Sign in
MC

MASCO CORP /DE/ (MAS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue fell 6% to $1.80B and adjusted operating margin held at 16.0%; EPS was $0.87, with management citing tariff and macro uncertainty and withdrawing FY25 guidance .
  • Against S&P Global consensus, MAS missed on EPS (actual $0.87 vs $0.914*) and revenue ($1.801B vs $1.835B*); decorative architectural (paint) weakness and tariff overhang drove cautious tone .
  • Plumbing performed resiliently (local-currency sales +1% and adjusted margin 18.5%), while decorative architectural sales declined 16% (ex-divestitures down 8%); pro paint grew mid-single digits, but DIY paint was down high single digits .
  • Management quantified in-year tariff cost at ~$400M before mitigation and expects to offset $200–$250M in 2025 (50–65%), targeting full annualized mitigation ($675M) by end-2026; capital allocation framework and dividend ($0.31/qtr) were maintained .

What Went Well and What Went Wrong

What Went Well

  • Plumbing segment resilience: local currency sales +1% and adjusted operating margin 18.5%, aided by e-commerce share gains and specialty spa/sauna dealer growth .
  • Pro paint strength: pro paint sales up mid-single digits, continued share gains with Home Depot, strong NPS and service metrics underpinning growth .
  • Cost discipline and margin: adjusted operating margin of 16.0% and gross margin +20 bps YoY to 35.9% despite volume pressure; SG&A fell $9M YoY .

Management quotes:

  • “We delivered solid adjusted operating profit margin of 16.0 percent and adjusted earnings per share of $0.87” – CEO Keith Allman .
  • “Teams are actively taking steps to mitigate increased costs through pricing actions, cost savings initiatives, and sourcing changes” – CEO Keith Allman .
  • “We continue to grow in the pro paint category... leading to ongoing share gains” – CEO Keith Allman .

What Went Wrong

  • Decorative architectural weakness: sales -16% (ex-divestitures -8%), DIY paint down high single digits and below internal expectations; partial reversal of Q4 inventory timing benefits .
  • EPS and revenue misses vs consensus; management withdrew full-year guidance due to tariff/macro uncertainty, a negative near-term catalyst .
  • Mix headwinds and higher marketing/trade show costs impacted plumbing profitability; elasticity and volume impacts from pricing actions are uncertain .

Financial Results

Quarterly Headline Metrics (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.983 $1.828 $1.801
EPS (Diluted, $)$0.77 $0.85 $0.87
Gross Margin % (reported)36.6% 34.7% 35.8%
Operating Profit ($USD Millions, reported)$357 $290 $286
Operating Margin % (reported)18.0% 15.9% 15.9%
Operating Margin % (adjusted)18.2% 15.9% 16.0%

Q1 2025 Actual vs S&P Global Consensus

MetricActualConsensusSurprise
EPS (Diluted, $)$0.87 $0.9139*-4.8% vs est*
Revenue ($USD Billions)$1.801 $1.835*-1.9% vs est*

Values with asterisks retrieved from S&P Global.

Segment Breakdown (Q1 2025 vs Q1 2024)

SegmentNet Sales Q1 2024 ($MM)Net Sales Q1 2025 ($MM)YoY %Adjusted Op Margin Q1 2024Adjusted Op Margin Q1 2025
Plumbing Products$1,192 $1,185 -1% 19.1% 18.5%
Decorative Architectural Products$734 $617 -16% 17.0% 15.6%
Total Company$1,926 $1,801 -6% 16.7% 16.0%

Non-GAAP Adjustments (Q1 2025)

ItemAmount ($MM)Notes
Rationalization charges (Gross/Op)$2 Included in adjusted reconciliations
Realized losses from private equity funds, net$5 Included in income per share reconciliation
Adjusted EPS (normalized tax 24.5%)$0.87 Matches reported diluted EPS

KPIs and Balance Sheet (oldest → newest)

KPIQ3 2024Q4 2024Q1 2025
Liquidity ($USD Billions)$1.646 $1.634 $1.246
Cash & Cash Investments ($MM)$646 $634 $377
Revolver Availability ($MM)$1,000 $1,000 $869
Working Capital as % LTM Sales16.4% 15.1% 18.7%
Share Repurchases ($MM)$192 $268 $130

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$4.20–$4.45 (Feb 11, 2025) Not providing FY25 guidance Withdrawn
Dividend per ShareFY 2025$0.31 per quarter (declared Feb then maintained) $0.31 per quarter (May 9 declaration) Maintained
Capital ExpendituresFY 2025~$175MM (framework) ~$175MM (framework) Maintained
Capital Allocation (FCF)FY 2025Deploy all available FCF to buybacks or M&A Same Maintained
Tariff Cost (before mitigation)FY 2025 (in-year)N/A~$400MM before mitigation New disclosure
Tariff MitigationFY 2025N/A~$200–$250MM (50–65%) in-year New disclosure
Tariff Annualized ImpactRun-rate~10% China tariff embedded pre-Q1 ~$675MM annualized before mitigation (incl. China + steel/aluminum + 10% reciprocal) Increased scope
Tariff Full Mitigation TargetEnd-2026N/ATarget full mitigation of ~$675MM by end-2026 New target

