Masco Corporation 2026 Second Quarter Conference Call

Good morning, ladies and gentlemen. Welcome to Masco Corporation's second quarter 2026 conference call. My name is Rob, 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, then the number one on your telephone keypad. To withdraw your question, please press star one again. I will now turn the call over to Renee Benedict, Vice President, Investor Relations and Corporate FP&A. You may begin.

Thank you operator and good morning everyone. Welcome to Masco Corporation's 2026 second quarter conference call. With me today are John Noody, President and CEO of Masco, and Rick Westenberg, Masco's Vice President and Chief Financial Officer. Our second 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. questions. Please limit yourself to one question with one follow-up. If we cannot take your question now, please call me directly at 313-792-5500. Our statements today will include our views about our future performance, which constitute forward-looking statements. These statements are subject to risk and uncertainties that could cause our actual results to differ materially from the forward-looking statements. We've described these risks and uncertainties and 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. 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, Renee. Good morning, everyone, and thank you for joining us. We have delivered strong results in the first half of the year, while navigating a macroeconomic and geopolitical environment that remains dynamic. As I outlined Dead Art Investor Day in May, we are committed to driving above-market growth through a consumer-driven strategy by leveraging our industry-leading brands, expanding our commercial capabilities, and enhancing our operational excellence. Our teams have remained focused on execution, and I am pleased with the progress we are making. Please refer to slide five, where I will highlight a few recent examples that demonstrate how our teams are creating value through strong brands, innovative new products, and exceptional customer service. First, Delta Fosset Company continues to execute on its new product roadmap, successfully launching five new kitchen and bath collections across its Delta, Breezo, and Newport Brass brands. These launches broaden our portfolio with compelling new designs and finishes enhancing consumer choice and supporting our focus on innovation brand strength and long-term growth additionally delta received the jd power customer service certification for the fifth straight year a testament to the team's unwavering focus on customer satisfaction and its long-standing commitment to delivering industry-leading service and support then lastly we celebrated hans groey's 125th anniversary we are proud to recognize the brand's remarkable legacy of innovation, craftsmanship, and design excellence, which has helped make it a global leader in premium water experiences and a key contributor to MASCO's success. With that, let's turn to our second quarter financial results. Please refer to slide six. Overall, our underlying second quarter and first half performance was in line with our expectations and reflects the resilience of our business and the strength of our execution. In addition, during the second quarter, we began to receive IEPA tariff refunds and recognized the benefit. The benefit of these refunds was partially offset by targeted strategic investments to support growth, as well as by employee-related incentive compensation costs associated with this favorable impact. Overall, we recorded a net tariff refund benefit of approximately $95 million during the quarter. Our net sales in the second quarter decreased 3%, which were impacted by a challenging comparison into the prior year, as well as the targeted strategic investments we recognized in the quarter. If you exclude the impact from the strategic investments, net sales in the second quarter will be roughly in line with the prior year, and our sales in the first half of the year would be up low single digits, consistent with our expectations. Operating profit was $482 million, an increase of 17%. Operating profit margin was 24.2%, and earnings per share grew 26% during the quarter to a dollar and 64 cents per share turning to our segments plumbing product sales decreased three percent in local currency however excluding the impact of the targeted strategic investments plumbing segment sales would have been in line with the prior year north american sales decreased six percent local currency driven by the strategic investments which accounted for more than half of this year's the year-over-year impact in addition north american sales were also impacted by a challenging comparison to q2 2025 when sales increased