Financial Data and Key Metrics Changes - For the third quarter, net sales decreased by 3%, with a 2% decrease in local currency excluding the Kichler divestiture [8][14] - Operating profit was $312 million, with an operating profit margin of 16.3% [8][15] - Earnings per share for the quarter was $0.97 [8][15] - Adjusted earnings per share for 2025 is now anticipated to be in the range of $3.90-$3.95, down from a previous expectation of $3.90-$4.10 [11][23] Business Line Data and Key Metrics Changes - Plumbing sales increased by 1% in local currency, with North American plumbing sales also up by 1% driven by favorable pricing [8][9] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture, with operating profit for the segment at $128 million and an operating margin of 19.1% [9][10] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits due to soft demand [10][17] Market Data and Key Metrics Changes - International plumbing sales were in line with the prior year in local currency, with growth in many European markets but challenges in China [9][16] - The overall market environment remains volatile, with expectations for the U.S. and international repair and remodel markets to decrease low single digits in 2025 [20][21] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovation in product offerings [7][12] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs while continuing to drive long-term shareholder value [11][13] - The company is committed to capital deployment strategies, returning $188 million to shareholders through dividends and share repurchases in the quarter [11][19] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term market conditions are challenging, structural factors for repair and remodel activity remain strong [12][13] - The company is focused on mitigating tariff impacts and expects to continue to gain market share in key growth areas [12][21] - Management expressed confidence in the strength of their brands and innovative products to deliver long-term value [14][13] Other Important Information - The company generated strong free cash flow and maintained a solid balance sheet, with gross debt to EBITDA at 2x at quarter end [18] - The total annualized cost impact of tariffs is estimated to be approximately $270 million, with ongoing efforts to mitigate these costs [20][21] Q&A Session Summary Question: Impact of competitor price increases on paint pricing outlook - Management indicated that they do not expect significant pricing increases on paint as they maintain a price-cost neutrality relationship with The Home Depot [25][27] Question: Long-term impact of tariffs on plumbing margins - Management acknowledged the volatility of tariffs and emphasized ongoing mitigation efforts to offset costs and restore margins over time [28][30] Question: Surprises in plumbing margins for Q3 - Management noted that Q3 results were impacted by tariffs, industry softness, and elevated commodity costs, with some unexpected adjustments in inventory reserves [34][35] Question: Dynamics in builders' hardware business - Management explained that the builders' hardware business faced softness in sales due to industry-wide challenges and a planned shipping process change [37] Question: Clarification on inventory reserves - Management confirmed that inventory-related adjustments were larger than typical due to market conditions, impacting plumbing segment margins [101][102]

Financial Data and Key Metrics Changes - For the third quarter, net sales decreased by 3%, and in local currency, excluding the Kichler divestiture, sales decreased by 2% [6][11] - Operating profit was $312 million, with an operating profit margin of 16.3% [6][12] - Earnings per share for the quarter was $0.97 [6][12] - Gross margin was 34.6%, impacted by higher tariffs and commodity costs [11][12] - The company anticipates adjusted earnings per share for 2025 to be in the range of $3.90 to $3.95, down from a previous expectation of $3.90 to $4.10 [9][10] Business Segment Data and Key Metrics Changes - Plumbing sales increased by 1% in local currency, driven by favorable pricing, with North American plumbing sales also up by 1% [6][14] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture, with operating profit for the segment at $128 million and an operating margin of 19.1% [7][15] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits due to soft demand [8][15] Market Data and Key Metrics Changes - International plumbing sales were in line with the prior year in local currency, with growth in many European markets but challenges in China [7][14] - The U.S. and international repair and remodel markets are expected to decrease low single digits in 2025 [19] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovative product introductions [5][10] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs [9][10] - The company is committed to capital deployment, returning $188 million to shareholders through dividends and share repurchases [9][16] Management's Comments on Operating Environment and Future Outlook - Management noted that near-term market conditions remain a headwind, but the company is focused on growing market share and driving long-term shareholder value [6][10] - Structural factors for repair and remodel activity remain strong, including aging housing stock and high home equity levels [10][19] - Management expressed confidence in the company's ability to navigate dynamic environments and deliver long-term value [10][11] Other Important Information - The company generated strong free cash flow and maintained a solid balance sheet, with gross debt to EBITDA at two times [16] - The total annualized cost impact of tariffs is estimated at approximately $270 million, with ongoing efforts to mitigate these costs [18][19] Q&A Session Summary Question: Impact of competitor price increases on paint pricing outlook - Management indicated that they do not expect significant pricing increases for paint as they maintain a price-cost neutrality relationship with The Home Depot [23][24] Question: Long-term impact of tariffs on plumbing margins - Management discussed ongoing efforts to mitigate tariff impacts through sourcing changes and pricing actions, aiming to offset costs and restore margins over time [25][26] Question: Surprises in plumbing margins for Q3 - Management noted that Q3 results were impacted by tariffs, industry softness, and elevated commodity costs, with adjustments in inventory reserves also affecting margins [29][30] Question: Dynamics in builders' hardware business - Management explained that the builders' hardware business faced softness in sales due to shipping timing changes but does not expect significant impacts for the full year [32][33] Question: Inventory reserves and their impact - Management clarified that adjustments in inventory reserves were larger than typical due to market conditions, impacting plumbing segment margins [84][85]

