UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20222023
or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________

Commission file number: 1-5794

Masco Corporation
(Exact name of Registrant as Specified in its Charter)
Delaware
38-1794485
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer Identification No.)
Delaware38-1794485
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer Identification No.)
17450 College Parkway,Livonia,Michigan48152
(Address of Principal Executive Offices)(Zip Code)
(313) 274-7400
(Registrant's telephone number, including area code)

Securities registered pursuantRegistered Pursuant to Section 12(b) of the Act:
Title of each classEach ClassTrading SymbolName of each exchange on which registeredEach Exchange
On Which Registered
Common Stock, $1.00 par valueMASNew York Stock Exchange

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

o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐þ No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒☑ Accelerated filer☐
Non-accelerated filer
☐ 
Smaller reporting company
☐
 Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ YesNo ☒ Noþ

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

Class Shares Outstanding at September 30, 20222023
Common stock, par value $1.00 per share 225,529,123224,500,911


MASCO CORPORATION

INDEX

  Page No.
PART I.
 
1
Condensed Consolidated Balance Sheets —- as of September 30, 20222023 and December 31, 20212022
1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 20222023 and 20212022
2
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 20222023 and 20212022
3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20222023 and 20212022
4
Condensed Consolidated Statements of Shareholders’Shareholders' Equity for the Three and Nine Months Ended September 30, 20222023 and 20212022
5
Notes to Condensed Consolidated Financial Statements
7
2115
3126
PART II.
3227
3227
3227
27
27
3328
3429









MASCO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30, 2023 and December 31, 2022
(In Millions, Except Share Data)
 September 30, 2023December 31, 2022
ASSETS
Current assets:  
Cash and cash investments$560 $452 
Receivables1,245 1,149 
Inventories1,046 1,236 
Prepaid expenses and other113 109 
Total current assets2,964 2,946 
Property and equipment, net1,077 975 
Goodwill593 537 
Other intangible assets, net395 350 
Operating lease right-of-use assets270 266 
Other assets72 113 
Total assets$5,371 $5,187 
LIABILITIES
Current liabilities:
Accounts payable$844 $877 
Notes payable66 205 
Accrued liabilities752 807 
Total current liabilities1,662 1,889 
Long-term debt2,946 2,946 
Noncurrent operating lease liabilities260 255 
Other liabilities336 339 
Total liabilities$5,204 $5,429 
Commitments and contingencies (Note M)
Redeemable noncontrolling interest19 20 
EQUITY
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share
   Authorized shares: 1,400,000,000;
   Issued and outstanding: 2023 – 224,400,000; 2022 – 225,300,000
224 225 
Preferred shares authorized: 1,000,000;
   Issued and outstanding: 2023 and 2022 – None
— — 
Paid-in capital4 16 
Retained deficit(507)(947)
Accumulated other comprehensive income223 226 
Total Masco Corporation's shareholders' deficit(56)(480)
Noncontrolling interest204 218 
Total equity148 (262)
Total liabilities and equity$5,371 $5,187 
See notes to condensed consolidated financial statements.
1
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three and Nine Months Ended September 30, 2023 and 2022
(In Millions, Except Per Common Share Data)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net sales$1,979 $2,204 $6,085 $6,757 
Cost of sales1,235 1,509 3,903 4,589 
Gross profit744 695 2,182 2,168 
Selling, general and administrative expenses361 344 1,081 1,056 
Operating profit383 351 1,101 1,112 
Other income (expense), net:  
Interest expense(26)(29)(82)(82)
Other, net(11)(12)(14)4 
(37)(41)(96)(78)
Income before income taxes346 310 1,005 1,034 
Income tax expense86 77 246 255 
Net income260 233 759 779 
Less: Net income attributable to noncontrolling interest11 15 42 50 
Net income attributable to Masco Corporation$249 $218 $717 $729 
Income per common share attributable to Masco Corporation: 
Basic:  
Net income$1.11 $0.97 $3.19 $3.14 
Diluted:  
Net income$1.10 $0.97 $3.17 $3.13 






See notes to condensed consolidated financial statements.
2
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
For the Three and Nine Months Ended September 30, 2023 and 2022
(In Millions)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Net income$260 $233 $759 $779 
Less: Net income attributable to noncontrolling interest11 15 42 50 
Net income attributable to Masco Corporation$249 $218 $717 $729 
Other comprehensive loss, net of tax  
Cumulative translation adjustment$(25)$(54)$(10)$(120)
Pension and other post-retirement benefits1 1 1 3 
Other comprehensive loss, net of tax(24)(53)(9)(117)
Less: Other comprehensive loss attributable to noncontrolling interest(6)(14)(6)(26)
Other comprehensive loss attributable to Masco Corporation$(18)$(39)$(3)$(91)
Total comprehensive income$236 $180 $750 $662 
Total comprehensive income attributable to noncontrolling interest5 1 36 24 
Total comprehensive income attributable to Masco Corporation$231 $179 $714 $638 






























MASCO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30, 2022 and December 31, 2021
(In Millions, Except Share Data)
September 30, 2022December 31, 2021
ASSETS
Current Assets:  
Cash and cash investments$464 $926 
Receivables1,330 1,171 
Prepaid expenses and other131 109 
Inventories:  
Finished goods807 702 
Raw material417 383 
Work in process115 131 
 1,339 1,216 
Total current assets3,264 3,422 
Property and equipment, net902 896 
Goodwill544 568 
Other intangible assets, net359 388 
Operating lease right-of-use assets263 187 
Other assets85 114 
Total assets$5,417 $5,575 
LIABILITIES
Current Liabilities:  
Accounts payable$1,048 $1,045 
Notes payable405 10 
Accrued liabilities771 884 
Total current liabilities2,224 1,939 
Long-term debt2,946 2,949 
Noncurrent operating lease liabilities253 172 
Other liabilities410 437 
Total liabilities5,833 5,497 
Commitments and contingencies (Note P)
Redeemable noncontrolling interest2022 
EQUITY
Masco Corporation's shareholders' equity:  
Common shares, par value $1 per share
  Authorized shares: 1,400,000,000;
  Issued and outstanding: 2022 – 225,300,000; 2021 – 241,200,000
225 241 
Preferred shares authorized: 1,000,000;
  Issued and outstanding: 2022 and 2021 – None
— — 
Paid-in capital15 — 
Retained deficit(998)(652)
Accumulated other comprehensive income141 232 
Total Masco Corporation's shareholders' (deficit)(617)(179)
Noncontrolling interest181 235 
Total equity(436)56 
Total liabilities and equity$5,417 $5,575 
See notes to condensed consolidated financial statements.
13

MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCASH FLOWS (Unaudited)
For the Nine Months Ended September 30, 2023 and 2022
(In Millions)
Nine Months Ended September 30,
 20232022
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:  
Cash provided by operations$954 $954 
Increase in receivables(120)(207)
Decrease (increase) in inventories199 (164)
Decrease in accounts payable and accrued liabilities, net(105)(63)
Net cash from operating activities928 520 
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: 
Purchase of Company common stock(126)(914)
Cash dividends paid(193)(195)
Dividends paid to noncontrolling interest(49)(68)
Proceeds from short-term borrowings77 — 
Payment of short-term borrowings(11)— 
Proceeds from term loan— 500 
Payment of term loan(200)(100)
Proceeds from the exercise of stock options37 1 
Employee withholding taxes paid on stock-based compensation(29)(17)
Decrease in debt, net(4)(9)
Net cash for financing activities(498)(802)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures(181)(137)
Acquisition of business, net of cash acquired(136)— 
Other, net(4)(7)
Net cash for investing activities(321)(144)
Effect of exchange rate changes on cash and cash investments(1)(36)
CASH AND CASH INVESTMENTS: 
Increase (decrease) for the period108 (462)
At January 1452 926 
At September 30$560 $464 

See notes to condensed consolidated financial statements.
4
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)
For the Three and Nine Months Ended September 30, 20222023 and 20212022
(In Millions, Except Per Common Share Data)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net sales$2,204 $2,204 $6,757 $6,353 
Cost of sales1,509 1,451 4,589 4,109 
Gross profit695 753 2,168 2,244 
Selling, general and administrative expenses344 368 1,056 1,057 
Operating profit351 385 1,112 1,187 
Other income (expense), net:    
Interest expense(29)(26)(82)(253)
Other, net(12)(17)4 (438)
 (41)(43)(78)(691)
Income before income taxes310 342 1,034 496 
Income tax expense77 103 255 158 
Net income233 239 779 338 
Less: Net income attributable to noncontrolling interest15 19 50 60 
Net income attributable to Masco Corporation$218 $220 $729 $278 
 Income per common share attributable to Masco Corporation:   
Basic:    
Net income$0.97 $0.89 $3.14 $1.08 
Diluted:    
Net income$0.97 $0.89 $3.13 $1.07 
See notes to condensed consolidated financial statements.
2

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

For the Three and Nine Months Ended September 30, 2022 and 2021
(In Millions)
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net income$233 $239 $779 $338 
Less: Net income attributable to noncontrolling interest15 19 50 60 
Net income attributable to Masco Corporation$218 $220 $729 $278 
Other comprehensive (loss) income, net of tax (Note L):    
Cumulative translation adjustment$(54)$(20)$(120)$(19)
Interest rate swaps— — — 7 
Pension and other post-retirement benefits1 2 3 365 
Other comprehensive (loss) income, net of tax(53)(18)(117)353 
Less: Other comprehensive (loss) attributable to noncontrolling interest(14)(5)(26)(15)
Other comprehensive (loss) income attributable to Masco Corporation$(39)$(13)$(91)$368 
Total comprehensive income$180 $221 $662 $691 
Less: Total comprehensive income attributable to noncontrolling interest1 14 24 45 
Total comprehensive income attributable to Masco Corporation$179 $207 $638 $646 
 Total
Common
Shares
($1 par value)
Paid-In
Capital		Retained (Deficit) EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling
Interest
Balance, January 1, 2022$56 $241 $— $(652)$232 $235 
Total comprehensive income (loss)242 — — 233 (6)15 
Shares issued1 1 — — — — 
Shares retired:
Repurchased(364)(6)(27)(331)— — 
Surrendered (non-cash)(17)— — (17)— — 
Cash dividends declared(67)— — (67)— — 
Redeemable noncontrolling interest - redemption adjustment1 — — 1 — — 
Stock-based compensation27 — 27 — — — 
Balance, March 31, 2022$(121)$236 $— $(833)$226 $250 
Total comprehensive income (loss)240 — — 278 (46)8 
Shares retired:
Repurchased(550)(11)(5)(534)— — 
Cash dividends declared(64)— — (64)— — 
Dividends declared to noncontrolling interest(79)— — — — (79)
Redeemable noncontrolling interest - redemption adjustment(1)— — (1)— — 
Stock-based compensation12 — 12 — — — 
Balance, June 30, 2022$(563)$225 $7 $(1,154)$180 $179 
Total comprehensive income (loss)181 — — 218 (39)2 
Cash dividends declared(64)— — (64)— — 
Redeemable noncontrolling interest - redemption adjustment2 — — 2 — — 
Stock-based compensation8 — 8 — — — 
Balance, September 30, 2022$(436)$225 $15 $(998)$141 $181 



