AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat25
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · The brand portfolio and established customer sales support commercial relevance, but significant customers control prices and terms. No protected distribution, switching barrier or comparative cost advantage is demonstrated.
durability · 1/4 · Historical sales and market-share losses following price increases weaken the case for durable brand protection. Difficulty replacing major customer sales shows Masco's dependence on distribution partners.
customer dependency · 1/4 · Customer bargaining power and observed price sensitivity indicate weak dependency on Masco. The disclosed concentration establishes Masco's reliance on customers rather than customer lock-in.
erosion resilience · 1/4 · Realized pricing harm and trading down show fragile differentiation. Continued substantial profitability provides some resilience, but 2025 operating profit and margin declined; online transparency adds prospective pressure.
Pricing power31
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 1/4 · Price increases have caused sales, mix and market-share losses, and customer-driven price reductions have adversely affected results. These are observed adverse outcomes, although their magnitude is unspecified.
retention · 1/4 · Assessed indirectly from disclosed demand behavior: higher prices have caused sales and market-share losses, and customers have traded toward lower-priced products. Repeat-purchase rates and account retention are not supplied.
margin resilience · 2/4 · Despite lower volume and higher tariffs and commodity costs, Masco generated $1.248 billion of operating profit in 2025. However, profit fell 8% and margin declined 90 basis points to 16.5%. This is mixed resilience, without isolating pricing's contribution.
contractual freedom · 1/4 · Existing customer arrangements can delay or prevent selling-price adjustments, and concentrated major customers materially influence prices and terms. Full contract terms are absent, but the disclosed constraints support a weak grade.
Predictability81
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 4.23
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.50
Financial strength78
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 65.67
- netDebtEbitGrade
- 63.14
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 84.44
- Debt / FCF (x)
- 3.40
- Net debt / operating income (x)
- 1.84
- Interest coverage (x)
- 12.36
- Current ratio (x)
- 1.81
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 55.92
- 3-year average dilution (%)
- -3.28
- 3-year average SBC / revenue (%)
- 0.43
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · 2025 operating cash flow of $1.022 billion supported $156 million of capital expenditures, repurchases and dividends. In the first half of 2026, $417 million of operating cash flow less $77 million of capital expenditures was below $592 million of repurchases plus $129 million of dividends; a $300 million term loan supplemented funding. Cash generation is substantial, but debt-supported distributions and unproven buyback value make discipline mixed. Planned full-year spending is a commitment, not an achieved outcome.
incentive alignment · 2/4 · Actual annual bonuses fell to 34% of target with weaker 2025 performance. The completed three-year LTIP used EPS, ROIC and relative shareholder returns and paid 131% of target. These demonstrate performance linkage, while the adopted shift of annual RSUs to time-based awards weakens that component's performance condition. Ownership levels and full pay weights are missing.
execution · 2/4 · Assessed from operating outcomes rather than management's growth claims: substantial profit and cash generation persisted through adverse demand and costs, but 2025 profit declined. First-half 2026 operating cash flow improved with working-capital changes and tariff benefits. Restructuring charges demonstrate implementation spending, not proven savings.
governance · 3/4 · The April proxy disclosed nine independent directors out of ten and documented Audit Committee work on financial reporting, ethics, tariffs, controls and auditor independence. Management subsequently concluded disclosure controls were effective at June 30. These support strong demonstrated oversight practices, with issuer-source limitations and no evidence of exceptional durability. Proposed shareholder-rights amendments are excluded.
Evidence
Our portfolio of industry-leading brands includes BEHR® paint; DELTA® and HANSGROHE® faucets, bath and shower fixtures; LIBERTY® branded decorative and functional hardware; and HOT SPRING® spas.
Item 1, Business: brand portfolio · Filed 10/02/2026
In 2025, our net sales to The Home Depot were $2.9 billion (approximately 38 percent of our consolidated net sales), and our net sales to Ferguson and Lowe’s were each less than 10 percent of our consolidated net sales.
Item 1A, Risk Factors: 2025 significant-customer sales · Filed 10/02/2026
Increased selling prices for our products have led and may in the future lead to sales declines, a shift in the mix of products we sell and loss of market share, particularly if those prices are not competitive.
Item 1A, Risk Factors: realized consequences of selling-price increases · Filed 10/02/2026
When our material costs decline, we have received and may in the future receive pressure from our customers to reduce our prices.
Item 1A, Risk Factors: customer pressure to reduce prices · Filed 10/02/2026
Such reductions have had and could in the future have an adverse impact on our results of operations and financial position.
