MASCO CORP /DE/

Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products, with a portfolio of industry-leading brands including BEHR paint, DELTA and HANSGROHE faucets, bath and shower fixtures, LIBERTY branded decorative and functional hardware, and HOT SPRING spas. The company operates in the residential repair and remodeling market and, to a lesser extent, the new home construction market, selling through home center retailers, online retailers, wholesalers and distributors, mass merchandisers, hardware stores, direct to the consumer, professional contractors, and homebuilders. The Decorative Architectural Products segment is impacted by seasonality and normally experiences stronger sales during the second and third calendar quarters, corresponding with the peak season for repair and remodel activity.

Masco believes its plumbing products are among the leaders in sales in North America and Europe. Competitors for plumbing products include Dornbracht GmbH & Co. KG, Fortune Brands Innovations' Moen, Rohl and Riobel brands, Kohler Co., Lixil Group Corporation's American Standard and Grohe brands, Spectrum Brands Holdings' Pfister faucets, Villeroy & Boch's Ideal Standard brand, Zurn Elkay Water Solutions Corporation, as well as private label and digitally native brands. Competitors for spas, exercise pools, aquatic fitness systems and saunas include Artesian Spas, Harvia, Jacuzzi and Master Spas brands. In Decorative Architectural Products, competitors include large national and international brands such as Benjamin Moore & Co., Pittsburgh Paints Co.'s Glidden, Olympic, Pittsburgh Paints and Stains and PPG Paints brands, RPM International Inc.'s Rust-Oleum and Zinsser brands, The Sherwin-Williams Company's Minwax, Sherwin-Williams, Thompson's Water Seal, Valspar and Purdy brands and the Wooster Brush Company. For cabinet and door hardware, key competitors in North America include Amerock Hardware, Richelieu Hardware Ltd., Top Knobs and private label brands. For decorative bath hardware, competitors include American Bath Group's Dreamline brand, Fortune Brands Innovations' Moen brand, Gatco Inc., Kohler Co. and private label brands. Net sales to The Home Depot were $2.9 billion ¹, approximately 38 percent ² of consolidated net sales in 2025, and net sales to Ferguson and Lowe's were each less than 10 percent ³ of consolidated net sales. The Behr business grants to The Home Depot Behr brand exclusivity in the retail sales channel in North America and exclusivity with respect to Kilz branded primer products in the home improvement big box retail sales channel and across online only mass market retail marketplaces in the United States and in the retail sales channel in Canada.

Masco generates revenue by designing, manufacturing, and distributing branded home improvement and building products, selling them primarily for repair and remodeling activity and, to a lesser extent, new home construction. The company provides customer programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives, which are considered variable consideration. Revenue is recognized as control of products is transferred to customers, generally at the time of shipment or upon delivery based on contractual terms, with customer payment terms generally ranging from 30 to 65 days. Net sales of architectural coatings comprised approximately 31 percent ⁴ of consolidated net sales in 2025 and 32 percent ⁵ of consolidated net sales in 2024 and 2023.

The Plumbing Products segment sells a wide variety of products including faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, shower drains, steam shower systems, water filtration systems, sinks and kitchen accessories, primarily sold to home center retailers, online retailers, mass merchandisers, wholesalers and distributors under brand names including DELTA, BRIZO, PEERLESS, HANSGROHE, AXOR, KRAUS, NEWPORT BRASS, WALTEC, BRISTAN and HERITAGE. The segment also manufactures acrylic tubs, bath and shower enclosure units, and shower bases and trays under DELTA and MIROLIN brands, and sells spas, exercise pools, aquatic fitness systems and saunas under HOT SPRING, CALDERA, FREEFLOW SPAS, FANTASY SPAS, AQUATERRA, LIFESMART, ENDLESS POOLS, TYLÖ, FINNLEO and HELO brands. Additionally, the segment includes brass, copper and composite plumbing system components and other non-decorative plumbing products marketed under BRASSCRAFT, PLUMBSHOP and MASTER PLUMBER brands, and develops connected water products including touchless activation, voice activation, controlled volume dispensing and systems for monitoring and controlling temperature and flow of water. The segment also performs electron beam irradiation services and supplies custom thermoplastic solutions, extruded plastic profiles, specialized fabrications and PEX tubing. Net sales for the Plumbing Products segment were $4,992 million ⁶ in 2025, $4,853 million ⁷ in 2024, and $4,842 million ⁸ in 2023.

