With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are home equipment and furnishings and household and personal products.

Fortune Sector Leaders: Household Products

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

The home improvement manufacturing conglomerate operates 60 facilities in the U.S. and more than 20 in other parts of the world. Delta faucets and Behr paints are among its best-known brands.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-384-Masco

The Livonia, Mich.-based distributor of home improvement and building products also makes faucets, cabinets, coatings, and windows.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Masco Corporation manufactures and distributes home-improvement and building products. Its plumbing portfolio includes shower drains, sinks, accessories for kitchens and bathrooms, spas, exercise pools, and saunas. The decorative products segment includes paints, primers, and bath and cabinet hardware. Its products appear under several brand names, such as Delta, Brizo, and Behr, and are sold through wholesalers, e-commerce, and other outlets for contractors and homebuilders, plus direct to the consumer.

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Q4 2024

Masco (MAS): Company Profile, Stock Price, News, Rankings

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Masco

masco

Good morning, ladies and gentlemen. Welcome to Masco Corporation's fourth quarter and full year 2025 conference call. My name is Danny, and I will be your operator for today's call. As a reminder, today's conference call is being recorded for replay purposes. To ask a question, please press star, then the number one on your telephone keypad. To withdraw your question, please press star, then the number two. I will now turn the call over to Robin Zondervan, Vice President, Investor Relations and FP&A. You may begin.

Thank you, operator, and good morning, everyone. Welcome to Masco Corporation's 2025 fourth quarter and full year conference call. With me today are John Nuti, President and CEO of Masco, and Rick Westenberg, Masco's Vice President and Chief Financial Officer. Our fourth quarter earnings release and the presentation slides are available on our website under Investor Relations. Following our remarks, we will open the call for analyst questions. Please limit yourself to one question with one follow-up. If we can't take your question now, please call me directly at 313-792-5500. Our statements today will include our views about our future performance, which constitute forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements.

We've described these risks and uncertainties in our risk factors and other disclosures in our Form 10-K that we filed with the Securities and Exchange Commission. Our statements will also include non-GAAP financial metrics. Our references to operating profit and earnings per share will be as adjusted unless otherwise noted. We reconcile these adjusted metrics to GAAP in our earnings release and presentation slides, which are available on our website under Investor Relations. With that, I will now turn the call over to John.

Thank you, Robin. Good morning, everyone, and thank you for joining us. Please turn to slide 5. I want to start today by highlighting some of our key accomplishments from 2025, which we achieved while navigating a dynamic and challenging environment. Following that, I'll turn to our financial results for 2025 and share our expectations for 2026. Starting with our plumbing product segment, we continue to demonstrate our market leadership even as we work to mitigate the impacts of higher tariff costs. Delta Faucet was awarded The Home Depot Kitchen and Bath Partner of the Year. This award recognized the strength of our brand, customer service, and innovation. Delta also continued to achieve notable market share gains in the e-commerce channel, driven by our industry-leading capabilities that deliver solutions for consumers.

At Hansgrohe, we continue to be a global leader, gaining additional market share through premium products with industry-leading designs. Hansgrohe also continues to demonstrate leadership and commitment to sustainability, having recently received multiple awards for corporate strategy and production initiatives at the German Sustainability Projects 2025 award ceremony. At Watkins Wellness, our integration of Sauna360 into our existing dealer network has generated double-digit sales growth in a market with ongoing opportunities for increased household penetration. We also introduced our cold plunge products, further expanding our presence in the consumer wellness market. In our decorative architectural segment, the strength of our brands continued to resonate with our customers. Behr was once again rated number one in interior paint, number one in exterior paint, and number one in exterior stain in a third-party study, demonstrating the exceptional quality and strength of our leading Behr brand.

Our continued strategic alignment and partnership with The Home Depot led to our recognition as Supplier of the Year for the paint department in the United States and Canada, and Interconnected Partner of the Year in Mexico. Our annual Pro sales are approximately $950 million, and our share of the Pro paint market has grown over 200 basis points since 2019. We've continued building capabilities to enhance the buying experience for our Pro customers, including expanded delivery options, loyalty programs, and a growing sales force, which allow us to further capitalize on the sizable growth opportunity in the Pro paint market. I want to thank all of our employees for their resilience, commitment, and leadership, which made these accomplishments possible. Now, onto our results. Please turn to slide six.

Beginning with our fourth quarter, results overall were largely in line with our expectations as we continue to navigate a dynamic geopolitical and macroeconomic environment. Net sales decreased 2%, or 3% in local currency, primarily due to lower volumes. Operating profit was $259 million, and operating profit margin was 14.4%. Earnings per share for the quarter was $0.82 per share. Turning to our segments, plumbing product sales increased 3% in local currency. North American sales increased 4%, driven by favorable pricing. Delta Faucet again delivered strong performance, particularly in the trade and e-commerce channels. International plumbing sales increased 1% in local currency, driven by Germany, partially offset by the weaker market in China. Operating profit for the segment was $240 million.

