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MASCO CORP /DE/ (MAS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 missed Street on revenue and EPS as tariffs and softer volumes pressured margins: net sales $1.917B (-3% YoY), adjusted EPS $0.97 (‑10% YoY); adjusted operating margin fell 190 bps to 16.3% as gross margin contracted 210 bps . Versus S&P Global consensus, revenue and EPS were below ($1.94B*, $1.03*), and EBITDA missed ($370M* vs $341M actual*) (see Estimates Context).
  • Decorative Architectural margins improved despite volume declines; Plumbing grew sales but saw margin compression from tariffs, commodities, and inventory reserves. Plumbing +2% revenue; adjusted margin 16.4% (‑350 bps YoY). Decorative Architectural sales ‑12% (‑6% ex‑divestiture) with adjusted margin +100 bps to 19.1% .
  • Guidance tightened and trimmed: FY25 adjusted EPS now $3.90–$3.95 (from $3.90–$4.10); total operating margin ~16.5% (from ~17%); Plumbing margin ~18% (from ~18.5%); MAS ex‑div/currency sales now seen down low‑single digits vs prior “roughly flat” .
  • Tariff headwinds increased: annualized impact raised to ~$270M (from ~$210M) with ~$150M in‑year 2025 impact; a temporary 145% China tariff added ~$15M in Q3, primarily to Plumbing. Management expects mitigation (pricing, sourcing shifts, cost) to largely offset 2025 direct costs .
  • Capital returns intact: $188M returned in Q3 (incl. $124M buybacks) and $0.31 dividend; liquidity $1.56B (cash + revolver) provides cushion for continued buybacks (~$500M 2025 plan) and bolt‑on M&A .

What Went Well and What Went Wrong

What Went Well

  • Decorative Architectural margin expansion on cost discipline despite lower volumes: adjusted segment margin up 100 bps to 19.1% while sales fell 12% (‑6% ex‑divestiture) .
  • Plumbing topline resilience on pricing and channel execution: segment sales +2% (+1% LC) with Delta strong in e‑commerce and trade; CEO: “We delivered adjusted operating profit of $312 million and adjusted earnings per share of $0.97 during the quarter” .
  • Robust cash generation and shareholder returns: $188M returned in Q3; dividend declared $0.31; CFO raised 2025 capital deployment to ~$500M due to a favorable cash tax benefit .

What Went Wrong

  • Revenue and EPS compression with margin pressure: adjusted operating margin fell 190 bps to 16.3%; adjusted gross margin down 210 bps to 34.6% on tariffs, commodities (notably copper), and inventory‑related reserves .
  • Plumbing margin hit: adjusted margin 16.4% (‑350 bps YoY), citing ~$15M Q3 impact from a temporary 145% China tariff, higher commodity costs, and elevated inventory reserves .
  • China weakness and DIY softness: Hansgrohe saw China increasingly challenged; DIY paint down mid‑single digits industry‑wide on low existing home sales; builders’ hardware faced shipment timing headwinds .

Financial Results

Consolidated Results – Sequential Actuals (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1,801 $2,051 $1,917
GAAP EPS ($)$0.87 $1.28 $0.90
Adjusted EPS ($)$0.87 $1.30 $0.97
Adjusted Gross Margin (%)35.9% 37.7% 34.6%
Adjusted Operating Margin (%)16.0% 20.1% 16.3%

Q3 2025 vs Prior Year (Q3 2024) and Segment Mix

MetricQ3 2024Q3 2025YoY
Total Revenue ($USD Millions)$1,983 $1,917 -3%
Adjusted Gross Margin (%)36.7% 34.6% -210 bps
Adjusted Operating Margin (%)18.2% 16.3% -190 bps
Adjusted EPS ($)$1.08 $0.97 -10%
Plumbing Sales ($MM)$1,219 $1,247 +2%
Plumbing Adj. Op Margin (%)19.9% 16.4% -350 bps
Decorative Architectural Sales ($MM)$764 $670 -12%
Decorative Architectural Adj. Op Margin (%)18.1% 19.1% +100 bps

