MASCO CORP /DE/ - Quarter Report: 2024 June (Form 10-Q)

Operating profit Other income (expense), net: Interest expense()()()()Other, net()()()()()()()()Income before income taxes Income tax expense Net income Less: Net income attributable to noncontrolling interest Net income attributable to Masco Corporation$ $ $ $ Income per common share attributable to Masco Corporation: Basic: Net income$ $ $ $ Diluted: Net income$ $ $ $

See notes to condensed consolidated financial statements.

Amounts may not add due to rounding.

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the Three and Six Months Ended June 30, 2024 and 2023

(In Millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$		$		$		$
Less: Net income attributable to noncontrolling interest
Net income attributable to Masco Corporation	$		$		$		$
Other comprehensive (loss) income, net of tax:
Cumulative translation adjustment	$	()	$	()	$	()	$
Pension and other post-retirement benefits
Proceeds from short-term borrowings
Payment of term loan			()
Proceeds from the exercise of stock options
Employee withholding taxes paid on stock-based compensation	()		()
Decrease in debt, net	()		()
Net cash for financing activities	()		()

CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	()		()
Acquisition of business	()
Other, net	()		()
Net cash for investing activities	()		()

Effect of exchange rate changes on cash and cash investments	()

CASH AND CASH INVESTMENTS:
Decrease for the period	()		()
At January 1
At June 30	$		$

See notes to condensed consolidated financial statements.

Amounts may not add due to rounding.

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three and Six Months Ended June 30, 2024 and 2023

(In Millions, Except Per Common Share Data)

Total

Common

($ par value)

Paid-In
Capital

Retained (Deficit) Earnings

Accumulated Other Comprehensive Income (Loss)

Noncontrolling
Interest

Balance, January 1, 2023

()

Total comprehensive income

—

Shares issued

—

Shares retired:

Repurchased

()

—

Surrendered (non-cash)

()

—

()

—

Cash dividends declared

()

—

()

—

Stock-based compensation

—

Balance, March 31, 2023

()

Total comprehensive income (loss)

—

()

Shares issued

—

Shares retired:

Repurchased

()

—

Cash dividends declared

()

—

()

—

Dividends declared to noncontrolling interest

()

—

()

Stock-based compensation

—

Balance, June 30, 2023

()

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Concluded)

For the Three and Six Months Ended June 30, 2024 and 2023

(In Millions, Except Per Common Share Data)

Total

Common

($ par value)

Paid-In
Capital

Retained (Deficit) Earnings

Accumulated Other Comprehensive Income (Loss)

Noncontrolling
Interest

Balance, January 1, 2024

()

Total comprehensive income (loss)

—

()

Shares issued

—

Shares retired:

Repurchased

()

—

Surrendered (non-cash)

()

—

()

—

Cash dividends declared

()

—

()

—

Redemption of redeemable noncontrolling interest

—

Stock-based compensation

—

Balance, March 31, 2024

()

Total comprehensive income (loss)

—

()

Shares retired:

Repurchased

()

—

Cash dividends declared

()

—

()

—

Dividends declared to noncontrolling interest

()

—

()

Stock-based compensation

—

Balance, June 30, 2024

()

See notes to condensed consolidated financial statements.

Amounts may not add due to rounding.

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

million ($ million), net of cash acquired. Sauna360 has a portfolio of products that includes traditional, infrared, and wood-burning saunas as well as steam showers. The business is included within the Plumbing Products segment. In connection with this acquisition, we recognized $ million of indefinite-lived intangible assets, which is related to trademarks, and $ million of definite-lived intangible assets, primarily related to customer relationships. The definite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of years. We also recognized $ million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. During the fourth quarter of 2023, we updated the allocation of the purchase price to certain identifiable assets and liabilities based on analysis of information as of the acquisition date, which resulted in a $ million decrease to goodwill. The purchase price allocation for this acquisition is based on analysis of information as of the acquisition date that was available through June 30, 2024, and will be updated through the measurement period, if necessary.