mid single digits when you viewed over the first half of the year excluding the impact of the strategic investments our north american plumbing sales grew low single digits in line with their expectations and we remain confident in the strength of our competitive position across our channels we continue to gain share through our e-commerce leadership innovative products and exceptional customer service Turning to international plumbing, sales increased 4% in local currency, driven by growth across many European markets, particularly Germany, partially offset by the ongoing weak market in China. This strong performance, driven by volume growth and pricing actions, demonstrates the strength of the Hansgrohe brand and the team's execution across our geographic markets. Operating profit for the plumbing product segment grew 26% to $361 million and operating margin expanded to 27%. Turning to our decorative architectural segment, sales decreased 4%. Our momentum in propane continued in the second quarter, with sales growing mid-single digits as our offering continues to resonate with pro customers. As we invest alongside our partner, the Home Depot, we are confident in our ability to drive further share gains and capitalize on the significant growth opportunities ahead. DIY paint sales decreased high single digits given the ongoing challenging industry dynamics. In addition, performance in the quarter was impacted by the customer transition of our primer and applicator business we discussed in our fourth quarter 2025 earnings call in February. We do not expect this transition to have a meaningful impact in the second half of the year. Despite these factors, our expectation for full-year DIY paint sales to be down mid-single digits remains unchanged. We believe Bear is well-positioned as the number one DIY brand, with leading positions in color, quality, and value. Operating profit for the segment was in line with the prior year at $148 million, and operating margin was 22.6%. Turning to capital allocation, our strong cash flow and previously announced accelerated share repurchase program allowed us to return $454 million to shareholders this quarter through dividends and share repurchases. Additionally, as we continue to actively manage our portfolio and focus on our core industry-leading brands, we recently divested Briston Group, a UK plumbing business. We believe Briston has a strong future with FM Mattson Group, while allowing us to focus on Hans Grohe as our core international plumbing business. Combined with the actions we are taking to improve efficiency and strengthen execution across the business, we are encouraged by our first-half performance, which reflects our team's strong execution and focus on operational excellence. We are also continuing to implement the restructuring actions we previously shared in order to better align our cost structure and enhance our flexibility to invest in future growth opportunities. As we look to the balance of the year, uncertainty in the macroeconomic and geopolitical environment remains. However, our first-half performance reinforces our confidence in the resilience of our business, the strength of our brands, and our ability to execute in a challenging environment. With our strong first-half performance and the benefit of the net tariff-free fund impact, which represents an estimated $85 million for the full year, we are raising our 2026 earnings per share guidance to $4.40 to $4.60 from our prior range of $4.10 to $4.30. Consistent with our prior guidance, we continue to expect that our sales will be up below single digits for 2026 and that commodities will remain elevated in the back half of the year. Rick will share additional details of our guidance in a few moments. While uncertainty remains in the near term, we continue to focus on executing the actions within our control and positioning the business to capitalize on the opportunities ahead. The long-term drivers of repair and remodel activity, including strong home equity levels, an aging housing stock, and pent-up demand for home improvement projects remain firmly in place. As market conditions improve, we expect these fundamentals to provide meaningful support for growth. At the same time, we're making investments in our business and taking actions to improve operational performance, ensuring we are well-positioned to capitalize when market conditions return to more historical growth rates. Supported by a portfolio of market-leading brands, robust cash generation, and the investments and actions we are taking to strengthen our operating performance and enhance execution across the business, we believe Masco is well-positioned to deliver above-market growth and continue to create long-term shareholder value.

