Masco's Q2 2026 sales fell 3% to $1.99B on 5% lower North American volume, but EPS rose 25% to $1.60, lifted mostly by a ~$95M IEEPA tariff refund; the 2026 adjusted EPS guidance raise to $4.40–$4.60 reflects that refund, not better demand.
Revenue
$2.0B
-2.9% YoY
Net income
$318M
+17.8% YoY
Diluted EPS
$1.60
+25.0% YoY
Operating margin
23.6%
Q2 2026 in one line: a one-off tariff refund covered up a weak quarter for sales volume
Masco makes Delta and hansgrohe faucets, Behr paint and Liberty hardware. In the second quarter of 2026 (April–June) its net sales fell 3% to $1,992 million, but operating profit rose 14% to $470 million and diluted EPS rose 25% to $1.60. Profit and sales moved in opposite directions mainly because of one item. Earlier in 2026 the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful, and Masco began receiving refunds in Q2. The 10-Q puts the net tariff benefit from those refunds at about $95 million for the quarter, "principally within the Plumbing Products segment." Without that refund, operating profit would have fallen, not risen.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$1,992M
$2,051M
-2.9%
Gross margin
43.6%
37.6%
+600 bps
Operating profit
$470M
$412M
+14%
Operating margin
23.6%
20.1%
+350 bps
Read 0 community reports on Masco, or write your own.Write a report
bps = basis points; 100 bps = 1 percentage point. Operating margin is the share of sales left after the costs of making and selling products, before interest and tax. Adjusted figures are Masco's own non-GAAP numbers. They exclude restructuring ("rationalization") charges of $12M this quarter and apply a standard 24.5% tax rate.
For the first half of 2026, sales rose 2% to $3,910M. Excluding currency moves they were flat. Operating profit rose 13% to $787M, and diluted EPS rose 23% to $2.64.
Sales: prices went up, volumes fell in North America
The MD&A breaks down the 3% quarterly decline. Lower North America sales volume cut sales by five percent. Higher net selling prices added one percent and higher International volume added another one percent. Currency had almost no effect: sales fell 3% both as reported and at constant exchange rates.
Masco's products sell mostly into repair and remodel work, meaning homeowners replacing a faucet or repainting a room, rather than into new homes. That demand tracks existing-home sales and consumer confidence. The 10-Q's overview says the company is "experiencing, and may continue to experience, lower market demand for our products." The CEO also noted "a challenging comparison to the prior year": Q2 2025 was a strong quarter. Pricing added only 1% this quarter against 3% for the half-year. That suggests the price increases taken to offset tariffs in 2025 are now in the prior-year base and adding little to growth.
By region, North America (78% of sales) fell 5%. International, which is mostly hansgrohe in Europe, grew 6% as reported and 4% in local currency. International sales sit entirely in the Plumbing segment.
Margins: the refund is the main story
Gross margin rose 600 bps to 43.6%. The MD&A attributes the gain to "lower tariff costs (inclusive of IEEPA tariff refunds), cost savings initiatives, and three percent due to higher net selling prices." The offsets were "five percent due to lower sales volume, as well as higher commodity costs, an increase in other expenses, and unfavorable sales mix."
Selling, general and administrative expenses (SG&A: sales, marketing, head office and other overhead) rose 10% to $397M, or 19.9% of sales against 17.6% a year earlier. The 10-Q attributes six points of that increase to higher employee-related costs and one point to legal and professional fees. Management calls these "targeted strategic investments to support growth." They are rising faster than sales.
Stripping out the refund: the ~$95M refund is a pre-tax figure. Taking it out of operating profit leaves roughly $375M, about 9% below last year's $412M, and an operating margin near 18.8% against 20.1%. On Masco's adjusted basis the same exercise gives about $387M against $413M, down roughly 6%. At the adjusted 24.5% tax rate and 199M diluted shares, the refund is worth about $0.36 of EPS. On that estimate, underlying adjusted EPS was about $1.28, slightly below last year's $1.30, rather than up 26%. These are our own estimates from the disclosed ~$95M figure; Masco does not publish a refund-free EPS.
Segments
Plumbing Products (Delta, hansgrohe, and now Liberty; $1,337M in sales, down 3%). Operating profit rose 24% to $352M and the margin rose from 20.8% to 26.3%. Most of the ~$95M refund landed here, because Plumbing is where Masco imports the most tariffed product, especially from China. Even allowing for the "principally" wording, removing most of the refund would put Plumbing's margin roughly back to last year's level. Also note that Liberty Hardware moved from Decorative into Plumbing in Q1 2026 (it was folded into Delta Faucet), and prior periods were restated. Comparisons with segment figures published before 2026 are therefore not like-for-like.
Decorative Architectural Products (mainly Behr paint, sold largely through Home Depot; $655M, down 4%). Sales fell "primarily due to lower sales volume, partially offset by higher net selling prices." Operating profit was unchanged at $147M. The margin still rose 80 bps to 22.4%, because higher prices and cost savings offset lower volume and higher commodity costs. No refund boosted this segment, so its margin gain is the cleaner operating result of the two.
Cash, buybacks and the balance sheet
Operating cash flow was $417M in the first half against $148M a year earlier. It was helped by the refund and by a much smaller working-capital build ($288M against $459M).
Buybacks: Masco repurchased about 7.8M shares for ~$596M in the first half, including a $300M accelerated repurchase that closed on July 27. It funded part of this with a new $300M term loan at 4.499%, and long-term debt rose to $3,245M from $2,945M. Management plans about $1.0 billion of buybacks in 2026. Diluted share count fell to 199M from 211M, and that ~6% reduction alone explains a large part of the EPS growth running ahead of net income growth.
Shareholders' equity is now negative (-$118M). This is an accounting result of years of buybacks exceeding retained earnings, not a sign of distress: liquidity was $1,548M and the company reports compliance with all debt covenants.
Portfolio moves: restructuring charges were $12M in Q2, with ~$50M expected for 2026. On July 28 Masco sold UK-based Bristan Group for £49M ($65M) plus up to £6M more if performance targets are met. Bristan was part of Plumbing, so it will be a small drag on reported sales from Q3.
Takeaway: The 25% EPS jump comes mostly from a one-off ~$95M tariff refund plus a smaller share count. By our estimate, excluding the refund, adjusted operating profit fell about 6% and adjusted EPS was roughly flat, because North American volume fell 5% while SG&A rose 10%. Paint (Decorative) was the steadier business: its margin improved without any refund.
Outlook
Masco raised its 2026 adjusted EPS guidance to $4.40–$4.60 from $4.10–$4.30. GAAP EPS guidance is $4.21–$4.41, with $0.19 of restructuring charges as the difference. The CEO said the whole increase comes from the refunds: "our underlying performance remains largely in line with our prior outlook, [and] the anticipated full year net benefit from IEEPA tariff refunds of approximately $85 million has led us to increase our 2026 adjusted earnings per share guidance." The full-year refund benefit ($85M) is smaller than Q2's ($95M). That implies a small net tariff cost in the second half, so the refund will not recur and the fourth-quarter comparisons will be harder.
Our read: the guidance raise does not show any improvement in the business. The main questions for the rest of 2026 are:
Whether North American repair-and-remodel volume, down 5% in Q2 and 3% in the first half, stabilises while home turnover stays weak.
Whether the SG&A spending turns into volume growth, given that pricing now adds only about 1%.
How far the ~$1.0B buyback, partly debt-funded, keeps lifting per-share results while operating profit before refunds is shrinking.
The Q3 10-Q, expected late October, will be the first quarter to show results without Bristan and with only the remaining refund effects, which makes it a cleaner test of the underlying trend.