Operating margin was 16.3% and included the impact of higher tariff and commodity costs. Now, turning to our decorative architectural segment, sales decreased 15% in the quarter. Overall, paint sales decreased double digits due to lower volume, including the impact on the favorable inventory timing in Q4 of 2024 and the impact related to the customer transition of our primer and applicator business in Q4 of 2025. Excluding these impacts, overall paint sales decreased mid-single digits. DIY paint sales decreased high single digits, and Pro paint sales grew low single digits. Operating profit for the segment was $76 million, and operating margin was 13.9%.... Please turn to slide 7 as we review our full year performance. Despite a dynamic geopolitical and macroeconomic environment for most of the year, we delivered solid profitability and remained disciplined on capital allocation.

Net sales decreased 3%, or 2% excluding the impacts of currency and the divestiture of Kichler. Operating profit was $1.3 billion, and operating profit margin was 16.8%. Earnings per share for the year was $3.96 per share. We delivered a return on invested capital of 41%. Our strong cash flow allowed us to return $832 million to shareholders through dividends and share repurchases. Near the end of 2025, we began taking decisive actions to further position our business for long-term value creation. We established an executive committee with dual corporate and business unit representation to fully leverage our enterprise strengths, which will enable us to continue to deliver strong execution and accelerate growth moving forward.

We also began implementing various restructuring actions to a greater extent than in the past, to further streamline our business, reduce headcount, and optimize operations. We incurred approximately $18 million in charges related to these actions in the fourth quarter of 2025, and we expect to incur approximately $50 million in additional charges in 2026. We anticipate the savings generated from these actions will fund additional growth initiatives and contribute to future margin expansion. As we move into 2026, we're announcing the integration of Liberty Hardware and the Delta Faucet Company. With over half of Liberty sales branded Delta and a complementary product portfolio, this realignment enhances our consumer-driven strategy to leverage our brands, capabilities, and scale across our organization.

As a result of this integration, Liberty Hardware, which was previously reported in the decorative architectural products segment, will be reported within our plumbing products segment moving forward. Turning to our expectations for 2026, we believe sales across the global repair and remodel markets will be roughly flat. This includes an expectation that both our North American and international markets, in aggregate, will also be roughly flat. Our expectation for our own sales in 2026 is to be flat to up low single digits. This estimate includes our expectation that we will continue to outperform the market in 2026. We expect margin expansion in 2026, driven by continued mitigation of higher tariff and commodity costs, cost savings resulting from our restructuring actions, and ongoing operational efficiencies across our business.

We expect plumbing margins, inclusive of the Liberty Hardware business integration, to be approximately 18% and decorative margins to be approximately 19%, resulting in a Masco operating margin of approximately 17%. Turning to capital allocation, our strategy remains consistent. First, reinvest in our business to accelerate growth and market share gains. Second, maintain a strong investment-grade balance sheet. Third, target a 30% dividend payout ratio. And fourth, deploy our remaining available free cash flow, which we expect to be approximately $600 million in 2026, towards share repurchases or value-accretive acquisitions. I am pleased to share that our Board approved a 3% increase to our dividend for 2026, raising our annual dividend to $1.28 per share and marking our 13th consecutive annual dividend increase.

Additionally, our Board authorized a new $2 billion share repurchase program, underscoring Masco's resilient business model and strong financial position, and the Board's confidence in our future performance. Our M&A strategy remains consistent. We continue to selectively pursue opportunities with strong strategic fit and attractive returns, focusing on bolt-on acquisitions with our plumbing, wellness, and coatings businesses. Based on our expected operating performance and capital deployment strategy, we anticipate earnings per share for 2026 to be in the range of $4.10-$4.30 per share. While the housing market remains pressured in the near term, we are confident that the fundamentals supporting mid- to long-term home improvement demand are quite strong. U.S. homeowner equity levels are at a record high, up more than 80% since 2019, providing greater capacity for home renovation projects.

Homes continue to age, with more than 55% of U.S. homes now over 40 years old, an age that typically requires an elevated repair and remodel spending. Additionally, a large cohort of homes built in the early 2000s is now entering the prime remodeling age of 20-40 years. Significant pent-up demand for larger renovation projects continues to build. As consumer sentiment improves, interest rates decline, and existing home turnover increases, we expect this pent-up demand to become a tailwind for our business. With these strong fundamentals and the actions we are taking to optimize the business, we believe we are well positioned to deliver above-market top and bottom-line growth. We plan to achieve this through our consumer-driven strategy that leverages our industry-leading brands, expanded commercial capabilities, and enhanced operational excellence.