With that, I'll now turn the call over to rick to go over our second quarter results and 2026 outlook in more detail rick thank you john and good morning everyone thank you for joining as renee mentioned my comments today will focus on adjusted performance turning to slide eight sales decreased three percent with currency having a minimal impact on our second quarter results in local currency north american sales decreased five percent, while international sales increased four percent. North American sales were impacted by a challenging comparison to a strong Q2 last year, as well as targeted strategic investments to support growth. Gross margin in the second quarter was 43.8 percent. The overall performance versus prior year was primarily driven by the net benefit from the IEPA tariff refunds, with underlying performance largely in line with the prior year. SG&A as a percent of sales was 19.6% and was impacted primarily by higher employee-related costs, including incentive compensation. Operating profit grew 17% to $482 million in the quarter, and our margin expanded to 24.2%. Operating profit was driven by the approximately $95 million net tariff refund benefit, pricing actions and cost savings initiatives. This was partially offset by lower volume and higher commodity, tariff and employee related costs. Our EPS grew 26% to $1.64 per share in the quarter. Turning to slide 9, plumbing sales decreased 3% in the second quarter. quarter. Currency had a minimal impact on our results. The year-over-year performance was primarily driven by lower volume and the recognition of target strategic investments in North American plumbing, partially offset by higher international volume and pricing actions across the segment. In local currency, North American plumbing sales decreased 6% in the quarter. This was primarily driven by a challenging comparison to a strong second quarter last year and the targeted strategic investments. Looking at our North American plumbing performance in the first half of the year, sales increased low single digits, excluding the impact of the strategic investments. This performance, which was driven by strong growth at our Delta Faucet and Watkins Wellness businesses, was in line with our expectations, giving us confidence to deliver low single-digit growth for the year. In local currency, international plumbing sales increased 4% in the quarter. Hansgrohe grew in many of its European markets, including its key market of Germany. This growth was partially upset by continued softness in China. Segment operating profit in the second quarter increased 26% to $361 million, and operating margin expanded to 27%. Operating profit was driven by the net tariff refund benefit, pricing actions, and cost savings initiatives. This was partially offset by lower volume and higher commodity, tariff, and employee-related costs. Turning to slide 10, decorative architectural sales decreased 4% in the second quarter. Our strong pro paint performance continued, with sales increasing mid-single digits in DIY paint sales decreased high single digits in the second quarter, reflecting ongoing weakness in the DIY paint market and the unfavorable impact from the customer transition of our primer and applicator business. We do not expect this transition to have a meaningful impact on our results in the back half of the year. Overall, our paint sales remain largely in line with our expectations, and we continue to anticipate full year pro paint sales to increase mid single digits and diy paint sales to decrease mid single digits operating profit in the second quarter was 148 million dollars and operating margin was 22.6 percent operating profit was in line with the prior year with cost savings initiatives and increased pricing offset by lower volume and higher commodity costs turning to slide 11, our balance sheet remains strong, with gross debt to EBITDA at 2.1 times at quarter end. We finished the quarter with $1.5 billion of liquidity, including cash and availability under our revolving credit facility. Working capital was 19.8 percent of sales at quarter end. As expected, working capital balances in the first half of the year remain elevated due to the impact of tariffs. 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 $454 million to shareholders through dividends and share repurchases, including the repurchase of $390 million of stock in the second quarter as we executed on our $300 million accelerated share repurchase program that we announced in May. With our ASR and the benefit from the tariff-free funds, we now expect to deploy approximately $1 billion towards share repurchases or acquisitions in 2026, up from our previous expectation of at least $800 million. Now let's turn to slide 12 and review our outlook for 2026. Our underlying performance in the first half of the year was strong and largely in line with our expectations. As a result, we are maintaining our full-year outlook while incorporating the estimated $85 million full-year net benefit from the IEPA tariff refunds, essentially all in our plumbing segment. For MASCO overall, we continue to expect 2026 sales to be up low single digits and now expect our operating margin to expand to approximately 18%, up from our previous guidance of approximately 17%. Turning to our segments, in our plumbing segment, we continue to expect 2026 full-year sales to be up low single digits, and now expect our operating margin to expand to approximately 20%, up from our previous guidance of 18%, driven by the net tariff refund benefit, 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 increasing our 2026 EPS estimate to be in the range of $4.40 to $4.60 per share up from our previous guidance of $4.10 to $4.30 per share. This continues to assume a $200 million average diluted share count for the year and a 24.5% effective tax rate. Additional financial assumptions for 2026 can be found on slide 15 of our earnings deck. With that, I would like to open up the call for questions. Operator?