The Decorative Architectural Products segment primarily includes architectural coatings, including paints, primers, specialty coatings, stains and waterproofing products, as well as paint applicators and accessories, sold under BEHR, KILZ, WHIZZ and other trademarks to do-it-yourself and professional customers through home center retailers and other retailers. The segment also includes branded cabinet and door hardware, functional hardware, hook and hook rail products, and outdoor living hardware sold under LIBERTY, FRANKLIN BRASS and other trademarks, as well as decorative bath hardware, shower accessories and shower doors sold under DELTA and FRANKLIN BRASS brands. Net sales for the Decorative Architectural Products segment were $2,570 million ⁹ in 2025, $2,975 million ¹⁰ in 2024, and $3,125 million ¹¹ in 2023.

In the fourth quarter of 2025, Masco began implementing various restructuring actions to further streamline its business, reduce headcount, and optimize operations, incurring charges of approximately $18 million ¹² in the fourth quarter of 2025, and expects to incur approximately $50 million ¹³ in additional charges in 2026. Subsequent to December 31, 2025, the company announced an internal reorganization resulting in the integration of its Liberty Hardware business into its Delta Faucet business, with Liberty to be included in the Plumbing Products segment beginning in the first quarter of 2026. In 2025, the company repurchased approximately 8.5 million ¹⁴ shares of its common stock and increased its quarterly dividend by approximately seven percent ¹⁵ compared to 2024. Effective October 20, 2022, the Board of Directors authorized the repurchase of up to $2.0 billion ¹⁶ of shares of common stock, and the company repurchased and retired 8.5 million ¹⁷ shares for approximately $576 million ¹⁸, inclusive of excise tax of $5 million ¹⁹, in 2025. Effective February 10, 2026, the Board of Directors authorized a new repurchase of up to $2.0 billion ²⁰ of shares. In the third quarter of 2024, the company sold its Kichler Lighting business for consideration of $125 million ²¹, net of cash disposed, recognizing a loss of $88 million ²², inclusive of costs to sell. In the third quarter of 2023, the company acquired Sauna360 Group Oy for approximately €124 million ²³ ($136 million ²⁴), net of cash acquired.

Net sales for 2025 were $7,562 million ²⁵, a decrease of three percent ²⁶ compared to 2024. Excluding divestitures and the effect of currency translation, net sales decreased two percent ²⁷. Gross profit for 2025 was $2,679 million ²⁸, a decrease of five percent ²⁹, with gross margin of 35.4 percent ³⁰ compared to 36.2 percent ³¹ in 2024. Operating profit for 2025 was $1,248 million ³², a decrease of eight percent ³³ compared to $1,363 million ³⁴ in 2024. Net income attributable to Masco Corporation for 2025 was $810 million ³⁵, compared to $822 million ³⁶ in 2024. Diluted income per common share was $3.86 ³⁷ in 2025, compared to $3.76 ³⁸ in 2024. Net cash from operating activities was $1,022 million ³⁹ in 2025, compared to $1,075 million ⁴⁰ in 2024.

Management expects capital expenditures, excluding any potential future acquisitions, to be approximately $190 million ⁴¹ in 2026. Depreciation and amortization expense, excluding any potential future acquisitions, is expected to be approximately $160 million ⁴² in 2026. The Board of Directors declared a quarterly dividend of $0.32 per share ⁴³ in the first quarter of 2026 with the intention to increase the annual dividend three percent ⁴⁴ to $1.28 per share ⁴⁵. Outside of any potential acquisitions, the company anticipates using approximately $600 million ⁴⁶ of cash for share repurchases (including shares to offset dilution from restricted stock units) in 2026.

Masco continues to pursue its strategy of driving the full potential of its core businesses, leveraging opportunities across its enterprise, and actively managing its portfolio. The company executes this strategy by investing in its brands, developing innovative products, making capital investments, and focusing on continuous productivity improvement and operational excellence. The company continues to leverage the Masco Operating System, its methodology to drive growth and productivity, and continuous improvement initiatives across its enterprise to identify additional opportunities to improve business operations. The company also pursues the acquisition of businesses complementary to its portfolio as a component of its strategy for future growth.

The company is experiencing, and may continue to experience, lower market demand for its products, elevated commodity and other input costs, as well as employee-related cost inflation. Additionally, the company has been experiencing, and may continue to experience, significantly higher costs, principally in its Plumbing Products segment, due to the recently enacted tariffs, particularly those related to China. Masco seeks to mitigate the impact of higher tariffs and other unfavorable impacts to its costs over time with pricing, cost savings initiatives, sourcing changes, and other activities. Consumer demand for its products could further diminish if consumer confidence erodes and the price of its products and other consumer goods increases.

In the fourth quarter of 2025, Masco began implementing various restructuring actions to further streamline its business, reduce headcount, and optimize operations, incurring charges of approximately $18 million ⁴⁷ in the fourth quarter of 2025, and expects to incur approximately $50 million ⁴⁸ in additional charges in 2026. The company also announced an internal reorganization integrating Liberty Hardware into Delta Faucet, with Liberty moving to the Plumbing Products segment beginning in the first quarter of 2026.

