Good morning, ladies and gentlemen. Welcome to the Masco Corporation's first quarter 2026 conference call. My name is Jeannie, and I will be your operator for today's call. As a reminder, today's conference call is being recorded for replay purposes. To ask a question, please press star and the number one on your telephone keypad.

To withdraw your question, please press star one again. thank you i will now turn the call over to robin zondervan vice president investor relations and fpna you may begin thank you operator and good morning everyone welcome to masco corporations 2026 first quarter conference call with me today are john nudie president and ceo of masco and rick westenberg masco's vice president and chief financial officer Our first quarter earnings release and the presentation slides are available on our website under Investor Relations. Following our remarks, we will open the call for analyst questions. Please limit yourself to one question with one follow-up. If we can't take your question now, please call me directly at 313-792-5500. Our statements today will include our views about future performance, which constitute forward-looking statements. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We've described these risks and uncertainties in our risk factors and other disclosures in our Form 10-K and our Form 10-Q that we filed with the Securities and Exchange Commission. Our statements will also include non-GAAP financial metrics. metrics. Our references to operating profit and earnings per share will be as adjusted unless otherwise noted. We reconcile these adjusted metrics to GAAP in our earnings release and presentation slides, which are available on our website under investor relations. With that, I will now turn the call over to John.

Thank you, Robin. Good morning, everyone, and thank you for joining us. Before I discuss our quarterly results, I want to spend a few minutes talking about the continued evolution of our Masco Executive Committee, which we established at the end of last year. Jay Shah, Group President of Plumbing and Wellness, and Rick Marshall, Vice President of Masco Operating System, recently announced their intent to retire from Masco later this I'd like to thank both Jay and Rick for their leadership and their important contributions to both our business and our culture. With Jay's retirement, we've taken steps to further streamline our organization. The leaders of our four largest businesses, Delta, Hans Grohe, Bayer, and Watkins Wellness, will now all report directly to me. These four leaders have over 80 years of combined service at Masco, have extensive experience in our industry, and are key contributors to Masco's performance and our culture. Furthermore, we are adding two new leaders to our executive committee with expertise in supply chain and procurement. The addition of these leaders and capabilities will enable us to drive additional efficiencies, leverage our scale, and enhance our speed of execution across the enterprise. The structure and leadership composition of our executive committee will help enable greater agility and tighter alignment between corporate and business unit priorities, all in the pursuit of delivering above-market top and bottom-line growth. In addition, we have continued the implementation of other initiatives that were announced earlier this year. Our integration of Liberty Hardware into Delta Fossil companies is on track as we further leverage the brands, capabilities, and scale for Delta Fossil business. Restructuring actions to streamline our business, reduce headcount, and optimize operations are ongoing. 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. The savings generated from these actions will fund additional growth initiatives and contribute to our future margin expansion. We're already experiencing the positive impact of these actions and our results. With that, let's dive into our first quarter results. Please turn to slide five. Overall, we are pleased with our performance in an extremely dynamic environment. Net sales increased six percent or four percent in local currency, primarily driven by favorable pricing. Additionally, while still down slightly, this was their strongest year-over-year first quarter volume performance since the end of the pandemic. Operating profit was $324 million, an increase of 13%. Operating profit margin was 16.9%, an improvement of 90 basis points. Earnings per share grew 20% during the quarter to $1.04 per share. Now turning to our segments, plumbing product sales increased 7% in local currency, exceeding our expectations, largely due to more resilient than expected volume. North American sales increased 9% in local currency, driven by favorable pricing as well as slightly higher volumes. Delta Faucet delivered a strong quarter with sales growth across all three channels, trade, retail, and e-commerce. Additionally, Delta Fossil was recognized by USA Today as a most trusted brand, and by Newsweek as one of America's most trustworthy companies, demonstrating the significant strength of Delta's brand and service capabilities, which are resonating with customers and consumers. Turning to international plumbing, sales increased 1% in local currency, driven by growth across many European markets, particularly Germany, partially offset by the ongoing wheat market in China. Operating profit for the plumbing product segment grew 10 percent to 250 million dollars and operating margin expanded 10 basis points to 18.3 percent. Turning to our decorative architectural segment, sales were in line with the prior year. DIY paint sales decreased low single digits while pro paint sales grew mid single digits. Operating profit for the segment increased 19% to $105 million and operating margin was 19%. Showcasing our commitment to innovative new products, Bayer Premium Plus Ecomix was recently named a 2026 Green Building Sustainable Product of the Year. Bayer continues its industry leadership in delivering both innovative and sustainable products. Turning to capital allocation, our strong cash flow allowed us to return $267 million to shareholders this quarter through dividends and share repurchases. We are pleased with our first quarter performance and the team's strong execution and operational focus. Additionally, I'm proud of how our teams are working quickly to implement various restructuring actions to ensure we have the appropriate cost structure for our business in this rapidly changing environment. Turning to our expectations for the full year, we continue to face a highly dynamic macroeconomic and geopolitical environment. Therefore, we believe it is prudent to maintain our 2026 earnings per share guidance in the range of $4.10 to $4.30 per share. Our guidance includes our expectation that our sales will now be up low single digits for 2026, but that we will also incur higher than previously anticipated commodity costs. Rick will share additional details of our guidance in a few moments. While it certainly remains in the near term we are focused on positioning ourselves for ongoing sales and profit growth over the mid to long term, the structural factors for repair and remodel activity are strong, including record high home equity levels, the age of the housing stock, and increasing pent-up demand for renovation projects. As consumer sentiment improves, interest rates decrease, and existing home turnover increases, we expect these favorable fundamentals to become a tailwind for our business. In addition, we are taking the right actions to optimize our business, leaving us well-positioned to deliver above-market top and bottom-line growth. We are committed to our consumer-driven strategy, which leverages our industry-leading brands, expanded commercial capabilities, and enhanced operational excellence. We look forward to further sharing this strategy and our long-term goals with you, either in person or online, at our upcoming Investor Day on Wednesday, May 13th in New York City. With that, I'll now turn the call over to Rick to go over our first quarter results in 2026 Outlook in more detail. Rick?

