MASCO CORP /DE/

Previous 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.

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, elevated costs, principally in our Plumbing Products segment, due to tariffs, particularly those related to China. We seek to mitigate the impact of elevated 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.

Previous wording

We continue to execute our strategies of leveraging our strong brand portfolio, our industry-leading positions and the Masco Operating System, our methodology to drive growth and productivity, to create long-term shareholder value. We remain confident in the fundamentals of our business and long-term strategy. We believe that our strong financial position and cash flow generation, together with our investments in our industry-leading branded building products, our continued focus on innovation and customer service and disciplined capital allocation, will allow us to drive long-term growth and create value for our shareholders.

Current wording

We plan to deliver above-market top- and bottom-line growth through a consumer driven strategy leveraging our industry-leading brands, expanded commercial capabilities, and enhanced operational excellence. We remain confident in the fundamentals of our business and long-term strategy. We believe that our strong financial position and cash flow generation, together with our investments in our industry-leading branded building products, our continued focus on innovation and customer service and disciplined capital allocation, will allow us to drive long-term growth and create value for our shareholders.

Previous wording

From time to time, we take actions to drive efficiency in our business through the strategic rationalization of our businesses, including business consolidations, plant closures, headcount reductions and other cost savings initiatives. In the fourth quarter of 2025, we began implementing various restructuring actions to further streamline our business, reduce headcount, and optimize operations. In connection with these actions, we incurred approximately $8 million in charges in the first quarter of 2026 and we expect to incur approximately $50 million in charges during the full year of 2026. Additionally, in the first quarter of 2026, we began the implementation of an internal reorganization resulting in the integration of our Liberty Hardware (“Liberty”) business, a distributor of cabinet and other hardware and shower doors, into our Delta Faucet business. As a result of the integration, all segment information herein, including comparable prior periods, include Liberty in our Plumbing Products segment rather than our Decorative Architectural Products segment.

Current wording

From time to time, we take actions to drive efficiency in our business through the strategic rationalization of our businesses, including business consolidations, plant closures, headcount reductions and other cost savings initiatives. In the fourth quarter of 2025, we began implementing various restructuring actions to further streamline our business, reduce headcount, and optimize operations. In connection with these actions, we incurred approximately $12 million and $20 million in charges in the three and six months ended June 30, 2026, respectively, and we expect to incur approximately $50 million in charges during the full year of 2026. Additionally, in the first quarter of 2026, we began the implementation of an internal reorganization resulting in the integration of our Liberty Hardware (“Liberty”) business, a distributor of cabinet and other hardware and shower doors, into our Delta Faucet business. As a result of the integration, all segment information herein, including comparable prior periods, include Liberty in our Plumbing Products segment rather than our Decorative Architectural Products segment.

Previous wording

We report our financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, we believe that certain non-GAAP performance measures and ratios used in managing the business may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, our reported results under GAAP. Within the tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.

Current wording

We report our financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, we believe that certain non-GAAP financial measures used in managing the business may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. These non-GAAP financial measures should be considered in addition to, and not as an alternative for or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies. Within the tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.

Previous 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.

Current wording

The following discussion of consolidated results of operations refers to the three and six months ended June 30, 2026 compared to the same periods of 2025.

Previous wording

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

Current wording

Below is a summary of our net sales, in millions, for the three and six months ended June 30, 2026 and 2025:

Previous 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.

Current wording

Our net sales for the three months ended June 30, 2026, were $1,992 million, which decreased three percent compared to the three months ended June 30, 2025. Excluding the effect of currency translation, net sales decreased three percent, primarily due to lower North America sales volume, which decreased sales by five percent, partially offset by higher net selling prices across the entire company, which increased sales by one percent, and higher International sales volume, which increased sales by one percent.

Previous wording

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

Current wording

Below is a summary of our results of operations for the three and six months ended June 30, 2026 and 2025:

Previous 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.

Current wording

Our operating profit for the three months ended June 30, 2026, was $470 million, an increase of 14 percent, and was positively impacted by increased gross profit, partially offset by higher selling, general and administrative expenses. These results were inclusive of the net tariff benefit from IEEPA tariff refunds of approximately $95 million for the three months ended June 30, 2026, principally within the Plumbing Products segment.

Previous 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.

Current wording

Our selling, general and administrative expenses for the six months ended June 30, 2026, were $766 million, an increase of seven percent, and were negatively impacted by two percent due to increased employee-related costs, two percent due to unfavorable foreign currency translation, one percent due to increased legal and professional fees, as well as an increase in other expenses.

Previous wording

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

Current wording

Below is a summary of our other income (expense), net, in millions, for the three and six months ended June 30, 2026 and 2025:

Previous 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:

Current wording

Below is a summary of our income tax expense, in millions, and our effective tax rate for the three and six months ended June 30, 2026 and 2025:

Previous 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:

Current wording

Below is a summary of our net income, in millions, and diluted income per common share for the three and six months ended June 30, 2026 and 2025:

Previous 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.

Current wording

The following discussion of business segment results refers to the three and six months ended June 30, 2026, compared to the same periods 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 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.