Thank you. We will now begin the question and answer session. 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. To ask a question, please press star, then the number 1 on your telephone keypad. To withdraw your question, again, press star 1. Your first question comes from the line of John Lovallo from UBS. Your line is open.

Good morning, guys. Thank you for taking my questions. The first one is just on the thought process behind including the IEPA tariff refund in the core numbers. And then also along those lines, why is the full-year benefit of $85 million $10 million less than the $95 that was incorporated in the first quarter?

Good morning, John. It's Rick. In terms of incorporating the IEPA tariff refund, we thought it was appropriate to include, in terms of providing financial forecasts for the full year, and obviously provides explanation in terms of our guidance for the year. We did, obviously, as you saw throughout our prepared remarks, quantify the impact on a net basis for the quarter at $95 million and for the year at $85 million. So we created that visibility. In terms of the difference between the quarter impact and the calendar year impact, it's really an accounting convention. It's really related to employee-related incentive comp that is not able to be booked in the full amount in the quarter in Q2. it gets amortized over the remaining part of the year so that 10 million delta you'd expect to see in the second half of the year okay i understood that's helpful and then you know what drove the strength in the deck arc margin of 22.6 it seems to imply a deceleration in the in the back half and what would be driving that diy was more from margin standpoint we understood

thank you guys your next question comes from a line of sam reed from wells fargo your line is open.

Thanks so much, everyone. Wanted to drill down a little bit on the plumbing top line in greater detail. You know, you talked to strategic investments in plumbing as being a key driver behind the year-over-year change in revenues. Could you just elaborate on what those strategic investments were, and did that involve stepping up promos in any way?

Hey, Sam, it's John. I guess maybe taking a step back and laddering back to our strategy that we unveiled our Investor Day in May. Really, we're trying to accelerate growth. We have the opportunity in the quarter to make some investments to really jumpstart our strategy and really set us up for accelerating growth as we move. And for competitive reasons, we're not going to detest, but rest assured promo that I can tell you that's not necessarily the focus. And certainly, we're trying to invest for the longer term to make sure that we can deliver.

That's helpful. Maybe just following up here, you obviously sell a lot of plumbing products into the home centers, and the home centers are very notorious for being quite price-sensitive with their customers. How has the dialogue gone with the home center channel, and are they looking for any reinvestment back in price as you receive tariff refunds? Thanks.

Yeah, I would say that channel, like all of our channels, our plumbing business, particularly in North America, I would say our conversations really leverage our portfolio specifically.

Thanks so much. I'll pass it on. Your next question comes from a line of Matthew Booley from Barclays. Your line is open.

Morning, everyone. Thanks for taking the questions. Just another one on the strategic investments in plumbing. I have a question. Is this kind of one time, or should we assume that this is kind of all gone by Q3? Is there sort of a customer transition situation here, like we're seeing in decorative architectural right now? And then you mentioned the improvement in ROI. over time, but just, you know, how should we think about what the eventual benefits of these investments might look like and when that would arrive? Thank you.

Yeah. Hey, Matt, what I would say is we try to contain the impact of the agents in one quarter. So I would say they were one time in nature.

Okay. Got it. Thank you for that. And then secondly, I just wanted to kind of drill down into the raw material environment and, you know, look, looks like some of the metals, copper, especially may still be drifting higher relative to your prior quarter. So just curious what you're assuming from a raw material perspective going forward and sort of timing of all that.

Sure, Matt. It's Rick. So what we've seen in terms of the commodity inflationary landscape is for the first half of the year, a low single digit inflationary dynamic, both in terms of our plumbing and our decorative segment. But as you articulated, we've seen upward pressure, both from a copper and metals input standpoint, as well as from an oil as we've all seen across sector and that's putting pressure in the second half of the year. Our commodity inflation expectations in H2 and for the calendar year overall are mid-single digits both for the plumbing and decorative architectural segment. It's something that we're monitoring very closely that's factored into our guidance for the year, but it's something that we are managing and as we've articulated in the past and have a track record of doing is work to offset and mitigate those headwinds and that's what we've contemplated in our expectations for the rest of this year got it thanks rick thanks john good luck guys your next question comes from the line of steven kim from evercore your line is open thanks very much guys um strategic investments i guess something i was curious about is are you implying that you would not have made these heard um or uh hey steven it's difficult there's some interference. Would you mind repeating your question?

Yeah.

