Masco Corporation

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 Jon Nudi, 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. 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 in 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 Jon.

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 at our Investor Day in May, we are committed to driving above-market growth through our 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 5, 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 Fossil 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 J.D. Power Customer Service Certification for the fifth straight year, a testament to the team's unwavering focus on customer satisfaction and its longstanding commitment to delivering industry-leading service and support. Then lastly, we celebrated Hans Grohe'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 to 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 would 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 $1.64 per share. Turning to our segments, plumbing product sales decreased 3% 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 6% in local currency, driven by the strategic investments, which accounted for more than half of this year's 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 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 our 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 pro paint 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 Behr 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 Hansgrohe 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 refund 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 low 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 are 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.