We look forward to discussing this strategy and our long-term goals in greater detail at our upcoming Investor Day on Wednesday, May thirteenth, in New York City. Please save the date, and we look forward to seeing you there. Now I'll turn the call over to Rick to go over our fourth quarter and full-year results and 2026 outlook in more detail. Rick?

Thank you, John, and good morning, everyone. Thank you for joining. As Robin mentioned, my comments today will focus on adjusted performance, excluding the impact of rationalization charges and other one-time items. Turning to Slide 9, sales in the fourth quarter decreased 2%, or 3%, excluding the favorable impact of currency. In local currency, North American sales decreased 5% and international sales increased 1%. Gross margin was 33.7% in the quarter. SG&A in the quarter was 19.3%, and in dollars was in line with the prior year. Operating profit was $259 million in the quarter, and our margin was 14.4%. Operating profit was impacted by lower volume and higher tariff and commodity costs, partially offset by pricing actions and cost savings initiatives. Our EPS was $0.82 per share in the quarter.

Turning to the full year of 2025, sales decreased 3% over the prior year, or 2% excluding the impact of our divestiture and favorable currency. Our divestiture of Kichler in the third quarter of 2024 resulted in a decrease in sales of 2% year-over-year for the full year of 2025, while currency represented a 1% increase in sales. In local currency, North American sales decreased 5%, or 2% excluding our divestiture, and international sales increased 1%. Gross margin was 35.5% and was impacted by higher tariff and commodity costs. SG&A, as a percent of sales, was in line with the prior year at 18.7%. Operating profit was approximately $1.3 billion, and operating margin was 16.8%.

Lastly, our EPS for the full year was $3.96 per share. Turning to Slide 10, plumbing sales increased 5% in the fourth quarter, or 3% excluding the favorable impact of currency. This growth was largely driven by pricing, which increased sales by 5%, partially offset by lower volume. In local currency, North American plumbing sales increased 4% in the quarter. This performance was primarily driven by solid growth in our Delta Faucet and Watkins Wellness businesses. In local currency, international plumbing sales increased 1% in the quarter. Hansgrohe grew in many of its European markets, including its key market of Germany. This growth was partially offset by the ongoing challenging market dynamics in China. Segment operating profit in the fourth quarter increased 2% to $204 million, and operating margin was 16.3%.

Operating profit was driven by cost savings initiatives and pricing actions, partially offset by higher tariff and commodity costs and lower volume. Turning to the full year of 2025, plumbing sales increased 3% or 2%, excluding the favorable impact of currency. Favorable pricing contributed 3%, partially offset by lower volume, which decreased sales by 1%. In local currency, North American plumbing sales increased 3%, and international plumbing sales increased 1%. Full year operating profit was $904 million, and operating margin was 18.1%. Turning to Slide 11, decorative architectural sales decreased 15% in the fourth quarter. In the quarter, total paint sales decreased double digits due to lower volume.

Volume was impacted by the favorable inventory timing in Q4 of 2024, as well as the impact related to the customer transition of our primer and applicator business in Q4 2025. Excluding these impacts, overall paint sales decreased mid-single digits, with Pro paint sales growing low single digits and DIY paint sales decreasing high single digits in line with our full year performance. Operating profit in the fourth quarter was $76 million, primarily impacted by lower volume and significantly higher tariff and glass anti-dumping duty costs at our Liberty Hardware business, partially offset by cost savings initiatives. We continue to take proactive actions to mitigate the impact of tariff and duties and have announced the integration of the Liberty business into Delta Faucet Company.

We believe this integration will provide a significant opportunity to further optimize the operations and improve the profitability of Liberty as we leverage the capabilities and scale of the combined business. Operating profit margin was 13.9% in the segment. Turning to the full year of 2025, sales decreased 14%, driven by our Kichler divestiture and lower volume, which decreased sales by 6% and 8%, respectively. Excluding the impact of the prior year inventory timing benefit, Pro paint sales were up low single digits, and DIY paint sales were down high single digits for the year. Full year operating profit was $457 million, and operating margin was 17.8%. Turning to Slide 12, our balance sheet remains strong, with gross debt to EBITDA at 2.1 times at year-end.

We ended the year with $1.6 billion of liquidity, including cash and availability under our revolving credit facility. Working capital was 16.7% of sales at quarter end. Working capital was impacted by tariff-related dynamics, including higher material costs and pricing, which resulted in increased working capital balances in 2025. We anticipate working capital as a percent of sales will be approximately 16.5% in 2026. Our free cash flow for the year was over $850 million, a bit stronger than anticipated, driven by disciplined cost and working capital management, achieving free cash flow conversion of nearly 100%.

