What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-11 compared with 2024-02-08 · 216 added, 305 removed, 1016 unchanged (34% of the section changed)

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 8.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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Total liabilities $ 5,069 $ 5,247

Commitments and contingencies (Note T)

Commitments and contingencies (Note R)

Redeemable noncontrolling interest — 18

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Net income attributable to Masco Corporation $ 822 $ 908 $ 844

Other comprehensive income (loss), net of tax (Note O)

Cumulative translation adjustment $ 35 $ ( 60 ) $ ( 32 )

Interest rate swaps — — 7

Other comprehensive (loss) income, net of tax

Currency translation adjustment $ ( 68 ) $ 35 $ ( 60 )

Pension and other post-retirement benefits 8 ( 8 ) 54

Other comprehensive income (loss), net of tax 27 ( 6 ) 359

Other comprehensive income (loss) attributable to noncontrolling interest:

Cumulative translation adjustment $ 5 $ ( 9 ) $ ( 19 )

Other comprehensive (loss) income, net of tax ( 60 ) 27 ( 6 )

Other comprehensive (loss) income attributable to noncontrolling interest:

Currency translation adjustment $ ( 14 ) $ 5 $ ( 9 )

Pension and other post-retirement benefits 2 ( 2 ) 9

Other comprehensive income (loss) attributable to Masco Corporation $ 24 $ ( 6 ) $ 374

Other comprehensive (loss) income attributable to Masco Corporation $ ( 48 ) $ 24 $ ( 6 )

Total comprehensive income $ 814 $ 987 $ 899

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Employee withholding taxes paid on stock-based compensation 35 29 17

Loss (gain) on investments, net — 5 ( 25 )

Loss on disposition of businesses, net 80 — 1

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Stock-based compensation 39 31 49

Dividends paid-in-kind — — ( 6 )

Decrease (increase) in receivables 42 ( 15 ) ( 64 )

(Increase) decrease in receivables ( 39 ) 42 ( 15 )

Decrease (increase) in inventories 4 233 ( 43 )

(Decrease) increase in accounts payable and accrued liabilities, net ( 34 ) ( 225 ) 190

Debt extinguishment costs — — 160

Decrease in accounts payable and accrued liabilities, net ( 95 ) ( 34 ) ( 225 )

Other, net 6 27 22

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CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:

Retirement of notes — — ( 1,326 )

Purchase of Company common stock ( 751 ) ( 353 ) ( 914 )

Excise tax paid on the purchase of Company common stock ( 3 ) — —

Cash dividends paid ( 254 ) ( 257 ) ( 258 )

Purchase of redeemable noncontrolling interest ( 15 ) — —

Dividends paid to noncontrolling interest ( 37 ) ( 49 ) ( 68 )

Issuance of notes, net of issuance costs — — 1,481

Proceeds from short-term borrowings — 77 —

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Payment of term loan — ( 200 ) ( 300 )

Debt extinguishment costs — — ( 160 )

Proceeds from the exercise of stock options 79 38 1

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Acquisition of businesses, net of cash acquired ( 4 ) ( 136 ) —

Proceeds from disposition of:

Businesses, net of cash disposed — — 5

Financial investments 2 1 171

Proceeds from disposition of business, net of cash disposed 126 — —

Other, net ( 4 ) ( 4 ) ( 6 )

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CASH AND CASH INVESTMENTS:

Increase (decrease) for the year 182 ( 474 ) ( 400 )

(Decrease) increase for the year ( 1 ) 182 ( 474 )

At January 1 634 452 926

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($ 1 par value)

Capital Retained Earnings (Deficit) Accumulated Other Comprehensive (Loss) Income Noncontrolling

Capital Retained (Deficit) Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling

Balance, January 1, 2022 $ 56 $ 241 $ — $ ( 652 ) $ 232 $ 235

Total comprehensive income 836 — — 410 374 52

Total comprehensive income (loss) 900 — — 844 ( 6 ) 62

Shares issued 1 1 — — — —

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Balance, December 31, 2022 $ ( 262 ) $ 225 $ 16 $ ( 947 ) $ 226 $ 218

Total comprehensive income (loss) 900 — — 844 ( 6 ) 62

Total comprehensive income 987 — — 908 24 55

Shares issued 27 2 25 — — —

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Dividends declared to noncontrolling interest ( 49 ) — — — — ( 49 )

Redeemable noncontrolling interest - redemption adjustment 2 — — 2 — —

Stock-based compensation 26 — 26 — — —

Balance, December 31, 2023 $ 98 $ 221 $ — $ ( 596 ) $ 249 $ 224

Total comprehensive income 987 — — 908 24 55

Total comprehensive income (loss) 814 — — 822 ( 48 ) 40

Shares issued 58 2 56 — — —

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Dividends declared to noncontrolling interest ( 37 ) — — — — ( 37 )

Redemption of redeemable noncontrolling interest 4 — 4 — — —

Stock-based compensation 35 — 35 — — —

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We record allowances for credit losses for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us.

Allowances are estimated based upon specific customer balances, where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among others.

Allowances are estimated based upon specific customer balances where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among other factors.

A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity.

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Our judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information.

In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, and, currently, a two percent to three percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast.

In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, and, currently, a two percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast.

For 2024, we utilized a weighted average cost of capital of approximately 8.50 percent as the basis to determine the discount rate to apply to the estimated future cash flows.

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Refer to Note B for additional information regarding acquisitions.

Fair Value of Financial Instruments.

Fair Value Measurements.

For our qualified defined-benefit pension plans, we have adopted accounting guidance that defines fair value, establishes a framework for measuring fair value and prescribes disclosures about fair value measurements.

We use derivative financial instruments to manage certain exposure to fluctuations in earnings and cash flows resulting from changes in foreign currency exchange rates, and occasionally from interest rate exposures.

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however, actual claims incurred could differ from our original estimates which would require us to adjust our previously established accruals.

Refer to Note T for additional information on our warranty accrual.

Refer to Note R for additional information on our warranty accrual.

A significant portion of our business is at the consumer retail level through home center retailers and other major retailers.

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Stock-Based Compensation.

We issue stock-based incentives in various forms to our employees and non-employee Directors.

Outstanding stock-based incentives were in the form of restricted stock units ("RSUs"), performance restricted stock units ("PRSUs"), stock options, long-term stock awards, phantom stock awards, and stock appreciation rights ("SARs").