In the first quarter of 2021, our Hansgrohe SE subsidiary acquired a percent equity interest in Easy Sanitary Solutions B.V. ("ESS"). The remaining percent equity interest in ESS was subject to a call and put option that was exercisable by Hansgrohe SE or the sellers, respectively, any time after December 31, 2023. The redemption value of the call and put option was the same and based on a floating EBITDA value. The call and put options were determined to be embedded within the redeemable noncontrolling interest and were recorded as temporary equity in the condensed consolidated balance sheets. We elected to adjust the redeemable noncontrolling interest to its full redemption amount directly into retained deficit.

In the first quarter of 2024, the sellers exercised their put option to sell the remaining percent equity interest in ESS for € million ($ million). The transaction was accounted for as an equity purchase transaction.

$ $ International Total$ $ $ Six Months Ended June 30, 2024Plumbing ProductsDecorative Architectural ProductsTotalPrimary geographic areas:North America$ $ $ International Total$ $ $

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

$ $ International Total$ $ $ Six Months Ended June 30, 2023Plumbing ProductsDecorative Architectural ProductsTotalPrimary geographic areas:North America$ $ $ International Total$ $ $

We recognized $ million and $ million of revenue for the three months ended June 30, 2024 and 2023, respectively, related to performance obligations settled in previous quarters of the same year. We recognized $ million of revenue for both the three and six months ended June 30, 2024, and $ million and $ million of revenue for the three and six months ended June 30, 2023, respectively, related to performance obligations settled in previous years.

Our contract asset balance was $ million and $ million at June 30, 2024 and December 31, 2023, respectively. Our contract liability balance was $ million and $ million at June 30, 2024 and December 31, 2023, respectively.

$ Provision for expected credit losses during the period Write-offs charged against the allowance()()Recoveries of amounts previously written off ()$

(A) In the second quarter of 2024, we recognized $ million of goodwill in our Decorative Architectural Products segment related to an immaterial acquisition.

million and $ million at June 30, 2024 and December 31, 2023, respectively, and principally included registered trademarks. The carrying value of our definite-lived intangible assets was $ million (net of accumulated amortization of $ million) at June 30, 2024 and $ million (net of accumulated amortization of $ million) at December 31, 2023, and principally included customer relationships.

to days. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

million at both June 30, 2024 and December 31, 2023. Of the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $ million and $ million at June 30, 2024 and December 31, 2023, respectively. All payments made under the program are recorded as a decrease in accounts payable and accrued liabilities, net, in our condensed consolidated statements of cash flows.

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

billion and a maturity date of April 26, 2027. Under the 2022 Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $ million with the current lenders or new lenders.

The 2022 Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries in U.S. dollars, European euros, British pounds sterling and certain other currencies for revolving credit loans, swingline loans and letters of credit. Borrowings under the revolving credit loans denominated in any agreed upon currency other than U.S. dollars are limited to the equivalent of $ million. We can also borrow swingline loans up to $ million and obtain letters of credit of up to $ million. Outstanding letters of credit under the 2022 Credit Agreement reduce our borrowing capacity and we had outstanding letters of credit under the 2022 Credit Agreement at June 30, 2024.

The 2022 Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding to 1.0, and (B) an interest coverage ratio, as adjusted for certain items, not less than to 1.0.

In order for us to borrow under the 2022 Credit Agreement, there must not be any default in our covenants in the 2022 Credit Agreement (i.e., in addition to the two financial covenants described above, principally limitations on subsidiary debt, negative pledge restrictions, and requirements relating to legal compliance, maintenance of our properties and insurance) and our representations and warranties in the 2022 Credit Agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, since December 31, 2021, no material ERISA or environmental non-compliance, and no material tax deficiency). We were in compliance with all covenants and borrowings were outstanding at June 30, 2024.

On April 26, 2022, we entered into a -day $ million senior unsecured delayed draw term loan (the "term loan") due April 26, 2023 with a syndicate of lenders. The term loan and commitments thereunder were subject to prepayment or termination at our option and the loans bore interest at SOFR plus a spread adjustment and %. The covenants, including the financial covenants, were substantially the same as those in the 2022 Credit Agreement. We repaid $ million during 2022 and the remaining $ million upon the maturity of the term loan on April 26, 2023.

On May 9, 2023, our Hansgrohe SE subsidiary entered into € million ($ million) of short-term borrowings to support working capital needs. The loans contained no financial covenants and the full amount remained borrowed and outstanding at a weighted average interest rate of % at June 30, 2023, and was fully repaid at December 31, 2023.

billion, compared with the aggregate carrying value of $ billion.