I was asking whether the strategy you have made them had you not received I think if I understood your question correctly effectively what we've done is overall we're investing in growth. You see that as a continued theme in terms of investing in our brands, our products, our services and so that's a continued effort from our standpoint to double down on our growth narrative. I think as it pertains to the YIPA tariff refund, we sent opportunity to be selective in terms of redeploying some of that to enhance our investments in growth. So it is opportunistic and is building upon our other growth initiatives overall.

Okay. Gotcha. And then I guess the second question relates to their sort of following up on your comment that you drove some costs out. I guess I was curious if you could elaborate a little bit more on that. And again, if this is something that you see as sort of a one-time in nature sort of event, or was the timing accelerated this quarter for a particular reason? Let's give us some color on that.

As we exit in 2025, we announce some recent, and we're going to continue to stay.

Great. Well, thanks very much, guys.

Your next question comes from the line of Trevor Allenson from Wolf Research. Your line is open.

Hi, good morning. Thank you for taking my questions. A follow-up question on your inflation expectations. I think a peer of yours yesterday was talking about pain inflation, maybe exiting the year closer to high single digits. So across both your businesses, maybe can you talk about where you're expecting input cost inflation to be exiting 2026, or if you think the year-over-year inflation impacts will be pretty similar between 3Q and 4Q?

Sure, Trevor. It's Rick. What I would say it's obviously a volatile situation out there. We monitor it closely but as you've seen as we've all seen oil prices jump around just given the conflict in the Middle East. So it's a tough one to call per se but I would say our expectations for balance of the year as we articulated is mid-single digit inflation and that's a reasonable run rate as we think about as we exit the year. But again that's something that we're tracking very closely and we'll respond accordingly.

Okay. Okay. Makes sense. Thanks for that, Rick. And then second question on deck arc margin guidance. It seems to imply that margins could be down more than 100 basis points the second half of the year. Appreciate there's some volume headwinds there. DIY is still pretty weak, but is there also a price cost headwind that is more timing related with your largest customer just given the nature of the relationship you have there?

And if that's the case, then would you expect some price cost recovery as you get into early next year thanks so Trevor it's Rick in terms of the back half of the year for deck arc there's a couple of factors at play one is is employee related costs in terms of incentive compensation which we referenced a little bit earlier but also to we've even it's a bit of timing in terms of our investments for growth I mean we talked about strategic investments in the plumbing space but as I referenced earlier we're making investments across the board and there's just some timing elements to that in the back half of 2026 and then finally the commodity headwinds that we've referenced before we're not going to talk about pricing with our with our customers um it's something that that we track and as we've articulated before we look for uh if we have an agreement with our biggest channel partner to be price cost neutral and so it's something that that we aim to do but as we've articulated a couple of times and is, I know, a dialogue more broadly in terms of the commodity inflation. That's a factor that we're seeing in the second half of the year.

Thank you for all the color and good luck moving forward.

Thanks, Trevor.

Thank you.

Your next question comes from a line of Susan McClary from Goldman Sachs. Your line is open.

Thank you. Good morning, everyone.

Good morning.

My first question is maybe referring a bit more to the wellness part of the business, which is something that you talked a lot about at your Investor Day, can you give us an update on how Watkins performed in the quarter and how that aligns with the overall strategy that you talked to? And then maybe within that, just an update on the health of the consumer and especially at the higher end, what you're seeing there.

Hi, Sue. It's John. We continue to remain excited about our wellness business as we talked about at Investor Day. It's really driven off a secular way in Sauna's continuum. And the reality as it is a case shape and good momentum on that business, we expect.

Okay. All right. That's helpful. And then one of the initiatives that you've also talked about is improving your working capital this year and focusing on some of the cash generation of the business. I guess just given all the puts and takes that we're seeing coming through, can you talk about the ability to generate that cash? Any thoughts on working capital and what that implies in terms of your priorities for capital allocation?

