Masco MAS · USD

O. SEGMENT INFORMATIONOur reportable segments are as follows:Plumbing Products – principally includes faucets, plumbing system components and valves, showerheads and handheld showers, bath hardware and accessories, bathing units, tubs and shower bases and enclosures, shower drains, steam shower systems, water filtration systems, sinks, kitchen accessories, spas, exercise pools, aquatic fitness systems, and saunas.Decorative Architectural Products – principally includes paints and other coating products, paint applicators and accessories, cabinet and other hardware, shower doors and, until the divestiture of Kichler in the third quarter of 2024, lighting fixtures, ceiling fans, landscape lighting and LED lighting systems.The above products are sold to the residential repair and remodel and to a lesser extent the new home construction markets through home center retailers, online retailers, wholesalers and distributors, mass merchandisers, hardware stores, direct to the consumer and homebuilders.Our operations are principally located in North America and Europe. Our country of domicile is the United States of America.Other than those assets specifically identified within a segment, corporate assets consist primarily of property and equipment, ROU assets, deferred tax assets, cash and cash investments and other investments. Our accounting policies are consistently applied by our segments. Our segments are based upon similarities in products and represent the aggregation of operating units for which financial information is regularly provided to our Chief Operating Decision Maker ("CODM"), who is our President and Chief Executive Officer. Our CODM uses segment net sales and operating profit in assessing segment performance and deciding how to allocate resources by comparing budget to actual results and assessing year-over-year variances. Subsequent to December 31, 2025, we announced that we will implement an internal reorganization to further streamline our business and optimize operations resulting in the integration of our Liberty Hardware (“Liberty”) business, a distributor of cabinet and other hardware and shower doors, into our Delta Faucet business. Prior to this reorganization Liberty has historically been included in our Decorative Architectural Products segment.

D. REVENUEOur revenues are derived from sales to customers in the following geographic areas: North America and International, which are particularly in Europe. Net sales from these geographic areas, by segment, were as follows, in millions:Year Ended December 31, 2025Plumbing ProductsDecorative Architectural ProductsTotalPrimary geographic areas:North America$3,380 $2,570 $5,950 International1,612 — 1,612 Total$4,992 $2,570 $7,562 Year Ended December 31, 2024Plumbing ProductsDecorative Architectural ProductsTotalPrimary geographic areas:North America$3,289 $2,975 $6,264 International1,564 — 1,564 Total$4,853 $2,975 $7,828 Year Ended December 31, 2023Plumbing ProductsDecorative Architectural ProductsTotalPrimary geographic areas:North America$3,259 $3,125 $6,384 International1,583 — 1,583 Total$4,842 $3,125 $7,967 We recognized increases to revenue of $3 million, $10 million, and $12 million in 2025, 2024, and 2023, respectively, for variable consideration related to performance obligations settled in previous periods.We record contract assets for items for which we have satisfied our performance obligation but our receipt of payment is contingent upon delivery or other circumstances other than the passage of time. Our contract assets are recorded in prepaid expenses and other in our consolidated balance sheets. Our contract assets generally become unconditional and are reclassified to receivables in the quarter subsequent to each balance sheet date. Our contract asset balance was $2 million at both December 31, 2025 and 2024.We record contract liabilities primarily for deferred revenue. Our contract liabilities are recorded in accrued liabilities in our consolidated balance sheets. Our contract liabilities are generally recognized to net sales in the immediately subsequent reporting period. Our contract liability balance was $57 million and $45 million at December 31, 2025 and 2024, respectively.D.

R. OTHER COMMITMENTS AND CONTINGENCIESLitigation. We are involved in claims and litigation, including class actions, mass torts and regulatory proceedings, which arise in the ordinary course of our business. The types of matters may include, among others: advertising, competition, contract, data privacy, employment, environmental, insurance coverage, intellectual property, personal injury, product compliance, product liability, securities and warranty. We are also subject to product safety regulations, product recalls and direct claims for product liabilities. We believe the likelihood that the outcome of these claims, litigation and product safety matters would have a material adverse effect on us is remote. However, there is no assurance that we will prevail in these matters, and we could, in the future, incur judgments or penalties, enter into settlements of claims or revise our expectations regarding the outcome of these matters, which could materially impact our results of operations.Warranty. Changes in our warranty liability were as follows, in millions:Year Ended December 31, 20252024Balance at January 1$81 $83 Accruals for warranties issued during the year35 38 Accruals related to pre-existing warranties11 8 Settlements made (in cash or kind) during the year(41)(43)Other, net (including currency translation and divestitures)2 (4)Balance at December 31$88 $81 Other Matters. We enter into contracts, which include reasonable and customary indemnifications that are standard for the industries in which we operate. Such indemnifications include claims made against builders by homeowners for issues relating to our products and workmanship. In conjunction with divestitures and other transactions, we occasionally provide reasonable and customary indemnifications. We have not paid a material amount related to these indemnifications, and we evaluate the probability that amounts may be incurred and record an estimated liability when it is probable and reasonably estimable.

