Good morning, everyone. I'm David Barry, Senior Vice President, Finance and Investor Relations with Fortune Brands. I'm excited to welcome you all today to the Fortune Brands Home & Security 2022 Investor Day. To those in the room and those joining online, we're excited that you're able to be with us, and our teams look forward to introducing you to the supercharged growth opportunities ahead of Fortune Brands Innovations and the transformational journey already underway at MasterBrand. Before we begin, just a couple quick housekeeping items. Today, we will be discussing non-GAAP metrics and using forward-looking statements. A full disclaimer is on the screen behind me, and also available in the investor presentation that is posted to our website. We will be conducting Q&A sessions after both presentations today. For those in the room that would like to submit a question, please use the QR code at the top right of the agenda at your place. You'll be able to access the Q&A platform and put your questions into the queue. As you can see from the agenda, we have a great day planned for everybody, leaders from both businesses will provide an in-depth view of each business's industry, strategy, competitive advantages, and financial performance and targets. Additionally, you'll have an opportunity to informally meet with our leaders over lunch and at a cocktail reception following the MasterBrand presentation. While it's my pleasure to introduce Nicholas Fink, CEO of Fortune Brands Innovations, before Nick takes the stage to begin the day, we have a brief video introducing Fortune Brands Innovations. Thank you, and enjoy the day. Well, good morning. Thank you for being here, and thank you for your interest in Fortune Brands Innovations. I couldn't be more excited to be able to talk to you about our very special business. I'm gonna start by formally introducing for the first time, Fortune Brands Innovations. What are we? We're a brand, innovation and channel leader. We're also a new company. We've been very purposeful in how we've spoken, both to external world and ourselves about this separation. We don't view it as an opportunity to just shift the portfolio or focus. This is an opportunity for us to relaunch our company with new focus, new strategies, and even more commitment to doing what we do. This company is going to operate in sectors I'm gonna take you through. As we walk through today, I'm gonna talk to you about our leading positions in very exciting segments of our categories, powered by tailwinds. I'm gonna talk to you about our advantaged business model and how that is poised to unlock even more growth and more productivity over time. I'm gonna talk to you about this immensely talented team who are here in the room with you today, what they're capable of, what they've done, and what they will do over time. You'll see how all this comes together to showcase us as an ESG leader, not just in our ability to do things well for our communities, but in our ability to tap into tailwinds that will be driven in the future in serving those markets. We're gonna touch on a disciplined acquisition strategy and how that has driven incremental growth over time, and Pat's gonna also take you through some of that. All of this comes together to show you how we're poised to deliver accelerated growth and productivity. Just a few quick reminders. Where do we operate? We operate essentially in three exciting categories: water, outdoors, and security. With leading brands. Our execution through those categories has delivered over time, and this is one segment of time that you can take differentiated growth on both the top line and our profitability consistently for our stakeholders. If you look a little bit back in time, of course, now for those who've been around a little bit, that Fortune Brands Home and Security is itself the product of a spin in 2011, which allowed this business to really focus on, first, outperformance through the housing recovery. Business was very, very focused on taking its portfolio and making sure that we were building the brands and the capacity to capture the housing recovery. Over that time, the team performed consistently while adding to our portfolio. We then entered the next phase, which was really execution excellence through a series of global disruptions. Going all the way back to tariffs in 2017, moving through some of that, border shutdowns, then of course COVID, a mini housing downturn inside of that in 2018. The team continued to perform with a focus on operational excellence and delivering consistently over time. Now we enter this new era. Winning with our brands in these supercharged categories of water, outdoors, and security, and taking that ability that we built, the capability to outperform over time and driving it consistently into this new future. I'm going to start by talking about those categories. We operate in three high-growth categories today: water, outdoors, and security. We're very excited about these categories. We've been very specific in our focus, and one of the things that excites us the most is that these categories are powered by tailwinds that will continue to deliver incremental growth over time. Things like water management, connected products, material science and conversion, outdoor living, safety and wellness, and sustainability. As we now concentrate more and more of our efforts, our innovation, our brand building and our focus to these tailwinds, over time, we expect these tailwinds to become a greater and greater proportion of our portfolio and our own market tailwinds. It's not enough to just play in good categories with really exciting tailwinds, but we do it with leading brands. This is very much part of the Fortune Brands business model. It's knowing how to operate with leading brands in categories and knowing how to manage those categories and be a best-in-class partner to our customers and our consumers. As you look across this page, it's pretty remarkable, right? Our brand positions over time that we have built allow us to speak to the consumer, to innovate, to manage the shelf, and to manage price and value realization for stakeholders. As you look, these number one brands are also excited to have in our portfolio a brand that isn't yet number one. To take all the power of what we know how to do as Fortune Brands and put that against new opportunities to build those brand positions over time. If that is where we play, how do we play there? We've made some changes over the last few years as we've become increasingly more and more closely coordinated as a company with an aligned business model that is designed to keep our customer intimacy and our consumer intimacy and end-to-end accountability as close to our markets as possible, but unlock what we saw as huge productivity and growth opportunities inside of the portfolio. It starts with the Fortune Brands Advantage, right? This is our business system. These are the few things that we as a management team got together and decided that we were going to do consistently well across the entire portfolio. It isn't enough to just decide that you're gonna be good at something, right? You actually have to invest. You have to make choices. These are areas where we've invested, you know, millions of dollars to be world-class at these capabilities, but those investments have unlocked many times the underlying investment that we've made. Things like category management. If you're going to have leading brands, you need to be able to speak with insight and data to what is happening in your categories and help manage those categories for your customers and consumers. Business simplification, right? The ability to take complexity out of the business, always to simplify and give us room to be able to continue to innovate and do great things in the marketplace. Our global supply chain excellence, right? We have completely shifted the model. Ron Wilson will be up here in a little bit talking about that. The model of how we manage our global supply chain from what I call the old school, Ron calls it the tin, the tin cup, asking for a little bit more every year, to a completely data-driven capability that allows us to do analytics, understand what things should cost, and actually put those prices to the market. Then, of course, our digital transformation, which is without a doubt our huge capability that is going to drive us into the future. These are not static. Over time, these will become ways of working in our business that are just what we do, and that will give us the opportunity to bring more Fortune Brands Advantages into the system that we will drive as a top team. Let some of these move into the business and just become everyday ways of working. If that is the business system, it is underpinned by an operating structure and approach, which for us is quite new. You saw on September sixth, we announced a new aligned operating model with Cheri Phyfer leading our brand, innovation, and channel, and Ron Wilson leading our supply chain, complemented by all of our functions that support Fortune Brands. What's most interesting about this model, twofold. One, we have now brought together a global supply chain. This allows us to work at scale, to work with best-in-class talent, to leverage opportunity, and to drive a lean culture and best-in-class way of executing through the supply chain. This will be a big productivity unlock for us. Bringing our brand, innovation, and channel organization together is equally as exciting. We could see opportunities where we were executing with excellence in one part of the business and wanted to bring that across the business. In designing this organization with five business units and five presidents reporting to Cheri Phyfer, we also built out value-driving functions underneath. Brand development and direct commerce, innovation and development, product development, right? We very purposely chose not to have these report to me. They don't need to. We want them closest to the market. Our principle is, unless it needs to report on the senior leadership team, it shouldn't. Everything that we can drive closest to the market will be closest to the market. With this structure, we will maintain our customer and consumer intimacy, but unlock the value of our scale to be able to do brand, innovation, product development with speed and with scale. I'm incredibly excited about this because I think we're just getting started with what we can do to unlock value over the next few years. Of course, this is underpinned by an incredibly, oh, wrong slide, talented team and culture. So in the room today, you have a remarkable, diverse, and talented team that I am so honored and humbled to work with. They are incredibly smart. They're incredibly Agile. They're incredibly hardworking. I'm sure you hear that from a lot of companies. They lead with heart. These are people that will run through walls for this business and this team. I'd ask you just to look at what this team has accomplished in the last few months as evidence of what this team has done and will do. Of course, it's not just the team in this room, but it is our 12,000 associates at Fortune Brands Innovations that really stand with us and alongside us that make our business so special. With team comes culture. Doing the right thing is key to our culture. It is in our DNA. These aren't just words, right? Our values that we talk about are aligned, agile, and accountable. We're aligned because we work as a team. We can disagree, but we align. We're agile, and boy, we've had to be agile over the last few years in responding to the changes in the world. We're accountable. We do what we say we will do, and we live to those values. We do our best to do right by our associates, whether it's our Home for All, which invites people to be their true selves inside of our organization. Our safety record, which is world-class, is something that we hope to further share with our customers and our partners as we take these metrics, which are off the charts, and share them and teach others. Of course, our environment, where we continue to receive accolades for the responsibility and quality with which we are custodians of the parts of our planet that we touch. When you take those segments and our leading positions, our advantaged business model, and this incredibly talented team, we also have the ability to deliver products that help make our world a better place, whether it's through saving water, utilizing recycled materials like Fiberon, 94% recycled in that cladding product. Help us conserve energy as we do with Therma-Tru doors or protect people, which is a big part of our Master Lock business. We are very privileged to be able to sit in these categories with these brands and this team and bring those things to life. Having talked about the markets in which we operate and the brands that we have, our business model and our team, I'm gonna take you a little bit through our winning formula. How are we going to take those things and win over time? It starts with our three key areas of focus: brand, innovation, and channel. Brand, innovation, and channel. These are choices. These are choices that we've made to focus in these areas because these are what we believe will be the drivers of our ability to do what we plan to do and more over the next few years. That's underpinned, of course, by our global supply chain, which is gonna help drive productivity and investment back into the portfolio with excellence. A digital initiative that John Lee is gonna come and talk to us about, which is off to a fantastic start. Our M&A disciplined approach and ability to leverage this portfolio and this platform to continue to do value-accreting M&A for the portfolio over time. Of course, none of this comes to life without talent and culture. Starting with the inside of that circle, brands. Brands are at the core of our DNA. It is in the name, Fortune Brands. Why do we believe in brands? Because brands drive consumer pull. Brands bring innovation to life. Brands are sustainable. Brands allow for pricing power. Brands are at the heart of what we do. We build brands. I think you've seen some of that from us in the past. I will tell you something, we are just getting started. The work that Cheri and her team are doing in their new aligned structure is going to unlock our power to build brands across our entire portfolio with the same quality and focus that you've seen from brands like Moen. Innovation. Innovation, of course, drives top-line growth. If you're disciplined about it, drives margin, but it also resonates with brands. It drives brand building. We love to think of ourselves as innovators, and we innovate for our customers and our consumers. We innovate for our pros. There on the in the blue, you have our Flow by Moen water ecosystem that Cheri's gonna touch on in more detail. We also innovate in our own operations. In that picture there is the work that we did at Fiberon, right? Having purchased Fiberon, we challenged ourselves to see what we could do to increase production and productivity and efficiency, and we actually brought in our hydrofluid dynamic experts from Moen to help us figure out how to use water more efficiently and more effectively to pull our deck boards even faster, so we can get them down the line even faster. That just tells you the culture of engineering inside of the company, and by the way, led by the same people who want to solve problems. Then channel. We have broad and deep trusted channel relationships. This is one of the things that Fortune Brands is known for, and we wanna build on this. Build on it, not just by saying, "Well, we got broad customer base, we gotta take care of them," but investing further in our channel development through things like category management capabilities, where we can bring value add to our customers and change the dialogue as we have in the last few years from win-lose or lose-win to win-win. How do we manage these categories with these brands together to generate incremental value for us, for the customers, and for the consumers? Again, these aren't things you just want to do. These are multimillion-dollar investments in data and analytics and insights that make us true channel partners and trusted category leaders. As you move from that, the key core, efficient, resilient global supply chain. I'd like to think we've done pretty well over the last few years. During COVID, we were beating ourselves up for some of our performance levels, only to learn from some of our customers that they were almost double the industry average. Double, right? Talk about a team that will run through walls and do it smartly and intelligently. We're just getting started. We have opportunities to take what we've done in pockets of the business and play it out everywhere. Things like strategic sourcing, more opportunity there. Using AI to better predict demand and manage our supply chain accordingly. Automation into our facilities. Leveraging our true global scale, something we started, but there's more opportunity behind. Really, really getting more data-driven, more insights. John will touch on some of this stuff, but even in the last year, just being able to see our spend, taking analytics to run a single item from months to a second, push of a button with a data cube, with a machine can tell us exactly what we're spending where, and we can put it out to bid. Huge change. That is a great segue into our digital transformation. Again, a choice, a commitment. These aren't cheap. A lot of companies will talk to you about their digital transformation, but you have to ask them what are they actually doing? What are they investing, and how are they bringing it to life? We chose to really focus, looking across an enormous opportunity set on things like connected product, our e-commerce capabilities, our data cube, and ability to drive productivity out of our portfolio, and of course, the talent machine that underpins this, because it is very different to legacy businesses. Over the course of the last year, 18 months, we've made significant investments. The results that John will take you through. I'm not gonna steal all his thunder. Have been simply remarkable. Delivering on time, above target, and in a rapid and agile fashion. That might be the most exciting thing about this, because things that used to take us months, if not years, we can now iterate and change in 2-week sprints. Take the Moen app rating, which went from okay to world-class inside of 2 months of having a team work in an agile fashion on it, because we completely shifted the way we working, the way we funded it, and our expectations. The best part about this is it is transforming the way we work as a company. Once others in the company see what you can do in agile fashion, the speed at which you can do it, they are adopting that and playing that through. Actually, a great example is this separation, right? When we announced it on April 27th, I believe, or 28th, there were really just a handful of us that were aware that we were gonna do this, and we exposed it to our team and said, "This is a heavy lift. Probably take a year." They looked over at the digital transformation and said, "Well, those guys are doing stuff in, like, 2-week sprints. It seem to me making a lot of progress. How about we do that?" You can see the result, again, delivering as promised, well ahead of schedule. When you build that platform of brands, innovation, channel strength, this business model, our ability to bring digital to life, it really gives you a powerful platform with which to do M&A. Now, we pride ourselves on being disciplined. We pride ourselves on being returns-focused. We need to know that we are going to create value, both by purchasing well, but by also creating value ourselves. If we, as Fortune Brands Innovations, cannot bring value to the table and unlock it, we won't look at something, no matter the price. Because it has to connect into our organization, and we have to have a thesis that we can execute on. I think you know well, 11 major acquisitions since 2011, more than $2 billion deployed. Of course, I'll talk about in a second, we just announced a very exciting transaction late last week. We will continue to focus on using our free cash flow and our platform to find other opportunities to drive value in these supercharged categories and further enhance our exposure to those tailwinds over time. A great example, right? Just last week, we announced a strategic transaction with the focus on supercharged categories, and that's the purchase of the Yale and August residential business in U.S. and Canada, and the Emtek and Schlage business globally. Yale gives us, and August, gives us exposure to that fast-growing connected device area. It gives us greater exposure in security, it gives us engineering firmware and software platform that we can leverage across our business to unlock more, whether it be in how we connect in the ecosystems we build or quite simply in the chipsets that we design and how we got and source them. Scale matters. Emtek gives us a leadership spot in an adjacent but new category for us, with leading brands, strong design, and wonderful margins. What do we think we can do with these? Well, on the security side, we're gonna be able to expand our retail omnichannel presence. We're going to broaden our whole connected ecosystem. Including the door, which today is really a dumb door with a smart lock, will in the future be a fully connected device. I would challenge you to think about how many people actually use a key today versus a keypad or a garage door. Of course, leveraging our Fortune Brands Advantage and our platform to unlock further value. On the hardware side, we already have a lot of premium showroom exposure through our House of Rohl, where our ability to create products that are differentiated with different brands that match them and bring them together and bring them to life in a setting has unlocked a ton of growth and value for us. This is a perfect complement to that. We also have other channel relationships on the thermostat side, also in the premium area, where some of our customers want to be able to access the ability to attach products and add value to the door system all the way through. More to come on this, but we are very, very excited for what these will do to unlock further value, and I think they are a good indicator of where we tend to take this portfolio. They are connected, they are great brands, they're smart, and they're going to drive growth and margin. With that, where are we going? Well, 2022, estimate we'll finish around $4.7 billion. Pat is gonna take you through some of these in more detail. Operating margin is 17%, EBITDA margin of about 20%. When it's been anything but a simple year, I'm pretty proud of the team's performance. They have not let up on executing with excellence no matter the environment. We have seen tumult, and we have seen change. I think when you look at these numbers, and particularly the margin performance, it tells you what our brands and segments, what our business operating model, and what the team is capable of delivering through cycles and through the environment. Over time, we tend to outgrow our markets. We peg a global housing market at 4%-6%. We intend to deliver net sales CAGRs in the 6%-9% range. As I mentioned, over time, as we increase our exposure to those tailwinds, that underlying sea is going to help raise the ship. Operating margin, we're gonna continue to focus on the productivity of our business for two key reasons. One, it is the fuel that fuels our top line. As we've delivered some incredible productivity over the last few years, we've driven some of that into the bottom line margin, and we've driven some of that into investments that continue to drive that top line. That algorithm works for this business, and we intend to continue it. Expect to see operating margins improve, so we can deliver for investors while we're delivering for our customers and consumers by reinvesting in the business and driving that top line. With that, I hope I've given you a brief and fairly high-level overview of what makes this business so special, of how we intend to focus, and how we intend to run it. I am immensely proud now to turn it over to my team, who are gonna take you through a lot more detail as to how we bring these things to life. With that, I'm going to introduce John Lee. Thank you, Nick. Good afternoon, everyone. It's a pleasure to be here today. My name is John Lee. I lead global strategy and growth for Fortune Brands Innovations as well as digital on an interim basis. I'm excited here to talk to you today about our markets and our categories. We have a lot of great things to say, and I'll start with the housing sector and why Fortune Brands Innovations stands to benefit from what we believe are very positive long-term fundamentals in both the residential remodel market as well as new construction. Starting with R&R, as you can see on the chart today, it's an incredibly resilient market. Actually, in the last 25 years, it's been growing at a compound annual growth rate of 5%, and it's been pretty steady through that period. Even though inflation today and some consumer spending headwinds will have an impact on R&R, we believe that the core, the overall fundamentals of R&R, are still very healthy and with real reasons to believe. The New York Times reported that, in the last 2 years, housing wealth in the U.S. has gone up $6 trillion. It's incremental $6 trillion of housing wealth in the last 2 years enjoyed by 65% of people that own homes. That's an incredible wealth creation. Even with the recent housing price pullback, that's $300,000 in average home equity. That is ample means and incentive to continue investing in your home. Even there, we see the aging housing stock. Aging housing stock, as you all know, means aging housing products, aging housing systems that do need to be repaired and refreshed over time. As the housing supply remains tight, the existing homeowners that are staying are going to thoughtfully continue renovating and remodeling their homes to meet their changing needs. We're actually already seeing that in the data. Google search trends would show that the search for home renovation projects remain at 25%-30% above pre-pandemic levels. Even in a recent house survey, recent as October, the vast majority of homeowners are saying that they're continuing with their home renovation projects into 2023. Now, with R&R representing two-thirds of our business, we are very positive and feel very good about the strength of our underlying business. Moving over to new construction and why we also believe in the long-term fundamentals here. You know, it's really too much demand chasing too little supply. Timing is discretionary when it comes to housing construction, but the need is absolutely not. You know, Harvard Joint Center would say, estimated that 12 million new households will be formed in the next 10 years. That's into a market supply environment that we believe is underbuilt by 3 million homes. That's a lot of homes. According to some estimates, that's actually conservative. There's additional upside as well, 'cause there's still a lot of young people that are living at home with their parents today, a very higher proportion than what we saw before 2008. As this cohort continues to age, they get married, they have families of their own, it's going to be a tailwind. It's gonna be an upside potential for housing demand. While near-term home construction may slow, that's only gonna make the need even more pressing. It's important to also realize that Fortune Brands is not only looking to navigate through this cycle, we're looking to lead. Fortune Brands, our performance in new construction has persisted over time. For real good reason. I mean, we have an incredibly large install base of loyal consumers that know and trust our brands. That is a dependable mode that you can count on through the cycle. Pivoting now, I'd like to talk to you about the exciting tailwinds that we see in our respective categories, and it's not necessarily a coincidence. For a number of years now, we've made a conscious strategic shift to selectively pursue and invest in categories that had real market tailwinds, consumer tailwinds, trends inside the category where we're seeing an increasing rate of adoption for new technologies and new disruptions. Things like mechanical products going into digital products. Where you see single-point water fixtures now moving towards a connected water management ecosystem. Where we see natural products converting over to advanced materials that offer superior functionality and are also good for the world. And for products that really have functional value, but now are adding health and safety benefits that add data and analytics that actually get smarter after you purchase them, that are getting actually better. These are great trends, and these are trends that when you think about R&R, you know, repair and remodel, think repair, remodel, upgrade. When's the last time you changed your phone because your last one didn't turn on? If there's more value to be had, you don't necessarily have to wait for the big remodel. You don't have to wait for the product that you have to break down. That's what's exciting about these categories because they share in a lot of these segment characteristics, both in the residential as well as in the commercial space. As you heard from Nick, that's the thing that's going to take our market from 4%- 6% growth rate to something substantially higher as these segments grow inside these categories. Let me double-click into water and why we're excited. You heard Nick talk about digital products in water, that is exciting. I don't think you'd be surprised to hear that during and following the pandemic, the demand for digital touchless faucets nearly doubled, and it continues to stay there. Digital demand is not just about the single point fixtures, as I mentioned. Water management control is something that consumers are increasingly aware about and understand the importance. If you're a homeowner, you understand that water is an essential network in your home. Like any network, it can fail. Unfortunately, increasing number of homeowners know that it's expensive when it fails. In fact, damage from water accounts for more than fire and theft combined. Many of us here have alarm systems, have control systems for fire and theft, but we don't have it for water. We do have products, and Cheri's gonna share with you just how exciting that prospect is inside of this category. In water, it's not just the digital trends that we're seeing. We're seeing real sustainability trends and conservation trends. Everybody says that they want to have a great experience with their water in their homes, their showers, their baths. 