Sure, Sue. It's Rick. So in terms of our working capital expectations, we articulate at least in my opening comments and where we're trending year to date, which is a bit higher just given the tariff impact on working capital. And what I mean by that is with a higher tariff and quantity cost for that matter, you have higher input costs that flow into inventory and receivables. And then in terms of payment terms, the tariff payment terms are shorter than our regular payment terms. And so that has implication on our working capital. That said, we continue to be very disciplined on working capital, make sure we've got enough inventory and safety stock, but otherwise really focus on being lean and focus on managing that for cash flow purposes. And as I articulated earlier, our expectations for the ending working capital balance is at about 16.5% of sales, which is consistent with historical levels. And I would say overall, taking a step back, our cash flows are strong. I mean, it's one of the strong attributes of our business model is we convert much, if not all of our earnings into cash and that really enables us to reinvest in the business make sure we have a very strong balance sheet and return cash to shareholders for dividends and share buybacks and as you heard earlier we've increased our our expectations of cash available for share buybacks or mna to a billion dollars for the year and that's a reflection not only of the asr and the funding through a term loan but also the cash flows from the business And so we feel really strong about the cash health and the cash performance of the business.

Okay. Thank you both for all the color. Good luck with the quarter.

Great. Thanks, Joe.

Your next question comes from the line of filling from Jefferies. Your line is open.

Hey, guys. It's Maggie on for Phil. I just wanted to go into the pricing impact in the quarter. Maybe if you could break out any color by segment. And then just more overall, how you would characterize the current pricing environment. You know, are you seeing any change in price elasticity or pricing fatigue, you know, following several years of kind of outsized pricing?

Yeah, hey, Maggie, it's John. I would tell you that we, on an underlying basis, optimizing our footprint, if necessary, we will price. Okay, great.

And then obviously a dynamic cost environment, but any update on how potential changes in Section 232 or the 301 tariffs are impacting you, and then does the VAT CAF guide assume any incremental pricing coming through, or is it all already in place? sure maggie it's rick you articulated it is a dynamic environment out there in many respects but certainly with regards to the tariff environment and and what i would say is uh our our guidance and our expectations for the rest of the year do contemplate the tariffs that are in

place as we stand today so includes the inclusive of the 232 tariffs on copper steel and aluminum as well as the section 301 tariffs that were just implemented a few days ago that amount to about 10 to 12.5% that effectively replaced the Section 122 tariffs that expired on July 24th. So that's all contemplated in our guidance. Obviously, it's a dynamic environment. There is discussion and investigation for further Section 301 tariffs. While I would say those aren't contemplated in our guide, as we get closer to the end of the year and the timing of when tariffs flow into our p and l and just as a reminder uh effectively it's about a one quarter lag between when tariffs are announced or implemented and when they ultimately flow through our our inventory into our p and l and so as we as we get closer to the end of the year um any changes in tariffs would likely have to have an insignificant impact for this year it'd be something that we'd be looking into looking at as we flow into the role into next year etc but what i would say is we're pretty confident that the that the current tariff environment is fully contemplated in our guidance for the year okay great thanks guys thank you

your next question comes from a line of keith hughes from truest your line is open thank you um back to the strategic investments is that in plumbing is that going to one in-user market, big box versus wholesale versus builder, how's that playing out?

Yeah, so, Keith, as I mentioned before, we're not going to get into a whole lot of details just for competitive reasons. What I would say is it's very much focused on our entire business. I would tell you it took the opportunity to.

Okay, thank you.

Your next question comes from a line of Mike Dahl from RBC Capital Markets. Your line is open.

Thanks for taking my questions. Can you help us understand, you know, you have a lot of the nets against the tariff refunds. What were your gross refunds, just so we can contextualize, you know, what some of those offsets represented?