We may issue stock-based incentives in various forms to our employees and non-employee Directors, including restricted stock units ("RSUs"), performance restricted stock units ("PRSUs"), stock options, long-term stock awards, phantom stock awards, and stock appreciation rights ("SARs").

We measure compensation expense for RSUs and long-term stock awards at the market price of our common stock at the grant date.

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The liability is remeasured and adjusted at the end of each reporting period until the SARs are exercised and payment is made to the employees or the SARs expire.

In December 2019, our Compensation and Talent Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan to provide that newly issued RSUs, stock options, phantom stock awards and SARs vest over a three-year period and redefined retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service.

As such, compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years , or the length of time until the grantee becomes retirement eligible.

In December 2019, our Compensation and Talent Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan, which was subsequently replaced by our 2024 Long Term Stock Incentive Plan, to redefine retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service for newly issued RSUs, stock options, phantom stock awards and SARs.

Compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years , or the length of time until the grantee becomes retirement eligible.

For grants prior to 2020, expense was recognized ratably over the shorter of the vesting period of the long-term stock awards, stock options and phantom stock awards, typically five years , or the length of time until the grantee became retirement-eligible, generally at age 65.

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Generally, a disproportionate tax effect will be eliminated and recognized in income tax expense when the circumstances upon which it is premised cease to exist.

The disproportionate tax effects related to our various qualified domestic defined-benefit pension plans were eliminated from accumulated other comprehensive income at the termination of the related pension plans in 2021.

The disproportionate tax effect relating to our interest rate swap hedge, which was terminated in 2012, was eliminated from accumulated other comprehensive income upon the early retirement of the related debt in March 2021.

We include payments for the purchase of transferable tax credits in our income tax expense and in our income taxes paid disclosure.

Recently Adopted Accounting Pronouncements.

In September 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-04, "Liabilities – Supplier Finance Programs (Subtopic 405-50):

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which requires additional disclosures regarding an entity's reportable segments, particularly regarding significant segment expenses, as well as information relating to the chief operating decision maker.

We adopted this standard on a retrospective basis for annual periods beginning January 1, 2024, and will adopt for interim periods within those annual periods beginning January 1, 2025.

The adoption of this guidance modified our disclosures, but did not have an impact on our financial position and results of operations.

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.

We adopted this standard for annual periods beginning January 1, 2024.

The adoption of this new standard did not have a material effect on our financial position or results of operations.

In September 2022, the 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.

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 was adopted prospectively for annual periods beginning January 1, 2024.

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 December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires additional income tax disclosures, particularly regarding the effective tax rate reconciliation and income taxes paid.

ASU 2023-09 is effective on a prospective basis for annual periods beginning January 1, 2025, with early adoption permitted.

The adoption of this guidance will modify our disclosures, but will not have an impact on our financial position and results of operations.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280):

ASU 2023-07 is effective on a retrospective basis for annual periods beginning January 1, 2024, and interim periods within those annual periods beginning January 1, 2025, with early adoption permitted.

In November 2024, the FASB issued ASU 2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses," which requires additional disclosure of the nature of expenses included in the income statement.

ASU 2024-03 is effective on a prospective or retrospective basis for annual periods beginning January 1, 2027, and interim periods within those annual periods beginning January 1, 2028.

Early adoption is permitted.

The adoption of this guidance will modify our disclosures, but will not have an impact on our financial position and results of operations.

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ACCOUNTING POLICIES (Concluded)

In March 2023, the FASB issued ASU 2023-02, "Investments – Equity Method and Joint Ventures (Topic 323):

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 do not anticipate that the adoption of this new standard will have a material effect on our financial position or results of operations.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires additional income tax disclosures, particularly regarding the effective tax rate reconciliation and income taxes paid.

ASU 2023-09 is effective on a prospective basis for annual periods beginning January 1, 2025, with early adoption permitted.

The adoption of this guidance will modify our disclosures, but will not have an impact on our financial position and results of operations.

In 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.

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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, we updated the allocation of the purchase price to certain identifiable assets and liabilities based on analysis of information as of the acquisition date that has been made available through December 31, 2023, which resulted in a $ 1 million decrease to goodwill.

The purchase price allocation for this acquisition is based on analysis of information as of the acquisition date that was available through December 31, 2023, and will be updated through the measurement period, if necessary.

In the third quarter of 2021, we acquired all of the share capital of Steamist, Inc.

("Steamist") for approximately $ 56 million in cash.

Steamist is a manufacturer of residential steam bath products that are complementary to many of our plumbing products.

This business is included in our Plumbing Products segment.

In connection with this acquisition, we recognized $ 31 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 11 years.

We also recognized $ 29 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business.

Working capital and other adjustments were finalized with the seller in the fourth quarter of 2021, resulting in no significant changes.

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"), for approximately € 47 million ($ 58 million), including $ 52 million of cash and $ 6 million of debt that was paid out over two years less any pending or settled indemnity matters.

The cash payment was made to a third-party notary on December 29, 2020 for the acquisition of this equity interest in advance of the transaction closing on January 4, 2021.

ESS is a manufacturer of shower channel drains that offers a wide range of products for barrier-free showering and bathroom wall niches.

This business is included in our Plumbing Products segment.

In connection with this acquisition, we recognized $ 32 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 10 years.

We also recognized $ 35 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business.

Working capital and other adjustments were finalized with the seller in the fourth quarter of 2021, resulting in no significant changes.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

ACQUISITIONS (Concluded)

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.

The redemption value of the call and put option was the same and based on a floating EBITDA value.

The call and put options were determined to be embedded within the redeemable noncontrolling interest and were recorded as temporary equity in the consolidated balance sheets.

The call and put options were determined to be embedded within the redeemable noncontrolling interest and were recorded as temporary equity in the condensed consolidated balance sheets.

We elected to adjust the redeemable noncontrolling interest to its full redemption amount directly into retained deficit.

On January 4, 2024, the sellers exercised their put option to sell the remaining 24.9 percent equity interest in ESS for € 12 million ($ 14 million).

This amount is based on information as of the date of this report and will be updated upon completion of the sale, if necessary.

On May 31, 2021, we completed the divestiture of our Hüppe GmbH ("Hüppe") business, a manufacturer of shower enclosures and shower trays.

In connection with the divestiture, we recognized a loss of $ 18 million for the year ended December 31, 2021, which is included in other, net in our consolidated statement of operations.