See notes to condensed consolidated financial statements.
3

MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Nine Months Ended September 30, 2022 and 2021
(In Millions)
Nine Months Ended September 30,
 20222021
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:  
Cash provided by operations$954 $904 
Increase in receivables(207)(219)
Increase in inventories(164)(237)
(Decrease) increase in accounts payable and accrued liabilities, net(63)147 
Net cash from operating activities520 595 
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:  
Retirement of notes— (1,326)
Purchase of Company common stock(914)(878)
Cash dividends paid(195)(154)
Dividends paid to noncontrolling interest(68)(43)
Issuance of notes, net of issuance costs— 1,481 
Proceeds from term loan500 — 
Payment of term loan(100)— 
Debt extinguishment costs— (160)
Proceeds from the exercise of stock options1 1 
Employee withholding taxes paid on stock-based compensation(17)(14)
Decrease in debt, net(9)(2)
Net cash for financing activities(802)(1,095)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:  
Capital expenditures(137)(82)
Acquisition of businesses, net of cash acquired— (57)
Proceeds from disposition of:  
Businesses, net of cash disposed— 5 
Other financial investments1 170 
Other, net(8)7 
Net cash (for) from investing activities(144)43 
Effect of exchange rate changes on cash and cash investments(36)(15)
CASH AND CASH INVESTMENTS:  
Decrease for the period(462)(472)
At January 1926 1,326 
At September 30$464 $854 
See notes to condensed consolidated financial statements.
4

MASCO CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three and Nine Months Ended September 30, 2022 and 2021
(In Millions, Except Per Common Share Data)
Total
Common
Shares
($1 par value)
Paid-In
Capital		Retained Earnings
(Deficit)		Accumulated
Other
Comprehensive
 (Loss) Income		Noncontrolling
Interest
Balance, January 1, 2021$421 $258 $— $79 $(142)$226 
Total comprehensive income (loss)90 — — 94 (12)8 
Shares issued— 1 (1)— — — 
Shares retired:
Repurchased(303)(6)(27)(270)— — 
Surrendered (non-cash)(13)— — (13)— — 
Redeemable noncontrolling interest - redemption adjustment(6)— — (6)— — 
Stock-based compensation28 — 28 — — — 
Balance, March 31, 2021$217 $253 $— $(116)$(154)$234 
Total comprehensive income (loss)380 — — (36)393 23 
Shares retired:
Repurchased(447)(6)(12)(429)— — 
Cash dividends declared(59)— — (59)— — 
Dividends declared to noncontrolling interest(43)— — — — (43)
Stock-based compensation12 — 12 — — — 
Balance, June 30, 2021$60 $247 $— $(640)$239 $214 
Total comprehensive income (loss)220 — — 220 (13)13 
Shares retired:
Repurchased(128)(4)(8)(116)— — 
Cash dividends declared(59)— — (59)— — 
Stock-based compensation8 — 8 — — — 
Balance, September 30, 2021$101 $243 $— $(595)$226 $227 

















5

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

For the Three and Nine Months Ended September 30, 20222023 and 20212022
(In Millions, Except Per Common Share Data)

Total
Common
Shares
($1 par value)
Paid-In
Capital		Retained
(Deficit) Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Noncontrolling
Interest		 Total
Common
Shares
($1 par value)
Paid-In
Capital		Retained (Deficit) EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling
Interest
Balance, January 1, 2022$56 $241 $— $(652)$232 $235 
Total comprehensive income (loss)242 — — 233 (6)15 
Balance, January 1, 2023Balance, January 1, 2023$(262)$225 $16 $(947)$226 $218 
Total comprehensive incomeTotal comprehensive income243 — — 205 17 21 
Shares issuedShares issued1 1 — — — — Shares issued6 1 5 — — — 
Shares retired:Shares retired:Shares retired:
RepurchasedRepurchased(364)(6)(27)(331)— — Repurchased(56)(1)(32)(23)— — 
Surrendered (non-cash)Surrendered (non-cash)(17)— — (17)— — Surrendered (non-cash)(17)— — (17)— — 
Cash dividends declaredCash dividends declared(67)— — (67)— — Cash dividends declared(65)— — (65)— — 
Redeemable noncontrolling interest - redemption adjustment1 — — 1 — — 
Stock-based compensationStock-based compensation27 — 27 — — — Stock-based compensation11 — 11 — — — 
Balance, March 31, 2022$(121)$236 $— $(833)$226 $250 
Balance, March 31, 2023Balance, March 31, 2023$(140)$225 $— $(847)$243 $239 
Total comprehensive income (loss)Total comprehensive income (loss)240 — — 278 (46)8 Total comprehensive income (loss)270 — — 263 (2)9 
Shares issuedShares issued11 1 10 — — — 
Shares retired:Shares retired:Shares retired:
RepurchasedRepurchased(550)(11)(5)(534)— — Repurchased(25)(1)(1)(23)— — 
Cash dividends declaredCash dividends declared(64)— — (64)— — Cash dividends declared(64)— — (64)— — 
Dividends declared to noncontrolling interestDividends declared to noncontrolling interest(79)— — — — (79)Dividends declared to noncontrolling interest(49)— — — — (49)
Redeemable noncontrolling interest - redemption adjustment(1)— — (1)— — 
Stock-based compensationStock-based compensation12 — 12 — — — Stock-based compensation4 — 4 — — — 
Balance, June 30, 2022$(563)$225 $7 $(1,154)$180 $179 
Balance, June 30, 2023Balance, June 30, 2023$7 $225 $13 $(671)$241 $199 
Total comprehensive income (loss)Total comprehensive income (loss)181 — — 218 (39)2 Total comprehensive income (loss)236 — — 249 (18)5 
Shares issuedShares issued9 — 9 — — — 
Shares retired:Shares retired:
RepurchasedRepurchased(45)(1)(23)(21)— — 
Cash dividends declaredCash dividends declared(64)— — (64)— — Cash dividends declared(64)— — (64)— — 
Redeemable noncontrolling interest - redemption adjustment2 — — 2 — — 
Stock-based compensationStock-based compensation8 — 8 — — — Stock-based compensation5 — 5 — — — 
Balance, September 30, 2022$(436)$225 $15 $(998)$141 $181 
Balance, September 30, 2023Balance, September 30, 2023$148 $224 $4 $(507)$223 $204 
See notes to condensed consolidated financial statements.
6

MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A. ACCOUNTING POLICIES

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to fairly state our financial position at September 30, 2022,2023, our results of operations and comprehensive income (loss) for the three and nine months ended September 30, 20222023 and 2021,2022, cash flows for the nine months ended September 30, 20222023 and 20212022 and changes in shareholders' equity for the three and nine months ended September 30, 20222023 and 2021.2022. The condensed consolidated balance sheet at December 31, 20212022 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted ("GAAP") in the United States of America.
Recently Adopted Accounting Pronouncements.In August 2020,September 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. We adopted this standard for annual periods beginning January 1, 2022. The adoption of this new standard did not impact our financial position or results of operations.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. We adopted this standard for annual periods beginning January 1, 2022. The adoption of this new standard did not impact our financial position or results of operations.

Recently Issued Accounting Pronouncements. 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. ASU 2022-04 is effectiveWe adopted this standard for annual periods on a retrospective basis, including interim periods within those annual periods, beginning January 1, 2023, except for the amendment on rollforward information, which is effective prospectively for annual periods beginning January 1, 2024 and will be adopted at that time. The adoption of this guidance modified our disclosures, but did not have an impact on our financial position and results of operations.
Recently Issued Accounting Pronouncements. In March 2023, the FASB issued ASU 2023-02, "Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method,” which permits an entity to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met, regardless of the tax credit program from which the income tax credits are received. ASU 2023-02 is effective for annual periods on either a modified retrospective or retrospective basis, including interim periods within those annual periods, beginning January 1, 2024. Early adoption is permitted. TheWe plan to adopt this standard beginning January 1, 2024, and do not anticipate that the adoption of this guidancenew standard will modify our disclosures, but will not have a material impacteffect on our financial statements.position or results of operations.

B. ACQUISITIONS

In the third quarter of 2021,2023, we acquired all of the share capital of Steamist, Inc. ("Steamist"Sauna360 Group Oy (“Sauna360”) for approximately $56€124 million in cash. Steamist is($136 million), net of cash acquired. Sauna360 has a manufacturerportfolio of residential steam bath products that are complementary to many of our plumbing products. Thisincludes traditional, infrared, and wood-burning saunas as well as steam showers. The business is included in ourwithin the Plumbing Products segment. In connection with this acquisition, we recognized $31$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 1116 years. We also recognized $29$60 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. Working capitalThe purchase price allocation for this acquisition is based on analysis of information as of the acquisition date that was available through September 30, 2023, and other adjustments were finalized with the seller in the fourth quarter of 2021, resulting in no significant changes.
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 will be 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 forupdated through the acquisition of this equity interest in advance of the transaction closing on January 4, 2021. ESS is a manufacturer of shower channel drains and 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 amortizationmeasurement 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.if necessary.













