MASCO CORP DE

Previous wording

Due to changing market conditions, we are experiencing, and may continue to experience, lower market demand for our products. We have been experiencing, and may continue to experience, elevated commodity and other input costs, as well as employee-related cost inflation. We aim to offset the potential unfavorable impact of our costs and lower demand for our products with productivity improvements, pricing, and other initiatives.

Current wording

Due to changing market conditions, we are experiencing, and may continue to experience, lower market demand for our products. We have been experiencing, and may continue to experience, elevated commodity and other input costs, as well as employee-related cost inflation. Additionally, we expect the recently-announced tariffs, particularly those related to China, to result in significantly higher costs to us, principally in our Plumbing Products segment. We seek to mitigate the impact of higher tariffs and other unfavorable impact to our costs over time with pricing, cost savings initiatives, sourcing changes, and other activities. Consumer demand for our products, however, could further diminish if consumer confidence erodes and the cost of our products and other consumer goods increases.

Previous wording

The following discussion of consolidated results of operations refers to the three and nine months ended September 30, 2024 compared to the same periods of 2023.

Current wording

The following discussion of consolidated results of operations refers to the three months ended March 31, 2025 compared to the same period of 2024.

Previous wording

Below is a summary of our net sales, in millions, for the three and nine months ended September 30, 2024 and 2023:

Current wording

Below is a summary of our net sales, in millions, for the three months ended March 31, 2025 and 2024:

Previous wording

Our net sales for the nine months ended September 30, 2024 were $6,000 million, which decreased one percent compared to the nine months ended September 30, 2023. Excluding acquisitions, divestitures and the effect of currency translation, net sales decreased two percent. Our net sales for the nine months ended September 30, 2024 decreased primarily due to lower sales volume across the entire company which decreased sales by two percent, lower net selling prices of decorative architectural products which decreased sales by one percent and unfavorable sales mix of plumbing products which decreased sales by one percent. These amounts were partially offset by higher net selling prices of plumbing products which increased sales by one percent.

Current wording

Our net sales for the three months ended March 31, 2025 were $1,801 million, which decreased six percent compared to the three months ended March 31, 2024. Excluding divestitures and the effect of currency translation, net sales decreased three percent. Our net sales for three months ended March 31, 2025 decreased primarily due to lower sales volume mostly driven by paints and other coating products which decreased sales by three percent and unfavorable sales mix of plumbing products which decreased sales by one percent, partially offset by higher net selling prices of plumbing products which increased sales by one percent.

Previous wording

Below is a summary of our results of operations for the three and nine months ended September 30, 2024 and 2023:

Current wording

Below is a summary of our results of operations for the three months ended March 31, 2025 and 2024:

Previous wording

Our gross profit for the three months ended September 30, 2024 was $725 million, which decreased three percent, and was negatively impacted by five percent due to the non-recurrence of the receipt of an insurance settlement payment in 2023, as well as higher commodity costs and unfavorable sales mix, partially offset by cost savings initiatives.

Current wording

Our gross profit for the three months ended March 31, 2025 was $644 million, which decreased six percent, and was negatively impacted by three percent due to lower sales volume, three percent due to the divestiture of our Kichler Lighting ("Kichler") business, as well as higher commodity costs, partially offset by cost savings initiatives and two percent due to higher net selling prices.

Previous wording

Our selling, general and administrative expenses for the three months ended September 30, 2024 were $368 million, which increased two percent, and were primarily impacted by higher marketing costs.

Current wording

Our selling, general and administrative expenses for the three months ended March 31, 2025 were $358 million, which decreased two percent, and were positively impacted by five percent due to the divestiture of Kichler and one percent due to favorable foreign currency, partially offset by two percent due to higher marketing costs.

Previous wording

Our operating profit for the three months ended September 30, 2024 was $357 million, which decreased seven percent, and was negatively impacted by decreased gross profit and higher selling, general and administrative expenses.

Current wording

Our operating profit for the three months ended March 31, 2025 was $286 million, which decreased 10 percent, and was negatively impacted by decreased gross profit, partially offset by lower selling, general and administrative expenses.

Previous wording

Below is a summary of our other income (expense), net, in millions, for the three and nine months ended September 30, 2024 and 2023:

Current wording

Below is a summary of our other income (expense), net, in millions, for the three months ended March 31, 2025 and 2024:

Previous wording

Below is a summary of our income tax expense, in millions, and our effective tax rate for the three and nine months ended September 30, 2024 and 2023:

Current wording

Below is a summary of our income tax expense, in millions, and our effective tax rate for the three months ended March 31, 2025 and 2024:

Previous wording

Our effective tax rate for the three months ended September 30, 2024 was unfavorably impacted primarily by $4 million of income tax expense resulting from adjustments to reflect filed tax returns and an increase in the liability for uncertain tax positions.