90% of consumers also say that they wanna take concrete steps to reduce their use of water. In fact, two of three consumers would say that they're willing to pay a premium for sustainable product. We absolutely see this in the data as well. This is going to be a long enduring trend for new products and new technologies and innovations that are going to help solve this. Where climate change has been over the last five years, water is going to be an increasing part of that message. We are really excited about the disruptive innovations that we're gonna be seeing in this domain. These are not only the only tailwinds that we see in water. We see water quality and filtration and new things in data analytics. Suffice to say, I want you to understand that we are very, very bullish in the water category and believe that it is poised for accelerated growth over the long term. I'm gonna move now and talk about outdoors. Outdoors, it's an exciting category. It's not just exciting to me because it's apparently exciting to all of you as well, because 90% of homeowners would say that they are thinking more about their outdoor living space than they ever have before. It remains the number one home exterior upgrade today. Consumers are really excited about this space. In this category, especially when it comes to doors and decking, materials matter. Consumers are willing to pay a premium for superior advanced materials that offer improved functionality and durability without sacrificing form and beautiful design. We see that actually playing out in the categories in which we compete. In fiberglass doors is 50% of the door market today, and it continues to gain share over wood every year. In the decking market, we see composite decking and PVC decking currently at 25% penetration and an accelerated growth rate following that same trend, taking share over pressure-treated lumber. Just like materials matter, and just like in water, sustainability also matters in this category. 70% of consumers say that the environmental impact of their products is a more important part of their purchase decision. You heard Nick mention that Fiberon decking is made of nearly 95% recycled content. 95% recycled content. That not only saves millions of trees, but it looks great with minimum maintenance, and it lasts 2 to 3 times longer than pressure-treated lumber. That's an incredible value proposition. We also see that with our Therma-Tru doors, our fiberglass doors that save a lot of energy. In fact, fiberglass doors have 4 times the insulating value of a wood door, and they also look durable and can match any design aesthetic. I think in this category, you have to remember that it's not just a category with a lot of consumer momentum and excitement, it's a winning category. Inside this winning category, there is an engine that's growing even faster behind these sustainable advanced materials. That's why we believe that this is going to continue to accelerate the growth rate of this category over the years. Finally, I wanna talk to you about our security category and how we are seeing tailwinds in both digital as well as health and safety, and safety and wellness. In the digital space, we see digital products, again, similar to water, going from mechanical to digital. Particularly in security as well, we see that value proposition expanding. It's not just about electrifying the lock and just being conveniently be able to remotely open it, but you can remotely give other users access to it. You can find users' history on the lock. It becomes a new proposition not only to the homeowner, but to real estate companies, to multifamily properties, as well as single-family rentals. With the exciting and anticipated acquisition of the Yale and August brands in this space, we are even more excited to be able to bring more innovations at a faster pace with a broader ecosystem of products to the residential sector. This is gonna be a phenomenal win for us. There is a tailwind behind safety and wellness as well. That's something that's actually very important. It's something that all of our employees take to heart. Employee health and safety is a top ESG issue, and 90% of EHS professionals would say that their organizations are doing more to mitigate employee health and safety risks today than before. Still, we see things like lockout/tagout still ranking among the top 10 OSHA violations. We really feel a responsibility to do something about that, to provide products that are gonna be uniquely able to help mitigate that risk, that important risk better. We are also seeing a lot of great tailwinds behind security. Now, before I introduce my next speaker, I wanna just leave you with this: that Fortune Brands Innovations is not just looking to win inside of the housing sector. We are absolutely dedicated and focused on winning in the winning categories in housing. To do that, you can't just be in the right place and stand to benefit. You have to lead in those categories with your innovations. That is what's going to allow us to deliver great performance, market outperformance through the cycle and over the long term. Now I'd like to introduce Cheri Phyfer, who's going to talk about exactly how we're going to win in those categories with our great brands, our innovations, and our channel management capabilities. Please welcome Cheri to the stage. Thank you, John. Good morning. It's a pleasure to be here with you. I'm Cheri Phyfer, the Group President of Fortune Brands Innovations. Nick did a great job earlier today really talking about this winning formula for supercharged growth and margins. I'm gonna focus on that bright blue, those three areas of focus that Nick talked about: brands, innovation, and channel today. I'm gonna bring those to life for you using various case studies, and I think you'll experience why this is a sustainable competitive advantage for us. It all starts with brands. You saw Nick's obsession with brands and how we're excited to bring that across the entire portfolio. We know we're in the right categories, we know we're in the right products, and we have a strong record of brand development. We excel for three reasons here. One, because of the expertise that we have, the knowledge we have with consumers and the industry. Secondly, because we strategically and meaningfully invest in these brands and the people behind them. Third, as you'll hear more today, we are entrenched in innovation as well as our channels that we play. When we look at our products, we like to think about the link that they have to our brands. Our products allow you to create beautiful functional spaces that represent your style. They also help you think about safety, comfort, and security that you want. When we add that together, we think this is the moment that you spend with the people that matter the most to you. Our brands reflect that promise as well. Let's watch this video and see. Brands are a big focus and a critical part of our strategy to build sustainable market power. Over the course of my career, I've led teams that have developed and transformed leading consumer brands, including the last five years of Fortune Brands. Why do brands matter? A strong brand is more than just a logo and a slogan. Through building reputation and emotion, strong brands help us stand out from our competition, drive sales, increase profit, and much more. Take the great brand work we've done in our water businesses. Today, Moen is America's most recognized faucet brand, most trusted brand, most considered for purchase, most desired, most purchased, and most loved brand. While well-known for 80 years and still known today as a dependable brand, through improved brand and innovation in the last 4 years, the Moen brand has become even more known by consumers as a market-leading brand, one they'd recommend to family and friends. Our top consumer perception is now style. Even better, we have increased Moen brand perception as a luxury brand while also increasing the view of good value for the money. This was enabled in part by a change in our brand positioning from being a brand not about plumbing, but about water experiences. This shift in brand perspective liberated category expansion, innovation, and growth, and was attractive to our core consumers as well. In China, we are transforming the Moen brand as well, leveraging our strong position with the trade to drive more awareness with the consumer as China evolves to a market driven by R&R. Our efforts have raised consumer awareness of Moen by 17 points to become the sixth most aware consumer brand in our industry in just four years, and now tied for the second highest non-Chinese brand. While we increased marketing investments to do so, we also increased profitability. We've had similar success with our luxury water brands. six years ago, we acquired several luxury water brands, and soon after, created a unique and powerful brand strategy under a new identity, The House of Rohl. A strategy which makes the most of many brands leveraged into one master brand. The House of Rohl now has 98% awareness amongst designers in the United States, up more than 25 points since 2020, and is growing share in every region, with showrooms now in the United States, Canada, Europe, and China. With these successes in hand, and with a new, more aligned organizational structure that's more focused on brand building and innovation, we see an opportunity to do even more across the whole enterprise. Like we did with Moen and The House of Rohl, build even greater strengths and advantages to get even more leverage out of the inherent brand equities of our other strong brands. Because the best known and best loved brands, consumer or trade, have the most opportunity for leverage. Take Therma-Tru. It's a great trade brand and is the number 1 entry door brand amongst U.S. builders. We can leverage this existing brand equity to become stronger on the consumer side through brand and innovation, where pricing and profit opportunities are robust, like we did in Moen China. A couple of inches further out from that doorway with Larson, also number 1 in the segment, we have two leading door brands that can be better leveraged together. Part of building great brands is also understanding consumer trends, like the rise of outdoor living. We will become the foundation for outdoor living with Fiberon, Fypon, and Solar Innovations developing new integrated benefits and growth potential. We think there is a unifying brand strategy available that helps us get the most of each individual brand and also brings more power to all of them, like we did with The House of Rohl. How about our most well-known and strongest share brand, Master Lock? Like Moen, Master Lock is number one in awareness and number one in share, and is America's top lock brand in a world where consumers are increasingly concerned about safety in their lives. Master Lock, along with SentrySafe, are opportunities that any brand professional would love to get their hands on, just like when we started our brand transformation with Moen. At Fortune Brands Innovations, we have rich and leverageable brand assets delivering real benefits in a world increasingly desiring them. The dreams of home have few limits and real power for those who can inspire and deliver them, as we will. Mark-Hans did a great job of really talking about how we build powerful brands and how we want to leverage that across the portfolio. Our first case study today is the strength of The House of Rohl. In 2016 and 2017, if you think about the roadmap that Nick showed, we acquired 5 different luxury brands,. They had 3 different distinct paths to market, and they all focused singly on one category. We started doing some research, and we realized Rohl was actually the number one brand in recognition out of those. We found this trademark that existed inside Rohl, House of Rohl. We brought those together under an umbrella brand that really allowed you to own the room, own the kitchen, own the bathroom by delivering curated luxury and bringing a sink and a faucet together in both the bathroom or the kitchen. You can see we had one route to market, one umbrella brand under The House of Rohl, and 17% compounded annual growth rate from 2019- 2022. The team really is excited to bring these brands to life. The reason we're so excited to bring these brands to life is that we know in bringing brand strength to the market, it doesn't just help us create the demand and the pull, it allows us to take price in the market, which is extremely important to that margin journey that we're on. That journey starts for customers very early on as they go to search. One of the things we've realized is that consumers, once a brand gets in their mind, it stays in their mind. I was shocked to learn that of our, of our categories, in 3 of those, above 40% of the time, two of them close to 50%, the search has started with brand, not the destination where they're gonna stop. We have an opportunity, as Nick pointed out earlier, to get to number one, both with Moen and Fiberon of those searches that are there. This tells you before a customer steps foot into a brick-and-mortar or before they get online, that they have a product in mind, and we want to be that brand that they have in mind. While brand is really important and we spend money towards brands, we also know that one of the things that is driving our success with brand is innovation. It's a culture of continuous improvement, bringing new products as well as existing products, new life. When we look at our innovation roadmap, we have over 1,200 ideas a year that come in from customers, come in from consumers, come in from academia, come from insights from our internal employees. We vet those down to about 100 concepts. You can see point two on our roadmap. We bring those concepts into prototypes and to new products. We have a goal of 25%-30% new product vitality. Products launched in the last 3 years will be 25%-30% of our business. We're not just throwing ideas. These are actual tangible products. I'm gonna walk you through several of these in Water, Outdoors, and Security when we're looking at our innovations that are coming. These are examples of technology that is ahead of the curve, products that are market-leading, that not only help us with our brands, but they also help us with our channel partners as we're bringing this innovation to them first to market. As we look at this, one of the examples would be our water ecosystem. Rather than just faucets and showers, we now are leveraging technology to give water a new life. When we look at this all started with the Smart Shower back in 2017, and now we have faucets, we have a leak detection device, smart water detectors, a sump pump, and we're launching this next spring, smart irrigation. I'm going to go back to that smart water shutoff that John talked about. He talked about you having a burglar alarm, having a fire alarm in your house, but not having that water alarm. This was a product that detects the smallest leak in your house and it will actually turn the water off, and then using the integrated app, you can turn your water back on from wherever you are. That's incredible in itself, this actually we realized could be the brains behind a water ecosystem. What this did is in Texas a few years ago where you had the freeze, we actually could have detected that freeze and flushed water through your lines, so there'd be a Burst Protect. If you're traveling or if this is a second home, a lot of people are worried about water staying in the pipes and waterborne diseases. It actually can flush the water lines for you. It works as the brain behind this integrated app. Let me show you this video that brings it to life more for you. Our relationship with the most essential element on Earth is being reimagined and redefined by the greatest instrument of change of our time, technology. Water flows through the moments of our day and through a vast and hidden network behind the walls of our homes. Now, for the first time ever, Moen lets you tap into the power of that network. The Moen Smart Water Network is a collection of smart products brought together in a single integrated app to give you unprecedented control over how you experience water in your everyday life. It's not technology for technology's sake. It's innovation that makes your life simpler, easier, and brings you peace of mind. How? At the center of it all is our Flo Smart Water Monitor and Shutoff. It constantly monitors the temperature and pressure of the water flowing through your home's pipes, which allows the intelligent system to track your water usage 24/7. It detects leaks as small as a drop a minute anywhere in your home and can automatically shut off the water before a catastrophic leak occurs. The power of the Smart Water Network and the interconnectivity of the products within it allows you to protect your home and family in ways never before possible. If it's cold outside and the temperature of the water in your pipes dips below 40 degrees Fahrenheit, our Burst Protect feature will automatically shut off the water supply to your home and then communicate through the network with your Moen smart faucets to flush the line so they don't freeze and rupture. If you're going to be away from home for a while, Health Protect will automatically flush the stagnant water from your pipes and through your smart faucets while you're gone to reduce the risk of waterborne disease. All of these innovations are designed with one thing in mind: to elevate the experience you have with the water in your home. With the Moen Smart Water Network, we're about to embark on the biggest transformation in how we experience water in our homes since our founder, Al Moen, designed a valve that allowed people to control the temperature of their water more than 80 years ago. We're not done. We'll continue to find new ways for you to enjoy the most precious resource in your home. Water designs our life. Who designs for water? While we're really excited about this from a hardware perspective, we're even more excited about the data and analytics that we're gaining from this and the reoccurring revenue model that having that app it gives us. As we move on to our next case study, wanna talk to you about doors. We have the number one brand in storm doors and the number one brand in fiberglass entry doors. People tell us that storm doors are important to them because it lets in light and air into their home, but they hate the way it looks like a bolt-on. Today, only 25% of consumers buy a storm door and an entry door. We have an opportunity here by bringing to light a door system that is an integrated storm and entry door, so it's aesthetically pleasing. Consumers have told us in shopping journeys that they want this. It just did not exist out there. If you think about this opportunity of combining these number one brands, aesthetically pleasing, there's 300 million doors. As people go to redo their homes, and they want this light and air ability in their front doors or back doors, they're able to do this now with our Impression door. Moving on to security. You know, most of us think about security and think about Master Lock, and you think about that high school combo lock that you bought, you know, at your local retailer and used when you were in high school. This is such an opportunity for us. You heard John Lee talk about it a little bit. This case study here, we went to the Metropolitan Indianapolis Board of Realtors. We sold over 9,500 locks in one sale, and they put them on the door. As John said, they're able to take their app and connect in their back end and connect into our app. It can give you the history of who's been in the homes. You can schedule an appointment and get that code to get in to access a house. We provided the training and the technology that was behind, obviously, the lock and helping the people adapt to this, we're extremely excited about what this does for us to take selling a lock to selling a ton of locks at the same time, providing a service. What excites us the most is this works with realtors, and there's 1.4 million realtors out there. This also can be used in that Lockout/Tagout opportunities. We're extremely excited to take that kind of technology and take it into the commercial space and see what that can do for us. Shifting a little bit over to our channels. I know that you're always interested in what do our sales look like by country, and then how diverse are we. When we look on the left side of the page, the sales by country, about 85% of our sales are in the U.S. and Canada and over 10% in China now. I think it's really important. We don't talk about China a lot, but our China team is homegrown, and they are China for China. They're self-funding, and they are self-sustaining. They have been on a double-digit profit journey and are doing amazing work. We're pleased that that's now over 10%, close to 11% of our business. Moving over to the right side of the page, really looking at that channel, John talked about it. We're heavily weighted towards R&R, a growth segment in the business. We are. We are exposed to growth categories, and you'll see the diversity. When you look at the diversity, look at it when you click a slide further, breaking it down by water, outdoors, and security. You see the diverse mix in all of the businesses, and it's really underpinned by deep channel relationships with the customers in that diverse portfolio. Nick mentioned category management, and this is so important to us because we pride ourselves on this diversity and this diversity because of those channel relationships I talked about. What enables us to have those channel relationships is you wanna be the go-to person. You wanna be the company that they're calling when they have a question. We pride ourselves on knowing everything about the competitor and everything about ourselves and things that we don't even know yet. When I break this into three different areas, the white space analysis. We are constantly out there doing trends work, finding out what's next, what's gonna hit the markets. We're in people's homes, actually watching them use our products to try to find those unmet needs that we know consumers will pay for. Moving over to shelf optimization, we know where the gaps exist, and we know where there's redundancy. We're constantly looking at those gaps, whether it's brand, style, price, or other things, and moving products around that all scripts rise for us and our partners selling those products for us. Lastly, features and benefits. It really brings together those first two, those white spaces and that shelf optimization. It's finding those untapped needs, those unmet needs that consumers are willing to pay for, figuring out the right customers to partner with on it, and making sure we're optimizing that shelf. With that, getting the close rate and the productivity up across our partners. Extremely excited about what we do and how we are gonna leverage that across all of our product portfolio. Just some case studies around our channel and what has been so successful for us. We acquired Fiberon, and you can see we were about 61% retail, a little under 40% wholesale. As we looked at what we wanted to be in this channel, we knew it was very functional. We wanted to be more aspirational and inspirational, and we felt that we could grow on both sides, we really knew that there was growth in margins over on the wholesale side of the business. We intentionally looked at that wholesale business, and what we were able to do is take those deep channel relationships that we had with our Therma-Tru customers. OrePac and Huttig, for example, they wanted Fiberon because of the relationship we had, because of the category management that we were able to provide them on the Therma-Tru side of the business. You can see that we have more than doubled our wholesale business since the acquisition of Fiberon and now sit at a 56/44% split between wholesale and retail. To touching on that Therma-Tru and that brand and channel that we had, when you think about this is the number one entry door, and we have been extremely successful with builders for decades, but we don't spend a lot of money on advertising here to the consumer. We believe, as you heard Mark- Hans say, that there's an opportunity here to speak more to the consumer, but this isn't necessarily where it's all about ASM. It's about innovation that has really led this for us. We were the first fiberglass door, and we haven't stopped there. We're continuing to look at skins and features and benefits that we can bring to the door to make it something that everybody wants. If you think about that, 47% of those consumers, that slide I showed you, search by doors, and they search Therma-Tru. 47% of people start, and Therma-Tru is the number one brand. We have an opportunity to not just take the brand work we've done, but now through digital transformation, really bring that product to life that as people start that search, they start it with Therma-Tru, and they stay with Therma-Tru for the acquisition of actually the product. Extremely excited about the channel partnerships that we have and really here what we've done with brand and innovation and channel to leverage that across all of them and drive margin and incredible sales. Pretty exciting here, maybe not for you, garbage disposals, but if you want to look at a case study that really brings brand, innovation, and channel together, this is it. Moen was number one in kitchen faucets. As I said, we look at things, and we think, how do we own that room? What are the other categories or adjacencies we could play in? We looked at garbage disposals and saw that it was a pretty sleepy category. The garbage disposal had not been innovated in a long time. We brought not only product innovation to the market, but innovation in our go-to-market strategy. We were able to leverage our channel relationships. You will find these garbage disposals at Menards, Lowe's, and Depot, all of the big brick-and-mortar. You'll find it on the first page of Amazon, page 1. You'll find it in many new homes as we've added this to our exclusive builder contracts. The builders are running with these Moen disposals. We had our supply chain friends to thank. We were able to service disposals when some of our competition was not, and that helped us grow in that wholesale business during the COVID years and the downturn. What was really exciting about this, though, was that go-to-market. You went in to shop a disposal before. You shopped on horsepower. Nobody really knew what a horsepower meant. It was really confusing. People looked at a shelf. They kinda looked at, well, which one has the most gone? I guess that's the one people are buying. I'll buy it. Instead, today, you go in and you shop by your lifestyle. Whether you're the light, you just once in a while have people over, you don't cook a lot, or whether you're the chef, and you really need a superpower. It makes it an easy category for people to shop and to feel comfortable with what they're getting. While it's not very exciting to think about garbage disposals, when you think about what we did with the Moen brand, what we did with the channel relationships we had, and what we did with innovation, not just in products, but in go-to-market, extremely excited about taking this type of just