7


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

B. ACQUISITIONS, Concluded
The remaining 24.9 percent equity interest in ESS is subject to a call and put option that is exercisable by Hansgrohe SE or the sellers, respectively, any time after December 31, 2023. The redemption value of the call and put option is 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 condensed consolidated balance sheet. We elected to adjust the redeemable noncontrolling interest to its full redemption amount directly into retained deficit.C. REVENUE

In the fourth quarter of 2020, we acquired substantially all of the net assets of Kraus USA Inc. ("Kraus"), a designer and distributor of sinks, faucets and accessories for the kitchen and bathroom, for approximately $103 million and an additional cash payment of up to $50 million to be paid in 2023, contingent upon the achievement of certain financial performance metrics for the year ending December 31, 2022. As of the closing date of the acquisition, the contingent consideration was assigned a fair value of approximately $8 million. Refer to Note G for additional information regarding the measurement of the contingent consideration liability. This business expands our product offerings to our customers and our online presence under the Kraus brand. This business is included in our Plumbing Products segment. In connection with this acquisition, we recognized $25 million of indefinite-lived intangible assets, which is related to trademarks, and $49 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 $20 million of goodwill, which is generally tax deductible, and is related primarily to the expected synergies from combining the operations into our business. During the first quarter of 2021, we revised 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 to goodwill.

C. DIVESTITURES
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 nine months ended September 30, 2021, which is included in other, net in our condensed 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 nine months ended September 30, 2022, we recorded a $2 million pre-tax post-closing gain related to the finalization of working capital items in other, net in our condensed 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.

D. REVENUE
Our revenues are derived primarily from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions:
Three Months Ended September 30, 2022Three Months Ended September 30, 2023
Plumbing ProductsDecorative Architectural ProductsTotalPlumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:Primary geographic markets:Primary geographic markets:
North AmericaNorth America$912 $880 $1,792 North America$814 $788 $1,602 
International, principally EuropeInternational, principally Europe412 — 412 International, principally Europe377 — 377 
TotalTotal$1,324 $880 $2,204 Total$1,191 $788 $1,979 
Nine Months Ended September 30, 2023
Plumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:Primary geographic markets:
North AmericaNorth America$2,428 $2,447 $4,875 
International, principally EuropeInternational, principally Europe1,210 — 1,210 
TotalTotal$3,638 $2,447 $6,085 
Three Months Ended September 30, 2022
Plumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:
North America$912 $880 $1,792 
International, principally Europe412 — 412 
Total$1,324 $880 $2,204 
Nine Months Ended September 30, 2022
Plumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:
North America$2,730 $2,701 $5,431 
International, principally Europe1,326 — 1,326 
Total$4,056 $2,701 $6,757 








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

D. REVENUE, Concluded
Nine Months Ended September 30, 2022
Plumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:
North America$2,730 $2,701 $5,431 
International, principally Europe1,326 — 1,326 
Total$4,056 $2,701 $6,757 
Three Months Ended September 30, 2021
Plumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:
North America$878 $875 $1,753 
International, principally Europe451 — 451 
Total$1,329 $875 $2,204 
Nine Months Ended September 30, 2021
Plumbing ProductsDecorative Architectural ProductsTotal
Primary geographic markets:
North America$2,553 $2,446 $4,999 
International, principally Europe1,354 — 1,354 
Total$3,907 $2,446 $6,353 

Our contract asset balance was $2 million and $1 million at September 30, 2022 and December 31, 2021, respectively. Our contract liability balance was $19 million and $67 million at September 30, 2022 and December 31, 2021, respectively.
We recognized $8$8 million of revenue for both the three months ended September 30, 20222023 and we reversed $1 million of revenue for the three months ended September 30, 20212022, related to performance obligations settled in previous quarters of the same year. We recognized $6 million and $11 million of revenue for the three and nine months ended September 30, 2023, respectively, and $5 million and $18 million of revenue for the three and nine months ended September 30, 2022, respectively, and $3 million and $7 million of revenue for the three and nine months ended September 30, 2021, respectively, related to performance obligations settled in previous years.
Our contract asset balance was $2 million and $1 million at September 30, 2023 and December 31, 2022, respectively. Our contract liability balance was $15 million and $61 million at September 30, 2023 and December 31, 2022, respectively.



8
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
C. REVENUE (Concluded)

Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions:
Nine Months Ended
September 30, 2022		Twelve Months Ended December 31, 2021
Balance at January 1$6 $7 
Provision for expected credit losses during the period3 1 
Write-offs charged against the allowance(2)(2)
Recoveries of amounts previously written off1 1 
Other (A)
— (1)
Balance at end of period$8 $6 
Nine Months Ended September 30, 2023Twelve Months Ended December 31, 2022
Balance at January 1$8 $6 
Provision for expected credit losses during the period4 5 
Write-offs charged against the allowance(4)(4)
Recoveries of amounts previously written off1 1 
Balance at end of period$9 $8 
(A)    As a result of Hüppe being divested in May 2021, $1 million for the year ended December 31, 2021 was removed from allowance for credit losses.

E.D. DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense was $105$107 million and $114$105 million for the nine months ended September 30, 20222023 and 2021,2022, respectively.

E. INVENTORIES

9The components of inventory were as follows, in millions:
 At September 30, 2023At December 31, 2022
Finished goods$651 $715 
Raw materials300 408 
Work in process95 113 
Total$1,046 $1,236 


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

F. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill at September 30, 2022,2023, by segment, was as follows, in millions:
Gross Goodwill At September 30, 2022Accumulated
Impairment
Losses		Net Goodwill At September 30, 2022
Plumbing Products$599 $(301)$298 
Decorative Architectural Products366 (120)246 
Total$965 $(421)$544 

 Gross Goodwill At September 30, 2023Accumulated Impairment LossesNet Goodwill At September 30, 2023
Plumbing Products$667 $(301)$366 
Decorative Architectural Products366 (139)227 
Total$1,033 $(440)$593 
The changes in the carrying amount of goodwill for the nine months ended September 30, 2022,2023, by segment, were as follows, in millions:
Gross Goodwill At December 31, 2021Accumulated
Impairment
Losses		Net Goodwill At December 31, 2021Other (B)Net Goodwill At September 30, 2022 Gross Goodwill At December 31, 2022Accumulated Impairment LossesNet Goodwill At December 31, 2022Acquisitions (A)Foreign Currency TranslationNet Goodwill At September 30, 2023
Plumbing Products (A)
Plumbing Products (A)
$623 $(301)$322 $(24)$298 
Plumbing Products (A)
$611 $(301)$310 $60 $(4)$366 
Decorative Architectural ProductsDecorative Architectural Products366 (120)246 — 246 Decorative Architectural Products366 (139)227 — — 227 
TotalTotal$989 $(421)$568 $(24)$544 Total$977 $(440)$537 $60 $(4)$593 
(A)    As a resultIn the third quarter of Hüppe being divested in May 2021, both gross goodwill and accumulated impairment losses2023, we acquired Sauna360. Refer to Note B for the Plumbing Products segment were reduced by $39 million.additional information.
(B)    Other consists of the effect of foreign currency translation.



9
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
F. GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded)

The carrying value of our other indefinite-lived intangible assets was $108were $123 million and $109$102 million at September 30, 20222023 and December 31, 2021,2022, respectively, and principally included registered trademarks. The carrying value of our definite-lived intangible assets was $251was $272 million (net of accumulated amortization of $110 million) at September 30, 2023 and $248 million (net of accumulated amortization of $85 million) and $279 million (net of accumulated amortization of $75$94 million) at September 30, 2022 and December 31, 2021, respectively,2022, and principally included customer relationships. The increase in our indefinite-lived and definite-lived intangible assets is primarily a result of our acquisition of Sauna360.

G. FAIR VALUE OF FINANCIAL INSTRUMENTSSUPPLIER FINANCE PROGRAM
Kraus Acquisition Contingent Consideration.
 As described
We facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. A third party administers the program; our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. We do not enter into agreements with any of the participating financial institutions in Note B,connection with the program. The range of payment terms we may be obligated to pay up to an additionalnegotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.
All outstanding payments owed under the program are recorded within accounts payable in our condensed consolidated balance sheets. The amounts confirmed as valid under the program and included in accounts payable were $60 million and $50 million inat September 30, 2023 for the Kraus acquisition contingent upon the achievement of certain financial performance metrics for the year endingand December 31, 2022. The measurement of2022, respectively. Of the liability for contingent consideration is based on significant inputs thatamounts confirmed as valid under the program, the amounts owed to participating financial institutions were $21 million and $29 million at September 30, 2023 and December 31, 2022, respectively. All payments made under the program are not observable in the market, and are therefore classified as Level 3 inputs. Examples of utilized unobservable inputs are estimated future revenues and earnings of the acquired business and an applicable discount rate. The estimate of the liability may fluctuate if there are changes in the forecast of the acquired business' future revenues and earnings,recorded as a result of actual levels achieved, ordecrease in the discount rate used to determine the present value of contingent future cash flows. All subsequent remeasurements from the initial estimate at the time of acquisition are recorded in other,accounts payable and accrued liabilities, net, in our condensed consolidated statements of operations, as described in Note N. As of September 30, 2022, we do not believe the financial performance metrics will be met and the fair value of the liability was estimated to be nil, using probability weighted discounted cash flows and a discount rate that reflects the uncertainty surrounding the expected outcomes, which we believe is appropriate and representative of a market participant assumption. The fair value of the liability was estimated to be $24 million as of December 31, 2021.

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 364-day term loan has an interest rate that resets monthly and the fair value of this instrument approximates the carrying value at September 30, 2022. The aggregate estimated market value of our short-term and long-term debt at September 30, 2022 was approximately $2.8 billion, compared with the aggregate carrying value of $3.4 billion. The aggregate estimated market value of our short-term and long-term debt at December 31, 2021 was approximately $3.2 billion, compared with the aggregate carrying value of $3.0 billion.





10


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

H. WARRANTY LIABILITY
Changes in our warranty liability were as follows, in millions: 
Nine Months Ended
September 30, 2022		Twelve Months Ended December 31, 2021
Balance at January 1$80 $83 
Accruals for warranties issued during the period31 38 
Accruals related to pre-existing warranties2 (8)
Settlements made (in cash or kind) during the period(24)(31)
Other, net (including currency translation and acquisitions)(4)(2)
Balance at end of period$85 $80 
flows.

I.H. DEBT

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. Upon entry into the 2022 Credit Agreement, our credit agreement dated March 13, 2019, as amended, with an aggregate commitment of $1.0 billion, was terminated.

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,pounds sterling, Canadian dollars 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 $125 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 at September 30, 2022.
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 1.0%; 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. Foreign currency revolving credit loans denominated in European euros bear interest at the adjusted EURIBOR rate, plus an applicable margin based upon our then-applicable corporate credit ratings. The various benchmarks are subject to applicable floors.

September 30, 2023.
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.
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). We were in compliance with all covenants and no borrowings were outstanding at September 30, 2022. 

