10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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 March 31, 2021

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.)

17450 College Parkway,	Livonia,	Michigan	48152
(Address of Principal Executive Offices)			(Zip Code)

(313) 274-7400

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1.00 par value	MAS	New York Stock Exchange

Indicate by check mark whether the registrant (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   ☐ No

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   ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "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. ☐

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

    ☐ Yes   ☒ No

    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 March 31, 2021
Common stock, par value $1.00 per share	253,785,852

MASCO CORPORATION

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets — as at March 31, 2021 and December 31, 2020	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	4
	Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2021 and 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION	26
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6.	Exhibits	27
	Signature	28

MASCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

March 31, 2021 and December 31, 2020

(In Millions, Except Share Data)

	March 31, 2021		December 31, 2020
ASSETS
Current Assets:
Cash and cash investments	$	838	$	1,326
Receivables	1,305		1,138
Prepaid expenses and other	97		149
Assets held for sale	18		—
Inventories:
Finished goods	601		552
Raw material	252		242
Work in process	95		82
	948		876
Total current assets	3,206		3,489
Property and equipment, net	894		908
Operating lease right-of-use assets	173		166
Goodwill	588		563
Other intangible assets, net	378		357
Other assets	326		294
Assets held for sale	9		—
Total assets	$	5,574	$	5,777
LIABILITIES
Current Liabilities:
Accounts payable	$	925	$	893
Notes payable	6		3
Accrued liabilities	803		1,038
Liabilities held for sale	14		—
Total current liabilities	1,748		1,934
Long-term debt	2,955		2,792
Noncurrent operating lease liabilities	157		149
Other liabilities	458		481
Liabilities held for sale	14		—
Total liabilities	5,332		5,356
Commitments and contingencies (Note P)
Redeemable noncontrolling interest	25		—
EQUITY
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share   Authorized shares: 1,400,000,000;   Issued and outstanding: 2021 – 253,100,000; 2020 – 258,200,000	253		258
Preferred shares authorized: 1,000,000;   Issued and outstanding: 2021 and 2020 – None	—		—
Paid-in capital	—		—
Retained (deficit) earnings	(116)		79
Accumulated other comprehensive loss	(154)		(142)
Total Masco Corporation's shareholders' (deficit) equity	(17)		195
Noncontrolling interest	234		226
Total equity	217		421
Total liabilities and equity	$	5,574	$	5,777

See notes to condensed consolidated financial statements.

1

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three Months Ended March 31, 2021 and 2020

(In Millions, Except Per Common Share Data)

	Three Months Ended March 31,
	2021		2020
Net sales	$	1,970	$	1,581
Cost of sales	1,270		1,034
Gross profit	700		547
Selling, general and administrative expenses	335		322
Operating profit	365		225
Other income (expense), net:
Interest expense	(202)		(35)
Other, net	(6)		(16)
	(208)		(51)
Income from continuing operations before income taxes	157		174
Income tax expense	43		33
Income from continuing operations	114		141
Income from discontinued operations, net	—		397
Net income	114		538
Less: Net income attributable to noncontrolling interest	20		8
Net income attributable to Masco Corporation	$	94	$	530
Income per common share attributable to Masco Corporation:
Basic:
Income from continuing operations	$	.34	$	.49
Income from discontinued operations, net	—		1.44
Net income	$	.34	$	1.93
Diluted:
Income from continuing operations	$	.34	$	.48
Income from discontinued operations, net	—		1.44
Net income	$	.34	$	1.92
Amounts attributable to Masco Corporation:
Income from continuing operations	$	94	$	133
Income from discontinued operations, net	—		397
Net income	$	94	$	530

See notes to condensed consolidated financial statements.

2

MASCO CORPORATION

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

For the Three Months Ended March 31, 2021 and 2020

(In Millions)

	Three Months Ended March 31,
	2021		2020
Net income	$	114	$	538
Less: Net income attributable to noncontrolling interest	20		8
Net income attributable to Masco Corporation	$	94	$	530
Other comprehensive income (loss), net of tax (Note L):
Cumulative translation adjustment	$	(36)	$	(29)
Interest rate swaps	7		—
Pension and other post-retirement benefits	5		5
Other comprehensive (loss), net of tax	(24)		(24)
Less: Other comprehensive (loss) attributable to noncontrolling interest	(12)		(4)
Other comprehensive (loss) attributable to Masco Corporation	$	(12)	$	(20)
Total comprehensive income	$	90	$	514
Less: Total comprehensive income attributable to noncontrolling interest	8		4
Total comprehensive income attributable to Masco Corporation	$	82	$	510

See notes to condensed consolidated financial statements.

3

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Three Months Ended March 31, 2021 and 2020

(In Millions) 

	Three Months Ended March 31,
	2021		2020
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$	323	$	7
Increase in receivables	(195)		(183)
Increase in inventories	(78)		(21)
(Decrease) increase in accounts payable and accrued liabilities, net	(139)		105
Net cash for operating activities	(89)		(92)
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Retirement of notes	(1,326)		—
Purchase of Company common stock	(303)		(602)
Cash dividends paid	(36)		(37)
Issuance of notes, net of issuance costs	1,481		—
Debt extinguishment costs	(160)		—
Proceeds from the exercise of stock options	—		20
Employee withholding taxes paid on stock-based compensation	(14)		(22)
(Decrease) increase in debt, net	(1)		2
Net cash for financing activities	(359)		(639)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(30)		(24)
Acquisition of business, net of cash acquired	—		(24)
Proceeds from disposition of:
Businesses, net of cash disposed	—		853
Other financial investments	1		1
Other, net	4		1
Net cash (for) from investing activities	(25)		807
Effect of exchange rate changes on cash and cash investments	(13)		(6)
CASH AND CASH INVESTMENTS:
(Decrease) increase for the period	(486)		70
At January 1	1,326		697
At March 31	$	840	$	767

See notes to condensed consolidated financial statements.

4

MASCO CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three Months Ended March 31, 2021 and 2020

(In Millions, Except Per Common Share Data)

	Total		Common Shares ($1 par value)		Paid-In Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive  (Loss)		Noncontrolling Interest
Balance, January 1, 2020	$	(56)	$	276	$	—	$	(332)	$	(179)	$	179
Cumulative effect of adoption of new credit loss standard	(1)						(1)
Adjusted balance, January 1, 2020	$	(57)	$	276	$	—	$	(333)	$	(179)	$	179
Total comprehensive income (loss)	514						530		(20)		4
Shares issued	11		1		10
Shares retired:
Repurchased	(602)		(14)		(28)		(560)
Surrendered (non-cash)	(13)						(13)
Cash dividends declared	(36)						(36)
Stock-based compensation	18				18
Balance, March 31, 2020	$	(165)	$	263	$	—	$	(412)	$	(199)	$	183
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 compensation	28				28
Balance, March 31, 2021	$	217	$	253	$	—	$	(116)	$	(154)	$	234

See notes to condensed consolidated financial statements.

5

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 March 31, 2021, our results of operations, comprehensive income (loss), cash flows and changes in shareholders' equity for the three-month period ended March 31, 2021 and 2020. The condensed consolidated balance sheet at December 31, 2020 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 January 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-01, "Investments—Equity Securities (Topic 321)," "Investments—Equity Method and Joint Ventures (Topic 323)," and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815," which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. We adopted ASU 2020-01 prospectively beginning on January 1, 2021. The adoption of the standard did not have a material effect on our financial position or results of operations.

B. ACQUISITIONS

In the first quarter of 2021, we acquired a 75.1% 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. These amounts are subject to working capital and other adjustments. The cash payment was made to a third-party notary on December 29, 2020 for the acquisition of this equity interest in advance of the transaction closing on January 4, 2021. ESS is a manufacturer of shower channel drains 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 amortization period of 10 years. We also recognized $35 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business.

The remaining 24.9% equity interest in ESS is subject to a call and put option that is exercisable by us 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 was recorded as temporary equity in the condensed consolidated balance sheet as of March 31, 2021. We elected to adjust the redeemable noncontrolling interest to its full redemption amount directly into retained earnings.

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 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. 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 three-month period ended March 31, 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 that has been made available through March 31, 2021, which resulted in a $1 million decrease to goodwill.

6

MASCO CORPORATION

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

B. ACQUISITIONS (Concluded)

In the fourth quarter of 2020, we acquired substantially all of the net assets of Work Tools International Inc. and Elder & Jenks, LLC (collectively, "Work Tools") for approximately $53 million, including $48 million of cash and $5 million of debt that will be paid out in 18 months less any pending or settled indemnity matters. Work Tools will expand our product offering to our customers as it is a leading manufacturer of high-quality precision painting tools and accessories including brushes, rollers and mini rollers for DIY and professionals. This business is included in our Decorative Architectural Products segment. In connection with this acquisition, we recognized $7 million of indefinite-lived intangible assets, which is related to trademarks, and $27 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 12 years. We also recognized $7 million of goodwill, which is generally tax deductible, and is related primarily to the expected synergies from combining the operations into our business. The working capital adjustments were finalized with the seller in the first quarter of 2021, resulting in no significant changes.

In the first quarter of 2020, we acquired all of the share capital of SmarTap A.Y Ltd. ("SmarTap") for approximately $24 million in cash. SmarTap is a developer of a smart bathing system that monitors and controls the temperature and flow of water. This acquisition provides an adaptable solution for a wide range of products as it is compatible with showerheads, hand showers, spouts and shower jets. This business is included in our Plumbing Products segment. In connection with this acquisition, we recognized $10 million of definite-lived intangible assets, primarily related to technology, which is being amortized on a straight-line basis over a weighted average amortization period of 5 years. We also recognized $14 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business.

C. DIVESTITURES

In March 2021, we entered into a definitive agreement to sell Hüppe GmbH ("Hüppe"), a manufacturer of shower enclosures and shower trays. The closing of the sale is expected during the second quarter of 2021, subject to customary closing conditions and regulatory approval. We determined that the assets and liabilities for Hüppe met the held for sale criteria. Accordingly, Hüppe's assets and liabilities were classified in the condensed consolidated balance sheet at March 31, 2021 as assets held for sale or liabilities held for sale. Additionally, we ceased recording depreciation and amortization for the held for sale assets upon meeting the held for sale criteria. The sale of Hüppe does not represent a strategic shift that will have a major effect on our operations and financial results so it was not presented as discontinued operations. This business is included in our Plumbing Products segment.

The carrying amount of major classes of assets and liabilities included as part of Hüppe being reported as held for sale, were as follows, in millions:

	March 31, 2021
Cash and cash investments	$	2
Receivables	7
Prepaid expenses and other	1
Inventories	8
Property and equipment, net	7
Operating lease right-of-use assets	2
Total assets classified as held for sale	$	27
Accounts payable	$	7
Accrued liabilities	7
Noncurrent operating lease liabilities	1
Other liabilities	13
Total liabilities classified as held for sale	$	28

7

MASCO CORPORATION

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

C. DIVESTITURES (Concluded)

On November 14, 2019, we entered into a definitive agreement to sell Masco Cabinetry LLC ("Cabinetry"), a manufacturer of cabinetry products. We completed the divestiture of Cabinetry on February 18, 2020 for proceeds of approximately $989 million, including $853 million, net of cash disposed. The remaining $136 million was accounted for as preferred stock issued by a holding company of the buyer; refer to Note G for additional information. In connection with the sale, we recognized a gain on the divestiture of $585 million for the three months ended March 31, 2020, which is included in income from discontinued operations, net in the condensed consolidated statement of operations.