Thank you, John, and good morning, everyone. Thank you for joining. As Robin mentioned, my comments today will focus on adjusted performance, excluding the impact of rationalization charges and other one-time items. Turning to slide 7, we delivered strong first quarter results, with total sales increasing 6% or 4% excluding the favorable impact of currency. In local currency, North American sales increased 5%, and international sales increased 1%. Gross margin expanded 10 basis points to 36% in the quarter. SG&A as a percent of sales was 19.1%, 80 basis points lower than the prior year. Operating profit grew 13% to $324 million in the quarter, and our margin expanded 90 basis points to 16.9%. Operating profit was driven by pricing actions and cost savings initiatives, partially offset by higher tariff and commodity costs. Our EPS grew 20% to $1.04 per share in the quarter. Turning to slide 8, plumbing sales increased 9% in the first quarter, or 7% excluding the favorable impact of currency. 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 In local currency, North American plumbing sales increased 9% in the quarter. This performance was primarily driven by strong growth in our Delta Faucet and Watkin Wellness businesses. In local currency, international plumbing sales increased 1% in the quarter. Hansgrohe grew in many of its European markets, including its key market of Germany. This growth was partially offset by softness in China and other smaller markets. Segment operating profit in the first quarter increased 10% to $250 million, and operating margin expanded 10 basis points to 18.3%. Operating profit was driven by pricing actions and cost savings initiatives, partially offset by higher tariff and commodity costs. Turning to slide nine, decorative architectural sales were in line with the prior year. This performance was driven by mid-single-digit growth in our pro paint sales, offset by a low single-digit decrease in our DIY paint sales. These results were largely in line with our expectations, and we continue to anticipate full-year pro paint sales to increase mid-single digits, and for DIY paint sales to decrease mid-single digits. Operating profit in the first quarter was $105 million. Growth versus the prior year was primarily driven by cost savings initiatives, which are inclusive of benefits from our recent restructuring actions, as well as increased pricing. This was partially offset by higher commodity costs. Operating margin was 19% in the quarter and reflects the benefits of our Liberty Hardware business now being reported in our plumbing segment. This was coupled with a more normalized first quarter for our paint business as we lapped the inventory timing dynamic that unfavorably impacted the first quarter of last year. Turning to slide 10, our balance sheet remained strong with gross debt to EBITDA at 2.1 times at quarter end. We finished the quarter with $1.3 billion of liquidity, including cash and availability under our revolving credit facility. Working capital was 19.5% of sales at quarter end. As expected, working capital balances in the first half of the year remain elevated versus the prior year due to the timing of when tariffs were implemented. However, we continue to anticipate working capital as a percent of sales will be approximately 16.5% at the end of the year. 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. Additionally, based on the strength of our balance sheet and confidence in our future performance, we recently entered into a two-year delay draw term loan of up to $500 million. We plan to utilize the available funds under this facility to opportunistically repurchase our shares. As a result, we now expect to deploy at least $800 million towards share repurchases or acquisitions in 2026, up from our previous expectation of approximately $600 million. Now let's turn to slide 11 and review our outlook for 2026. While we are pleased with our strong results in the first quarter, there remains a high degree of uncertainty in the macroeconomic and geopolitical environment. As a result, we are largely maintaining our full-year outlook. For MASCO overall, we expect 2026 sales to be up low single digits versus our previous guide of flat to up low single digits, and we continue to expect our margins to expand to approximately 17%. 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. 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. Given the recent ruling on IEPA 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. 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. Copper prices remain elevated, and oil, which impacts a wide range of material as well as logistics costs, also remains elevated and volatile we continue to monitor these dynamics and will work diligently to mitigate the impacts as we have demonstrated in the past turning to our segments in our plumbing segment we continue to expect 2026 full year sales to be up low single digits and our operating margin to expand to approximately 18 driven by pricing discipline operational efficiencies and continued cost savings initiatives. In our decorative architectural segment, we continue to expect 2026 sales to be roughly flat with the prior year and our operating margin to be approximately 19% with a continued focus on cost savings initiatives. Finally, as John mentioned earlier, we are maintaining our 2026 EPSS submit of $4.10 to $4.30 per share. This now assumes a 200 million average diluted share count for the year versus our previous guide of 202 million shares and a 24.5% effective tax rate. Additional financial assumptions for 2026 can be found on slide 14 of our earnings deck. With that, I would like to open up the call for questions. Operator?