obsession over these three pillars and these three focus areas across our portfolio and seeing what we can do. As we do, you know, as I wrap up and get ready to turn the stage back over to John Lee to talk about our digital transformation, what I will tell you is we are so excited. We are just getting started, and there is so much runway in front of us. We're gonna continue to drive these 3 pillars, these 3 focus areas of innovation, brand, and channel. We know that that will drive accelerated sales and margins for us. We are building incredibly strong e-commerce capabilities that John Lee's gonna talk about. We're gonna double down in that connected space. You hear the energy from all of us talking about these connected products and what that does from a reoccurring revenue standpoint, what that does from a data and analytics standpoint, and how we're gonna use all that to continue to win in this omni-channel market. We're gonna accelerate into the commercial business with brands like Master Lock. Lastly, we're gonna continue to transform the portfolio, always looking at beating whatever's happening in that market with sales and margins. I'm extremely excited to have the opportunity to lead the innovation brands and channel for Fortune Brands and excited to see what we'll do in the future. John, I'll turn it back over to you for digital transformation. Thank you, Cheri. As I mentioned before, I lead the digital transformation at Fortune Brands Innovations on an interim basis, I'm excited to be here today to talk to you about some of the great progress that the team has made. As you heard from Nick, digital transformation is a key part of our Fortune Brands Advantage. It is something that is going to clearly enable our growth across the entire enterprise. I wanna first start by saying that our digital transformation did not start with technology. It started with our business strategy, really understanding our business model today, how we are evolving it, what makes us win in the marketplace today, and really projecting out what does the market, the consumer, and the customer look like in the future. Really trying to understand that is how we came up with our transformation strategy. As you heard from Nick, as you heard from Cheri, we have a lot of great digital products and ecosystems in water, in security and safety that are in the, in the market today as well as in the pipeline. All of those things need to be supported by the best-in-class digital technologies as well as data science and analytics. That's gonna be really key to not only supporting the products, but opening up new revenue streams in the future, like recurring revenue streams. Digital is not just about products for Fortune Brands, it's way bigger. It's across the enterprise, and there's a lot of opportunity we found that we can unlock. Starting with things like our integrated tech organization. Our tech organization across all our businesses are now integrated today. They're going to be focusing on core technologies that are gonna help us streamline our processes and optimize our value chains and our back office functions for the entire enterprise. It's about raising a data-centric organization, not just products, but the data, and what does that data tell us? In order to do that, you need to connect, you need to collect that information, and you need to look for patterns in that data about your businesses and again, about your consumers and how they shop, how they engage with your brands through the entire journey, and how they engage with your brands after they buy it and they take it home. These are the things that are gonna help us not only understand our consumers, but design new products and features that are going to delight them and keep them coming back for more. It also means having an organization that is running on modern, Agile ways of working through this very iterative cycle and a very quick process of coming up with working solutions, working products and working services at a faster rate that is actually keeping up with the fast pace of market change. It is important to realize that digital transformation for us is across the enterprise. I talked a little bit about the holistic change. Let me dive a little bit deeper into one area, and that is our digital factory. This is where our technology and our people meet to scale those new products and solutions at a rapid agile pace. Our digital factory is comprised of a number of cross-functional teams that have technical, dedicated technical people on those teams, but they're business-led and they're very missions focused in turning around solutions at a quick pace. They're working against some of our biggest opportunities, including developing some of the connected products we talked about today, as well as feature-rich, rich apps to support them. Also, accelerating our e-commerce business and helping that channel continue to increase in productivity every year. As well as savings throughout our supply chain. You heard Nick talk a little bit about the savings in our indirect spend and consolidating that spend into one single spend cube across our entire organization, accessed by a single digital tool. Finally, linking up our technology and our data to really get to a single source of truth. We have a lot of great businesses in Fortune Brands, and we can leverage all of that data together to provide insights across our businesses to understand that consumer better. We're actually seeing really positive outcomes, early wins already, including 120 e-commerce tests that have been launched. These are teams that are testing a lot of new concepts on our sites and trying to find what's the fastest way that you can get to the, you know, the first page on Amazon more often? How do you increase your click-through rate? How do you increase your conversion rate once they click through? The fact that we have large scale brands and lots of transactions and that speed, that gives us more information. When we find these insights and when we scale these insights, that has a bigger impact on our business. Nick also mentioned that the Moen app rating increased by 33% within the first 8 months of the teams working on it. $8 million in indirect spend has been found with that consolidated spend cube that I just mentioned. I mentioned a lot about digital. I think it's just important to take away 3 key things, which is we find incredible enterprise value potential through our digital transformation. We are leaning in as an organization to connect, to learn, and to change at the pace of the market, that we are going to be the industry leader in digital in the next 5 years. I think we have a short break. I think it's gonna be a 15-minute break. After the break, we'll welcome Nick back up to the stage. He's gonna talk a little bit about our Fortune Brands Advantage, specifically as it relates to our global supply chain. He'll be joined by Ron Wilson, our Chief Supply Chain Officer, he will be sharing about our world-class capabilities. Thank you. Stitched up, feeling the burn. strung out, I finally learned. I'm trapped in, can't do a thing because I'm locked down. Stitched up, out of my mind. strung out, lagging behind. trapped in, can't do a thing because I'm locked down. Stitched up, feeling the burn. strung out, I finally learned. I'm trapped in, can't do a thing because I'm locked down, locked down. Stitch me up, string me out, trap me in, lock me down. Stitch me up, string me out, trap me in, lock me down. I wanna be stitched me up, string me out, trap me in, lock me down. Stitch me up, lock me down. Stitch me up, string me out because I'm down and down and out. Ladies and gentlemen, please find your way back into the main room as the program will continue shortly. Thank you. Is my mic on? Perfect. Well, welcome back. I'm here with Ron Wilson, our Chief Supply Chain Officer. We're gonna have a little bit of a Q&A session. Before we get to that, I'd just like to give a quick reminder. To the extent that you have questions, the QR code on your agenda is there. You can just click on that and feel free to submit questions. We're gonna have a broader Q&A session in a little bit. As I kick this off, you heard both me and some of the others talk today about the importance of our supply chain. At the end of the day, we are a manufacturer, and we have a hugely complex global supply chain that we manage. I think that we manage it incredibly well, yet we see opportunity to do even better. That supply chain not just serves our customers, keeps them in stock, and brings our innovation to life, but it fuels our growth, right? It is a productivity engine to continue to fuel our growth. I'm very excited to have Ron Wilson up here with me. Ron, just starting out, why don't you just tell us a little bit about your background and how you came to join Fortune Brands in this role? Yeah, sure. engineer by trade and ended up with GE for over 30 years and really came up the net career through operations, manufacturing, all the jobs that, you know, you would think of. Lighting business for a lot of that time, a lot of consumer products work on the appliance side. Got to lead operations for lighting while we were in a big industrial change from incandescent to LED lighting, and all the implications that came with that. Went to corporate for a while on the sourcing front and then ended up in industrial solutions, which was our electrification, switchgear, circuit breakers. We got divested to ABB, helped integrate that, and 7 months later, came to Water Innovations with Fortune Brands 3 months before COVID hit. even though it's been 3 years, feels more like dog years, like 14 years or something, I don't know. It was... But had the opportunity to really lead the team through COVID and all the implications that came with that. A lot of disruptions in lighting. Hopefully, we're the ones doing all the disrupting now. Good to be on this side. Tell me a little bit about your role now as chief supply chain officer of the Integrated Supply Chain and some of the initiatives you're most excited about. If you take a look at Fortune Brands Innovations, you know, so we handle everything from raw material to manufacturing to getting the product out to the customer. We source from hundreds of suppliers literally around the globe. We manufacture across four different continents. We distribute equally among those continents in several countries, everything that's involved in A to B and getting it to the customer. In terms of what excites me about what we're doing now with Fortune Brands Innovations and bringing all those businesses together, as an operations person, you love the idea of can I have less input and get more output. Right. One of the things that we're seeing very early on is we've built what I think is an incredible team in operations. We're able to take the best of the best talent, let them work across the enterprise, and we're seeing the productivity right off the bat. You know, we're gonna get double-digit productivity on the people side, but we're also gonna elevate the game across the board. Sure. because we're gonna take best practices, that I've seen, that we've all seen across the network and how do you go with higher speed, and push those across the entire Fortune Brands Innovations network to kind of up the game in total. So whether it's digital, whether it's factory automation, whether it's data analytics, we can take those pockets and just accelerate the impact we can have across the broader space. I'm so excited to be able to drive that best-in-class manufacturing culture, that lean culture through an integrated organization, which I think is an untapped opportunity for us. As you think about the efforts and the initiatives, would you say they're more focused on driving cost out or driving revenue? The short answer would be both, in a sense, right. Operations, we're always gonna be focused on driving costs out, getting efficiencies, both in terms of the number of people it takes to do it, as well as getting material costs out, getting efficiencies in our factories, getting efficiencies in sourcing. I'd say the other piece is, right, we want this to be a competitive differential for us in the marketplace. We want supply chain to matter. You know, a great example, we're building a new distribution center with Water Innovations out in Vegas. That DC, as opposed to just, and we're doing it. We have a DC there. We need more space, because of the growth that we've seen, and it's not just duplicating what we have in a bigger space. It will be a highly automated distribution center. What that does for us, yes, it's gonna get cost. It's gonna drive resiliency because we won't be as dependent on the labor market. The other thing it's gonna do is it's gonna open up channel opportunities for us that we can deliver efficiently, as you think about direct to owner, direct to consumer, that we see as potential growth. We're building that DC to be able to handle that different channel to enable that revenue. You know, another quick example which I think is where we can bring relevance, you know, we had one of our large customers in from Water Innovations. We kinda walked down through what our strategies are and what we're doing. One of the things that we shared with them is that through the 2 years of COVID, we dropped our accident rate by 50%, even while we were hiring like crazy, onboarding people going through this chaos. They stopped, and they said, "Hey, can we ask you, how did you do that? You know, what was the key things you changed in culture? Can we talk to your distribution team?" Because they ran, you know, tons of distribution centers across the country. It was relevance, not just in terms of getting them product, but how we do it. That stickiness and whenever we can create that with a customer, that's, you know, leveraging world-class operations to grow the business also. Yeah. It speaks to those deep channel relationships because you establish those, you're, you know, you're worth more than just what you did for me yesterday. You're actually driving value into their businesses. I think we saw that too. I mean, you're biased not to mention it, but opening the Columbus distribution center in the midst of COVID, under budget, early, and, you know, the fill rates for our customers have been spectacular, and I think that did drive revenue because that led to share gain. Absolutely. As you think about the digital strategy that John was talking about, how do you see that playing into the supply chain, and are there any milestones or sort of early metrics you could share? Yeah. I think, you know, as we look at digital, it will impact us across the board, whether it's how we source product, how we manufacture product, and those are kind of the easy ones that people think about, how you distribute product. What we found right across this is there's places that we're doing some good stuff now is how do you drive that? How do you drive what we have across the enterprise? You know, one example I'll give with that is in our planning process, you talk about the customer that came in, I've never had a customer do this in, like, 3 decades, right? They showed us our service metrics to them were, you know, not necessarily where we'd want it to be, but like mid-80s on first time fill. They said the rest of the plumbing category is at 40%. It wasn't just that we worked harder as we found ways to work smarter through digital enablement. You know, what we ended up doing, you know, we built with our data scientists through a machine learning program that literally looked at 200+ data points, external and internal, that, you know, regenerates every month as they draw more data. It goes back 17 years, and it just models out what's happened with demand. We knew, you know, as supply chains got longer, shipping times got longer, it wasn't good enough to forecast out a couple months. We had to be looking, what's the market doing 5 months from now, 6 months from now. We found that this was more reliable than anything that we could come up with on spreadsheets. We leaned into it, and we took steps to get out in front of the growth that we were seeing. I think it's one of the reasons why our customers consistently told us, "Well, you're 6 months ahead of the competition." It was really that digital enablement that we used on the forecasting side. We're taking a look at that machine learning, that process, saying, you know, "How do you put that into the other BUs now? Right. How do you take what we currently have and go leverage that? That was an example of digital enabling growth and market share gain and customer success. Right. What's so remarkable about that is you built that AI 'cause you needed it, somewhat organically. The ability to now put it into a digital factory and just have it accelerate and constantly iterate and improve will be exponential. Could you touch on a little bit in the sourcing arena in particular, you know, how does, the digital technology, the enablement, helped us in our sourcing efforts? Yeah. you know, when you think about Fortune Brands Innovations, right, sourcing for us is key because the amount of material costs that we have and that we deal with. if you think about, you know, buying in the ballpark of $2 billion of direct material, and you think if I can get a 1% gain. Right. It's huge from a margin percent, right? If I can get 1% better in how I do that. We've been doing for the last 2 or 3 years, you know, what we call next-gen sourcing and different techniques. Like you said, you know, I talk, you know, historically, you tin cup and give me 3%, do this. We've gotten some good gains from that. On the Water Innovations, we're building that in security and in other places. The one thing now that we want to get to is should- costing. Should costing, we've got a software program that we use. We did this with injection molding on the Water Innovations side, and we'll spread this out quickly. You kind of build this digital factory. You feed it drawings of different parts you're getting, it comes out and says, based upon the tolerances that you have, the size of the part, the country it's built in, this is what it should be costing your supplier to make. One of the things that we found was there are some pieces that it says you're getting a pretty good price. Other pieces, you ought to be buying this for 20% less. What that does for the sourcing leader, it allows them to use their time a lot more effectively. They start to focus in on the places that there's the biggest opportunity, as opposed to spreading their time out over everything. The other unique thing we found, it wasn't that, gee, these are bad suppliers, right? It was with injection molding. Some suppliers were better at different types of parts than others. Literally, you could move parts between 2 suppliers, get double-digit deflation. They're happy their volume is still there, but you're leveraging your suppliers and what they're good at better because of the data that we were able to get out of that true costing. Yeah, it's game changing. It's game changing. Is Bigford any other areas where you think, you know, the digital factory is really gonna drive value for the supply chain organization in this? I would look at it in a couple ways. Like digital factory, you know, John talked about what we're able to do with taking all the data from all the different businesses, bringing it in on indirect sourcing, get that spend cube. Again, now it gives more tools in the toolkit to our indirect sourcing team that says I can look out at total buys in certain areas. I can look at freight in total better than I was able to before. We'll get those benefits. You know, John was talking about $8 million on there. We're gonna leverage that. We're looking at can we do that on direct material as we purchase also. I think, you know, the other one, you get into the factories and this is where it'll get fun as we take it to the next level. I was in our plant in Nogales for the first time. There's one that makes safes, the other that makes locks there. In the safe factory, they're doing big injection molding machines, and they have built sensors on the equipment, looking at pressures, temperatures, recording that, looking at trending on that. Their first phase is they're just giving feedback to that operator that's working the machine so that they can do better, smarter with it, right? The next part of their journey is how do they make that a closed loop system? As they start to see things move, it will talk to the machine, right? Tell it, "Go increase pressure on this point, go increase the temperature on this." That's phase II that they're looking at. Phase III that we'll get to is give me predictive maintenance now. Right. Start to monitor amperage on motors. Start to monitor when this goes to a certain point and get out and fix the equipment prior to it breaking. As they go on that journey, right, there's implications that we can use in Fiberon, which is a very process-centric business. Shaws Sinks with ceramic processing, Victoria & Albert, tubs. Leveraging that and you look at that, and it's really front-end, front-edge digital enablement in the manufacturing environment. You're like, "Well, get this right, and we'll just cookie cutter this across the network. You know, you talked about your GE career and obviously left them and given that it's been such a quiet time geopolitically, it's probably seemed opportune to enter a new phase of your career managing a global supply chain. Do you wanna talk for a few minutes on just how you think about volatility, the geopolitical challenges, resiliency and some of the things that we're gonna work on? You know, no doubt, as you look at supply chain over the last few years, just as I think we've learned anything, the uncertainty is not gonna stop, geopolitical risks are not gonna stop. How you adapt and how agile you are to those changes will make the difference on if you're in front or behind, right? I think the good thing is, as I look at Fortune Brands, it's not like we're starting from ground zero. You know, we've been at this for three or four years, at least as tariffs started and different things. You know, when I say, look, we have a lot of suppliers in China. Certainly a volatile situation with COVID and lockdowns and all the geopolitical side. The good thing is, a lot of these suppliers we have great relationships with. They're very smart owners, and they get the geopolitical risk. They have gone with us, and we have said- Right. You know, we need to diversify. You know, Cheri talked about disposals, right? We went to our disposals supplier. We knew we wanted to grow that category. They were gonna need to build a new factory, said, "We don't want you to build it in China. Right. They went to Cambodia. What that did is it gave us great flexibility, you know, great startup in Cambodia. When we saw a surge, we leveraged the China factory too, and it was in two different places. What I think historically we used to think about, you know, dual sourcing is the name of the game, right? As long as you got two suppliers, that's great. Now we're thinking more about dual geography. It can't be 2 suppliers in China. That's not gonna be good enough. It can't be 2 in the same country. We are putting a team in place and really working on more nearshoring opportunities, both in terms of finding existing suppliers that are there in certain places, as well as maybe taking some of our current partners. Right. With us, to drive that. You know, I talked a little bit about automation that we're doing. I think resiliency, you know, the other thing that we learned during COVID, the labor market in the U.S. has changed. Yeah. It's harder to hire, it's harder, you know, people aren't loving the factory jobs as much. We've looked in some of our places, Fiberon, you know, I'll use this as an example. Some of the toughest jobs that they had the highest turnover, the team did a great job at automating. Right. Those jobs, right? You're less dependent on labor, and you're taking out the toughest part of the jobs out of it. The jobs that are left are those that are more rewarding for people to go in and work day in and day out. What we're doing in the Vegas DC, like I talked about. It's, you know, we know we need resiliency on the labor front too. We wanna build agility. We wanna build speed. We've done a lot, but there's, like, definitely more to do for us in that. Well, you know, Cheri talked earlier about our deep customer relationships and our channel relationships and how we can use those to really unlock innovation and growth. You know, you're right to touch on those deep supplier relationships 'cause those are the partnerships that we are leveraging to really make a more resilient supply chain. It's not just about scratching them and going finding new. It's building on those partnerships and adding that automation, which I think you're right, our team is delighted when they don't have to do those. Yeah. those harder jobs. you know, I touched on in my talk our new aligned operating model and structure and how we really wanna unlock both growth and productivity. What benefits do you see now that you've been in this for about three months and you're starting to bring that team together? You know, how do you see that unlock? I think on the operations side, for us, it's really taken the Fortune Brands Advantage and moved it from PowerPoint to real world, right? As we looked at combining that organization. People are seeing that, yes, we're getting the productivity, but the other thing that it was there is, as people are looking at what we're doing across their organizations, transportation is a great example, right? Transportation, we don't need 5 different transportation teams for 5 BUs. You need 1 transportation team that thinks about ocean freight, outbound freight. Not only are you gonna do it with less people, you start to look around the BUs, and there's certain ones that are doing certain things better than others. Absolutely. You start to align on that, and you're gonna get better results. You see the team just going like, "Oh my gosh, Yes, we're getting some good stuff up front, but what we can do over the next two or three years is amazing?" Just by taking what we're already doing somewhere, not by creating something new. I think, you know, that part is extremely exciting for myself and the team. Well, I think back to even when we acquired Rohl and found some things that they were doing better and less expensive inside of their business, and yes, we played that through our water business, but the opportunity to play it across the whole portfolio quickly and unlock those, you know, it's just an easy example of how that, how that comes to life. How do you define success? Wow, that's a big I'll take it, you just mean for supply chain. No, I Not for life in general. Wherever you wanna go with it, Ron. Sure. You know, if I look at supply chain, I'll take it from that route, right? We're gonna define success in supply chain. You know, supply chain is really about outcomes in my mind, right? I'll start with outcomes for our employees, right? We have more employees in supply chain than anywhere else in the business, as you look at our manufacturing plants, distribution, the people that make the execution pieces happen, right? We want those jobs to be more fulfilling. We want them to have the right tools. We want them to feel more successful and energized by the jobs they're doing. Right. I think we're absolutely gonna see that. The second piece, you know, we do have to get costs. We are a manufacturing company. We're operations. That's what we do for a living. We'll accelerate, I think, that cost out, not just on the people side, but as we look at, you know, we have a culture of continuous improvement and material costs out, manufacturing costs out. You know, I feel like we're gonna be able to accelerate that by 25% over where we've historically been by leveraging the Fortune Brands Advantage, better ideas, all that stuff. Third, we'll move faster. Right. With being one team. finally, you know, I'd say we're going to get better results for our customer. I mean, at the end of the day, I believe wholeheartedly our customers are gonna feel the difference, and we are gonna be a competitive advantage for this company as a supply chain. Excellent. All right, almost out of time. Final question. You're a talented musician. During COVID, you lifted all of our spirits with online concerts. I think that was, you know, I'm not sure I have a lot of favorite COVID memories, but that would be one of them. Are we gonna get to see you perform for the group at some point? We could probably make that happen at some point. Probably will not be today 'cause I have to go a cappella, and nobody wants to hear that today. No, it was, you know, it was something that was good for me to do, too. During COVID, it was just one of those things that helps your mind be better, and I think, you know, people enjoyed it, too, so. Oh, it was wonderful. All right. Well, thank you, Ron. I think we just sort of scratched the surface