Executive Summary

Masco delivered a clean beat: Q2 revenue $2.051B vs $1.994B consensus and adjusted EPS $1.30 vs $1.08 consensus; operating margin expanded to 20.1% on cost productivity and favorable price-cost, partially offset by lower volume . Estimates marked with * are from S&P Global.*
Segment divergence persisted: Plumbing grew 5% with adjusted margin up to 21.0%, while Decorative Architectural declined 12% (down ~4% ex-divestiture) amid soft DIY demand; Pro paint grew mid-single digits .
Management restored 2025 guidance, lowering adjusted EPS to $3.90–$4.10 (from prior $4.20–$4.45) given enacted tariffs but expects mitigation via pricing, cost actions, and sourcing to largely offset in-year tariff costs; total company operating margin guided ~17% .
Strategic/tactical levers: accelerated supply chain diversification (China exposure reduced 45% since 2018), disciplined pricing, and capital allocation with at least $450M earmarked for buybacks/M&A in 2025; Q2 buybacks were $101M .
Near-term catalysts/risks: continued Pro paint share gains with Home Depot, Behr’s AI-driven ChatHUE color selection, and tariff cadence; watch Q3 working capital normalization and copper tariff clarity .

What Went Well and What Went Wrong

What Went Well

Margin expansion and EPS growth: “we expanded adjusted operating profit margin by 100 basis points to 20.1 percent, and we grew adjusted earnings per share by 8 percent to $1.30” — CEO Jon Nudi .
Plumbing strength: North America Plumbing up 5% in local currency, e-commerce and trade channels “particularly strong,” with adjusted segment margin at 21.0% (+110 bps) .
Pro paint resilience and strategy: Pro up mid-single digits; management emphasized partnership with Home Depot and sustained share gains, noting +70% Pro growth since 2020 .
Innovation/AI: Behr launched ChatHUE with Google Cloud to reduce color-selection friction, supporting demand stimulation and brand leadership .
Cost discipline: SG&A down $27M YoY in Q2, aided by divestiture and non-repeating cost favorability, boosting operating leverage .

What Went Wrong

DIY paint softness: DIY down high-single digits as existing-home sales sit at a three-decade low; Decorative Architectural segment down 12% (ex-divestiture down ~4%) .
Tariff and commodity headwinds: 2025 in-year tariff impact ~$140M before mitigation (mostly H2), with additional Q3 drag from a temporary 145% China tariff window flowing through inventory .
Working capital pressure: LTM working capital at 20.1%; management expects ~17.5% by year-end but highlighted tariff-driven inflation and shorter payable terms as current drags .

Financial Results

Quarterly Performance

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$1.828	$1.801	$2.051
Gross Margin %	34.7%	35.8%	37.6%
Operating Margin %	15.9%	15.9%	20.1%
Diluted EPS (GAAP) ($)	$0.85	$0.87	$1.28
Adjusted EPS ($)	$0.89	$0.87	$1.30

Q2 2025 Actual vs Consensus

Metric	Q2 2025 Actual	Q2 2025 Consensus
Revenue ($USD Billions)	$2.051	$1.994*
Adjusted EPS ($)	$1.30	$1.08*

Values with * are retrieved from S&P Global.

Segment Breakdown

Segment Metric	Q2 2024	Q1 2025	Q2 2025
Plumbing Net Sales ($USD Billions)	$1.253	$1.185	$1.312
Plumbing Operating Margin % (Adj)	19.9%	18.5%	21.0%
Decorative Net Sales ($USD Billions)	$0.838	$0.617	$0.738
Decorative Operating Margin % (Adj)	20.8%	15.6%	21.3%

KPIs

KPI	Q4 2024	Q1 2025	Q2 2025
Liquidity ($USD Billions)	$1.634	$1.246	$1.344
Cash & Cash Investments ($USD Billions)	$0.634	$0.377	$0.390
Share Repurchases ($USD Millions)	$268	$130	$101
Dividend per Share Declared ($)	$0.31	$0.31	$0.31
Working Capital as % of Sales (LTM)	15.1%	18.7%	20.1%
Gross Debt / EBITDA (x)	2.0x	2.0x	2.0x

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY2025	$4.20–$4.45 (Q4’24)	$3.90–$4.10 (Q2’25)	Lowered
GAAP EPS	FY2025	Not provided	$3.87–$4.07 (Q2’25)	New
Total Co. Operating Margin	FY2025	Not provided	~17%	New
Tax Rate	FY2025	~24.5% (baseline)	24.5%	Maintained
Avg. Diluted Shares	FY2025	Not provided	~211M	New
Plumbing Sales	FY2025	Not provided	Up low-single digits (price > volume)	New
Plumbing Margin	FY2025	Not provided	~18.5%	New
Decorative Sales	FY2025	Not provided	Down low-double digits; mid-single digits ex-divestiture	New
Decorative Margin	FY2025	Not provided	~18%	New
Capital Allocation	FY2025	Returned $1.0B in FY’24	≥$450M to buybacks/M&A; capex ~$175M; dividend $1.24/sh	New specificity
Working Capital % of Sales	FY2025 YE	Not provided	~17.5% expected by year-end	New
Tariff Impact (in-year)	FY2025	Not quantified	~$140M before mitigation; largely offset expected	New