In order to ensure that everyone has a chance to participate, we would like to request that you limit yourself to asking one question and one follow-up question during the q a session again to ask a question please press star then the number one on your telephone keypad to withdraw your question please press star one again and your first question comes from the line of john lavallo with ubs please go ahead good morning guys thanks for taking my questions um the first one is is just on the section 232s You said that this could be actually favorable, which seems right to us.

But is this really driven by the fact that the product that you're importing, whether it's faucets or showerheads, are not entirely copper and that some of the subassembly is done in the U.S.? And how do you kind of wrap your arms around what this potential benefit could be?

Yeah. Hey, John. Good morning. It's Rick. So, with regards to our comments on the potential favorability on the tariff impact, it's really an impact—it's really a composite impact. So, it's not just the 232 tariffs, but it's the ruling on the IEPA tariffs at the end of February, the imposition of Section 122 tariffs, and then, of course, the 232 tariffs which you speak. 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 but in addition to the ones that we talked about in our opening comments as you probably are aware the administration is looking into a couple of investigations on section 301 tariffs as well the environment remains uncertain we think on that net it'll be favorable for us for the year but it's difficult to quantify just given the moving parts and as we also mentioned we think any favorability will likely be offset by elevated commodity costs as we talked about okay that's helpful and then i think you guys said you know your prior estimate was for consolidated pricing uh to be up low single digits with mid single

digit pricing and plumbing and sort of flattish and deck arc i mean how are you guys kind of thinking about this now particularly with the move in resins um since the conflict in the middle east began yeah so with regards our pricing expectations for the year our plumbing expectation is mid single digit.

In terms of deck arc, it's really going to be dependent on where we end up from a commodity perspective. We are seeing significant headwinds given the elevated and volatile oil prices and the impact that it has really across the input spectrum and including freight costs as well, but certainly on the deck arc side with regards to resins, et cetera. And so we're seeing upward pressure in the neighborhood of mid to high single digits. Obviously, it's still in discussion. And so that's something that we're tracking very closely. I think from an overall company perspective, we would expect mid-single-digit inflation, and that's really commodities as well as run-of-the-way inflation as well. So it's something that we're monitoring and managing very closely. We do have a track record of offsetting and managing through these challenges, and we believe we'll do so here as well through a combination of levers. But that's really the landscape. And a caveat is, as we all recognize, it's still uncertain, but there is upward pressure.

Okay. Thanks very much.

Your next question comes from the line of Stephen Kim with Evercore ISI. Please go ahead.

Yeah. Thanks very much, guys. Appreciate it. I think you effectively have said that you think, well, you just reiterated that you think that the changes in the tariffs will largely be offset by the commodity. I was wondering if you could give us It's just an overall estimate of how much that piece, which will be transferred effectively, will be for the year, and if there's a quarterly cadence to that that we should be mindful Just to clarify your question, in terms of the transfer of costs, could you just elaborate?

The offset.

Yeah, the offset. You were basically saying that the tariff changes could be beneficial to you, but the commodity costs will be higher and that those pieces would effectively be offsetting, if I heard you correctly. And so I'm just wondering, how big is that piece effectively?

Yeah, we're not going to quantify the actual magnitude of it. 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. So, you know, we're basically tracking that. But I think at the end of the day, those commodity costs are going to offset the favorability or potentially more than that. In terms of your second question, quarterly cadence, this is largely a back half of 2026 phenomenon. I think we've described in the past, particularly on the plumbing side of the business, commodity costs, when they show up in the market, really have to flow through our inventory and then our P&L, usually a couple of quarters later. We saw elevated copper and zinc cost really as we entered into 2026, so that will be more of a back half 26 phenomenon. As it pertains to oil and resin costs, that's a little bit more near term because we've been seeing that as of late, and that's more of a quarter to two quarters out. So it's really kind of as we approach mid-year and the second half of the year that we would see that impact. And that lines up pretty cleanly with regards to our tariff favorability, because the tariff favorability is largely driven by the IEPA tariff ruling. And that occurred, as we all know, on February 20th. And so that takes some time to flow through our P&L as well. So they tend to map pretty cleanly. But at the end of the day, there's still a lot of volatility out there, Stephen, as you recognize. Okay, great.

That's actually a good cleanup. Appreciate that. In the DECARC segment, your margins were stronger than we expected, and I was curious if you could give us some sense for the relative importance of the cost savings initiatives from restructuring versus pricing, and give us a sense for what your expectation is about the quarterly cadence, because we typically see the margins rise in 2Q and 3Q from 1Q. Is there anything that we should be mindful of that would be different this year than normal?