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

$ $ $ $ $ $ $ Decorative Architectural Products Total$ $ $ $ $ $ $ $ Our operations by geographic area were:North America$ $ $ $ $ $ $ $ International Total, as above$ $ $ $ General corporate expense, net()()()()Operating profit Other income (expense), net()()()()Income before income taxes$ $ $ $

(A) Inter-segment sales were not material.

percent for the three months ended June 30, 2024 and 2023, and percent for the six months ended June 30, 2024 and 2023. Our effective tax rate for the six months ended June 30, 2024 and 2023 was favorably impacted by $ million and $ million of income tax benefits, respectively. For both periods, the income tax benefits primarily resulted from stock-based compensation and a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitation.

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

$ $ $ Less: Allocation to unvested restricted stock awards Net income attributable to common shareholders$ $ $ $ Denominator:Basic common shares (based upon weighted average) Add: Dilutive effect of stock options and other stock-based incentives Diluted common shares

For the three and six months ended June 30, 2024 and 2023, we allocated dividends and undistributed earnings to the unvested restricted stock awards.

Number of restricted stock units Number of performance restricted stock units

Effective October 20, 2022, our Board of Directors authorized the repurchase, for retirement, of up to $ billion of shares of our common stock, exclusive of excise tax, in open-market transactions or otherwise. During the six months ended June 30, 2024, we repurchased and retired approximately million shares of our common stock (including million shares to offset the dilutive impact of restricted stock units granted in the six months ended June 30, 2024) for approximately $ million, inclusive of excise tax of $ million. At June 30, 2024, we had approximately $ billion remaining under the 2022 authorization.

and $ for the three and six months ended June 30, 2024, respectively, and $ and $ for the three and six months ended June 30, 2023, respectively.

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Concluded)

$ Accruals for warranties issued during the period Accruals related to pre-existing warranties Settlements made (in cash or kind) during the period()()Other, net (including currency translation and acquisitions)() Balance at end of period$ $


MASCO CORPORATION
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Due to changing market conditions, we are experiencing, and may continue to experience, lower market demand for our products. We have been experiencing, and may continue to experience, elevated commodity and other input costs, as well as employee-related cost inflation. We aim to offset the potential unfavorable impact of our costs and lower demand for our products with productivity improvements, pricing, and other initiatives.

We continue to execute our strategies of leveraging our strong brand portfolio, our industry-leading positions and the Masco Operating System, our methodology to drive growth and productivity, to create long-term shareholder value. We remain confident in the fundamentals of our business and long-term strategy. We believe that our strong financial position and cash flow generation, together with our investments in our industry-leading branded building products, our continued focus on innovation and customer service and disciplined capital allocation, will allow us to drive long-term growth and create value for our shareholders.

SECOND QUARTER 2024 AND THE FIRST SIX MONTHS 2024 VERSUS
SECOND QUARTER 2023 AND THE FIRST SIX MONTHS 2023

Consolidated Results of Operations

We report our financial results in accordance with accounting principles generally accepted in the United States of America ("GAAP"). However, we believe that certain non-GAAP performance measures and ratios used in managing the business may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, our reported results under GAAP. Within the tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes.

The following discussion of consolidated results of operations refers to the three and six months ended June 30, 2024 compared to the same periods of 2023.

NET SALES

Below is a summary of our net sales, in millions, for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024		2023		Change		2024		2023		Change
Net sales, as reported	$	2,091	$	2,127	(2)	%	$	4,017	$	4,106	(2)	%
Acquisitions	(23)		—				(45)		—

Net sales, excluding acquisitions	2,068		2,127		(3)	%	3,973		4,106		(3)	%
Currency translation	14		—				18		—
Net sales, excluding acquisitions and the effect of currency translation	$	2,082	$	2,127	(2)	%	$	3,991	$	4,106	(3)	%

Our net sales for the three months ended June 30, 2024 were $2,091 million, which decreased two percent compared to the three months ended June 30, 2023. Excluding acquisitions and the effect of currency translation, net sales decreased two percent. Our net sales for the three months ended June 30, 2024 decreased primarily due to lower sales volume driven by paints and other coating products which decreased sales by two percent and unfavorable sales mix of plumbing products which decreased sales by one percent.

