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Q2 2013 Earnings Call
July 30, 2013 8:00 am ET
Maria Duey - Vice President - Investor Relations
Timothy Wadhams - Chief Executive Officer, President and Director
John G. Sznewajs - Chief Financial Officer, Vice President and Treasurer
Michael Dahl - Crédit Suisse AG, Research Division
Robert C. Wetenhall - RBC Capital Markets, LLC, Research Division
Dennis McGill - Zelman & Associates, LLC
Keith B. Hughes - SunTrust Robinson Humphrey, Inc., Research Division
Nishu Sood - Deutsche Bank AG, Research Division
George L. Staphos - BofA Merrill Lynch, Research Division
Mike Wood - Macquarie Research
Kenneth R. Zener - KeyBanc Capital Markets Inc., Research Division
Sam Darkatsh - Raymond James & Associates, Inc., Research Division
Nicholas A. Coppola - Thompson Research Group, LLC
Adam Rudiger - Wells Fargo Securities, LLC, Research Division
Michael Jason Rehaut - JP Morgan Chase & Co, Research Division
Stephen F. East - ISI Group Inc., Research Division
Susan Maklari - UBS Investment Bank, Research Division
David S. MacGregor - Longbow Research LLC
Previous Statements by MAS
» Masco Corporation Presents at DbAccess Global Industrials and Basic Materials Conference: US Industrial Renaissance in Chicago, Jun-12-2013 08:40 AM
» Masco's CEO Presents at 6th Annual J.P. Morgan Homebuilding and Building Products Conference (Transcript)
» Masco Management Discusses Q1 2013 Results - Earnings Call Transcript
Thank you, Regina, and good morning to everyone. Welcome to Masco Corporation's Second Quarter 2013 Earnings Conference Call. Joining me on our call today are Tim Wadhams, President and CEO of Masco; and John Sznewajs, Masco's Vice President, Treasurer and Chief Financial Officer. Our second 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 have described 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.
Today's presentation also includes non-GAAP financial measures. We have provided a reconciliation of these adjusted measurements to GAAP on 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 second quarter 2013 earnings call. If you please move to Slide #4. We're very pleased with our second quarter 2013 results, certainly one of our strongest quarters since the downturn and a continuation of the momentum, which started for us in the fourth quarter of 2012. We continued our trend of delivering growth in the second quarter, with all 5 of our operating segments increasing top line sales and expanding operating margins. Our leadership position in the building products industry and our focused execution against rising new home construction activity particularly benefited our Cabinet, Installation and window-related businesses.
Notably, our Installation and Cabinetry segments were both profitable in the quarter, reflecting our strong leverage to a housing recovery and our continued commitment to cost containment. As we previously indicated, returning these segments to profitability has been one of our prime -- our top priorities.
Demonstrating the strength of our brands was a strong sales contribution from new product introductions, particularly in our paint and Plumbing businesses. And despite challenging macroeconomic environments in the Eurozone, our international sales increased in the quarter, reflecting strong performance by our international Plumbing and window businesses.
And if you would please turn to Slide #5. As we've communicated in the past, our strategy is focused on 4 key elements to drive performance. We expanded our market leadership by continuing our legacy of introducing new products and programs, which matter to both our customers and the end consumer. Our Decorative Architectural businesses introduced new products at retail, which have exceeded expectation. And we continue to reap the benefits from previously-introduced products and programs with our North American faucet and toilet businesses, which delivered mid-teens growth in the quarter.
Our emphasis on cost control is evident in our continued SG&A improvement. As I mentioned, we continue to see improvement in our Installation and Cabinet segments. Our Installation segment is capitalizing on improved market dynamics and drove increased sales in all channels of their business. By remaining focused on profitability, they continued their trend of improving operating profit. The new management team that's been in place in our North American Cabinet business for the past year has had a positive impact on that business. The segment reached profitability in the quarter and continues to execute on their plan of stabilizing the business and positioning it for future profitable growth.
Combining these 2 segments, our Cabinet and Installation business improved by $26 million of operating profit versus the second quarter of 2012, and we're obviously very pleased with that performance. In addition, we remain committed to strengthening our balance sheet and continue to improve our working capital during the quarter. These execution highlights produced a very strong second quarter, and we're very pleased with the trajectory of our performance.
If you please move to Slide #6. At this time, I'd like to turn the presentation over to John Sznewajs, our Chief Financial Officer. And John will walk us through our segment operating performance.