Given our strong cash performance, we were able to return $832 million to shareholders through dividends and share repurchases, including the repurchase of $217 million in stock in the fourth quarter and the repurchase of $571 million for the full year. Now, let's turn to Slide 13 and review our outlook for 2026. The guidance that is being provided today reflects the integration of Liberty Hardware into Delta Faucet Company.... Therefore, Liberty's results will now be included in the plumbing product segment versus previously being included in the decorative architectural segment. For comparison purposes, we have recast our segments in 2025 by quarter to reflect this change. This information can be found in the appendix of our earnings deck on our website.

Our guidance also includes the impact of currently enacted tariffs in effect in February, inclusive of the 10% reduction in China tariffs that went into effect after our third quarter earnings call. As a result of this tariff reduction, as well as proactive and ongoing changes to our sourcing footprint, we now estimate that the total annualized cost impact from tariffs to be approximately $200 million before mitigation, down from an annualized $270 million as of our third quarter earnings call. Of the $200 million annualized cost impact, approximately $80 million is related to the current 20% China tariffs, and the remaining approximately $120 million is driven by a combination of the various tariffs on countries other than China, the 50% tariffs on steel, aluminum, and copper, and the glass anti-dumping duties.

We anticipate the full $200 million will impact 2026. This is up from the in-year impact in 2025 of approximately $150 million, largely due to the timing of tariffs as they were implemented throughout 2025. Our teams continue to actively work to further mitigate these costs and recover the cost and margin impact through a combination of levers. These include cost reductions, continued efforts to change our sourcing footprint, and pricing where necessary. We anticipate that these mitigation actions will offset the direct cost impact of the currently enacted tariffs in 2026. To provide an update on our China exposure, in 2026, we expect to import approximately $400 million from China that is subject to the reciprocal tariffs, down from our 2025 exposure of $450 million.

Based on our continued efforts, we anticipate that our China exposure will be less than $300 million as we exit 2026. This represents a greater than 60% reduction from our peak exposure in 2018. From a segment perspective, with a shift of Liberty Hardware to the plumbing product segment, nearly all of our tariff exposure and impact reside in this segment. Now, turning to our expected financial performance for 2026. For Masco overall, we expect 2026 sales to be flat to up low single digits and operating margin to expand to approximately 17%, up from 16.8% in 2025. Our 2026 sales guide reflects an assumption that the global repair and remodel markets in aggregate will be roughly flat.

As we think about the cadence for the year, excluding the impact of currency, we expect sales to be roughly flat to slightly up in both the first and second half of the year. We expect SG&A as a % of sales to be in line with 2025 as we continue to invest in our business for future growth, while also maintaining cost discipline. Also, as it relates to operating margins, given the timing of tariff impacts, which largely impacted our results in the second half of last year, we anticipate total Masco margin contraction in the first half of the year, with expansion expected in the second half as we lap the tariff impact and as our mitigation actions continue to take hold. In our plumbing segment, we expect 2026 full year sales to be up low single digits.

We anticipate the full year plumbing margin will be approximately 18%, up from a comparable 2025 margin of 17.6%. Margin expansion will primarily be driven by pricing discipline, operational efficiencies, and continued cost savings initiatives. In our decorative architectural segment, we expect 2026 sales to be roughly flat with the prior year. We expect our Pro paint business will increase mid-single digits, and our DIY paint business will decrease mid-single digits. We anticipate the full year decorative architectural margin to be approximately 19%, relatively in line with a comparable 2025 margin of 18.9%, with a continued focus on cost savings initiatives.

With regards to capital allocation, we expect to reinvest approximately $190 million through capital expenditures to pay a dividend of $1.28 per share, up 3% from our 2025 dividend, and to deploy approximately $600 million toward share repurchases or acquisitions in 2026. Finally, as John mentioned earlier, our 2026 EPS estimate is $4.10-$4.30 per share. This assumes a 202 million average diluted share count for the year and a 24.5% effective tax rate, which is consistent with our 2025 effective tax rate. Additional financial assumptions for 2026 can be found on slide 16 of our earnings deck. With that, I'd like to open up the call for questions. Operator?

Thank you. We will now begin the question and answer session. In order to ensure that everyone has a chance to participate, we would like to request that you limit yourself to asking one question and one follow-up question during the Q&A session. To ask a question, please press star, then the number 1 on your telephone keypad. To withdraw your question, please press star, then the number 2. One moment, please, while we assemble the queue... Your first question comes from Matthew Bouley of Barclays. Please go ahead.

Good morning, everyone. Thank you for taking the questions. Maybe just one common question we're getting from investors now is around commodity inflation and specifically copper. So maybe just a quick question there around how you're embedding that into your guidance for plumbing margin expansion in 2026, and maybe the sort of timing of that commodity impact. Thank you.