Yeah, hi Stephen, it's John, I'll jump in first and then Rick can follow up with anything I missed here. You know, we, I guess overall feel good about the trajectory that our paint business is As you know, we exited 2025 with the challenging year behind us. Again, we saw our business overall flat with ProPaint growing mid-single digits, DIY down, low single digits. I feel great about the plans we have in place with our retail partner and we'll continue to, again, grow share with the pro painter who tends to, you know, which is a big opportunity for us. And we've got a significant amount of headroom there. And then make sure that we continue to grow with DIY as well, where we have a significant share. In terms of margins, I would say, yes, they were up. They were much more, you know, normalized versus a typical Q1, though. We had, I would say, our restructuring actions are paying.

In terms of the implications on Q1, I would just reinforce that the performance in Q1 was driven really based off of reduction actions that were in our control, including the restructuring actions that John alluded to. We did see some low single-digit inflation in the commodity input cost, so that's something that we are mindful of and, as I mentioned earlier, are expected to increase over time. So that's something that we're tracking. But I think in terms of our margin performance in Q1, it was largely in line with what we would have seen from a historical standpoint on a clean Q1.

Appreciate it, guys. Thanks.

Your next question comes from the line of Sam Reed with Wells Fargo. Please go ahead.

Thanks, everyone. Congrats on the quarter here. In plumbing, really nice beat versus expectation. I just wanted to perhaps unpack the plumbing volumes that you kind of put up during the quarter. I know they were modest, but I believe there was some volume benefit there.

And just wanted to double confirm that there wasn't anything one time or any pull forward in there around pricing that we should be mindful of yeah sam this is john i would say the short answer is no we feel really good about our plumbing business and the performance that that team put up really around the world where we saw our business grow nicely north american i think one of the you know if you look at our beat versus our internal expectations for q1 it was really plumbing uh and then primarily north american plumbing and the vast majority of that be was really just volume versus expectations. As you're aware, we took, you know, a fairly significant amount of pricing as we had a job really putting that pricing in place. Fundamentals are sale trade or e-com.

That's super helpful. And then maybe double clicking on the plumbing price in a little bit more detail. I mean, it sounds like the strength was widespread across all of your channels. But could you perhaps give us a little bit more color on whether there were any nuances between plumbing price, say, retail versus wholesale, wholesale versus e-com? We'd just love maybe a view on how that plumbing price might have looked by channel.

This is John again. We typically don't get into that level of detail from a pricing standpoint. I think suffice to say, though, if you look at our results, we executed our plans well from a pricing standpoint across all channels, given that we saw the price realization in market that we had hoped for and our elasticities weren't so really good about how we navigated and the performance was pretty consistent all helpful thanks so much your next question comes from the line of matthew bully with berkeley's please go ahead morning everyone uh thank you

for taking the questions um wanted to start on the uh growth guidance in plumbing um so so you know obviously started the year at this nine percent growth and still guiding the full year up low single digits. And so presumably, you know, those pricing comps will get a lot tougher in the second half. So I guess that part is understood. But, you know, you would still need a lot more deceleration either as soon as Q2 or perhaps even a negative comp at some point just to kind of hit that guide. So I guess the question is, should we be expecting that deceleration and growth is sort of already happening here in Q2? Or are you just really building in a lot of conservatism around the volume side that you kind of think is prudent here to sort of get that type of deceleration. Thank you.

You're welcome. This is John. So, as I mentioned, I'm really pleased with the performance in Q1. As we look to the remainder of the year, really in the row around is two things very closely. One, the demand environment. And today, we have not seen a meaningful change, but it's something that we're looking at very, very closely. And I think as the oil shock ripples to the economy, you know, we have questions. Again, nothing to date. As Rick mentioned earlier, what we have seen, particularly...

Got it. Okay. That's very helpful. Secondly, shifting over to the Hans Grohe business, the question is on, you know, basically both demand and energy costs, specifically in Europe. So as the conflict began, the question is have you sort of seen any changes either from a consumer perspective? I mean, it sounded like Europe was still positive in the quarter, but anything changing on the margin around demand in Europe or just the energy costs related to natural gas in your business there? So any kind of color on how you expect that to play out? Thank you.

You're welcome. I'd say similar to what we're seeing in North Sea commodity pressure. And then from a demand standpoint, again, And remember that Hans Grohe is really a global business. We like how Europe's holding up at this point. China is no secret. It remains a challenging market, if anything.

Your next question comes from the line of Ketan Mamatoro with BMO Capital Markets. Please go ahead.

Good morning, and congrats on a strong quarter. Maybe just coming back to the full year guidance, John or Rick, what is the right way to think about sort of what you're embedding as the base case, if volumes, the demand environment stay kind of where it is today, do you expect to be more sort of at the midpoint of that range? How should we think about that?

Yeah, Kaden, good morning. So with regards to our guidance, it's informed by all the information that we have to date with regards to what we're seeing in the marketplace, obviously the uncertainty in the macroeconomic and geopolitical environment, as well as from an earnings perspective, the the tariff implications and the commodity implications that we've spoken to already i mean at the end of the day we we feel confident in terms of delivering our results within the range um and without further you know input on that i think that you know you can you can comfortably assume that we'll end in the mid part of the range from a top line perspective our guidance we did increase our expectations for the year from from flat to low single digits to up low single digits. So we do expect growth on our top line this year from a total company perspective, driven primarily in our plumbing space. And from a bottom line perspective, we do expect earnings growth and EPS expansion and landing in the 410 to 430 range for the year.