KPIs and Balance Sheet

KPIQ3 2025
Liquidity (Cash + Revolver) ($MM)$1,559
Cash & Investments ($MM)$559
Revolver Availability ($MM)$1,000
Working Capital as % of Sales (LTM)18.5%
Share Repurchases ($MM)$124
Dividend/Share$0.31

Guidance Changes

MetricPeriodPrevious Guidance (Q2)Current Guidance (Q3)Change
Adjusted EPS ($)FY 2025$3.90–$4.10 $3.90–$3.95 Narrowed/lowered high end
Total Operating Margin (%)FY 2025~17% ~16.5% Lowered
MAS Sales ex‑div & FXFY 2025Roughly flat YoY Down low‑single digits Lowered
Plumbing SalesFY 2025Up low‑single digits Up low‑single digits Maintained
Plumbing Margin (%)FY 2025~18.5% ~18% Lowered
Decorative Architectural SalesFY 2025Down low‑double digits; mid‑single digits ex‑div Down low‑double digits; mid‑single digits ex‑div Maintained
Decorative Architectural Margin (%)FY 2025~18% ~18% Maintained
Tariff Annualized Impact ($MM)Run‑rate~$210 ~$270 Higher
Tariff In‑Year 2025 Impact ($MM)FY 2025~$140 ~$150 Higher
Capital Deployment (Buybacks/M&A)FY 2025≥$450MM ~ $500MM Raised

Earnings Call Themes & Trends

TopicQ1 2025 (Apr)Q2 2025 (Jul)Q3 2025 (Oct)Trend
Tariffs & mitigationAnnualized impact initially ~$675M; in‑year ~$400M; plan to offset 50–65% in 2025 Annualized cut to ~$210M; in‑year ~$140M; mitigation via pricing/cost; sourcing 2026 lever Annualized raised to ~$270M; in‑year ~$150M; ~$15M Q3 hit from 145% China tariff; mitigation to mostly offset 2025 Worsened vs Q2
Price/cost balanceEarly tariff shock; pricing to offset part in 2025 Favorable price‑cost; Plumbing +3% pricing Plumbing +3% pricing again; sequential traction expected Stable
DIY vs Pro PaintDIY weak; Pro up mid‑single digits DIY down HSD; Pro up MSD; mid‑single‑digit Pro growth FY DIY down MSD; Pro up LSD; Q4 faces tough comp Unchanged
China/InternationalChina challenged; EU stabilizing China challenged; Germany growing China increasingly challenged; EU growth offsets Worsened in China
E‑commerce/TradeE‑commerce strength; share gains Delta leading in e‑commerce; strong trade E‑commerce growth continues; retail flattish Improving
Capital allocationBuybacks/dividend ongoing ≥$450M buybacks/M&A plan ~$500M plan; $188M returned in Q3 More aggressive
AI/Tech initiatives—Behr launches ChatHue AI color tool Behr.com digital transformation with AI‑powered personalization (announced 10/28) Progressing

Management Commentary

  • CEO tone and priorities: “While the near‑term market conditions remained a headwind to our business, our teams continued to focus on execution to grow share and drive long‑term success.” Cited adjusted operating profit of $312M and adjusted EPS of $0.97, with capital returns of $188M in Q3 .
  • Updated outlook: “We now anticipate our 2025 adjusted earnings per share to be in the range of $3.90 to $3.95, compared to our previous expectation of $3.90 to $4.10” .
  • Segment color: Delta Faucet strong in e‑commerce and trade; Hansgrohe growing in Europe, offset by China; Pro paint up low‑single digits while DIY remains soft .
  • Cost pressures and drivers: CFO highlighted higher tariffs (including a temporary 145% China rate adding ~$15M in Q3), commodity inflation (copper), and elevated inventory reserves impacting margins; mitigation via pricing, sourcing shifts, and cost actions expected to mostly offset 2025 direct tariff costs .