Sure, Matt, it's Rick. Good morning. So with regards to commodity inflation, as I'm sure you've been seeing, particularly with copper, we saw that really tick up later part of last year, and really the first part of this year. We're monitoring it very closely. It's obviously a volatile dynamic. With regards to inflation, we saw in our plumbing segment, mid-single-digit inflation in Q4, so we're seeing some of that pull through, and we're expecting mid-single-digit inflation in our guide for plumbing in the calendar 2026. So it's something that we've contemplated. Admittedly, it is volatile, and there's risk and upside, depending on how things play out.

As a reminder, with regards to how you think about commodities flowing through to our P&L, it's usually about a six-month lag in terms of when you see the commodity costs in the market, before it hits our P&L. So that's why you're seeing it kind of later in Q4 in 2025 and in 2026. So that delay is. And so to the extent that there's movement one way or the other, you can envision that lag would stay true.

Okay. Perfect. Thank you for that, Rick. Second one, pricing in plumbing. I think I heard you say 5% in the fourth quarter, and correct me if I'm wrong, but I think that would suggest price was probably above that in North America, assuming it was below that level in the international business. And so given that level of price, can you speak a little bit about what you're expecting to kind of flow through in the first half of 2026? Any kind of early reads on your initial January pricing actions in that segment? And if you're expecting that to contribute additional price on top of what you've already got, and kind of how that would flow through the first half and second half. Thank you.

Yeah. Hi, Matt. It's, it's John. Maybe I'll start and then turn it over to Rick to get into the flow for 2026. You know, I would say, really pleased with the way that our plumbing team has handled, you know, a lot of challenges in 2025. Obviously, between tariffs and commodities, they were faced with a lot and really took action and really used to save some sophisticated tools to take precise pricing and really across all of our channels. And the good news is, we continued to grow share through that time period. As we've taken smart pricing, we believe we're well positioned in the market. And again, I'll let Rick talk a little bit about the flow and how that will happen.

But again, really pleased with the way that we're navigating this environment.

Yeah, Matt, with regards to your specific question, you heard correctly that pricing and plumbing was a 5% benefit in Q4. It's fair to assume that international wasn't as significant. I'll leave it at that. As it pertains to 2026, we've indicated that we would expect mid-single-digit pricing for plumbing in the calendar year. From a case perspective, we won't get into the details, but suffice it to say that we started to implement mitigation actions, as John alluded to, really, as tariffs started to take hold across cost, sourcing, and pricing, really mid-year last year. So you can imagine, as we lap that activity in 2026, you'll see some moderation with regards to year-over-year comparison. But for the full year, you can expect a mid-single-digit pricing benefit.

Your next question comes from Anthony Pettinari of Citi. Please go ahead.

Good morning. Just pivoting from plumbing to DA, I'm wondering if you could, you know, talk about assumptions for price cost in 2026, any commodity cost trends that you'd call out, and any pricing actions that you can talk about?

Yeah, absolutely. This is John. As we look at, as we look at DAP, we are seeing some upward pressure on cost. As you likely know, we have a unique relationship with our large exclusive big box retailer and have a price cost mechanism in place. So not gonna comment on prospective pricing or even our conversations with our retail partner, but given the costs that we're seeing, you know, those conversations are beginning. We'll come back in future quarters and let you know where we shake out in that space.

Okay. Okay. And then in terms of DIY, I think you've guided down mid-single digits. You know, are there any kind of big picture thoughts you can share in terms of the volume pressure in that business? And you know, how much of it might just be a sort of a secular shift from DIY to Pro, so maybe you know, demand is not being destroyed, it's just being kind of shifted between the channels? Just kind of as you look back at the last three, four years, can you give us some context and how that informs your expectations for 2026?

Yeah, absolutely. So this is John. It's certainly been dynamic for sure. We do know that existing home sales correlate highly with DIY paint, and it makes sense. When you go to sell a home, you tend to paint it, and when you buy it, you tend to paint it again to put your own mark and style into the home. So as existing home sales were at 3- or 4-decade near lows, and then in 2025, it was challenging, and we saw that obviously in, in the previous years as well. As we look forward, we know that we have a strong DIY brand, one of the-- one of the share leaders.

We have amazing quality at great value, and we think we can actually tell our story better just to make sure that, you know, we get our continued growth share in the DIY market. The space that we're, you know, very excited about is the Pro market. When you look at that, that segment, it's the biggest single segment Masco competes in. It's over $10 billion, and it's grown nicely, really over the short, medium, and long term. And we have a relatively small share. We have less than a 10% share. Really proud that we gained 200 basis points of share since 2019. But we are squarely focused on growing that at a differential rate. And the good news is The Home Depot, our retail partner, is very, very squarely focused on the Pro as well.

So we're working to take friction out of the experience for the Pro. Things like order online and pickup in store, which is available now. Order online and have it delivered to the job site, which we can do now. The Home Depot is trialing some trade credit, which we think will make a real difference. And then we can continue to increase the number of both outside and inside sales reps we have focused on the Pro. So regardless of where the market goes, we like our ability to play both in DIY, where we're very strong today, and then we think there's a tremendous amount of upside in Pro, and we'll continue to invest in that space, and again, very aligned with, with our retail partner, in that initiative.