Got it. Now that's helpful, Rick. And just as a follow-up, on the capital allocation side, you move the target higher to $800 million. Is it fair to say that you see bigger opportunity on sort of the share repurchase side, or are you seeing kind of more M&A opportunity as well?

Yeah, fair question. As it pertains to the increase in our share repurchase expectations or availability for share repurchase or acquisitions, basically we we saw an opportunity with regards to the the strength of our balance sheet we've got a very healthy rosette diva to a ratio or leverage ratio and our confidence in our performance obviously demonstrated in q1 and our confidence our future performance an opportunity to look at at increasing the cash available for share repurchases from 600 million to at least 800 million to enable to do that we entered into as I mentioned in my opening comments a delayed draw term loan facility to enable that so it's really gonna be opportunistic we like the flexibility that that offers and we like the opportunity in terms of the valuation that we're at today to be able to be opportunistic and leverage that so you know we'll keep providing updates as we progress on each quarter but right now we do expect an increase in share repurchases from 600 million to 800 million plus absent any M&A at this point.

Our focus, if we find the right deal, we'll do it. The ability to go out and borrow a bit more, and we frankly believe that our shares...

Perfect. That's very helpful. I'll turn it over. Good luck. Thank you. Thank you.

Your next question comes from the line of Mike Dahl with RBC Capital Markets. Please go ahead.

Morning. Thanks for taking my questions. I wanted to circle back to some of the cost and margin dynamics. I think the question is, if you look at this being kind of net neutral to less favorable in terms of costs and tariffs and a lot of uncertainty around the second half. I understand that, you know, historically you've had the ability to do things to offset this. When you have like broad increases in inputs and global tariffs, it's a little harder to get those savings from shifting footprint, unless I'm wrong about that. So in your guide, if that is, you know, potentially a negative versus your initial assumption, it's what is the primary lever that you're relying on to offset that and giving you the confidence to still guide margins up in the back half.

Yeah, Mike, good morning. It's Rick. So your understanding of the playing field is accurate in terms of our read of the fact that commodity and input costs are likely to be a headwind that exceeds the favorability on tariffs. And as I mentioned earlier, it is more of a back half of the 2026 dynamic. In terms of the levers that we're looking at, it's really the same levers that we've been executing against already. So footprint in terms of sourcing footprint is still a lever that we're pulling. And that is really on track in terms of helping to mitigate the tariff impacts that we see still are encountering but it's also cost reductions we've really executed well in terms of our cost savings initiative and of course the restructuring that we announced in our February call and John alluded to earlier in his opening comment that is really taking a hold and so that is that is amplifying our cost savings initiatives and we're streamlining the business reducing headcount and optimizing operations and so that's a huge lever for us and we're going to continue to do that and then pricing Obviously, we've been really effective at our execution on pricing, and although much of the pricing actions that we've been pursuing are implemented, there's still a lever that we're looking at selectively as we proceed during the course of the year. So I would say, overall, Mike, the levers remain the same, and we're going to continue to execute like we've done in the past, and we believe that the mitigation actions that we are executing and we intend to execute through the course of the year will be sufficient to allow us to mitigate the headwinds and allow us to deliver results complementing within the guidance range that we provided.

Great. Thanks for that, Rick. That's helpful. Then shifting gears and back to the, I guess part of this might tie back to the capital allocation. I did note that in your queue you have a little bit of commentary about the potential to seek relief or refunds from previously paid tariffs, but that nothing has currently been done or contemplated. What can you articulate about, you know, your strategy in terms of seeking refunds, and does that tie in at all to kind of the expanded buyback guide where if you do get some refunds, you know, your inclination would be to return that back to shareholders, or how would you frame that?

Mike, this is John. I would say we think the refund process still has a lot of uncertainty in it until if and when we get refunds, we'll obviously report what they might be and how we might handle them, but we are not banking on refunds, and it didn't really play any kind of role in our decision to take on the incremental debt that we talked about. So, again, we're taking the steps necessary to protect our shareholders, and at the same time, it's still highly uncertain.

Thanks, John.

Your next question comes from the line of Trevor Allenson with Wolf Research. Please go ahead.

Thank you for taking my questions. I wanted to follow up on the restructuring actions. I think last quarter you guys had talked about those being bigger impacts to 27 and 28, but it sounds like you're seeing those come through this year as well and providing nice tailwinds. So, do you size for us what sort of benefit you're getting from the restructuring actions here in 26, and then how much larger does that become as you move into 27 and 28?

Trevor, good morning. It's Rick. So with regards to the restructuring actions, we're really pleased with the execution, both the true execution and the timing of our restructuring actions. As we disclosed, we incurred about $8 million in Q1. We had incurred several million dollars in Q4 of last year we expect 50 million of restructuring costs for the calendar year and those are on track and so we're we're starting to see those savings we haven't quantified nor do we intend to quantify the savings per se because part of the savings are going to be redeployed in terms of growth initiative as well as helping us to expand our margins and that's a contributing factor to our margin expansion this year you're absolutely right the restructuring actions are going to to be executed over the course of 2026. And so we'll see more of a full-year benefit as we move into 27 and to 28. But we're going to be managing those cost savings and leveraging those to, as I mentioned, to drive growth as well as managing our margin expansion.