Current wording

Our effective tax rate for the three months ended March 31, 2025 and 2024 was impacted by $9 million and $16 million of income tax benefits, respectively. For both periods, the income tax benefits primarily resulted from a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitations and stock-based compensation.

Previous wording

Below is a summary of our net income, in millions, and diluted income per common share for the three and nine months ended September 30, 2024 and 2023:

Current wording

Below is a summary of our net income, in millions, and diluted income per common share for the three months ended March 31, 2025 and 2024:

Previous wording

The following tables set forth our net sales and operating profit information by business segment and geographic area, dollars in millions.

Current wording

The following tables set forth our net sales and operating profit information by business segment, dollars in millions.

Previous wording

The following discussion of business segment and geographic area results refers to the three and nine months ended September 30, 2024 compared to the same periods of 2023. Changes in operating profit in the following business segment and geographic area results discussion exclude general corporate expense, net.

Current wording

The following discussion of business segment results refers to the three months ended March 31, 2025 compared to the same period of 2024. Changes in operating profit in the following business segment results discussion exclude general corporate expense, net.

Previous wording

International net sales increased three percent for the three months ended September 30, 2024, and in local currencies (including sales in currencies outside their respective functional currencies), net sales increased three percent. Higher sales volume increased sales by five percent and higher net selling prices increased sales by one percent, partially offset by unfavorable sales mix which decreased sales by three percent. International net sales decreased two percent for the nine months ended September 30, 2024, and in local currencies, net sales decreased one percent. Unfavorable sales mix decreased sales two percent, partially offset by higher net selling prices which increased sales by one percent.

Current wording

Net sales in the Plumbing Products segment decreased one percent for the three months ended March 31, 2025. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased one percent. Higher net selling prices increased sales by one percent, partially offset by unfavorable sales mix which decreased sales by one percent.

Previous wording

Operating profit in the Plumbing Products segment for the three months ended September 30, 2024 was positively impacted by cost savings initiatives and higher sales volume, partially offset by higher commodity and transportation costs and unfavorable sales mix. Operating profit for the nine months ended September 30, 2024 was positively impacted by cost savings initiatives and higher net selling prices, partially offset by unfavorable sales mix and increased employee-related costs.

Current wording

Operating profit in the Plumbing Products segment for the three months ended March 31, 2025 was negatively impacted by higher commodity costs, higher marketing costs and unfavorable sales mix, partially offset by higher net selling prices and cost savings initiatives.

Previous wording

Net sales in the Decorative Architectural Products segment decreased three percent and five percent for the three and nine months ended September 30, 2024, respectively. For the three months ended September 30, 2024, the decrease was due primarily to the divestiture of our Kichler business and lower sales volume of builders' hardware and lighting products. For the nine months ended September 30, 2024, the decrease was due primarily to lower sales volume and lower net selling prices across the segment.

Current wording

Net sales in the Decorative Architectural Products segment decreased 16 percent for the three months ended March 31, 2025. The divestiture of our Kichler business decreased sales by eight percent and lower sales volume decreased sales by seven percent.

Previous wording

Operating profit in the Decorative Architectural Products segment for the three months ended September 30, 2024 was negatively impacted by the non-recurrence of the receipt of an insurance settlement payment in 2023, higher marketing costs, and lower sales volume, partially offset by cost savings initiatives. Operating profit for the nine months ended September 30, 2024 was negatively impacted by the non-recurrence of the receipt of an insurance settlement payment in 2023, lower net selling prices, and lower sales volume, partially offset by cost savings initiatives.

Current wording

Operating profit in the Decorative Architectural Products segment for the three months ended March 31, 2025 was primarily negatively impacted by lower sales volume.

Previous wording

We had cash and cash investments of approximately $646 million and $634 million at September 30, 2024 and December 31, 2023, respectively. Our cash and cash investments consist of overnight interest bearing money market demand accounts, time deposit accounts, and money market mutual funds containing government securities and treasury obligations. While we attempt to diversify these investments in a prudent manner to minimize risk, it is possible that future changes in the financial markets could affect the security or availability of these investments. Of the cash and cash investments we held at September 30, 2024 and December 31, 2023, $332 million and $323 million, respectively, was held in our foreign subsidiaries. If these funds were needed for our operations in the U.S., their repatriation into the U.S. would not result in significant additional U.S. income tax or foreign withholding tax, as we have recorded such taxes on substantially all undistributed foreign earnings, except for those that are legally restricted.