As the sale of Cabinetry represented a strategic shift having a major effect on our operations and financial results, the business was presented in discontinued operations separate from continuing operations for the three months ended March 31, 2020.

The major classes of line items constituting income from discontinued operations, net, in millions:

	Three Months Ended March 31,
	2021		2020
Net sales	$	—	$	101
Cost of sales	—		78
Gross profit	—		23
Selling, general and administrative expenses	—		32
(Loss) from discontinued operations	—		(9)
Gain on disposal of discontinued operations	—		585
Income before income tax	—		576
Income tax expense	—		(179)
Income from discontinued operations, net	$	—	$	397

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 March 31, 2021
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	808	$	721	$	1,529
International, principally Europe	441		—		441
Total	$	1,249	$	721	$	1,970

	Three Months Ended March 31, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	632	$	626	$	1,258
International, principally Europe	323		—		323
Total	$	955	$	626	$	1,581

8

MASCO CORPORATION

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

D. REVENUE (Concluded)

Our contract asset balance was $2 million at both March 31, 2021 and December 31, 2020. Our contract liability balance was $27 million and $62 million at March 31, 2021 and December 31, 2020, respectively.

We recognized $1 million and $3 million of revenue for the three-month periods ended March 31, 2021 and 2020, respectively, related to performance obligations settled in previous years.

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

	Three Months Ended March 31, 2021		Twelve Months Ended December 31, 2020
Balance at January 1	$	7	$	5
Provision for expected credit losses during the period	1		3
Write-offs charged against the allowance	(1)		(2)
Recoveries of amounts previously written off	1		1
Other (A)	(1)		—
Balance at end of period	$	7	$	7

(A)    As a result of Hüppe being considered held for sale, $1 million for the three month period ended March 31, 2021 was removed from allowance for credit losses.

E. DEPRECIATION AND AMORTIZATION

 Depreciation and amortization expense was $43 million and $33 million for the three-month periods ended March 31, 2021 and 2020, respectively.

F. GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the three-month period ended March 31, 2021, by segment, were as follows, in millions: 

	Gross Goodwill At March 31, 2021		Accumulated Impairment Losses		Net Goodwill At March 31, 2021
Plumbing Products (A)	$	598	$	(301)	$	297
Decorative Architectural Products	366		(75)		291
Total	$	964	$	(376)	$	588

(A)    As a result of Hüppe being considered held for sale, both gross goodwill and accumulated impairment losses for the Plumbing Products segment were reduced by $39 million.

	Gross Goodwill At December 31, 2020		Accumulated Impairment Losses		Net Goodwill At December 31, 2020		Acquisitions		Other (B)		Net Goodwill At March 31, 2021
Plumbing Products	$	613	$	(340)	$	273	$	34	$	(10)	$	297
Decorative Architectural Products	365		(75)		290		1		—		291
Total	$	978	$	(415)	$	563	$	35	$	(10)	$	588

(B)    Other consists of the effect of foreign currency translation.

The carrying value of our other indefinite-lived intangible assets was $109 million at both March 31, 2021 and December 31, 2020 and principally included registered trademarks. The carrying value of our definite-lived intangible assets was $269 million (net of accumulated amortization of $79 million) and $248 million (net of accumulated amortization of $73 million) at March 31, 2021 and December 31, 2020, respectively, and principally included customer relationships. The increase in our definite-lived intangible assets is primarily a result of our acquisition of ESS.

9

MASCO CORPORATION

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

G. FAIR VALUE OF FINANCIAL INVESTMENTS

Preferred Stock of ACProducts Holding, Inc. In conjunction with our divestiture of Cabinetry, we received preferred stock of ACProducts Holding, Inc., the holding company of the buyer, with a liquidation preference of $150 million. We do not have the ability to exercise significant influence, and the fair value of this security is not readily available. We have elected to measure this investment at cost (less impairment, if any) adjusted for observable price changes in orderly transactions for the identical or similar investments of the same issuer for subsequent measurements of fair value.

As the preferred stock was received in conjunction with the sale of Cabinetry, we determined the cost to be the fair value of the preferred stock at the time of sale. The fair value of the preferred stock was measured on a non-recurring basis, and estimated using discounted cash flow and option pricing models (Level 3 inputs). The significant unobservable inputs used to value the preferred stock included: time to exit (deemed maturity) since the preferred stock is not mandatorily redeemable, discount rate used to determine the present value of expected cash flows, which included the spread on company specific debt and the risk-free rate of return, the liquidation preference and the coupon rate. On the date of acquisition, the fair value of this investment was determined to be $136 million and was included in other assets in our condensed consolidated balance sheet.

Dividends earned on this investment are included within other income (expense), net in our condensed consolidated statement of operations with a corresponding increase to our basis in the investment. We had dividend income of $3 million for the three-month period ended March 31, 2021. The preferred stock was reported at the carrying value of $149 million and $146 million in other assets in our condensed consolidated balance sheet at March 31, 2021 and December 31, 2020, respectively.

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 March 31, 2021 was approximately $3.1 billion, compared with the aggregate carrying value of $3.0 billion. The aggregate estimated market value of our short-term and long-term debt at December 31, 2020 was approximately $3.3 billion, compared with the aggregate carrying value of $2.8 billion.

H. WARRANTY LIABILITY

Changes in our warranty liability were as follows, in millions: 

	Three Months Ended March 31, 2021		Twelve Months Ended December 31, 2020
Balance at January 1	$	83	$	84
Accruals for warranties issued during the period	8		34
Accruals related to pre-existing warranties	—		(3)
Settlements made (in cash or kind) during the period	(8)		(33)
Other, net (including currency translation and acquisitions)	(1)		1
Balance at end of period	$	82	$	83

10

MASCO CORPORATION

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

I. DEBT

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.

On March 13, 2019, we entered into a credit agreement (the “Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the 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 Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million, was terminated.

The Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries, in U.S. dollars, European euros, British Pounds Sterling, Canadian dollars and certain other currencies for revolving credit loans, swingline loans and letters of credit. Borrowings under the revolving credit loans denominated in any agreed upon currency other than U.S. dollars are limited to $500 million, equivalent. We can also borrow swingline loans up to $100 million and obtain letters of credit of up to $25 million; outstanding letters of credit under the Credit Agreement reduce our borrowing capacity. At March 31, 2021, we had no outstanding standby letters of credit under the Credit Agreement.

    Revolving credit loans bear interest under the Credit Agreement, at our option, at (A) a rate per annum equal to the greater of (i) the JPMorgan Chase Bank, N.A. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) if available, adjusted LIBO Rate plus 1.0% (the "Alternative Base Rate"); plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) if available, adjusted LIBO Rate plus an applicable margin based upon our then-applicable corporate credit ratings. The foreign currency revolving credit loans bear interest at a rate equal to adjusted LIBO Rate, if available, plus an applicable margin based upon our then-applicable corporate credit ratings.

The 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) a minimum interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0.

In order for us to borrow under the Credit Agreement, there must not be any default in our covenants in the Credit Agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of properties and insurance) and our representations and warranties in the 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, 2018, 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 March 31, 2021. 

11

MASCO CORPORATION

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

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 March 31, 2021, outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units, performance restricted stock units, and phantom stock awards.

Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: 

	Three Months Ended March 31,
	2021		2020
Long-term stock awards	$	3	$	4
Stock options	4		3
Restricted stock units	19		8
Performance restricted stock units	2		1
Phantom stock awards	2		—
Total	$	30	$	16

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 three-month periods ended March 31, 2021 and 2020.

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

	Three Months Ended March 31,
	2021		2020
Unvested stock award shares at January 1	1		2
Weighted average grant date fair value	$	36	$	34
Stock award shares vested	—		1
Weighted average grant date fair value	$	34	$	32
Stock award shares forfeited	—		—
Weighted average grant date fair value	$	37	$	35
Unvested stock award shares at March 31	1		1
Weighted average grant date fair value	$	37	$	36

At March 31, 2021 and 2020, there was $18 million and $32 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of two years and three years at March 31, 2021 and 2020, respectively.

The total market value (at the vesting date) of stock award shares which vested was $26 million and $29 million during the three-month periods ended March 31, 2021 and 2020, respectively.

12

MASCO CORPORATION

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

J. STOCK-BASED COMPENSATION (Continued)

Stock Options. Stock options are granted to certain key employees.

We granted 331,970 shares of stock options in the three-month period ended March 31, 2021 with a grant date weighted average exercise price of approximately $56 per share.

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

		Three Months Ended March 31,
		2021		2020
Option shares outstanding, January 1		2		3
Weighted average exercise price	$	33	$	27
Option shares granted		1		1
Weighted average exercise price	$	56	$	48
Option shares exercised		—		1
Aggregate intrinsic value on date of exercise (A)	$	—	$	22 million
Weighted average exercise price	$	—	$	17
Option shares forfeited		—		—
Weighted average exercise price	$	11	$	42
Option shares outstanding, March 31		3		3
Weighted average exercise price	$	36	$	32
Weighted average remaining option term (in years)		7		7
Option shares vested and expected to vest, March 31		3		3
Weighted average exercise price	$	36	$	32
Aggregate intrinsic value (A)	$	65 million	$	14 million
Weighted average remaining option term (in years)		6		7
Option shares exercisable (vested), March 31		2		1
Weighted average exercise price	$	30	$	26
Aggregate intrinsic value (A)	$	51 million	$	13 million
Weighted average remaining option term (in years)		5		6

(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 March 31, 2021 and 2020, there was $6 million and $9 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 and three years at March 31, 2021 and 2020, respectively.

13

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 model were as follows: 

	Three Months Ended March 31,
	2021			2020
Weighted average grant date fair value	$	13.61		$	10.67
Risk-free interest rate	0.75		%	1.53		%
Dividend yield	1.67		%	1.14		%
Volatility factor	30.00		%	24.00		%
Expected option life	6 years			6 years

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 635,840 restricted stock units in the three-month period ended March 31, 2021 with a weighted average grant date fair value of $56 per share. In the three-month period ended March 31, 2021, 126,295 shares were issued and 8,789 restricted stock units were forfeited. During the three-month period ended March 31, 2020, we granted 394,970 restricted stock units with a grant date fair value of approximately $47 per share and 4,760 restricted stock units were forfeited.

At March 31, 2021 and 2020, there was $23 million and $10 million, respectively, of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years and three years at March 31, 2021 and 2020, respectively.

The total market value (at the vesting date) of restricted stock units which vested was $7 million during the three-month period ended March 31, 2021.

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 three-month period ended March 31, 2021, we granted 85,360 performance restricted stock units with a grant date fair value of approximately $53 per share and 104,757 shares were issued. No performance restricted stock units were forfeited during the three-month period ended March 31, 2021. During the three-month period ended March 31, 2020, we granted 133,390 performance restricted stock units with a grant date fair value of approximately $34 per share and 151,724 shares were issued.

14

MASCO CORPORATION

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

K. EMPLOYEE RETIREMENT PLANS

Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 

	Three Months Ended March 31,
	2021				2020
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	1	$	—	$	1	$	—
Interest cost	8		1		6		1
Expected return on plan assets	(4)		—		(6)		—
Amortization of net loss	6		1		6		1
Net periodic pension cost	$	11	$	2	$	7	$	2

As of January 1, 2010, substantially all of our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans. These plans are expected to be settled in the second quarter of 2021.

L. RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE LOSS

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

	Amounts Reclassified
Accumulated Other Comprehensive Loss	Three Months Ended March 31,				Statement of Operations Line Item
	2021		2020
Amortization of defined-benefit pension and other post-retirement benefits:
Actuarial losses, net	$	7	$	7	Other income (expense), net
Tax (benefit)	(2)		(2)
Net of tax	$	5	$	5
Interest rate swaps (A)	$	2	$	—	Interest expense
Tax expense	5		—
Net of tax	$	7	$	—

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

15

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 March 31,
	2021		2020		2021		2020
	Net Sales (A)				Operating Profit (Loss)
Operations by segment:
Plumbing Products	$	1,249	$	955	$	252	$	157
Decorative Architectural Products	721		626		142		95
Total	$	1,970	$	1,581	$	394	$	252
Operations by geographic area:
North America	$	1,529	$	1,258	$	308	$	210
International, principally Europe	441		323		86		42
Total	$	1,970	$	1,581	394		252
General corporate expense, net					(29)		(27)
Operating profit					365		225
Other income (expense), net					(208)		(51)
Income from continuing operations before income taxes					$	157	$	174

(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 March 31,
	2021		2020
Income from cash and cash investments	$	—	$	1
Equity investment income, net	2		—
Foreign currency transaction losses	—		(9)
Net periodic pension and post-retirement benefit cost	(11)		(8)
Dividend income	3		—
Total other, net	$	(6)	$	(16)

16

MASCO CORPORATION

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

O. 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 March 31,
	2021		2020
Numerator (basic and diluted):
Income from continuing operations	$	94	$	133
Less: Allocation to redeemable noncontrolling interest	6		—
Less: Allocation to unvested restricted stock awards	—		1
Income from continuing operations attributable to common shareholders	88		132
Income from discontinued operations, net	—		397
Less: Allocation to unvested restricted stock awards	—		3
Income from discontinued operations, net attributable to common shareholders	—		394
Net income attributable to common shareholders	$	88	$	526
Denominator:
Basic common shares (based upon weighted average)	256		273
Add: Stock option dilution	1		1
Diluted common shares	257		274

For the three-month period ended March 31, 2021, we allocated undistributed earnings to the unvested restricted stock awards. For the three-month period ended March 31, 2020, we allocated dividends and undistributed earnings to the unvested restricted stock awards.

Additionally, 188,000 and 582,000 common shares for the three-month periods ended March 31, 2021 and 2020, respectively, related to stock options, and 7,000 restricted stock units for the three-month period ended March 31, 2020 were excluded from the computation of diluted income per common share due to their antidilutive effect.

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, replacing the previous Board of Directors authorization established in 2019. In the first three months of 2021, we repurchased and retired 5.5 million shares of our common stock (including 0.6 million shares to offset the dilutive impact of restricted stock units granted in the first three months of the year), for approximately $303 million. At March 31, 2021, we had $1.9 billion remaining under the 2021 authorization.

On the basis of amounts paid (declared), cash dividends per common share were $0.140 for the three-month period ended March 31, 2021 and $0.135 ($0.135) for the three-month period ended March 31, 2020, respectively.

17

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Concluded)

P. OTHER COMMITMENTS AND CONTINGENCIES

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: competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, and insurance coverage. 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.

Q. INCOME TAXES

Our effective tax rate was 27 percent and 19 percent for the three-month periods ended March 31, 2021 and 2020, respectively. The increase in the rate was primarily due to a $5 million income tax expense from the elimination of a disproportionate tax effect from accumulated other comprehensive loss, relating to our interest rate swap, following the retirement of the related debt in March 2021 and a $5 million increase to income tax expense from an anticipated loss on the termination of our qualified domestic defined-benefit pension plans in 2021 providing no tax benefit in certain jurisdictions. The increase in the rate was also due to an additional $4 million income tax benefit on stock-based compensation, recognized in the first quarter of 2020.

18

MASCO CORPORATION

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FIRST QUARTER 2021 VERSUS FIRST QUARTER 2020

SALES AND OPERATIONS

The following table sets forth our net sales and operating profit (loss) by business segment and geographic area, dollars in millions:

	Three Months Ended March 31,				Percent Change
	2021		2020		2021	vs.	2020
Net Sales:
Plumbing Products	$	1,249	$	955	31			%
Decorative Architectural Products	721		626		15			%
Total	$	1,970	$	1,581	25			%
North America	$	1,529	$	1,258	22			%
International, principally Europe	441		323		37			%
Total	$	1,970	$	1,581	25			%

	Three Months Ended March 31,
	2021		2020
Operating Profit (Loss): (A)
Plumbing Products	$	252	$	157
Decorative Architectural Products	142		95
Total	$	394	$	252
North America	$	308	$	210
International, principally Europe	86		42
Total	394		252
General corporate expense, net	(29)		(27)
Operating profit	$	365	$	225

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

19

We report our financial results in accordance with generally accepted accounting principles ("GAAP") in the United States of America. 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 and segment and geographic results refers to the three-month period ended March 31, 2021 compared to the same period of 2020.

NET SALES

Net sales increased 25 percent for the three-month period ended March 31, 2021. Excluding acquisitions and the effect of currency translation, net sales increased 19 percent for the three-month period ended March 31, 2021. The following table reconciles reported net sales to net sales, excluding acquisitions and the effect of currency translation, in millions:

	Three Months Ended March 31,
	2021		2020
Net sales, as reported	$	1,970	$	1,581
Acquisitions	(57)		—
Net sales, excluding acquisitions	1,913		1,581
Currency translation	(38)		—
Net sales, excluding acquisitions and the effect of currency translation	$	1,875	$	1,581

North American net sales increased 22 percent for the three-month period ended March 31, 2021. Higher sales volume of plumbing products, paints and other coating products, builders' hardware products and lighting products, in aggregate, increased sales by 19 percent for the three-month period. The acquisitions of Kraus and Work Tools increased sales by four percent for the three-month period. Favorable currency translation increased sales by one percent. Such increases were slightly offset by unfavorable net selling prices of paints and other coating products and plumbing products, which decreased sales by two percent.

International net sales increased 37 percent for the three-month period ended March 31, 2021. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased 27 percent. Higher sales volume and, to a lesser extent, favorable sales mix of plumbing products increased sales by 23 percent for the three-month period. The acquisition of ESS increased sales by three percent for the three-month period.

Net sales in the Plumbing Products segment increased 31 percent for the three-month period ended March 31, 2021. Higher sales volume increased sales by 21 percent and favorable sales mix increased sales by two percent for the three-month period. The acquisitions of Kraus and ESS increased sales by five percent and favorable foreign currency translation further increased sales by four percent for the three-month period. Such increases were slightly offset by unfavorable net selling prices, which decreased sales by one percent.

Net sales in the Decorative Architectural Products segment increased 15 percent for the three-month period ended March 31, 2021, due mostly to higher sales volume of paints and other coating products, and to a lesser extent, builders' hardware and lighting products. The Work Tools acquisition increased sales by two percent for the three-month period. Such increases were partially offset by unfavorable net selling prices of paints and other coating products and lighting products for the three-month period.

20

OPERATING PROFIT

Our gross profit margin was 35.5 percent for the three-month period ended March 31, 2021 compared to 34.6 percent for the comparable period of 2020. Gross profit margins for the three-month period ended March 31, 2021 were positively impacted by increased sales volume and cost savings initiatives. Such increases were partially offset by unfavorable net selling prices.

Selling, general and administrative expenses, as a percentage of sales, was 17.0 percent for the three-month period ended March 31, 2021 compared to 20.4 percent for the comparable period of 2020. Selling, general and administrative expenses were positively impacted by cost containment activities, including reduced expenses resulting from the COVID-19 pandemic and leverage of fixed expenses due primarily to increased sales volume.

Operating profit in the Plumbing Products segment for the three-month period ended March 31, 2021 was positively impacted by increased sales volume, as well as cost savings initiatives, including reduced expenses resulting from the COVID-19 pandemic and favorable foreign currency translation. These positive impacts were partially offset by lower net selling prices and increased commodity costs and wages.

Operating profit in the Decorative Architectural Products segment for the three-month period ended March 31, 2021 benefited primarily from increased sales volume, as well as cost savings initiatives, including reduced expenses resulting from the COVID-19 pandemic. These positive impacts were partially offset by lower net selling prices.

OTHER INCOME (EXPENSE), NET

Interest expense for the three-month period ended March 31, 2021 was $202 million compared to $35 million for the three-month period ended March 31, 2020. The increase is due primarily to 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, for the three-month period ended March 31, 2021 included $11 million of net periodic pension and post-retirement benefit cost, partially offset by $3 million of dividend income related to preferred stock of ACProducts Holding, Inc., and $2 million of earnings related to equity method investments. Other, net, for the three-month period ended March 31, 2020 included $9 million of foreign currency transaction losses and $8 million of net periodic pension and post-retirement benefit cost.

INCOME TAXES

Our effective tax rate of 27 percent for the three-month period ended March 31, 2021 was higher than our normalized tax rate of 25 percent. The increase was due primarily to a $5 million income tax expense from the elimination of a disproportionate tax effect from accumulated other comprehensive loss, relating to our interest rate swap, following the retirement of the related debt in March 2021 and a $5 million increase to income tax expense from an anticipated loss on the termination of our qualified domestic defined-benefit pension plans in 2021 providing no tax benefit in certain jurisdictions. The increased income tax expense was partially offset by an additional $5 million state income tax benefit from a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitation in the first quarter of 2021.

Our effective tax rate of 19 percent for the three-month period ended March 31, 2020 was lower than our normalized tax rate of 25 percent due primarily to an additional $6 million income tax benefit on stock-based compensation and an additional $4 million state income tax benefit from a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitation in the first quarter of 2020.

INCOME AND INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS — ATTRIBUTABLE TO MASCO CORPORATION

Income from continuing operations for the three-month period ended March 31, 2021 was $94 million compared to $133 million for the comparable period of 2020. Diluted income per common share for the three-month period ended March 31, 2021 was $0.34 per common share, compared with $0.48 per common share for the comparable period of 2020.

21

OTHER FINANCIAL INFORMATION

Our current ratio was 1.8 to 1 at both March 31, 2021 and December 31, 2020.

For the three-month period ended March 31, 2021, net cash used for operating activities was $89 million.

For the three-month period ended March 31, 2021, net cash used for financing activities was $359 million, primarily due to $1,326 million for the early retirement of our 5.950% Notes due March 15, 2022, 4.450% Notes due April 1, 2025, and 4.375% Notes due April 1, 2026 and $160 million of related debt extinguishment costs. Net cash used for financing activities was also impacted by $303 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 2021), $36 million for the payment of cash dividends, and $14 million for employee withholding taxes paid on stock-based compensation. These uses of cash were partially offset by proceeds, net of issuance costs, of $1,481 million due to the issuances of $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.

For the three-month period ended March 31, 2021, net cash used for investing activities was $25 million, comprised primarily of $30 million for capital expenditures.

Our cash and cash investments were $838 million and $1.3 billion at March 31, 2021 and December 31, 2020, respectively. Our cash and cash investments consist of overnight interest-bearing money market demand accounts, time deposit accounts, and money market mutual funds containing government securities and treasury obligations.