of some of the things you're doing, but hopefully the conversation gives the group here some insight. With that, we've discussed a lot of words and a lot of numbers, but I'm gonna hand it over to our esteemed Chief Financial Officer, Pat Hallinan, who's gonna come up here and round out some of these numbers and talk about where we're going. Okay. Thanks for the opportunity. Sure. Ron, it's very disappointing to hear that you and Nick aren't prepared for your Smothers Brothers rendition today. That's very disappointing. Well, thank you. I am gonna start by highlighting our value creation track record. I think it's important to start with what we've done over the last decade and then attach that to where we're going from here. We are a brands, innovation and channel management leader. We have consistently driven growth and are a growth company. You can see that we have grown reported sales at various intervals over the last decade at double-digit levels. We have grown organic sales consistently at high single-digit CAGRs. This means acquisitions have added 300 to 500 basis points to growth, accounting for that difference between the reported and organic growth. And, you know, represent every bit of the reason we pursued the opportunity you heard about last week. More importantly, we turn this growth into rewards for investors. We have a proven track record of growing profit faster than sales. We use our Fortune Brands Advanced capabilities to expand margin and drive profit growth ahead of revenue growth. Over the last 3 years, you see we've grown net sales, operating income and EBITDA at double-digit CAGRs, with sales growing at 12% and op income and EBITDA at 15%. As a Fortune Brands Innovations leadership team, we expect to continue this track record of exceptional value creation. As we look forward, our refined portfolio is designed to continue to produce exceptional growth and margin expansion. The portfolio is aligned against categories with exceptional growth potential and long-term secular tailwinds. We have designed an advantage business model, we keep adding differentiating capabilities to this business model, including the digital capabilities that John and Cheri and others have talked about today. You know, this year, a very challenging year with the separation going on, would have been a very convenient year to pause those types of activities and investment. This year, we made a $25 million investment in long-term growth capabilities that we expect to continue to deploy. The separation of the Cabinets business enables us, in a more focused manner, to get leverage from our capability deployment and our capital allocation. We believe the separation sets us up to accentuate this growth track record that we have. More importantly, though, let's talk about where we go from here. You know, 2022, we experienced solid share in margin performance. We expect to deliver margin expansion in 2022. You know, these are the 2022 outlook for Fortune Brands Innovations. These 2022 numbers are completely consistent with the guidance we gave on the Q3 call. Nothing new there, nothing intended to be new there. For 2023, we are preparing our teams and our cost structures for 2023. Our focus will be on margin and cash generation, though we are gonna be committed to keeping our business positioned for growth over the long term and margin expansion. We are going to, even during what we expect will be a 23 that presents some challenges, make sure that we're positioned to support our key priorities and keep our brands healthy. We'll provide more specific guidance for 23 on the Q4 earnings call. You should know whatever the market conditions are then, we'll still be positioned to outperform the market. Right now, if we looked at 23 and said, "If the market declines are in the range of mid-single digits or better, we are targeting incremental margins in the 20%-30% range." More importantly is where we go from here, and where do our strategic plans in this refined portfolio take us from here? Our longer term value creation objectives through the cycle are to grow our top line at a CAGR of 6%-9%, relative to a market CAGR of 4%-6%. Think of that as US R&R in the 3%-5% range, US new construction in the 6%-8% range. That's how we get to that market. We expect to drive growth in our water and outdoors business, 7%-9% CAGR, and our security business at 3%-6% CAGR. On a consolidated basis, we expect to drive towards an operating margin of 20%-22% from a base of 17% today. That's a 300-500 basis point improvement. We get there with the water business at 25%+ margins. With the other two businesses, outdoors and security, in the 18%-20% operating margin range. We expect that same 300-500 basis points of margin improvement to drive EBITDA to the range of 23%-25%. Our operational excellence and value creation track record underpins these targets, and we will drive to these objectives. If I break down and illustrate for a moment, where this margin improvement comes from, you know, from a basis of 17% operating margin today, where we'll end this year, we expect to drive 300 to 500 basis points of margin improvement from four levers. From continuous operating improvement, from footprint improvement, meaning where are our factories and distribution centers based, and how do we leverage them. Through continuous improvement to SG&A productivity and through volume leverage. Importantly, volume leverage is only about 25% of this equation. This is not a margin improvement story that is hinged to very, very bullish volume assumptions. This is a lot of self-help and continuous improvement, our track record is that we achieve this level of margin improvement. Also part of this is a set of SG&A improvement. Over the next three to four years, Fortune Brands Innovations is gonna be targeting gross SG&A improvements of about $50 million-$100 million. We'll invest a chunk of that back for growth, so probably producing a net SG&A productivity improvement of $50 million-$75 million. That won't all be in our corporate line item. A number of people today have kind of come up to me and wanna know about the corporate line item. Today, those of you who are familiar with Fortune Brands Home and Security, we produce a corporate line item in our reporting. This year, it'll be around $130 million. You know, I would say going forward, for just next year, it's probably in the $110 million ±$10 million. You know, next year, we'll try to drive in the corporate line item somewhere in that $10 million-$15 million improvement range. That's not the only place where we have SG&A. We have SG&A across the business. As we give guidance for 2023, and as we talk to you beyond 2023, we'll point out where you're seeing that SG&A improvement. SG&A improvement is important to invest in growth, but also such that this separation doesn't just result in dyssynergies of SG&A. In terms of capital allocation, consistent with our track record, we are gonna be very thoughtful and active allocators of capital. Our go-forward capital allocation priorities will be very consistent with those of our past. Our top priority, because it's such a high return opportunity for us, is to invest in our own organic growth in terms of innovation and capacity and brand. We will carry out targeted M&A, in particular in areas where we have powerful distribution and ops and supply chain synergies. Finally, we'll return capital to shareholders in the form of dividends and opportunistic share buyback. In terms of dividends, today we're not announcing an official dividend for FBIN. Our board will meet on that next week. You can expect Fortune Brands Innovations to have a dividend and to have a payout and cadence of dividend that is similar to that of FBHS, adjusted for the EBITDA that goes to MasterBrand as they separate. We expect to have about $4 billion-$6 billion of capital to deploy. We remain committed to maintaining an investment-grade balance sheet. Given the higher margin and lower volatility of the Fortune Brands Innovations portfolio, we expect to be able to do that with a higher net debt to EBITDA leverage than we've traditionally had. For those who've talked to us about this in the past, we've tended to keep our net debt to EBITDA around 2.5 times at FBHS. We think we probably could push that towards 2.7, 2.8 and keep the same level of investment-grade balance sheet ratings. Most importantly, this capital deployment will provide that catalyst of accretive acquisitions that you saw generated 300 to 500 basis points of growth on top of our organic growth. In terms of our recent M&A activity, just to give you an update on that and build on some of the things that both Nick and John touched on. We have agreed a contract to acquire some very exciting complementary growth assets, and we've done it at a very attractive multiple, net of tax benefits below 8x, roughly $90 million of EBITDA. These assets have strong synergy potential with our House of Rohl, our doors, and our security businesses. By roughly 2025, 2026, we expect those synergies to be producing, like, $7 million-$15 million a year of incremental EBITDA on top of that $90 million-dollar base, and we expect to grow those synergies from there. In 2023, we expect the acquisition, assuming it closes, to be roughly EPS neutral, and that's with $0.16-$0.17 of purchase accounting amortization per share. Of course, the deal is contingent on a legal proceeding surrounding the assets acquisition of Spectrum's HHI assets. The best we can tell is that that will resolve itself around the Q2 of 2023, and that's about the time that we would expect to close shortly thereafter. A separation update. You know, we are very much ahead of schedule, as Nick said, that's what has us all here today. Two weeks ago, our board officially approved, which is the final internal legal step to consummating the separation. Our Form 10 went effective last week. The separation itself happens with the distribution on the 14th of December, and regular way trading will start on the 15th of December. The MasterBrand leadership team and board are in place. It's an exceptional team. Many of you are probably staying this afternoon to hear from the leadership team this afternoon. We believe very, very strongly that MasterBrand is well-positioned to be a very successful public company. As it separates from FBHS, it'll go out with a balance sheet where the net debt to EBITDA is about 2.2 times. Finally, to conclude, I and the rest of the Fortune Brands Innovations leadership team are very confident in the future and in our ability to take the capabilities we have built and the refined portfolio of assets that we have to continue our exceptional and proven track record of value creation. We are rapidly executing our winning formula. The new org structure and our Fortune Brands Advantage capabilities are critical to us efficiently pursuing a path of continued value creation. We have a really strong team, a team that has demonstrated its ability to perform through cycles. While 2023 may present some challenges, we have every confidence that we're gonna keep our brands healthy and keep our priorities in place and launch forward from there to pursue the growth objectives we reviewed with you today. We're a very passionate team. We love our brands and our people. We really thank everybody here for their interest in and support of Fortune Brands Innovations in the past and going forward. We really look forward to your questions today and to continuing our work together. With that, I'll pass it back to Dave, and then we'll get ready for your questions. I think we should have some people coming to add some chairs. Why don't we get them in, then we can have the team come up. There we go. We have a number of questions submitted through the Q&A platform, so thank you for that. While we're getting the stage set, if there are additional questions, please go ahead and have them submitted, and we'll cover them with the group. We have about 30 minutes or so for Q&A before we break for lunch. This is where Dave and I ham and egg it. That's right. I'm not a musician, Pat. I don't know about you, so we can't go there. Ron can come back up. I thought that you two could be spotted for us. You guys wanna start to come up? Yeah. There you go. No. You wanna round it out a little bit? I don't know if I'm sitting on this thing. Yeah, press the thing. Thank you. Can you hear okay? Yeah. Good. Thank you. Thank you. I'll be well-hydrated. Okay. Is this where you put us under the spotlight? This is it. Got a good list of questions. Why don't we start, Nick, with you. A lot of questions in around the new structure. Can you share with us what you're most excited about and how you see this structure really driving the accelerated growth and margin potential that Pat shared and the organic targets? Sure. What I'm most excited about, growth, growth, and growth. As Pat pointed out in some of the numbers we went through, we've had a phenomenal track record of growing above the market. I say this humility because it far exceeds my tenure. There are not a whole lot of companies that can consistently beat the market year in and year out on a multi-decade basis, which, you know, this group has done even prior to being an independent public company. Very proud of that. However, still see plenty of opportunities to accelerate the things that are working inside of the business. I think as Cheri well knows, right, a lot of those get stuck in one place and perform in one place, and we sort of internally negotiated to apply those elsewhere. I think this is a major unlock for growth, both in the ability to take those things and play them very quickly across the portfolio, but also to take some of the productivity that Cheri and Ron and Pat just referred to and redeploy that into our innovation engine, into our talent engine, into our brand engine. At the end of the day, when I think about this structure, it's all about growth, it's about maintaining that customer intimacy, that consumer intimacy, then leveraging our scale, and finally unlocking the things that we do really well across the portfolio at pace. Good. Ron, a lot of questions on supply chain, so a lot of interest coming in. You know, as you think about Fortune Brands Innovations post-cabinet, can you help the team or the group understand a bit more of the opportunities that could be available across the entire network that maybe weren't unlocked before? Yeah, I think, you know, what I would say is a couple things, right? I look at sourcing, even though, yes, these are different products and in some cases we don't have that much overlap, sourcing is a process. Sourcing is a process about giving your team the right data. It's about doing the right analytics, it's about spreading that fast so that they can, you know, do well within their commodities that they're buying. The second thing is there is some overlap that we're going to see. We will have one metals commodity leader, and whether they're buying for doors, whether they're buying for security or for water, you know, they are now gonna have a larger portfolio of suppliers that they're gonna know. They're gonna figure out strategically where to go, and it'll help us accelerate other places where we may wanna nearshore and maybe security is using this supplier that we didn't know about on the Water Innovations side, and as opposed to having to go out and seek and find that supplier, there it is. I think if you look at sourcing as a process and some of the things that we can spread fast, we're gonna accelerate deflation as well as the supplier awareness and be able to leverage higher volumes in some cases over that supply base. I think as a follow-on to that, Pat, maybe you can help the audience understand how we think about productivity savings targets and continuous improvement targets as we kinda model our financial growth. I mean, we do our annual planning, our traditional algorithm, these will remain part of the go-forward algorithm, is that, in terms of materials inflation, and things like that, freight, we try to both do continuous cost improvement, predominantly in the operations and distribution world and in pricing, try to cover those. We try to drive continuous improvement in operations and in the SG&A framework to offset the labor inflation that we naturally have in our business. In addition to that, with this new aligned structure where we're effectively removing the holding company type approach to organizing our business and trying to drive much more productivity, and capability deployment through the organization more quickly. On top of that, we're going to be driving $50 million-$100 million of SG&A over the next 3-4 years. We'll probably invest some of that back in digital stuff, but that is on top of what would be our normal traditional continuous improvement approach. A handful of questions around the recently announced acquisition. Maybe, Nick, starting with you. You know, security historically has been less of a focus, right? We talk a lot about water and outdoors. You know, this acquisition brings a lot of opportunity for security. Can you talk a bit about, you know, how this acquisition is gonna fit in the portfolio, and what are the key kinda growth and cost synergies that we'll be pursuing? Yeah. I'll take on a couple vectors. Firstly, you know, you look at the security business in and of itself. I think if we hadn't taken it to the place that, you know, Cheri was showing in part of her presentation, you're right. It's padlocks, and it's off and so on. Where does this, you know, where is the connectivity there? What we've done is we've looked at it and we said, "Well, we've got a world-class brand, I mean, a world-class brand and a market position. We have an opportunity to drive brand, to drive innovation, to drive that margin so that we can reinvest in that business." As we look at the places to do that, they really coalesce around keeping that core really healthy, but investing in the connected products. Where we found the connected product has had the most play is in the commercial space, interestingly, right? You know, products like, you know, lockout/tagout products like the MyBoard platform you just showed, where, you know, it's not just the ability to sell 9 or 10,000 locks, it's the back-end system that allows a customer to manage all of that together, right? You start to make investments in these back-end systems, in the technology that can power that. Well, look at this acquisition. You know, Yale and August, perfect fit, right? We've agreed to acquire the US and Canadian residential business of those, but it comes with a really, really powerful technology core that we can start to leverage. You know, not just the IP, but the know-how, the software engineering, the firmware engineering, the talent, the scale, even the ability to simply just, you know, spin boards and source boards and simplify and take cost out and get leverage across all of our connected products, not just in security, but in the, you know, in the water ecosystem as well. So that, you know, it brings a lot of advantages that way. You know, the other, the other spot is it does then connect security more tightly to home, right? We do have, as you heard, the market's leading fiberglass entry door, right? The leading brand in that space. I would guess that, you know, not all doors are going to be dumb doors forever. I mean, you know, many of us don't even know where our keys are. We enter via garage, we enter via keypad. Today, these things are bolted on. Tomorrow, they're truly integrated and connected. We have an opportunity to build that system, which frankly is an opportunity we're gonna pursue regardless of this acquisition. To do it with the power of that platform and the power of the brands that come along with that and create that connected space, it can be hugely impactful. Great. I think to build on that, Pat, can you just educate people on the organic targets that we presented? Do they include or exclude this recent deal? And then what's the timeframe that we think about with those targets? Yeah. The targets exclude M&A, so they would exclude this recent deal. They're organic targets. They're targets that run through the cycle, so through a housing cycle, so typically over like a 3- 5-year period or thereabout. That's how you should think of them. Okay. Thank you. A couple channel specifics, Cheri, for you. You know, a lot of excitement around the Moen Smart Water Network. Can you help us understand the work the team is doing to drive consumer adoption and kind of further penetrate into consumers with our products? Yeah. First, I'll just set the stage by saying our adoption has been limited only by shipability. We really had to slow down the adoption last year. Now that we have the availability, we were doing things behind the scenes to quickly be able to go. On the builder side of the business, we were putting spacers in, so they can go back in and quickly put that product in. On the retail side, it goes back to that water alarm. People looked at this, they didn't know what leak detection meant, didn't know why they wanted it. When you really put it under that theft and fire and then water alarm, it comes to life for people, and it's a little bit more approachable. The other thing is the partnerships. You go into, you know, one of our partners today, you'll see that this is, you know, compatible with Google, it's compatible with Apple, it's Alarm.com. I mean, on and on, the partnerships, the Nest. This is with those name brands, and people are gonna learn more about kinda water security, which I think is really important. The other thing is we learned that that main brain is really important, but some people are kinda scared to take that first step, so we have those water detection devices that we talked about and the sump pump. Some less expensive ways to enter into that Smart Water Network, and then we're gonna constantly try to sell you on the whole network as it comes to life. Excited about the opportunity that we have there, and what's in front of us. Cheri, talk a little bit about the plumber outreach that we're doing. Dave, great point that I missed there. I mean, our plumbers are so important to us, and as I talked about having those spacers, that a DIY customer, a do-it-yourself customer could do. If you wanted to go in, if you had a leak of some sort, or you have a plumber there changing out a faucet, we want these plumbers actually in the home selling it. We also wanna make sure if they buy it at one of our retailers or offline, that there's a plumber that can come in and install it. We are doing outreach, making sure plumbers are behind this product. Probably the other piece that comes into it is insurance agencies have been great partners for us here. If any of you have built or bought a new home, you might actually need to have this before they'll give you an insurance policy. Or in different states, they're actually offering you a rebate on your insurance because you have this. Because it's just proven to save that money in water leaks. Not only is it the pro, it's different avenues for us advertising the branding. Cheri, you know, there's a recurring revenue component to Flo today, right? You can pay a few dollars a month to get upgraded data and insights into your home. Where else in the portfolio do you see the opportunity for increased service or recurring revenue going forward? Extremely excited about what we're doing in water, and you're already seeing it in security. When we talked about my door, you know, that opportunity for them to, you know, use data, behind the scenes and get a reoccurring revenue is really important. Nick talked about Lockout/Tagout. I mean, think about those clipboards where somebody was going through and checking each of the locks. It's a very manual process that we're bringing automation to and being able to get those data and analytics and the reoccurring revenue model that comes with that. I think Nick just hinted to it, you know, you think about a door, and rather than all this being bolt on, how is this built, that you're actually able to go in, you know, to your house, have it look aesthetically pleasing, but then able to give out codes to different areas and have it there too? I see it across water, security, and outdoors. I'll just add, you know, I think you talk about investing in data science, and we've invested pretty heavily in data science, and it's one of those things you sort of gotta put a toe in the water and make that investment and start to get the information back to even start to learn how you could monetize it. It's been astounding what some of the use cases are for how people are using our products and the data that comes back. I mean, we learned with Flo by Moen that people were installing it as a non-intrusive way of checking on elderly parents. Did they get up in the morning? Did they turn the shower on? Is the water flowing? I know they're good. How can you help people better understand what's going on in the home, by using that data? You know, similarly with Lockout/Tagout, I mean, it's a safety system that allows people to make sure energy sources are turned off before they access an energy source in the machine. We're the leaders in that space. As you automate and digitize that, you're gonna find out information about people's productivity, their work styles, Standard work, what's working, what's not working. Again, you know, it's early days, I think, as we kinda tip our toes into this data science space and analytics and what we can do with it, but over time, be very powerful stuff. Great. Let's shift gears a bit and move to Fiberon. We showed a slide about the channel transition in Fiberon from wholesale to retail. The numbers behind the slide imply, you know, double-digit wholesale growth and low single digit retail growth over time. Can you, Nick, we'll start with you, 1, provide a bit of context of what was going on in the business during that period, and then how do we feel about that channel mix and where are we going forward with Fiberon? Sure. Well, I'll start with the big picture. Steve, you might be looking for the fly in the ointment. The Fiberon growth obviously has been spectacular, right? We have been very choiceful in how we've built that growth. As you will recollect, when we acquired Fiberon, it was really a entry-level deck board, mostly with a single customer. We had really perfected that entry-level deck board, which is very, very hard to do, I think, as people familiar with the category have seen, as others tried to enter that space. The engineering behind that is very challenging. That was a space that we owned. Where we saw the opportunity was to move upmarket and into wholesale. Those things, by the way, go hand in hand, because as you move upmarket, there are more SKUs, more variability. It tends to be stocked at wholesale. You can special order it through retailers or through wholesalers. That's where we saw the opportunity to grow the brand, to grow the margins, and to get that top line going. That's where we really focused on limited resources. Strategy is all about choices, right? So we chose to grow it in those channels. Not just it's the channel exposure, it's the exposure to the higher price points and the richer mix. So, you know, that's what you see in the numbers, where that kinda entry level was less of the mix as we really focused on that. Going forward, there's still more work to do in getting that mix absolutely nailed, in bringing the next generation of deck board to life. If you think about deck board today, I'd say we're on, say, Gen 2.0 when, you know, people figured out how to cap the composite and make it look beautiful. We've got some exciting ideas about 3.0. Having now secured a much broader channel exposure, right? Which had to be the priority, we would then be able to play that innovation across all channels. We feel really good about the spot we're in. Yeah. I would just quickly add there, Nick, it goes back to that white space exploration. We know what the trends are, and we know what the unmet needs are. When we look at this, there's an opportunity to play at a lower and a higher level and really kinda own that deck category with some features and benefits that consumers are willing to pay for, and also making it more attainable and usable in a DIY format. Excited that we continue to look at that white space and those features and benefits and category management to really bring life behind where we're going with this category. Great. John, a couple digital questions coming in for you. One, can you talk a little bit about just the relative size of the digital investment that we're making today? Then with respect to digital products, how are we bringing the consumer along the journey and making it an easier sell on the R&R side for digital? In terms of the investments that we made on digital, we spent about $25 million in incremental investment this year on digital, and we're gonna scale that appropriately as we see. You know, I don't want you to hear that number and think we spent $25 million on an ERP implementation. That's