This loss resulted primarily from the recognition of $ 23 million of currency translation losses that were previously included within accumulated other comprehensive income.

During the first quarter of 2022, we recorded a $ 2 million pre-tax post-closing gain related to the finalization of working capital items in other, net in our consolidated statement of operations.

The sale of Hüppe did not represent a strategic shift that will have a major effect on our operations and financial results and therefore was not presented as discontinued operations.

Prior to the divestiture, the results of the business were included in our Plumbing Products segment.

Our revenues are derived from sales to customers in North America and Internationally, particularly Europe.

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.

In the third quarter of 2024, we sold our Kichler Lighting ("Kichler") business, a provider of decorative residential and light commercial lighting products, ceiling fans, and LED lighting systems, for consideration of $ 125 million, net of cash disposed, and subject to final closing adjustments.

Post-closing adjustments were finalized with the buyer in the fourth quarter of 2024.

In connection with the divestiture, we recognized a loss of $ 88 million, inclusive of costs to sell, for the year ended December 31, 2024, which is included in other, net in our consolidated statement of operations.

The sale of Kichler did not represent a strategic shift that will have a major effect on our operations and financial results and therefore was not presented as discontinued operations.

Prior to the divestiture, the results of the business were included in our Decorative Architectural Products segment.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Our 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:

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North America $ 3,289 $ 2,975 $ 6,264

International, particularly Europe 1,583 — 1,583

International 1,564 — 1,564

Total $ 4,853 $ 2,975 $ 7,828

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North America $ 3,259 $ 3,125 $ 6,384

International, particularly Europe 1,702 — 1,702

International 1,583 — 1,583

Total $ 4,842 $ 3,125 $ 7,967

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North America $ 3,550 $ 3,428 $ 6,978

International, particularly Europe 1,751 — 1,751

International 1,702 — 1,702

Total $ 5,252 $ 3,428 $ 8,680

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

REVENUE (Concluded)

We recognized increases t o revenue o f $ 10 million, $ 12 million, and $ 20 million in 2024, 2023, and 2022, respectively, for variable consideration related to performance obligations settled in previous periods.

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Our contract liabilities are generally recognized to net sales in the immediately subsequent reporting period.

Our contract liability balance was $ 45 million and $ 61 million at December 31, 2023 and 2022, respectively.

Our contract liability balance was $ 45 million at both December 31, 2024 and 2023.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

REVENUE (Concluded)

Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions:

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Inventories, which include purchased parts, materials, direct labor and applied overhead, are stated at the lower of cost or net realizable value, with cost determined primarily by use of the first-in, first-out method, and to a lesser extent the average cost method.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

We have operating and finance leases primarily for corporate offices, manufacturing facilities, warehouses, vehicles, and equipment.

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Interest on lease liabilities 1 1 1

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

LEASES (Continued)

Supplemental cash flow information related to leases was as follows, in millions:

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Finance leases — — —

______________________________

(A) Includes $ 6 million and $ 2 million of ROU assets obtained in exchange for new lease obligations related to the acquisitions of Sauna360 in 2023 and ESS and Steamist in 2021, respectively.

(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:

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Finance leases 3.2 % 3.3 % 3.3 %

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

LEASES (Concluded)

Supplemental balance sheet information related to leases was as follows, in millions:

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Long-term debt — 14 — 17

Gross ROU assets under finance leases recorded within property and equipment, net was $ 41 million at both December 31, 2023 and 2022, and accumulated amortization associated with these leases was $ 23 million and $ 20 million, at December 31, 2023 and 2022, respectively.

Gross ROU assets under finance leases recorded within property and equipment, net was $ 41 million at both December 31, 2024 and 2023.

Accumulated amortization associated with these leases was $ 25 million and $ 23 million at December 31, 2024 and 2023, respectively.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

LEASES (Concluded)

At December 31, 2024, future maturities of lease liabilities were as follows, in millions:

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Total $ 1,116 $ 1,121

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

GOODWILL AND OTHER INTANGIBLE ASSETS

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Plumbing Products $ 667 $ ( 301 ) $ 367

Decorative Architectural Products 366 ( 139 ) 227

Decorative Architectural Products (A)

305 ( 75 ) 230

Total $ 973 $ ( 376 ) $ 597

(A) As a result of the divestiture of Kichler in the third quarter of 2024, both gross goodwill and accumulated impairment losses for the Decorative Architectural Products segment were reduced by $ 64 million as the goodwill had been fully impaired prior to the divestiture.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded)

The changes in the carrying amount of goodwill for years ended December 31, 2024 and 2023, by segment, were as follows, in millions:

Gross Goodwill At December 31, 2022 Accumulated Impairment Losses Net Goodwill At December 31, 2022 Acquisitions (A) Pre-tax Impairment Charge Foreign Currency Translation Net Goodwill At December 31, 2023

Gross Goodwill At December 31, 2023 Accumulated Impairment Losses Net Goodwill At December 31, 2023 Acquisitions (B) Foreign Currency Translation Net Goodwill At December 31, 2024

Plumbing Products $ 677 $ ( 301 ) $ 377 $ 2 $ ( 12 ) $ 367

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Total $ 1,043 $ ( 440 ) $ 604 $ 6 $ ( 12 ) $ 597

Gross Goodwill At December 31, 2021 Accumulated Impairment Losses Net Goodwill At December 31, 2021 Acquisitions Pre-tax Impairment Charge Foreign Currency Translation Net Goodwill At December 31, 2022

Gross Goodwill At December 31, 2022 Accumulated Impairment Losses Net Goodwill At December 31, 2022 Acquisitions (B)

Foreign Currency Translation Net Goodwill At December 31, 2023

Plumbing Products $ 611 $ ( 301 ) $ 310 $ 59 $ 7 $ 377

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Total $ 977 $ ( 440 ) $ 537 $ 59 $ 7 $ 604

(A) In the third quarter of 2023, we acquired Sauna360.

Refer to Note B for additional information.

(B) In the third quarter of 2023, we acquired Sauna360 and during the third quarter of 2024, we recognized $ 2 million of goodwill in our Plumbing Products segment related to this acquisition (refer to Note B for additional information).

In the second quarter of 2024, we recognized $ 4 million of goodwill in our Decorative Architectural Products segment related to an immaterial acquisition.

Other indefinite-lived intangible assets were $ 79 million and $ 108 million at December 31, 2024 and 2023, respectively, and principally included registered trademarks.