2023. 



11

10

MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
H. DEBT (Concluded)

I. DEBT, Concluded
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. The senior unsecured term loan and commitments thereunder arewere subject to prepayment or termination at our option and the loans will bearbore interest at SOFR plus a spread adjustment and 0.70%. The covenants, including the financial covenants, arewere substantially the same as those in the 2022 Credit Agreement. We repaid $100$300 million during 2022 and the three months endedremaining $200 million upon the maturity of the term loan on April 26, 2023.
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 contain no financial covenants and €60 million ($63 million) remained borrowed and outstanding at a weighted average interest rate of 4.807% at September 30, 2022. We repaid an additional $65 million subsequent to2023.
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 aggregate estimated market value of our short-term and long-term debt at September 30, 2022.

On March 4, 2021, we issued $600 million2023 was approximately $2.5 billion, compared with the aggregate carrying value of 1.500% Notes due February 15, 2028, $600 million$3.0 billion. The aggregate estimated market value of 2.000% Notes due February 15, 2031our short-term and $300 millionlong-term debt at December 31, 2022 was approximately $2.7 billion, compared with the aggregate carrying value 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 nine months ended September 30, 2021, which was recorded as interest expense in the condensed consolidated statement of operations.$3.2 billion.

J. STOCK-BASED COMPENSATION
Our 2014 Long Term Stock Incentive Plan provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At September 30, 2022, outstanding stock-based incentives were in the form of restricted stock units, performance restricted stock units, stock options, long-term stock awards and phantom stock awards.I. SEGMENT INFORMATION

Pre-tax compensation expense for these stock-based incentivesInformation by segment and geographic area was as follows, in millions:

Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Restricted stock units$4 $3 $29 $26 
Performance restricted stock units1 2 5 8 
Stock options1 1 7 6 
Long-term stock awards2 2 6 8 
Phantom stock awards— 1 — 3 
Total$8 $9 $47 $51 
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.
We granted approximately 608,000 restricted stock units in the nine months ended September 30, 2022 with a weighted average grant date fair value of approximately $59 per share.


12


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

J. STOCK-BASED COMPENSATION, Continued
Our restricted stock unit activity was as follows, units in thousands: 
Nine Months Ended September 30,
 20222021
Unvested restricted stock units at January 1934 435 
Weighted average grant date fair value$54 $47 
Restricted stock units granted608 663 
Weighted average grant date fair value$59 $57 
Restricted stock units vested350 141 
Weighted average grant date fair value$53 $47 
Restricted stock units forfeited16 16 
Weighted average grant date fair value$56 $54 
Unvested restricted stock units at September 301,176 941 
Weighted average grant date fair value$57 $54 

At September 30, 2022 and 2021, there was $21 million and $18 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 both September 30, 2022 and 2021.

The total market value (at the vesting date) of restricted stock units which vested was $20 million and $8 million during the nine months ended September 30, 2022 and 2021, respectively.

Performance Restricted Stock Units. Under our Long Term Incentive Program, we grant performance restricted stock units to certain senior executives. These performance restricted stock units will vest and share awards will be issued at no cost to the employees, subject to our achievement of specified performance metrics established by our Compensation Committee over a three-year performance period and the recipient's continued employment through the share award date.
During the nine months ended September 30, 2022, we granted approximately 92,000 performance restricted stock units with a grant date fair value of approximately $55 per share and approximately 168,000 shares were issued. No performance restricted stock units were forfeited during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, we granted approximately 85,000 performance restricted stock units with a grant date fair value of approximately $53 per share and approximately 105,000 shares were issued. No performance restricted stock units were forfeited during the nine months ended September 30, 2021.
Stock Options. Stock options are granted to certain key employees.
We granted approximately 338,000 shares of stock options in the nine months ended September 30, 2022 with a grant date weighted average exercise price of approximately $59 per share.

13


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

J. STOCK-BASED COMPENSATION, Continued
Our stock option activity was as follows, shares in thousands: 
Nine Months Ended September 30,
 20222021
Option shares outstanding, January 12,692 2,488 
Weighted average exercise price$37 $33 
Option shares granted338 332 
Weighted average exercise price$59 $56 
Option shares exercised32 18 
Aggregate intrinsic value on date of exercise (A)
$1 million$1 million
Weighted average exercise price$34 $20 
Option shares forfeited10 — 
Weighted average exercise price$37 $11 
Option shares outstanding, September 302,988 2,802 
Weighted average exercise price$39 $36 
Weighted average remaining option term (in years)66
Option shares vested and expected to vest, September 302,928 2,687 
Weighted average exercise price$39 $36 
Aggregate intrinsic value (A)
$30 million$53 million
Weighted average remaining option term (in years)66
Option shares exercisable (vested), September 302,051 1,717 
Weighted average exercise price$34 $30 
Aggregate intrinsic value (A)
$28 million$43 million
Weighted average remaining option term (in years)55
Three Months Ended September 30,Nine Months Ended September 30,
20232022202320222023202220232022
 Net Sales (A)Operating ProfitNet Sales (A)Operating Profit
Our operations by segment were:   
Plumbing Products$1,191 $1,324 $223 $220 $3,638 $4,056 $673 $686 
Decorative Architectural Products788 880 181 151 2,447 2,701 493 498 
Total$1,979 $2,204 $404 $371 $6,085 $6,757 $1,166 $1,184 
Our operations by geographic area were:
North America$1,602 $1,792 $348 $305 $4,875 $5,431 $972 $961 
International, principally Europe377 412 56 66 1,210 1,326 194 223 
Total, as above$1,979 $2,204 404 371 $6,085 $6,757 1,166 1,184 
General corporate expense, net(21)(20)(65)(72)
Operating profit383 351 1,101 1,112 
Other income (expense), net(37)(41)(96)(78)
Income before income taxes$346 $310 $1,005 $1,034 
(A)    Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price), multiplied by the number of shares.

At September 30, 2022 and 2021, there was $2 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 at both September 30, 2022 and 2021.

14


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

J. STOCK-BASED COMPENSATION, Concluded
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 modelInter-segment sales were as follows: 
Nine Months Ended September 30,
 20222021
Weighted average grant date fair value$14.66 $13.61 
Risk-free interest rate1.90 %0.75 %
Dividend yield1.89 %1.67 %
Volatility factor29.00 %30.00 %
Expected option life6 years6 years
Long-Term Stock Awards. Prior to the amendment of our 2014 Long Term Stock Incentive Plan in December 2019, we granted long-term stock awards to our key employees and non-employee Directors. We did not grant shares of long-term stock awards in the nine months ended September 30, 2022 and 2021.
Our long-term stock award activity was as follows, shares in thousands: 
Nine Months Ended September 30,
 20222021
Unvested stock award shares at January 1608 1,125 
Weighted average grant date fair value$37 $36 
Stock award shares vested324 491 
Weighted average grant date fair value$37 $34 
Stock award shares forfeited10 18 
Weighted average grant date fair value$37 $37 
Unvested stock award shares at September 30274 616 
Weighted average grant date fair value$38 $37 

At September 30, 2022 and 2021, there was $4 million and $12 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of one year and two years at September 30, 2022 and 2021, respectively.

The total market value (at the vesting date) of stock award shares which vested was $21 million and $28 million during the nine months ended September 30, 2022 and 2021, respectively.







material.








15

11

MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)
J. OTHER INCOME (EXPENSE), NET

K. EMPLOYEE RETIREMENT PLANS
Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost,Other, net, which is recordedincluded in other income (expense), net, in our condensed consolidated statements of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions:
 Three Months Ended September 30,
 20222021
 QualifiedNon-QualifiedQualifiedNon-Qualified
Service cost$1 $— $1 $— 
Interest cost— 1 1 2 
Expected return on plan assets(1)— (1)— 
Amortization of net loss1 — 2 — 
Net periodic pension cost$1 $1 $3 $2 
 Nine Months Ended September 30,
 20222021
 QualifiedNon-QualifiedQualifiedNon-Qualified
Service cost$2 $— $3 $— 
Interest cost1 3 14 3 
Expected return on plan assets(2)— (8)— 
Settlement loss— — 406 — 
Amortization of net loss3 1 13 2 
Net periodic pension cost$4 $4 $428 $5 

In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans. In the second quarter of 2021, we settled these pension 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 during the nine months ended September 30, 2021.


















16


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


L. RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME
The reclassifications from accumulated other comprehensive income to the condensed consolidated statements of operations were as follows, in millions: 
 Amounts Reclassified 
Accumulated Other Comprehensive IncomeThree Months Ended September 30,Nine Months Ended September 30,Statement of Operations Line Item
2022202120222021
Settlement and amortization of defined-benefit pension and other post-retirement benefits (A):
     
Actuarial losses, net$1 $2 $4 $18 Other, net
Settlement loss— — — 447 Other, net
Tax (benefit)— — (1)(100) 
Net of tax$1 $2 $3 $365  
Interest rate swaps (B)
$— $— $— $2 Interest expense
Tax expense— — — 5  
Net of tax$— $— $— $7  
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Foreign currency transaction losses$(7)$(4)$(7)$(6)
Net periodic pension and post-retirement benefit expense(3)(2)(9)(7)
Income from cash and cash investments3 1 5 2 
Equity investment loss, net(1)(6)(1)(6)
Realized gains from private equity funds— — 1 — 
Contingent consideration (A)
— — — 24 
Loss on sale of businesses, net— — — (1)
Other items, net(3)(1)(3)(2)
Total other, net$(11)$(12)$(14)$4 
(A)In the second quarter of 2021,nine months ended September 30, 2022 we settled our qualified domestic defined-benefit pension plans and recognized $447$24 million of pre-tax actuarial lossesincome from accumulated other comprehensive incomethe revaluation of contingent consideration related to our acquisition of Kraus USA Inc.


K. INCOME TAXES

Our effective tax rate was 25 percent and $9624 percent for the three and nine months ended September 30, 2023, respectively, and was 25 percent for both the three and nine months ended September 30, 2022. Our effective tax rate for the nine months ended September 30, 2023 and 2022 was favorably impacted by $14 million and $10 million of income tax benefit, which included $11 million of related disproportionatebenefits, respectively. For both periods, the income tax expense. Additionally, the amortization of defined-benefit pension and other 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, 2022primarily resulted from a reduction in the first quarterliability for uncertain tax positions resulting from the expiration of 2021, we recognized the remaining interest rate swap lossstatutes of limitation 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 condensed consolidated statement of operations in conjunction with the divestiture of Hüppe in the second quarter of 2021.

stock-based compensation.


























