-term guide. That is higher than this 18.5%, and it’s basically you’re approaching that with your 1Q. So — when we look forward, are there specific things that you can point to for the balance of the year that would end up coming in and being incremental headwinds to the plumbing business, whether it’s mix or other things like that that would bring the margin down from what you’re experiencing here?
Keith Allman: Well, I think we’ve — Mike demonstrated an ability to manage commodity changes. Who knows where they will go. We’re seeing a little bit of variability. We’re watching crude oil. There’s some freight components in terms of incremental costs as we ship around the Red Sea. There’s a pending labor negotiations in the East Coast. So those are the types of things that we watch, and we’re uncertain where those may go and if they will result in headwinds, but I think we’ve demonstrated the ability to manage those with our pipeline of productivity, initiatives and cost out as well as the strength of our brands and innovation and ability to get price where we need to. I think in terms of what’s out there that could materially drive margin.
And what we’re really looking at is the overall volume. Our plan is to convert volume at that 30% to 35% range in Plumbing. So that could be an upside if volume goes in the positive direction. And then we’re going to have to manage very tightly on the decrementals should it go the other way. But really don’t have in mind any significant negative headwinds in our Plumbing business that we’re anticipating going forward. We’re just ready to manage in the volatility. I think that’s the key.
Mike Dahl: Yeah. That makes sense. Okay. And then just shifting gears to the overall capital allocation environment. We’ve seen a decent number of building products businesses, trade hands or announce transactions, a variety of scale there in terms of small to large. Can you just update us on what you’re seeing out there, how you’re thinking about the environment and how it’s unfolding year-to-date?
Keith Allman: Sure. I think the important — the most important view that we have is that our capital allocation strategy has not changed. I think we’re anticipating in the range of $600 million this year of availability for acquisition from cash flow available for acquisitions or buyback. And we see those as fungible, and we’re not going to hoard cash, and we’re going to manage that very consistently with how we have in the past, and that’s resulted in good shareholder value creation. So no change in our strategy in terms of acquisitions, focused on bolt-ons in our paint and Plumbing business. We think that’s the right place to be given the relative pricing of deals that we’re seeing out there. I would say that the deal flow is up a little bit, but not necessarily materially.
