John G. Sznewajs
Vice President and Chief Financial Officer at Masco
Thank you, Keith. And good morning, everyone. And as Dave mentioned, my comments today will focus on adjusted performance, excluding the impact of rationalization and other one-time items.
Turning to Slide 8. Demand for our industry-leading brands remained robust and we delivered a strong finish to the year with sales increasing 9% in the quarter against a healthy 13% comp in the fourth quarter of last year. Net acquisitions and divestitures contributed 2% to growth and currency had a minimal impact.
In local currency, North American sales increased 11%, or 7% excluding acquisitions. Our team's outstanding execution drew a strong growth in both DIY and Pro paint as well as faucets, showers and spas. In local currency, international sales increased 3%, or 5% excluding acquisitions and divestitures. Our gross margin of 30.7% was impacted by higher commodity and logistics costs in the quarter. As we discussed on our third quarter call, price cost in 2021 had peak impact on our P&L in the fourth quarter.
Our SG&A as a percentage of sales improved 140 basis points to 17.6% as we continue to drive cost containment activities across our business. Operating profit in the fourth quarter was $265 million with an operating margin of 13.1% and our EPS was $0.67.
Turning to the full year 2021, sales increased 17% over prior year. Net acquisitions and divestitures contributed 3% to growth and currency contributed another 1%. In local currency, North American sales increased 14% and international sales increased 21%. Our SG&A as a percent of sales decreased 100 basis points to 16.9%.
Operating profit increased $148 million or 11% with an operating margin of 17.4%. Lastly, our EPS increased 19% to $3.70. I want to thank our employees across the globe for their hard work, dedication and commitment to safety that enabled us to achieve these outstanding results in another challenging year.
Turning to Slide 9. Plumbing growth was 5% against a strong 14% comp in the fourth quarter of last year. Net acquisitions and divestitures contributed 3% to this growth and currency had a minimal impact.
North American sales increased 6% in local currency and 1% excluding acquisitions. This performance was aided by Delta's continued strength in their growing e-commerce channel and increased selling prices. Watkins Wellness was also a significant contributor to growth and they continued to experience strong demand for their industry-leading spas. International plumbing sales increased 3% in local currency, or 5% excluding net acquisitions and divestitures. Hansgrohe grew sales in many of the key markets, including China and the UK.
Segment operating profit in the fourth quarter was $156 million and operating margins were 12.7%. As we discussed on our third quarter call, operating profit was impacted by an unfavorable price cost relationship, along with greater marketing and personnel expenses as we continue to invest to grow our plumbing businesses.
Turning to the full year 2021, plumbing sales increased an outstanding 24%. Net acquisitions and divestitures contributed 4% to this growth and currency contributed another 2%. In local currency, North American plumbing sales grew 22%, or 17% excluding acquisitions and international plumbing sales increased 21%, or 22% excluding net acquisitions and divestitures. Full year operating profit was $931 million, up $118 million or 15% and operating margin of 18.1%.
Turning to Slide 10. Decorative Architectural sales increased 15% for the fourth quarter, or 14% excluding acquisitions. Our DIY paint business grew mid-single digits in the quarter, against the high-teens comp in the fourth quarter of last year. Our Pro paint business grew more than 50% in the quarter, driven by strong professional paint demand and operational execution, resulting in share gains.
We expect Pro paint demand to remain strong as contractors continue to see growing demand for their services. We also anticipate increasing our penetration with the Pro by continuing to invest, along with our partners at Home Depot, in new services and programs to retain and grow the Pro customer. Our builders' hardware and lighting businesses also contributed to the segment's overall growth in the quarter.
Operating profit was $132 million in the quarter, up $23 million from 21% with margins expanding 80 basis points to 16.6%. This performance was driven by higher net selling prices, improved results in our lighting business, incremental volume and cost productivity initiatives, partially offset by higher commodity costs.
Turning to the full year 2021, sales increased 6%, driven by exceptional performance of our DIY and Pro paint businesses. Our teams did an outstanding job at effectively managing through numerous supply chain constraints throughout the year to deliver for our customers and gain share in the paint market. Full year operating income increased $41 million or 7% with margins expanding 20 basis points to 19.4%.
Turning to Slide 11, our year-end balance sheet is strong with net debt-to-EBITDA at 1.3 times. We ended the quarter with approximately $1.9 billion of balance sheet liquidity, which includes full availability of our $1 billion revolver. Working capital as a percent of sales was 16%. With our strong operating performance and lower than normal capex, adjusted free cash flow was nearly $900 million, representing 90% of adjusted net income. This is a strong result when considering the significant impact of inflation and supply chain disruptions on our working capital investment throughout the year. Finally, during 2021, we repurchased more than 17.6 million shares for over $1 billion. We increased our annual dividend by 68%.
Now, let's turn to Slide 12 and review our outlook for 2022. For Masco overall, we expect sales growth in the range of 4% to 8%, excluding foreign currency, with operating margins of 17.5%. Operating profit will be unfavorably impacted in the first half of the year as we experience the impact of a more normalized level of growth investments as compared to the first half of 2021.
For our Plumbing segment, we expect 2022 sales growth to be in the range of 3% to 7%, excluding foreign currency. Given current exchange rates, foreign currency is expected to unfavorably impact plumbing revenue by approximately 2% or $90 million. We anticipate full year plumbing margins will expand to approximately 19%. Margins in the first half of 2022, particularly in the first quarter, will be impacted by higher year-over-year marketing and personnel expenses as we comp against our strong margins in the first half of 2021.
For our Decorative Architectural segment, we expect 2022 sales to grow in the range of 6% to 10%. Looking specifically at peak growth for 2022, we currently anticipate our DIY business to increase high single digits and our PRO business to increase mid-teens. We anticipate full year Decorative Architectural margins to be approximately 18%.
As we have previously discussed, in this segment, pricing actions typically only recover the dollar amount of the inflation. As a result, all else equal, operating profit dollars remain neutral from cost recovery pricing actions that results in margin compression. During 2022, we also anticipate increased investment in this segment for marketing and new products that will drive future growth.
Finally, as Keith mentioned earlier, our 2022 EPS estimate of $4.10 to $4.30 represents 14% EPS growth at the midpoint of the range. This assumes a 240 million average diluted share count for the year. Additional modelling assumptions for 2022 can be found on Slide 15 in our earnings deck.
With that, I'll now turn the call back over to Keith.