Financial Performance - Q3 2025 - Total company sales decreased by 3%[23], but only 2%[20] when excluding divestiture and currency impacts - Adjusted gross margin reached 34.6%[20] - Adjusted operating profit margin was 16.3%[20], a decrease of 190 bps year-over-year[22] - Adjusted EPS was $0.97[15], a 10% decrease year-over-year[22] Segment Performance - Q3 2025 - Plumbing Products segment sales increased by 2%[24], or 1% excluding currency impacts[26], with an operating margin of 16.4%[24] - Decorative Architectural Products segment sales decreased by 12%[27], or 6% excluding divestiture[28], with an operating margin of 19.1%[27] Full Year 2025 Outlook - The company updated its anticipated full-year adjusted EPS to a range of $3.90-$3.95[16] - Total Masco sales are forecasted to be down low single digits[32], with an adjusted operating profit margin of approximately 16.5%[32] - Plumbing Products sales are forecasted to be up low single digits with an adjusted operating profit margin of approximately 18%[32] - Decorative Architectural Products sales are forecasted to be down low double digits, or down mid-single digits excluding divestiture, with an adjusted operating profit margin of approximately 18%[32] Financial Position - The company has a strong balance sheet with $559 million in cash and cash investments[29] - Revolver availability is $1 billion, resulting in total liquidity of $1.559 billion[29] - Gross debt to EBITDA is 2.0x[29]

Financial Performance - Net sales for the three months ended September 30, 2025, were $1,917 million, a decrease of 3% compared to $1,983 million in the same period of 2024[78][79] - For the nine months ended September 30, 2025, net sales were $5,769 million, down 4% from $6,000 million in the prior year[78][80] - Gross profit for the three months ended September 30, 2025, was $656 million, a decrease of 10% from $725 million in 2024, impacted by higher commodity and tariff costs[82][83] - Operating profit for the three months ended September 30, 2025, was $303 million, down 15% from $357 million in the same period of 2024[82][85] - Net income for the three months ended September 30, 2025, was $189 million, an increase of 13% compared to $167 million in the same period of 2024[93] - Diluted income per common share for the three months ended September 30, 2025, was $0.90, up 17% from $0.77 in 2024[93] Segment Performance - The Plumbing Products segment reported a 2% increase in net sales for both the three and nine months ended September 30, 2025, driven by higher net selling prices[95][97] - Decorative Architectural Products segment net sales decreased by 12% and 13% for the three and nine months ended September 30, 2025, respectively, primarily due to the divestiture of Kichler and lower sales volume[99] - Plumbing Products segment operating profit was negatively impacted by higher commodity and tariff costs, increased expenses, and lower sales volume, with cost savings initiatives partially offsetting these effects[98] - Operating profit in the Decorative Architectural Products segment was negatively impacted by lower sales volume and higher commodity costs, partially offset by cost savings initiatives[100] Expenses and Cash Flow - Selling, general and administrative expenses for the three months ended September 30, 2025, were $353 million, a decrease of 4% from $368 million in 2024[82][84] - Other income (expense), net for the three months ended September 30, 2025, was $(27) million, a favorable change of 75% compared to $(109) million in 2024[90] - For the nine months ended September 30, 2025, net cash provided by operations was $604 million, driven by operating profit and changes in deferred taxes[108] - Cash and cash investments were approximately $559 million as of September 30, 2025, down from $634 million at December 31, 2024[101] - Net cash used for financing activities was $592 million for the nine months ended September 30, 2025, primarily due to stock repurchases and cash dividends[109] Share Repurchase and Financing - The company repurchased approximately 5.1 million shares for about $357 million during the nine months ended September 30, 2025, with $542 million remaining under the share repurchase authorization[107] - The company anticipates using approximately $500 million of cash for share repurchases in 2025 as part of its long-term capital allocation strategy[107] - The company has a revolving credit agreement with an aggregate commitment of $1.0 billion, maturing on April 26, 2027, with the option to increase by an additional $500 million[103] - The company reported a decrease in accounts payable related to a supply chain finance program, with valid amounts confirmed at $32 million as of September 30, 2025[105] Tax and Other Financial Metrics - The effective tax rate for the three months ended September 30, 2025, was 28%, compared to 27% in the same period of 2024[92]

