Masco Corporation

Good morning, ladies and gentlemen. Welcome to Masco Corporation's third quarter 2026 earnings call. As a reminder, today's conference call is being recorded for replay purposes. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, please press star 1 again. I will now hand the conference over to Renee Benedict, Vice President, Investor Relations and Corporate FP&A. Renee, please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Masco Corporation's 2026 Third 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 third 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 risks 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 delivered strong third quarter results, reflecting the disciplined execution of our teams and the resilience of our business in the face of a challenging macroeconomic backdrop. Our strategy is clear, drive above market growth by investing in our industry leading brands, expanding our commercial capabilities and enhancing our operational excellence. This quarter, we made tangible progress across each of these priorities. If you turn to slide five, I'll highlight a few examples of how we're advancing our strategy across the business. First, we rounded out our executive committee with the appointments of Brad Hiranaga as Masco's chief marketing officer and Yaro and Ben David as chief technology and AI officer. Together, they bring deep expertise, which will enhance our capabilities in two increasingly critical areas. Advance our strategic priorities and further position Masco for long-term growth and success. Second, I was honored to attend the Home Depot's 2026 supplier partnership meeting earlier this month, where Delta Fossett Company was named Interconnected Partner of the Year and Bearpink Company was named Marketing Partner of the Year. These recognitions demonstrate the strength of our customer partnerships and our team's continued focus on delivering innovative solutions. Lastly, Delta further reinforced its leadership position with two important brand distinctions. Based on 2025 US dollar sales, Delta is the number one FOSA brand in the US. In addition, a third-party survey ranked Delta the number one go-to brand for professionals. This broad appeal among homeowners and trade professionals underscores the strength of the Delta brand. Collectively, these accomplishments demonstrate how we are continuing to strengthen our capabilities, deepen our customer partnerships, and build on the leadership of our brands to drive long-term growth. I'll turn to our third quarter financial results. Please refer to slide six. Our net sales in the quarter increased 3%. In local currency and excluding the divestiture of the Bristol business, which we announced in July, sales increased 4%. Operating profit was $351 million, an increase of 13% over the prior year. Operating profit margin was 17.9%, an increase of 160 basis points. and earnings per share grew 23% during the quarter to $1.19 per share. We are very pleased with these results, which demonstrate the resilience of our business and our ability to execute in a dynamic external environment. Turning to our segments, plumbing product sales increased 4% or 5% excluding the impacts of our divestiture of Bristol and unfavorable currency. North American sales increased 8% in local currency, led by our Delta business, which delivered strong growth in the third quarter. Recent product launches at Delta are gaining traction, including the new Banachi bath collection, which is performing well across both showroom and e-commerce channels. Our premium and luxury brands also continue to perform well, supported by resilient demand at the higher end of the market. Across our Breezo Newport Brass brands, we have earned 12 product design awards this year alone. and we're seeing encouraging progress from our continued digital investments, which are making it easier for customers to find, choose, and install our products. Overall, this performance builds on solid year-to-date North America plumbing results, with sales up 3%, reflecting the strength of our brands and innovative products, and reinforcing our confidence in the long-term growth opportunity in this business. Turning to international plumbing, sales decreased 5% in local currency, or 1%, excluding the Bristol divestiture. Reflecting lower sales against a difficult prior year comparison in some European markets, as well as continued weakness in China. We remain confident in our core Hansgrohe international plumbing business, the strength of the brand, innovative products and geographic market opportunities. We feel good about the solid year to day performance with sales up 1% local currency and excluding the divestiture. Operating profit for the plumbing product segment grew 25% to $256 million, and operating margin expanded 320 basis points to 19.1%. Turning to our decorative architectural segment, sales were flat compared to the prior year. Propaint delivered another quarter of strong mid-single-digit growth. With more consumers turning to professionals for the painting projects, we believe Behr is well-positioned to capture this opportunity through its combination of innovative, high-quality products, compelling value, and exceptional service. Our investments alongside the Home Depot continue to gain traction, and we are retaining existing pro customers while attracting new professional painters to the Behr brand. DIY paint sales decreased to low single digits, largely in line with our expectations, given the continued softness in the market. Despite the near-term environment, we remain focused on strengthening the consumer experience and investing to make color selection easier and more engaging. This includes continuing to advance ChatYou, our AI-powered color selection tool, along with recently launching a new marketing campaign, highlighting bear pain as having the best quality at the best price. Together, these investments are further differentiating bear and positioning the business to capitalize when market conditions improve. Operating profit for this segment was roughly flat compared to the prior year at $126 million, and the operating margin was 20.1%. Turning to capital allocation, our free cash flow and balance sheet remains strong, allowing us to return $322 million to shareholders in the quarter through dividends and share repurchases. As we look ahead, we expect uncertainty in the macroeconomic and geopolitical environment to continue through the balance of the year and likely into 2027. Against this backdrop, we remain focused on executing our strategy and driving above market growth. We'll also continue to implement the restructuring actions we previously discussed to better align our cost structure. Based on our strong execution and operational performance year to date, we are raising our 2026 earnings per share guidance to $4.65 to $4.75 from our previous range of $4.40 to $4.60. While we continue to expect sales to increase low single digits in 2026, our operating profit margin outlook has improved. We now expect operating profit margin to be in the range of 18 to 18.5% compared to our prior guidance of approximately 18%. While the near-term environment remains uncertain, we are encouraged by the strength and resilience of our business and our ability to continue to execute. Our confidence extends beyond this quarter. The long-term fundamentals supporting repair and remodel activity remain compelling. including strong home equity levels and aging housing stock to pent up demand for home improvement projects. And importantly, we're not waiting for the market to improve. We're investing in our industry leading brands and innovative products, strengthening our customer partnerships and driving greater efficiency across the organization. Combined with our strong cash generation, these actions give us confidence in our ability to outperform in our markets and to create long-term shareholder value. With that, I'll now turn the call over to Rick to go over our third quarter results and 2026 outlook in more detail.