On February 11, Masco, the parent company of international coatings giant Behr, announced its financial results for the fourth quarter and full year of 2024. The company reported a net sales revenue of $7.828 billion for 2024, a 2% year-over-year decline. Excluding acquisitions and divestitures, net sales declined by 1% in local currency. The decline was primarily due to decreased sales volume of North American plumbing products, lower net selling prices in the decorative architectural products segment, and an unfavorable sales mix in plumbing products, each contributing to a 1% drop. These declines were partially offset by an increase in net selling prices for plumbing products, which boosted sales by 1%.
In local currency, North American sales declined by 2%, while international sales remained flat. The gross margin increased by 60 basis points from 35.6% to 36.2%. Operating profit grew by 1% to $1.363 billion, benefiting from the absence of impairment charges on other intangible assets recorded in 2023. Net profit was $874 million, an 8.96% decline year-over-year, with earnings per share (EPS) falling 6% to $3.76 per share.
In the fourth quarter of 2024, net sales declined by 3% to $1.828 billion. Excluding divestitures, net sales increased by 1% in local currency. North American sales declined by 4%, while international sales grew by 2% in local currency. The plumbing products segment reported a 1% decline in net sales to $1.189 billion, with a similar 1% decrease in local currency. The decorative architectural products segment experienced a 6% decline in net sales to $639 million; however, excluding divestitures, net sales grew by 5% in local currency. The gross margin remained steady at 34.7%, while operating profit surged by 17% from $247 million to $290 million.
"We have delivered another quarter of strong operational performance," said Masco President and CEO Keith Allman. "Our adjusted operating margin expanded by 140 basis points in the fourth quarter, marking the seventh consecutive quarter of year-over-year margin expansion, while adjusted EPS grew by 7%. Furthermore, we returned $331 million to shareholders through dividends and share repurchases this quarter as part of our capital allocation strategy."
Allman continued, "By focusing on cost-saving initiatives and operational efficiency, we expanded our adjusted operating margin by 70 basis points to 17.5% for the full year 2024. Despite a challenging demand environment, we achieved 6% growth in adjusted EPS. Our strong cash flow allowed us to return $1 billion to shareholders through dividends and share buybacks."
"For 2025, we expect global demand in the repair and remodeling market to remain flat to low single-digit growth. After adjusting for divestitures and currency impacts, we anticipate our sales to be roughly flat to low single-digit growth, as we expect to continue outperforming the market," said Allman. "Based on our market outlook, expected operational performance, and capital deployment strategy, we forecast full-year adjusted EPS to range between $4.20 and $4.45 per share. With our industry-leading portfolio focused on repair and remodeling, a strong balance sheet, and disciplined capital allocation, we believe Masco is well-positioned to continue delivering long-term value to shareholders."
The decorative architectural products segment includes paint products, paint applicators and accessories, cabinets, and other hardware. Before the divestiture of Kichler in Q3 2024, it also included lighting fixtures, ceiling fans, landscape lighting, and LED lighting systems. These products are primarily sold in North and South America under brands such as Behr?, KILZ?, WHIZZ?, and Elder & Jenks? through home center retailers, other retailers, and professional customers.
Architectural coatings accounted for approximately 32% of Masco’s total net sales in 2022, 2023, and 2024. The coatings business generated $2.505 billion in revenue in 2024. Behr products are primarily sold through The Home Depot, which is the segment's largest customer. Behr holds exclusive brand rights in the North American retail sales channel through The Home Depot.
The segment reported net sales of $639 million in Q4 2024, down 6% year-over-year due to divestitures. Excluding divestitures, net sales grew by 5% in local currency. Benefiting from favorable inventory timing, paint product sales increased by mid-single digits. Without this impact, total paint sales declined by low single digits, with PRO paint sales growing by high single digits and DIY paint sales decreasing by mid-single digits. Operating profit for Q4 2024 was $113 million, a 13% year-over-year increase, with an operating margin of 17.7%. Profit growth was driven by higher sales volume, including favorable inventory timing and cost-saving initiatives, partially offset by unfavorable price/cost relationships.
For the full year 2024, the segment reported net sales of $2.975 billion, a 5% year-over-year decline, primarily due to the divestiture of Kichler in Q3 2024, lower net selling prices across the segment, and decreased sales volume in builder hardware products. These declines were partially offset by increased sales volume in paint products. Operating profit was $549 million, a 5% decline, impacted by lower net selling prices and the absence of insurance settlement payments received in 2023. However, these factors were partially offset by cost-saving initiatives, the absence of intangible asset impairment charges from 2023, and lower sales commissions.
For 2024, excluding the impact of inventory benefits, PRO paint sales grew by mid-single digits, slightly exceeding expectations, while DIY paint sales declined by high single digits, in line with projections. The segment’s full-year operating profit margin improved by 70 basis points to 18.5%.
CEO Keith J. Allman highlighted Masco’s continued investment in its paint business, service expansion, and strong partnership with The Home Depot, which helped grow market share in both DIY and PRO paint categories. The PRO paint category exceeded $900 million in sales for 2024, representing more than a 70% increase since 2020. The company’s products resonate with PRO painters, allowing Masco to capitalize on significant growth opportunities in the PRO paint market.
Regarding capital allocation, Masco’s strategy remains unchanged. The company prioritizes reinvestment in its business to maintain and expand its market leadership, particularly in domestic plumbing, wholesale channels, international plumbing, and PRO paint. Additionally, Masco remains committed to maintaining a strong investment-grade balance sheet, targeting a 30% dividend payout ratio, and allocating excess free cash flow to share repurchases or acquisitions. The company expects to deploy approximately $600 million for share repurchases or acquisitions in 2025.
Masco’s merger and acquisition strategy remains selective, seeking strategic acquisitions that align with its long-term goals and provide the right returns. The company aims for an annual revenue growth rate of 1% to 3% through acquisitions.
Masco CFO Richard Westenberg stated that the company expects a low single-digit decline in 2025 sales, but operating margins are projected to expand from 17.5% in 2024 to approximately 18%. The 2025 sales guidance assumes a flat to low single-digit growth environment in the global repair and remodeling market. The divestiture of Kichler in 2024 is expected to reduce 2025 sales by approximately 2%.
Westenberg also noted that for the decorative architectural products segment, 2025 sales are expected to decline by mid-single digits or remain roughly flat excluding divestitures. PRO paint sales are projected to grow by mid-single digits, while DIY paint sales are expected to decline by low single digits. The segment’s full-year 2025 operating margin is anticipated to rise to 19%-19.5%, driven by divestitures and cost-saving measures.