Yeah, thanks for that, Rick. And then second question maybe is related to that then. I mean, you guys have made some changes in your incentive comp structure recently.

It looks like you're being more focused on growth than you've been in the past can you talk about that change why you made the adjustment and does that imply some shifting priorities for you guys in terms of growth moving forward yeah sure this is john maybe i'll jump in so as i joined masco last summer it was clear to me masco is a high performing company um as i wanted did a listening tour and talked a lot of uh key constituents the one thing i heard is that there's likely an opportunity for us to drive our top line a bit faster. Don't take the focus off of margins. Don't take the focus off of cash flow. The company's done a great job on that. But if you can continue to deliver the bottom line and grow a little bit faster, it's probably a benefit to everyone. So we've been focused on doing just that. We're taking actions across the board, including the structure of our executive committee to bring some external expertise in in areas that we believe that we can benefit, setting up centers of excellence around things like digital marketing and e-commerce and certainly um you know incentive is important so we did make a change to the largest percentage of the pie we just balanced it out thank you for all in color good luck making four thanks robert your next question

comes from the line of adam baumgarten with vertical research partners please go ahead hey everyone good morning nice quarter um i guess just on the margin piece you talk You talked about first-half margins now being flattish year-over-year, which would still imply some margin pressure in 2Q. Do you expect both segments to see margin pressure next quarter?

Adam, good morning. It's Rick. So in terms of our margin expectations, you're right in terms of our updated guide for the first half of the year is flat margins. And given the fact that we had expanded margins in Q1, it does imply a margin contraction in Q2. I would just remind you that Q2 of 2025, so last year's quarter, we really weren't impacted by tariffs quite significantly at that point in time, and we had a very strong quarter with regards to 20% margin, so it's a challenging quarter from a year-over-year perspective. We do expect a very solid quarter in Q2. from a margin contraction perspective. I'm not going to comment on the segments per se, but overall we do expect some margin contraction, but we do expect to deliver a very strong quarter in Q2.

Okay, got it, thanks. And then I think you guys alluded to maybe some incremental price actions. A couple questions, you know, would that be in both segments and would that, you know, or happen if kind of commodity costs stay where they are today or would you need to see more commodity inflation to then, you know, think about raising prices further.

Adam, it's John. I guess I would say we're not going to talk about prospective price advances. I just would probably tell you to look at history here of how we've approached things. And, you know, pricing is the last resort for us. We start with negotiating with our supplier, taking costs out of our own system. But if the need is there, I think our team has proven, you know, that they can take – we'll continue to monitor things. Again, as we talked before, I'd say the one surprise for us, you know, so far this year has been the impacts on natural business. So that's an area that we have.

Okay, great. Thanks. Best of luck.

Your next question comes from the line of Phil Eng with Jeffries. Please go ahead.

Hey, guys. Congrats on a really impressive quarter. I guess they kind of kicked things off, John. I mean, I think volumes for plumbing came in, as you pointed out, better than you expected. it. Is that a more resilient consumer, maybe better price elasticity? Can you tease out if there's any share gains of note that drove some of that? Help us kind of think through where, I guess, plumbing would have surprised, and it sounds like it's been pretty resilient Yeah, Phil.

Good morning. Yeah, I mean, we're really pleased with plumbing, as I mentioned. It's globally we grew, which is great. I would say, again, versus expectations, it was really in North America that we saw saw the beat. And as I mentioned, the vast majority of that beat versus our expectation was volume. And I would say our Delta team is firing on all cylinders right now. They've got a great marketing plan for the year. They've got terrific new products that they've launched. Our vitality rate continues. Our commercial plans with our key customers are incredibly strong as well. So that team continues to perform. And then when you break it down across channels, and we grew high single digits in North America across each of the channels so wholesale and e-commerce and retail and that's tricky to do and indicating the team is a hyper focused on building strong plans at each each of our customers so we do feel like they're taking some share and at the same time I think executed pricing in a really effective way that we didn't see the elasticity maybe that we would have modeled out beforehand and I think it's again the last thing I would add is we continue to see strength in our upper premium and luxury segment of the market where we have brands such as Breezo and Axor, the high-end consumer.

Gotcha. And just kind of teasing off that, I guess for plumbing, for perhaps Rick, you guys kept your guidance for up low single digit top line growth. It sounds like there was nothing of note for 1Q and volumes were up. It sounds like things are pretty resilient. Could that be a source of upside or are you kind of expecting volumes to kind of decline in the back CAP perhaps, just given some of the macro dynamics that is out there. Just want to kind of think through some of the puts and takes there on the demand side.