Our net sales for the six months ended June 30, 2024 were $4,017 million, which decreased two percent compared to the six months ended June 30, 2023. Excluding acquisitions and the effect of currency translation, net sales decreased three percent. Our net sales for the six months ended June 30, 2024 decreased primarily due to lower sales volume across the entire company which decreased sales by three percent and unfavorable sales mix of plumbing products which decreased sales by one percent. These amounts were partially offset by higher net selling prices which increased sales by one percent, driven by plumbing products.

RESULTS OF OPERATIONS

Below is a summary of our results of operations for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,								Six Months Ended June 30,
	2024			2023			Favorable / (Unfavorable)		2024			2023			Favorable / (Unfavorable)
Net sales	$	2,091		$	2,127		(2)	%	$	4,017		$	4,106		(2)	%
Cost of sales	(1,306)			(1,358)			4	%	(2,547)			(2,668)			5	%
Gross profit	$	785		$	769		2	%	$	1,470		$	1,438		2	%
Gross margin	37.5		%	36.2		%	130 bps		36.6		%	35.0		%	160 bps

Selling, general and administrative expenses	$	(388)		$	(366)		(6)	%	$	(755)		$	(720)		(5)	%
Selling, general and administrative expenses as a percent of net sales	(18.6)		%	(17.2)		%	(140) bps		(18.8)		%	(17.5)		%	(130) bps

Operating profit	$	397		$	403		(1)	%	$	715		$	718		—	%
Operating profit margin	19.0		%	18.9		%	10 bps		17.8		%	17.5		%	30 bps

Three Months Ended June 30, 2024

Our gross profit for the three months ended June 30, 2024 was $785 million, which increased two percent, was positively impacted by cost savings initiatives and lower commodity costs, partially offset by unfavorable sales mix and two percent due to lower sales volume.

Our selling, general and administrative expenses for the three months ended June 30, 2024 were $388 million, which increased six percent, primarily impacted by higher employee-related costs.

Our operating profit for the three months ended June 30, 2024 was $397 million, which decreased one percent, was negatively impacted by higher selling, general and administrative expenses, partially offset by increased gross profit.

Six Months Ended June 30, 2024

Our gross profit for the six months ended June 30, 2024 was $1,470 million, which increased two percent, was positively impacted by cost savings initiatives, two percent due to higher net selling prices, as well as lower commodity costs. These amounts were partially offset by three percent due to lower sales volume, as well as unfavorable sales mix.

Our selling, general and administrative expenses for the six months ended June 30, 2024 were $755 million, which increased five percent, primarily impacted by higher employee-related costs.

Our operating profit for the six months ended June 30, 2024 was $715 million, which remained relatively flat, was negatively impacted by higher selling, general and administrative expenses, mostly offset by increased gross profit.

OTHER INCOME (EXPENSE), NET

Below is a summary of our other income (expense), net, in millions, for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024		2023		Favorable / (Unfavorable)		2024		2023		Favorable / (Unfavorable)
Interest expense	$	(26)	$	(28)	7	%	$	(50)	$	(56)	11	%
Other, net	(5)		(1)		(400)	%	(10)		(3)		(233)	%
Other income (expense), net	$	(31)	$	(29)	(7)	%	$	(61)	$	(59)	(3)	%

INCOME TAXES

Below is a summary of our income tax expense, in millions, and our effective tax rate for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,							Six Months Ended June 30,
	2024			2023			Favorable / (Unfavorable)	2024			2023			Favorable / (Unfavorable)
Income tax expense	$	(94)		$	(96)		2%	$	(154)		$	(160)		4%
Effective tax rate	(26)		%	(26)		%	— bps	(24)		%	(24)		%	— bps

Our effective tax rate for the six months ended June 30, 2024 and 2023 was favorably impacted by $16 million and $12 million of income tax benefits, respectively. For both periods, the income tax benefits primarily resulted from stock-based compensation and a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitation.