17

12

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

M. SEGMENT INFORMATION
Information by segment and geographic area was as follows, in millions: 
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021202220212022202120222021
 Net Sales (A)
Operating Profit
Net Sales (A)
Operating Profit
Operations by segment:        
Plumbing Products$1,324 $1,329 $220 $248 $4,056 $3,907 $686 $773 
Decorative Architectural Products880 875 151 166 2,701 2,446 498 496 
Total$2,204 $2,204 $371 $414 $6,757 $6,353 $1,184 $1,269 
Operations by geographic area:    
North America$1,792 $1,753 $305 $332 $5,431 $4,999 $961 $1,010 
International, principally Europe412 451 66 82 1,326 1,354 223 259 
Total$2,204 $2,204 371 414 $6,757 $6,353 1,184 1,269 
General corporate expense, net  (20)(29)(72)(82)
Operating profit  351 385 1,112 1,187 
Other income (expense), net  (41)(43)(78)(691)
Income before income taxes  $310 $342 $1,034 $496 
(A)    Inter-segment sales were not material.

N. OTHER INCOME (EXPENSE), NET
Other, net, which is included in other income (expense), net, was as follows, in millions:
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Contingent consideration (A)
$— $(14)$24 $(14)
Equity investment (loss) income, net(6)5 (6)7 
Net periodic pension and post-retirement benefit
   expense (B)
(2)(4)(7)(430)
Foreign currency transaction losses(4)(4)(6)(2)
Income from cash and cash investments1 — 2 — 
Loss on sale of businesses, net— — (1)(18)
Gain on preferred stock redemption (C)
— — — 14 
Dividend income— — — 6 
Other items, net(1)— (2)(1)
Total other, net$(12)$(17)$4 $(438)
(A)    We recognized $24 million of income for the nine months ended September 30, 2022, and we recognized $14 million of expense for the three and nine months ended September 30, 2021, from the revaluation of contingent consideration related to a prior acquisition. Refer to Note G for additional information.
(B)    In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $406 million of additional pension expense.
(C)    In May 2021, we received, in cash, $166 million for the redemption of the AC Products Holding, Inc. preferred stock, including all accrued but unpaid dividends, and recognized a gain of $14 million.




18


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

O.L. INCOME PER COMMON SHARE

Reconciliations of the numerators and denominators used in the computations of basic and diluted income per common share were as follows, in millions:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021 2023202220232022
Numerator (basic and diluted):Numerator (basic and diluted):    Numerator (basic and diluted):
Net incomeNet income$218 $220 $729 $278 Net income$249 $218 $717 $729 
Less: Allocation to redeemable noncontrolling interestLess: Allocation to redeemable noncontrolling interest(2)— (2)6 Less: Allocation to redeemable noncontrolling interest— (2)— (2)
Less: Allocation to unvested restricted stock awardsLess: Allocation to unvested restricted stock awards— 1 3 1 Less: Allocation to unvested restricted stock awards— — — 3 
Net income attributable to common shareholdersNet income attributable to common shareholders$220 $219 $728 $271 Net income attributable to common shareholders$249 $220 $717 $728 
Denominator:Denominator:    Denominator:
Basic common shares (based upon weighted average)Basic common shares (based upon weighted average)226 246 232 251 Basic common shares (based upon weighted average)225 226 225 232 
Add: Stock option dilutionAdd: Stock option dilution1 1 1 2 Add: Stock option dilution1 1 1 1 
Diluted common sharesDiluted common shares227 247 233 253 Diluted common shares226 227 226 233 
For the three and nine months ended September 30, 20222023 and 2021,2022, we allocated dividends and undistributed earnings to the unvested restricted stock awards.

The following stock options, restricted stock units and performance restricted stock units were excluded from the computation of weighted-average diluted common shares outstanding due to their anti-dilutive effect, in thousands:

Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Number of stock options392670861623
Number of restricted stock units84422 
Number of performance restricted stock units15— 15— 
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Number of stock options67070623285
Number of restricted stock units4—22—

Effective February 10, 2021, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock in open-market transactions or otherwise. We repurchased and retired approximately 16.6 million shares of our common stock in the nine months ended September 30, 2022 for approximately $914 million. This included 0.6 million shares to offset the dilutive impact of restricted stock units granted in the nine months ended September 30, 2022. At September 30, 2022, we had $214 million remaining under the 2021 authorization. Effective October 20, 2022, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock in open-market transactions or otherwise, replacing the previous Board of Directors authorization established in 2021. We repurchased and retired approximately 2.4 million shares of our common stock in the nine months ended September 30, 2023 for approximately $126 million. This included 0.2 million shares to offset the dilutive impact of restricted stock units granted in the nine months ended September 30, 2023. At September 30, 2023, we had approximately $1.9 billion remaining under the 2022 authorization.

On the basis of amountsWe have declared and paid (declared), cash dividends per common share wereof $0.285 and $0.855 for the three and nine months ended September 30, 2023, respectively, and $0.280 ($0.280) and $0.840 ($0.840) for the three and nine months ended September 30, 2022, respectively, and $0.235 ($0.235) and $0.610 ($0.470) for the three and nine months ended September 30, 2021, respectively.













19

13

MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Concluded)
P.M. OTHER COMMITMENTS AND CONTINGENCIES

Litigation.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, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, product compliancesecurities and insurance coverage.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. 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:
 Nine Months Ended September 30, 2023Twelve Months Ended December 31, 2022
Balance at January 1$80 $80 
Accruals for warranties issued during the period29 40 
Accruals related to pre-existing warranties3 (3)
Settlements made (in cash or kind) during the period(30)(34)
Other, net (including currency translation and acquisitions)1 (3)
Balance at end of period$83 $80 

Q. INCOME TAXESN. INSURANCE SETTLEMENT
Our 2021 income tax expense was impacted by
During the elimination of disproportionate tax effects from accumulated other comprehensive income resulting in income tax expense of $16 million for the ninethree months ended September 30, 2021,2023, we received an insurance settlement payment in our Decorative Architectural Products segment related to lost sales resulting from a weather event that occurred in Texas in 2021 which impacted the operations of a resin supplier and interrupted our debt retirementability to manufacture certain paints and pension plan termination. Our 2021 income tax expense was also impactedother coating products. The insurance settlement payment increased gross profit and operating profit by losses providing no tax benefit in certain jurisdictions from our pension plan termination and a business divestiture resulting in income tax expense of $10 million and $15$40 million for the three and nine months ended September 30, 2021, respectively.

R. SUPPLEMENTAL CASH FLOW INFORMATION

Right-of-use assets obtained in exchange for new lease obligations were $116 million and $40 million for the nine months ended September 30, 2022 and 2021, respectively.





























2023.

20

14


MASCO CORPORATION
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Recent TrendsOverview

Due to changing market conditions, we are experiencing, and may continue to experience, lower market demand for our products. We have been experiencing, and may continue to experience, elevated commodity and other input costs, elevated transportation costs and supply chain disruptions, particularly disruptions related to our ability to source products, components and raw materials. We have also been experiencing, and may continue to experience,as well as employee-related cost inflation and constraints in hiring qualified employees.inflation. While still elevated, we have recently seen some reduction of certain costs, and we aim to offset the potential unfavorable impact of theseour costs and lower demand for our products with productivity improvement, pricing, and other initiatives.
We continue to execute our strategies of leveraging our strong brand portfolio, industry-leading positions and the Masco Operating System, our methodology to drive growth and productivity, to create long-term shareholder value. We remain confident in the fundamentals of our business and long-term strategy. We believe that our strong financial position and cash flow generation, together with our investments in our industry-leading branded building products, our continued focus on innovation and disciplined capital allocation, will allow us to drive long-term growth and create value for our shareholders.

THIRD QUARTER 2023 AND THE FIRST NINE MONTHS 2023 VERSUS
THIRD QUARTER 2022 AND THE FIRST NINE MONTHS 2022 VERSUS
THIRD QUARTER 2021 AND THE FIRST NINE MONTHS 2021

Consolidated Results of Operations

We report our financial results in accordance with accounting principles generally accepted accounting principles in the United States of America ("GAAP"). However, we believe that certain non-GAAP performance measures and ratios used in managing the business may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, our reported results under GAAP.

The following discussion of consolidated results of operations refers to the three and nine months ended September 30, 20222023 compared to the same periods of 2021.2022.

SALES AND OPERATIONS

Net Sales
Below is a summary of our net sales, in millions, for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022Change20232022Change
Net sales, as reported$1,979 $2,204 $(225)$6,085 $6,757 $(672)
Acquisitions(6)— (6)(6)— (6)
Net sales, excluding acquisitions1,973 2,204 (231)6,079 6,757 (678)
Currency translation(14)— (14)20 — 20 
Net sales, excluding acquisitions and the effect of currency translation$1,959 $2,204 $(245)$6,099 $6,757 $(658)


15


Net sales for the three months ended September 30, 2023 were $2.0 billion, which decreased 10 percent compared to the three months ended September 30, 2022. Excluding acquisitions and the effect of currency translation, net sales decreased 11 percent. Net sales for the nine months ended September 30, 2023 were $6.1 billion, which decreased 10 percent compared to the nine months ended September 30, 2022. Excluding acquisitions and the effect of currency translation, net sales decreased 10 percent.
Net sales decreased primarily due to:
•
Lower sales volume which decreased sales by 12 percent and 13 percent for the three and nine months ended September 30, 2023, respectively.
•
Unfavorable sales mix of plumbing products which decreased sales by one percent for the nine months ended September 30, 2023.
These amounts were partially offset by:
•
Higher net selling prices driven by plumbing products which increased sales by one percent for the three months ended September 30, 2023 and higher net selling prices across the entire company which increased sales by four percent for the nine months ended September 30, 2023.

Gross Profit and Gross Margin
Below is a summary of our gross profit, in millions, and gross margin for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022Favorable / (Unfavorable)20232022Favorable / (Unfavorable)
Gross profit$744$695$49$2,182$2,168$14
Gross margin37.6 %31.5 %610 bps35.9 %32.1 %380 bps
Gross profit margin was positively impacted by:
•
Higher net selling prices for both periods.
•
Receipt of an insurance settlement payment for both periods.
•
Cost savings initiatives for both periods.
•
Lower commodity costs for the three months ended September 30, 2023.
•
Lower transportation costs for both periods.
These amounts were partially offset by:
•
Lower sales volume for both periods.
•
Unfavorable sales mix for the nine months ended September 30, 2023.