Of the $838 million and $1.3 billion of cash and cash investments held at March 31, 2021 and December 31, 2020, $338 million and $385 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.

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.

On March 13, 2019, we entered into a credit agreement (the "Credit Agreement") with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the 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. See Note I to the condensed consolidated financial statements.

The 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) a minimum 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 Credit Agreement at March 31, 2021.

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.

22

All outstanding payments owed under the program are recorded within accounts payable in our condensed consolidated balance sheets. The amounts owed to participating financial institutions under the program and included in accounts payable for our continuing operations were $44 million and $45 million at March 31, 2021 and December 31, 2020, respectively. We account for all payments made under the program as a reduction to our cash flows from operations and reported within our (decrease) increase in accounts payable and accrued liabilities, net, line within our condensed consolidated statements of cash flows. The amounts settled through the program and paid to participating financial institutions were $46 million and $30 million for our continuing operations during the three-month periods ended March 31, 2021 and 2020, 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.

We believe that our present cash balance, cash flows from operations, and borrowing availability under our 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.

COVID-19 IMPACT AND RESPONSE

During 2020, certain aspects of our businesses were adversely affected by the COVID-19 pandemic. Many, but not all, of our businesses remained operating because the products we provide are critical to infrastructure sectors and day-to-day operations of homes and businesses in our communities as defined by applicable local orders. Operational activity that was previously slowed at certain of our facilities, as a result of the pandemic and governmental orders, largely resumed operations at normal capacities enabling them to progress on the fulfillment of production backlogs that developed as well as to meet current consumer demand, which has continued to be strong in the first quarter of 2021. Finally, we have and may continue to experience supply chain disruptions, particularly disruptions related to our ability to source plumbing, lighting and builders’ hardware products.

We continue to be committed to the safety and well-being of our employees during this time, and, led by our cross-functional Infectious Illness Response Team, we have employed best practices and followed guidance from the World Health Organization and the Centers for Disease Control and Prevention. We have implemented and are continuing to implement alternative work arrangements to support the health and safety of our employees, including working remotely and avoiding large gatherings. In addition, we have modified work areas and workstations to provide protective measures for employees, are staggering shifts, requiring the use of face coverings, practicing social distancing and increasing the cleaning of our facilities, and in the event that we learn of an employee testing positive for COVID-19, we are completing contact tracing and requiring impacted employees to self-quarantine.

OUTLOOK FOR THE COMPANY

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.

23

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 competitive position in our industries, our reliance on key customers, the length and severity of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer confidence, our production capabilities, our employees and our supply chain, the cost and availability of materials and the imposition of tariffs, our dependence on third-party suppliers, 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 and may acquire, our ability to attract, develop and retain talented and diverse personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. 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.  The forward-looking statements in this report speak only as of the date of this report. 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.

24

MASCO CORPORATION

Item 4.

CONTROLS AND PROCEDURES

a.     Evaluation of Disclosure Controls and Procedures.

The Company’s principal executive officer and principal financial officer have concluded, based on an evaluation of the Company’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 March 31, 2021, 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 March 31, 2021, 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.

25

MASCO CORPORATION

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings involving us is set forth in Note P 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, 2020.

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-month period ended March 31, 2021 under the 2019 share repurchase authorization: 

Period	Total Number  Of Shares Purchased	Average Price Paid Per Common Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans or Programs (A)	Maximum Value Of Shares That May Yet Be Purchased Under The Plans Or Programs
1/1/21 - 1/31/21	2,031,375	$	55.45	2,031,375	661,594,923
2/1/21 - 2/9/21	742,102	$	55.93	742,102	620,087,704
Total for the quarter	2,773,477	$	55.58	2,773,477	620,087,704

(A)    In September 2019, 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. This authorization was replaced in February 2021.

The following table provides information regarding the repurchase of our common stock for the three-month period ended March 31, 2021 under the 2021 share repurchase authorization:

Period	Total Number  Of Shares Purchased	Average Price Paid Per Common Share		Total Number Of Shares Purchased As Part Of Publicly Announced Plans or Programs (A)	Maximum Value Of Shares That May Yet Be Purchased Under The Plans Or Programs
2/10/21 - 2/28/21	1,757,968	$	54.05	1,757,968	1,904,983,216
3/1/21 - 3/31/21	1,000,029	$	54.22	1,000,029	1,850,760,865
Total for the quarter	2,757,997	$	54.11	2,757,997	1,850,760,865

(A)    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, replacing the previous Board of Directors authorization established in 2019.

26

MASCO CORPORATION

PART II.  OTHER INFORMATION, Continued

Item 6. Exhibits 

4.1	–	Resolutions establishing the terms of the 1.500% Notes Due 2028 and form of global note. Incorporated by reference to Exhibit 4.1 to Masco Corporation’s Current Report on Form 8-K dated and filed on March 4, 2021.
4.2	–	Resolutions establishing the terms of the 2.000% Notes Due 2031 and form of global note. Incorporated by reference to Exhibit 4.2 to Masco Corporation’s Current Report on Form 8-K dated and filed on March 4, 2021.
4.3	–	Resolutions establishing the terms of the 3.125% Notes Due 2051 and form of global note. Incorporated by reference to Exhibit 4.3 to Masco Corporation’s Current Report on Form 8-K dated and filed on March 4, 2021.
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 March 31, 2021, 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)

27

MASCO CORPORATION

PART II.  OTHER INFORMATION, Concluded

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

MASCO CORPORATION
By:	/s/ John G. Sznewajs
Name:	John G. Sznewajs
Title:	Vice President, Chief Financial Officer

April 28, 2021

28

EX-31.A

Exhibit 31a

MASCO CORPORATION

Certification Required by Rule 13a-14(a) or 15d-14(a)

of the Securities Exchange Act of 1934

I, Keith J. Allman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Masco Corporation ("the registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 28, 2021	By:	/s/ Keith J. Allman
			Keith J. Allman
			President and Chief Executive Officer

1

EX-31.B

Exhibit 31b

MASCO CORPORATION

Certification Required by Rule 13a-14(a) or 15d-14(a)

of the Securities Exchange Act of 1934

I, John G. Sznewajs, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Masco Corporation ("the registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 28, 2021	By:	/s/ John G. Sznewajs
			John G. Sznewajs
			Vice President, Chief Financial Officer

1

EX-32

Exhibit 32

MASCO CORPORATION

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

    The certification set forth below is being submitted in connection with the Masco Corporation Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

    Keith J. Allman, the President and Chief Executive Officer, and John G. Sznewajs, the Vice President, Chief Financial Officer, of Masco Corporation, each certifies that, to the best of his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of Masco Corporation.

Date:	April 28, 2021	/s/ Keith J. Allman
		Keith J. Allman
		President and Chief Executive Officer
Date:	April 28, 2021	/s/ John G. Sznewajs
		John G. Sznewajs
		Vice President, Chief Financial Officer

1

XML

Cover Page	3 Months Ended
	Mar. 31, 2021 shares
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	1-5794
Entity Registrant Name	Masco Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-1794485
Entity Address, Address Line One	17450 College Parkway,
Entity Address, City or Town	Livonia,
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48152
City Area Code	313
Local Phone Number	274-7400
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	MAS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)	253,785,852
Entity Central Index Key	0000062996
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash investments	$ 838	$ 1,326
Receivables	1,305	1,138
Prepaid expenses and other	97	149
Assets held for sale	18	0
Inventories:
Finished goods	601	552
Raw material	252	242
Work in process	95	82
Total inventories	948	876
Total current assets	3,206	3,489
Property and equipment, net	894	908
Operating lease right-of-use assets	173	166
Goodwill	588	563
Other intangible assets, net	378	357
Other assets	326	294
Assets held for sale	9	0
Total assets	5,574	5,777
Current Liabilities:
Accounts payable	925	893
Notes payable	6	3
Accrued liabilities	803	1,038
Liabilities held for sale	14	0
Total current liabilities	1,748	1,934
Long-term debt	2,955	2,792
Operating Lease, Liability, Noncurrent	157	149
Other liabilities	458	481
Liabilities held for sale	14	0
Total liabilities	5,332	5,356
Commitments and contingencies (Note P)
Redeemable Noncontrolling Interest, Equity, Redemption Value	25	0
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2021 – 253,100,000; 2020 – 258,200,000	253	258
Preferred shares authorized: 1,000,000; Issued and outstanding: 2021 and 2020 – None	0	0
Paid-in capital	0	0
Retained (deficit) earnings	(116)	79
Accumulated other comprehensive loss	(154)	(142)
Total Masco Corporation's shareholders' (deficit) equity	(17)	195
Noncontrolling interest	234	226
Total equity	217	421
Total liabilities and equity	$ 5,574	$ 5,777

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common share, par value (in dollars per share)	$ 1	$ 1
Common shares, shares authorized (in shares)	1,400,000,000	1,400,000,000
Common shares, shares issued (in shares)	253,100,000	258,200,000
Common shares, shares outstanding (in shares)	253,100,000	258,200,000
Preferred shares, shares authorized (in shares)	1,000,000	1,000,000
Preferred shares, shares issued (in shares)	0	0
Preferred shares, shares outstanding (in shares)	0	0

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Net sales	$ 1,970	$ 1,581
Cost of sales	1,270	1,034
Gross profit	700	547
Selling, general and administrative expenses	335	322
Operating profit	365	225
Other income (expense), net:
Interest expense	(202)	(35)
Other, net	(6)	(16)
Total other income (expense), net	(208)	(51)
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total	157	174
Income tax expense	43	33
Income from continuing operations	114	141
Income from discontinued operations, net	0	397
Net income	114	538
Less: Net income attributable to noncontrolling interest	20	8
Net income attributable to Masco Corporation	$ 94	$ 530
Basic:
Income from continuing operations (in dollars per share)	$ 0.34	$ 0.49
(Loss) income from discontinued operations, net (in dollars per share)	0	1.44
Net income (in dollars per share)	0.34	1.93
Diluted:
Income from continuing operations (in dollars per share)	0.34	0.48
(Loss) income from discontinued operations, net (in dollars per share)	0	1.44
Net income (in dollars per share)	$ 0.34	$ 1.92
Amounts attributable to Masco Corporation:
Income from continuing operations	$ 94	$ 133
Income from discontinued operations, net	$ 0	$ 397

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 114	$ 538
Less: Net income attributable to noncontrolling interest	20	8
Net income attributable to Masco Corporation	94	530
Other comprehensive income (loss), net of tax (Note L):
Cumulative translation adjustment	(36)	(29)
Interest rate swaps	7	0
Pension and other post-retirement benefits	5	5
Other comprehensive (loss), net of tax	(24)	(24)
Less: Other comprehensive (loss) attributable to noncontrolling interest	(12)	(4)
Other comprehensive (loss) attributable to Masco Corporation	(12)	(20)
Total comprehensive income	90	514
Less: Total comprehensive income attributable to noncontrolling interest	8	4
Total comprehensive income attributable to Masco Corporation	$ 82	$ 510