not digital transformation for us. In fact, we are spending some of those dollars to defragment our tech stacks to get more out of our technologies. A lot of this investment is actually already having positive ROI, as we talked about with the tools and indirect sourcing. There's a lot going on with digital. There's a lot of setting up of new teams and setting up of data teams. We're trying to become a new, not just a digital products company, but a digitally oriented company, where we can really do things like Ron was saying, where it's kinda hands off the wheel. It's let the data run the show. We're retooling and we're investing there. In terms of, you know, how do we make it more accessible to consumers, you know, I think of course we are marketing ourselves better for our products. We're making sure that, you know, they are available at where all the DIY consumers are, but we're also making sure that they're having a great experience with it. You know, that's the best thing that you're going to do for a digital product is to have great ratings and great experiences with those digital products. That was actually a journey for us from a, from a company that made products to a company that makes products that has continued services throughout the life cycle of those products. So we have a dedicated team both on, in the, in the factory that's just working on the connected products, but also on the software and making sure that they are addressing, any issues with, the products and making sure that they are getting high app ratings. High app ratings really equate to just delighted customers. That's what they're 100% focused on, and that's the thing that's really gonna get it really, get the ball moving in our connected products. Great. Thank you. Pat, a question for you on margin opportunity. You know, the guide for our financial targets implies a greater opportunity with Outdoors & Security than at Water Innovations. You know, first part of the question: How do we think about the Water Innovations margins, and is there more improvement to come there? Second part, what are the real drivers behind the Outdoors & Security margin? Yeah, I, you know, first of all, I'll start with our track record, right? You know, this has been a pretty tumultuous last 4 years of a total FBHS environment, we've delivered over, you know, by the time we get to the end of this year, over 50 points a year margin improvement on average over those 4 years as FBHS. It's very much a commitment, and it's a commitment to both keep our brands and our capabilities in a winning position, but to reward shareholders. I would say, as you try to put each of those margins into perspective, it's all about how do we take the assets we have and the competitive dynamics in which those assets compete and give investors the best mix of top line and bottom line growth. You know, the fact that water is already at a relatively high level, probably finish this year around 24-ish% and go to 25, it's not because it couldn't go higher than 25, and it may very well go higher than 25. We're always gonna be striking the balance of keeping the brands healthy and keeping the innovation at the leading edge. It's been long a industry leader in terms of both growth and margin potential. We feel like that's a good algorithm inside of the competitive dynamics of that industry to keep the brand on a long-term growth trajectory and give investors great share potential. You are seeing in the numbers we shared and in the question, more upside in both Outdoors & Security. In the case of Outdoors, it's tapping the full integration and leverage potential that we have in businesses like Fiberon and Larson that are still in the early days of their journey in fully integrating with other Fortune Brands businesses and getting the productivity of their physical assets and their human assets to the level we expect at Fortune Brands. There is a lot of great opportunity in Larson and Fiberon to get up that curve. As we make some potential footprint and product changes in Security, and we bring in, hopefully the assets that we're, you know, contractually working to acquire in the recent acquisition activity, get a like set of footprint and scale advantages to the Security business. You are seeing in the numbers and in our intent a greater upside, but that's not because plumbing is limited. That's because plumbing is already at a very high margin performance level with more upside to be tapped, but always through the lens of keeping the brand and its innovation relevant relative to the competitive dynamics. Great. I think, Pat, staying with you on margins, but shifting to 2023, remind people, does the 20%-30% decremental margin that we shared, is that purely on volumes, or are there initiatives to drive to that level in 2023? I mean, if all we did was just let potentially volume flow out, it would, it would probably produce a result that's going to be less favorable than that 20%-30%. You know, we will be pursuing, you know, probably on the, on the corporate side of things, just consistent with our objective of pursuing those long-term SG&A objectives over a 3-5-year period. We'll be in the $10 million-$20 million of just pure corporate savings. Then we're gonna be very choiceful using this new organizational rollout to be very focused on what our priorities are for 2023, both near term and long term. Then, you know, leaning out the organization to drive in a quicker fashion the capability leverage across the organization. That we'll be taking very significant actions. We've already been doing that. We haven't been sitting on our hands. We will have a good portion of the game plan enacted before the clock even turns to 23. Great. I'm gonna transition the line of questioning to China. We've had a decent amount of questions come in on China. Nick, let me start with you, and then Cheri, maybe add some color. Nick, just give everyone just an overview of our China business, but then given some of the volatility in the China market currently, you know, where do we see the growth opportunities to outperform that market over time? Sure. Well, I'd be happy to talk about it. We're blessed for our business in China. I've run other businesses in China, and it's not easy. This business is a particularly special one. For one thing, as Cheri mentioned, we've got a homegrown team in China that really started organically, almost 30 years ago, right? As we were producing product in China, just started to see if they could sell it. Over that time, it's built a fabulous business. Two leaders in all that time. Two leaders, right? Homegrown team. It's really a China for China business today. So we built a wonderful manufacturing facility in China. I would say pre-2017, we envisaged a world in which that would supply other markets, but combination of tariffs and the growth that we experienced in China, that became the manufacturing facility for China. Built our own innovation engine in China, which is actually one of the benefits of having it in the portfolio, is it's one of our strongest innovation engines, and it feeds the rest of the world. Because of, I'd say almost this closed loop system, they're extremely agile, right? It is a high-growth market. It's also been a volatile market, not just now. That team is able to manage their P&L to continue to drive growth. The rest have been there and managed the profitability and actually grow the profitability very, very well over time. I think we're at an interesting time for China because it has been fueled by a lot of big, somewhat speculative new construction. We've shied away from that business as much as we could. We really focused on tier 1 and tier 2 cities, not the tier 3 and 4 cities. I think what is going to happen now is that market matures and changes, it's gonna become a much stronger R&R market, which really is not a bad thing long term. When you look at our business, you know, Mark-Hans Richer has talked about the brand building we're doing. You know, number 2 international brand now. Well, you know, our share, I'd say just sub 10%. It's 25% in Shanghai, right? By focusing on these cities that are primed for renewal, you know, we wanna position that business to really be able to capture that R&R as it comes through. I think we'll get through this next period, which the team's digested incredibly well, and really be positioned to continue to benefit from the growth in the world's two best housing markets, which are the US and China. You're not gonna change the fact that there is still a huge population that is coming into cities and are going to need housing and going to need to renew that housing that already exists. The final point I'll make before I hand it over, is that, you know, the other thing that the team's done exceptionally well is look for and spot areas where we have almost no share today and grow there. For example, we launched the sanitary ware line in China because that is so central to the purchase decision of the consumer. It's been a knockout success. We've probably gone up from no share to a 2% share. A lot of room just to go organically as that portfolio becomes more and more complete over time, so. Yeah. You, you nailed it. I'll echo just a couple things. One, they are very aggressive in their category expansion and really owning the room and leaning in there. They can do that, I think Ron and Nick talked on it earlier, because of the deep supplier relationships. We are very blessed, obviously, as Nick said, to have, you know, 30 years of leadership there that have those relationships, and we talked about being able to leverage those relationships to even get out of China. It really is in large part because of that China team. The respect over there is just absolutely amazing. So excited about what that has done. I would also say, as Nick said, we see it emerging to an R&R, we think we're on the front side of that, really unlocking a way of shopping and doing repair that they haven't done before. The housing age, the age of the housing stock there is primed for that. We are leaning in there. I would just close by saying that this gives us reason to believe in the new Fortune Brands structure. China has been run that way out of the Water Innovations for a while, end-to-end control, really lean in behind the scenes with those Fortune Brands advantages. We've leveraged these things behind the scenes. Right. we've let them own that market. That's why we know as we bring these outdoor security and water together, under Fortune Brands, we have a winning combination here. We've seen it. We've done it. Great. We are up against a lunch break. I know there are additional questions in the queue that we weren't able to answer live on stage, but the team will be around and happy to take Q&A throughout the day when available. wanna thank everyone for being on stage for the Q&A session. Nick, turn it to you for any closing remarks before we break. Yeah. Well, I would just perhaps say thank you to those in the room and those watching online for your interest. It is an immense privilege to be up here showcasing this incredible company. We spent, I would say, the last few years, 2- 3 years, really preparing for this moment. You know, doing hard work to get the foundation set to really disrupt ourselves and really start to do something different. Hopefully what you've seen today is how we're increasingly exposing our business to those growth tailwinds that are there inside of what is already a pretty growthy market. Growth tailwinds in excess of that as we get more and more exposure to that, you know, our underlying growth and markets will grow. An advantage business model that I think you can tell we're all very excited about because we can see that opportunity, and we have yet to tap into it. Finally, and I'd say with the most humility, just an incredible team. You know, the people you're seeing up on the stage, our Chief Legal Officer, Hiranda Donoghue, is over there, our CHRO, who couldn't be here today, Cheri Grissom, and the 12,000 people that stand alongside us and the passion that they bring every day to making this a reality is second to none. You can have these brands, you can have these market positions, and you can have a great business model, but if you don't have people with that kind of passion bringing that extra 10% every day, it doesn't happen. We have that in spades, and that's a, it's a privilege to be part of leading it. I hope that some of that came across today. I just wanted to thank you for your time and attention and your interest in our great company. While Pat alluded to, I think we might have a bumpy 2023 ahead, this team is undaunted because of all the things that we've done to prepare ourselves to outperform, and we will get through that as we have other cycles. On the other side, I think we're at risk of doing something pretty incredible. Thank you. Great. Thanks, everybody. We'll take a lunch break and then reconvene shortly before 12:30 P.M. for the MasterBrand presentation this afterno Ladies and gentlemen, please make your way back to the seats. The afternoon program will begin in about five minutes. Thank you. Ladies and gentlemen, please take your seats. The program will begin very shortly. As a reminder, in courtesy to our presenters, please silence all wireless devices during the program. Thank you. All right. Thanks. Welcome back, everybody. Thank you for coming back here after lunch. We think we got a great afternoon plan. I just wanna introduce myself. My name is Farand Pawlak. I'm the Vice President Investor Relations here at MasterBrand. Like the morning session, we are gonna be making forward-looking statements. Those forward-looking statements in the presentation are based on current market outlook and expectations and the results may vary greatly from those expectations. If you wanna know more about the risks and uncertainties, you can look that up on our Form 10 and our other SEC filings. We undertake no obligation to go ahead and update those as except required by law. With that said, I wanna go ahead and welcome Nick and Dave Banyard to the stage and get the afternoon going. Thanks a lot. Good afternoon. For those of you who stayed through the morning session, thank you for being here. I'm just gonna make a very brief introductory comment and then hand it over to Dave and his team to present. If you were here this morning, I think you saw the pride and enthusiasm of the Fortune Brands Innovations team, and you're going to see the same pride and enthusiasm with the MasterBrand team. I think in doing a separation, it is fair to judge a CEO, not just by the performance of the business that that person remains with, but the performance of the business that they separate and stand up for success. I know, having spent the last few years working with Dave and his team, that this business has been prepared in terms of its platform, its capability, and its talent to stand up as its own independent public company. You do these things when businesses are ready to perform and be strong and outperform. This is a great time, Dave, for your business and for your team. I'm very fortunate and lucky to be here, helping you kick it off. With that, I'm gonna hand it over to Dave, you're gonna learn a lot about this wonderful company, the machine that they're building, and plenty more room to go. Great. Thanks, Nick. Appreciate it. Feels like an official handshake there that we're done. I'm gonna start us off. Everybody's finishing lunch here. I'm gonna start us off with a short video to get things rolling. Go ahead and roll the video, please. For nearly 70 years, we've been shaping the places where people come together, enriching lives and creating meaningful memories for our customers. That, combined with our stylish products, leading dealer networks and dedicated employees, has helped make us the number 1 North American residential cabinet business. We offer an unmatched product and brand portfolio featuring a diversified mix of cabinets across price points, product types, and standards. Aristokraft stock cabinets, the original member of our cabinet brands, can be found in new construction homes across the country. Diamond, our semi-custom cabinetry brand, offers stylish, versatile solutions that blend seamlessly into the lives of our consumers. Omega, our premium custom cabinetry brand, appeals to high-end designers and consumers. These products are delivered through our industry-leading distribution network with over 4,500 dealers. This is all made possible by our focus on operational excellence and is kept alive by the more than 14,000 associates across 20-plus manufacturing facilities and offices. MasterBrand's unique culture of continuous improvement is based on trusting the tools, empowering the team, and moving forward. As a valued partner to our customers, we deliver a world-class experience and create cabinets that consumers gather around every single day in their homes, with families and friends. This differentiation positions us for future growth as we leave our mark on the industry. MasterBrand, building great experiences together. Well, welcome. Good afternoon. I'm Dave Banyard, the CEO of MasterBrand, and we're delighted to welcome you here today to introduce you to MasterBrand Cabinets. When Nick called me about this opportunity, he described the company this way. He said it's a market leader, it's in a great industry, and it's got a wealth of opportunity. He said it also needed to transform the way it operated. I've spent my entire career transforming businesses for companies like Danaher, Roper, and Myers. This fit right in my wheelhouse, and I was really excited about it, so I jumped on the opportunity. We're excited to be here today to talk you through the progress we've made on that transformation, as well as tell you about the wealth of opportunities we have to continue to drive market-leading value. Let's jump right in. You know, a lot of people think that a market leader is just the largest, and indeed, we are the largest residential cabinet manufacturer in North America. Being a market leader is a lot more than that, I learned that at Roper when we had companies that weren't the largest but were still leaders. Being a leader in your market requires a couple of things. First, you have to have a great channel, and we do. You have to have great product to cover that channel, and we have that as well. The third thing you need to have, though, is you have to have a great culture and a business system, a way to deliver that product through that channel to your end customer. That's what we've been working on over the past three years, and we're excited to tell you about that today. Our business system is built on great tools, well-established tools, and it is part of our culture. That's a really important part of that. We're gonna talk a lot today about how you execute. When it comes to execution, you can see on the right side of the page here, this is how we've executed over the last few years. I'll go into more detail on this later. What you don't see behind that is the tremendous disruption that's occurred in most markets, but particularly in ours. Yet we've consistently delivered improved results every year. MasterBrand has been around for a while. We built this company through the past almost 70 years through a combination of organic and inorganic growth. When I got here, I realized that we really hadn't integrated this company together, so there was an opportunity to do that. The reason to integrate was to be able to use the scale that we had, both in channel product as well as our operations, to really drive market-leading value. When I talk about integration, what I've got on the page here are a number of, there are plenty more than this to show you how complicated the different capabilities you need to have to be effective in the cabinet business. You know, a lot of people, when I was the same way when I first started here. You talk about a cabinet, it's a wooden box, right? How hard could that be? Well, you have a plethora of choices as a consumer to make about how you want that product to look, how you want it to be finished, what species you wanna have. Beyond that, there's a multitude of ways that you can manufacture and construct that box and so on and so forth. When I talk about integrating, it's about combining capabilities in a way that helps us take advantage of and use our scale most efficiently and most effectively. You wanna talk about scale. This is our extended supply chain here on the page. Cabinets is a very local business in that you have to be in the region that you're serving with your manufacturing operations. The reason for that is you're shipping a lot of air. It's not economical to ship cabinets over long distances. You have to cover a lot of territory with your operations. If you don't do this in effective and efficient way, it's a tremendous amount of cost that you're adding to the business. We've built an extended supply chain, including our own internal operations, that takes advantage of that scale in the most efficient way possible, we're going to spend a lot of time today talking about how we do that. Today, we are the only cabinet company in North America that can deliver the full range of products at this kind of scale. Being a leader also means you have to be a good steward of your resources. As we looked at this topic, we wanted to make sure we were focused, that what we were focused on was relevant to our business and that it would drive value. Let's dig in a little bit here. On environmental, obviously, our product, excuse me, is made out of wood. We believe that wood, if sourced properly, is one of the best renewable resources on the planet. It regrows itself. You have to focus on that, and you have to do it the right way. That's why we're committed to making sure our supply base uses sustainable practices to source their raw material. We go beyond that. We also know that over time, that hasn't always been the case. That's why we support organizations and partner with organizations like the National Forest Foundation. For those of you that don't know what that is, it's an organization that's committed to planting over 50 million trees by 2025, and they're well past halfway on that journey. They're planting 8 million trees a year to refurbish the forests that have been depleted. If you combine that with the efforts we have with our supply chain, we're building a long-term renewable resource that not only helps our business but has a profound and excellent impact on the planet. Now, being good stewards means we have to be good stewards for our people as well. The first thing that comes to mind when you think of that is safety. We are maniacal about safety. It's in everything we do. It's every day through every aspect of our business, we talk about safety. Because for us to be great at safety, it has to be part of your culture. You're gonna hear that kind of thing a lot from me today. We have an OSHA recordable rate that's around 1. Our industry average is about 3, and most manufacturing industries is higher than 3. While one is good compared to our competitors and our peers, we're not satisfied with that. For safety, there's only one goal, and that's zero. The way to get to zero is you talk about and you use tools every single day in everything you do focused on that. We have a program called Always Aware. It's a behavior-based safety program, and it goes beyond what you might think about when it comes to safety in terms of inspecting and auditing and all those sorts of things. This is we talk about safety, and we look for safety in everything we do. You're gonna hear a little bit later that we talk about Kaizen events that we do every week at MasterBrand. In our Kaizen events, it's required that as you change, you also pay attention to what may change from a safety perspective. We also go above and beyond with things like our ergonomic program. Every operation that we do within our organization gets evaluated for its ergonomics. Repetitive motion injuries, excuse me, are one of the most common things we see. We need to eliminate those. Our ergonomic program is designed to identify them so that we can eliminate them throughout our operations. That's how you get the kind of industry-leading results that we get in safety. Now, safety is not just about the safe workplace in terms of the traditional way you think about safety. We also look at safety in terms of we want people to feel safe when they come to work. We have a very diverse workforce, which we're excited about. We wanna make sure we have a workplace where everyone feels welcome to be who they are when they come to work. We feel that one of the best ways to promote that is have your leadership represent that diverse population. Our executive team is made up of 50% women. 