NET INCOME AND INCOME PER COMMON SHARE - ATTRIBUTABLE TO MASCO CORPORATION

Below is a summary of our net income, in millions, and diluted income per common share for the three and six months ended June 30, 2024 and 2023:


	Three Months Ended June 30,						Six Months Ended June 30,
	2024		2023		Favorable / (Unfavorable)		2024		2023		Favorable / (Unfavorable)
Net income	$	258	$	263	(2)	%	$	473	$	468	1	%
Diluted income per common share	$	1.17	$	1.16	1	%	$	2.14	$	2.07	3	%

Business Segment and Geographic Area Results

The following tables set forth our net sales and operating profit information by business segment and geographic area, dollars in millions.


	Three Months Ended June 30,				Percent Change		Six Months Ended June 30,				Percent Change
	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
Net Sales:
Plumbing Products	$	1,253	$	1,225	2	%	$	2,445	$	2,447	—	%
Decorative Architectural Products	838		902		(7)	%	1,572		1,659		(5)	%
Total	$	2,091	$	2,127	(2)	%	$	4,017	$	4,106	(2)	%

North America	$	1,695	$	1,718	(1)	%	$	3,220	$	3,273	(2)	%
International	397		409		(3)	%	797		833		(4)	%
Total	$	2,091	$	2,127	(2)	%	$	4,017	$	4,106	(2)	%


	Three Months Ended June 30,				Percent Change		Six Months Ended June 30,				Percent Change
	2024		2023		2024 vs. 2023		2024		2023		2024 vs. 2023
Operating Profit:
Plumbing Products	$	247	$	244	1	%	$	472	$	450	5	%
Decorative Architectural Products	174		180		(3)	%	299		312		(4)	%
Total	$	421	$	424	(1)	%	$	771	$	762	1	%

North America	$	360	$	358	1	%	$	645	$	624	3	%
International	61		66		(8)	%	126		138		(9)	%
Total	421		424		(1)	%	771		762		1	%
General corporate expense, net	(24)		(21)		14	%	(55)		(44)		25	%
Total operating profit	$	397	$	403	(1)	%	$	715	$	718	—	%

The following discussion of business segment and geographic area results refers to the three and six months ended June 30, 2024 compared to the same periods of 2023. Changes in operating profit in the following business segment and geographic area results discussion exclude general corporate expense, net.

BUSINESS SEGMENT RESULTS DISCUSSION

Plumbing Products

Sales

Net sales in the Plumbing Products segment increased two percent for the three months ended June 30, 2024, and remained flat for the six months ended June 30, 2024. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased three percent and one percent for the three and six months ended June 30, 2024, respectively. Higher net selling prices increased sales by two percent and the acquisition of Sauna360 Group Oy ("Sauna360") increased sales by two percent for both the three and six months ended June 30, 2024. For the three months ended June 30, 2024, these amounts were partially offset by unfavorable sales mix which decreased sales by one percent. For the six months ended June 30, 2024, these amounts were mostly offset by lower sales volume which decreased sales by three percent and unfavorable sales mix which decreased sales by one percent.

Operating Results

Operating profit in the Plumbing Products segment for the three and six months ended June 30, 2024 was positively impacted by higher net selling prices and cost savings initiatives. These amounts were partially offset by lower sales volume for the six months ended June 30, 2024 and unfavorable sales mix and increased employee-related costs for the three and six months ended June 30, 2024.

Decorative Architectural Products

Sales

Net sales in the Decorative Architectural Products segment decreased seven percent and five percent for the three and six months ended June 30, 2024, respectively. These decreases were due primarily to lower sales volume for paints and other coating products and builders' hardware products and lower net selling prices for paints and other coating products for both periods.

Operating Results

Operating profit in the Decorative Architectural Products segment for the three and six months ended June 30, 2024 was negatively impacted by lower net selling prices and lower sales volume, partially offset by lower commodity costs and cost savings initiatives. For the three months ended June 30, 2024, operating profit was also positively impacted by lower marketing costs.

GEOGRAPHIC AREA RESULTS DISCUSSION

North America

Sales

North America net sales decreased one percent and two percent for the three and six months ended June 30, 2024, respectively. Lower sales volume decreased sales by two percent and three percent for the three and six months ended June 30, 2024, respectively, and unfavorable sales mix decreased sales by one percent for both periods. This was partially offset by the acquisition of Sauna360 which increased sales by one percent for both periods.