Capital expenditures for 2025 were $156 million ⁴⁹, compared with $168 million ⁵⁰ for 2024. For 2026, capital expenditures, excluding any potential future acquisitions, are expected to be approximately $190 million ⁵¹. Depreciation and amortization expense for 2025 totaled $148 million ⁵², compared with $150 million ⁵³ for 2024. For 2026, depreciation and amortization expense, excluding any potential future acquisitions, is expected to be approximately $160 million ⁵⁴. The company repurchased and retired 8.5 million ⁵⁵ shares of its common stock in 2025 for approximately $576 million ⁵⁶, inclusive of excise tax of $5 million ⁵⁷. At December 31, 2025, the company had $325 million ⁵⁸ remaining under the 2022 authorization. Effective February 10, 2026, the Board of Directors authorized a new repurchase of up to $2.0 billion ⁵⁹ of shares. The company paid a quarterly dividend of $0.31 per common share ⁶⁰ for an annual dividend of $1.24 per share ⁶¹ in 2025, with total cash dividends paid of $261 million ⁶². The Board of Directors declared a quarterly dividend of $0.32 per share ⁶³ in the first quarter of 2026 with the intention to increase the annual dividend three percent ⁶⁴ to $1.28 per share ⁶⁵.

The company's business performance relies on residential repair and remodeling activity and, to a lesser extent, on new home construction activity, which are impacted by a number of economic and other factors including consumer confidence levels, consumer income and debt levels, consumer affordability, unemployment and underemployment levels, the availability of home equity loans and mortgages and the interest rates for and tax deductibility of such loans, inflationary pressures including from duties and tariffs, changing government policies and programs, existing home sales, age of the housing stock, fluctuations in home prices, household formation, trends in lifestyle and housing design, the availability of skilled tradespeople for repair and remodeling work, and natural disasters, terrorist acts, pandemics, social or civil unrest, wars or conflicts or other catastrophic events. Economic contractions or recessions have resulted in and could in the future result in a decline in residential repair and remodeling activity or in demand for new home construction.

The company faces significant competition and operates in an evolving competitive landscape. Home center retailers are increasingly selling directly to professional contractors and installers, which may adversely impact margins on products that contractors and installers would otherwise buy through dealers and wholesalers. Certain customers sell products sourced from low-cost foreign manufacturers under their own private label brands, which directly compete with Masco's brands. The growing e-commerce channel brings an increased number of competitors and greater pricing transparency for consumers and customers, as well as conflicts between existing distribution channels. The company's sales are concentrated with three significant customers, with net sales to The Home Depot of $2.9 billion ⁶⁶ (approximately 38 percent ⁶⁷ of consolidated net sales) in 2025, and net sales to Ferguson and Lowe's each less than 10 percent ⁶⁸ of consolidated net sales.

Masco's business performance is heavily dependent on residential repair and remodeling activity and, to a lesser extent, new home construction, which are subject to economic cycles and factors including consumer confidence, interest rates, inflationary pressures from duties and tariffs, and housing market conditions. The company faces significant customer concentration risk, as net sales to The Home Depot were $2.9 billion ⁶⁹, approximately 38 percent ⁷⁰ of consolidated net sales in 2025, and the loss of a substantial portion of sales to The Home Depot or the loss of all sales to Ferguson or Lowe's would have a material adverse impact. Variability in the cost and availability of raw materials, components, and finished products, including significantly higher costs from increased duties and tariffs mainly in the Plumbing Products segment, poses a risk, and the company may not be able to pass cost increases on to customers due to competitive considerations and customer resistance. The company is also exposed to risks associated with its international operations, as 21 percent ⁷¹ of sales in 2025 were made outside of North America and transacted in currencies other than the U.S. dollar, exposing the company to foreign currency fluctuations, particularly the euro, Chinese renminbi, Canadian dollar, British pound sterling, and Mexican peso.

Management's message emphasizes confidence in the fundamentals of the business and long-term strategy, highlighting that the company's strong financial position and cash flow generation, together with investments in industry-leading branded building products, continued focus on innovation and customer service, and disciplined capital allocation, will allow the company to drive long-term growth and create value for shareholders. Management states that the company continues to pursue its strategy of driving the full potential of its core businesses, leveraging opportunities across its enterprise, and actively managing its portfolio. Specific forward-looking statements include expectations for capital expenditures of approximately $190 million ⁷² in 2026, depreciation and amortization expense of approximately $160 million ⁷³ in 2026, and the intention to increase the annual dividend three percent ⁷⁴ to $1.28 per share ⁷⁵. The company also anticipates using approximately $600 million ⁷⁶ of cash for share repurchases in 2026 outside of any potential acquisitions. Management notes that the company expects to incur approximately $50 million ⁷⁷ in additional restructuring charges in 2026.