Current wording

We had cash and cash investments of approximately $377 million and $634 million at March 31, 2025 and December 31, 2024, respectively. Our cash and cash investments consist of overnight interest bearing money market demand accounts, time deposit accounts, and money market mutual funds containing government securities and treasury obligations. While we attempt to diversify these investments in a prudent manner to minimize risk, it is possible that future changes in the financial markets could affect the security or availability of these investments. Of the cash and cash investments we held at March 31, 2025 and December 31, 2024, $265 million and $321 million, respectively, was held in our foreign subsidiaries. If these funds were needed for our operations in the U.S., their repatriation into the U.S. would not result in significant additional U.S. income tax or foreign withholding tax, as we have recorded such taxes on substantially all undistributed foreign earnings, except for those that are legally restricted.

Previous wording

The 2022 Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) an interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0. We were in compliance with all covenants and no borrowings were outstanding at September 30, 2024.

Current wording

The 2022 Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) an interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0. We were in compliance with all covenants and $131 million was borrowed and outstanding at a weighted average interest rate of 5.554% at March 31, 2025.

Previous wording

As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including extending payment terms. We also facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The amounts confirmed as valid under the program and included in accounts payable were $52 million and $53 million at September 30, 2024 and December 31, 2023, respectively. Of the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $28 million at both September 30, 2024 and December 31, 2023. All payments made under the program are recorded as a decrease in accounts payable and accrued liabilities, net, in our condensed consolidated statements of cash flows. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the program. We do not believe such risk would have a material impact on our working capital or cash flows, as substantially all of our payments are made outside of the program.

Current wording

As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including extending payment terms. We also facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The amounts confirmed as valid under the program and included in accounts payable were $46 million and $36 million at March 31, 2025 and December 31, 2024, respectively. Of the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $24 million and $23 million at March 31, 2025 and December 31, 2024, respectively. All payments made under the program are recorded as a decrease in accounts payable and accrued liabilities, net, in our condensed consolidated statements of cash flows. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the program. We do not believe such risk would have a material impact on our working capital or cash flows, as substantially all of our payments are made outside of the program.

Previous wording

Effective October 20, 2022, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock, exclusive of excise tax, in open-market transactions or otherwise. During the nine months ended September 30, 2024, we repurchased and retired approximately 6.6 million shares of our common stock (including 0.5 million shares to offset the dilutive impact of restricted stock units granted in the nine months ended September 30, 2024) for approximately $486 million, inclusive of excise tax of $3 million. At September 30, 2024, we had approximately $1.2 billion remaining under the 2022 authorization. Consistent with our past practice and as part of our long-term capital allocation strategy, outside of any potential acquisitions, we anticipate using approximately $750 million of cash for share repurchases in 2024.

Current wording

Effective October 20, 2022, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock, exclusive of excise tax, in open-market transactions or otherwise. During the three months ended March 31, 2025, we repurchased and retired approximately 1.8 million shares of our common stock (including 0.3 million shares to offset the dilutive impact of restricted stock units granted in the three months ended March 31, 2025) for approximately $131 million, inclusive of excise tax of $1 million. At March 31, 2025, we had approximately $766 million remaining under the 2022 authorization.

Previous wording

For the nine months ended September 30, 2024, net cash provided by operations was $668 million, primarily driven by operating profit, partially offset by changes in working capital.

Current wording

For the three months ended March 31, 2025, net cash used for operations was $158 million, primarily driven by changes in working capital, partially offset by operating profit.

Previous wording

For the nine months ended September 30, 2024, net cash used for financing activities was $673 million, primarily due to $482 million for the repurchase and retirement of our common stock, $191 million for the payment of cash dividends, $34 million for employee withholding taxes paid on stock-based compensation, $25 million for dividends paid to noncontrolling interest, and $15 million for the purchase of the remaining equity interest in Easy Sanitary Solutions B.V. These uses of cash were partially offset by $76 million of proceeds from the exercise of stock options.

Current wording

For the three months ended March 31, 2025, net cash used for financing activities was $72 million, primarily due to $130 million for the repurchase and retirement of our common stock and $66 million for the payment of cash dividends, partially offset by $131 million of net proceeds from revolving credit loan borrowings.

Previous wording

Our future performance may be affected by the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands, to develop innovative products and respond to changing consumer purchasing practices and preferences, our ability to maintain our public image and reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials, our dependence on suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse workforce, risks associated with cybersecurity vulnerabilities, threats and attacks and risks associated with our reliance on information systems and technology.

Current wording

Our future performance may be affected by the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands, to develop innovative products and respond to changing consumer purchasing practices and preferences, our ability to maintain our public image and reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials, our dependence on suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, the impact on demand, pricing and product costs resulting from tariffs, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse workforce, risks associated with cybersecurity vulnerabilities, threats and attacks and risks associated with our reliance on information systems and technology.