Operating Results

North America operating profit for the three and six months ended June 30, 2024 was positively impacted by cost saving initiatives and lower commodity costs. For the three and six months ended June 30, 2024, these amounts were partially offset by lower sales volume, increased employee-related costs and unfavorable sales mix.

International

Sales

International net sales decreased three percent and four percent for the three and six months ended June 30, 2024, respectively. In local currencies (including sales in currencies outside their respective functional currencies), net sales decreased one percent and three percent for the three and six months ended June 30, 2024, respectively. Lower sales volume decreased sales by two percent for the six months ended June 30, 2024 and unfavorable sales mix decreased sales by two percent and one percent for the three and six months ended June 30, 2024, respectively. These amounts were partially offset by higher net selling prices which increased sales by one percent for both periods.

Operating Results

International operating profit for the three and six months ended June 30, 2024 was negatively impacted by unfavorable sales mix and unfavorable foreign currency translation. For the six months ended June 30, 2024, operating profit was also negatively impacted by lower sales volume. For the three and six months ended June 30, 2024, these amounts were partially offset by cost saving initiatives and increased net selling prices.

Liquidity and Capital Resources

Overview of Capital Structure

We had cash and cash investments of approximately $398 million and $634 million at June 30, 2024 and December 31, 2023, respectively. Our cash and cash investments consist of overnight interest bearing money market demand accounts, time deposit accounts, and money market mutual funds containing government securities and treasury obligations. While we attempt to diversify these investments in a prudent manner to minimize risk, it is possible that future changes in the financial markets could affect the security or availability of these investments. Of the cash and cash investments we held at June 30, 2024 and December 31, 2023, $284 million and $323 million, respectively, was held in our foreign subsidiaries. If these funds were needed for our operations in the U.S., their repatriation into the U.S. would not result in significant additional U.S. income tax or foreign withholding tax, as we have recorded such taxes on substantially all undistributed foreign earnings, except for those that are legally restricted.

Our current ratio was 1.8 to 1 and 1.7 to 1 at June 30, 2024 and December 31, 2023, respectively.

We believe that our present cash balance and cash flows from operations, and borrowing availability under our revolving credit agreement, are sufficient to fund our near-term working capital and other investment needs. We believe that our longer-term working capital and other general corporate requirements will be satisfied through cash flows from operations and, to the extent necessary, from bank borrowings and future financial market activities. However, due to the changing market conditions and its impact on our customers and suppliers, we are unable to fully estimate the extent of the impact that the changing market conditions may have on our future financial condition.

Credit Agreement

On April 26, 2022, we entered into a revolving credit agreement (the “2022 Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of April 26, 2027.

Under the 2022 Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $500 million with the current lenders or new lenders. See Note H to the condensed consolidated financial statements for additional information.

The 2022 Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) an interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0. We were in compliance with all covenants and no borrowings were outstanding at June 30, 2024.

364-day Term Loan

On April 26, 2022, we entered into a 364-day $500 million senior unsecured delayed draw term loan (the "term loan") due April 26, 2023 with a syndicate of lenders. The term loan and commitments thereunder were subject to prepayment or termination at our option and the loans bore interest at SOFR plus a spread adjustment and 0.70%. The covenants, including the financial covenants, were substantially the same as those in the 2022 Credit Agreement. We repaid $300 million during 2022 and the remaining $200 million upon the maturity of the term loan on April 26, 2023.

Other Liquidity and Capital Resource Activities

On May 9, 2023, our Hansgrohe SE subsidiary entered into €70 million ($77 million) of short-term borrowings to support working capital needs. The loans contained no financial covenants and the full amount remained borrowed and outstanding at a weighted average interest rate of 4.173% at June 30, 2023, and was fully repaid at December 31, 2023.

As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including extending payment terms. We also facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. The amounts confirmed as valid under the program and included in accounts payable were $53 million at both June 30, 2024 and December 31, 2023. Of the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $21 million and $28 million at June 30, 2024 and December 31, 2023, respectively. All payments made under the program are recorded as a decrease in accounts payable and accrued liabilities, net, in our condensed consolidated statements of cash flows. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the program. We do not believe such risk would have a material impact on our working capital or cash flows, as substantially all of our payments are made outside of the program.