Item 1A, Risk Factors: realized adverse effects of price reductions · Filed 10/02/2026
As a result of this trend, we have experienced and may in the future experience lower demand for our products or a shift in the mix of some products we sell toward more value-priced or opening price point products, which has impacted and may in the future impact our results of operations and financial position.
Item 1A, Risk Factors: experienced lower demand and trading down · Filed 10/02/2026
The growing e-commerce channel brings an increased number of competitors and greater pricing transparency for consumers and customers, as well as conflicts between our existing distribution channels and a need for different distribution methods.
Item 1A, Risk Factors: e-commerce competition and pricing transparency · Filed 10/02/2026
These customers can significantly impact the prices we receive for our products and the terms and conditions on which we do business with them.
Item 1A, Risk Factors: significant customers' bargaining power · Filed 10/02/2026
Although other retailers, dealers, distributors, wholesalers and homebuilders represent other channels of distribution for our products and services, we might not be able to quickly replace, or replace at all, the loss of a substantial portion of our sales to The Home Depot or the loss of all of our sales to either Ferguson or Lowe’s.
Item 1A, Risk Factors: difficulty replacing major customer sales · Filed 10/02/2026
Our existing arrangements with customers, competitive considerations and customer resistance to price increases may delay or make us unable to adjust selling prices.
Item 1A, Risk Factors: customer arrangements and constraints on price adjustments · Filed 10/02/2026
Over the course of 2025, we experienced lower sales volume and higher tariffs and commodity costs.
Compensation Discussion and Analysis: experienced 2025 volume and cost headwinds · Filed 10/04/2026
Despite these headwinds, we were able to deliver $1,248 million in operating profit, down 8% from $1,363 million in 2024, and reported an operating margin of 16.5%, 90 basis points below 2024.
Compensation Discussion and Analysis: 2025 operating profit and margin results · Filed 10/04/2026
36 MASCO CORPORATION and Consolidated Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2025, 2024 and 2023 (In Millions) 2025 2024 2023 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: Net income $ 858 $ 874 $ 960 Depreciation and amortization 148 150 149 Deferred income taxes 64 28 (32) Employee withholding taxes paid on stock-based compensation 10 35 29 Loss on disposition of business, net — 80 — (Gain) loss on disposition of property and equipment (5) 3 6 Pension and other post-retirement benefits (8) (7) (6) Impairment charges for other intangible assets 5 — 15 Stock-based compensation 30 39 31 Decrease (increase) in receivables 19 (39) 42 (Increase) decrease in inventories (81) 4 233 Decrease in accounts payable and accrued liabilities, net (14) (95) (34) Other, net (4) 3 21 Net cash from operating activities 1,022 1,075 1,413 CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Purchase of Company common stock (571) (751) (353) Excise tax paid on the purchase of Company common stock (6) (3) — Cash dividends paid (261) (254) (257) Purchase of redeemable noncontrolling interest — (15) — Dividends paid to noncontrolling interest (45) (37) (49) Proceeds from short-term borrowings — — 77 Payment of short-term borrowings — — (77) Payment of term loan — — (200) Proceeds from the exercise of stock options 6 79 38 Employee withholding taxes paid on stock-based compensation (10) (35) (29) Payment of debt (2) (3) (5) Net cash for financing activities (888) (1,017) (854) CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Capital expenditures (156) (168) (243) Acquisition of businesses, net of cash acquired — (4) (136) Proceeds from disposition of: Business, net of cash disposed — 126 — Property and equipment 14 1 3 Other, net (3) (5) (7) Net cash for investing activities (144) (50) (383) Effect of exchange rate changes on cash and cash investments 25 (9) 6 CASH AND CASH INVESTMENTS: Increase (decrease) for the year 14 (1) 182 At January 1 634 634 452 At December 31 $ 647 $ 634 $ 634 See notes to consolidated financial statements.