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$ 323	$ 7
Increase in receivables	(195)	(183)
Increase in inventories	(78)	(21)
(Decrease) increase in accounts payable and accrued liabilities, net	(139)	105
Net cash for operating activities	(89)	(92)
Repayments of Notes Payable	(1,326)	0
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Purchase of Company common stock	(303)	(602)
Cash dividends paid	(36)	(37)
Proceeds from Notes Payable	1,481	0
Payment for Debt Extinguishment or Debt Prepayment Cost	(160)	0
Proceeds from the exercise of stock options	0	20
Employee withholding taxes paid on stock-based compensation	(14)	(22)
(Decrease) increase in debt, net	(1)	2
Net cash for financing activities	(359)	(639)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(30)	(24)
Acquisition of business, net of cash acquired	0	(24)
Proceeds from disposition of:
Businesses, net of cash disposed	0	853
Other financial investments	1	1
Other, net	4	1
Net cash (for) from investing activities	(25)	807
Effect of exchange rate changes on cash and cash investments	(13)	(6)
CASH AND CASH INVESTMENTS:
(Decrease) increase for the period	(486)	70
At January 1	1,326	697
At March 31	$ 840	$ 767

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Millions	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Shares ($1 par value)	Common Shares ($1 par value) Cumulative Effect, Period of Adoption, Adjustment	Paid-In Capital	Paid-In Capital Cumulative Effect, Period of Adoption, Adjustment	Retained (Deficit) Earnings	Retained (Deficit) Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive (Loss) Income	Accumulated Other Comprehensive (Loss) Income Cumulative Effect, Period of Adoption, Adjustment	Noncontrolling Interest	Noncontrolling Interest Cumulative Effect, Period of Adoption, Adjustment
Balance at Dec. 31, 2019	$ (56)	$ (57)	$ 276	$ 276	$ 0	$ 0	$ (332)	$ (333)	$ (179)	$ (179)	$ 179	$ 179
Balance (Accounting Standards Update 2016-13) at Dec. 31, 2019		$ (1)						$ (1)
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	514						530		(20)		4
Shares issued	11		1		10
Shares retired:
Repurchased	(602)		(14)		(28)		(560)
Surrendered (non-cash)	(13)						(13)
Cash dividends declared	(36)						(36)
Noncontrolling Interest, Change in Redemption Value	0
Stock-based compensation	18				18
Balance at Mar. 31, 2020	$ (165)		263		0		(412)		(199)		183
Shares retired:
Common share, par value (in dollars per share)	$ 1
Common share, par value (in dollars per share)	$ 1
Balance at Dec. 31, 2020	$ 421		258		0		79		(142)		226
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	90						94		(12)		8
Shares issued	0		1		(1)
Shares retired:
Repurchased	(303)		(6)		(27)		(270)
Surrendered (non-cash)	(13)						(13)
Noncontrolling Interest, Change in Redemption Value	(6)						(6)
Stock-based compensation	28				28
Balance at Mar. 31, 2021	$ 217		$ 253		$ 0		$ (116)		$ (154)		$ 234
Shares retired:
Common share, par value (in dollars per share)	$ 1

XML

Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Accounting Policies

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 March 31, 2021, our results of operations, comprehensive income (loss), cash flows and changes in shareholders' equity for the three-month period ended March 31, 2021 and 2020. The condensed consolidated balance sheet at December 31, 2020 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 January 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-01, "Investments—Equity Securities (Topic 321)," "Investments—Equity Method and Joint Ventures (Topic 323)," and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815," which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. We adopted ASU 2020-01 prospectively beginning on January 1, 2021. The adoption of the standard did not have a material effect on our financial position or results of operations.

XML

Acquisitions

3 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

In the first quarter of 2021, we acquired a 75.1% 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. These amounts are subject to working capital and other adjustments. The cash payment was made to a third-party notary on December 29, 2020 for the acquisition of this equity interest in advance of the transaction closing on January 4, 2021. ESS is a manufacturer of shower channel drains 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 amortization period of 10 years. We also recognized $35 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business.

The remaining 24.9% equity interest in ESS is subject to a call and put option that is exercisable by us 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 was recorded as temporary equity in the condensed consolidated balance sheet as of March 31, 2021. We elected to adjust the redeemable noncontrolling interest to its full redemption amount directly into retained earnings.

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 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. 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 three-month period ended March 31, 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 that has been made available through March 31, 2021, which resulted in a $1 million decrease to goodwill.

B. ACQUISITIONS (Concluded)

In the fourth quarter of 2020, we acquired substantially all of the net assets of Work Tools International Inc. and Elder & Jenks, LLC (collectively, "Work Tools") for approximately $53 million, including $48 million of cash and $5 million of debt that will be paid out in 18 months less any pending or settled indemnity matters. Work Tools will expand our product offering to our customers as it is a leading manufacturer of high-quality precision painting tools and accessories including brushes, rollers and mini rollers for DIY and professionals. This business is included in our Decorative Architectural Products segment. In connection with this acquisition, we recognized $7 million of indefinite-lived intangible assets, which is related to trademarks, and $27 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 12 years. We also recognized $7 million of goodwill, which is generally tax deductible, and is related primarily to the expected synergies from combining the operations into our business. The working capital adjustments were finalized with the seller in the first quarter of 2021, resulting in no significant changes.

In the first quarter of 2020, we acquired all of the share capital of SmarTap A.Y Ltd. ("SmarTap") for approximately $24 million in cash. SmarTap is a developer of a smart bathing system that monitors and controls the temperature and flow of water. This acquisition provides an adaptable solution for a wide range of products as it is compatible with showerheads, hand showers, spouts and shower jets. This business is included in our Plumbing Products segment. In connection with this acquisition, we recognized $10 million of definite-lived intangible assets, primarily related to technology, which is being amortized on a straight-line basis over a weighted average amortization period of 5 years. We also recognized $14 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business.

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Divestitures

3 Months Ended

Mar. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

DIVESTITURES

In March 2021, we entered into a definitive agreement to sell Hüppe GmbH ("Hüppe"), a manufacturer of shower enclosures and shower trays. The closing of the sale is expected during the second quarter of 2021, subject to customary closing conditions and regulatory approval. We determined that the assets and liabilities for Hüppe met the held for sale criteria. Accordingly, Hüppe's assets and liabilities were classified in the condensed consolidated balance sheet at March 31, 2021 as assets held for sale or liabilities held for sale. Additionally, we ceased recording depreciation and amortization for the held for sale assets upon meeting the held for sale criteria. The sale of Hüppe does not represent a strategic shift that will have a major effect on our operations and financial results so it was not presented as discontinued operations. This business is included in our Plumbing Products segment.

The carrying amount of major classes of assets and liabilities included as part of Hüppe being reported as held for sale, were as follows, in millions:

	March 31, 2021
Cash and cash investments	$	2
Receivables	7
Prepaid expenses and other	1
Inventories	8
Property and equipment, net	7
Operating lease right-of-use assets	2
Total assets classified as held for sale	$	27
Accounts payable	$	7
Accrued liabilities	7
Noncurrent operating lease liabilities	1
Other liabilities	13
Total liabilities classified as held for sale	$	28

C. DIVESTITURES (Concluded)

On November 14, 2019, we entered into a definitive agreement to sell Masco Cabinetry LLC ("Cabinetry"), a manufacturer of cabinetry products. We completed the divestiture of Cabinetry on February 18, 2020 for proceeds of approximately $989 million, including $853 million, net of cash disposed. The remaining $136 million was accounted for as preferred stock issued by a holding company of the buyer; refer to Note G for additional information. In connection with the sale, we recognized a gain on the divestiture of $585 million for the three months ended March 31, 2020, which is included in income from discontinued operations, net in the condensed consolidated statement of operations.

As the sale of Cabinetry represented a strategic shift having a major effect on our operations and financial results, the business was presented in discontinued operations separate from continuing operations for the three months ended March 31, 2020.

The major classes of line items constituting income from discontinued operations, net, in millions:

	Three Months Ended March 31,
	2021		2020
Net sales	$	—	$	101
Cost of sales	—		78
Gross profit	—		23
Selling, general and administrative expenses	—		32
(Loss) from discontinued operations	—		(9)
Gain on disposal of discontinued operations	—		585
Income before income tax	—		576
Income tax expense	—		(179)
Income from discontinued operations, net	$	—	$	397

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Revenue

3 Months Ended

Mar. 31, 2021

Revenues [Abstract]

Revenue

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 March 31, 2021
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	808	$	721	$	1,529
International, principally Europe	441		—		441
Total	$	1,249	$	721	$	1,970

	Three Months Ended March 31, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	632	$	626	$	1,258
International, principally Europe	323		—		323
Total	$	955	$	626	$	1,581

D. REVENUE (Concluded)

Our contract asset balance was $2 million at both March 31, 2021 and December 31, 2020. Our contract liability balance was $27 million and $62 million at March 31, 2021 and December 31, 2020, respectively.

We recognized $1 million and $3 million of revenue for the three-month periods ended March 31, 2021 and 2020, respectively, related to performance obligations settled in previous years.

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

	Three Months Ended March 31, 2021		Twelve Months Ended December 31, 2020
Balance at January 1	$	7	$	5
Provision for expected credit losses during the period	1		3
Write-offs charged against the allowance	(1)		(2)
Recoveries of amounts previously written off	1		1
Other (A)	(1)		—
Balance at end of period	$	7	$	7

(A)    As a result of Hüppe being considered held for sale, $1 million for the three month period ended March 31, 2021 was removed from allowance for credit losses.

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Depreciation and Amortization	3 Months Ended
	Mar. 31, 2021
Depreciation, Depletion and Amortization [Abstract]
Depreciation and Amortization	DEPRECIATION AND AMORTIZATION Depreciation and amortization expense was $43 million and $33 million for the three-month periods ended March 31, 2021 and 2020, respectively.

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Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the three-month period ended March 31, 2021, by segment, were as follows, in millions: 

	Gross Goodwill At March 31, 2021		Accumulated Impairment Losses		Net Goodwill At March 31, 2021
Plumbing Products (A)	$	598	$	(301)	$	297
Decorative Architectural Products	366		(75)		291
Total	$	964	$	(376)	$	588

(A)    As a result of Hüppe being considered held for sale, both gross goodwill and accumulated impairment losses for the Plumbing Products segment were reduced by $39 million.

	Gross Goodwill At December 31, 2020		Accumulated Impairment Losses		Net Goodwill At December 31, 2020		Acquisitions		Other (B)		Net Goodwill At March 31, 2021
Plumbing Products	$	613	$	(340)	$	273	$	34	$	(10)	$	297
Decorative Architectural Products	365		(75)		290		1		—		291
Total	$	978	$	(415)	$	563	$	35	$	(10)	$	588

(B)    Other consists of the effect of foreign currency translation.

The carrying value of our other indefinite-lived intangible assets was $109 million at both March 31, 2021 and December 31, 2020 and principally included registered trademarks. The carrying value of our definite-lived intangible assets was $269 million (net of accumulated amortization of $79 million) and $248 million (net of accumulated amortization of $73 million) at March 31, 2021 and December 31, 2020, respectively, and principally included customer relationships. The increase in our definite-lived intangible assets is primarily a result of our acquisition of ESS.

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Fair Value of Financial Investments

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Of Financial Investments

FAIR VALUE OF FINANCIAL INVESTMENTS

Preferred Stock of ACProducts Holding, Inc. In conjunction with our divestiture of Cabinetry, we received preferred stock of ACProducts Holding, Inc., the holding company of the buyer, with a liquidation preference of $150 million. We do not have the ability to exercise significant influence, and the fair value of this security is not readily available. We have elected to measure this investment at cost (less impairment, if any) adjusted for observable price changes in orderly transactions for the identical or similar investments of the same issuer for subsequent measurements of fair value.

