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. Additionally, we have been experiencing, and may continue to experience, significantly higher costs to us, principally in our Plumbing Products segment, due to the recently announced and enacted tariffs, particularly those related to China. 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 price of our products and other consumer goods increases.

Current wording

Due to a dynamic geopolitical and macroeconomic environment, 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 have been experiencing, and may continue to experience, significantly higher costs to us, principally in our Plumbing Products segment, due to tariffs, particularly those related to China. We seek to mitigate the impact of higher tariffs and other 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 price of our products and other consumer goods increases. We are monitoring developments following the recent Supreme Court ruling related to tariffs imposed under the International Emergency Economic Powers Act, which may create the potential for previously paid tariffs to be refunded by the U.S. government; however, the ability to recover, and the timing and amount of any potential refunds are uncertain, and at this time we cannot reasonably estimate the financial impact to us, if any. As of March 31, 2026, we have not recognized any amounts associated with potential refunds related to these tariffs.

Previous wording

The following discussion of consolidated results of operations refers to the three and nine months ended September 30, 2025 compared to the same periods of 2024.

Current wording

The following discussion of consolidated results of operations refers to the three months ended March 31, 2026 compared to the same period of 2025.

Previous wording

Below is a summary of our net sales, in millions, for the three and nine months ended September 30, 2025 and 2024:

Current wording

Below is a summary of our net sales, in millions, for the three months ended March 31, 2026 and 2025:

Previous wording

Our net sales for the three months ended September 30, 2025 were $1,917 million, which decreased three percent compared to the three months ended September 30, 2024. Excluding divestitures and the effect of currency translation, net sales decreased two percent primarily due to lower sales volume across the entire company which decreased sales by four percent, partially offset by higher net selling prices of plumbing products which increased sales by two percent.

Current wording

Our net sales for the three months ended March 31, 2026 were $1,918 million, which increased six percent compared to the three months ended March 31, 2025. Excluding the effect of currency translation, net sales increased four percent, primarily due to higher net selling prices across the entire company, which increased sales by five percent, partially offset by lower sales volume of paints and other coating products, which decreased sales by one percent.

Previous wording

Below is a summary of our results of operations for the three and nine months ended September 30, 2025 and 2024:

Current wording

Below is a summary of our results of operations for the three months ended March 31, 2026 and 2025:

Previous wording

Our gross profit for the three months ended September 30, 2025 was $656 million, which decreased 10 percent, and was negatively impacted by higher commodity and tariff costs, four percent due to lower sales volume, an increase in other expenses (including inventory-related reserves), and two percent due to the divestiture of our Kichler Lighting ("Kichler") business. These amounts were partially offset by seven percent due to higher net selling prices, as well as cost savings initiatives.

Current wording

Our gross profit for the three months ended March 31, 2026 was $686 million, an increase of seven percent, and was positively impacted by 14 percent due to higher net selling prices across the entire company, as well as cost savings initiatives, partially offset by higher commodity and tariff costs and an increase in other expenses.

Previous wording

Our selling, general and administrative expenses for the three months ended September 30, 2025 were $353 million, which decreased four percent, and were positively impacted by four percent due to the divestiture of Kichler and two percent due to lower marketing costs, partially offset by one percent due to unfavorable foreign currency translation.

Current wording

Our selling, general and administrative expenses for the three months ended March 31, 2026 were $369 million, an increase of three percent, and were negatively impacted by three percent due to unfavorable foreign currency translation, partially offset by one percent due to lower employee-related costs.

Previous wording

Our operating profit for the three months ended September 30, 2025 was $303 million, which decreased 15 percent, and was negatively impacted by decreased gross profit, partially offset by lower selling, general and administrative expenses.

Current wording

Our operating profit for the three months ended March 31, 2026 was $316 million, an increase of 10 percent, and was positively impacted by increased gross profit, partially offset by higher 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, 2025 and 2024:

Current wording

Below is a summary of our other income (expense), net, in millions, for the three months ended March 31, 2026 and 2025:

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, 2025 and 2024:

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, 2026 and 2025:

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, 2025 and 2024:

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, 2026 and 2025:

Previous wording

The following discussion of business segment results refers to the three and nine months ended September 30, 2025 compared to the same periods of 2024. Changes in operating profit in the following business segment results discussion exclude general corporate expense, net.

Current wording

The following discussion of business segment results refers to the three months ended March 31, 2026 compared to the same period of 2025. Changes in operating profit in the following business segment results discussion exclude general corporate expense, net.

Previous wording

Net sales in the Plumbing Products segment increased two percent for both the three and nine months ended September 30, 2025. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased one percent and two percent for the three and nine months ended September 30, 2025, respectively. For the three months ended September 30, 2025, net sales increased three percent due to higher net selling prices, partially offset by three percent due to lower sales volume. For the nine months ended September 30, 2025, net sales increased three percent due to higher net selling prices, partially offset by one percent due to lower sales volume.

Current wording

Net sales in the Plumbing Products segment increased nine percent for the three months ended March 31, 2026. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased seven percent, primarily due to higher net selling prices which increased sales by six percent.

