mas-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 1-5794

Masco Corporation

(Exact name of Registrant as Specified in its Charter)

Delaware

38-1794485

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer Identification No.)

17450 College Parkway,

Livonia,

Michigan

48152

(Address of Principal Executive Offices)

(Zip Code)

(313) 274-7400

(Registrant's telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange
On Which Registered

Common Stock, $1.00 par value

MAS

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class						Shares Outstanding at June 30, 2023
Common stock, par value $1.00 per share						224,926,048

MASCO CORPORATION

INDEX

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited):

Condensed Consolidated Balance Sheets - as of June 30, 2023 and December 31, 2022

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2023 and 2022

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022

Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended June 30, 2023 and 2022

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

MASCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

June 30, 2023 and December 31, 2022

(In Millions, Except Share Data)


	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash investments	$	380	$	452

Receivables	1,371		1,149
Inventories	1,144		1,236
Prepaid expenses and other	112		109

Total current assets	3,007		2,946
Property and equipment, net	1,063		975
Goodwill	540		537
Other intangible assets, net	337		350
Operating lease right-of-use assets	264		266
Other assets	97		113

Total assets	$	5,308	$	5,187

LIABILITIES
Current liabilities:
Accounts payable	$	958	$	877
Notes payable	79		205
Accrued liabilities	712		807

Total current liabilities	1,749		1,889
Long-term debt	2,946		2,946
Noncurrent operating lease liabilities	252		255
Other liabilities	333		339

Total liabilities	$	5,280	$	5,429

Commitments and contingencies (Note L)
Redeemable noncontrolling interest	21		20

EQUITY
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2023 – 224,800,000; 2022 – 225,300,000	225		225
Preferred shares authorized: 1,000,000; Issued and outstanding: 2023 and 2022 – None	—		—
Paid-in capital	13		16
Retained deficit	(671)		(947)
Accumulated other comprehensive income	241		226
Total Masco Corporation's shareholders' deficit	(192)		(480)
Noncontrolling interest	199		218
Total equity	7		(262)
Total liabilities and equity	$	5,308	$	5,187

See notes to condensed consolidated financial statements.

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three and Six Months Ended June 30, 2023 and 2022

(In Millions, Except Per Common Share Data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net sales	$	2,127	$	2,352	$	4,106	$	4,553
Cost of sales	1,358		1,583		2,668		3,080
Gross profit	769		769		1,438		1,473
Selling, general and administrative expenses	366		361		720		712


Operating profit	403		408		718		761
Other income (expense), net:
Interest expense	(28)		(28)		(56)		(53)
Other, net	(1)		17		(3)		16
	(29)		(11)		(59)		(37)
Income before income taxes	374		397		659		724
Income tax expense	96		103		160		178
Net income	278		294		499		546


Less: Net income attributable to noncontrolling interest	15		16		31		35
Net income attributable to Masco Corporation	$	263	$	278	$	468	$	511

Income per common share attributable to Masco Corporation:
Basic:


Net income	$	1.17	$	1.19	$	2.07	$	2.17
Diluted:


Net income	$	1.16	$	1.18	$	2.07	$	2.15

See notes to condensed consolidated financial statements.

MASCO CORPORATION

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

For the Three and Six Months Ended June 30, 2023 and 2022

(In Millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	278	$	294	$	499	$	546
Less: Net income attributable to noncontrolling interest	15		16		31		35
Net income attributable to Masco Corporation	$	263	$	278	$	468	$	511
Other comprehensive (loss) income, net of tax
Cumulative translation adjustment	$	(7)	$	(55)	$	15	$	(66)

Pension and other post-retirement benefits	—		1		—		2

Other comprehensive (loss) income, net of tax	(7)		(54)		15		(64)
Less: Other comprehensive loss attributable to noncontrolling interest	(5)		(8)		—		(12)
Other comprehensive (loss) income attributable to Masco Corporation	$	(2)	$	(46)	$	15	$	(52)
Total comprehensive income	$	271	$	240	$	514	$	482
Total comprehensive income attributable to noncontrolling interest	10		8		31		23
Total comprehensive income attributable to Masco Corporation	$	261	$	232	$	483	$	459

See notes to condensed consolidated financial statements.

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Six Months Ended June 30, 2023 and 2022

(In Millions)


	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$	632	$	662
Increase in receivables	(243)		(296)
Decrease (increase) in inventories	95		(159)
Decrease in accounts payable and accrued liabilities, net	(36)		(33)
Net cash from operating activities	448		174

CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:

Purchase of Company common stock	(81)		(914)
Cash dividends paid	(129)		(131)
Dividends paid to noncontrolling interest	(49)		—


Proceeds from short-term borrowings	77		—
Proceeds from term loan	—		500
Payment of term loan	(200)		—

Proceeds from the exercise of stock options	23		1
Employee withholding taxes paid on stock-based compensation	(23)		(17)

Decrease in debt, net	(4)		(7)


Net cash for financing activities	(386)		(568)

CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(133)		(70)









Other, net	(4)		(4)
Net cash for investing activities	(137)		(74)

Effect of exchange rate changes on cash and cash investments	3		(18)

CASH AND CASH INVESTMENTS:
Decrease for the period	(72)		(486)
At January 1	452		926
At June 30	$	380	$	440

See notes to condensed consolidated financial statements.