25% of our executive team are women of color. As another example, our Texas and Mexico operation are 100% led by Latinas. We feel that's how you make people feel safe at work 'cause they recognize their leaders and they feel comfortable being who they are at work. That's the environment and culture that we want. Again, we go above and beyond. We train throughout our organization on allyship, and we have employee resource groups that help promote that allyship throughout the organization. Lastly, you have to be good stewards of your capital, and that comes down to governance. We've adopted a lot of the world-class governance practices from Fortune Brands as we chart our own course here. We've built a very diverse and world-class board of directors, 80% of which has significant public board experience for our board of directors, and we're excited to join with them as we move forward. The tough part about being a leader is once you're there, you gotta stay there. When you're number 2 or number 3, the goal is easy. You wanna be number 1. Well, we're number 1. As we took a step back and looked at our strategy, we kept that in mind and said, "Our goal is to stay number one." To stay number one, you've got to change, and you've got to adapt with the market around you. I know you heard this earlier from the Fortune Brands Innovations team, we've also seen that the consumer has changed, and that they want more of an experience from the products that they buy. We know today that we deliver, in the end state, a wonderful experience. Most of you probably spend a lot of time in your kitchen, and if you have one of our beautiful kitchens in your house, first of all, thank you. Second of all, you probably love the experience. Cabinets dominate a kitchen. The experience of our consumers using our product is great, but we also know that we have to adapt to how they buy our product, and that's part of our strategy is continuing to adapt. If you think about our vision on the page here, it's to continually innovate how we work, so we can continue to delight our customers. As I said earlier, a big part of being a leader is having a business system and a culture that drives that improvement and change and that transformation. We call ours The MasterBrand Way. As I also said, it's built on well-established tools, I'm gonna spend a bit of time later going through each one of them to explain not only what they are, if you don't know what they are, I think many of you will recognize them, but also how we use them 'cause they interlock in a lot of different ways. Now, I'm honored to partner with a world-class management team to do this. The team we've assembled is a combination of industry veterans and people from outside the industry that are coming together to help transform this business. You're gonna hear from a number of them today, but again, like I said, we have folks, leaders within our organization that have been around this industry for a long time, understand the nuances, and we've partnered them specifically with leaders that have transformed businesses in other industries, like myself, to find the best solutions that work for our industry. Now, strategy is great, but it's gotta yield results. We are already delivering market-leading results in our business, but we're aiming higher than that. Our strategy is gonna enable us to continue to deliver value and these kind of market-beating results into the future. We're gonna walk you through all that as we go through the strategy. I thought we'd take a step back for a few minutes as we move forward here and talk about what we've done over the past few years to set the table for what's coming next with our strategy. As I mentioned, as MasterBrand came together, we put together a world-class channel coverage. We cover all the important channels within this market. I'll start with retail and builder because they're the largest and most consolidated within our industry. We work with the market leaders in each of those categories, and we serve them in a wide variety of ways, and we serve them with excellence. I'll direct your attention to the dealer channel, which happens to be the largest part of the market, but it's also the most fragmented. It's the largest portion of our business, and it's the largest part of the market, very fragmented. To give you an indication of that fragmentation, no single customer within our dealer network is greater than 3% of our sales. In order to be effective in that part of the market, you have to have great relationships, and you have to pick the best ones. There are tons of large and small dealers throughout North America. You have to have the skill to be able to pick the right ones and interlock that network of distribution so that you're hitting the best parts of the market and covering all the consumers that might be wanting to buy cabinets, and that's what we've done. We have long-standing relationships with the best dealers in the market. Our top 20 customers we've had relationships with and great business with for over 20 years. Second thing I said was product. We have the most comprehensive product offering in the market. We're the only cabinet company at scale that offers everything from very high-end and customized premium all the way down to off-the-shelf stock. On the one hand, you say, "Well, great, you can sell product to everybody." This also gives us a lot of insight. It gives us insight to the trends that are happening in the market. When I say trends, it's a couple different things. One, where are people buying? What's the right price point? What's really hitting the mark in terms of how the consumer is behaving in terms of what they can afford? Very appropriate in the current environment, which we'll talk about a bit later. The other thing it allows us to get insight to, which is unique for us, is that we can see style trends early on. Most style changes occur in the very customized portion of the market, and then they migrate throughout the other product portfolio. We see that early because we're selling into it every day. That allows us to update our product categories at a greater speed than others. Lastly, by having this great product portfolio, we're able to deliver with efficiency and speed to wherever the consumer wants to meet us. If the consumer wants to buy at a dealer, we're there, and we're there with a product portfolio that's gonna fit their need. Same thing with a home center or for a new construction home when they're looking to buy new. The big breakthrough for us was in the operating side, and I highlighted that earlier when I talked about transforming the operations. I wanna talk you through a little bit about what the old model was first, so that you can understand the challenges with that. Way cabinet companies have been set up over time is you build a brand in one factory in one region, and if you get bigger, you might build another factory of that same brand somewhere else. That was about it. As we acquired and grew, we had a lot of pockets and islands in different regions throughout the country. On the one hand, those are very entrepreneurial. The people that are running those businesses really understand their local market and can be effective. To really use your scale, it provides some challenges. When the market's nice and steady, we haven't seen that in a while, so it's one of those things we all hope for and keep waiting for. When the market's nice and steady, having these little islands doesn't really bother anybody. It's easy to manage. When the market changes, either up, like we've seen over the past couple of years, or down, as we see in our forward look, you really have challenges when you have all these pockets, and I'll give you a couple of examples. Let's say you have Cabinet Company A in one location, and market demand for that product goes through the roof. Your only choice as a manufacturer is to add capacity, either add an addition to that plant or build another plant. That's capital that you have to put into the business. You can do it, again, you have to put the capital into the business. Flip that around. In a down market, when that particular brand starts coming down below a certain level, that factory becomes very inefficient. There's no real way around that. You've got stranded capital at that point, and your choice is either run it inefficiently, not make as much money or shut it down. If you shut it down in that kind of situation, you're effectively eliminating that product line and that brand. Not an easy choice to make. How are we addressing this? I'm gonna talk to you a little bit later about our strategy and the tools that we're using with Align to Grow and Lead through Lean and Tech Enabled. What we've done over the past few years is network our plants together. Effectively, what that allows us to do is shift volume across our platform to any plant that has the right level of capacity for us to move that volume. We have several platforms that I'm gonna go into detail a little bit more later. Effectively, we're able to flex up and down this organization in great times, and you see that in the results that we've delivered, market-leading growth results over the last few years and driving that to the bottom line, not just growing on the top line. Also it builds a model that allows us to handle a down cycle as well, because we can take capacity off in a controlled fashion where we're still able to offer that same product across the spectrum as needed. It also allows us to move with the consumer. If the consumers are starting to trade down to lower price points, we know that we have enough capacity to handle those shifts throughout our network. That's unique. That wasn't the case a couple of years ago. These are the results of the last couple of years. We know it's been an up market. In an upmarket, good things happen. What's underlying this that you don't see on the page here is all the chaos that's been going on in the world around us that affects these kinds of results. Inflation. You know, I'll share with you that the inflation we've experienced the last couple of years dwarfed the total operating profit we made a few years ago. I mean, that's the magnitude of it. You don't see labor constraints or challenges in here, but we all know that everybody experienced that, and we weren't immune to it. Every manufacturer experienced significant labor challenges over the last few years. You don't see that in these numbers. Supply chain challenges, even worse than the other 2 things I just said. Snarls, no ability to get product delivered, challenges with capacity of suppliers because of labor and their problems getting material. All those things have occurred over the last 2 or 3 years, and yet we consistently delivered market-leading value through that time period. That's because of the operating model that we have and the work that we're doing on our strategy and our transformation. Let me shift gears a little bit here. I know it's a big front of mind topic about what's going on in the industry. I want to talk a little bit about that. Some of these things are things you've heard before, but let me take a moment here to just talk about. We do have some near-term challenges, obviously. Andi's going to talk about how we're viewing the market for next year, but we feel that we've built this company for the cycle. We know that we're exposed to a cycle, we've built our business to be able to handle that. On top of that, we've already prepared. This discussion that I was just having about how we flex our capacity up and down. We're able to see these trends happening near real time. We're able to start moving our capacity in the right direction very early, and we've already prepared ourselves for what's to come in 2023 in terms of our capacity and our cost structure. The other thing that we have the ability to do is go after opportunities. I think one of the hallmarks that we hope to demonstrate to you over the next couple of years is that we're gonna continue to invest in this business regardless of whether it's upturn or a downturn. We're gonna continue to drive value throughout that, because we see opportunity even when there's challenges in the market. For us, as you see on the right side of the page here, we cover the market with our product breadth. We feel that allows us to move where the customer wants to be and still deliver product to them. I know that cabinets is a bigger-ticket item than some of the things that Fortune Brands Innovations talked about earlier, but we still feel that if the consumer is able to come in to buy a kitchen, that we can meet them where they are at the price point they need to be because of our flexibility and the breadth of product that we have. We also see pockets in the market where we still see opportunity for growth, even in a down market. I'll give you an example. We had a gap that we saw in the lower end of the market a couple of years ago. We launched a product, and in the past 3 years, we've built that product growing at 140% per year. It's now a $150 million business. 3 years ago, it was 0. We were able to do that because we had the market insights, we understood what the product needed to be, and then we had the capability of delivering that. And that's a product that has very short lead time, and we were able to deliver that consistently, and that allowed us to grow that with that level of pace. There's also still a tremendous amount of fragmented manufacturers within this industry, and you can see it on the page here. 45% of the market are still small manufacturers. And again, we see that as opportunity to bring our advantages to customers in a bigger way. I'm gonna shift gears here a little bit. I know that there's a lot of attention on what's gonna happen over the coming 12 months and the current cycle. Long-term, the residential housing market is very favorable for us. I know you've heard these stats before, I'm gonna say them again because they're absolutely true, they make it very different from the last time there was a big housing down cycle. There's a significant underbuild in housing. There's also a significant aging that's gone on over that period of time. Average house has gone up to 39 years, as you see on the page here. We have two-thirds of our business exposed to the repair and remodel space, which allows us to be a big player in that dynamic, where people have old houses and they wanna re-repair and remodel their kitchens. On the builder side, we're built very differently than we were during the last cycle. That networking that I described earlier, and that I'll go into more detail here in a little bit, really sets us up to be able to flex with the market in a way that we weren't able to do before. You know, as people redo their kitchens, 95% of them do the cabinets as part of the project. While there's a bit more amplitude in the swing of the cycle for larger ticket items like ours, once that consumer makes the decision to buy a kitchen, they're going to buy cabinets. Why wouldn't you? I mean, that's a gorgeous kitchen. You're not just gonna do the appliances because you're not gonna get that look. The cabinets make the kitchen. When you make that change, you're gonna put those great cabinets in. Let's look towards the future. The strategy we're gonna describe today is already in action. These are a set of tools that everyone in the company is familiar with, and we're executing on these every single day. Let's talk about that a little bit, because I think a lot of times when you get into a presentation like this, everybody wants to hear about the strategy. To me, strategy is important, but execution is critical. Here's how we execute. First and foremost, we have a tool. You're gonna hear that a lot. No surprise, it's a lean tool. It's called strategy deployment. Strategy deployment effectively takes your stress goal, a future state that you wanna be, that you're not sure how to get to, and methodically walks backwards to present day, building a plan the entire step of the way in whatever increment chunks you choose. You're gonna hear that a lot from us because that's how we think. When it comes to a customer, we think about what they want first and walk our way back to where we are today and bridge that gap. Same thing with strategy. Strategy deployment is a tool that allows you to do that execution really, really well. Here's how it works. Strategy deployment helps you focus on what's most important, what you gotta do first. It's always the hard part with strategy. You have a lofty goal, and you're not quite sure how to get there. When you walk backwards, you know what you have to do first. You also have to give these projects appropriate resources. The teams that are working on our strategy deployment and our initiatives are 100% dedicated to that. Again, I'll refer you back to our financials. You don't see that in those numbers. These are investments we are making in our business to ensure the execution of these initiatives. That's why we've been successful over the last few years at changing our operating model so rapidly. Lastly, you got to measure things. We're maniacal about measuring things, as you can imagine. If you're a lean practitioner, that's what you do. You're gonna hear that from some of our executives here in a bit. We measure what matters, and we measure the progress that we're making towards these initiatives, and we review this every month. This is the most critical part of our operating model. It's what we have to get right. We all come together as a team every month, we review the progress, we make sure that focus is still there. Oftentimes, when you're doing strategy, it's real easy to get broad and start wandering down paths that don't yield anything. We keep the teams focused. We make sure they're resourced properly. We measure what they're doing, and then we go around the next cycle. Talk a little bit about the tools now. These are again, as I said, they're well-established tools. The beauty of these tools, and being well-established, is they give your team confidence in their ability to execute. How many of you out there have tried to go fix something in your house, and you sort of don't bother to pull out the instruction book, and you just go at it, and then after an hour, you realize, "I probably should have pulled out the instruction book." We wanna make sure our team has an instruction book. How do you do this? Strategy is hard that way as there really, in a lot of ways, aren't an instruction book, but if you have tools that work right, you're gonna get there. That's what we really encourage in our culture with our organization is use the tools and we're gonna talk about that in a bit as well. Let's start with the first one, Align to Grow. This is based on a tool called 80/20. It's called Align to Grow specifically for a reason. 80/20 is a growth tool. Many people understand 80/20 as a way of organizing and simplifying. It's not that. 80/20 is a way of aligning your organization to grow. That's why we call it Align to Grow. I'm gonna give you the quick overview of how it works, and then explain what we've done on this. You know, first and foremost, you find a great customer. You figure out what they want, you deliver it exactly the way they want it, and then you get value from that. They get value, and you get value. It's as simple as that. The hard part is figuring all that out. For us, as I highlighted earlier, we weren't effectively integrated, it was really difficult to execute on that middle part that you see up there. We spent a lot of time in the last three years making sure we could execute on the middle part of that. Let me walk you through how we've done that. As I said, we have a very extended supply chain. It first came down to what's the footprint need to look like? We've organized ourselves around that. We had to move some factories. We closed a couple of factories to make sure that we had the footprint in the right regions with the right type of capacity so that we could serve the customer with excellence. The next part of that is making sure your product is hitting the mark. You can see on the right side of the page here, and if you've looked at our display out there, you've seen this as well. We've significantly reduced the number of SKUs that we've had over the last couple of years. You may say, "Well, Dave, you just told us that you have this broad product selection. You can offer anything to anybody. That's kinda conflicting with that, right?" This was just unnecessary complexity. We had different product lines that had very similar products, almost completely invisible to the human eye differences that required different capabilities to manufacture. Eighth of an inch difference between a particular profile. Very slight pigment difference in a color. All those things add complexity, require different capabilities, and jumble up your ability to deliver to a customer consistently. Also, if you think about it from an extended supply chain standpoint, it really makes it difficult to have a great extended supply chain that's consolidated and efficient. We fixed that. Lastly, it's building in common and standard processes throughout our plants so that anyone in our company can go to any plant and understand how it works. You're gonna hear a little bit later that there's a lot of complexity in how things arrive at the assembly line in our plant. If you've ever been in an automotive plant, it's very similar to that. Lots of components arriving in one place. In order to get that done, you've gotta have some standardization throughout. The beauty of this is we still have a lot more to go. We're in the process right now of really dialing in exactly what those customer segments want so that we can align to that and sell effectively through that and deliver that outsized value and get paid for it. We also have just gone through one of those disruptive supply chain environments that I've ever seen in my career. That precluded us from really organizing our extended supply chain in a way that is most effective. We have work to do still there. Some parts of the business are well established in that. We still have tons of opportunity ahead of us to organize our extended supply chain in a way that makes the most sense for us and the way that we can deliver to our consumer. Lastly, internally, as I'll talk about next, we use lean tools within our factories and standardize as much as we can, but that's a process, and it's an ongoing journey that really never ends. We still have a lot of that opportunity in front of us, which is gonna continue to help us deliver the market-leading value that we have so far. Our next set of tools we call Lead through Lean. I'm sure many of you in the room have heard of lean before, interacted with companies that either use or say that they use lean. You're probably looking at this slide and saying, "What do these other things have to do with lean? That's not the lean toolbox I'm used to looking at, right?" Well, everything you're used to looking at is down in the foundational section there. It's the same tools. You're gonna hear an example here where we're gonna run a video. You're gonna see the tools that we use, and they're gonna be ones that you recognize. We look at Lean as the ultimate associate engagement tool. I'm gonna tell you a little bit about how that works. We do a plethora of events every week, 3-10. Any given week at MasterBrand, you can come, and there are that many events running. Now, a lot of people that do Lean like to brag. "Look at how many events I do, how great that is." It's not about how many you do. I'm telling you that number to tell you that this is a regular thing that's going on. It's not the goal to do, you know, X number of events. Within each of those events, every week on Friday, we have a very standard report-out format. It's all on Zoom now. It was one of the benefits of COVID, is we figured out how to do this type of activity broadly. Anybody at MasterBrand, any Friday morning, can sit through half-hour report-outs on all these events. The best part about these events is they are all led by the people in the location, whether it be back office or in the plants, that are doing the work. The people that are doing the work are the ones that raise their hand and say, "I want to do this event." Management comes in to facilitate, to train with the tool, and to help them with any resources they may need. This effectively flips the model in terms of how a company normally operates. In the past, companies, management would come in and tell the workers what to do, and they would go and do the work. Our model is those closest to the work understand where all the challenges are, so they should be the one bringing those forward and helping fix them. We do that all throughout our organization. I'll tell you a quick story on that. I was at a plant in the western part of the US, and one of the associates came up to me to tell me about the event that he had been in. This is a guy that's worked in our factory for over 20 years. He said, "We did an event last week, and we moved this piece of equipment from here over to there." He said, "I've been here for 20 years. I've always known that piece of equipment should have been over there. I never felt like I could say something about that." He's like, "The first day we started this event, people were asking me for ideas, and I said, 'We should move this piece of equipment over here.' We had the tool to help explain why that was." Well, of course, he understood why that needed to be over there. He was doing the work every day. The tool showed everybody else that he was right. His comment to me was great. He said, "I have tons more ideas here. I can't wait to get more events so I can get those ideas out." That is the power of Lean. That's what we do every week at MasterBrand. It's also a great way for us to see talent. You know, as I said, we have a great diverse employee base. We see that talent in action leading every week when they report out on these events. They're leading change within their own plants, and we get to see them in action and decide if they have opportunities elsewhere in the company to continue to do that or to promote from within that plant. We get to see that every week, live TV in these report-outs. There's no better talent development process in my view, because everybody in the company can see that any day of the week. The last piece of it is the recognition. You know, I can't be everywhere. We have, as you saw earlier, we have a very large internal footprint. None of our leaders can be in all these places at once. The way we do this allows for us to be a participant in all these events and recognize the great work that our associates do every day, and they get a charge out of it. I think if you were to interview people within our company, they would say this process is one of the best team-building processes they've ever been a part of. We go a step further on the recognition. We actually have an app. They make these apps these days, which are great. You can give a recognition via this app to anybody in the company at any point. It's almost like a little Facebook feed that you can see a continual stream of the recognitions that people are passing forth, whether peer-to-peer, worker-to-manager, or manager to the associate. Over 250,000 recognitions, we've had this in place for about a year and a half, almost 2 years. It's really been a wonderful part to bring our company together and really drive our culture forward using these tools. Ultimately, our goal is a lofty one. We want to be a best place to work. You know, we define that by great retention, that we are able to promote. You know, remember I talked to you about being good stewards and want to have a leadership team that reflects the diversity of our organization. That's how we're going to do that, through internal promotion. Lastly, engagement scores. Now, we do associate engagement scores. Many companies do. Our associate engagement score went up by 7% from 2021 to 2022. For those of you that read the paper, you know that that period is also called the Great Resignation, right? Our associate engagement scores went up during that time. Statistically significant, if you're a stats geek like me, is about 2%. We tripled that. I'll tell you one other thing about our associate engagement surveys, and it was really interesting for me to watch this. I've done these at other companies, and often, especially the first few times you do it, management sort of gets a little clenched up. "Oh, you know, I'm gonna hear some bad things." You do. You hear the raw feedback when people are able to give you that unbiased feedback in an anonymous way. A lot of times, management is a little, has some trepidation about engagement scores. What you see from our management team now, this is a great thing for me to see, was our management team actually is excited to get this feedback because now we know what to go fix. We understand what the problems are. When people are telling us what the problems are, we know what they are, so we can go fix them. Our culture is about running towards problems, not running away from them. It shows in the way our leadership teams jump in when we get these engagement surveys back. Look, at the end of the day, we all know that Lean done well drives results. You can see some of the results that we have here. Really, again, I'll go back to it's only effective if it's part of your culture. It's like any other skill. It can atrophy over time. If it's not part of your culture, it ends up being words on a wall that don't drive anything, and you go backwards. We've driven Lean, and that's why we call it Lead through Lean, because it is a leadership skill. It requires you to understand the tools but lead with the tools. As part of our culture, we talk about it in the tagline that we have at the bottom of the screen here. Trust the tools. I've been talking about the tools a lot. Gives you confidence to know you have the right tools for the job. Trust them. Whenever we have a problem and someone starts going down a path using an opinion or some other non-standard method for solving the problem, most people in the organization will orient them right back to, "Well, let's get the right tool out here to solve that." Empower the team. I just talked about how Lean is the ultimate associate engagement tool. It empowers those doing the work to fix their own problems. Move forward. We have that because speed is important. You have to keep making progress. We want people to move at pace. We know that there are going to be failures. Indeed, we have a ton of these events that we've done that haven't yielded the kind of results that you're gonna see here in a minute in the video. That's okay. Learn from your failures. Continue to move forward. That's our culture in a nutshell. Lead through Lean and Align to Grow really help drive that throughout the organization. I'm gonna talk about one last piece here, and then we're gonna do a quick video. Navi is gonna come up a bit later to talk about our digital efforts, I wanna just tee it up. I won't steal her thunder. She's got a lot more to say about this. Ultimately, the final tool in our toolkit, tech-enabled, is grounded in the tools of Agile. I know you heard from John Lee earlier about what that is, if you're unfamiliar. It's essentially a way to bring a focused team together and move quickly to change and get results in a quick fashion, iterate, move on. That's a methodology that we actually use beyond just our digital teams. We use it in our marketing teams. We use it on the factory floor. It just builds in a speed tempo that's very different from what typical manufacturers will do, and that's a big benefit that we've gotten from interacting with leaders like Navi. Ultimately, we've got a lot of work to do, and Navi is gonna explain to you the path here. We need to continue to simplify, and that's a lot of our systems and our data. We need to streamline, make that data available so we can take action on it. Ultimately, we see tech-enabled as a big opportunity for growth for us because we think the insights that we have, because we have that scale and we see the market, we believe those insights can really help us pinpoint where the best places to grow are and take advantage of that using our other tools. To wrap up here real quick and we'll take a... I'm sorry, I missed the video. Let me do the video real quick, then we'll jump right into the wrap up. We have a quick video to talk about one of the events that we did using Lead through Lean. Why don't you roll the tape? During our annual value stream mapping event, the team identified the hand stain wiping area as having a large amount of labor and underutilized equipment. Several years ago, we had invested in an automated spray coding machine. However, because of the formulation of some of our colors, we've never been able to fully utilize that piece of equipment. In addition, those colors required the use of chromium. When you use chromium and it gets in the booth filters, that requires you to handle that as hazardous waste. It was very important to us to get the closest individuals to the problem engaged with the project. We had both supervisory as well as hourly employees that were involved on the team. We also used two engineers that were very close to the issue as well. We love to utilize the ideas from both the hourly and supervisory employees to come up with a final solution. We utilized a value stream mapping event to identify any potential waste and what tools to deploy. We utilized the Eight Waste Walk, 6S, standard work, JHA, and Yamazumi charts to develop a solution. Our 8 Waste Walk and our success audit helped us to realize that we didn't have a cleanliness problem, but we had a waste problem, so we came up with a solution to eliminate the waste. The tools that we used pointed us in the direction of what we needed to do from both an equipment and a material standpoint. We got roughly $1 million in savings throughout the whole project. We were able to reallocate 30 employees to other areas within the facility that needed the extra assistance. Before the project, we had 18 individuals in the stain room. Now we only have 3 quality inspectors. Hand stain wiping is a very laborious task. By us eliminating that, it makes this workplace safer. It has helped improve our retention within our facility. Also, from an environmental standpoint, this material is much less hazardous. Those are a couple of different things that we have from our continuous improvement. What's exciting about continuous improvement is it's happening across the organization every day. Year to date, we've averaged over 7 Kaizen events per week. We're sustaining those Kaizen events with daily management. Daily management also engages our associates in what we're working on. It also makes MasterBrand a better place to work. In facilities like Ferdinand, we've achieved tremendous results through our transformation, but there still remains a lot of runway. We're gonna take a short break and then jump into a fireside chat with a couple of our leaders. 