Yeah, sure, Phil. As it pertains to, as John mentioned, and we talked before, G1 was a really strong quarter. We're very pleased with our results, and the consumer, in terms of our businesses, is holding in there. The uncertainty is something that we're continuing to track, both on the macro and geopolitical. Consumer confidence is a bit challenged, but as it pertains to the fundamentals of our business are strong. The only thing I would point to from a first-half versus second-half perspective is we started to take pricing from a tariff mitigation standpoint in the second half of 2025, and so we'll lap that as we get to the middle of the year. As evidenced by our Q1 pricing of 6% in Q1, we won't see that type of year-over-year comp in the second half of the year, so that's part of the dynamic, just mechanically, but we still feel pretty confident, and obviously we're hopeful that there is upside relative to our expectations but at this point we're we're we're guiding that little single digit in terms of terms of growth for the year okay thank you really appreciate the color guys your next question comes from the line of michael reho with jp morgan please go ahead hi uh thanks good morning everyone thanks for taking my questions um wanted to shift the focus uh to uh decorative and you know the

sales were flat, you know, still better than what we were looking for, uh, down low single digits, was hoping to get a sense of, you know, DIY versus pro and the different drivers there and where, you know, things might be, if, if, if it's indeed the case, maybe coming in a little stronger, if you're seeing any momentum, uh, similar to what you've seen in, in plumbing and, and how you might contrast, you know, the sales momentum that you've seen in plumbing versus what you're seeing in decorative across, you know, again, DIY versus pro on the paint side.

And Mike, good question. It's John. So, so our, our, our sales for the quarter were flat. Clearly that was a better performance than what we saw in Q4 2025 and really most of 2025. When you break it down, we saw pro continue to grow mid single digits. DIY was down low single digits. and we feel good about the plans we have in place. I mean, I do believe that DIY is going to remain pressured. When you look at that business, it's highly correlated with existing home sales, and obviously existing home sales remain pressured. So as a result, we're putting strong plans in place. We're going to focus on the great quality that provide the best value in the industry, really make sure that that's playing through, and feel good about our plans with our retail partner. The pro sign is where we continue to see a tremendous amount of opportunity. I mean, that's where the growth has been over the last, you know, longer time. We have a relatively small share in that space as well. We've grown our share by 200 basis points over the last few years. Take friction out of the experience, same exact ways, or focus on the pro as well. So I think, you know, we hope to DIY market.

Great. No, that's helpful. And I know at the risk of, you know, beating this one to death a little bit, But I think it's a it's going to be a big topic over the next month or two around the strength in plumbing, particularly the volume side. And, you know, you just highlighted the fact that you've seen that strength across different channels in North America. You know, a lot of success in your execution, you know, notwithstanding, you know, maybe being a little more conservative in the back half for various reasons. um and i presume you also hit on this at your analyst day next month but are we to think about let's say the share gains that you've been able to achieve in the first quarter as uh sustainable and are there parts of the market that you know maybe you see an opportunity where you know this share gain dynamic can persist throughout this year and into the into 27 28 just trying to get a sense of, you know, the sustainability and the performance. And if there's anything that's shifted within the market, either on the customer side or some of your competitors out there that, you know, lead you believe, lead you to believe that, you know, that the share gain dynamic can persist on a, let's say, on a medium term basis.

And, Mike, you know, good question. I mean, as I mentioned, we feel terrific about what our team has delivered in America. You know, we don't take anything for granted brands out there, and it's a dynamic environment. So we're going to keep playing our game, keep focused on building our brands, innovating, and then executing at a high level. And if we do that, we believe that we'll continue to be strong as we move forward. As I mentioned earlier, I mean, the big question mark for us is just what happens with the end consumer. And, you know, a couple of months ago, you know, we clearly talked about it being uncertain times and a lot of dynamic environment and conflict in the Middle East. It's taken it to a whole new level. So we believe that we're just being prudent in terms of, hey, let's wait and see. And as we mentioned before, we are starting to see if there's any caution, and certainly these are data monitored in terms of what we can control, I feel great about what our teams are doing. I feel we have a very clear line of sight into our plans for the rest of the year, and I expect our performance to be strong, certainly versus the category.

Great. Best of luck.

Your next question comes from the line of Anthony Pettinari with Citi. Please go ahead.

Good morning.

Hi, Anthony.

Hey, just following up on plumbing, can you give any additional color on the growth you saw in Watkins and, you know, the opportunity or the TAM there? I think you flagged Delta and Watkins as your strongest growers. You know, is Watkins growing maybe similar to Delta or is it growing faster off a lower base? You know, is there any product set or brand within Watkins that's really driving the strength?

Anthony, it's John. We feel, as we talked about, great about Watkins and the opportunity. Watkins did grow in Q1. And we're going to get into a lot more detail on our investor day next month in New York City. So we'll walk you through the TAM. We'll walk you through the opportunities that we see. What I would tell you is that, you know, HutTubs is our biggest business and we like the momentum or the share leader in that space across North America. Where we're seeing outsized growth is really in sauna, front and center in the wellness product. So we grew nicely from a walk-in standpoint in Q1. We'll give you a lot more details next month.