Next question comes from Stephen Kim of Evercore ISI. Please go ahead.

Yeah, thanks a lot, guys. Appreciate all the color so far. I guess, in your guide for fiscal 26, can you give a sense for what your expectations are for existing home sales, and just anything else relevant coming out of the housing market, specifically, in your outlook?

Hey, Steven, good morning. So we've got pretty modest expectations with regards to some of the macro drivers. From an overall R&R perspective, we're assuming both in terms of the U.S. market in which we play, as well as international, roughly flat. And that's contemplating volume down and pricing up, kind of offsetting one another. From an industry perspective, we, Masco, expect to outperform that and be flat to slightly up or up low single digits. In terms of some of the other macro factors, existing home sales, new home builds, et cetera, pretty modest expectations, nothing significant differently from what we've seen in the last couple of years.

If you did see an inflection upwards in existing home sales beyond your expectations, would you be expecting that you would see that more on the pricing side? Or do you anticipate that there would be certain other sort of subcategories that would particularly benefit or see it first?

Yeah, Stephen, that's a tricky one to answer. I think from a standpoint, I think pricing, as we've taken price with regards to mitigating both tariff and commodity costs, that's largely in place. Obviously, we continue to monitor the market. I think from an overall variability standpoint, I would presume volume would be the biggest dynamic, both in terms of upside opportunity as in terms of risk. I mean, we look at, you know, I gave you the assumptions with regards to the overall R&R industry. Within that, we look at plumbing as an opportunity for us, particularly in terms of how we're competing in the market.

In Q4, for example, we gained sales across the e-commerce, trade, and retail channels, so we're seeing really good momentum in that regard, and we're going to continue to drive our performance, kind of relative to the market overall.

Yeah, Steven, I might just add that, obviously, existing home sales are important. I've mentioned how important that is to, to our paint business. You know, beyond though, that we, we, you know, are 90% repair and remodel, and, and I think big picture, believe that there's a lot of opportunity once the market frees up. And you look at, I mentioned in the prepared remarks that home equity levels are at record highs, up 80% since 2019. Interest rates are heading in the right direction. I think the combination of some, additional cuts to interest rates and then, and, and importantly, improved consumer confidence, we think that's gonna be really the driver to, to turn the market. So, whether that happens in 2020 or 2026 or not, we'll see.

But again, we think that those are the key things that'll be needed for us to get back to historical growth rates across our categories.

Your next question comes from Michael Rehaut of J.P. Morgan. Please go ahead.

Hi. Yeah, good morning. Thanks for taking my questions. Wanted to hit on the restructuring actions contemplated for 2026. I assume part of that is with regards to moving Liberty over and integrating that. I just wanted to get a sense for, you know, what the dollar benefit you anticipate from those restructuring actions in 2026, and how much of that might be reinvested in the company? 'Cause I heard you say, you know, fund growth initiatives versus, you know, just a fall to the bottom line, so to speak.

Yes, so maybe I'll start and Rick can add on as well. You know, obviously, with markets that aren't growing historical rates, you know, we want to take action and make sure that we have the cost structure that's needed for today and into the future. So the actions are broad. So again, Liberty would obviously be a part of it, something that we pointed out. But we're really looking across our organization just to make sure we have the right footprint in terms of manufacturing base, make sure that we're leveraging our scale where it makes sense. And the idea is to take those dollars, you know, drop some of them to the bottom line as we've guided. Again, we want to grow margins in 2026 and into the future.

Importantly, we want to free up differential amount of dollars that we can reinvest back into creating capabilities. We won't go into a lot of detail today, but at our main Investor Day, we'll really detail the capabilities that we're building to not only help us drive to the bottom line, so things like leveraging our scale with shared services and global purchasing, but importantly, creating capabilities that will drive our top line even faster. So things like e-commerce and digital marketing, brand building, and consumer insights, and then finally really accelerating innovation. So again, I'll let Rick touch a little bit on the dimensions of this year and into the future. But just know that this is an area that we'll continue to focus on.

We're gonna continue to drive hard from a cost standpoint, just because we do want to keep growing our margins and keep investing in our capabilities as well.

Yeah, Mike, with regards to restructuring and timing, so as you—as we indicated in our prepared remarks, we took a charge of about $18 million in Q4 of 2025, and we expect about $50 million of charges here in 2026. So we've embarked on restructuring actions, and we were highlighting this for a couple of reasons. One is because it's more significant than Masco has done in the recent past in terms of the extent of restructuring, all for the reasons that John mentioned in terms of the overall market dynamics, volume, et cetera. In terms of the... and it's broad-based in nature. I would say in terms of benefits, those restructuring actions are gonna take hold as we move through 2026. They're contemplated within our guidance, and we do have some margin expansion contemplated in our guidance for 2026.