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We recognized a $ 19 million and $ 7 million non-cash impairment charge within our Decorative Architectural Products segment to goodwill and other indefinite-lived intangible assets, respectively, in the fourth quarter of 2022 due to competitive market conditions, higher inflationary costs and increased cost of capital in our lighting business.

We recognized a $ 45 million non-cash goodwill impairment charge within our Decorative Architectural Products segment in the fourth quarter of 2021 due to competitive market conditions and higher inflationary costs in our lighting business.

There was no impairment of goodwill for any of our reporting units or of our other indefinite-lived intangible assets in any of these years, other than as disclosed above.

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Amortization expense related to the definite-lived intangible assets wa s $ 29 million, $ 31 million and $ 29 million in 2024, 2023 and 2022, respectively.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded)

At December 31, 2024, amortization expense related to the definite-lived intangible assets during each of the next five years will be as follows:

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2028 – $ 14 million and 2029 – $ 14 million.

The increase in our indefinite-lived and definite-lived intangible assets is primarily a result of our acquisition of Sauna360.

The decrease in our indefinite-lived intangible assets and definite-lived intangible assets is primarily a result of the divestiture of Kichler.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SUPPLIER FINANCE PROGRAM

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We do not enter into agreements with any of the participating financial institutions in connection with the program.

Our current payment terms with a majority of our suppliers generally range from 45 to 90 days.

The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

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All payments made under the program are recorded as a decrease in accounts payable and accrued liabilities, net, in our consolidated statements of cash flows.

Changes in the confirmed obligations outstanding were as follows, in millions:

Year Ended December 31, 2024

Confirmed obligations outstanding at January 1 $ 53

Invoices confirmed 214

Confirmed invoices paid ( 229 )

Other (including currency translation and divestitures) ( 2 )

Confirmed obligations outstanding at December 31 $ 36

ACCRUED LIABILITIES

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Operating lease liabilities (Note F) 43 44

Warranty (Note T) 42 34

Warranty (Note R) 41 42

Interest 29 29

Income taxes payable 28 32

Product returns 23 30

Interest 29 30

Property, payroll and other taxes 22 22

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3.125 %, due February 15, 2051

364-day term loan, due April 26, 2023 — 200

Prepaid debt issuance costs ( 15 ) ( 18 )

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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, Canadian dollars and certain other currencies for revolving credit loans, swingline loans and letters of credit.

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.

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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, 2024.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DEBT (Continued)

Revolving credit loans denominated in U.S.

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plus an applicable margin based upon our then-applicable corporate credit ratings.

Foreign currency revolving credit loans denominated in Canadian dollars bear interest at a rate per annum equal to the greater of (i) the rate equal to the PRIMCAN Index rate and (ii) the CDOR rate for a one month interest period, plus 1.0 %;

plus an applicable margin based upon our then-applicable corporate credit ratings.

Foreign currency revolving credit loans denominated in British pounds sterling bear interest at a rate per annum equal to the Daily Simple SONIA, plus an applicable margin based upon our then-applicable corporate credit ratings.

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The 2022 Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) an interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DEBT (Concluded)

In order for us to borrow under the 2022 Credit Agreement, there must not be any default in our covenants in the 2022 Credit Agreement (i.e., in addition to the two financial covenants described above, principally limitations on subsidiary debt, negative pledge restrictions, and requirements relating to legal compliance, maintenance of our properties and insurance) and our representations and warranties in the 2022 Credit Agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, since December 31, 2021, no material ERISA or environmental non-compliance, and no material tax deficiency).

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On May 9, 2023, our Hansgrohe SE subsidiary entered into € 70 million ($ 77 million) of short-term borrowings to support working capital needs.

The loans contained no financial covenants and the entire balance was repaid as of December 31, 2023.

The loans contained no financial covenants and the entire balance was repaid at December 31, 2023.

On April 26, 2022, we entered into a 364 -day $ 500 million senior unsecured delayed draw term loan (the "term loan") due April 26, 2023 with a syndicate of lenders.

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We repaid $ 300 million during 2022 and the remaining $ 200 million upon the maturity of the term loan on April 26, 2023.

On March 4, 2021, we issued $ 600 million of 1.500 % Notes due February 15, 2028, $ 600 million of 2.000 % Notes due February 15, 2031 and $ 300 million of 3.125 % Notes due February 15, 2051.

We received proceeds of $ 1,495 million, net of discount, for the issuance of these Notes.

The Notes are senior indebtedness and are redeemable at our option at the applicable redemption price.

On March 22, 2021, proceeds from the debt issuances, together with cash on hand, were used to repay and early retire our $ 326 million 5.950 % Notes due March 15, 2022, $ 500 million 4.450 % Notes due April 1, 2025, and $ 500 million 4.375 % Notes due April 1, 2026.

In connection with these early retirements, we incurred a loss on debt extinguishment of $ 168 million for the year ended December 31, 2021, which was recorded as interest expense in the consolidated statement of operations.

Interest paid was $ 107 million in both 2023 and 2022 and $ 114 million in 2021.

The 2021 amount excludes $ 160 million of debt extinguishment costs related to the early retirement of debt, which was recorded as interest expense and paid in 2021.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DEBT (Concluded)

Interest paid was $ 99 million in 2024 and $ 107 million in both 2023 and 2022.

Fair Value of Debt.

The fair value of our short-term and long-term fixed-rate debt instruments is based principally upon modeled market prices for the same or similar issues, which are Level 1 inputs.

The term loan had an interest rate that reset monthly and the fair value of the instrument approximated the carrying value at December 31, 2022.

The aggregate estimated market value of our short-term and long-term debt at December 31, 2023 was approximately $ 2.6 billion, compared with the aggregate carrying value of $ 3.0 billion.

The aggregate estimated market value of our short-term and long-term debt at December 31, 2022 was approximately $ 2.7 billion, compared with the aggregate carrying value of $ 3.2 billion.

At both December 31, 2024 and 2023, the aggregate estimated market value of our short-term and long-term debt was approximately $ 2.6 billion, compared with the aggregate carrying value of $ 3.0 billion.

STOCK-BASED COMPENSATION

Our 2014 Long Term Stock Incentive Plan (the "2014 Plan") provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors.