K. DEBT The carrying value of outstanding debt was as follows, in millions:At December 31, 20252024Notes and debentures: 3.500%, due November 15, 2027$300 $300 1.500%, due February 15, 2028600 600 7.750%, due August 1, 2029235 235 2.000%, due October 1, 2030300 300 2.000%, due February 15, 2031598 597 6.500%, due August 15, 2032200 200 4.500%, due May 15, 2047414 415 3.125%, due February 15, 2051300 300 Other14 17 Prepaid debt issuance costs(13)(15)2,947 2,948 Less: Current portion2 3 Total long-term debt$2,945 $2,945 All of the notes and debentures above are senior indebtedness and, other than the 7.750% Notes due 2029, are redeemable at our option.At December 31, 2025, the debt maturities during each of the next five years were as follows: 2026 – $2 million; 2027 – $302 million; 2028 – $602 million; 2029 – $237 million and 2030 – $302 million. 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. 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 $500 million. We can also borrow swingline loans up to $108 million and obtain letters of credit of up to $25 million. Outstanding letters of credit under the 2022 Credit Agreement reduce our borrowing capacity and we had no outstanding letters of credit under the 2022 Credit Agreement at December 31, 2025.Revolving credit loans denominated in U.S. dollars bear interest under the 2022 Credit Agreement at our option, at (A) SOFR rate for the interest period in effect for the borrowing, plus 0.1%, plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) a rate per annum equal to the greatest of (i) the U.S. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) the adjusted term SOFR rate for a one month interest period, plus 1.

P. INCOME TAXESComponents of income taxes on income before income taxes and the components of deferred tax assets and liabilities were as follows, in millions: 202520242023Income before income taxes:U.S. $889 $881 $968 Foreign246 280 270 $1,135 $1,161 $1,238 Income tax expense:Currently payable:U.S. Federal$123 $153 $189 State and local17 26 47 Foreign74 80 74 Deferred:U.S. Federal51 14 — State and local8 9 (39)Foreign4 5 7 $277 $287 $278 Deferred tax assets at December 31:Receivables$9 $8 Inventories16 13 Other assets, including stock-based compensation7 8 Accrued liabilities43 48 Noncurrent operating lease liabilities46 44 Other long-term liabilities46 49 Capitalized research expenditures— 48 Net operating loss carryforward52 57 Tax credit carryforward7 8 226 283 Valuation allowance(27)(27)199 256 Deferred tax liabilities at December 31:Property and equipment83 77 Operating lease right-of-use assets49 45 Intangibles79 80 Investment in foreign subsidiaries16 14 Other17 16 244 232 Net deferred tax (liability) asset at December 31$(45)$24 The net deferred tax (liability) asset consisted of net deferred tax assets (included in other assets) of $50 million and $62 million, and net deferred tax liabilities (included in other liabilities) of $95 million and $38 million, at December 31, 2025 and 2024, respectively.P. INCOME TAXES (Continued)In the fourth quarter of 2023, we recognized a $29 million state income tax benefit, net of federal expense, due to a legal restructuring of certain U.S. businesses that occurred in early 2024 which allowed for the utilization of certain loss carryforwards that were not previously recognized. We continue to maintain a valuation allowance of $27 million on certain state and foreign deferred tax assets as of both December 31, 2025 and 2024 due primarily to cumulative losses in those jurisdictions and net operating losses that are expected to expire unused. Our capital allocation strategy includes reinvesting in our business, maintaining an investment grade credit rating, maintaining a relevant dividend and deploying excess free cash flow to share repurchases or acquisitions. In order to provide greater flexibility in the execution of our capital allocation strategy, we may repatriate earnings from certain foreign subsidiaries.

