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Core Insights - Masco (MAS) reported quarterly earnings of $0.97 per share, missing the Zacks Consensus Estimate of $1.02 per share, and down from $1.08 per share a year ago [1][2] - The company's revenues for the quarter were $1.92 billion, also missing the Zacks Consensus Estimate by 1.1%, and down from $1.98 billion year-over-year [3] Earnings Performance - The earnings surprise for the quarter was -4.90%, contrasting with a previous quarter where Masco exceeded expectations by +20.37% [2] - Over the last four quarters, Masco has surpassed consensus EPS estimates two times [2] Revenue Analysis - Masco's revenue performance has been less consistent, topping consensus revenue estimates only once in the last four quarters [3] - The current consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $1.82 billion, and for the current fiscal year, it is $4.02 on revenues of $7.61 billion [8] Market Performance - Masco shares have declined approximately 5.7% since the beginning of the year, while the S&P 500 has gained 17.2% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Context - The Building Products - Miscellaneous industry, to which Masco belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Masco's stock performance [6]

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% [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] - Gross margin was 34.6%, impacted by higher tariffs and commodity costs [14][15] - The company anticipates adjusted earnings per share for 2025 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, driven by favorable pricing [8][15] - North American plumbing sales increased by 1%, with Delta Faucet showing strong performance, particularly in e-commerce and trade [8][15] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture [9][10] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits [10][17] - Operating profit for the plumbing segment was $204 million, with an operating margin of 16.4% [9][16] - Operating profit for the Decorative Architectural segment was $128 million, with an operating margin of 19.1% [9][10] 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 U.S. and international repair and remodel markets are expected to decrease low single digits in 2025 [20][21] - The company expects its overall sales in 2025 to decrease low single digits, impacted by the Kichler divestiture [21][22] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovative product introductions [7][12] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs [11][12] - The company is committed to capital deployment, returning $188 million to shareholders through dividends and share repurchases [11][19] Management's Comments on Operating Environment and Future Outlook - Management noted that near-term market conditions remain a headwind, but the company continues to focus on execution to grow market share [8][12] - The structural factors for repair and remodel activity are strong, including the age of housing stock and high home equity levels [12][13] - Management expressed confidence in the company's ability to navigate dynamic environments and deliver long-term value for shareholders [13][14] Other Important Information - The company generated strong free cash flow during the quarter and maintained a solid balance sheet, with gross debt to EBITDA at 2x [11][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 Questions and Answers Question: How might a competitor's price increase influence the company's outlook for pricing? - Management indicated that they have a long-standing relationship with The Home Depot, which allows for price-cost neutrality over time, and they do not expect significant pricing increases in the coming year [25][27] Question: What is the long-term impact of tariffs on plumbing margins? - Management noted that they are actively working to mitigate tariff impacts through sourcing changes, cost reductions, and pricing strategies, aiming to offset the dollar cost of tariffs and restore margins over time [28][30] Question: What were the drivers behind the Q3 results? - Management identified three main drivers: tariffs, overall industry softness, and incremental costs related to commodity inputs and inventory reserves [34][35] Question: Can you elaborate on the builders' hardware business performance? - Management explained that the builders' hardware business faced softness in sales due to a planned shipping process change, but they do not expect a significant impact for the full year [37][39] Question: What is the expected impact of inventory reserves on plumbing? - Management stated that adjustments to inventory reserves were larger than typical this quarter due to the overall market environment and slow industry sales, impacting margins [101][102]

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]