At December 31, 2023, outstanding stock-based incentives were in the form of restricted stock units, performance restricted stock units, stock options, long-term stock awards, phantom stock awards and stock appreciation rights ("SARs").

Our 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, 2024, 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 ("SARs").

Pre-tax compensation expense included in income before income taxes for these stock-based incentives was as follows, in millions:

8 unchanged sentences

At December 31, 2024, 7.5 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.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

STOCK-BASED COMPENSATION (Continued)

Restricted Stock Units.

10 unchanged sentences

Unvested restricted stock units at December 31 738 $ 66 796 $ 57 1,154 $ 57

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

STOCK-BASED COMPENSATION (Continued)

At December 31, 2024, 2023, and 2022, there was $ 15 million, $ 11 million, and $ 17 million, respectively, of unrecognized compensation expense related to unvested restricted stock units;

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based on our performance, the number of performance restricted stock units that vest can be adjusted downward to zero and upward to a maximum of 200 percent of the target number.

During 2023, we granted approximately 99,000 performance restricted stock units with a grant date fair value of approximately $ 52 per share, approximately 253,000 performance restricted stock units were issued and no performance restricted stock units were forfeited.

At December 31, 2023, there were approximately 59,000 shares vested but unissued.

During 2024, we granted approximately 70,000 performance restricted stock units with a grant date fair value of approximately $ 75 per share, approximately 48,000 performance restricted stock units were issued and 6,000 performance restricted stock units were forfeited.

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Stock Options.

Stock options are granted to certain key employees.

Stock options are granted to certain senior executives.

The exercise price equals the market price of our common stock at the grant date and the stock options expire no later than 10 years after the grant date.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

STOCK-BASED COMPENSATION (Continued)

Our stock option activity was as follows, shares in thousands:

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The aggregate intrinsic value for options exercised during 2024, 2023 and 2022 was $ 48 million, $ 26 million and $ 1 million, respectively.

The weighted-average remaining term for options outstanding at December 31, 2023, 2022 and 2021 was six years , five years and six years , respectively.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

STOCK-BASED COMPENSATION (Continued)

The weighted-average remaining term for options outstanding at December 31, 2024, 2023 and 2022 was seven years , six years and five years , respectively.

The following table summarizes information for stock options vested and expected to vest and exercisable (vested) stock options, shares in thousands:

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Weighted-average remaining term 7 years 5 years 6 years 5 years 5 years 4 years

At December 31, 2023, 2022 and 2021, there was $ 1 million, $ 1 million and $ 4 million, respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options;

such options had a weighted average remaining vesting period of two years , one year and two years at December 31, 2023, 2022 and 2021, respectively.

At December 31, 2024, 2023 and 2022, there was $ 1 million of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options;

such options had a weighted average remaining vesting period of two years at both December 31, 2024 and 2023 and one year at December 31, 2022.

The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model were as follows:

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Expected option life 6 years 6 years 6 years

The following table summarizes information for stock option shares outstanding and exercisable, shares in thousands:

At December 31, 2023,

Option Shares Outstanding Option Shares Exercisable

Range of Prices Number of Shares Weighted Average Remaining Option Term Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price

256 2 $ 25 256 $ 25

538 4 $ 35 469 $ 35

1,459 7 $ 53 896 $ 50

2,254 6 $ 45 1,621 $ 42

MASCO CORPORATION

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Long-Term Stock Awards.

Prior to the amendment of our 2014 Plan in December 2019, we granted long-term stock awards to our key employees and non-employee Directors.

Prior to 2020, we granted long-term stock awards to our key employees and non-employee Directors.

Our long-term stock award activity was as follows, shares in thousands:

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Unvested stock award shares at December 31 — $ — 79 $ 36 273 $ 38

At December 31, 2023, the total unrecognized compensation expense related to unvested stock awards was insignificant and the unvested stock awards will vest in 2024.

At December 31, 2022 and 2021, there was $ 3 million and $ 10 million, respectively, of total unrecognized compensation expense related to unvested stock awards;

such awards had a weighted average remaining vesting period at December 31, 2022 and 2021 of one year and two years , respectively.

The total market value (at the vesting date) of stock award shares which vested was $ 5 million, $ 10 million and $ 21 million during 2024, 2023 and 2022, respectively.

2 unchanged sentences

employees are granted phantom stock awards and SARs.

We recognized expense of $ 5 million, $ 1 million and $ 6 million in 2023, 2022 and 2021, respectively, related to phantom stock awards.

In 2023, 2022 and 2021, we granted approximately 57,000 , 74,000 , and 82,000 shares, respectively, of phantom stock awards with an aggregate fair value of $ 3 million, $ 4 million and $ 5 million in 2023, 2022 and 2021, respectively, and paid cash of $ 4 million in 2023, $ 4 million in 2022 and $ 3 million in 2021 to settle phantom stock awards.

In 2024, 2023 and 2022, we granted approximately 42,000 , 57,000 , and 74,000 shares, respectively, of phantom stock awards with an aggregate fair value of $ 3 million in both 2024 and 2023 and $ 4 million in 2022 and paid cash of $ 5 million in 2024 and $ 4 million in both 2023 and 2022 to settle phantom stock awards.

Information related to phantom stock awards was as follows, dollars in millions and shares in thousands:

3 unchanged sentences

Equivalent common shares 96 126

We granted 22,000 shares of SARs in 2023, and the associated expense recognized in 2023 was insignificant.

No SARs were granted in 2022 or 2021, and no expense was recognized in either year.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

We granted 22,000 shares of SARs in 2023 and no SARs were granted in 2024 and 2022.

EMPLOYEE RETIREMENT PLANS

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$ 69 $ 78 $ 51

As of January 1, 2010, substantially all our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals.

In December 2019, our Board of Directors approved a resolution to terminate our qualified domestic defined-benefit pension plans.

In the second quarter of 2021, we settled these plans and made a final contribution of $ 101 million.

The settlement loss included $ 447 million of pre-tax actuarial losses that were reclassified out of accumulated other comprehensive income for the year ended December 31, 2021.

In the fourth quarter of 2021, we recognized a $ 7 million reduction in pension expense related to the reversion of excess pension plan assets for the settlement of such plans.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

Substantially all our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals.

