Tariff Impact and Mitigation
Q: How will new China tariffs affect 2025 results?
A: We've been preparing mitigation strategies, including reducing our China exposure by 45% since 2018 " , adjusting our sourcing footprint, engaging suppliers for partial offsets, and considering pricing. " These actions will significantly mitigate our exposure and minimize the impact in 2025. " " Tariffs went into effect on February 4 " ; mitigation will layer in over time, affecting profit margins being flat in the first half and increasing in the second half of the year. "

2026 Margin Targets and Kichler Divestiture
Q: Can you sustain margin targets after selling Kichler?
A: Despite the sale of Kichler, we maintain our 2026 margin targets. " " Softer DIY volumes offset the mechanical margin improvement from the divestiture. " In Plumbing, we're confident due to our efficient production system and strong productivity pipeline " ; it's about maintaining momentum " , and the business is running extremely well. "

Growth Outlook for 2025
Q: What is your growth outlook for 2025?
A: We estimate the industry will return to growth in 2026. " For 2025, we expect to be slightly down in the first half and see modest growth in the second half. " " Fundamentals like millennial household formations and housing stock age are tailwinds. " We're focused on managing effectively in a volatile market. "

Cost Inflation and Pricing Strategies
Q: How are cost inflation and pricing affecting 2025?
A: In Plumbing, we expect low single-digit inflation, including commodities and freight. " While costs remain elevated, we anticipate pricing to more than offset the commodity headwind, resulting in a positive price-cost dynamic. " In Decorative Architectural Products, we're seeing some upward pressure on raw materials like resins and TiO₂ " ; however, we expect a flat price-cost dynamic due to arrangements with channel partners. "

Cost Savings and Margin Expansion
Q: Will cost savings continue to drive margins in 2025?
A: Yes, operational efficiencies and cost savings remain a huge priority. " We've expanded margins each of the last couple of years " , and despite modest market expectations for 2025, we'll continue driving these initiatives to deliver margin expansion. "

Acquisition Strategy and M&A Outlook
Q: What's your M&A focus and timing expectations?
A: Our strategy remains unchanged, focusing on bolt-on acquisitions in paint and plumbing. " We're patient, seeking the right fit to leverage our channel expertise, brands, or technological advantages. " " The overall market remains soft with no significant change, so we can't specify timing between the front or back half of the year. "

Supply Chain and China Exposure
Q: Are you reducing reliance on China further?
A: Yes, we plan to continue shifting away from China carefully, working with existing suppliers to protect quality and delivery. " We're pursuing value engineering, cost sharing with suppliers, and have pricing levers to manage costs. " "

Innovation Pipeline and Vitality Index
Q: How is your innovation pipeline supporting growth?
A: Our Vitality Index remains steady at around 30% of products less than 36 months old. " We focus on solving customer pain points, such as ease of use and efficiency, which customers are willing to pay for. " This helps offset potential headwinds and supports margins. "

Working Capital Management
Q: How is working capital expected to trend?
A: We anticipate working capital to normalize around 16% of sales in 2025. " The reduction to 15% in 2024 was due to the Kichler divestiture. " We remain disciplined, and efficiencies will flow through working capital, but it will scale with the business. "

Market Share at Home Depot
Q: Any changes in share at Home Depot post-PPG divestiture?
A: We haven't noticed any material changes; things have been fairly typical. "