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.

Is now the time to buy MAS? Find out in our full research report (it’s free).

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.

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.

• 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.

• 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.”

• 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.

• 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.

• 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."

Drivers of Future Performance

Management’s outlook for the coming quarters centers on mitigating tariff impacts, adapting to shifting consumer patterns, and executing cost control while navigating a period of leadership change.

• Tariff mitigation remains critical: The company’s ability to offset tariff costs through price increases and supply chain adjustments will be a primary factor in maintaining margins, with sourcing changes expected to play a larger role in 2026.

• Consumer demand uncertainty: Ongoing softness in the DIY market and potential volume declines from higher pricing pose risks to near-term revenue growth, particularly as the broader economic environment remains volatile.

• Leadership transition implications: The transition to a new CEO introduces some operational uncertainty, but management emphasized continuity in strategic priorities and execution, aiming to preserve Masco’s margin structure and market share.

Top Analyst Questions

• Michael Dahl (JPMorgan): Asked about demand trends through April and expectations for Q2, with management citing continued strength in e-commerce and pro paint, but persistent DIY and retail softness.

• Stephen Kim (Evercore ISI): Probed the drivers behind DIY paint weakness and whether consumer stockpiling or demographic shifts played a role. Allman identified a long-term move from DIY to hiring professionals and higher price sensitivity among DIY customers.

• Sam Reid (Wells Fargo): Inquired about pricing strategy across channels and performance of brands like Delta versus Brizo, with Allman noting premium brands were more resilient and pressure remained in retail and DIY segments.

• Anthony Pettinari (Citi): Focused on sourcing changes and tariff exposure outside China, with Westenberg confirming ongoing diversification of supply chains and noting most U.S. imports from Mexico qualify for USMCA exemption.

• Matthew Bouley (Barclays): Sought clarification on the timeline and magnitude of tariff mitigation actions, with management indicating targeted full mitigation by the end of 2026, primarily through sourcing shifts rather than further price increases.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) progress on Masco’s tariff mitigation efforts, including pricing actions and supply chain adjustments, (2) signs of stabilization or recovery in the DIY paint market, and (3) the effectiveness of the leadership transition as John Nooty assumes the CEO role. We will also assess the company’s ability to sustain share gains in pro paint and e-commerce channels amid ongoing macroeconomic uncertainty.

Masco currently trades at a forward P/E ratio of 14.3×. In the wake of earnings, is it a buy or sell? Find out in our free research report.

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