Changes in the projected benefit obligation and fair value of plan assets, and the funded status of our defined-benefit pension plans were as follows, in millions:

5 unchanged sentences

Interest cost 4 5 4 6

Actuarial loss (gain), net 15 2 ( 54 ) ( 27 )

Actuarial (gain) loss, net ( 4 ) ( 1 ) 15 2

Foreign currency exchange ( 8 ) — 4 —

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Funded status at December 31 $ ( 33 ) $ ( 101 ) $ ( 46 ) $ ( 108 )

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

Amounts in our consolidated balance sheets were as follows, in millions:

11 unchanged sentences

Total $ 19 $ 24 $ 27 $ 26

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions:

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Expected return on plan assets ( 5 ) — ( 4 ) — ( 3 ) —

Settlement loss — — — — 404 —

Recognized net loss 1 1 — 1 3 3

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Net periodic pension cost $ 2 $ 6 $ 3 $ 7 $ 6 $ 6

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

We expect to recognize $ 3 million of pre-tax net loss from accumulated other comprehensive income into net periodic pension cost in 2025 related to our defined-benefit pension plans.

For plans in which almost all of the plan's participants are inactive, pre-tax net loss within accumulated other comprehensive income is amortized using the straight-line method over the remaining life expectancy of the inactive plan participants.

For plans which do not have almost all inactive participants, pre-tax net loss within accumulated other comprehensive income is amortized using the straight-line method over the average remaining service period of the active employees expected to receive benefits from the plan.

For all other plans, pre-tax net loss within accumulated other comprehensive income is amortized using the straight-line method over the average remaining service period of the active employees expected to receive benefits from the plan.

Our qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows:

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Total 100 % 100 %

Accounting guidance defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date."

Following is a description of the valuation methodologies used for assets measured at fair value.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

The following is a description of the valuation methodologies used for assets measured at fair value.

There have been no changes in the methodologies used at December 31, 2024 compared to December 31, 2023.

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Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

The following tables set forth, by level within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2024 and 2023, in millions.

4 unchanged sentences

International 11 — — 11

Corporate debt securities:

United States — 4 — 4

International — 14 — 14

Government and other debt securities:

Corporate, government and other debt securities:

United States — 6 — 6

International — 22 — 22

United States 3 — — 3

International — — 11 11

5 unchanged sentences

$ 33 $ 48 $ 11 $ 92

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

At December 31, 2023

3 unchanged sentences

International 8 — — 8

Corporate debt securities:

Corporate, government and other debt securities:

United States — 5 — 5

International — 21 — 21

Government and other debt securities:

United States 3 — — 3

International 2 — 12 14

United States 3 — — 3

Buy-in annuity:

International — 3 — 3

2 unchanged sentences

Total plan assets $ 32 $ 46 $ 12 $ 90

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Continued)

Changes in the fair value of the qualified defined-benefit pension plan Level 3 assets were as follows, in millions:

1 unchanged sentence

Fair value, January 1 $ 12 $ 12

Purchases — 6

Currency translation ( 1 ) —

Fair value, December 31 $ 11 $ 12

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Discount rate for net periodic pension cost 4.00 % 4.50 % 1.80 %

The discount rate for obligations for 2023, 2022 and 2021 is based primarily upon the expected duration of each defined-benefit pension plan's liabilities matched to the December 31, 2023, 2022 and 2021 Willis Towers Watson Rate Link Curve.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Concluded)

The discount rate for obligations for 2024, 2023 and 2022 is based primarily upon the expected duration of each defined-benefit pension plan's liabilities matched to spot rates along a high-quality corporate bond yield curve for the geography of the individual plans.

At December 31, 2024, such rates for our defined-benefit pension plans ranged from 2.1 percent to 5.4 percent, with the most significant portion of the liabilities having a discount rate for obligations of 3.4 percent or higher.

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At December 31, 2022, such rates for our defined‑benefit pension plans ranged from 0.8 percent to 5.3 percent, with the most significant portion of the liabilities having a discount rate for obligations of 3.7 percent or higher.

The decrease in the weighted average discount rate from 2022 to 2023 is principally due to lower long-term interest rates in the bond markets.

The increase in the weighted average discount rate from 2023 to 2024 is principally due to higher long-term interest rates in the bond markets.

Our weighted average projected long-term rate of return on plan assets for the foreign qualified defined-benefit pension plans was 5.5 percent, 4.5 percent and 3.0 percent for 2023, 2022 and 2021, respectively.

The decrease in the weighted average discount rate from 2022 to 2023 is principally due to lower long-term interest rates in the bond markets.

The asset allocation of the investment portfolio was developed with the objective of achieving our expected rate of return and reducing volatility of asset returns, and considered the freezing of future benefits.

8 unchanged sentences

Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EMPLOYEE RETIREMENT PLANS (Concluded)

Potential events or circumstances that could have a negative effect on estimated fair value include the risks of inadequate diversification and other operating risks.

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In addition, we periodically seek the input of our independent advisor to ensure the investment policy is appropriate.

We sponsor certain post-retirement benefit plans that provide medical, dental and life insurance coverage for eligible retirees and dependents based upon age and length of service.

Substantially all of these plans were frozen as of January 1, 2010.

The aggregate present value of the unfunded accumulated post-retirement benefit obligation was $ 7 million at both December 31, 2023 and 2022.

At December 31, 2024, we expect to contribute approximately $ 11 million in 2025 to our non-qualified (domestic) defined-benefit pension plans.

3 unchanged sentences

2030 - 2034 31 42

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SHAREHOLDERS' EQUITY

1 unchanged sentence

During 2024, we repurchased and retired 10.0 million shares of our common stock (including 0.5 million shares to offset the dilutive impact of restricted stock units granted in 2024) for $ 757 million, inclusive of excise tax of $ 6 million.

At December 31, 2023, we had $ 1.6 billion remaining under the 2022 authorization.

During 2022, we repurchased and retired 16.6 million shares of our common stock (including 0.6 million shares to offset the dilutive impact of restricted stock units granted in 2022), for cash aggregating $ 914 million.

During 2021, we repurchased and retired 17.6 million shares of our common stock (including 0.7 million shares to offset the dilutive impact of restricted stock units granted in 2021) for cash aggregating $ 1,026 million.

On the basis of amounts paid (declared), cash dividends per common share were $ 1.140 ($ 1.140 ) in 2023, $ 1.120 ($ 1.120 ) in 2022 and $ 0.845 ($ 0.705 ) in 2021.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SHAREHOLDERS' EQUITY (Concluded)

At December 31, 2024, we had $ 896 million remaining under the 2022 authorization.