Current wording

Net sales in the Plumbing Products segment decreased three percent for the three months ended June 30, 2026, and net sales increased three percent for the six months ended June 30, 2026. In local currencies (including sales in currencies outside their respective functional currencies), net sales decreased three percent for the three months ended June 30, 2026, and increased one percent for the six months ended June 30, 2026. For the three months ended June 30, 2026, net sales decreased four percent due to lower North America sales volume, partially offset by one percent due to higher International sales volume and slightly higher net selling prices. For the six months ended June 30, 2026, net sales increased three percent due to higher net selling prices, partially offset by two percent due to lower North America sales volume.

Previous 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.

Current wording

Operating profit in the Plumbing Products segment for the three and six months ended June 30, 2026, was positively impacted by lower tariff costs (inclusive of IEEPA tariff refunds), cost savings initiatives, and higher net selling prices, partially offset by lower sales volume, higher commodity costs, unfavorable sales mix, increased employee-related costs, and an increase in other expenses.

Previous wording

Net sales in the Decorative Architectural Products segment for the three months ended March 31, 2026, were consistent with the comparative prior period primarily due to lower sales volume, mostly offset by higher net selling prices.

Current wording

Net sales in the Decorative Architectural Products segment decreased four percent and two percent for the three and six months ended June 30, 2026, respectively, primarily due to lower sales volume, partially offset by higher net selling prices.

Previous 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.

Current wording

Operating profit in the Decorative Architectural Products segment for the three and six months ended June 30, 2026, was positively impacted by higher net selling prices and cost savings initiatives, offset by lower sales volume and higher commodity costs.

Previous 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.

Current wording

We had cash and cash investments of approximately $548 million and $647 million at June 30, 2026 and December 31, 2025, respectively. Our cash and cash investments consist of overnight interest bearing money market demand 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 June 30, 2026 and December 31, 2025, $316 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

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.

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 no borrowings were outstanding at June 30, 2026.

Previous wording

On April 21, 2026, we entered into a two year, up to $500 million senior unsecured delayed draw term loan due April 21, 2028 with a syndicate of lenders. The senior unsecured term loan and commitments thereunder are subject to prepayment at our option and the loans will bear interest, at our option, at a rate per annum equal to (A) a U.S. dollar base rate, (B) the adjusted term SOFR rate, or (C) the adjusted daily simple SOFR rate, in each case, plus an applicable margin based upon our then-applicable corporate credit ratings. The various benchmarks are subject to applicable floors. The covenants are substantially the same as those in the 2026 Credit Agreement. We intend to utilize the available funds to repurchase shares of our common stock.

Current wording

On April 21, 2026, we entered into a two year, up to $500 million senior unsecured delayed draw term loan due April 21, 2028 with a syndicate of lenders. The senior unsecured delayed draw term loan and commitments thereunder are subject to prepayment at our option and the loans will bear interest, at our option, at a rate per annum equal to (A) a U.S. dollar base rate, (B) the adjusted term SOFR rate, or (C) the adjusted daily simple SOFR rate, in each case, plus an applicable margin based upon our then-applicable corporate credit ratings. The various benchmarks are subject to applicable floors. The covenants are substantially the same as those in the 2026 Credit Agreement. We were in compliance with all covenants and $300 million was borrowed and outstanding at a weighted average interest rate of 4.499% at June 30, 2026. The borrowed funds were utilized to repurchase shares of our common stock.

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 $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.

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 $39 million and $26 million at June 30, 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 June 30, 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 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.

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. In May 2026, we entered into an accelerated share repurchase transaction whereby we agreed to repurchase a total of $300 million of our common stock with an initial delivery of approximately 3.3 million shares. This transaction was completed on July 27, 2026, at which time we received, at no additional cost, approximately 0.8 million additional shares of our common stock based on the volume weighted average stock price of our common stock over the term of the transaction, less a discount. In total, excluding the incremental shares we received in July 2026 from the accelerated share repurchase transaction, we repurchased and retired approximately 7.8 million shares of our common stock in the six months ended June 30, 2026 for approximately $596 million, inclusive of excise tax of $5 million. This included 0.4 million shares to offset the dilutive impact of restricted stock units granted in the six months ended June 30, 2026. At June 30, 2026, we had approximately $1.5 billion remaining under the 2026 authorization. Consistent with our long-term capital allocation strategy, outside of any potential acquisitions, we currently anticipate using approximately $1.0 billion of cash, including funds available under the term loan, for share repurchases in 2026.

Previous 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.

Current wording

For the six months ended June 30, 2026, net cash provided by operations was $417 million, primarily driven by operating profit, inclusive of the net tariff benefit from IEEPA tariff refunds, partially offset by changes in working capital.

Previous 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.

Current wording

For the six months ended June 30, 2026, net cash used for financing activities was $433 million, primarily due to $592 million for the repurchase and retirement of our common stock and $129 million for the payment of cash dividends, partially offset by $300 million of proceeds from the term loan.

Previous 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.

Current wording

For the six months ended June 30, 2026, net cash used for investing activities was $78 million, primarily driven by $77 million of capital expenditures.