The full benefit will be realized as we get into 2027 and 2028. As John indicated, we'll provide more visibility in terms of our margin expectations as we get into our discussion at Investor Day in May.

Okay. I appreciate that. I guess secondly, just to follow up on the earlier question around raw materials and where copper prices are today. You said, obviously, that, you know, your 2026 guide contemplates or reflects, you know, that you're aware of what's going on in the markets. Just, you know, a little - just for a little clarity's sake, does that imply that, you know, if copper prices today - if copper prices of today were to hold, that would be, in effect, a neutral impact on, let's say, the second half of the year because there is a lag? Or would there need to be some additional adjustments taken to make sure that you can, you know, achieve the guidance that you've laid out?

Yeah, Mike, without giving you a specific figure in terms of what we've pegged our plan at, what I can say is we have contemplated elevated copper prices. We haven't contemplated copper prices at the levels that they've reached in the recent past, like above $6 per pound from a COMEX perspective. But that's something that we continue to monitor. We do have, as I mentioned earlier to Matt's question, a bit of a delay with regards to when it impacts our P&L. So it does give us the opportunity to respond, whether it's through further cost actions or pricing, to mitigate those impacts. And so that's something that we continue to monitor, and we've demonstrated the ability to offset these types of headwinds in the past.

And so it may not be one for one from a timing perspective, and there might be both risk and upside relative to our, to the copper assumption. But we do, we do monitor very closely, and we do take action accordingly.

Yeah. I would just say, Mike, look, it's one of many risks and opportunities that we continue to look at. So I, I would say we feel good about where the call is today. If, if it moves materially, we'll, we'll take actions to make sure we mitigate it.

Your next call comes from Susan Maklari of Goldman Sachs. Please go ahead.

Good morning. Building on your recent comments to Mike's questions, can you talk a bit about the executive committee that you formed there, some of the initiatives that you're gonna be really focused on as you think about driving that growth, and anything specific that we should be focused on for 2026 as it relates to that?

Yeah, Sue, this is John. I'm happy to take that question. I'm excited about the new executive committee, and really, it was designed to do two things. One, allow us to get closer to the business. As we all know, the world's moving faster than ever before, including our consumers and customers, and we wanted to bring our four big BU leaders onto the senior team of the company. That's the first time we've done that at Masco. Their businesses make up more than 80% of our total business. And we meet at least weekly. We talk about what's working, what's not, where there's challenges, and we're flowing resources to those challenges more quickly than we have in the past. And again, just being really in touch with the business is what we're shooting for.

In addition to that, Behr is now reporting directly to me, as, you know, they deal with our largest customer. I think that helps with decision-making. It helps me be really in tune with what's happening on that important business, as well as with our most important and largest customer as well. In addition to that, the goal is to leverage our scale better. Masco has a long history of driving a lot of success. We've done that in a very decentralized way. What I would say is, I don't plan to centralize this company. That's not the goal at all, but the goal is to really leverage our scale where it makes sense. And to do that, we need to make sure that we do it in a smarter way.

So as we build these strategies to leverage our scale, having the business unit leaders be a part of the strategy of development, and then obviously, the execution as we go to market and deploy these capabilities, things that I talked about, like digital marketing, e-commerce, and brand building, and consumer insights, and innovation. Having them to be a part of the development, I think, is really important. So our goal is to keep doing what we've done historically from a margin standpoint, keep driving margins, but probably grow a bit more quickly on the top line and bring in this growth mindset to Behr, is what we're trying to do as an executive committee.

... Yeah. Okay, that, that's great color. And then turning to the cash flow side of the business, you guided for working capital to come down a bit, 16.5% of sales this year. Can you talk about the path of getting there, further potential upside to that as, as conditions perhaps normalize? And then how we should be thinking about what that means for overall cash generation and the uses of that cash?

Sure, Sue, it's Rick. So with regards to working capital, as you may recall, and I believe I mentioned this in my prepared remarks as well, 2025 working capital was adversely impacted by the tariff dynamic. And what I mean by that is a couple of folds. One is, as cost bled into our inventory and as pricing bled into our receivables, that inflated our working capital ratios. Also, from a payment timing perspective, tariffs are due on shorter payment terms than our regular vendor payables, and so that shortened our payable days as well. And so those impacts took hold in 2025 and were adverse impact in terms of our working capital dynamics. In 2026, we expect more of a return to normalization.