During 2023, we repurchased and retired 6.2 million shares of our common stock (including 0.2 million shares to offset the dilutive impact of restricted stock units granted in 2023) for $ 356 million, inclusive of excise tax of $ 3 million.

We have declared and paid cash dividends per common share of $ 1.16 in 2024, $ 1.14 in 2023 and $ 1.12 in 2022.

Accumulated Other Comprehensive Income.

1 unchanged sentence

At December 31,

Cumulative translation adjustments, net $ 291 $ 261

Currency translation adjustments, net $ 237 $ 291

Unrecognized net loss and prior service cost, net ( 36 ) ( 42 )

Accumulated other comprehensive income $ 201 $ 249

The cumulative translation adjustment, net, is reported net of income tax benefit of $ 3 million and $ 2 million at December 31, 2023 and 2022, respectively.

The unrecognized net loss and prior service cost, net, is reported net of income tax benefit of $ 6 million and $ 4 million at December 31, 2023 and 2022, respectively.

RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME

The reclassifications from accumulated other comprehensive income to the consolidated statements of operations were as follows, in millions:

Year Ended December 31,

Accumulated Other Comprehensive Income 2023 2022 2021 Statement of Operations Line Item

Settlement and amortization of defined-benefit pension and other post-retirement benefits (A) :

Actuarial losses, net and prior service cost $ 1 $ 6 $ 18 Other, net

Settlement loss — — 451 Other, net

Tax expense (benefit) — ( 2 ) ( 104 )

Net of tax $ 1 $ 4 $ 365

Interest rate swaps (B) :

$ — $ — $ 2 Interest expense

Tax expense — — 5

Net of tax $ — $ — $ 7

(A) In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $ 447 million of pre-tax actuarial losses from accumulated other comprehensive income and $ 96 million of income tax benefit, which included $ 11 million of related disproportionate tax expense.

Additionally, the amortization of defined-benefit pension and post-retirement benefits included $ 3 million, net of tax, due to the disposition of pension plans in connection with the divestiture of Hüppe.

(B) Upon full repayment and retirement of the 5.950 % Notes due March 15, 2022, in the first quarter of 2021, we recognized the remaining interest rate swap loss and related disproportionate tax expense.

In addition to the above amounts, we reclassified $ 23 million of currency translation losses from accumulated other comprehensive income to the consolidated statement of operations in conjunction with the divestiture of Hüppe in the second quarter of 2021.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEGMENT INFORMATION

Our reportable segments are as follows:

Plumbing Products – principally includes faucets, plumbing system components and valves, showerheads and handheld showers, bath hardware and accessories, bath units, tubs and shower bases and enclosures, shower drains, steam shower systems, sinks, kitchen accessories, toilets, spas, exercise pools, aquatic fitness systems, saunas and water handling systems.

Decorative Architectural Products – principally includes paints and other coating products, paint applicators and accessories, lighting fixtures, ceiling fans, landscape lighting and LED lighting systems, and cabinet and other hardware.

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 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.

1 unchanged sentence

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, right-of-use assets, deferred tax assets, cash and cash investments and other investments.

Our segments are based upon similarities in products and represent the aggregation of operating units, for which financial information is regularly evaluated by our corporate operating executive in determining resource allocation and assessing performance, and is periodically reviewed by the Board of Directors.

Accounting policies for the segments are the same as those for us.

We primarily evaluate performance based upon operating profit and, other than general corporate expense, allocate specific corporate overhead to each segment.

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.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEGMENT INFORMATION (Concluded)

Information by segment and geographic area was as follows, in millions:

Year Ended December 31, At December 31,

Operating Profit

2023 2022 2021 2023 2022 2021 2023 2022 2021

Our operations by segment were:

SEGMENT INFORMATION (Continued)

Information by segment was as follows, in millions:

Year Ended December 31, 2024

Plumbing Products

Decorative Architectural Products

Total $ 7,967 $ 8,680 $ 8,375 $ 1,439 $ 1,384 $ 1,510 $ 4,837 $ 4,876 $ 4,976

Our operations by geographic area were:

North America $ 6,384 $ 6,978 $ 6,624 $ 1,210 $ 1,116 $ 1,214 $ 3,538 $ 3,552 $ 3,510

International, particularly Europe 1,583 1,702 1,751 229 268 296 1,299 1,324 1,466

Total, as above $ 7,967 $ 8,680 $ 8,375 1,439 1,384 1,510 4,837 4,876 4,976

Net sales (A) (B) (C)

$ 4,853 $ 2,975 $ 7,828

Operating expenses (D)

Impairment charges for goodwill and other intangible assets — —

Corporate expenses (E)

Segment operating profit

$ 911 $ 549 $ 1,460

General corporate expense, net (E)

Operating profit 1,363

Other income (expense), net ( 202 )

Income before income taxes $ 1,161

Year Ended December 31, 2023

Plumbing Products

Decorative Architectural Products

Net sales (A) (B) (C)

$ 4,842 $ 3,125 $ 7,967

Operating expenses (D)

Impairment charges for goodwill and other intangible assets — 15

Corporate expenses (E)

Segment operating profit

$ 861 $ 578 $ 1,439

General corporate expense, net (E)

Operating profit 1,348

1 unchanged sentence

Income before income taxes $ 1,238

Corporate assets 527 311 599

Total assets $ 5,363 $ 5,187 $ 5,575

Year Ended December 31, 2022

Property Additions (G)

Plumbing Products

Decorative Architectural Products

Net sales (A) (B) (C)

$ 5,252 $ 3,428 $ 8,680

Operating expenses (D)

Impairment charges for goodwill and other intangible assets — 26

Corporate expenses (E)

Segment operating profit

$ 819 $ 565 $ 1,384

General corporate expense, net (E)

Operating profit 1,297

Other income (expense), net ( 104 )

Income before income taxes $ 1,193

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SEGMENT INFORMATION (Concluded)

Property Additions (F)

Depreciation and Amortization

Year Ended December 31,

2024 2023 2022 2024 2023 2022 2024 2023 2022

Our operations by segment were:

Plumbing Products $ 122 $ 161 $ 154 $ 108 $ 107 $ 103 $ 3,131 $ 3,140 $ 3,096

1 unchanged sentence

2 6 6 7 7 8 450 527 311

Unallocated amounts, principally related to corporate assets 6 6 3 7 8 13

Total $ 168 $ 243 $ 224 $ 150 $ 149 $ 145 $ 5,016 $ 5,363 $ 5,187

(A) Included in net sales were export sales from the U.S.

of $ 253 million, $ 337 million and $ 322 million in 2023, 2022 and 2021, respectively.