L. STOCK-BASED COMPENSATIONOur 2024 Long Term Stock Incentive Plan (the "2024 Plan") replaced the 2014 Long Term Stock Incentive Plan in May 2024 and provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At December 31, 2025, outstanding stock-based incentives were in the form of restricted stock units, performance restricted stock units, stock options, phantom stock awards and stock appreciation rights.Pre-tax compensation expense included in income before income taxes for these stock-based incentives was as follows, in millions:Year Ended December 31, 202520242023Restricted stock units$21 $26 $15 Performance restricted stock units3 5 3 Stock options3 4 5 Phantom stock awards and stock appreciation rights3 4 5 Long-term stock awards— — 3 Total$30 $39 $31 At December 31, 2025, approximately 7.0 million shares of our common stock were available under the 2024 Plan for the granting of restricted stock units, performance restricted stock units, stock options and long-term stock awards.L. STOCK-BASED COMPENSATION (Continued)Restricted Stock Units. Restricted stock units are granted to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. Our restricted stock unit activity was as follows, units in thousands: Year Ended December 31,202520242023 Number of SharesWeighted Average Grant Date Fair ValueNumber of SharesWeighted Average Grant Date Fair ValueNumber of SharesWeighted Average Grant Date Fair ValueUnvested restricted stock units at January 1738 $66 796 $57 1,154 $57 Granted347 75 466 73 205 56 Vested(372)63 (455)57 (532)55 Forfeited(53)74 (68)68 (32)58 Unvested restricted stock units at December 31661 $72 738 $66 796 $57 At December 31, 2025, 2024, and 2023, there was $16 million, $15 million, and $11 million, respectively, of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years at December 31, 2025, 2024 and 2023.The total market value (at the vesting date) of restricted stock units which vested was $28 million, $34 million, and $28 million during 2025, 2024 and 2023, respectively.Performance Restricted Stock Units. Under our Long Term Incentive Program ("LTIP"), we grant performance restricted stock units to certain executives.

F. LEASESWe have operating and finance leases primarily for corporate offices, manufacturing facilities, warehouses, vehicles, and equipment. Our leases have remaining lease terms up to 17 years, some of which may include one or more renewal options with terms to extend the lease for up to an additional 15 years, and some of which may include options to terminate the leases prior to their expiration. The components of lease cost included in income before income taxes were as follows, in millions:Year Ended December 31, 202520242023Operating lease cost$63 $64 $61 Short-term lease cost8 9 10 Variable lease cost6 5 7 Finance lease cost:Amortization of ROU assets2 3 3 Interest on lease liabilities— 1 1 F. LEASES (Continued)Supplemental cash flow information related to leases was as follows, in millions:Year Ended December 31, 202520242023Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows for operating leases$60 $54 $50 Operating cash flows for finance leases— 1 1 Financing cash flows for finance leases2 3 3 ROU assets obtained in exchange for new lease obligations:Operating leases (A)42 34 41 (A)Includes $6 million of ROU assets obtained in exchange for new lease obligations related to the acquisition of Sauna360 in 2023.Certain other information related to leases was as follows:At December 31,202520242023Weighted-average remaining lease term:Operating leases9 years9 years10 yearsFinance leases6 years7 years8 years Weighted-average discount rate:Operating leases5.3 %5.2 %5.2 %Finance leases3.2 %3.2 %3.3 %Supplemental balance sheet information related to leases was as follows, in millions:At December 31,20252024Operating LeasesFinance LeasesOperating LeasesFinance LeasesProperty and equipment, net$— $13 $— $16 Notes payable— 2 — 3 Accrued liabilities47 — 43 — Long-term debt— 12 — 14 Gross ROU assets under finance leases recorded within property and equipment, net was $31 million and $41 million at December 31, 2025 and 2024, respectively. Accumulated amortization associated with these leases was $17 million and $25 million at December 31, 2025 and 2024, respectively. F.

B. ACQUISITIONSIn the third quarter of 2023, we acquired all of the share capital of Sauna360 Group Oy (“Sauna360”) for approximately €124 million ($136 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 $22 million of indefinite-lived intangible assets, which is related to trademarks, and $45 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 16 years. We also recognized $60 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 and third quarter of 2024, 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 $1 million decrease and a $2 million increase to goodwill, respectively.In the first quarter of 2021, our Hansgrohe SE subsidiary acquired a 75.1 percent equity interest in Easy Sanitary Solutions B.V. ("ESS"). The remaining 24.9 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. In the first quarter of 2024, the sellers exercised their put option to sell the remaining 24.9 percent equity interest in ESS for €13 million ($15 million). The transaction was accounted for as an equity purchase transaction.