Q&A Highlights

  • Tariff cadence and magnitude: Annualized tariff impact raised to ~$270M (from $210M) with ~$150M in‑year 2025; ~$140M relates to 30% China tariffs on ~$450M imports; ~$130M from global reciprocal tariffs, steel/aluminum/copper, and glass anti‑dumping .
  • Plumbing margins: Q3 impacted by ~$15M one‑time spike tied to 145% China tariff; additional pressure from copper and inventory‑related reserves; mitigation expected to continue into 2026 via sourcing and pricing .
  • Paint dynamics: DIY remains pressured by near‑record‑low existing home sales; Pro continues to grow; Q4 faces tough YoY comp due to prior year channel inventory build .
  • Builders’ hardware: Shipment timing (planned process change) curtailed Q3 shipments; expected not to be a significant full‑year headwind .
  • Capital deployment: 2025 cash available for buybacks/M&A raised to ~$500M; ~$150M planned in Q4 absent M&A .

Estimates Context

Q3 2025 Actuals vs S&P Global Consensus (Primary EPS, Revenue, EBITDA):

MetricQ3 2025 ActualConsensus*Surprise
Revenue ($USD Millions)$1,917 $1,939.8*Miss
Adjusted/Primary EPS ($)$0.97 $1.03*Miss
EBITDA ($USD Millions)$341.0*$369.5*Miss

Forward Consensus (select):

  • Q4 2025: Revenue $1,821.3M*, EPS $0.795*
  • Q1 2026: Revenue $1,863.3M*, EPS $0.887*
  • Q2 2026: Revenue $2,098.3M*, EPS $1.311*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Tariff overhang intensified in Q3, now a ~$270M annualized headwind; mitigation actions should mostly offset 2025 direct tariff costs, but Plumbing margins likely remain pressured near‑term until sourcing shifts fully land in 2026 .
  • Decorative Architectural margin control is a bright spot; sustained Pro growth and cost discipline offset DIY volume pressure, though Q4 faces a tough channel inventory comp .
  • Q3 was an execution quarter under macro/geo pressures: both revenue and adjusted EPS missed consensus, driven by tariffs, copper inflation, and inventory reserves; watch for sequential improvement as pricing and mitigation gain traction .
  • Guidance reset lowers the bar: tighter FY25 adjusted EPS ($3.90–$3.95) and lower margin targets position for potential upside if tariff relief or volume stabilizes; near‑term narrative hinges on tariff updates and China plumbing trends .
  • Capital returns remain a support: ~$500M 2025 deployment and healthy $1.56B liquidity provide downside cushion; opportunistic buybacks likely continue absent M&A .
  • Strategic focus areas—e‑commerce, luxury faucets, Pro paint, and digital/AI enhancements at Behr—should underpin medium‑term share gains as R&R demand normalizes .
  • Trading lens: Monitor tariff headlines (China, reciprocal tariffs, metals, glass), copper price trajectory, DIY traffic, and Plumbing margin cadence; a clearer 2026 mitigation roadmap in February could be a catalyst .
Citations: All company results, guidance and qualitative commentary from Masco’s Q3 2025 press release and 8‑K **[62996_180b2282198949d48c5464d6291bfe62_0]** **[62996_180b2282198949d48c5464d6291bfe62_1]** **[62996_180b2282198949d48c5464d6291bfe62_4]** **[62996_180b2282198949d48c5464d6291bfe62_5]** **[62996_180b2282198949d48c5464d6291bfe62_7]** **[62996_180b2282198949d48c5464d6291bfe62_8]** **[62996_0000062996-25-000034_a930258-kex99.htm:0]** and Q3 2025 earnings call transcript **[0000062996_2211206_1]** **[0000062996_2211206_2]** **[0000062996_2211206_3]** **[0000062996_2211206_4]** **[0000062996_2211206_7]** **[0000062996_2211206_9]** **[0000062996_2211206_10]** **[0000062996_2211206_11]** **[0000062996_2211206_12]** **[0000062996_2211206_13]** **[0000062996_2211206_15]**. Prior‑quarter comparatives from Q2 2025 press release and call **[62996_f5473236e7934d18820ad806a271cdde_0]** **[62996_f5473236e7934d18820ad806a271cdde_4]** **[0000062996_2221738_5]** **[0000062996_2221738_6]** and Q1 2025 press release and call **[62996_aa54acfdd05347fc832da54f04c02e39_0]** **[62996_aa54acfdd05347fc832da54f04c02e39_3]** **[62996_MAS_3422674_4]** **[62996_MAS_3422674_5]**. Behr digital press release (10/28/25) **[62996_a4de781f9a3c4f34a2fa7a78ef1b9083_0]**.