Great, great. And then I guess, you know, given the rise in diesel and gas prices, I'm wondering if you've historically seen real sensitivity between gasoline prices and consumer spending for your products. I guess I'm thinking specifically about DIY paint and maybe some of the smaller ticket items. It seems like You haven't seen that so far, but I'm just wondering if that's something historically that's moved the business.

Anthony, it's Rick. So it's tough to single out a particular driver. I think what we watch, generally speaking, is consumer sentiment as well as overall the health of the economy. And so higher oil prices, as we all recognize, is generally a headwind to consumer confidence and generally a headwind to disposable income. And it's a headwind in terms of input costs. So those are things that we're monitoring closely, and that's one of the reasons that gives us caution in why we're prudent with regards to our expectations as we move out through the course of the year. Again, the fundamentals of the business, as John articulated, are really strong. We're pleased with the execution of what we've been doing here at Massco and across our business unit. Loyal prices is something that is a headwind, but it's more in terms of how it manifests itself in terms of consumer confidence, etc. For us, in terms of our products, they tend to be lower ticket R&R items, so they tend to be more resilient in these types of environments, but nonetheless, we're not immune to it, but it's something that we'll continue to monitor and track as we progress for the course That's very helpful.

I'll turn it over.

Your next question comes from the line of Susan McClary with Goldman Sachs. Please go ahead.

Good morning, everyone. Thanks for taking the question. I want to talk about the longer term growth path, but the changes in leadership that you announced this week, you now have the heads of those four key businesses reporting directly to you, John. Can you talk about what that means in terms of your ability to drive growth over time and how the executive committee is focused on some of these items and what that will mean for MASCO?

Yes. So, great question. And as I mentioned before, as I came into Masco, I heard that top-line growth was something that probably was an opportunity, something for us to focus on. And then, you know, as I took a step deeper in terms of feedback, the other thing I heard is just, you know, our ability to move with pace and be agile is probably the other area to focus on. So with the executive committee, we're trying to do two things. One, make sure that we have the right experts, you know, in terms of our centers of excellence and deep functional knowledge where it matters. We announced just earlier this week that we're bringing in a procurement, a chief procurement officer who has 30 years of the most modern capability, and also with the executive committee really trying to, you know, streamline the organization to have more frequent communication, allow us to make decisions more quickly and move at pace. So with the new organization, you know, essentially, you know, removed a layer, we talk as an executive committee, we meet once a week. I can tell you, I talk to my direct reports many more times than that.

Great color. And then despite the moving parts around inventories and costs, you're still targeting to get that working capital down to about 16.5% of sales this year. Can you just talk through some of the pieces in there and how we should think about that coming together?

Sure, Sue. It's Rick. So part of the reason our working capital is higher than it typically is this time of year or has been for the last several months is because of the implications of tariffs. So the higher tariff costs and commodity costs, quite frankly, that lead into our inventory and receivables have elevated our working capital, and the shorter payment terms on the tariff bills or invoices also reduces our payables. So there's an overarching tariff dynamic that has been at play. We'll see that normalize as we get into the second half of the year, and we continue to be, the team is very focused on managing not only costs but also working capital, and so but something that we're continuing to execute on. And once we get through the normalization of the tariff implications in the second half of the year, we should be able to execute towards a working capital that's more in line with our historical average, and we're guided towards 16.5%.

Okay. Thank you. Good luck with the quarter.

Great. Thanks, Sue.

And your last question comes from Rafe Jodrasich with Bank of America. Please go ahead.

Hi. Good morning. Thanks for taking my questions. The outperformance in plumbing volume in the first quarter in North America, how much would you attribute to just broader consumer resilience and the category holding up relative to your market share outperforming what you were expecting going into the quarter?

So, again, I'm not sure we'll quantify it to the level of detail you're looking for. I mean, I think the category performed fairly well. I am very confident we also took market share. As I mentioned, I believe that we're firing on all cylinders right now and customers. So just leave it at it as probably a bit of both. But if I had to say which one was the bigger driver, I would say probably our market share.

That's helpful. And then in terms of the input cost in inflation, what you're expecting, can you talk about what either copper price is embedded in guidance for the second half of the year Or should we be assuming that copper prices and zinc stay where they are today? Just what are you assuming to get to the full-year guidance?

Sure, Rafe. It's Rick. We're not going to disclose a specific assumption in our outlook. But suffice it to say, I would assume that where we have been recently, pretty late as we closed out 2025, is a pretty reasonable place to be. Obviously, it's volatile in that nature. I mean, I think as we sit at $6 or above $6 per pound, that is something that represents a bit of a headwind to us, but it's a volatile environment, and at the end of the day, as I've mentioned before, we're not only monitoring the situation, but we're proactively taking actions from a cost reduction standpoint, from an efficiency standpoint, and as necessary a pricing standpoint to mitigate those impacts, whether they're copper, oil inputs, tariffs, et cetera to be able to deliver the results that we've got it's really helpful thank you this concludes the question and answer session i will now turn the call back to robin zonderman for

closing remarks we'd like to thank all of you for joining us on the call this morning and for your interest in masco that concludes today's call have a wonderful day this concludes today's conference call thank you all for joining you may now disconnect