5 minutes, 10 minutes? Something like that? Appreciate it. Ladies and gentlemen, we'll resume the program in about three minutes. Thank you. All right, are we back? We're on? Thanks. We determined up here that we think we need a little more rock in music here in the New York Stock Exchange. We're cabinet makers, so we're country or rock. In any event, I'm excited to introduce Gay McMichael and Kurt Wanninger joining me on the stage. Gay and Kurt are responsible for product, customer service, and operations across all of MasterBrand. We're gonna talk about a couple of various topics together, and I'm excited to introduce them to you. You guys wanna introduce yourselves to everyone here, please? Sure. Good afternoon, everyone. Gay McMichael. I've had a 32-year career with MasterBrand. That career has sort of been divided into thirds. First third, working in brand and channel marketing. Second third, doing sales and sales leadership in big box retail, and most recently, doing general management and business unit leadership. My name is Kurt Wanninger. Three things about me, been in manufacturing over 40 years, so quite some time. Over half of that has been at MasterBrand Cabinets. Probably the third thing is, you know, automotive, washing machine, weed eaters, cabinets has kind of been my career. In the last few years in cabinets has been kind of my favorite. We've got a nice tailwind behind us here, and we've just really had some momentum. Great. Why don't you guys tell us a little bit about what's different about MasterBrand from how the company operated in the past. How is it different today than it was in the past, since you've both been here for a while? Yeah. I think the biggest difference in the last few years has been The MasterBrand Way, how that's helped us focus on lean and how we now practice lean throughout the whole organization, whether it's standard work and just driving consistency throughout the processes each and every day. You know, I think a great example of that, I'm not sure if you remember an event we had last spring out west. The team there that was doing door manufacturing was really faced with excessive overtime, and they knew it wasn't sustainable. The team actually put their hand up and said, "We need an event. We need to do something." We organized an event, week-long event, and the team got down to work, looked at current state, really worked to identify waste and come up with some potential solutions. Then they try-storm, which is basically put into action for a couple days, potential solutions on how they could drive the waste out. What was really cool about that event is that entire department couldn't participate but the department was willing to take their lunch hours, and they all sat down together, really looked at what the tighter team was looking at and say, "Yeah, that'll work for us. No, it won't. Have you thought about that?" Really having total department engagement, the team was then able to come up with some great solutions. By the end of the week when they did the report out, they really had a solution that would allow them to not only significantly increase output in the department, but almost eliminate all the overtime. That really is the power of some of the tools and what we're doing. Yeah, it's amazing when you have a group of employees that eliminates their own overtime you know, they went after that, and it was a fun event. You know, the Align to Grow, I'm gonna talk about that just a little bit. You know, that uses, as you mentioned earlier, kind of the tools of 80/20 to reduce complexity. It really helps us focus on delivering product and services that our customers really respect. Just a brief example, you know, you had talked about MasterBrand, a lot of acquisitions, a lot of different companies, we never really integrated those businesses. You know, out on the board, it kind of describes one of the journeys there. One of those journeys was the number of white paints we had. As a lot of different companies came together, each company kind of had their own palette of white paints. We ended up with dozens and dozens of different white paints. Part of the 80/20 was to reduce that complexity and reduce the number of white paints from dozens down to less than a dozen. You know, we still offer all the same kinds of paints. We have a Color Choice Program where, you know, our customers can get any white that they actually want, but really helped us take complexity out of the business. To get any color you want, you're moving up the curve in the cost and you're getting paid for that. Yeah. Yeah, it's, you really have to use data to be able to see this. When you look at the data, you realize that the things you're getting rid of really are not things that people. You're not eliminating a choice from a consumer. You're really eliminating things that don't need to be there. Yeah. Yeah. Dave, I'm glad you brought that up because that really is what Align to Grow and 80/20 is all about. That's another thing that's different for us is how we then use that data to bring new products to market. Traditionally, because of the acquisition we talked about and independent factories, our new product development was really pretty siloed. It was usually centered around a brand or a product platform. Today, what we're doing is really different. What we're developing is an innovation process that is really more Agile-focused. It's structured around a number of channel-focused agile pods, and their mission is to really understand what it takes to win in the channels that they're focused on. The output of their work really will feed our innovation funnel with the products and programs and solutions that'll be true value creators for our channel partners and ultimately their customers. Yeah. Great. It's about cleanup first. You gotta clean up all the complexity, and then once you do, you are very clear that you're not gonna add that complexity, but it gives you the ability to really focus your energies on where we think. Then Mantra was a great example of that, the Mantra product line that I described earlier that's grown at 140% a year. It's an example of being able to hit the mark with a particular product, so great. I know we've been talking about this, but it's so ingrained in our culture that we talk a lot about it. How's the MasterBrand Way helped you and your team run the business more effectively? Yeah, I'll start with that. Standardization by far. We have standard measures, we have common metrics throughout all of the 20 manufacturing plants that really help us consistently drive the business and identify opportunities to improve. Our teams have gotten very adept at using the tools, whether it's an A3 to attack an opportunity, a value stream map to look at waste in the work, and really we do our Kaizen events around that type of activity. My favorite example this year in 2022 was we significantly increased the capacity of one of our vanity plants, we added several different assembly lines. We were able to staff those assembly lines through freed work from standard work events. Yeah. You know, we didn't have to go to the outside and hire. We freed that labor through events. Yeah. You effectively added a ton of capacity to your existing plant and no labor. Exactly. It wasn't because it was automated. Yeah. Some automation, but not completely. Great. Gay? You know, I think what I would say is it's really given us more depth of engagement of our employees, depth of understanding of our business, and depth of alignment around really what is the right thing to do to give our customers a great experience. It really reminds me of an event we had up in our Canadian operations about this time last year. They had just done a new product launch, and it was really successful, and they were faced with a tremendous increase in their demand for paint capacity, and they had to do something fast. They pulled the tool kit out and started to do a value stream map to really understand where the opportunities were. They reflowed the entire department and also redefined all the standard work for the area. Within 90 days, they were able to really increase their capacity in a way that they could keep up. Actually, the really cool thing about that story, it's 1 year later, and they've been able to sustain that momentum. Great. We've talked a lot about how this is ingrained in our culture, but what's a typical day look like? Describe this for us, how these tools work on a daily basis. Well, I think a typical day is a combination of run the business and change the business. From a run the business perspective, our operations folks will probably start out with a morning huddle and a morning stretch. Production will start and to keep track of the pace of the business, they'll use hourly, hour-by-hour boards. At some time during the day, at multiple levels within the plant, we'll be doing daily management. The daily management is a lead tool. It centers around a daily management board. You actually saw one in the video. You saw the group's large, almost like a billboard, right? With a large report card on it. It's not just a scorecard. What that board does is to facilitate discussion, understanding how the plant or how the department is operating on the key metrics that really drive performance. It'll show trending. It'll also do Pareto analysis, like, have a lot of data so that the teams can understand if they aren't meeting the metrics, where do they need to go to look to start to establish root cause and develop countermeasures. Using daily management, the teams can really address issues before they come systemic and make sure that they're all aligned on their priorities as well as what it takes to win the day and the week. I think you know, lean is one of those tools and our Lead through Lean efforts are all about doing it over and over again. It requires practice and a lot of plants have scorecards in them, but if you're not doing anything with that information and using the tools to make positive change, it's really a waste. It's not it doesn't add any value. That's not how we think about it. These are insights for us to really drive results every day. You know, Dave touched on it. Dave, in the video, in our Ferdinand plant, you know, that Kaizen event that changed the business when we went to no white stains was big. You know, that's something that we really worked on and tried to accomplish for a number of years. Right. The tools really enabled us to be able to do that and do it very successfully. You can see the pride in the team, you know, extremely proud. You know, it's just another example where within any plant, any given week, whether it's on the production line or in the back office, there's a number of events going on utilizing the tools each and every week. Okay. Let's shift gears and talk about the marketplace and these tools and our performance. What stands out for you in the marketplace? What are customers saying about what we've been able to accomplish here over the past few years? I think a lot of people in business would answer that question saying, "These are my capabilities. I have this capability, I have that capability." We really try to approach it differently and go all the way to the customer and then work our way back to say, "How are we gonna align our capabilities with what our customers need from us?" For instance, you might have channel A, who's a dealer channel B, who's a dealer channel. Channel A has more of a repair and remodel business, where channel B is more new construction focused. They both need cabinets, but they need them very differently. Different product platforms, lead times, service models, et cetera. Really by looking at it through the lens of the customer and the lens of the channel and what they need, it allows us to use that broad portfolio that we have and our extensive manufacturing network to really be able to deliver targeted solutions for our channel partners. Basically, we know when they win, then we win. You know, Dave, you talked about the Mantra, the example of our fastest-growing product line that we've had in a few years. You know, a great customer request or an experience that we had is, you know, that product line is really all e-commerce driven. You know, it's ordered online by our customers. Our customers really wanted the ability to see the available to ship inventory online. We just weren't really able to provide that. One of our events really were to have an event where we could identify the value stream, the waste associated with it, and where the opportunity was to pull the available to ship inventory in. You know, our digital team really was part of the event. Through the data lake, they took the opportunity to link the systems. We, through 21 different countermeasures, we were able to do that within 30 days, get the available to ship inventory online. Right. You know, you asked what our customers would say. I think our customers would say they recognize and they appreciate our approach, and they value our service and our capabilities of helping our customers be successful. You know, within each of our channels, we have great partnerships, with every channel within our business. I think they would really value that. Okay. Well, it was a good segue, Kurt, on the digital and tech front. Thank you both for joining me on stage. Thank you. I'd next like to invite Navi Grewal to come up, and she's gonna talk you through tech-enabled in more detail. Thank you, Dave. Thank you, Gay and Kurt, for the plug-in for digital and tech. Good afternoon, everyone. I'm Navi Grewal. I'm the Executive Vice President of Digital and Technology for MasterBrand. I've been with the company a little over a year and have 24 years of experience leading digital and technology teams, actually leading business transformation in many different companies, mainly focused in consumer goods in multi-industrial space. As Dave, Gay, and Kurt mentioned, MasterBrand is on this transformation journey. We are innovating how we work by streamlining and automating our back office processes, making our employees more productive and self-sufficient. How we make our product by digitizing our manufacturing sites, working very closely with our plant managers and our lean leaders so that we can scale those capabilities across the manufacturing sites. Finally, enhancing how we sell so that we can become one of the best partners for our customers, and through that, provide best experiences for our end consumers. Dave and Gay talked about it, we have also implemented Agile methodology to drive speed to value and greater adoption. What that helps us is prioritize that effort and create focused Agile teams to drive the business outcomes that we talked about. As you saw in earlier slides, in the past, MasterBrand has come from multiple different acquisitions. As complex as our product continuum and factory network was, our data and system landscape was even worse. We had hundreds of different ways of doing things and dozens of different ways we describe the component that goes into a cabinet. Imagine the amount of complexity it creates for the back office processes, where we had to constantly reconcile transactions among the different systems and translate data and transform data using Excel and Access to drive business insights, which at the point was days and weeks and months old. I would say we had a lot of data within MasterBrand, but we were not able to use it in a timely and efficient manner. Said another way, we had a lot of data, but we were insight poor. Data-rich, but insight poor. In today's world, we've implemented our data lake technology that Kurt also talked about, which has helped us standardize our data landscape, and it is quickly becoming the single source of data and insights for our company. As Kurt mentioned, we run quick insights and quick events, and we are able to give the insights that the teams come up with running some of these Kaizen events. Our plan in the next 6-12 months is to further build that data lake with additional data domains like manufacturing, customer and consumer three sixty, and pricing analytics. Another area of key focus for us is our ERP modernization project, which is focused on consolidating our ERP instances, standardizing the order management layer, and setting the foundation for a robust technology architecture, so we can implement the capabilities with speed and agility. That further sets the foundation for the modern data architecture and the governance we talked about. Here, I am not talking about a big bang ERP implementation, but more around standardizing our current footprint with a focus on process and data simplification. We already have industry-leading software, both for our back office and most of our manufacturing sites, and the plan is that we uplift that standard footprint across the sites that do not have it. All this work in data and the system front really excites me because this sets the foundation for a smart enterprise, which will quickly become the source of competitive advantage for us. If you visit our plants, you will see how magic happens, where the different components come together in the assembly area to form a cabinet. This is a very complex process, where our line managers and the project and the factory workers have to constantly make these decision points on a daily basis to produce a cabinet that goes into an order. Any mistake could lead to reorder, additional cost, delays in the order. What we are doing is we are early on our journey looking for opportunities to unlock the data across our plants so we can eliminate or automate these decision points. The process to identify these automation opportunities is a part of our value stream mapping process, which is a part of the lean tools that Dave and team talked about, where we highlight areas to eliminate waste that could maximize the business value that we're looking for. The digital tools are helping us accelerate those efforts. One of the examples is the RFID technology implementation, which we've implemented in a couple of plants, which helps us track the components across a plant to make it easier to find and assemble the components into a cabinet. We have successfully, as I said, implemented in a couple of plants. In the next 2 years, we plan to scale that at the rest of our plants. So far, this capability we've seen has saved a couple of million dollars to our bottom line. We have stood up a Center of Excellence to scale these capabilities across MasterBrand, and this CoE is comprised of internal cross-functional team members and niche external vendors so that we can learn what's out in the market, and the teams can pilot these capabilities. Once we have successfully piloted in one plant and see the business value that we were expecting, we can easily scale that across the other plants. Now, coming from a consumer goods background and leading customer experience teams in the industrial space, this is an area of passion for me. There is so much value that we can unlock for the customer and our end consumers by focusing on the services and the experiences around our products. In today's world, especially after the pandemic, we have learned that people buy an experience. Product quality is a given. What creates the differentiation, the stickiness is the experience factor. As Dave mentioned, our teams are already working on customer segmentation based on the channels we serve, and crafting services and experiences based on the channel segment and so that we can create some personalization there. We have also started to work on the customer journey so that we can further understand the steps that our customers go through to sell our product and the moments that matter and how we can simplify that and remove any friction across that process. We are relaunching a brand-new customer portal, which is focused on providing self-service, which empowers our customers to do more and become self-sufficient and enable our customer service teams to focus their energy on interactions which drive higher value for the customer. This portal will provide information like where is my order, easier quote-to-order process, and also warranty registration. Focusing on the customer helps us delight our end consumers. We have a lot more coming in this area, so stay tuned. To summarize, leveraging digital and technology, we are driving operational excellence, agility and scale, and exceptional customer experience, we're going to continue our journey into data modernization. With that, I'm going to hand it over to Andi Simon, who's the Chief Financial Officer. All right. Thanks for continuing to listen to us as we continue this journey. Hi everyone. I'm Andi Simon. I'm the CFO. I'm very excited to be here today. I joined MasterBrand about 2 years ago. Prior to that, I held various positions, a lot of traditional audit accounting, finance positions. Also held some positions in IT, strategy, and supply chain. Most recently, I was the DM of a smaller turnaround. As I prepared for today, I reflected a bit on, you know, why did I come to MasterBrand? I thought it was relevant to our story today. First, I came here because I could see that it was a really good company, and when you looked at and heard people talk about their operations, their people, their products, it had great potential to be great. Second, I really enjoy being a part of transformations. It's very satisfying, it's very fun for me. Third, in the interview process, what I was confident that the people of MasterBrand wanted to be on this transformation journey, and I think that's a very critical component in making sure a transformation is successful. What I wanted to say briefly as an introduction is I'm really proud of where we've come, and I'm here to show you or demonstrate our performance to date and where we expect our performance to be in the future. Starting out, again, you saw the timeline that Dave presented. Here we show the story of the MasterBrand evolution in, basically 3 chapters. The 1st chapter was pre-21st century, let's call it. That's when MasterBrand was defined by acquisitions, ownership changes. It developed its customer relationships, its channel, it widened its footprint, then it moved into the 2000s, its 2nd chapter. In that timeframe, acquisitions continued. However, they were more focused on companies that had specialties in products or specialties in capabilities. It was in this timeframe that MasterBrand became a true market leader. Now we're entering a new chapter. Dave Banyard came on board, we're entering a transformation of MasterBrand. What the next slide is gonna show you, which Dave briefly showed earlier, is that this transformation is working financially. You'll see in the top two charts that we expect net sales CAGR to end up over the last three years to be 11% while the adjusted EBITDA CAGR is at 18%. It's phenomenal performance. Again, as Dave briefly mentioned, there was a lot of world and market turbulence over this time, from COVID to, you know, weather events, inflation, interest rates, supply chain disruptions. There was a lot of disruption, what MasterBrand did was stuck to its strategy, kept using the tools, and performed. When you look at the bottom chart, you'll see that in the last few years, MasterBrand has decided to invest in its business, particularly in the strategic initiatives. Those initiatives really are what secured our flexible platform for growth in the future. Keep in mind, though, that CapEx looks like quite an increase, in both of those years, the CapEx is still less than 1.2 times depreciation, so relatively modest. Really the question now is: How does MasterBrand continue to perform? How does it perform in varying markets and in the short term? First, in the long term, how is MasterBrand gonna continue? Well, we're gonna continue executing our strategy. From a top-line perspective, we're gonna continue to align with our customers and grow in the most attractive market areas. We're gonna continue to Lead through Lean, and that's gonna allow us to improve our service and our deliveries so that our customers continue to choose us as their preferred customer vendor. Lastly, we're gonna continue to improve our digital capabilities, and this will not only improve the overall experience for our customer, it'll improve the overall work experience for our employee. Therefore, again, our customer chooses us as their preferred vendor, and our employees choose us as their improved employer or their chosen employer. From a bottom-line perspective, the same strategies apply. Through our Align to Grow strategy, we've made adjustments to the business so that margins now are attractive across products and across channels. This is huge to our performance 'cause it allows us to be flexible when the markets change, when consumer preferences change, without sacrificing profitability. Second, from a bottom-line perspective, we're gonna continue to Lead through Lean, and we're gonna take waste and cost out of this business, not only in the plants, but also in the back office. Lastly, we'll continue to enable our technology from a very basic perspective, just being able to make decisions better and faster. How do we perform in changing markets, right? Whether we're growing or whether the market's declining. We believe we have a resilient and nimble platform now, so that we perform in all market conditions. Firstly, the foundation of operational excellence is now already established. As Dave briefly went over earlier, our tools and events have resulted in annual savings of over $40 million. Keep in mind, we've just started to learn these tools, and now we're starting to get good at them. We expect this progress to continue. Secondly, we have a well-invested capital base. Already established with the investments we've done in over the last couple of years. We believe we can increase our current volume output by more than 20% with our current capital base. Third, an important item that allows us to perform in various markets is that we have a very high variable cost structure. When you look at variable costs as a percentage of adjusted operating costs, it's at 75%. That's a 5-point improvement just from 2019, despite the capital investments that brought depreciation. That improvement is really can be attributed to our transformational efforts and the use of the tools. Now we know there's a lot of headwinds coming at us. It's prudent to talk about it, and I will in just a minute on the right side of the slide. First, looking at 2022, we expect 2022 to be another great year for Cabinets. Our net sales growth will be at the high end of the market. Keep in mind, this is all organic growth for us. Then our adjusted operating margin, as historically reported by Fortune, will reach about 12%. This is despite all the inflation that we had this year. As Dave mentioned earlier, I'm gonna repeat it again because it's such an amazing point of reference, is we had more inflation dollars this year than we've delivered in operating profit in previous years, yet we still performed as we did. Looking at 2023, we all know there's headwinds and a lot of challenges. We do expect the market to come down in the high single digits%. It'll definitely be weighted in the H1, particularly in Q1. With that said, we will deliver decrementals, market-leading decrementals of 25%. How are we going to do that? First, obviously, we're going to continue to lead to lean and take waste and costs out of the business. More importantly, and a big impact right now is we have taken very proactive measures already in the Q4 of 2022 in anticipation of this downturn in the market. We have closed a plant, we have repurposed a plant, we have mothballed a plant actually this week. We have reduced shifts, and other headcounts across the business, and we have various cost initiatives going on. This includes customer and vendor contract renegotiations. Our goal is to reach $100 million in savings. We are well on our way with most of this, not only identified, but already executed. From a cash perspective, we believe cash will be resilient in 2023. That's really for 3 reasons. 