Previous wording

Operating profit in the Plumbing Products segment for the three and nine months ended September 30, 2025 was negatively impacted by higher commodity and tariff costs, an increase in other expenses (including inventory-related reserves), and lower sales volume, partially offset by higher net selling prices and cost savings initiatives. For the nine months ended September 30, 2025, operating profit was also negatively impacted by unfavorable sales mix and higher marketing costs.

Current wording

Operating profit in the Plumbing Products segment for the three months ended March 31, 2026 was positively impacted by higher net selling prices and cost savings initiatives, partially offset by higher commodity and tariff costs and an increase in other expenses.

Previous wording

Operating profit in the Decorative Architectural Products segment for the three and nine months ended September 30, 2025 was negatively impacted by lower sales volume and higher commodity and tariff costs, partially offset by cost savings initiatives. For the three months ended September 30, 2025, negative impacts to operating profit were also partially offset by higher net selling prices.

Current wording

Operating profit in the Decorative Architectural Products segment for the three months ended March 31, 2026 was positively impacted by higher net selling prices and cost savings initiatives, partially offset by higher commodity costs.

Previous wording

We had cash and cash investments of approximately $559 million and $634 million at September 30, 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 September 30, 2025 and December 31, 2024, $303 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.

Current wording

We had cash and cash investments of approximately $388 million and $647 million at March 31, 2026 and December 31, 2025, 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, 2026 and December 31, 2025, $313 million and $306 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

On April 26, 2022, we entered into a revolving credit agreement (the “2022 Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of April 26, 2027.

Current wording

On March 20, 2026, we entered into a revolving credit agreement (the “2026 Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of March 20, 2031. At our request (which may not be exercised more than two times), the maturity may be extended for an additional one-year period, in each case subject to customary terms and conditions, including the consent of lenders holding at least a majority of the commitments and outstanding credit exposure under the 2026 Credit Agreement at the time. Upon entry into the 2026 Credit Agreement, our credit agreement dated April 26, 2022, with an aggregate commitment of $1.0 billion, was terminated.

Previous wording

Under the 2022 Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $500 million with the current lenders or new lenders. See Note H to the condensed consolidated financial statements for additional information.

Current wording

Under the 2026 Credit Agreement, we may, at our option, request an increase in the aggregate commitment under the 2026 Credit Agreement of up to $500 million, subject to customary terms and conditions. See Note F to the condensed consolidated financial statements for additional information.

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, 2025.

Current wording

The 2026 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 $127 million was borrowed and outstanding at a weighted average interest rate of 4.690% at March 31, 2026.

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 $32 million and $36 million at September 30, 2025 and December 31, 2024, respectively. Of the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $22 million and $23 million at September 30, 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.

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 $35 million and $26 million at March 31, 2026 and December 31, 2025, respectively. Of the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $19 million and $17 million at March 31, 2026 and December 31, 2025, 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, 2025, we repurchased and retired approximately 5.1 million shares of our common stock (including 0.3 million shares to offset the dilutive impact of restricted stock units granted in the nine months ended September 30, 2025) for approximately $357 million, inclusive of excise tax of $3 million. At September 30, 2025, we had approximately $542 million 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 $500 million of cash for share repurchases in 2025.

Current wording

Effective February 10, 2026, 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, replacing the previous Board of Directors authorization established in 2022. During the three months ended March 31, 2026, we repurchased and retired approximately 3.1 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, 2026) for approximately $203 million, inclusive of excise tax of $2 million. At March 31, 2026, we had approximately $1.9 billion remaining under the 2026 authorization. Consistent with our long-term capital allocation strategy, outside of any potential acquisitions, we currently anticipate using at least $800 million of cash, including funds available under the delayed draw term loan, for share repurchases in 2026.

Previous wording

For the nine months ended September 30, 2025, net cash provided by operations was $604 million, primarily driven by operating profit and the change in deferred taxes as a result of the cash tax benefit associated with immediate expensing of qualified fixed assets and research and development expenditures from the enactment of the One Big Beautiful Bill Act, partially offset by changes in working capital.

Current wording

For the three months ended March 31, 2026, net cash used for operations was $79 million, primarily driven by changes in working capital, partially offset by operating profit.

Previous wording

For the nine months ended September 30, 2025, net cash used for financing activities was $592 million, primarily due to $354 million for the repurchase and retirement of our common stock, $197 million for the payment of cash dividends, and $30 million for dividends paid to noncontrolling interest.

Current wording

For the three months ended March 31, 2026, net cash used for financing activities was $137 million, primarily due to $202 million for the repurchase and retirement of our common stock and $65 million for the payment of cash dividends, partially offset by $127 million of net proceeds from revolving credit loan borrowings.

Previous wording

For the nine months ended September 30, 2025, net cash used for investing activities was $111 million, primarily driven by $109 million of capital expenditures.

Current wording

For the three months ended March 31, 2026, net cash used for investing activities was $36 million, primarily driven by $34 million of capital expenditures.