Masco (NYSE:MAS) Q3 2025 Earnings Call October 29, 2025 08:00 AM ET Company ParticipantsRick Westenberg - VP and CFORobin Zondervan - VP of Investor RelationsJon Nudi - President and CEOConference Call ParticipantsStephen Kim - AnalystKeith Hughes - AnalystSam Reid - AnalystNone - AnalystRafe Jadrosich - Senior Equity AnalystAdam Baumgarten - AnalystCollin Varren - AnalystMatthew Bouley - Senior Equity Research AnalystMichael Rehaut - AnalystTrevor Allison - AnalystMike Dahl - AnalystAnthony Pettinari - Res ...

Masco (NYSE:MAS) Q3 2025 Earnings Call October 29, 2025 08:00 AM ET Company ParticipantsRick Westenberg - VP and CFORobin Zondervan - VP of Investor RelationsJon Nudi - President and CEOConference Call ParticipantsStephen Kim - AnalystKeith Hughes - AnalystSam Reid - AnalystNone - AnalystRafe Jadrosich - Senior Equity AnalystAdam Baumgarten - AnalystCollin Varren - AnalystMatthew Bouley - Senior Equity Research AnalystMichael Rehaut - AnalystTrevor Allison - AnalystMike Dahl - AnalystAnthony Pettinari - Res ...

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]