Financial Performance - Net sales decreased by 3% to $1,917 million, with a 2% decrease in local currency excluding divestitures[5] - Adjusted operating profit was $312 million, with an adjusted operating margin of 16.3%, down 190 basis points from the previous year[5] - Adjusted earnings per share decreased by 10% to $0.97, compared to $1.08 per share in the same quarter last year[5] - Operating profit decreased by 15% to $303 million from $357 million in the same quarter last year[5] - Gross margin decreased by 240 basis points to 34.2% from 36.6% in the prior year[5] - The company’s operating margin as reported decreased to 15.8% for the three months ended September 30, 2025, from 18.0% in 2024[26] - EBITDA, as adjusted, for the total company was $349 million for the three months ended September 30, 2025, compared to $397 million in 2024, reflecting a decrease of 12.1%[26] Shareholder Returns - The company returned $188 million to shareholders through dividends and share repurchases, including the repurchase of 1.8 million shares for $124 million[4] - The Board of Directors declared a quarterly dividend of $0.31 per share, payable on November 24, 2025[6] Sales Performance by Segment - Plumbing Products' net sales increased by 2%, while Decorative Architectural Products' net sales decreased by 12%[5] - Net sales for Plumbing Products segment rose by 2% to $1,247 million for the three months ended September 30, 2025, compared to $1,219 million in the same period of 2024[26] - Decorative Architectural Products segment experienced a 12% decline in net sales, dropping to $670 million for the three months ended September 30, 2025, from $764 million in 2024[26] Liquidity and Cash Flow - Liquidity at the end of the third quarter was $1,559 million, including availability under the revolving credit facility[5] - Total liquidity, including cash and cash investments, was $1,559 million as of September 30, 2025, down from $1,646 million in 2024[24] - Cash provided by operating activities totaled $896 million for the nine months ended September 30, 2025, down from $957 million in 2024, a decrease of 6.4%[24] - The company reported a net cash outflow for financing activities of $592 million for the nine months ended September 30, 2025, compared to $673 million in 2024[24] Future Outlook - For the full year 2025, the company expects adjusted earnings per share in the range of $3.90 to $3.95, revised from a previous expectation of $3.90 to $4.10[4] Working Capital - Working capital as a percentage of sales increased to 18.5% for the nine months ended September 30, 2025, compared to 16.4% in 2024[22] Total Assets - Total assets increased to $5,311 million as of September 30, 2025, up from $5,016 million at December 31, 2024, representing a 5.9% growth[22]

Core Insights - Masco Corporation (MAS) is set to report its third-quarter 2025 results on October 29, with expectations of adjusted earnings per share (EPS) at $1.02, reflecting a 5.6% decline from the previous year [1][3][9] Financial Performance - In the last reported quarter, Masco's adjusted earnings and net sales exceeded the Zacks Consensus Estimate by 20.4% and 2.3%, respectively, although the top line saw a year-over-year decline of 1.9% while the bottom line increased by 8.3% [1][2] - The consensus estimate for net sales in Q3 2025 is $1.94 billion, indicating a 2.3% decline from the prior year's figure of $1.98 billion [3][9] Segment Analysis - The Decorative Architectural Products segment, which contributed 36% of total net sales in Q2 2025, is expected to have faced challenges due to lower sales volume and the divestiture of the Kichler business, leading to a projected 12.8% decline in net sales to $666.6 million [4][7] - Conversely, the Plumbing Products segment, accounting for 64% of total net sales in Q2 2025, is anticipated to see a 3.2% year-over-year increase in net sales to $1.26 billion, supported by higher net selling prices [6][7] Geographic Performance - North American net sales, which made up 79.9% of total net sales in Q2 2025, are expected to decline by 4.6% year over year to $1.52 billion, while international net sales are projected to increase by 3.9% to $403.1 million [8] Margin Expectations - The company's bottom line is likely to decline year over year due to increased costs from tariffs and commodity inflation, with adjusted operating margins for Plumbing Products and Decorative Architectural Products expected to decrease by 180 basis points to 18.1% and 150 basis points to 16.6%, respectively [9][12] - Higher tariffs, input costs, and soft demand in the DIY paint category are anticipated to pressure Masco's margins [10][11] Earnings Prediction - The current model does not predict an earnings beat for Masco, as the Earnings ESP stands at 0.00% and the company holds a Zacks Rank of 3 [13]

