How large is the offsetting impact between favorable tariffs and higher commodity costs, and what is the quarterly cadence?

Management stated they would not quantify the exact magnitude but expect the net impact to be relatively flat to a headwind due to commodity inflation (copper, zinc, oil-based inputs). The impact is largely a 'back half of 2026 phenomenon' for plumbing (due to inventory flow-through) and more near-term for oil/resin costs in decorative architectural. “I think on a net basis, you can think of them as relatively flat to potentially a headwind for us for the year, just given the extent of commodity inflation that we've seen really across many input costs, particularly copper and zinc as well as oil-based inputs, particularly resins, et cetera.”

Confirm if plumbing volumes were genuinely strong or if there were one-time/pull-forward effects.

Jon Nudi confirmed no one-time or pull-forward effects. Strong performance was driven by Delta Faucet in North America, with better-than-expected volume elasticity after pricing actions, market share gains across all channels, and strong product lineup/marketing. “It was a pretty normalized quarter in terms of inventories. -- we feel really good about deploying business and the performance that, that team put up really around the world where we saw our business grow nicely. Our North American business, in particular, with Delta Faucet had a terrific first quarter. growing high single digits.”

Given 9% Q1 growth, why is full-year plumbing guidance still low single digits? Is deceleration expected or is it conservatism?

Jon Nudi attributed the maintained guidance to macroeconomic and geopolitical uncertainty (war, oil shock impact on economy/consumer sentiment). While no meaningful change in demand has been seen, the company is being prudent. Rick Westenberg added that pricing comps get tougher in H2 2025 due to tariff mitigation pricing actions. “As we look to the remainder of the year, really, it's the uncertainty that we see in the road around is that, that cause us to keep our guidance where it is. Certainly, you had all of the uncertainty prior to the war and ramp with tariffs. And consumer sentiment and things like that. And then obviously, the war adds a whole another level of uncertainty.”

MAS

Masco (MAS) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Materials· Apr 22, 2026

Source: earnings call transcript

Executive summary

Masco Q1 FY26 — Strong Plumbing Performance and Increased Share Repurchase Authorization

Masco delivered a strong first quarter, exceeding expectations with robust plumbing performance and significant margin expansion, despite a dynamic macroeconomic environment. The company is actively streamlining operations and increasing capital returns through an expanded share repurchase program, while prudently maintaining full-year EPS guidance due to anticipated commodity cost headwinds.

Highlights

Net sales increased 6% (4% in local currency), driven by favorable pricing and stronger-than-expected volume.
Operating profit grew 13% to $324 million, with operating margin expanding 90 basis points to 16.9%.
Adjusted EPS grew 20% to $1.04 per share.
Plumbing Products segment sales increased 9% (7% local currency), with North American plumbing sales up 9% local currency, driven by strong Delta Faucet and Watkins Wellness performance.
Increased share repurchase/acquisition target to at least $800 million from $600 million.

Concerns

Anticipated higher than previously expected commodity costs, particularly copper, oil, and resins, expected to offset tariff favorability.
DIY paint sales decreased low single digits, reflecting continued pressure from existing home sales.
Ongoing weak market in China for International Plumbing sales.
High degree of macroeconomic and geopolitical uncertainty.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Adjusted EPS	$4.10 to $4.30 per share high materiality	FY26 · 2026	High
Full-year 2026 Sales Growth	up low single digits high materiality	FY26 · 2026	High
Full-year 2026 Total Masco Operating Margin	approximately 17% high materiality	FY26 · 2026	High
Full-year 2026 Plumbing Segment Sales Growth	up low single digits medium materiality	FY26 · 2026	High
Full-year 2026 Plumbing Segment Operating Margin	approximately 18% medium materiality	FY26 · 2026	High
Full-year 2026 Decorative Architectural Segment Sales Growth	roughly flat with the prior year medium materiality	FY26 · 2026	High
Full-year 2026 Decorative Architectural Segment Operating Margin	approximately 19% medium materiality	FY26 · 2026	High
Full-year 2026 Average Diluted Share Count	200 million shares medium materiality	FY26 · 2026	High
Full-year 2026 Effective Tax Rate	24.5% low materiality	FY26 · 2026	High
Full-year 2026 Share Repurchases or Acquisitions	at least $800 million high materiality	FY26 · 2026	High
Full-year 2026 Working Capital as % of Sales	approximately 16.5% medium materiality	FY26 · 2026	High
First Half 2026 Total Masco Operating Margin	relatively flat medium materiality	H1 FY26 · 2026	High
Second Half 2026 Total Masco Operating Margin	expand medium materiality	H2 FY26 · 2026	High
Full-year 2026 Pro Paint Sales Growth	increase mid-single digits low materiality	FY26 · 2026	High
Full-year 2026 DIY Paint Sales Growth	decrease mid-single digits low materiality	FY26 · 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Plumbing Products Growth driven by pricing actions (6%) and slightly higher volumes. North American growth was strong in Delta Faucet and Watkins Wellness. International growth in European markets (Germany) offset by weakness in China. Local currency sales growth: 7%North American local currency sales growth: 9%International local currency sales growth: 1%Operating profit growth: 10%Operating margin: 18.3%Operating margin expansion: 10 basis points	—	9%	—	$250 million operating profit
Decorative Architectural Performance driven by mid-single-digit growth in Pro paint sales, offset by low single-digit decrease in DIY paint sales. Operating margin reflects cost savings initiatives and a more normalized Q1 compared to prior year's inventory timing. DIY paint sales growth: low single digits decreasePro paint sales growth: mid-single digits increaseOperating profit growth: 19%Operating margin: 19%	in line with prior year	flat	—	$105 million operating profit

Product announcements

Product	Type	Timeline	Details
BEHR PREMIUM PLUS Ecomix	milestone	2026

Deals & partnerships

Liberty Hardware Integration into Delta Faucet Company

Our integration of Liberty Hardware into Delta Faucet Company is on track as we further leverage the brands, capabilities and scale of our Delta Faucet business.