16


Selling, General and Administrative Expenses
Below is a summary of our selling, general and administrative expenses, in millions, and selling, general and administrative expenses as a percentage of net sales for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022(Favorable) / Unfavorable20232022(Favorable) / Unfavorable
Selling, general and administrative expenses$361$344$17$1,081$1,056$25
Selling, general and administrative expenses as percentage of net sales18.2 %15.6 %260 bps17.8 %15.6 %220 bps
Selling, general and administrative expenses as percentage of net sales was negatively impacted by:
•
Increased employee-related costs for both periods.
•
Increased marketing costs for the nine months ended September 30, 2023.
•
Lower net sales resulting from lower volumes for both periods.

Operating Profit
Below is a summary of our operating profit, in millions, and operating profit margin for the three and nine months ended September 30, 2023 and 2022:
Three Months Ended September 30,Nine Months Ended September 30,
20232022Favorable / (Unfavorable)20232022Favorable / (Unfavorable)
Operating profit$383$351$32$1,101$1,112$(11)
Operating profit margin19.4 %15.9 %350 bps18.1 %16.5 %160 bps
For the three months ended September 30, 2023, operating profit was positively impacted by:
•
Lower transportation and commodity costs.
•
Receipt of an insurance settlement payment.
•
Cost savings initiatives.
•
Higher net selling prices.
These amounts were partially offset by:
•
Lower sales volume.
•
Increased employee-related costs.
For the nine months ended September 30, 2023, operating profit was negatively impacted by:
•
Lower sales volume.
•
Increased employee-related costs.
•
Unfavorable sales mix.
•
Increased marketing costs.
•
Unfavorable foreign currency translation.
17


These amounts were partially offset by:
•
Higher net selling prices.
•
Cost savings initiatives.
•
Receipt of an insurance settlement payment.
•
Lower transportation costs.

OTHER INCOME (EXPENSE), NET

Interest Expense

Below is a summary of our interest expense, in millions, for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022Favorable / (Unfavorable)20232022Favorable / (Unfavorable)
Interest expense$(26)$(29)$3 $(82)$(82)$— 
Other, net

Below is a summary of our other, net, in millions, for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022Favorable / (Unfavorable)20232022Favorable / (Unfavorable)
Other, net$(11)$(12)$1 $(14)$4 $(18)
For the nine months ended September 30, 2022, other, net included $24 million of income from the revaluation of contingent consideration related to our acquisition of Kraus USA Inc.

INCOME TAXES

Below is a summary of our income tax expense, in millions, and our effective tax rate for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022(Favorable) / Unfavorable20232022(Favorable) / Unfavorable
Income tax expense$86$77$9$246$255$(9)
Effective tax rate25 %25 %— %24 %25 %(1)%
Our effective tax rate for the nine months ended September 30, 2023 and 2022 was favorably impacted by $14 million and $10 million of income tax benefits, respectively. For both periods, the income tax benefits primarily resulted from a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitation and stock-based compensation.









18


NET INCOME AND INCOME PER COMMON SHARE - ATTRIBUTABLE TO MASCO CORPORATION

Below is a summary of our net income and diluted income per common share, in millions, except per share data, for the three and nine months ended September 30, 2023 and 2022:
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022Favorable / (Unfavorable)20232022Favorable / (Unfavorable)
Net income$249 $218 $31 $717 $729 $(12)
Diluted income per common share$1.10 $0.97 $0.13 $3.17 $3.13 $0.04 
19


Business Segment and Geographic Area Results

The following tables set forth our net sales and operating profit information by business segment and geographic area, dollars in millions.
 Three Months Ended September 30,Percent
Change		Nine Months Ended September 30,Percent
Change
 202320222023 vs. 2022202320222023 vs. 2022
Net Sales:   
Plumbing Products$1,191 $1,324 (10)%$3,638 $4,056 (10)%
Decorative Architectural Products788 880 (10)%2,447 2,701 (9)%
Total$1,979 $2,204 (10)%$6,085 $6,757 (10)%
North America$1,602 $1,792 (11)%$4,875 $5,431 (10)%
International, principally Europe377 412 (8)%1,210 1,326 (9)%
Total$1,979 $2,204 (10)%$6,085 $6,757 (10)%
Three Months Ended September 30,Percent
Change		Nine Months Ended September 30,Percent
Change
 202320222023 vs. 2022202320222023 vs. 2022
Operating Profit (A):  
Plumbing Products$223 $220 1 %$673 $686 (2)%
Decorative Architectural Products181 151 20 %493 498 (1)%
Total$404 $371 9 %$1,166 $1,184 (2)%
North America$348 $305 14 %$972 $961 1 %
International, principally Europe56 66 (15)%194 223 (13)%
Total404 371 9 %1,166 1,184 (2)%
General corporate expense, net(21)(20)5 %(65)(72)(10)%
Total operating profit$383 $351 9 %$1,101 $1,112 (1)%
(A)Before general corporate expense, net; refer to Note I to the condensed consolidated financial statements.

















20
21



SALES AND OPERATIONSThe following discussion of business segment and geographic area results refers to the three and nine months ended September 30, 2023 compared to the same periods of 2022. Changes in operating profit in the following business segment and geographic area results discussion exclude general corporate expense, net.

Net BUSINESS SEGMENT RESULTS DISCUSSION

Plumbing Products
Sales
Below is a summary of ourNet sales in the Plumbing Products segment decreased 10 percent for both the three and nine months ended September 30, 2023. In local currencies (including sales in currencies outside their respective functional currencies), net sales in millions,decreased 11 percent and 10 percent for the three and nine months ended September 30, 20222023, respectively. Lower sales volume decreased sales by 14 percent and 2021:13 percent for the three and nine months ended September 30, 2023, respectively. Unfavorable sales mix decreased sales by one percent for both the three and nine months ended September 30, 2023. These amounts were partially offset by higher net selling prices which increased sales by three percent and four percent for the three and nine months ended September 30, 2023, respectively.

Operating Results
Three Months Ended September 30,Nine Months Ended September 30,
 20222021Change20222021Change
Net sales, as reported$2,204 $2,204 $— $6,757 $6,353 $404 
Acquisitions— — — (11)— (11)
Divestitures— — — — (32)32 
Net sales, excluding acquisitions and divestitures2,204 2,204 — 6,746 6,321 425 
Currency translation67 — 67 155 — 155 
Net sales, excluding acquisitions, divestitures and the effect of currency translation$2,271 $2,204 $67 $6,901 $6,321 $580 
Operating profit in the Plumbing Products segment for the three months ended September 30, 2023 was positively impacted by higher net selling prices, lower transportation and commodity costs and cost savings initiatives. These amounts were mostly offset by lower sales volume, unfavorable foreign currency translation and increased employee-related costs. Operating profit for the nine months ended September 30, 2023 was negatively impacted by lower sales volume, increased employee-related costs, unfavorable foreign currency translation, unfavorable sales mix and increased marketing costs. These amounts were partially offset by higher net selling prices, lower transportation and commodity costs and cost savings initiatives.
Decorative Architectural Products
Sales
Net sales in the Decorative Architectural Products segment decreased 10 percent and nine percent for the three and nine months ended September 30, 2023, respectively. For the three months ended September 30, 2023 this decrease was due primarily to lower sales volume and lower net selling prices. For the nine months ended September 30, 2023 this decrease was due primarily to lower sales volume, partially offset by higher net selling prices.
Operating Results
Operating profit in the Decorative Architectural Products segment for the three months ended September 30, 2023 was positively impacted by the receipt of an insurance settlement payment and cost savings initiatives, partially offset by lower sales volume and lower net selling prices. Operating profit for the nine months ended September 30, 2023 was negatively impacted by lower sales volume and increased commodity costs, mostly offset by higher net selling prices, receipt of an insurance settlement payment and cost saving initiatives.


Net sales for the three months ended September 30, 2022 were $2.2 billion, which matched the three months ended September 30, 2021. Excluding acquisitions, divestitures and the effect of currency translation, net sales increased three percent. Net sales for the nine months ended September 30, 2022 were $6.8 billion, which increased six percent compared to the nine months ended September 30, 2021. Excluding acquisitions, divestitures and the effect of currency translation, net sales increased nine percent.

Net sales for the three months ended September 30, 2022 increased primarily due to:

•Higher net selling prices across the entire company which increased sales by nine percent.

These amounts were offset by:

•Lower sales volume which decreased sales by six percent.
•Unfavorable foreign currency translation which decreased sales by three percent.

Net sales for the nine months ended September 30, 2022 increased primarily due to:

•Higher net selling prices across the entire company which increased sales by nine percent.
•Higher sales volume of plumbing products which increased sales by one percent.

These amounts were partially offset by:

•Unfavorable foreign currency translation which decreased sales by two percent.
•Lower sales volume of lighting and builders' hardware products which decreased sales by one percent.
•The divestiture of our Hüppe business which decreased sales by one percent.











22


Gross Profit and Gross Margin

Below is a summary of our gross profit, in millions, and gross margin for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Gross profit$695$753 $(58)$2,168$2,244$(76)
Gross margin31.5 %34.2 %(270) bps32.1 %35.3 %(320) bps

For the three and nine months ended September 30, 2022, gross profit margin was negatively impacted by:

•Increased commodity and other input costs and transportation costs for both periods.
•Lower sales volume for the three months ended September 30, 2022.

These amounts were partially offset by:

•Favorable net selling prices for both periods.

Selling, General and Administrative Expenses

Below is a summary of our selling, general and administrative expenses, in millions, and selling, general and administrative expenses as a percentage of net sales for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021(Favorable) / Unfavorable20222021(Favorable) / Unfavorable
Selling, general and administrative
   expenses
$344$368 $(24)$1,056$1,057$(1)
Selling, general and administrative
   expenses as percentage of net sales
15.6 %16.7 %(110) bps15.6 %16.6 %(100) bps

For the three months ended September 30, 2022, selling, general and administrative expenses as a percentage of sales was positively impacted by:

•Lower variable compensation.

This amount was partially offset by:

•Increased marketing costs.

For the nine months ended September 30, 2022, selling, general and administrative expenses as a percentage of sales was positively impacted by:

•Higher sales resulting from favorable net selling prices.