Consolidated statements of cash flows: 2023–2025 · Filed 10/02/2026
3 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Six Months Ended June 30, 2026 and 2025 (In Millions) Six Months Ended June 30, 2026 2025 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: Cash provided by operations $ 705 $ 606 Increase in receivables (327) (271) Increase in inventories (22) (133) Increase (decrease) in accounts payable and accrued liabilities, net 61 (55) Net cash from operating activities 417 148 CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Purchase of common stock (592) (231) Excise tax paid on the purchase of common stock (5) (6) Cash dividends paid (129) (132) Dividends paid to noncontrolling interest (13) (15) Proceeds from revolving credit borrowings, net — 46 Proceeds from term loan 300 — Proceeds from the exercise of stock options 23 2 Employee withholding taxes paid on stock-based compensation (14) (8) Payment of debt (1) (1) Debt financing costs (3) — Net cash for financing activities (433) (344) CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Capital expenditures (77) (68) Other, net (1) (1) Net cash for investing activities (78) (70) Effect of exchange rate changes on cash and cash investments (6) 22 CASH AND CASH INVESTMENTS: Decrease for the period (100) (243) At January 1 647 634 At June 30 $ 548 $ 390 See notes to condensed consolidated financial statements.
Unaudited condensed consolidated statements of cash flows: first half of 2026 and 2025 · Filed 29/07/2026
Cash Flows For the six months ended June 30, 2026, net cash provided by operations was $417 million, primarily driven by operating profit, inclusive of the net tariff benefit from IEEPA tariff refunds, partially offset by changes in working capital.
MD&A, Cash Flows: operating cash flow and tariff-refund benefit · Filed 29/07/2026
Consistent with our long-term capital allocation strategy, outside of any potential acquisitions, we currently anticipate using approximately $1.0 billion of cash, including funds available under the term loan, for share repurchases in 2026.
MD&A, Share Repurchases: anticipated 2026 spending including term-loan funds · Filed 29/07/2026
As a result of our performance in 2025, which was negatively impacted by the headwinds described above, our executive officers earned 34% of target under our annual performance program, and received a cash bonus consistent with this performance.
Compensation Discussion and Analysis: actual 2025 annual bonus outcome · Filed 10/04/2026
For the three-year period of 2023-2025, our LTIP was based on the financial metrics of cumulative earnings per share (“EPS”), a three-year average return on invested capital (“ROIC”) and relative total shareholder return (“rTSR”).
Compensation Discussion and Analysis: 2023–2025 LTIP performance metrics · Filed 10/04/2026
We achieved 200% of our cumulative EPS target, 106% of our ROIC target and 88% of our rTSR target, resulting in overall achievement of 131%, and our executive officers received a share award consistent with this performance.
Compensation Discussion and Analysis: actual LTIP achievement and share awards · Filed 10/04/2026
Beginning with the 2025 performance year, our annual grant of restricted stock units to our executive officers is a time-based award that is forward-looking, meaning that it rewards stock price appreciation and continuous service during the vesting period, rather than a backward-looking award that is granted following the achievement of specified performance goals.
Compensation Discussion and Analysis: adopted change to time-based annual RSU awards · Filed 10/04/2026
DIRECTORS AND DIRECTOR NOMINEES Our Board is currently comprised of ten directors, nine of whom are independent directors.
Corporate Governance: board size and independence as disclosed April 10, 2026 · Filed 10/04/2026
Audit Committee key activities in 2025: • reviewed and approved our 2024 Form 10-K • reviewed our Form 10-Qs filed in 2025 and related earnings press releases • discussed with management quarterly updates regarding our 2025 internal audit annual operating plan and our internal controls over financial reporting • reviewed with management quarterly updates on ethics matters and fraud reporting • discussed with management certain accounting and risk management practices, including in the areas of product compliance, tax, employee benefits and treasury governance • discussed with management the impact of tariffs, our related mitigation actions and our trade compliance governance • discussed with management our sustainability reporting processes and controls • reviewed the performance of our internal and independent auditors and evaluated the independent auditors’ qualifications and independence • reviewed and approved our independent auditors’ 2026 integrated audit plan and service fees • reviewed and approved our 2026 internal audit annual operating plan 14 Table of Contents PART I — CORPORATE GOVERNANCE | MASCO 2026 Compensation and Talent Committee Mark R.
Corporate Governance: Audit Committee activities during 2025 · Filed 10/04/2026
The Company's Principal Executive Officer and Principal Financial Officer have concluded, based on an evaluation of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 that, as of June 30, 2026, the Company's disclosure controls and procedures were effective.
Item 4, Controls and Procedures: management's June 30, 2026 effectiveness conclusion · Filed 29/07/2026
In connection with these actions, we incurred approximately $12 million and $20 million in charges in the three and six months ended June 30, 2026, respectively, and we expect to incur approximately $50 million in charges during the full year of 2026.
MD&A, Overview: incurred and expected 2026 restructuring charges · Filed 29/07/2026
