Masco(US:MAS)2025-02-11 12:04Financial Performance - Net sales for 2024 were $7,828 million, a decrease of 2% compared to 2023, primarily due to lower sales volume of North America plumbing products and lower net selling prices of decorative architectural products[124]. - Gross profit for 2024 was $2,831 million, remaining flat compared to 2023, with a gross margin of 36.2%, an increase of 60 basis points from the previous year[126]. - Operating profit for 2024 was $1,363 million, an increase of 1% from 2023, positively impacted by the non-recurrence of an impairment charge for other intangible assets[129]. - Net income for 2024 was $822 million, a decrease of 9% compared to 2023, with diluted income per common share at $3.76, down 6%[135]. - The Plumbing Products segment reported net sales of $4,853 million, flat compared to 2023, while operating profit increased by 6% to $911 million[137]. - The Decorative Architectural Products segment experienced a 5% decline in net sales to $2,975 million, with operating profit also decreasing by 5% to $549 million[137]. - Other income (expense), net for 2024 was $(202) million, significantly impacted by a loss of $88 million on the sale of Kichler Lighting[131]. - The effective tax rate for 2024 was 25%, an increase of 300 basis points from 2023, influenced by the absence of a state income tax benefit recognized in the previous year[133]. - The company continues to face challenges from lower market demand and elevated commodity costs, aiming to offset these through productivity improvements and pricing initiatives[120]. Shareholder Returns - In 2024, the company repurchased approximately 10.0 million shares of common stock and increased its quarterly dividend by approximately 2% compared to 2023[17]. - The company has repurchased and retired 10 million shares of common stock in 2024 for approximately $757 million, with $896 million remaining under the share repurchase authorization[157]. - A quarterly dividend of $0.31 per share was declared in Q1 2025, with an intention to increase the annual dividend by 7% to $1.24 per share[107]. - In 2024, the company paid a quarterly dividend of $0.29 per share, totaling $254 million, and plans to increase the annual dividend by 7% to $1.24 per share in 2025[159]. Business Operations - The company completed the divestiture of its Kichler Lighting business in Q3 2024[17]. - The plumbing products segment is believed to be among the leaders in sales in North America and Europe, facing competition from brands like Moen and Kohler[20]. - The company operates 33 manufacturing facilities and 24 warehouse and distribution centers in North America as of December 31, 2024[97]. - The company has granted Behr brand exclusivity to The Home Depot in North America, impacting distribution flexibility[72]. - The company develops connected water products that enhance user experience with features like touchless activation and voice control[20]. - The Decorative Architectural Products segment is primarily sold through The Home Depot, which is the largest customer for this segment[22]. - In 2024, net sales to The Home Depot were $3.0 billion, accounting for approximately 38% of consolidated net sales[71]. - Sales concentration is significant, with Ferguson and Lowe's each representing less than 10% of consolidated net sales[71]. Market and Economic Factors - The company focuses on residential repair and remodeling activity, which is influenced by various economic factors[41]. - The company experienced a 20% of its sales made outside of North America in 2024, particularly in Europe, transacted in currencies other than the U.S. dollar[52]. - The company is affected by changing consumer preferences, including a shift towards e-commerce and demand for sustainable products[63]. - U.S. and Eurozone GDP are projected to grow at approximately 1.8% and 1.4%, respectively, in 2025[177]. Risks and Challenges - The company faces challenges in passing cost increases to customers, which may adversely impact its results of operations and financial position[47]. - The company has been negatively impacted by variability in the cost and availability of raw materials, which could continue to affect its financial position[46]. - The company relies on third-party suppliers for raw materials and components, and any disruptions in their operations could adversely impact its results[49]. - The company has experienced and may continue to experience constraints on transporting raw materials and finished products, leading to higher transportation costs[51]. - The company is exposed to foreign currency risks due to international operations, which could adversely impact its financial results[56]. - The company faces significant competition and must maintain strong brands and innovate to avoid losing market share[61]. - The company must comply with various international laws and regulations, which can be costly and may disrupt operations[55]. - Cybersecurity risks are a significant concern, with potential impacts on operations and financial position due to attacks[74]. - The company maintains a cybersecurity program aligned with the NIST Cybersecurity Framework to manage risks[88]. Financial Position and Assets - Total assets decreased from $5,363 million in 2023 to $5,016 million in 2024, a decline of approximately 6.5%[213]. - Current liabilities reduced from $1,695 million in 2023 to $1,560 million in 2024, representing a decrease of about 7.9%[213]. - The retained deficit increased from $(596) million in 2023 to $(693) million in 2024, indicating a worsening of approximately 16.3%[213]. - Total equity shifted from $98 million in 2023 to $(53) million in 2024, marking a decline of 154%[213]. - Goodwill decreased from $604 million in 2023 to $597 million in 2024, a reduction of about 1.2%[213]. - Inventories fell from $1,022 million in 2023 to $938 million in 2024, a decrease of approximately 8.2%[213]. - Total current assets decreased from $2,856 million in 2023 to $2,730 million in 2024, a decline of about 4.4%[213]. - Noncurrent operating lease liabilities decreased from $258 million in 2023 to $223 million in 2024, a reduction of approximately 13.6%[213]. - The company's total liabilities decreased from $5,247 million in 2023 to $5,069 million in 2024, a decline of about 3.4%[213]. - The company's cash and cash investments remained stable at $634 million in both 2023 and 2024[213]. Goodwill and Intangible Assets - The company's consolidated goodwill balance was $597 million as of December 31, 2024[208]. - In 2024, the company did not recognize any impairment charges for goodwill, as future discounted cash flows projected for all reporting units were greater than their carrying values[180]. - The company utilizes a weighted average cost of capital of approximately 8.50% to determine the discount rate for estimated future cash flows[178]. - A 10% decrease in the estimated fair value of reporting units would not have resulted in any goodwill impairment[180]. - The company did not recognize any impairment charges for other indefinite-lived intangible assets in 2024, as projected future discounted cash flows were greater than their carrying values[184]. - A 10% decrease in the estimated fair value of other indefinite-lived intangible assets would have resulted in a $1 million impairment[184]. - The company assesses the effectiveness of its internal control over financial reporting and determined it was effective as of December 31, 2024[196].