Company Overview - Masco (MAS) is expected to report earnings for the quarter ended September 2025, with a consensus estimate of $1.02 per share, reflecting a year-over-year decline of 5.6% [3] - Revenues are anticipated to be $1.94 billion, down 2.3% from the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for release on October 29, and the stock may rise if actual results exceed expectations, while a miss could lead to a decline [2] - The consensus EPS estimate has been revised 0.78% higher in the last 30 days, indicating a slight positive adjustment by analysts [4] Earnings Surprise Prediction - The Most Accurate Estimate for Masco is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -6.22%, suggesting a bearish outlook from analysts [12] - Masco currently holds a Zacks Rank of 3 (Hold), complicating predictions of an earnings beat [12] Historical Performance - In the last reported quarter, Masco had an earnings surprise of +20.37%, posting $1.30 per share against an expectation of $1.08 [13] - Over the past four quarters, Masco has beaten consensus EPS estimates two times [14] Industry Comparison - Armstrong World Industries (AWI), a peer in the Zacks Building Products - Miscellaneous industry, is expected to report earnings of $1.99 per share, indicating a year-over-year increase of 9.9% [18] - AWI's revenues are projected to be $421.11 million, up 8.9% from the previous year, with a positive Earnings ESP of +0.63% [19][20]

Core Insights - Masco Corporation, based in Livonia, Michigan, specializes in designing, manufacturing, and distributing home improvement and building products, with a market capitalization of $14.1 billion [1] Earnings Expectations - The company is set to release its third-quarter earnings on October 29, with analysts expecting an adjusted profit of $1.02 per share, a decrease of 5.6% from $1.08 in the same quarter last year [2] - For the full fiscal year 2025, adjusted EPS is projected at $4.02, down nearly 2% from $4.10 in 2024, while a rebound of 8.5% to $4.36 per share is anticipated in fiscal 2026 [3] Stock Performance - Over the past 52 weeks, Masco's stock has declined by 20.5%, underperforming compared to the Industrial Select Sector SPDR Fund's 8.9% gains and the S&P 500 Index's 13.5% returns [4] - Following the release of better-than-expected Q2 results, Masco's stock rose by 3.7% and maintained positive momentum for three subsequent trading sessions, with net sales of $2.1 billion, down 1.9% year-over-year but 2.3% above expectations [5] Analyst Ratings - Analysts maintain a consensus "Moderate Buy" rating for Masco, with 21 analysts covering the stock, including seven "Strong Buys," 13 "Holds," and one "Moderate Sell" [6] - The mean price target for Masco is $74.88, indicating a potential upside of 10.1% from current price levels [6]

Core Viewpoint - The article discusses the investment outlook for Masco Corp. (NYSE: MAS), emphasizing a cautious stance due to deteriorating consumer spending conditions and existing headwinds [1]. Group 1: Investment Philosophy - The investment approach is fundamentally based, focusing on long-term durability and affordability rather than merely low multiples [1]. - There is a belief that successful investments can be risky if valuations are not carefully considered, highlighting the importance of price in the context of growth potential [1]. Group 2: Company Characteristics - The ideal companies for investment are characterized by steady long-term growth, lack of cyclicality, and strong balance sheets [1]. - The article suggests that in certain situations, the potential for growth may outweigh immediate price concerns, indicating a nuanced view of valuation [1].

Core Insights - Masco Corporation (MAS) specializes in producing and marketing a wide range of branded home improvement and building products, including Behr paints and Delta faucets [1] - The company has a market capitalization of approximately $15.1 billion, positioning it firmly in the large-cap category [2] Stock Performance - MAS stock has experienced volatility, currently trading about 16.7% below its October 2024 peak of $86.70, but has recovered nearly 18.6% over the past three months, outperforming the ProShares Ultra Industrials ETF (UXI) which rose 14.2% [3][4] - Over the past 52 weeks, MAS stock has declined by 13.2%, with a slight year-to-date drop, while UXI has surged 20.7% in the same period [4] - Despite challenges, MAS shares have remained above their 50-day moving average of $70.86 and 200-day moving average of $70.10 since late August, indicating some level of investor confidence [5] Financial Performance - On July 31, MAS stock rose 3.7% following stronger-than-expected second-quarter fiscal 2025 results, with revenue reaching $2.05 billion, down 1.9% year-over-year but exceeding the forecast of $2 billion [6] - Adjusted EPS for the quarter was $1.30, beating the anticipated $1.08 and reflecting an 8.3% year-over-year increase [6] Future Outlook - Management has set ambitious plans for the second half of 2025, expecting full-year sales to align with the previous year when adjusted for divestitures and currency fluctuations [7] - The company projects adjusted EPS between $3.90 and $4.10 for the year [7] Competitive Landscape - MAS faces challenges in comparison to its rival, Armstrong World Industries, Inc. (AWI), which has achieved a remarkable 49.1% gain over the past 52 weeks and a year-to-date increase of 39.1%, highlighting MAS's relative underperformance in the sector [8]