Masco Corporation Q4 FY2025 earnings call

• Plumbing products: Delta Faucet awarded Home Depot Kitchen and Bath Partner of the Year, Ulta e-commerce market share gains, Hansgrohe global leadership and sustainability awards, Watkins Wellness double-digit sales growth and new cold plunge products. • Decorative architectural: Behr top in paint categories, Supplier of the Year awards, pro paint annual sales ~$950M with share growth. • 2025 accomplishments: Navigated dynamic environment, achieved solid profitability, established executive committee, implemented restructuring actions. • 2026 plans: Integrate Liberty Hardware into plumbing segment, focus on margin expansion via tariff mitigation, cost savings, operational efficiencies, invest in business, maintain dividend, deploy free cash flow for repurchases/acquisitions.

Plumbing products segment: Fourth quarter sales increased 3% in local currency, North American sales up 4% due to favorable pricing, international up 1% (Germany positive, China weak); operating profit $204 million, margin 16.3% including tariff impacts. Decorative Architectural segment: Fourth quarter sales down 15%, paint sales down double digits due to lower volume; operating profit $76 million, margin 13.9%. Full year: Net sales down 3% or 2% excluding currency and divestiture; operating profit $1.3 billion, margin 16.8%; EPS $3.96; return on invested capital 41%; returned $832 million to shareholders. 2026 expectations: Sales flat to up low single digits; plumbing margin ~18%, decorative ~19%, Masco operating margin ~17%; dividend increased 3% to $1.28 per share, $2 billion share repurchase program approved.

• 2026 sales: Flat to up low single digits, global repair and remodel markets roughly flat. • Margins: Plumbing ~18%, decorative ~19%, Masco ~17% due to tariff mitigation, restructuring savings, operational efficiencies. • Dividend: Increased 3% to $1.28 per share. • Share repurchase: $2 billion program authorized. • EPS: $4.10 - $4.30 per share. • Capital allocation: Invest in business, maintain balance sheet, 30% dividend payout, deploy free cash flow for repurchases/acquisitions.

• Commodity inflation, especially copper, with volatility and lag in impact on P&L. • Tariff and duty impacts, including on China, steel, aluminum, copper, glass; ongoing efforts to mitigate but uncertainty remains. • Housing market pressures affecting sales, though long-term fundamentals strong but near-term challenges. • Volatility in market dynamics and consumer sentiment affecting sales and margins.

Q: About commodity inflation, especially copper, impact on plumbing margin expansion and timing?

A: Rick Westenberg said mid-single-digit inflation in Q4 2025, expecting mid-single-digit in 2026, with 6-month lag in commodity costs hitting P&L.

Q: Pricing in plumbing, 5% in Q4, flow through in 2026?

A: Jonathon Nudi and Rick Westenberg said mid-single-digit pricing expected in 2026, started mitigation actions mid-2025, lap of activity in 2026 for moderation.

Q: Price cost in DA 2026, commodity trends, pricing actions?

A: Jonathon Nudi said seeing upward cost pressure, unique relationship with retailer, conversations ongoing but no specific pricing disclosed.

Q: DIY paint volume pressure, secular shift to pro?

A: Jonathon Nudi said existing home sales correlate with DIY paint, pro market has ~$10B size, gained 200 basis points share since 2019, focused on growing pro via e-commerce, loyalty programs, sales force.

Q: Existing home sales impact on 2026 outlook?

A: Rick Westenberg said modest expectations, Masco expects to outperform, Jonathon Nudi said home equity highs, interest rates, consumer confidence key drivers.

Q: Restructuring actions for 2026, dollar benefit and reinvestment?

A: Jonathon Nudi and Rick Westenberg said ~$50M charges in 2026, aim to free cash for reinvestment in capabilities like e-commerce, brand building, innovation, benefits realized in 2027-2028.

Q: Liberty Hardware margin in plumbing outlook and why core?

A: Rick Westenberg said impacted by tariffs and glass duties in 2025, over half sales branded Delta, product complement, integration with Delta to optimize operations, core due to product and brand fit.

Q: Paint sales one-time items impact in Q4 2025?

A: Rick Westenberg said inventory timing in Q4 2024 and customer transition of primer/applicator business had mid-single-digit and single-digit impacts on sales.

Q: DeckArc margins, cadence in 2026?

A: Rick Westenberg said Q4 2025 margins impacted by volume and Liberty Hardware tariffs, 2026 cadence to be seen with recast segment, no specific negatives noted yet.

Q: Watkins performance relative to plumbing portfolio in 2026?

A: Jonathon Nudi said positive on Watkins, wellness on trend, low household penetration in spas, saunas, sees growth potential aligning with plumbing segment.

Q: Plumbing volume expectations in 2026, compared to 2025?

A: Rick Westenberg said guiding plumbing volumes down single digits, partially offset by mid-single-digit pricing, continuation of 2025 volume trends.

Q: DeckArc volume confidence in 2026, despite past declines?

A: Jonathon Nudi said 2025 had challenging comps, focusing on brand building, value messaging, alignment with Home Depot, expecting better trends in 2026.

Q: Pro paint trade credit trial with Home Depot?

A: Jonathon Nudi said The Home Depot driving trade credit trial, important unlock for pro customer, details to be commented on by Home Depot.

Q: Plumbing share gains in 2026, channels?

A: Jonathon Nudi said positive on North American retail, e-commerce momentum, strong performance in upper premium/luxury segment with Brizo, Newport Brass, Axor.