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three and Six Months Ended June 30, 2023 and 2022

(In Millions, Except Per Common Share Data)


	Total		Common Shares ($1 par value)		Paid-In Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest
Balance, January 1, 2022	$	56	$	241	$	—	$	(652)	$	232	$	235
Total comprehensive income (loss)	242		—		—		233		(6)		15
Shares issued	1		1		—		—		—		—
Shares retired:
Repurchased	(364)		(6)		(27)		(331)		—		—
Surrendered (non-cash)	(17)		—		—		(17)		—		—
Cash dividends declared	(67)		—		—		(67)		—		—

Redeemable noncontrolling interest - redemption adjustment	1		—		—		1		—		—
Stock-based compensation	27		—		27		—		—		—
Balance, March 31, 2022	$	(121)	$	236	$	—	$	(833)	$	226	$	250
Total comprehensive income (loss)	240		—		—		278		(46)		8

Shares retired:
Repurchased	(550)		(11)		(5)		(534)		—		—

Cash dividends declared	(64)		—		—		(64)		—		—
Dividends declared to noncontrolling interest	(79)		—		—		—		—		(79)
Redeemable noncontrolling interest - redemption adjustment	(1)		—		—		(1)		—		—
Stock-based compensation	12		—		12		—		—		—
Balance, June 30, 2022	$	(563)	$	225	$	7	$	(1,154)	$	180	$	179

MASCO CORPORATION

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

For the Three and Six Months Ended June 30, 2023 and 2022

(In Millions, Except Per Common Share Data)


	Total		Common Shares ($1 par value)		Paid-In Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest
Balance, January 1, 2023	$	(262)	$	225	$	16	$	(947)	$	226	$	218
Total comprehensive income	243		—		—		205		17		21
Shares issued	6		1		5		—		—		—
Shares retired:
Repurchased	(56)		(1)		(32)		(23)		—		—
Surrendered (non-cash)	(17)		—		—		(17)		—		—
Cash dividends declared	(65)		—		—		(65)		—		—


Stock-based compensation	11		—		11		—		—		—
Balance, March 31, 2023	$	(140)	$	225	$	—	$	(847)	$	243	$	239
Total comprehensive income (loss)	270		—		—		263		(2)		9
Shares issued	11		1		10		—		—		—
Shares retired:
Repurchased	(25)		(1)		(1)		(23)		—		—

Cash dividends declared	(64)		—		—		(64)		—		—
Dividends declared to noncontrolling interest	(49)		—		—		—		—		(49)

Stock-based compensation	4		—		4		—		—		—
Balance, June 30, 2023	$	7	$	225	$	13	$	(671)	$	241	$	199

See notes to condensed consolidated financial statements.

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A. ACCOUNTING POLICIES

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to fairly state our financial position at June 30, 2023, our results of operations and comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022, cash flows for the six months ended June 30, 2023 and 2022, and changes in shareholders' equity for the three and six months ended June 30, 2023 and 2022. The condensed consolidated balance sheet at December 31, 2022 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted ("GAAP") in the United States of America.

Recently Adopted Accounting Pronouncements. In September 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-04, "Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which requires that an entity that uses a supplier finance program in connection with the purchase of goods or services disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude. We adopted this standard for annual periods on a retrospective basis, including interim periods within those annual periods, beginning January 1, 2023, except for the amendment on rollforward information, which is effective prospectively for annual periods beginning January 1, 2024 and will be adopted at that time. The adoption of this guidance modified our disclosures, but did not have an impact on our financial position and results of operations.

Recently Issued Accounting Pronouncements. In March 2023, the FASB issued ASU 2023-02, "Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method,” which permits an entity to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met, regardless of the tax credit program from which the income tax credits are received. ASU 2023-02 is effective for annual periods on either a modified retrospective or retrospective basis, including interim periods within those annual periods, beginning January 1, 2024. Early adoption is permitted. We plan to adopt this standard beginning January 1, 2024, and we are currently reviewing the provisions of this standard and the impact, if any, the adoption of this guidance will have on our financial position and results of operations.

B. REVENUE

Our revenues are derived from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions:


	Three Months Ended June 30, 2023
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	816	$	902	$	1,718
International, principally Europe	409		—		409
Total	$	1,225	$	902	$	2,127

	Six Months Ended June 30, 2023
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,614	$	1,659	$	3,273
International, principally Europe	833		—		833
Total	$	2,447	$	1,659	$	4,106

MASCO CORPORATION

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

B. REVENUE (Concluded)


	Three Months Ended June 30, 2022
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	926	$	979	$	1,905
International, principally Europe	447		—		447
Total	$	1,373	$	979	$	2,352

	Six Months Ended June 30, 2022
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:

SEC Form 10-Q filed by Masco Corporation