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Home-building design and manufacturing company Masco Corporation (NYSE:MAS) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 6.5% year on year to $1.8 billion. Its non-GAAP profit of $0.87 per share was 5.3% below analysts’ consensus estimates.
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Masco (MAS) Q1 CY2025 Highlights:
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Revenue: $1.8 billion vs analyst estimates of $1.84 billion (6.5% year-on-year decline, 2% miss)
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Adjusted EPS: $0.87 vs analyst expectations of $0.91 (5.3% miss)
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Adjusted EBITDA: $322 million vs analyst estimates of $340.6 million (17.9% margin, 5.5% miss)
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Operating Margin: 15.9%, in line with the same quarter last year
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Free Cash Flow was -$190 million compared to -$125 million in the same quarter last year
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Organic Revenue fell 2.6% year on year (-3.8% in the same quarter last year)
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Market Capitalization: $13.1 billion
StockStory’s Take
Masco’s first quarter performance was shaped by continued weakness in the DIY (do-it-yourself) paint market and the impact of recently enacted tariffs on imported materials, particularly from China. CEO Keith Allman highlighted ongoing softness in the retail channel and noted that pro paint sales outpaced DIY demand, reflecting a broader shift in consumer behavior. Allman also addressed significant changes in the geopolitical environment, outlining steps the company is taking to mitigate increased costs, such as pricing actions and sourcing adjustments. The quarter also marked the announcement of Allman’s retirement and the appointment of John Nooty as the incoming CEO, signaling a period of transition at the company’s helm.
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Looking ahead, management refrained from providing full-year guidance due to macroeconomic uncertainty and evolving tariff policies. CFO Rick Westenberg explained that Masco’s mitigation efforts could offset roughly half of the new tariff-related costs in 2025, but acknowledged the potential for further demand softening as higher prices are passed through to customers. The leadership team expects to address the remaining cost pressures by the end of 2026 through ongoing changes to the sourcing footprint and continued cost reduction initiatives.
Key Insights from Management’s Remarks
First quarter results were impacted by persistent challenges in the DIY paint segment, tariff-driven cost escalation, and a leadership change. Management focused on operational measures and market trends underpinning both the quarter’s performance and the evolving business landscape.
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Leadership transition announced: Keith Allman’s retirement and John Nooty’s upcoming appointment as CEO were a major focus, with Allman emphasizing a seamless transition and confidence in Nooty’s strategic vision.
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Tariff cost mitigation plan: Management detailed a structured approach to addressing $400 million in new tariff costs for 2025, with actions including price increases, cost reductions, and sourcing shifts. Westenberg stated, “We currently estimate that we can offset approximately $200 to $250 million…during the current year.”
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DIY vs. Pro paint divergence: The DIY paint market continued to underperform, attributed to demographic shifts and increased price sensitivity among consumers. Pro paint sales, in contrast, grew at a mid-single-digit rate, supported by Masco’s partnership with The Home Depot and expanded services.
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Plumbing segment resilience: International plumbing, especially in Central Europe, stabilized, while North American plumbing saw growth in e-commerce and specialty spa channels, offset by softness in retail.
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Dynamic pricing response: Management highlighted the need for flexible pricing strategies in response to tariff volatility, with Allman explaining, "the ability to be dynamic with our pricing, both up and down, together with a very strong drive on the cost outs, we think is the right dynamic."