(B) Excluded from net sales were intra-company sales between segments of less than one percent in 2023, 2022 and 2021.

(C) Included in net sales were sales to one customer of $ 3,070 million, $ 3,298 million and $ 3,037 million in 2023, 2022 and 2021, respectively.

(A) Intra-company sales between segments were not material and have been excluded from net sales.

(B) Included in net sales were sales to one customer of $ 3,010 million, $ 3,070 million and $ 3,298 million in 2024, 2023 and 2022, respectively.

Such net sales were included in each of our segments.

(D) Net sales from our operations in the U.S.

were $ 5,996 million, $ 6,140 million and $ 6,756 million in 2024, 2023 and 2022, respectively.

(E) General corporate expense, net included those expenses not specifically attributable to our segments.

(F) Long-lived assets of our operations in the U.S.

(D) Operating expenses included cost of sales and selling, general and administrative expenses.

(E) Corporate expenses included specific corporate overhead allocated to each segment.

General corporate expense, net included those expenses not specifically attributable to our segments.

(F) Property additions exclude amounts paid for long-lived assets as part of acquisitions.

(G) Long-lived assets of our operations in the U.S.

and Europe were $ 1,323 million and $ 638 million, $ 1,459 million and $ 677 million, and $ 1,372 million and $ 548 million at December 31, 2024, 2023 and 2022, respectively.

(G) Property additions exclude amounts paid for long-lived assets as part of acquisitions.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

OTHER INCOME (EXPENSE), NET

Other, net, which is included in other income (expense), net, was as follows, in millions:

Year Ended December 31,

2023 2022 2021

Income from cash and cash investments $ 9 $ 2 $ 1

Net periodic pension and post-retirement benefit expense (A)

( 8 ) ( 10 ) ( 430 )

Equity investment (loss) income, net ( 1 ) ( 6 ) 11

Foreign currency transaction losses ( 1 ) ( 3 ) ( 4 )

Realized gains from private equity funds

Contingent consideration (B)

Loss on sale of businesses, net

— ( 1 ) ( 18 )

Gain on preferred stock redemption (C)

Dividend income — — 6

Other items, net ( 4 ) ( 2 ) ( 3 )

Total other, net $ ( 4 ) $ 4 $ ( 439 )

(A) In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $ 406 million of additional pension expense.

In the fourth quarter of 2021, we recognized a $ 7 million reduction in pension expense related to the reversion of excess pension plan assets for the settlement of such plans.

Refer to Note M for additional information.

(B) We recognized $ 24 million of income in 2022 and $ 16 million of expense in 2021 from the revaluation of contingent consideration related to our acquisition of Kraus USA Inc.

in the fourth quarter of 2020.

preferred stock, including all accrued but unpaid dividends, and recognized a gain of $ 14 million.

MASCO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Components of income taxes on income before income taxes and the components of deferred tax assets and liabilities were as follows, in millions:

34 unchanged sentences

INCOME TAXES (Continued)

We have loss carryforwards in certain state jurisdictions resulting from perpetual losses for which deferred tax assets were not recognized as the likelihood of utilization was remote.

Due to a legal restructuring of certain U.S.

businesses that will occur in early 2024, it is more likely than not a significant portion of these loss carryforwards will be utilized.

As a result, we recognized a $ 29 million state income tax benefit, net of federal expense, in the fourth quarter of 2023.

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 and $ 33 million on certain state and foreign deferred tax assets as of December 31, 2024 and 2023, respectively, due primarily to cumulative loss positions in those jurisdictions.

13 unchanged sentences

Stock-based compensation ( 1 ) ( 1 ) —

Business divestiture with no tax impact — — 1

Disproportionate tax effects — — 2

Other, net — ( 1 ) ( 1 )

Effective tax rate 25 % 22 % 24 %

We incurred a $ 14 million state income tax expense in 2021 resulting from the loss on the termination of our qualified domestic defined-benefit pension plans providing no tax benefit in certain state jurisdictions.

The loss from the divestiture of Hüppe provided no tax benefit in certain foreign jurisdictions resulting in a $ 4 million foreign income tax expense in 2021.

We recorded a $ 16 million income tax expense due to the elimination of disproportionate tax effects from accumulated other comprehensive income relating to our interest rate swap following the retirement of the related debt and the termination of our qualified domestic defined-benefit pension plans in 2021.

Income taxes paid were $ 260 million, $ 328 million and $ 281 million in 2024, 2023 and 2022, respectively.

9 unchanged sentences

Additions 1 3

Reductions — ( 3 )

Lapse of applicable statutes of limitation ( 13 ) ( 12 )

3 unchanged sentences

Balance at December 31, including interest and penalties $ 101 $ 97

If recognized, $ 66 million of the liability for uncertain tax positions at both December 31, 2023 and 2022, net of any U.S.

If recognized, $ 67 million and $ 66 million of the liability for uncertain tax positions at December 31, 2024 and 2023, respectively, net of any U.S.

Federal tax benefit, would impact our effective tax rate.

25 unchanged sentences

Basic common shares (based upon weighted average) 218 225 231

Stock option dilution 1 1 2

Dilutive effect of stock options and other stock-based incentives 1 1 1

Diluted common shares 219 226 232

13 unchanged sentences

Number of performance restricted stock units 47 — 15

Common shares outstanding included on our balance sheet and for the calculation of income per common share do not include unvested stock awards ( 79,000 and 273,000 common shares at December 31, 2023 and 2022, respectively).

Shares outstanding for legal requirements included all common shares that have voting rights (including unvested stock awards).

MASCO CORPORATION

4 unchanged sentences

advertising, competition, contract, data privacy, employment, environmental, insurance coverage, intellectual property, personal injury, product compliance, product liability, securities and warranty.

We believe we have adequate defenses in these matters.

We are also subject to product safety regulations, product recalls and direct claims for product liabilities.

7 unchanged sentences

Settlements made (in cash or kind) during the year ( 43 ) ( 42 )

Other, net (including currency translation and acquisitions) 2 ( 3 )

Other, net (including currency translation, acquisitions, and divestitures) ( 4 ) 2

Balance at December 31 $ 81 $ 83

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data