Share Repurchases

Effective October 20, 2022, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock, exclusive of excise tax, in open-market transactions or otherwise. During the six months ended June 30, 2024, we repurchased and retired approximately 4.1 million shares of our common stock (including 0.4 million shares to offset the dilutive impact of restricted stock units granted in the six months ended June 30, 2024) for approximately $292 million, inclusive of excise tax of $2 million. At June 30, 2024, we had approximately $1.4 billion remaining under the 2022 authorization.

Cash Flows

For the six months ended June 30, 2024, net cash provided by operations was $252 million, primarily driven by operating profit, partially offset by changes in working capital.

For the six months ended June 30, 2024, net cash used for financing activities was $404 million, primarily due to $290 million for the repurchase and retirement of our common stock, $128 million for the payment of cash dividends, $33 million for employee withholding taxes paid on stock-based compensation, $15 million for the purchase of the remaining equity interest in Easy Sanitary Solutions B.V., and $12 million for dividends paid to noncontrolling interest. These uses of cash were partially offset by $75 million of proceeds from the exercise of stock options.

For the six months ended June 30, 2024, net cash used for investing activities was $80 million, primarily driven by $74 million of capital expenditures.

Cautionary Statement Concerning Forward-Looking Statements

This Report contains statements that reflect our views about our future performance and constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "outlook," "believe," "anticipate," "appear," "may," "will," "should," "intend," "plan," "estimate," "expect," "assume," "seek," "forecast," and similar references to future periods. Our views about future performance involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements.

Our future performance may be affected by the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands, to develop innovative products and respond to changing consumer purchasing practices and preferences, our ability to maintain our public image and reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials, our dependence on suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse workforce, risks associated with cybersecurity vulnerabilities, threats and attacks and risks associated with our reliance on information systems and technology.

These and other factors are discussed in detail in Item 1A. "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other filings we make with the Securities and Exchange Commission. Any forward-looking statement made by us speaks only as of the date on which it was made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.


MASCO CORPORATION
Item 4.
CONTROLS AND PROCEDURES

a.Evaluation of Disclosure Controls and Procedures.

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, 2024, the Company's disclosure controls and procedures were effective.

b. Changes in Internal Control over Financial Reporting.

In connection with the evaluation of the Company's internal control over financial reporting that occurred during the quarter ended June 30, 2024, which is required under the Securities Exchange Act of 1934 by paragraph (d) of Exchange Rules 13a-15 or 15d-15 (as defined in paragraph (f) of Rule 13a-15), management determined that there was no change that materially affected or is reasonably likely to materially affect internal control over financial reporting.

MASCO CORPORATION

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings involving us is set forth in Note L to our condensed consolidated financial statements included in Part I, Item 1 of this Report and is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors of the Company set forth in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding the repurchase of our common stock for the three months ended June 30, 2024 under the 2022 share repurchase authorization:


Period	Total Number Of Shares Purchased	Average Price Paid Per Common Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans or Programs	Maximum Value Of Shares That May Yet Be Purchased Under The Plans Or Programs
4/1/24 - 4/30/24	776,908	$	73.38	776,908	$	1,442,487,966
5/1/24 - 5/31/24	776,946	$	70.03	776,946	$	1,388,081,164
6/1/24 - 6/30/24	463,613	$	67.74	463,613	$	1,356,677,192
Total for the quarter	2,017,467	$	70.79	2,017,467	$	1,356,677,192

Item 5. Other Information

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements

During the three months ended June 30, 2024, none of our officers or directors or any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

MASCO CORPORATION

PART II. OTHER INFORMATION, Continued

Item 6. Exhibits


1 0.a						Non-Employee Directors Equity Program under Masco Corporation's 2024 Long Term Stock Incentive Plan.
1 0.b						Form of Restricted Stock Unit Award Agreement for Non-Employee Directors (for awards on or after May 10, 2024).
31.a						Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
31.b						Certification by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
32						Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
101						The following financial information from Masco Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, and (vi) Notes to Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

MASCO CORPORATION

PART II. OTHER INFORMATION, Concluded

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


			MASCO CORPORATION
			By:			/s/ Richard J. Westenberg
						Richard J. Westenberg Vice President, Chief Financial Officer and Treasurer

July 25, 2024

MASCO CORP /DE/ - Quarter Report: 2024 June (Form 10-Q)

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