Risks & headwinds

Macroeconomic and geopolitical uncertainty near term

high degree of uncertainty

Mitigation:focused on positioning ourselves for ongoing sales and profit growth over the mid- to long term; taking right actions to optimize business

Higher commodity and related input costs back half 2026 phenomenon (for plumbing); more near term (for oil/resin in decorative)

higher than previously anticipated commodity costs; mid- to high single digits inflation (for oil/resins); Copper prices remain elevated and oil... also remains elevated and volatile.

Mitigation:monitor these dynamics and we'll work diligently to mitigate the impact as we have demonstrated in the past; offset that inflation by negotiating with their suppliers, looking at footprint -- but ultimately, if we have to take price, we'll work to do that

Weak market in China ongoing

ongoing weak market; remains challenging market from a new home construction standpoint and a building standpoint

Mitigation:looking to improve our trends in that market

DIY paint market pressure short term

DIY paint sales decreased low single digits; highly correlated with existing home sales... existing home sales remain pressured

Mitigation:putting strong plans in place... focus on the great quality that we provide the best value in the industry... work with our retail partner

What to watch in Q2 FY26

Total Masco Margin Trajectory

Q2 FY26 (for H1 flat), H2 FY26 (for expansion)

Current 16.9% (Q1 FY26)

Target relatively flat (H1 FY26 vs prior year), expand (H2 FY26)

Why it matters

Indicates effectiveness of cost savings and pricing actions against commodity headwinds, crucial for full-year margin guidance.

regarding cadence for the year, given the timing of tariff impacts, which largely impacted our results in the second half of last year, we anticipate total Masco margin to be relatively flat in the first half of the year versus our previous guide of margin contraction and to expand in the second half of the year as we lap the tariff impact and as our mitigation actions continue to take hold.

Find out whether MAS delivers this. Inve re-checks your case every morning.

Q&A highlights

Clarification on the 'favorable' tariff impact, specifically regarding Section 232, and how it's quantified given subassembly in the U.S.

Rick Westenberg explained that the favorability is a composite of NEPA, Section 122, and Section 232 tariffs. While 232 is nominal, the composite is expected to be favorable but difficult to quantify due to uncertainty and ongoing investigations (Section 301). This favorability is expected to be offset by rising commodity costs.

“it's really an impact -- it's really a composite impact. So it's not just the 232 tariffs, but it's the really on the EBA tariffs at the end of February, the imposition of Section [indiscernible] tariffs. And then, of course, the 232 tariffs, which -- so we look at it from a composite perspective. The 232 tariffs themselves are relatively nominal in terms of their net impact. But on composite, we expect a favorable impact.”

asked by John Lovallo (UBS) · answered by Richard Westenberg

2 min read 5 chapters

Detailed narrative

Organizational Streamlining and Cost Savings

Masco is streamlining its Executive Committee, with leaders of the four largest businesses (Delta, Hansgrohe, Behr, Watkins Wellness) now reporting directly to the CEO. This aims for greater agility and alignment. Restructuring actions, including headcount reduction and operations optimization, are ongoing, with $8 million incurred in Q1 and an expected $50 million in total charges for 2026.

These savings will fund growth initiatives and margin expansion.

Capital Allocation Strategy

The company maintains its capital allocation strategy focused on bolt-on M&A, but has increased its share repurchase/acquisition target to at least $800 million for 2026, up from $600 million. This increase is supported by a new 2-year delayed draw term loan of up to $500 million, reflecting confidence in performance and opportunistic share valuation.

Macroeconomic Headwinds and Mitigation

Masco acknowledges a highly dynamic macroeconomic and geopolitical environment. While Q1 performance was strong, the company anticipates higher commodity costs (copper, oil, resins) that are expected to offset any favorability from tariff changes. Management emphasizes its track record of mitigating such impacts through sourcing footprint changes, cost savings, and selective pricing actions.

Plumbing Segment Strength

The Plumbing segment delivered strong Q1 results, with North American sales growing 9% in local currency, primarily driven by Delta Faucet and Watkins Wellness. This growth was attributed to effective pricing, better-than-expected volume elasticity, strong new product lineups, and market share gains across all channels (wholesale, retail, e-commerce). The high-end consumer segment also showed continued strength.

Decorative Architectural Segment Performance

Sales for the Decorative Architectural segment were flat year-over-year. Pro paint sales grew mid-single digits, while DIY paint sales decreased low single digits. The company continues to invest in the Pro segment, aiming to grow market share by enhancing the customer experience and expanding sales teams, acknowledging that the DIY market remains challenged due to its correlation with existing home sales.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.