• Fourth Quarter Revenue: Decreased 3%, but increased 1% excluding divestiture and currency impacts.
• Fourth Quarter Operating Profit: Increased $19 million, with a margin improvement of 140 basis points to 15.9%.
• Fourth Quarter Earnings Per Share (EPS): Increased 7% to $0.89 per share.
• Plumbing Segment Operating Profit: $200 million, with a margin of 16.8%, up 40 basis points.
• Decorative Architectural Segment Operating Profit: $113 million, with a margin of 17.7%, up 290 basis points.
• Full Year Gross Margin: Improved 110 basis points to 36.3%.
• Full Year Operating Margin: Expanded 70 basis points to 17.5%.
• Full Year EPS: Grew 6% to $4.10 per share.
• Return on Invested Capital: 44%.
• Cash Returned to Shareholders: Over $1 billion through dividends and share repurchases.
• 2025 Sales Outlook: Expected to be down low single digits, but flat to up low single digits excluding divestiture and currency impacts.
• 2025 Operating Margin Outlook: Expected to expand to approximately 18%.
• 2025 EPS Estimate: $4.20 to $4.45 per share.
• 2025 Dividend Increase: 7% increase to $1.24 per share.
• 2025 Share Repurchases/Acquisitions: Approximately $600 million planned.

• Warning! GuruFocus has detected 11 Warning Signs with CRESY.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Masco Corp (NYSE:MAS) introduced several innovative products in 2024, including water filtration products and a smart monitoring system for spas.
• The company completed the sale of Kichler Lighting, which is expected to streamline its portfolio and drive greater shareholder value.
• Masco Corp (NYSE:MAS) achieved a 7% increase in earnings per share in the fourth quarter, marking the seventh consecutive quarter of year-over-year margin expansion.
• The company returned over $1 billion to shareholders in 2024 through dividends and share repurchases.
• Masco Corp (NYSE:MAS) has a strong innovation pipeline, maintaining a vitality index of around 30% for products less than 36 months old.

Negative Points

• Fourth-quarter sales decreased by 3%, primarily due to the divestiture of Kichler Lighting.
• Plumbing sales decreased by 1% in local currency, with lower volumes in North America.
• The Decorative Architectural segment saw a 6% decrease in sales, largely due to the Kichler divestiture.
• The company anticipates a flat to down low single-digit market for global repair and remodel markets in 2025.
• Masco Corp (NYSE:MAS) faces potential challenges from recently enacted China tariffs, which could impact costs despite mitigation efforts.

Q & A Highlights

Q: Can you provide details on the inventory timing benefit in the Decorative Architectural segment and its impact on Q1 2025 results? A: The inventory timing benefit in Q4 2024 was about a mid-single digit boost to the top line. This will likely be a headwind in early 2025, but we expect the Decorative Architectural segment to be roughly flat for the year, with pro paint sales up mid-single digits. - Richard Westenberg, CFO

Q: What is Masco's focus for acquisitions, and how does the current macro environment affect this strategy? A: Our M&A strategy remains focused on bolt-ons in paint and plumbing. The market is slightly soft, but we are patient and looking for the right strategic fit. Technology is a consideration, and we aim to leverage our channel expertise and brands. - Keith Allman, CEO

Q: How are you addressing the impact of China tariffs, and are there any plans to mitigate potential tariffs on Mexico? A: We have reduced our China exposure by 45% since 2018 and are implementing short-term and long-term mitigation actions, including pricing and supplier negotiations. We have significant manufacturing capabilities in the U.S. and Mexico, allowing us to adjust sourcing as needed. - Keith Allman, CEO

Q: Can you elaborate on the cost inflation assumptions for 2025 and any offsetting pricing actions? A: We expect low single-digit inflation in plumbing, with pricing expected to offset commodity headwinds. In Decorative Architectural, we anticipate a price-cost neutral dynamic due to arrangements with our channel partner. - Richard Westenberg, CFO

Q: What gives you confidence in growth acceleration in the second half of 2025? A: We expect industry fundamentals, such as home equity and millennial household formations, to support growth. We anticipate modest growth in the second half of 2025, with the industry returning to growth in 2026. - Keith Allman, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.