Yeah, Mike, it's Rick. So, we're not going to break down the composition of the net tariff refund impact. We wanted to be transparent and provide visibility in terms of the net impact. is we believe that's most meaningful in terms of understanding the impact to our financial performance and so at the end of the day we we we are disclosing the fact that on a net basis we've had a favorable impact of 95 million dollars in the quarter what i would say is john alluded to this before is we endeavor to capture as much of the impact in q2 as possible and that includes all the refunds so we've received much of the refunds in cash but that which we haven't, we booked as a receivable so that the full benefit and as much as possible the full impact in terms of our investment and employee-related costs are captured here in Q2 with a bit of a spillover for an earlier question of incentive comp that translates into an $85 million impact for the year. But at this point, Mike, that's where we're planning to disclose in terms of the implications on our financials.

Got it. Okay, understood. And sorry to harp on this, but the investments, I think John mentioned in response to an earlier question that it's not leaning on promos, but at the same time, some of the other commentary was talking about underlying pricing X, some of these investments. and then also you don't expect to be talking about the impacts going forward it sounds like there is something maybe pricing related to this and so then the question would be why wouldn't that be an ongoing impact to the balance of the year is it because the offset on volume comes through fairly immediately or something else I mean it's still a little in our view like a little too vague in terms of the description and impacts understanding that there are some sensitivities around competitive dynamics.

Yeah, Mike, it's Rick. Understand the question. As it pertains, it's really a function of our intent to capture as much of the impact in Q2 as possible as previously articulated, as well as the accounting around it. Much of our investments will impact our various parts of the P&L. Effectively, many of our investments in our programs run through net sales. So that's where we've captured the impact in the quarter. And as John articulated, we captured what is our best estimate of the investments we plan to make. They're still being deployed. And so from a timing perspective, we'll see that impact future quarters hopefully to the benefit in terms of incremental sales. But our expectation and our estimate is that we We've captured it here within the quarter in terms of the accounting P&L side of things. And we'll obviously track it in going forward. But the intent is to capture our best estimate here within the quarter.

Appreciate that.

Your next question comes from a line of Rafe Jedrosich from Bank of America. Your line is open.

Hi. Thanks for taking my questions. On the strategic investments, were they contemplated in the previous guidance? And are they associated with any specific opportunities to gain shelf space or share?

They weren't broad-based investments that, again, will help accelerate the growth.

Okay, that's helpful. And then just following up on that, if the investments were not in the guidance at the beginning of the year, what what's sort of the offset that's letting you hold the full year plumbing revenue guide is it that you'll start to get the the better volume by the end of the year so if you know obviously it's like incremental to the um an incremental price headwind to the second quarter what's the offset that's letting you hold the full year guide yeah right maybe i'll tackle it from a couple of ways here in terms of in terms of the impact and i'll get to the revenue side in a moment but from From a P&L standpoint, as we've articulated, we've captured the net impact of the $95 million for the full net tariff refund net impact in the quarter.

And so that is on an overall operating profit and P&L standpoint, incremental to our guidance on a net basis. From a revenue standpoint, we are still very confident in terms of delivering both single digit top line growth for plumbing, and that is inclusive of these investments that we've referred to. So we believe that we've got enough momentum in terms of the underlying performance, which has been strong. And the first half of the year, our plumbing business is up low single digits, even that of the strategic investments. And so our expectations is that we'll be able to deliver low single digit performance in the back half of the year and for the year overall.

Yeah, I would just reinforce, while there's certainly some noise in the quarter, given the tariff refunds our underlying plumbing business remains quite strong we have seen no thank you it's really helpful and your final question comes from the line of david mcgregor from longbow research your line is open hey good morning this is joe nolan on for david first i just wanted to ask about international sales with those up four percent in plumbing

could you just talk about what you're seeing in some of your international markets particularly in Europe and got it okay and then there's been a few questions and discussion on uh pricing and

cost just wondering is there enough pricing put through right now to maintain price cost neutrality and do the second half of the year yeah maybe just to clarify the the point or the question uh in terms of our segment price on our plumbing side of the our plumbing segment we do expect price cost positive for the year and for our decorative architectural price cost uh neutral for the year and that's consistent with our prior guidance got it that's helpful thanks thank you thank you and i'll now turn the call back over to renee benedict for some final closing remarks we'd like to thank 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 great day this concludes today's conference call thank you for your participation you may now just