As the preferred stock was received in conjunction with the sale of Cabinetry, we determined the cost to be the fair value of the preferred stock at the time of sale. The fair value of the preferred stock was measured on a non-recurring basis, and estimated using discounted cash flow and option pricing models (Level 3 inputs). The significant unobservable inputs used to value the preferred stock included: time to exit (deemed maturity) since the preferred stock is not mandatorily redeemable, discount rate used to determine the present value of expected cash flows, which included the spread on company specific debt and the risk-free rate of return, the liquidation preference and the coupon rate. On the date of acquisition, the fair value of this investment was determined to be $136 million and was included in other assets in our condensed consolidated balance sheet.

Dividends earned on this investment are included within other income (expense), net in our condensed consolidated statement of operations with a corresponding increase to our basis in the investment. We had dividend income of $3 million for the three-month period ended March 31, 2021. The preferred stock was reported at the carrying value of $149 million and $146 million in other assets in our condensed consolidated balance sheet at March 31, 2021 and December 31, 2020, respectively.

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 March 31, 2021 was approximately $3.1 billion, compared with the aggregate carrying value of $3.0 billion. The aggregate estimated market value of our short-term and long-term debt at December 31, 2020 was approximately $3.3 billion, compared with the aggregate carrying value of $2.8 billion.

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Warranty Liability

3 Months Ended

Mar. 31, 2021

Product Warranties Disclosures [Abstract]

Warranty Liability

WARRANTY LIABILITY

Changes in our warranty liability were as follows, in millions: 

	Three Months Ended March 31, 2021		Twelve Months Ended December 31, 2020
Balance at January 1	$	83	$	84
Accruals for warranties issued during the period	8		34
Accruals related to pre-existing warranties	—		(3)
Settlements made (in cash or kind) during the period	(8)		(33)
Other, net (including currency translation and acquisitions)	(1)		1
Balance at end of period	$	82	$	83

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Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt

DEBT

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.

On March 13, 2019, we entered into a credit agreement (the “Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the 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 Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million, was terminated.

The Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries, in U.S. dollars, European euros, British Pounds Sterling, Canadian dollars and certain other currencies for revolving credit loans, swingline loans and letters of credit. Borrowings under the revolving credit loans denominated in any agreed upon currency other than U.S. dollars are limited to $500 million, equivalent. We can also borrow swingline loans up to $100 million and obtain letters of credit of up to $25 million; outstanding letters of credit under the Credit Agreement reduce our borrowing capacity. At March 31, 2021, we had no outstanding standby letters of credit under the Credit Agreement.

    Revolving credit loans bear interest under the Credit Agreement, at our option, at (A) a rate per annum equal to the greater of (i) the JPMorgan Chase Bank, N.A. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) if available, adjusted LIBO Rate plus 1.0% (the "Alternative Base Rate"); plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) if available, adjusted LIBO Rate plus an applicable margin based upon our then-applicable corporate credit ratings. The foreign currency revolving credit loans bear interest at a rate equal to adjusted LIBO Rate, if available, plus an applicable margin based upon our then-applicable corporate credit ratings.

The 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) a minimum interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0.

In order for us to borrow under the Credit Agreement, there must not be any default in our covenants in the Credit Agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of properties and insurance) and our representations and warranties in the 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, 2018, 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 March 31, 2021.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

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 March 31, 2021, outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units, performance restricted stock units, and phantom stock awards.

Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: 

	Three Months Ended March 31,
	2021		2020
Long-term stock awards	$	3	$	4
Stock options	4		3
Restricted stock units	19		8
Performance restricted stock units	2		1
Phantom stock awards	2		—
Total	$	30	$	16

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 three-month periods ended March 31, 2021 and 2020.

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

	Three Months Ended March 31,
	2021		2020
Unvested stock award shares at January 1	1		2
Weighted average grant date fair value	$	36	$	34
Stock award shares vested	—		1
Weighted average grant date fair value	$	34	$	32
Stock award shares forfeited	—		—
Weighted average grant date fair value	$	37	$	35
Unvested stock award shares at March 31	1		1
Weighted average grant date fair value	$	37	$	36

At March 31, 2021 and 2020, there was $18 million and $32 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of two years and three years at March 31, 2021 and 2020, respectively.

The total market value (at the vesting date) of stock award shares which vested was $26 million and $29 million during the three-month periods ended March 31, 2021 and 2020, respectively.

J. STOCK-BASED COMPENSATION (Continued)

Stock Options. Stock options are granted to certain key employees.

We granted 331,970 shares of stock options in the three-month period ended March 31, 2021 with a grant date weighted average exercise price of approximately $56 per share.

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

		Three Months Ended March 31,
		2021		2020
Option shares outstanding, January 1		2		3
Weighted average exercise price	$	33	$	27
Option shares granted		1		1
Weighted average exercise price	$	56	$	48
Option shares exercised		—		1
Aggregate intrinsic value on date of exercise (A)	$	—	$	22 million
Weighted average exercise price	$	—	$	17
Option shares forfeited		—		—
Weighted average exercise price	$	11	$	42
Option shares outstanding, March 31		3		3
Weighted average exercise price	$	36	$	32
Weighted average remaining option term (in years)		7		7
Option shares vested and expected to vest, March 31		3		3
Weighted average exercise price	$	36	$	32
Aggregate intrinsic value (A)	$	65 million	$	14 million
Weighted average remaining option term (in years)		6		7
Option shares exercisable (vested), March 31		2		1
Weighted average exercise price	$	30	$	26
Aggregate intrinsic value (A)	$	51 million	$	13 million
Weighted average remaining option term (in years)		5		6

(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 March 31, 2021 and 2020, there was $6 million and $9 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 and three years at March 31, 2021 and 2020, respectively.

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 model were as follows: 

	Three Months Ended March 31,
	2021			2020
Weighted average grant date fair value	$	13.61		$	10.67
Risk-free interest rate	0.75		%	1.53		%
Dividend yield	1.67		%	1.14		%
Volatility factor	30.00		%	24.00		%
Expected option life	6 years			6 years

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 635,840 restricted stock units in the three-month period ended March 31, 2021 with a weighted average grant date fair value of $56 per share. In the three-month period ended March 31, 2021, 126,295 shares were issued and 8,789 restricted stock units were forfeited. During the three-month period ended March 31, 2020, we granted 394,970 restricted stock units with a grant date fair value of approximately $47 per share and 4,760 restricted stock units were forfeited.

At March 31, 2021 and 2020, there was $23 million and $10 million, respectively, of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years and three years at March 31, 2021 and 2020, respectively.

The total market value (at the vesting date) of restricted stock units which vested was $7 million during the three-month period ended March 31, 2021.

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 three-month period ended March 31, 2021, we granted 85,360 performance restricted stock units with a grant date fair value of approximately $53 per share and 104,757 shares were issued. No performance restricted stock units were forfeited during the three-month period ended March 31, 2021. During the three-month period ended March 31, 2020, we granted 133,390 performance restricted stock units with a grant date fair value of approximately $34 per share and 151,724 shares were issued.

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Employee Retirement Plans

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

Employee Retirement Plans

EMPLOYEE RETIREMENT PLANS

Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 

	Three Months Ended March 31,
	2021				2020
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	1	$	—	$	1	$	—
Interest cost	8		1		6		1
Expected return on plan assets	(4)		—		(6)		—
Amortization of net loss	6		1		6		1
Net periodic pension cost	$	11	$	2	$	7	$	2

As of January 1, 2010, substantially all of our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans. These plans are expected to be settled in the second quarter of 2021.

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Reclassifications From Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2021

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Reclassifications From Accumulated Other Comprehensive Loss

RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE LOSS

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

	Amounts Reclassified
Accumulated Other Comprehensive Loss	Three Months Ended March 31,				Statement of Operations Line Item
	2021		2020
Amortization of defined-benefit pension and other post-retirement benefits:
Actuarial losses, net	$	7	$	7	Other income (expense), net
Tax (benefit)	(2)		(2)
Net of tax	$	5	$	5
Interest rate swaps (A)	$	2	$	—	Interest expense
Tax expense	5		—
Net of tax	$	7	$	—

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

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Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

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

	Three Months Ended March 31,
	2021		2020		2021		2020
	Net Sales (A)				Operating Profit (Loss)
Operations by segment:
Plumbing Products	$	1,249	$	955	$	252	$	157
Decorative Architectural Products	721		626		142		95
Total	$	1,970	$	1,581	$	394	$	252
Operations by geographic area:
North America	$	1,529	$	1,258	$	308	$	210
International, principally Europe	441		323		86		42
Total	$	1,970	$	1,581	394		252
General corporate expense, net					(29)		(27)
Operating profit					365		225
Other income (expense), net					(208)		(51)
Income from continuing operations before income taxes					$	157	$	174

(A)    Inter-segment sales were not material.

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Other Income (Expense), Net

3 Months Ended

Mar. 31, 2021

Other Income and Expenses [Abstract]

Other Income (Expense), Net

OTHER INCOME (EXPENSE), NET

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

	Three Months Ended March 31,
	2021		2020
Income from cash and cash investments	$	—	$	1
Equity investment income, net	2		—
Foreign currency transaction losses	—		(9)
Net periodic pension and post-retirement benefit cost	(11)		(8)
Dividend income	3		—
Total other, net	$	(6)	$	(16)

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Income Per Common Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Income Per Common Share

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 March 31,
	2021		2020
Numerator (basic and diluted):
Income from continuing operations	$	94	$	133
Less: Allocation to redeemable noncontrolling interest	6		—
Less: Allocation to unvested restricted stock awards	—		1
Income from continuing operations attributable to common shareholders	88		132
Income from discontinued operations, net	—		397
Less: Allocation to unvested restricted stock awards	—		3
Income from discontinued operations, net attributable to common shareholders	—		394
Net income attributable to common shareholders	$	88	$	526
Denominator:
Basic common shares (based upon weighted average)	256		273
Add: Stock option dilution	1		1
Diluted common shares	257		274

For the three-month period ended March 31, 2021, we allocated undistributed earnings to the unvested restricted stock awards. For the three-month period ended March 31, 2020, we allocated dividends and undistributed earnings to the unvested restricted stock awards.

Additionally, 188,000 and 582,000 common shares for the three-month periods ended March 31, 2021 and 2020, respectively, related to stock options, and 7,000 restricted stock units for the three-month period ended March 31, 2020 were excluded from the computation of diluted income per common share due to their antidilutive effect.

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, replacing the previous Board of Directors authorization established in 2019. In the first three months of 2021, we repurchased and retired 5.5 million shares of our common stock (including 0.6 million shares to offset the dilutive impact of restricted stock units granted in the first three months of the year), for approximately $303 million. At March 31, 2021, we had $1.9 billion remaining under the 2021 authorization.

On the basis of amounts paid (declared), cash dividends per common share were $0.140 for the three-month period ended March 31, 2021 and $0.135 ($0.135) for the three-month period ended March 31, 2020, respectively.

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Other Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Other Commitments and Contingencies

OTHER COMMITMENTS AND CONTINGENCIES

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: competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, and insurance coverage. 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.