1. Our favorable decrementals. 2. We will again have relatively modest CapEx. It'll be less than 1.3 times depreciation. We'll have a gradual improvement in our working capital dollars. That will mostly come from inventory. In 2022, we purposely built up our inventory. It was to combat all the supply chain disruptions. Some of those issues now are starting to subside. In 2023, we expect to have solid operating leverage. We will start the year or basically at close, we expect to have a net debt-to-equity ratio of 2.3 times. We do expect to start the year with ample liquidity that'll last us through the year with an undrawn revolver of about $300 million. Our achievable long-term targets, as Dave put out there, we are aggressive. We wanna continue to grow this business and deliver profits. We plan to deliver market-leading net sales and market-leading margins, and we will do that through implementation of our strategy and using of the tools. Finally, I just wanted to briefly go over our capital allocation priorities. I mean, first, we are going to reinvest in this business, especially in high return areas where we see value, particularly in our customer experience and our digital technologies. That will continue to happen. I should mention, in those 2023 decremental numbers that I gave you, that does include continued investment in our strategic initiatives. Second, we will maintain a strong balance sheet. We have near to midterm goals of obtaining investment-grade metrics. Thirdly, as our balance sheet allows, we will seek opportunities to return capital to our shareholders. Finally, also as our balance sheet allows, we will look at and investigate M&A, and we'll do it in a disciplined manner. With that, welcome Dave back to the stage. We're gonna jump into Q&A here in a minute, but I just wanna take a minute to wrap up. What you heard about today is MasterBrand is a market leader, and we intend to stay a market leader. We're gonna do that using our strategy, which has really become part of our culture, which is a set of well-established tools that are designed to continue to drive market-leading value, both to our customers and to our associates, but also to you as shareholders. That's our commitment to you Now I'll invite Andi to come up. Sorry, excuse me, also Farand to come up. Similar to Fortune Brands Innovations, there's an online tool for you to ask questions. Farand will moderate, and we'll be happy to answer them. All right. Thanks for your attention. Dave, as Dave mentioned, the QR code, if anybody still has questions, we've got several kinda coming in here that we'll start with, but if people have more, just use the QR code on the agenda and go ahead and submit them. We'll get to as many as we can. With that, let's take the first question. We got a couple on kind of this related to the, you know, the current margins where we are. Maybe this is one for Andi. You know, when you just went through some of the margins and the outlook. You know, where we are and kind of bridging and what we see kind of the levers to get there over a period of time. Could you maybe provide a little color there? We've got a few questions on that. Yeah. I mean, in the short term, if we're, if it's referring to those decrementals, it's all about being proactive, in our cost reduction efforts and managing our plants and our capacity accordingly. In the long term, it's continuing those efforts and being willing to act quickly, using our variable cost base to act quickly to market results. It's about making those decisions on a, on a timely manner without sacrificing, you know, capabilities of the future. I'll just say the... If you look longer term at our long-term financial targets, it's a methodical build to that. As I highlighted earlier, strategy deployment is all about setting that long-term bar out there and then working backwards to current state. The specific areas start with things like lead through lean, where every year we redo the value stream maps for every part of our organization, and that continues to identify those opportunities. When we first started this, you had to push the teams to do that. Now they do that independently. Every part of our business does that every year to set themselves up to identify what those opportunities are for next year. I think the other key thing, I mentioned it earlier, but I wanna emphasize it again. Because of the supply chain dynamic over the last couple of years, we have not yet fully streamlined our extended supply chain. It just really wasn't an environment where you could do that. You had to take the supply you could get, and we were very effective at that. But it really wasn't an ideal environment for you to streamline an extended supply chain. There's a lot of work still to be done there. There are parts of the business that were built that way. We built the stock business to be more streamlined right out of the gate. But there's a tremendous opportunity to continue to make gains and efficiency out of our extended supply base. Those two areas are key. Then there's growth opportunity. As I highlighted a couple of channels, one that I didn't that I'll bring up is e-com. We're a player in e-com. We have a nice business that's sold digitally. There's a lot more runway for us as consumers migrate more in this category. It's not a huge category in e-com today, but it's an area that's under indexed for us. I always look at places where we know we can execute, but we're under indexed is a great way for us to grow. That's actually a good one. You touched on it a little bit. We got 2 people asking about this one. When you think about the strategic transformation you talked about, you mentioned, you know, the annual value stream mapping, if you thought about it and kind of where we are in that process, you mentioned runway. Where would you say we are in it, how much runway do we have left? Yeah. I'm a baseball fan. I'll use that analogy. It's a common one, but I'd say we're in the middle innings. You know, we've established the culture. People understand it. People are executing on it. But now it's really becoming part of what we do every day. I'd say middle innings, but we may also be in a, you know... I think there's a lot of opportunities, so maybe there's gonna be extra innings in this game. I don't know. That's how I would characterize it. As Andi highlighted, too, is that the better you get at this thing, the curve goes upward. It's not a linear set of opportunities that present themselves. As you get better and better at this, those improvements come at a more exponential rate than what you've seen from our results so far. Great. You know, one of the ones that people are asking about, too, is the comment on the H1 versus the back half of 2023. I know we're not giving, obviously, updated outlook or anything here today, but, you know, any additional color on why we think the H1 is gonna be a little bit worse than the back half? Anything you wanna add? You wanna take that? Yeah, sure. I mean, I think what it's all about is the backlog, right? It's slowing right now, partly due to cyclicality with the holidays, but then also due to the interest rates and market and the uncertainty. Our year-on-year beginning backlog will be down. That's where we really see the Q1 being more challenged than the rest of the year. Q2 will most likely still be impacted by the interest rates and inflation, and then we hope to see some steadiness and potentially some recovery in the Q4. I think if you look at our business, you know, it's 1/3 new construction, 2/3 repair and remodel. On the new construction side, the starts have dropped significantly over the last several months, and that's a leading indicator for the number of houses we're gonna put cabinets in. You know, builders have been steady in completions over the last several months, but we start seeing that coming down as well. At a certain point, our ability to grow in this market is limited by the starts, and then that is gonna start affecting. It's a, it's a normal behavior for the builders here that still have a backlog that wanna reduce that backlog. They're just artificially lowering their starts. We'll have to wait for them to increase starts again. I mean, historically, it's not the worst that's ever happened. It's just a big variance from what it has been. You know, I go back to there'll be a cycle. I don't know yet how long that will last. We'll have more clarity on that most likely in our Q1, in the Q4 earnings call that we do in the Q1. Coming out of that cycle, the demand is still there, or the gap in housing is still there. It's probably gonna get worse, frankly. At some point, the builders are going to have to or gonna want to get back to the pace that they've been on. At some point, that'll kick back in. We just have to wait and see what the timing of that change is. Okay. That's good. Kinda moving away from next year. We've got enough questions, we'll get back to that maybe. This is a little bit longer term one. You know, you talked about some of the trends, I think Gay mentioned it in her portion of the Q&A. How do we stay ahead of trends? The question here is, what are you thinking about staying on trend and what consumers want? You know, how are we thinking about that going forward? Yeah. I think, you know, what you heard a lot today is about the operational transformation that we've been doing with the company, which it in some ways probably sounds internally focused. As we talked about with Align to Grow, there's a lot of external focus. Navi really told you some of the breadcrumbs, if you will, of how we get more externally focused using digital tools and data. You kinda have to get your house in order first, we're well on our way there. Our attention quickly turns to where is it growing, how do we participate in that? That becomes our next area of focus as we get through all the work that we've been doing and that we need to finish here. To me, it's because we cover the market so broadly, we're able to see those trends, and we've been acting on them. That's gonna become more and more of our focus. As Gay highlighted and I highlighted too with Align to Grow, it's really understanding what those customers want to be able to deliver to them. Then take that to the next step, which is using data, using understanding from all the digital tools that we're putting in place to really thrive and find those continued pockets of growth and deliver those. A lot of that has to do with the styles. We have a great team that designs kitchens like you see in these slides to stay current on that, so we can shift with those various trends in the market. Yeah. I was gonna add to that. Just sort of mention, we have an amazing team. To me, very creative folks, that have amazing showroom and design center, and they stay up with recent designs, HGTV, do it yourself, and they keep well ahead of those market trends. Great. Let me ask a little bit on the $100 million savings that you've mentioned in your presentation. Now you're going back to the financials. You talked about it. Is that cumulative, you know, savings? You know, what's all included in there as far as how cumulative is that? Is that margin target dependent on that $100 million that you mentioned? Let me just clarify a few things. It excludes our normal $40 million in annual savings from CI. The $100 million is proactive actions we're taking now to specifically address the headwinds in 2023. It isn't really margin related. It's focused on true costs, whether it's capacity reduction, shift reduction, headcount reduction, where it's appropriate without losing capability, and a lot of other, you know, contract negotiations, those sorts of initiatives. I would say it's true cost focus. Good. Good to know. Thanks for the clarification. As far as the, you've got a lot coming in here, you know, with the spin, the corporate expenses, the additional cost related to the business, can you help people kind of understand that? It seems like some people want that unpacked. Yeah, it is a bit confusing, especially when you look at the Form 10. In the Form 10, you'll see prior to this year, you'll see in this historical accounting type allocation. A lot of those allocation, it's higher 'cause it essentially includes duplicate tip costs. For example, there's the management team of MasterBrand, already in MasterBrand, and then there's the allocation of Fortune's management team, which of course will go away once the spin happens. When you look at 2022, there will be that allocation, plus there will be all the one-time spin costs. Again, it's a little confusing when you look at it from a pure accounting Form 10-K perspective. Going forward, as you'll see, which was in the Form 10, 2022, ongoing spin costs are estimated to be about $30 million. Generally, in the future, you can look at spin costs of being about 100 basis points of net sales. In 2023, there will be probably mid to high single digits of additional spin costs, one-time spin costs, as we continue to stand on our own. After that, we plan to be around that 100 basis points of spin costs. Or excuse me, standalone costs. Okay. Helpful. Then just kind of quick follow into that one, CapEx as well, expectations. CapEx expectations for 2023, again, no higher than 1.3 times depreciation. It will be highly focused. In the last two years, when you saw on those charts, those were highly focused on our platform, making it flexible and focused on our footprint. In 2023, it's highly focused on our digital capabilities and our consumer experience. There'll be a change in focus in our CapEx, but it'll still be relatively modest, below 1.3 times depreciation. You know, after that, it'll depend, right? It'll depend on growth. It'll depend on other initiatives that may come about in the market. Got it. Thank you. Kind of stepping away from some of the financials, Dave, maybe this one is directed at you. You know, how do you think about the long-term opportunity in the direct-to-consumer sales? You know, is this something we'd wanna put a significant investment in and for brand? Yeah, it's. I think there's certainly opportunity for it. We are spending time learning about it. It is a different way of selling, and it's a different way of operating. We do experiment with that. As I highlighted earlier, we are in the e-commerce channel, with all the large, as you would expect, all the large leaders in that channel. We're learning a lot about fulfillment there and how to connect with the consumer through existing e-channel, e-commerce channels. I think eventually, that gives us the opportunity to do more of that. Again, it comes back to prioritization and focus. You wanna be good. You know, going direct to a consumer, you really, you wanna make a good first impression. You don't wanna get out there and all of a sudden, because you get that instant feedback. I think John Lee was talking about this in his presentation. You get that instant feedback in the reviews. Then, if you haven't done a great job with it almost hurts you more than doing nothing. It really does take a focused effort. We've done some learning with it, but we're not there yet to the point where we feel that it's a viable place to go. We, of course, as we get better at it, we're gonna go after it and as an opportunity. Okay. Good. Kinda going back to, financial question for you, Andi. A couple people asked specifically about going into next year, you know, assumptions around and Dave as well, but, you know, on the pricing front. You know, as we go into the market, you know, what are we thinking from that, from a financial perspective about the ability to maintain it, and, you know, what's in our assumptions? Also, and for the long term, targets. Then, you know, Dave, maybe more related on the commercial side. What are your thoughts? Well, I'll start with how we think about it commercially. You know, first and foremost, there has not been a significant deflation yet in our supply chain side of things. Materials are still costing more. Freight and logistics are still costing more. While the obvious trend when markets slow down is for commodities to start coming down, we haven't seen a material change there yet. I'm sure we will. Our approach to price is, particularly in this kind of environment, to really approach the customer with what are they trying to accomplish. Steer the conversation differently to say, "We can deliver for you what you're looking for at a lower cost to you that's not a price discussion." That's the beauty of our product continuum and our delivery capability, and in a lot of ways, our channel, is that we can have those conversations to say, "If you're aiming for this price point, we have a product set that fits that and accomplishes what you're trying to accomplish, without talking about the actual price of what you've been buying." That being said, as commodities do come down, there will be market pressure to change the list price on things, and we'll work through that as we go. We've gotten a lot better at pricing over the past couple years. I think you heard Navi talking about how we're trying to bring that data into our systems in a way that we get quicker insights. I think, you know, we wouldn't have been able to accomplish what we have over the past couple years if we hadn't gotten a lot better at pricing. We're more nimble than we were on pricing before, which I think will help us in the coming environment. Also that nimbleness is how we approach the customers that we're dealing with on that very topic in terms of what we're offering them. I don't know if you have anything- Yeah. I would just add one point which I think really helps us, and it's really due to this transformation, was the adjustments we've made in the business that we can, if the market does flex us across the product line, the margin profitability is still favorable in all those products and channels now. Where it used to be a little bit more weighted to made-to-order products versus stock. Now we have profitability across the channels. We're able to react a little bit faster. We've also become much more strategic in our pricing, such that rather than just, you know, dropping the price like someone might do, we have components of pricing, whether that's fuel surcharges or other things, where a fuel surcharge will come down, effectively reduce the price when fuel comes down, so it comes down with our cost. That helps us in maintaining that profitability. Good follow on that. There's 1 question came in about promotional activity. Any changes you could see in that related? You know, we use promotion activity to test and learn. I think the key to promoting is using promotion to determine is this a demand problem or a price problem. We are judicious about using... Obviously, if you've been out into cabinet dealers and in home centers, you see that there is, that those channels often use discounting. If you use discounting to understand does it change the dynamic of demand or not, you're gonna make the right decision about what you do with that promotion. That's how I look at promotion is if you experiment with it to understand do we have a price problem, or is this just a demand problem? If it's a demand problem, it really, you know, dropping price with promotion doesn't help anybody. It really just sits there on the shelf and still doesn't sell. That's how we look at it, and that's how we've been approaching it this fall is using it as a tool to do that. Okay. Actually one question relates to what we had presented for our market expectations versus FBIN. You know, what helps us get to our high single digit guide as opposed to what FBIN put out mid-single? You know, what's the difference? I mean, the markets now are different with the two different companies, so maybe help people understand that. Sure. A number of folks have asked me this, Albert, during some of the breaks. We're a larger ticket item, so we're gonna have more amplitude in our cycle than the remaining part of Fortune Brands Innovations. It's a bigger purchase, so when times are tight, it's a bigger decision to make that purchase decision. I go back to, again, putting in front of the consumer exactly what fits their need, hopefully at a price point that convinces them it's the time to do it. While we will have bigger amplitude in our cycle than other building products companies that are less discretionary, I think we're built well to handle that within our part of the industry because we are able to o nce that consumer walks in the door, we're putting things in front of them that are getting them to yes, as opposed to other parts of the market that may not have that same ability. Yeah. Another one here is asking about, when you look at the leverage targets, and you talked about specifically on the balance sheet. You know, we mentioned the interest in staying investment-grade rating. What's the range that actually people should think about as opposed to what we're initially coming out with our net debt to EBITDA? At close, we plan to be around 2.3 times. The range, is there any range that we think we wanna operate in? Any clarity there or? I think we wanna be at 2-2.5, of course, if M&A comes about, strategic M&A, we'll take exception. Okay. Fair enough. Yeah, I mean, I think we have a path, certainly within the near term to stay inside of, you know, 2 to 3, depending on how the market performs over the next year. Then, you know, prior to doing any M&A, we'll wanna make sure we're comfortable that the balance sheet is in good shape for a long period of time. To make those decisions. There's also M&A. You know, I don't know if you're gonna get a question on this, but I'll answer it for you anyway. We have not done M&A in this business during my tenure here. Obviously have in the past. You know, M&A is a muscle that you have to practice with and work, and I think, you know, Nick's team at Fortune Brands has done a phenomenal job with it. We haven't done it in a while, and you really, you don't wanna go into that kind of mode without, you know, being ready for it and practicing. I think you see as we look at potentially moving down the road towards M&A, which is a thing that I think is a great part about us spinning is that we're freed up to do that. We're gonna be doing smaller bolt-on type things first, things that add to our capabilities in a meaningful way but aren't transformational. Because you really, it's a high risk, high return way of using your capital. I think there's a lot of great things that you can do with it. I've done that for my whole career, but I think you really have to be practiced at it so that you're effective and not creating more complexity. You're actually add-additive and not just creating more of a mess. That was perfect timing because that actually was the next question. Okay. Well, there's another one. That was not planned, but I assumed it was coming. There is. It's perfect though. I think another one came in about industry structure, maybe try and hit that one here. You know, as far as we would look at ourselves now compared to maybe other public competitors or the others out there right now, you know, anything you'd want to point to as far as, you know, difference between our platform, the platform of other competitors, anything specific we wanna point to? Yeah. I mean, I think it starts with what I talked about from a market leadership standpoint. We have the most comprehensive channel coverage and the most comprehensive product portfolio to cover that channel. Those are great, but it's how you execute on that that matters. Again, I don't work at our competitors obviously, so I think we treat our tools and our culture as the most critical thing that we do, and it's embedded in our culture. When you have that, you have this flywheel that starts spinning, and great things happen when that flywheel keeps spinning. That's what we spend our time focusing on. That combined with our market leading position in channel and product is it really drives that opportunity for growth both on the top line and the bottom line. You're just consistent with every stakeholder that you're dealing with. You're consistent with your customers, your associates love working there, and you deliver great returns for shareholders. To me, that's, that model works really well, and it's not easy to do. A transformation like this, you have to have, you know, the fortitude to get through the challenges of building that kind of culture. That's why there are a lot of companies out there that say that they use these tools. I'm sure all of you as investors hear these tools quite a bit. Dig in underneath and see how well they're really using them. Is it part of their culture? That's the differentiator here. You can use it for things like what Navi was talking about, which are groundbreaking for us and our industry, where we're not really a digital industry, but we have the opportunity and the headspace to do that because we've improved the business in so many other places. Yep. Quite time left for 2 questions. I think these are 2 good ones to finish on, is we're, you know, how would you say... I think we've already covered it a bit. How would you say things are different between the company and maybe the industry this time versus the last downturn? Yeah. Certainly the housing dynamic is different. The overall housing market looks very different today in terms of overbuilt versus underbuilt. We'll start there. Specific to the cabinet industry, there was not the scale player like us back at that point, and there wasn't a scale player that had the flexibility and the nimbleness in the operating model like us back then. There may have been companies that had certain aspects of it, but there wasn't that complete full product portfolio with a very flexible and agile operating system behind it in the last downturn. Going into this, we're well prepared for it. I don't, you know, it's not, you don't sit here preparing for the worst all the time, but, I mean, we know that we're in a market that has this kind of cycle. Everything we do is built around how do we help ourselves and our customers through that cycle. We really didn't operate that way before, nor did anybody else. I think based on this, there's a lot better fundamentals for housing in general going into this cycle, and we're better built for it. I think it's just gonna be a different outcome. Sounds good. All right, this one, I don't know, this one's definitely directed at you, Dave. As a new CEO of a standalone public company, the question is just, you know, how do you spend or bucket your time? Yeah. Fortunately, I've had a little practice at this, and I've got a few years to have a few things that weren't on my place. You know, look, I think to me, it's the CEO sets the tone for culture. I'm the culture cheerleader in this company. That really is what I do. Hopefully you can see I love this stuff. You know, internally, I spend a ton of time just driving that culture and helping everybody understand how it works. I like to translate that for our customers. I'd say even split between culture cheerleader internally and then expounding on that to our customers externally about how great this is. You know, the great part about it is we're not perfect, and I'm always willing to listen to what we're not perfect at. I think what our customers start realizing is that when they tell me about things that maybe we're not perfect at, we go fix them. I love those interactions because we've gotten to a relationship standpoint as customer and supplier, where they're willing to share that in a constructive way, and we help them fix that. The last piece, of course, is, I have to now interact with all of you on a regular basis. I will add that to my list, and I'm excited to do that and continue to tell you about what we're working on and how we're doing that. That's I'd say I divide it up that way. Perfect. All right. Thanks for that. Thanks, everybody, for the questions. You know, obviously, if there's ones going forward, please reach out to me. Happy to answer them. With that, I'll go ahead and leave it for you to close the remarks, Dave. Well, thank you all for coming today as we introduce MasterBrand to you. We're really excited about the road ahead, and we're gonna join you for a reception in the lobby right after this. Again, thanks for your time and attention. Really appreciate you being here, and we look forward to chatting with you more.