There'll be some residual implications, of course, for the tariffs, but 16.5% is more where we've run historically. And so that's more of a normalization, I would call it, with regards to our working capital. From an overall cash, cash allocation perspective, our capital allocation framework, as you know, has not changed, and we're consistently deploying capital as we've done in the past. And that's, number one, first and foremost, investing in the business. And we guided to an expectation of approximately $190 million of capital expenditures in 2026. Second is an investment-grade credit rating, which we have securely in place, you know.

Third is a relevant dividend, and as John and I both mentioned, we got support from the board to increase our dividend 3% to $1.28 per share for 2026. And then all available cash that we don't deploy to capital investments or to the dividend are available for share buybacks or M&A activity. And we indicated our expectation is that number would be about $600 million for 2026.

Okay. Thanks for the color, and good luck with the quarter.

Your next question comes from John Lovallo of UBS. Please go ahead.

Good morning, guys. Thanks for taking my questions as well here. The first one, just on Liberty Hardware. It looks like the operating margin was kind of mid- to high single digits in 2025, and I'm sure that was impacted by tariffs, but that compares to sort of 16%-17% in 2024. So I guess the question is, you know, what are your expectations for Liberty Hardware margin embedded in the plumbing outlook? And can you remind us why this business is still considered core?

Sure, John, it's Rick. So we typically do not comment on individual business unit performance, but obviously, with the shift of Liberty Hardware from our decorative architectural segment to our plumbing segment, it creates a bit more visibility. And as you noted, our, our margins were adversely impacted in 2025. And that's really, I would say, primarily driven by a couple things. The volumes were a bit challenged, but really even more than that, from a profit margin perspective, we, we were hit significantly by tariff and the glass anti-dumping duties. And just as a reminder, the glass anti-dumping duties impact our shower door sourcing, and that was at a rate of 323%.

So needless to say, the team has been proactively working to mitigate and change our sourcing footprint to address that duty impact, and we're making good progress on that, and that will be something that we mitigate over the course of 2026. As it pertains to Liberty overall, Liberty is a core part of our business. As John noted in his comments, over half of the sales of Liberty are branded Delta. There's a great product complement, portfolio complement that Liberty possesses in terms of kitchen and bath hardware and shower doors, that we're really excited will be even more successful with regard-when we integrate it into Delta in 2026.

Got it. And then on the paint sales side, I think you guys talked about paint being down 15%, but you called out a couple sort of one-time item, items, if you will, the inventory timing and the customer transition of primer and applicator businesses. Can you just help sort of break out the impact of each of those two factors in that number?

Sure, John. So you're right. We identified a couple of items that provided a bit of impact in Q4. What I would say is not new news is the inventory channel build in Q4 2024 that we experienced, and we had flagged as a favorable impact in Q4 2024 and an unfavorable comparison as we look at Q4 2025. That had about a mid-single-digit impact in terms of our volume and sales for the business on a year-over-year basis. And then with regards to the transition of the primer and applicator business from one of our customers, that had about a single-digit impact in terms of sales in the quarter. So we thought it was appropriate to adjust those out as it pertains to providing a more representative picture of our performance during the quarter.

Our performance during the quarter, quite frankly, when you strip out some of those impacts, is in line with what we saw through the course of the calendar year 2025, which was down high single digits in terms of DIY and up low single digits in terms of Pro. We expect, as John have articulated, an improvement in that trend rate as we move into 2026 in terms of overall paint sales being roughly flat year-over-year, with DIY down mid-single digits and Pro up mid-single digits.

Your next question comes from Sam Reid of Wells Fargo. Please go ahead.

... Thanks, everyone. I just wanted to circle back on the mid-single-digit plumbing pricing for 2026. If you could just disaggregate in your outlook between wholesale and retail channel pricing, would just love some perspective on how potentially those retail conversations are going, and also just how you might be managing price gaps that might be evolving between wholesale and retail and plumbing.

Sam, this is John. I'll take a crack at this. So, you know, I would say, in terms of pricing and plumbing, we feel good about where we are today, and the conversations we have with customers are being, you know, constructive. As you can imagine, customers don't love pricing no matter the environment, so we always have to give good justification for it, and we're working through that as we speak right now. We won't get into, you know, channel by channel.

It's just not something that we really guide to, but I can tell you that we're putting some good discipline in place in terms of our strategic revenue management approach, and that means just having strategies by channel, making sure that we have, you know, a good idea of price elasticity and where we stand versus our competitors. I think at the end of the day, what you really want to do is keep growing your business while you take price. Clearly, we're doing that. We're growing nicely. We're growing share in the category. Part of that is just being competitive, which we believe we are, and it's also about building your brands and about innovating.

So we feel good about where we are from a, you know, pricing standpoint for sure, but more importantly, just a business standpoint, particularly on our plumbing business in North America. Our Delta team, I think, did a fantastic job in 2025, navigating an incredible number of headwinds, and we really like where we stand today.

Masco (MAS) Q4 2025 Earnings Call Transcript

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