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Income Taxes	3 Months Ended
	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXESOur effective tax rate was 27 percent and 19 percent for the three-month periods ended March 31, 2021 and 2020, respectively. The increase in the rate was primarily due to a $5 million income tax expense from the elimination of a disproportionate tax effect from accumulated other comprehensive loss, relating to our interest rate swap, following the retirement of the related debt in March 2021 and a $5 million increase to income tax expense from an anticipated loss on the termination of our qualified domestic defined-benefit pension plans in 2021 providing no tax benefit in certain jurisdictions. The increase in the rate was also due to an additional $4 million income tax benefit on stock-based compensation, recognized in the first quarter of 2020.

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Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements	Recently Adopted Accounting Pronouncements. In January 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-01, "Investments—Equity Securities (Topic 321)," "Investments—Equity Method and Joint Ventures (Topic 323)," and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815," which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. We adopted ASU 2020-01 prospectively beginning on January 1, 2021. The adoption of the standard did not have a material effect on our financial position or results of operations.

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Divestitures (Tables)

3 Months Ended

Mar. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations

The carrying amount of major classes of assets and liabilities included as part of Hüppe being reported as held for sale, were as follows, in millions:

	March 31, 2021
Cash and cash investments	$	2
Receivables	7
Prepaid expenses and other	1
Inventories	8
Property and equipment, net	7
Operating lease right-of-use assets	2
Total assets classified as held for sale	$	27
Accounts payable	$	7
Accrued liabilities	7
Noncurrent operating lease liabilities	1
Other liabilities	13
Total liabilities classified as held for sale	$	28

The major classes of line items constituting income from discontinued operations, net, in millions:

	Three Months Ended March 31,
	2021		2020
Net sales	$	—	$	101
Cost of sales	—		78
Gross profit	—		23
Selling, general and administrative expenses	—		32
(Loss) from discontinued operations	—		(9)
Gain on disposal of discontinued operations	—		585
Income before income tax	—		576
Income tax expense	—		(179)
Income from discontinued operations, net	$	—	$	397

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Revenue (Tables)

3 Months Ended

Mar. 31, 2021

Revenues [Abstract]

Disaggregation of 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 March 31, 2021
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	808	$	721	$	1,529
International, principally Europe	441		—		441
Total	$	1,249	$	721	$	1,970

	Three Months Ended March 31, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	632	$	626	$	1,258
International, principally Europe	323		—		323
Total	$	955	$	626	$	1,581

Financing Receivable, Allowance for Credit Loss

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

	Three Months Ended March 31, 2021		Twelve Months Ended December 31, 2020
Balance at January 1	$	7	$	5
Provision for expected credit losses during the period	1		3
Write-offs charged against the allowance	(1)		(2)
Recoveries of amounts previously written off	1		1
Other (A)	(1)		—
Balance at end of period	$	7	$	7

(A)    As a result of Hüppe being considered held for sale, $1 million for the three month period ended March 31, 2021 was removed from allowance for credit losses.

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Goodwill and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in carrying amount of goodwill

The changes in the carrying amount of goodwill for the three-month period ended March 31, 2021, by segment, were as follows, in millions: 

	Gross Goodwill At March 31, 2021		Accumulated Impairment Losses		Net Goodwill At March 31, 2021
Plumbing Products (A)	$	598	$	(301)	$	297
Decorative Architectural Products	366		(75)		291
Total	$	964	$	(376)	$	588

(A)    As a result of Hüppe being considered held for sale, both gross goodwill and accumulated impairment losses for the Plumbing Products segment were reduced by $39 million.

	Gross Goodwill At December 31, 2020		Accumulated Impairment Losses		Net Goodwill At December 31, 2020		Acquisitions		Other (B)		Net Goodwill At March 31, 2021
Plumbing Products	$	613	$	(340)	$	273	$	34	$	(10)	$	297
Decorative Architectural Products	365		(75)		290		1		—		291
Total	$	978	$	(415)	$	563	$	35	$	(10)	$	588

(B)    Other consists of the effect of foreign currency translation.

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Warranty Liability (Tables)

3 Months Ended

Mar. 31, 2021

Product Warranties Disclosures [Abstract]

Schedule of changes in the Company's warranty liability

Changes in our warranty liability were as follows, in millions: 

	Three Months Ended March 31, 2021		Twelve Months Ended December 31, 2020
Balance at January 1	$	83	$	84
Accruals for warranties issued during the period	8		34
Accruals related to pre-existing warranties	—		(3)
Settlements made (in cash or kind) during the period	(8)		(33)
Other, net (including currency translation and acquisitions)	(1)		1
Balance at end of period	$	82	$	83

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of pre-tax compensation expense and the related income tax benefit for these stock-based incentives

Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: 

	Three Months Ended March 31,
	2021		2020
Long-term stock awards	$	3	$	4
Stock options	4		3
Restricted stock units	19		8
Performance restricted stock units	2		1
Phantom stock awards	2		—
Total	$	30	$	16

Schedule of the Company's long-term stock award activity

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

	Three Months Ended March 31,
	2021		2020
Unvested stock award shares at January 1	1		2
Weighted average grant date fair value	$	36	$	34
Stock award shares vested	—		1
Weighted average grant date fair value	$	34	$	32
Stock award shares forfeited	—		—
Weighted average grant date fair value	$	37	$	35
Unvested stock award shares at March 31	1		1
Weighted average grant date fair value	$	37	$	36

Schedule of the Company's stock option activity

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

		Three Months Ended March 31,
		2021		2020
Option shares outstanding, January 1		2		3
Weighted average exercise price	$	33	$	27
Option shares granted		1		1
Weighted average exercise price	$	56	$	48
Option shares exercised		—		1
Aggregate intrinsic value on date of exercise (A)	$	—	$	22 million
Weighted average exercise price	$	—	$	17
Option shares forfeited		—		—
Weighted average exercise price	$	11	$	42
Option shares outstanding, March 31		3		3
Weighted average exercise price	$	36	$	32
Weighted average remaining option term (in years)		7		7
Option shares vested and expected to vest, March 31		3		3
Weighted average exercise price	$	36	$	32
Aggregate intrinsic value (A)	$	65 million	$	14 million
Weighted average remaining option term (in years)		6		7
Option shares exercisable (vested), March 31		2		1
Weighted average exercise price	$	30	$	26
Aggregate intrinsic value (A)	$	51 million	$	13 million
Weighted average remaining option term (in years)		5		6

(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.

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

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

	Three Months Ended March 31,
	2021			2020
Weighted average grant date fair value	$	13.61		$	10.67
Risk-free interest rate	0.75		%	1.53		%
Dividend yield	1.67		%	1.14		%
Volatility factor	30.00		%	24.00		%
Expected option life	6 years			6 years

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Employee Retirement Plans (Tables)

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

Schedule of net periodic pension cost for the Company's defined-benefit pension plans

Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 

	Three Months Ended March 31,
	2021				2020
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	1	$	—	$	1	$	—
Interest cost	8		1		6		1
Expected return on plan assets	(4)		—		(6)		—
Amortization of net loss	6		1		6		1
Net periodic pension cost	$	11	$	2	$	7	$	2

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Reclassifications From Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2021

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Schedule of reclassifications from accumulated other comprehensive (loss) income to the condensed consolidated statements of operations

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

	Amounts Reclassified
Accumulated Other Comprehensive Loss	Three Months Ended March 31,				Statement of Operations Line Item
	2021		2020
Amortization of defined-benefit pension and other post-retirement benefits:
Actuarial losses, net	$	7	$	7	Other income (expense), net
Tax (benefit)	(2)		(2)
Net of tax	$	5	$	5
Interest rate swaps (A)	$	2	$	—	Interest expense
Tax expense	5		—
Net of tax	$	7	$	—

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

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Schedule of information by segment and geographic area

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

	Three Months Ended March 31,
	2021		2020		2021		2020
	Net Sales (A)				Operating Profit (Loss)
Operations by segment:
Plumbing Products	$	1,249	$	955	$	252	$	157
Decorative Architectural Products	721		626		142		95
Total	$	1,970	$	1,581	$	394	$	252
Operations by geographic area:
North America	$	1,529	$	1,258	$	308	$	210
International, principally Europe	441		323		86		42
Total	$	1,970	$	1,581	394		252
General corporate expense, net					(29)		(27)
Operating profit					365		225
Other income (expense), net					(208)		(51)
Income from continuing operations before income taxes					$	157	$	174

(A)    Inter-segment sales were not material.

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Other Income (Expense), Net (Tables)

3 Months Ended

Mar. 31, 2021

Other Income and Expenses [Abstract]

Schedule of components of other, net, which is included in other income (expense), net

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

	Three Months Ended March 31,
	2021		2020
Income from cash and cash investments	$	—	$	1
Equity investment income, net	2		—
Foreign currency transaction losses	—		(9)
Net periodic pension and post-retirement benefit cost	(11)		(8)
Dividend income	3		—
Total other, net	$	(6)	$	(16)

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Income Per Common Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of reconciliations of the numerators and denominators used in the computations of basic and diluted earnings 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 March 31,
	2021		2020
Numerator (basic and diluted):
Income from continuing operations	$	94	$	133
Less: Allocation to redeemable noncontrolling interest	6		—
Less: Allocation to unvested restricted stock awards	—		1
Income from continuing operations attributable to common shareholders	88		132
Income from discontinued operations, net	—		397
Less: Allocation to unvested restricted stock awards	—		3
Income from discontinued operations, net attributable to common shareholders	—		394
Net income attributable to common shareholders	$	88	$	526
Denominator:
Basic common shares (based upon weighted average)	256		273
Add: Stock option dilution	1		1
Diluted common shares	257		274

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Acquisitions (Details) € in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2021 EUR (€)	Dec. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Jan. 04, 2021
Business Acquisition [Line Items]
Goodwill, acquired during period	$ 35
Payments to Acquire Businesses, Net of Cash Acquired	0				$ 24
Easy Sanitary Solutions B.V.
Business Acquisition [Line Items]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners						24.90%
SmarTap
Business Acquisition [Line Items]
Payments to acquire businesses				$ 24
Goodwill, acquired during period				14
Finite-lived intangible assets acquired				$ 10
Weighted average useful life (in years)				5 years
Easy Sanitary Solutions B.V.
Business Acquisition [Line Items]
Payments to acquire businesses	52
Goodwill, acquired during period	35
Finite-lived intangible assets acquired	$ 32
Weighted average useful life (in years)	10 years	10 years
Business Acquisition, Percentage of Voting Interests Acquired						75.10%
Payments to Acquire Businesses, Net of Cash Acquired	$ 58	€ 47
Business Combination, Consideration Transferred, Liabilities Incurred	$ 6
Business Combination, Consideration Transferred, Liabilities Incurred, Payment Period	2 years	2 years
Kraus USA Inc
Business Acquisition [Line Items]
Payments to acquire businesses			$ 103
Goodwill, acquired during period			20
Finite-lived intangible assets acquired			$ 49
Weighted average useful life (in years)			10 years
Payments for Asset Acquisition, Contingent			$ 50
Business Combination, Contingent Consideration, Liability			8
Indefinite-lived Intangible Assets Acquired			25
Decrease to goodwill	$ 1
Work Tools International Inc and Elder & Jenks LLC
Business Acquisition [Line Items]
Payments to acquire businesses			48
Goodwill, acquired during period			7
Finite-lived intangible assets acquired			$ 27
Weighted average useful life (in years)			12 years
Payments to Acquire Businesses, Net of Cash Acquired			$ 53
Business Combination, Consideration Transferred, Liabilities Incurred			$ 5
Business Combination, Consideration Transferred, Liabilities Incurred, Payment Period			18 months
Indefinite-lived Intangible Assets Acquired			$ 7
Decrease to goodwill	$ 0

