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    MAS
    Earnings call· Mar 2026(Q1 FY26)

    MASCO CORP /DE/ Q1 FY26 earnings call MAS

    Apr 22, 2026 Source

    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

    5

    • 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

    4

    • 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

    15
    CategoryTargetConfidence
    Full-year 2026 Adjusted EPS
    $4.10 to $4.30 per share
    high materiality
    High
    Full-year 2026 Sales Growth
    up low single digits
    high materiality
    High
    Full-year 2026 Total Masco Operating Margin
    approximately 17%
    high materiality
    High
    Full-year 2026 Plumbing Segment Sales Growth
    up low single digits
    medium materiality
    High
    Full-year 2026 Plumbing Segment Operating Margin
    approximately 18%
    medium materiality
    High
    Full-year 2026 Decorative Architectural Segment Sales Growth
    roughly flat with the prior year
    medium materiality
    High
    Full-year 2026 Decorative Architectural Segment Operating Margin
    approximately 19%
    medium materiality
    High
    Full-year 2026 Average Diluted Share Count
    200 million shares
    medium materiality
    High
    Full-year 2026 Effective Tax Rate
    24.5%
    low materiality
    High
    Full-year 2026 Share Repurchases or Acquisitions
    at least $800 million
    high materiality
    High
    Full-year 2026 Working Capital as % of Sales
    approximately 16.5%
    medium materiality
    High
    First Half 2026 Total Masco Operating Margin
    relatively flat
    medium materiality
    High
    Second Half 2026 Total Masco Operating Margin
    expand
    medium materiality
    High
    Full-year 2026 Pro Paint Sales Growth
    increase mid-single digits
    low materiality
    High
    Full-year 2026 DIY Paint Sales Growth
    decrease mid-single digits
    low materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    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 yearflat—$105 million operating profit

    Operational metrics

    19
    Net sales growth
    4%
    Q1 FY26

    Net sales increased 6% or 4% in local currency, primarily driven by favorable pricing.

    Operating profit
    $324 million13% increase
    Q1 FY26

    Operating profit was $324 million, an increase of 13%.

    Operating profit margin
    16.9%90 basis points improvement
    Q1 FY26

    Operating profit margin was 16.9%, an improvement of 90 basis points.

    Adjusted EPS
    $1.0420% growth
    Q1 FY26

    Earnings per share grew 20% during the quarter to $1.04 per share.

    Restructuring charges incurred
    $8 million
    Q1 FY26

    We incurred approximately $8 million in restructuring charges in the first quarter, and we continue to expect approximately $50 million in total charges in 2026.

    Gross margin
    36%10 basis points expansion
    Q1 FY26

    Gross margin expanded 10 basis points to 36% in the quarter.

    SG&A as % of sales
    19.1%80 basis points lower than prior year
    Q1 FY26

    SG&A as a percent of sales was 19.1%, 80 basis points lower than the prior year.

    Plumbing sales growth from pricing
    6%
    Q1 FY26

    While this growth was primarily driven by pricing actions, which increased sales by 6%, our performance was better than expected, driven by volume, which was up slightly in the quarter.

    Plumbing sales growth from volume
    up slightly
    Q1 FY26

    While this growth was primarily driven by pricing actions, which increased sales by 6%, our performance was better than expected, driven by volume, which was up slightly in the quarter.

    Gross debt-to-EBITDA
    2.1x
    Q1 FY26

    Our balance sheet remains strong with gross debt-to-EBITDA at 2.1x at quarter end.

    Total liquidity
    $1.3 billion
    Q1 FY26

    We finished the quarter with $1.3 billion of liquidity, including cash and availability under our revolving credit facility.

    Working capital as % of sales
    19.5%
    Q1 FY26

    Working capital was 19.5% of sales at quarter end.

    Capital returned to shareholders
    $267 million
    Q1 FY26

    Our strong cash performance enabled us to return $267 million to shareholders through dividends and share repurchases, including the repurchase of $202 million of stock in the first quarter.

    Share repurchase executed
    $202 million
    Q1 FY26

    including the repurchase of $202 million of stock in the first quarter.

    Delayed draw term loan facility
    $500 million
    Q1 FY26

    we recently entered into a 2-year delayed draw term loan of up to $500 million.

    Expected commodity cost inflation
    mid- to high single digits
    FY26

    we would expect mid-single-digit inflation, and that's really commodities as well as 1 of the way inflation as well.

    Total cost impact from incremental tariffs (before mitigation)
    $200 millionestimated on prior earnings call
    FY26

    As it relates to tariffs, on our prior earnings call, we estimated the total cost impact from incremental tariffs to be approximately $200 million before mitigation this year.

    Net tariff impact
    favorable
    FY26

    Given the recent ruling on NEPA tariffs, the implementation of temporary Section 122 tariffs and changes to how Section 232 tariffs on steel, aluminum and copper are applied, we do anticipate the impact of these tariff changes before mitigation to be favorable.

    Tariff favorability offset
    more than offset by anticipated increases in commodity and related input costs
    FY26

    However, given the great deal of uncertainty as to where tariffs will ultimately land, it is challenging to quantify. In addition, we anticipate any tailwind from these tariff changes will be more than offset by anticipated increases in commodity and related input costs.

    Industry KPIs

    1
    MetricValueDetails
    Price cost6%%

    Product announcements

    1
    ProductTypeDetails
    BEHR PREMIUM PLUS Ecomixmilestone

    Deals & partnerships

    1
    Liberty HardwareIntegration 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

    4
    Macroeconomic and geopolitical uncertaintynear 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 costsback 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 Chinaongoing

    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 pressureshort 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

    5

    Total Masco Margin Trajectory

    Q2 FY26 (for H1 flat), H2 FY26 (for expansion)
    Current16.9% (Q1 FY26)
    Targetrelatively 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 impact🌐s, 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.