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Tariffs & MacroNo new tariffs yet; commodity headwinds emerged, margins expanded via cost FY25 EPS guide issued with 10% China tariffs embedded Broad-reaching tariff hikes; ~$400MM in-year cost, mitigation 50–65% in 2025; guidance withdrawn Deteriorating macro visibility, increased cost pressure
DIY vs Pro PaintDIY down mid-single digits; Pro up high single digits DIY soft; reaffirm ~18% segment margin DIY down high single digits (below plan); Pro up mid-single digits; partial reversal of Q4 inventory timing DIY worsened; Pro remains positive
E-commerce & Retail PlumbingRetail/e-commerce strong; trade flattish Continuing retail/e-commerce strength E-commerce share gains continue; retail softening; international plumbing stable with Europe strength, China softness Mixed: e-comm positive, retail cautious
Sourcing FootprintReduced China exposure ~40% post-Kichler Continued footprint work Accelerating resourcing; majority of mitigation in 2026 from sourcing Accelerating footprint shift
Capital Allocation$255MM buybacks; liquidity strong $268MM buybacks; $0.31 dividend; FY25 EPS guide $130MM buybacks; liquidity $1.246B; framework maintained Steady deployment
2026 Margin TargetsSix consecutive quarters of margin expansion At high end of 17–17.5% for 2024 Confident in structural margin potential; timing uncertain due to tariffs Long-term intact, near-term timing risk
Leadership——CEO succession: Jon Nudi to become CEO July 7, 2025 Transition planned

Management Commentary

  • “We experienced significant changes in the geopolitical and macroeconomic environment, including the enactment of new and broad-reaching tariffs... we are not providing full-year financial guidance at this time.” – CEO Keith Allman .
  • “Based on the tariffs enacted this year, we expect in-year cost of approximately $400 million prior to mitigation efforts... we currently estimate that we can offset approximately $200 million to $250 million.” – CFO Rick Westenberg .
  • “International Plumbing sales were flat in local currency as higher volumes in Europe... were offset by softness in various other markets, particularly China.” – CFO Rick Westenberg .
  • “We continue to grow in the pro paint category... leading to ongoing share gains.” – CEO Keith Allman .
  • CEO Succession: Board appointed Jonathon Nudi as CEO effective July 7, 2025; Allman to retire after 27 years .

Q&A Highlights

  • Demand cadence and channel mix: E-commerce strength and European stability; retail plumbing softening; DIY paint expected to remain weak through 2025 .
  • Pricing elasticity and mitigation: 2025 mitigation primarily via pricing and cost reductions; varied by product/category; sourcing changes more impactful in 2026; elasticity impact uncertain .
  • Paint inventory unwind: Partial reversal in Q1 (approx half the volume decline included ~4% from inventory unwind); some further normalization possible .
  • Tariff scope and geography: Largest exposure is China; steel/aluminum and reciprocal tariffs add ~$50M annualized; majority of Mexico imports qualify under USMCA .
  • New build exposure: MAS remains predominantly repair & remodel (>85%); selective approach to builders; pricing strategy details not disclosed .

Estimates Context

  • Q1 2025 results vs S&P Global consensus: EPS $0.87 vs $0.9139* (miss), revenue $1.801B vs $1.835B* (miss). Paint weakness and tariff overhang contributed to cautious outlook and guidance withdrawal .
  • Potential estimate revisions: Expect downward adjustments to FY25 consensus given loss of formal guidance and quantified net tariff impact ($150–$200M) before volume effects; plumbing resilience and pro paint share gains provide offsets .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup is cautious: MAS withdrew FY25 guidance due to tariff/macro uncertainty; quantified ~$400M in-year tariff costs with only 50–65% mitigation, implying net $150–$200M impact before volume effects .
  • Segment divergence persists: Plumbing resilient with 18.5% adjusted margin and local-currency sales +1%; decorative architectural challenged, with DIY paint down high single digits while pro paint continues to grow .
  • Margins holding via cost discipline: Adjusted operating margin at 16.0% and gross margin +20 bps YoY despite lower volumes; SG&A down $9M YoY .
  • Long-term thesis intact: Management reaffirmed confidence in structural margin targets and plans to fully mitigate annualized tariff impact (~$675M) by end-2026, primarily via sourcing changes .
  • Capital deployment steady: $196M returned in Q1 (buybacks + dividends); dividend maintained at $0.31/qtr; liquidity $1.246B supports flexibility .
  • Watch catalysts: Pace/timing of pricing actions, elasticity and potential demand softening; trajectory of DIY paint normalization; clarity on tariffs could restore guidance and reduce uncertainty .
  • Leadership transition: CEO handoff to Jon Nudi in July; continuity in strategy and operating system expected .