John G. Sznewajs
Vice President and Chief Financial Officer at Masco
Thank you, Keith, and good, morning, everyone. As Dave mentioned, my comments today will focus on adjusted performance excluding the impact of rationalization and other one-time items. Turning to Slide 7. Sales in the quarter matched prior year and excluding currency, grew 3%. Net selling prices increased sales by 9%, partially offset by lower volumes, which decreased sales by 6%. In local currency, North American sales increased 3%. This performance was driven by strong growth in PRO paint as well as in spas. Higher net selling prices increased sales by 11%, partially offset by lower volumes, which decreased sales by 8%.
In local currency, international sales increased 5%. Net selling prices increased sales by 4% and higher volumes increased sales by 3%, partially offset by a mix impact of 1%. Gross margin of 31.5% was impacted by higher year-over-year operational costs in the quarter. We anticipate that gross margin will continue to face pressure in the fourth quarter, but will improve year-over-year. Our SG&A as a percentage of sales improved 110 basis points to 15.6%. Operating profit in the third quarter was $351 million and operating margin was 15.9%. Operating profit was impacted by lower volumes, higher operational costs and currency, partially offset by higher net selling prices. Lastly, our EPS in the quarter was $0.98.
Turning to Slide 8. Plumbing sales were flat to prior year. Excluding the impact of currency, segment sales grew 5% against a healthy 15% comp in the third quarter of last year. Pricing contributed 7% to growth and volume decreased sales by 2%. North American sales increased 4% in local currency. This performance was driven by strong spa volumes and pricing actions across the segment, partially offset by lower volumes in other product categories. International plumbing sales increased 5% in local currency against an 18% comp from last year. Growth was led by strength in China with most European markets roughly flat versus prior year. Segment operating profit in the third quarter was $220 million and operating margin was 16.6%. Operating profit was impacted by lower volumes, higher operational costs and currency, partially offset by higher net selling prices.
Turning to Slide 9. Decorative Architectural sales increased 1% in the third quarter. Our PRO paint business continued to deliver outstanding performance, with sales up mid-teens, I guess a robust comp of over 45% in the third quarter of 2021. We continue to gain share and drive conversion as our PRO paint offering, strong brands, and high quality products resonate with PRO customers. Our DIY paint business declined low-single digits versus prior year, largely as expected. Additionally, our lighting and builders hardware businesses declined in aggregate mid single-digits in the quarter. Operating profit was $151 million in the quarter and operating margin was 17.2%. Operating profit was impacted by lower volumes and higher freight and material costs, partially offset by higher net selling prices.
Turning to Slide 10. Our balance sheet is strong with net debt to EBITDA at 1.9 times. We ended the quarter with approximately $1.5 billion of balance sheet liquidity. Working capital as a percent of sales was 18.5%. Working capital was impacted by higher inventory levels at many of our businesses, cost inflation, and delays in receipt and delivery of material. We continue to balance our inventory levels with demand and expect working capital as a percent of sales to be approximately 16.5% at year end.
In the quarter, we also paid down a $100 million of the $500 million term loan that we borrowed in the second quarter. Additionally, our Board authorized a new $2 billion share repurchase program effective October 20, 2022, replacing the existing authorization. This action underscores Masco's strong financial position and our Board's confidence in Masco's future. We do not expect further share repurchases this year as we will use our free cash flow to repay the balance of the $500 million term loan that we took out in the second-quarter.
Turning to Slide 11. Let's review our outlook for 2022. Given moderating demand and additional foreign currency headwinds, we now expect our full year sales growth for Masco to be in the range of 3% to 4% versus our prior guidance of 5% to 7%. We now anticipate full year operating margins to be approximately 16% given lower volumes and higher operational costs. While we continue to expect year-over-year margin expansion in the fourth quarter, it will be lower than previously anticipated.
In our Plumbing segment, we now expect 2022 sales growth to be in the range of 1% to 2%, including foreign currency versus our previous guidance of 3% to 5%. Given current exchange rates, foreign currency is expected to unfavorably impact plumbing revenue by approximately 4%. We now anticipate the full year Plumbing margins will be approximately 16.5%.
In our Decorative Architectural segment, we expect 2022 sales to grow in, the range of 7% to 8% versus our previous guidance of 9% to11%. Looking specifically at paint growth for 2022, we currently anticipate our DIY paint sales to increase mid single-digits and our PRO paint sales to increase strong double-digits. We now expect the full year Decorative Architectural margin to be approximately 17.5%. This is lower than our previous guidance due to lower-than-anticipated volumes and higher advertising spend. Finally, as Keith mentioned earlier, our updated 2022 EPS estimate is $3.70 to $3.80. This assumes a $233 million average diluted share count for the year. Additional modeling assumptions for 2022 can be found on Slide 14 in our earnings deck.
With that, I'd like to, open the call for Q&A. Operator?