This amount was partially offset by:

•Increased marketing costs.





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Operating Profit

Below is a summary of our operating profit, in millions, and operating profit margin for the three and nine months ended September 30, 2022 and 2021:
Three Months Ended September 30,Nine Months Ended September 30,
20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Operating profit$351$385$(34)$1,112$1,187$(75)
Operating profit margin15.9 %17.5 %(160) bps16.5 %18.7 %(220) bps
For the three and nine months ended September 30, 2022, operating profit was negatively impacted by:
•Increased commodity and other input costs and transportation costs for both periods.
•Unfavorable foreign currency translation for both periods.
•Increased marketing costs for both periods.
•Lower sales volume for the three months ended September 30, 2022.

These amounts were partially offset by:

•Favorable net selling prices for both periods.
•Lower variable compensation for the three months ended September 30, 2022.

OTHER INCOME (EXPENSE), NET

Interest Expense

Below is a summary of our interest expense, in millions, for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Interest expense$(29)$(26)$(3)$(82)$(253)$171 

For the nine months ended September 30, 2022, the decrease in interest expense is primarily due to the absence of the $168 million loss on debt extinguishment which was recorded as additional interest expense in connection with the early retirement of debt in the first quarter of 2021.

Other, net

Below is a summary of our other, net, in millions, for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Other, net$(12)$(17)$5 $4 $(438)$442 

Other, net, for the three and nine months ended September 30, 2022 included:

•$4 million and $6 million, respectively, of realized foreign currency transaction losses.
•$2 million and $7 million, respectively, of net periodic pension and post-retirement benefit expense.
•$6 million of losses related to equity method investments for both periods.




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For the nine months ended September 30, 2022 these amounts were more than offset by:

•$24 million of income from the revaluation of contingent consideration related to a prior acquisition.

Other, net, for the three and nine months ended September 30, 2021 included:

•$4 million and $430 million, respectively, of net periodic pension and post-retirement benefit expense, which includes $406 million of settlement loss related to the termination of our qualified domestic defined-benefit pension plans for the nine months ended September 30, 2021.
•$18 million loss related to the divestiture of Hüppe for the nine months ended September 30, 2021.
•$14 million of expense from the revaluation of contingent consideration related to a prior acquisition for both periods.

These amounts were partially offset by:

•$14 million gain recognized on the redemption of the preferred stock of ACProducts Holding, Inc. and $6 million of related dividend income for the nine months ended September 30, 2021.
•$5 million and $7 million, respectively, of earnings related to equity method investments.

INCOME TAXES

Below is a summary of our income tax expense, in millions, and our effective tax rate for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021(Favorable) / Unfavorable20222021(Favorable) / Unfavorable
Income tax expense$77$103$(26)$255$158$97
Effective tax rate25 %30 %(5)%25 %32 %(7)%

Our 2021 income tax expense was impacted by the elimination of disproportionate tax effects from accumulated other comprehensive income resulting in income tax expense of $16 million for the nine months ended September 30, 2021, related to our debt retirement and pension plan termination. Our 2021 income tax expense was also impacted by losses providing no tax benefit in certain jurisdictions from our pension plan termination and a business divestiture resulting in income tax expense of $10 million and $15 million for the three and nine months ended September 30, 2021, respectively.

NET INCOME AND INCOME PER COMMON SHARE — ATTRIBUTABLE TO MASCO CORPORATION

Below is a summary of our net income and diluted income per common share, in millions, except per share data, for the three and nine months ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 20222021Favorable / (Unfavorable)20222021Favorable / (Unfavorable)
Net income$218 $220 $(2)$729 $278 $451 
Diluted income per common share$0.97 $0.89 $0.08 $3.13 $1.07 $2.06 



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Business Segment and Geographic Area Results

The following table sets forth our net sales and operating profit information by Business Segment and Geographic Area, dollars in millions.

Three Months Ended September 30,Percent ChangeNine Months Ended September 30,Percent Change
 202220212022vs.2021202220212022vs.2021
Net Sales:   
Plumbing Products$1,324 $1,329 — %$4,056 $3,907 4 %
Decorative Architectural Products880 875 1 %2,701 2,446 10 %
Total$2,204 $2,204 — %$6,757 $6,353 6 %
North America$1,792 $1,753 2 %$5,431 $4,999 9 %
International, principally Europe412 451 (9)%1,326 1,354 (2)%
Total$2,204 $2,204 — %$6,757 $6,353 6 %


 Three Months Ended September 30,Percent ChangeNine Months Ended September 30,Percent Change
 202220212022vs.2021202220212022vs.2021
Operating Profit: (A)  
Plumbing Products$220 $248 (11)%$686 $773 (11)%
Decorative Architectural Products151 166 (9)%498 496 — %
Total$371 $414 (10)%$1,184 $1,269 (7)%
North America$305 $332 (8)%$961 $1,010 (5)%
International, principally Europe66 82 (20)%223 259 (14)%
Total371 414 (10)%1,184 1,269 (7)%
General corporate expense, net(20)(29)(31)%(72)(82)(12)%
Total operating profit$351 $385 (9)%$1,112 $1,187 (6)%

(A)    Before general corporate expense, net; see Note M to the condensed consolidated financial statements.


BUSINESS SEGMENT RESULTS DISCUSSION

The following discussion of Business Segment and Geographic Area Results discussion refers to the three and nine months ended September 30, 2022 compared to the same periods of 2021. Changes in operating profit in the following Business Segment and Geographic Area Results discussion exclude general corporate expense, net.











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Plumbing Products
Sales
Net sales in the Plumbing Products segment were flat to prior year for the three months ended September 30, 2022, and increased four percent for the nine months ended September 30, 2022. Favorable net selling prices increased sales by seven percent for both periods. These amounts were partially offset by unfavorable foreign currency translation which decreased sales by five percent and four percent for the three and nine months ended September 30, 2022, respectively, as well as the divestiture of our Hüppe business, which decreased sales by one percent for the nine months ended September 30, 2022. Lower sales volume decreased sales by two percent for the three months ended September 30, 2022 and higher sales volume increased sales by one percent for the nine months ended September 30, 2022.

Operating Results
Operating profit in the Plumbing Products segment was negatively impacted by increased commodity and other input costs, transportation costs, unfavorable foreign currency translation, and increased marketing costs in both periods, as well as lower sales volume for the three months ended September 30, 2022. These amounts were partially offset by favorable net selling prices in both periods, and to a lesser extent, lower variable compensation for the three months ended September 30, 2022 and increased sales volume for the nine months ended September 30, 2022.

Decorative Architectural Products
Sales
Net sales in the Decorative Architectural Products segment increased one percent and 10 percent for the three and nine months ended September 30, 2022, respectively. These increases were due primarily to favorable net selling prices of paints and other coating products, lighting products, and builders' hardware products. These amounts were partially offset by lower sales volume of paints and other coating products in the three months ended September 30, 2022 and by lower sales volume of lighting products and builders' hardware products in both periods.

Operating Results
Operating profit in the Decorative Architectural Products segment for the three months ended September 30, 2022 was negatively impacted by increased commodity and other input costs, transportation and marketing costs, as well as decreased sales volume. These amounts were partially offset by favorable net selling prices. Operating profit for the nine months ended September 30, 2022 was positively impacted by favorable net selling prices. These amounts were offset by increased commodity and other input costs, transportation and marketing costs.

GEOGRAPHIC AREA RESULTS DISCUSSION

North America
Sales
North AmericanAmerica net sales increased two percent and nine percent for the three and nine months ended September 30, 2022, respectively. Favorable net selling prices across all of our product categories increased sales bydecreased 11 percent and 10 percent for the three and nine months ended September 30, 2022,2023, respectively. Lower sales volume across all product categories decreased sales by 11 percent and 13 percent for the three and nine months ended September 30, 2023, respectively. Unfavorable sales mix decreased sales by one percent for both the three and nine months ended September 30, 2023. These amounts were partially offset by higher net selling prices which increased sales by one percent and three percent for the three and nine months ended September 30, 2023, respectively.
Operating Results
North America operating profit for the three months ended September 30, 2023 was positively impacted by lower transportation and commodity costs, receipt of an insurance settlement payment and cost savings initiatives. These amounts were partially offset by lower sales volume across all of our product categories, which decreased sales by eight percentand higher employee-related costs. North America operating profit for the three months ended September 30, 2022 and lower sales volume in lighting products, builders' hardware products, and plumbing products, which decreased sales by two percent for nine months ended September 30, 2022.

Operating Results
Operating profit in North America2023 was negativelypositively impacted by increased commodityhigher net selling prices, cost savings initiatives, receipt of an insurance settlement payment and other input costs,lower transportation and marketing costs, as well as decreased sales volume for the three and nine months ended September 30, 2022.costs. These amounts were partiallymostly offset by favorable net selling priceslower sales volume, higher employee-related costs and lower variable compensation in both periods.

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higher marketing costs.
International, Principally Europe
Sales
International net sales decreased nineeight percent and twonine percent for the three and nine months ended September 30, 2022,2023, respectively. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased fivedecreased 11 percent and eightseven percent for the three and nine months ended September 30, 2022,2023, respectively. FavorableLower sales volume decreased sales by 16 percent and 12 percent for the three and nine months ended September 30, 2023, respectively. Unfavorable sales mix decreased sales by one percent for the nine months ended September 30, 2023. These amounts were partially offset by higher net selling prices of plumbing productswhich increased sales by four percent and six percent for the three and nine months ended September 30, 2022,2023, respectively. Higher sales volume of plumbing products increased sales by three percent and five percent
Operating Results
International operating profit for the three and nine months ended September 30, 2022, respectively.2023 was negatively impacted by lower sales volume and unfavorable foreign currency translation. For the nine months ended September 30, 2023 operating profit was also negatively impacted by unfavorable sales mix. These amounts were partially offset by unfavorable sales mix which decreased sales by one percent for the three months ended September 30, 2022 and the divestiture of our Hüppe business which decreased sales by two percent for the nine months ended September 30, 2022.

Operating Results
International operating profit was negatively impacted by increased commodity and other input costs, unfavorable foreign currency translation and increased employee-related costs for both periods, as well as increased transportation costs for the nine months ended September 30, 2022. These amounts were partially offset by favorablehigher net selling prices and higher sales volume of plumbing products for both periods.lower transportation and commodity costs.