Note: Q1’25 guidance was suspended due to tariff uncertainty and is superseded by Q2’25 restored guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 & Q1’25)	Current Period (Q2’25)	Trend
Tariffs/Macro	Q4’24 guided including China tariffs; Q1’25 withheld guidance due to uncertainty	Annualized impact ~$210M; 2025 in-year ~$140M before mitigation; offset via pricing/cost/sourcing; temporary 145% China tariff window impacts Q3	Visibility improved; quantified offsets; still volatile
Pricing & Mitigation	Early pricing actions; cost savings emphasized	Low- to mid-single-digit pricing benefit in Plumbing; dollar-for-dollar offset goal	Pricing remains key lever
Pro vs DIY Paint	Q1: Pro up mid-single digits; DIY down high-single digits	Continuation: Pro up mid-single digits; DIY soft on low existing-home sales	Pro strength; DIY headwinds persist
Plumbing Demand	Q1: NA plumbing up modestly	NA plumbing +5% LC; strong e-com & trade; some pre-buy ahead of tariffs	Strengthening with minor timing effects
Supply Chain & Sourcing	China exposure reduced 45% since 2018; ongoing diversification	Further acceleration of resourcing; end state not quantified; resilient multi-country footprint	Accelerating diversification
AI/Tech Initiatives	N/A	Behr launched ChatHUE with Google Cloud AI to enhance color selection	New digital demand enabler
E-commerce	N/A	Delta outperformance in e-commerce; building capabilities to stay ahead amid AI-driven search shifts	Structural growth channel
Working Capital	Q4’24: 15.1% of sales	Q2 LTM 20.1%; YE target ~17.5%; tariffs influencing receivables/inventory/payables cadence	Elevated short-term; normalization targeted
Regional Trends	Q1: Int’l flat LC	Europe stable; China challenged; NA down 3% LC excluding divestiture	Mixed, with China drag
Regulatory/Legal	Q4’24 referenced tariffs; guidance included	Copper tariffs uncertainty; awaiting composition (HS codes) before quantification	Ongoing policy risk

Management Commentary

“We are restoring our financial guidance for 2025… We anticipate our full year adjusted earnings per share to be in the range of $3.90 to $4.10.” — Jon Nudi, President & CEO .
“Operating profit increased 4% to $413 million… driven by cost productivity initiatives, favorable SG&A, and a positive price-cost relationship, partially offset by lower volume.” — CFO Rick Westenberg .
“Pro paint… grew mid-single digits… we think there’s a lot more room to run… partnership with The Home Depot continues to result in growth.” — CEO Jon Nudi .
“Annualized cost impact of incremental tariffs is approximately $210M… 2025 in-year impact ~$140M before mitigation… mitigation will largely offset direct cost impacts.” — CFO Rick Westenberg .
“Delta Faucet… leading in e-commerce… staying ahead as AI changes consumer search.” — CEO Jon Nudi .

Q&A Highlights

Capital allocation: ≥$450M 2025 deployment, with remaining post-H1 likely to buybacks absent M&A; H1 repurchases ~$230M .
Pricing realization and elasticity: Plumbing price benefits (~3% in Q2; mid-single-digit full-year), with some second-half volume moderation and minor Q2 pre-buy .
Tariff cadence: Temporary 145% China tariff window (Apr–May) flowing through Q3 inventory; mitigation split across pricing and cost actions; sourcing footprint accelerates into 2026 .
Working capital drivers: Tariff-related inflation, pricing impacting nominal balances, shorter payable terms; YE ~17.5% target .
E-commerce differentiation: Delta’s talent/capabilities driving outperformance despite broader channel pressure .

Estimates Context

Q2 2025 beat: Revenue $2.051B vs $1.994B consensus*; adjusted EPS $1.30 vs $1.08 consensus* .
Forward setup: Street sees Q3 2025 EPS ~$1.03* and revenue ~$1.94B*, with potential upward revisions on sustained margin execution and Pro strength. Values retrieved from S&P Global.*

Key Takeaways for Investors

Q2 print was high quality: broad-based margin execution delivered double-digit operating margin expansion and an EPS beat despite top-line pressure in DIY .
Segment mix matters: overweight to Plumbing and growing Pro paint partially insulates from cyclical DIY softness; sustained share gains with Home Depot are strategic .
Tariff risk is now quantified and actively mitigated; expect second-half headwinds but management aims for dollar-for-dollar offset in 2025 .
Guidance reset reduces risk: EPS range now reflects enacted tariffs; monitor cadence of copper/reciprocal tariffs and sourcing progress for 2026 uplift .
Working capital normalization is a near-term cash flow catalyst as tariff-driven balances ease toward ~17.5% by YE .
Behr’s ChatHUE AI is a differentiated demand enabler; watch for adoption metrics and conversion impacts in coming quarters .
Trading lens: Favor near-term on estimate revisions and margin durability; medium-term thesis hinges on tariff landscape, Pro paint share gains, and plumbing innovation/e-commerce scaling .

Notes on non-GAAP: Adjusted results exclude rationalization charges and apply a normalized 24.5% tax rate; Q2 adjusted EPS $1.30 vs GAAP $1.28; reconciliations provided in Exhibit A .

MASCO CORP /DE/ (MAS)·Q2 2025 Earnings Summary