Liquidity and Capital Resources
Our current ratio was 1.5 to 1 and 1.8 to 1 at September 30, 2022 and December 31, 2021, respectively. The decrease in our current ratio is primarily due to the 364-day $500 million term loan that we entered into on April 26, 2022.

For the nine months ended September 30, 2022, net cash provided by operating activities was $520 million. Our cash flows from operations primarily benefited from operating profit, partially offset by changes in working capital, primarily higher receivables and inventory balances.Overview of Capital Structure

For the nine months ended September 30, 2022, net cash used for financing activities was $802 million, primarily due to $914 million for the repurchase and retirement of our common stock (including 0.6 million shares repurchased to offset the dilutive impact of restricted stock units granted in 2022), $195 million for the payment of cash dividends, $100 million for the partial payment of the 364-day term loan, $68 million for dividends paid to noncontrolling interest, and $17 million for employee withholding taxes paid on stock-based compensation. These uses of cash were partially offset by $500 million in proceeds from the 364-day term loan.

For the nine months ended September 30, 2022, net cash used for investing activities was $144 million, comprised primarily of $137 million of capital expenditures.
OurWe had cash and cash investments were $464of approximately $560 million and $926$452 million at September 30, 20222023 and December 31, 2021,2022, respectively. Our cash and cash investments consist of overnight interest-bearinginterest bearing money market demand accounts, time deposit accounts, and money market mutual funds containing government securities and treasury obligations. While we attempt to diversify these investments in a prudent manner to minimize risk, it is possible that future changes in the financial markets could affect the security or availability of these investments. Of the cash and cash investments we held at September 30, 20222023 and December 31, 2021, $2972022, $274 million and $490$321 million, respectively, was held in our foreign subsidiaries. If these funds were needed for our operations in the U.S., their repatriation into the U.S. would not result in significant additional U.S. income tax or foreign withholding tax, as we have recorded such taxes on substantially all undistributed foreign earnings, except for those that are legally restricted.
Our current ratio was 1.8 to 1 and 1.6 to 1 at September 30, 2023 and December 31, 2022, respectively. The increase in our current ratio is primarily due to the repayment of the 364-day term loan during 2023.
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We believe that our present cash balance and cash flows from operations, and borrowing availability under our revolving credit agreement, are sufficient to fund our near-term working capital and other investment needs. We believe that our longer-term working capital and other general corporate requirements will be satisfied through cash flows from operations and, to the extent necessary, from bank borrowings and future financial market activities. However, due to the changing market conditions and its impact on our customers and suppliers, we are unable to fully estimate the extent of the impact that the changing market conditions may have on our future financial condition.
Credit Agreement
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. Upon entry intoSee Note H to the 2022 Credit Agreement, our credit agreement dated March 13, 2019, as amended, with an aggregate commitment of $1.0 billion, was terminated.



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condensed consolidated financial statements for additional information.
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. We were in compliance with all covenants and no borrowings were outstanding under our 2022 Credit Agreement at September 30, 2022.2023.

364-day Term Loan
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. The senior unsecured term loan and commitments thereunder arewere subject to prepayment or termination at our option and the loans will bearbore interest at SOFR plus a spread adjustment and 0.70%. The covenants, including the financial covenants, arewere substantially the same as those in the 2022 Credit Agreement. We repaid $100$300 million during 2022 and the three months endedremaining $200 million upon the maturity of the term loan on April 26, 2023.
Other Liquidity and Capital Resource Activities
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 contain no financial covenants and €60 million ($63 million) remained borrowed and outstanding at a weighted average interest rate of 4.807% at September 30, 2022. We repaid an additional $65 million subsequent to September 30, 2022.

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, which was recorded as interest expense in the condensed consolidated statement of operations.2023.
As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including extending payment terms. We also facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. A third party administers the program; our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. We do not enter into agreements with any of the participating financial institutions in connection with the program. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

All outstanding payments owed under the program are recorded within accounts payable in our condensed consolidated balance sheets. The amounts owed to participating financial institutionsconfirmed as valid under the program and included in accounts payable were $36$60 million and $43$50 million at September 30, 20222023 and December 31, 2021,2022, respectively. We account for allOf the amounts confirmed as valid under the program, the amounts owed to participating financial institutions were $21 million and $29 million at September 30, 2023 and December 31, 2022, respectively. All payments made under the program are recorded as a reduction to our cash flows from operations and reported within our (decrease) increasedecrease in accounts payable and accrued liabilities, net, line withinin our condensed consolidated statements of cash flows. The amounts settled through the program and paid to participating financial institutions were $153 million and $170 million during the nine months ended September 30, 2022 and 2021, respectively. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the program. We do not believe such risk would have a material impact on our working capital or cash flows, as substantially all of our payments are made outside of the program.

Acquisitions
We believeIn the third quarter of 2023, we acquired all of the share capital of Sauna360 for approximately €124 million ($136 million), net of cash acquired. Sauna360 has a portfolio of products that our present cash balance, cash flows from operations,includes traditional, infrared, and borrowing availability under our 2022 Credit Agreement are sufficient to fund our near-term working capital and other investment needs. We believe that our longer-term working capital and other general corporate requirements will be satisfied through cash flows from operations and, to the extent necessary, from bank borrowings and future financial market activities.











wood-burning saunas as well as steam showers.


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Share Repurchases
Effective October 20, 2022, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock in open-market transactions or otherwise, replacing the previous Board of Directors authorization established in 2021. We repurchased and retired approximately 2.4 million shares of our common stock in the nine months ended September 30, 2023 for approximately $126 million. This included 0.2 million shares to offset the dilutive impact of restricted stock units granted in the nine months ended September 30, 2023. At September 30, 2023, we had approximately $1.9 billion remaining under the 2022 authorization. Consistent with our past practice and as part of our long-term capital allocation strategy, we anticipate using approximately $350 million of cash for share repurchases (including shares which will be purchased to offset any dilution from restricted stock units granted as part of our compensation program) in 2023.
Cash Flows
For the nine months ended September 30, 2023, net cash provided by operations was $928 million, primarily driven by operating profit.
For the nine months ended September 30, 2023, net cash used for financing activities was $498 million, primarily due to $200 million for the repayment of the 364-day term loan, $193 million for the payment of cash dividends, $126 million for the repurchase and retirement of our common stock (including 0.2 million shares repurchased to offset the dilutive impact of restricted stock units granted in 2023), and $49 million for dividends paid to noncontrolling interest. These uses of cash were partially offset by $66 million of net proceeds from short-term debt borrowings.
For the nine months ended September 30, 2023, net cash used for investing activities was $321 million, primarily driven by $181 million of capital expenditures and $136 million for the acquisition of Sauna360.

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Cautionary Statement Concerning Forward-Looking Statements

This Report contains statements that reflect our views about our future performance and constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "outlook," "believe," "anticipate," "appear," "may," "will," "should," "intend," "plan," "estimate," "expect," "assume," "seek," "forecast," and similar references to future periods. Our views about future performance involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements.

Our future performance may be affected by the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands and reputation and to develop innovative products, our ability to maintain our public reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the duration of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer discretionary spending, our employees and our supply chain, the cost and availability of materials, our dependence on third-party suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse personnel,workforce, risks associated with cybersecurity vulnerabilities, threats and attacks, risks associated with our reliance on information systems and technology and risks associated with cybersecurity vulnerabilities, threatsthe impact of the ongoing COVID-19 pandemic on our business and attacks.operations.

These and other factors are discussed in detail in Item 1A. "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other filings we make with the Securities and Exchange Commission. Any forward-looking statement made by us speaks only as of the date on which it was made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.

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MASCO CORPORATION
Item 4.
CONTROLS AND PROCEDURES

a.Evaluation of Disclosure Controls and Procedures.
The Company’s principal executive officerCompany's Principal Executive Officer and principal financial officerPrincipal Financial Officer have concluded, based on an evaluation of the Company’sCompany's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 that, as of September 30, 2022,2023, the Company's disclosure controls and procedures were effective.

b. Changes in Internal Control over Financial Reporting.
In connection with the evaluation of the Company's internal control over financial reporting that occurred during the quarter ended September 30, 2022,2023, which is required under the Securities Exchange Act of 1934 by paragraph (d) of Exchange Rules 13a-15 or 15d-15 (as defined in paragraph (f) of Rule 13a-15), management determined that there was no change that materially affected or is reasonably likely to materially affect internal control over financial reporting.



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MASCO CORPORATION
 
PART II.  OTHER INFORMATION


Item 1. Legal Proceedings
 
Information regarding legal proceedings involving us is set forth in Note PM to our condensed consolidated financial statements included in Part I, Item 1 of this Report and is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors of the Company set forth in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding the repurchase of our common stock for the three months ended September 30, 2023 under the 2022 share repurchase authorization: 
PeriodTotal Number 
Of Shares
Purchased		Average Price
Paid Per
Common Share		Total Number Of
Shares Purchased
As Part Of
Publicly Announced
Plans or Programs		Maximum Value Of
Shares That May
Yet Be Purchased
Under The Plans Or Programs
7/1/23 - 7/31/23773,051 $58.22 773,051 $1,873,997,902 
8/1/23 - 8/31/23— $— — $1,873,997,902 
9/1/23 - 9/30/23— $— — $1,873,997,902 
Total for the quarter773,051 $58.22 773,051 $1,873,997,902 

Item 5. Other Information

Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2023, none of our officers or directors adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.






















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MASCO CORPORATION
 
PART II.  OTHER INFORMATION, Continued
Item 66.. Exhibits 
31a–
Certification by Chief Executive Officer Required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31b–
Certification by Chief Financial Officer Required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32–
Certification Required by Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code
101–
The following financial information from Masco Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity, and (vi) Notes to Condensed Consolidated Financial Statements.
104–Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Employment Offer Letter dated August 28, 2023 between Richard Westenberg and Masco Corporation.
Amended and Restated Transition and Severance Agreement and Release of All Liability with David A. Chaika.
Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
Certification by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.
Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
101
The following financial information from Masco Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, and (vi) Notes to Condensed Consolidated Financial Statements.
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

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MASCO CORPORATION
 
PART II.  OTHER INFORMATION, Concluded


SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this reportReport to be signed on its behalf by the undersigned thereunto duly authorized.
 MASCO CORPORATION
By:/s/ Richard J. Westenberg
 By:/s/ John G. Sznewajs
Name:John G. Sznewajs
Title:
Richard Westenberg
Vice President, Chief Financial Officer
October 26, 20222023

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