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Divestitures - Hüppe (Details) - Disposal Group, Not Discontinued Operations - Hüppe $ in Millions	Mar. 31, 2021 USD ($)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash and cash investments	$ 2
Receivables	7
Prepaid expenses and other	1
Inventories	8
Property and equipment, net	7
Operating lease right-of-use assets	2
Total assets classified as held for sale	27
Accounts payable	7
Accrued liabilities	7
Noncurrent operating lease liabilities	1
Other liabilities	13
Total liabilities classified as held for sale	$ 28

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Divestitures - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Sep. 30, 2020	Mar. 31, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed	$ 0		$ 853
Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on disposal of discontinued operations	0		585
Income before income tax, discontinued operations	$ 0		576
Masco Cabinetry | Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed		$ 989
Gain (loss) on disposition of business			$ 585
Cash and Cash Equivalents | Masco Cabinetry | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed		853
ACProducts Preferred Stock | Masco Cabinetry | Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses		$ 136

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Divestitures - Income Statement (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) income from discontinued operations, net	$ 0	$ 397
Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	0	101
Cost of sales	0	78
Gross profit	0	23
Selling, general and administrative expenses	0	32
(Loss) from discontinued operations	0	(9)
Gain on disposal of discontinued operations	0	585
Income before income tax	0	576
Income tax benefit (expense)	0	(179)
(Loss) income from discontinued operations, net	$ 0	$ 397

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Revenue (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Disaggregation of Revenue [Line Items]
Net sales	$ 1,970	$ 1,581
Contract with customer, asset, gross, current	2		$ 2
Contract with customer, liability	27		62
Performance obligation satisfied in previous period	1	3
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance at January 1	7	5	5
Provision for expected credit losses during the period	1		3
Write-offs charged against the allowance	(1)		(2)
Recoveries of amounts previously written off	1		1
Financing Receivable, Allowance for Credit Loss, Asset Held-for-Sale	1		0
Balance at end of period	7		$ 7
Plumbing Products (A)
Disaggregation of Revenue [Line Items]
Net sales	1,249	955
Decorative Architectural Products
Disaggregation of Revenue [Line Items]
Net sales	721	626
North America
Disaggregation of Revenue [Line Items]
Net sales	1,529	1,258
North America | Plumbing Products (A)
Disaggregation of Revenue [Line Items]
Net sales	808	632
North America | Decorative Architectural Products
Disaggregation of Revenue [Line Items]
Net sales	721	626
International, principally Europe
Disaggregation of Revenue [Line Items]
Net sales	441	323
International, principally Europe | Plumbing Products (A)
Disaggregation of Revenue [Line Items]
Net sales	441	323
International, principally Europe | Decorative Architectural Products
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0

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Depreciation and Amortization (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Depreciation, Depletion and Amortization [Abstract]
Depreciation and amortization expense	$ 43	$ 33

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Goodwill and Other Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Goodwill [Line Items]
Gross goodwill		$ 964	$ 978
Accumulated Impairment Losses		(376)	(415)
Net goodwill	$ 588	588	563
Goodwill [Roll Forward]
Gross goodwill		964	978
Accumulated Impairment Losses		(376)	(415)
December 31, 2020	563
Acquisitions	35
Goodwill, Other Increase (Decrease)	(10)
March 31, 2021	588
Goodwill, Written off Related to Sale of Business Unit	39
Plumbing Products (A)
Goodwill [Line Items]
Gross goodwill		598	613
Accumulated Impairment Losses		(301)	(340)
Net goodwill	273	297	273
Goodwill [Roll Forward]
Gross goodwill		598	613
Accumulated Impairment Losses		(301)	(340)
December 31, 2020	273
Acquisitions	34
Goodwill, Other Increase (Decrease)	(10)
March 31, 2021	297
Decorative Architectural Products
Goodwill [Line Items]
Gross goodwill		366	365
Accumulated Impairment Losses		(75)	(75)
Net goodwill	290	291	290
Goodwill [Roll Forward]
Gross goodwill		366	365
Accumulated Impairment Losses		$ (75)	$ (75)
December 31, 2020	290
Acquisitions	1
Goodwill, Other Increase (Decrease)	0
March 31, 2021	$ 291

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Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2021	Dec. 31, 2020
Goodwill [Line Items]
Other indefinite-lived intangible assets	$ 109	$ 109
Carrying value of definite-lived intangible assets	269	248
Accumulated amortization	$ 79	$ 73

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Fair Value of Financial Investments (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Feb. 18, 2020
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, fair value disclosure				$ 136,000,000
Dividend income	$ 3,000,000	$ 0
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated market value of long-term and short-term debt	3,100,000,000		$ 3,300,000,000
Carrying Value Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate carrying value of long-term and short-term debt	3,000,000,000.0		2,800,000,000
ACProducts Preferred Stock | Other Assets
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	149,000,000		$ 146,000,000
ACProducts Holding, Inc
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Preferred stock, liquidation preference, value	$ 150,000,000

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Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 83	$ 84
Accruals for warranties issued during the period	8	34
Accruals related to pre-existing warranties	0	(3)
Settlements made (in cash or kind) during the period	(8)	(33)
Other, net (including currency translation and acquisitions)	(1)	1
Balance at the end of the period	$ 82	$ 83

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Debt (Details) - USD ($)				3 Months Ended
	Mar. 22, 2021	Mar. 04, 2021	Mar. 13, 2019	Mar. 31, 2021	Mar. 31, 2020	Mar. 28, 2013
Debt
Proceeds from Issuance of Debt		$ 1,495,000,000
Repayments of Notes Payable				$ 1,326,000,000	$ 0
Gain (Loss) on Extinguishment of Debt	$ 168,000,000
Credit Agreement dated March 13, 2019
Debt
Borrowing capacity, maximum			$ 1,000,000,000.0
Increase in maximum borrowing capacity			$ 500,000,000
Maximum net leverage ratio			4.0
Minimum interest coverage ratio			2.5
Borrowings outstanding				0
Credit Agreement dated March 13, 2019 | Federal funds effective rate
Debt
Interest rate, basis spread (as a percent)			0.50%
Credit Agreement dated March 13, 2019 | Libor rate
Debt
Interest rate, basis spread (as a percent)			1.00%
Credit Agreement dated March 13, 2019 | Revolver
Debt
Borrowing capacity, maximum			$ 500,000,000
Credit Agreement dated March 13, 2019 | Swingline loans
Debt
Borrowing capacity, maximum			100,000,000
Credit Agreement dated March 13, 2019 | Letters of credit
Debt
Borrowing capacity, maximum			$ 25,000,000
Letters of credit outstanding, amount				$ 0
Credit Agreement dated March 28, 2013
Debt
Borrowing capacity, maximum						$ 750,000,000
1.5 Notes and Debentures Due February 15, 2028
Debt
Long-term Debt, Gross		$ 600,000,000
Debt Instrument, Interest Rate, Stated Percentage		1.50%
2.0% Notes and Debentures Due February 15, 2031
Debt
Long-term Debt, Gross		$ 600,000,000
Debt Instrument, Interest Rate, Stated Percentage		2.00%
3.125 Notes and Debentures Due February 15, 2051
Debt
Long-term Debt, Gross		$ 300,000,000
Debt Instrument, Interest Rate, Stated Percentage		3.125%
5.95 Notes and Debentures Due March 15, 2022
Debt
Debt Instrument, Interest Rate, Stated Percentage	5.95%
Repayments of Notes Payable	$ 326,000,000
4.45 Notes and Debentures Due April 1, 2025
Debt
Debt Instrument, Interest Rate, Stated Percentage	4.45%
Repayments of Notes Payable	$ 500,000,000
4.375 Notes and Debentures Due April 1, 2026
Debt
Debt Instrument, Interest Rate, Stated Percentage	4.375%
Repayments of Notes Payable	$ 500,000,000

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Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock-based compensation
Pre-tax compensation expense	$ 30	$ 16
Long-term stock awards
Stock-based compensation
Pre-tax compensation expense	3	4
Stock options
Stock-based compensation
Pre-tax compensation expense	4	3
Restricted stock units
Stock-based compensation
Pre-tax compensation expense	19	8
Performance Restricted Stock Units
Stock-based compensation
Pre-tax compensation expense	2	1
Phantom stock awards
Stock-based compensation
Pre-tax compensation expense	$ 2	$ 0

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Stock-Based Compensation - Long-Term Stock Award (Details) - Long-term stock awards - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Unvested stock award shares
Balance at the beginning of the period (in shares)	1	2
Vested (in shares)	0	1
Forfeited (in shares)	0	0
Balance at the end of the period (in shares)	1	1
Weighted average grant date fair value
Balance at the beginning of the period (in dollars per share)	$ 36	$ 34
Vested (in dollars per share)	34	32
Forfeited (in dollars per share)	37	35
Balance at the end of the period (in dollars per share)	$ 37	$ 36
Additional disclosures
Total unrecognized compensation expense	$ 18	$ 32
Weighted average remaining vesting period	2 years	3 years
Total market value (at the vesting date) of stock award shares	$ 26	$ 29

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Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock Options
Grant date intrinsic value (in dollars per share)	$ 56
Shares
Granted (in shares)	331,970
Stock options
Shares
Outstanding at the beginning of the period (in shares)	2,000,000	3,000,000
Granted (in shares)	1,000,000	1,000,000
Exercised (in shares)	0	1,000,000
Forfeited (in shares)	0	0
Outstanding at the end of the period (in shares)	3,000,000	3,000,000
Vested and expected to vest at the end of the period (in shares)	3,000,000	3,000,000
Exercisable at the end of the period (in shares)	2,000,000	1,000,000
Weighted average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 33	$ 27
Granted (in dollars per share)	56	48
Exercised (in dollars per share)	0	17
Forfeited (in dollars per share)	11	42
Outstanding at the end of the period (in dollars per share)	36	32
Vested and expected to vest at the end of the period (in dollars per share)	36	32
Exercisable at the end of the period (in dollars per share)	$ 30	$ 26
Aggregate intrinsic value
Exercised	$ 0	$ 22
Vested and expected to vest at the end of the period	65	14
Exercisable at the end of the period	$ 51	$ 13
Weighted average remaining option term
Outstanding at the end of the period	7 years	7 years
Vested and expected to vest at the end of the period	6 years	7 years
Exercisable at the end of the period	5 years	6 years
Additional disclosures
Total unrecognized compensation expense	$ 6	$ 9
Weighted average remaining vesting period	2 years	3 years

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Stock-Based Compensation - Option Pricing Assumptions and Estimates (Details) - Stock options - $ / shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock Options
Weighted average grant date fair value (in dollars per share)	$ 13.61	$ 10.67
Risk-free interest rate (as a percent)	0.75%	1.53%
Dividend yield (as a percent)	1.67%	1.14%
Volatility factor (as a percent)	30.00%	24.00%
Expected option life	6 years	6 years

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Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Restricted stock units
Stock-based compensation
Granted (in shares)	635,840	394,970
Granted (in dollars per share)	$ 56	$ 47
Forfeited (in shares)	8,789	4,760
unrecognized compensation expense	$ 23	$ 10
Weighted average remaining vesting period	2 years	3 years
Shares issued in period (in shares)	126,295
Total market value (at the vesting date) of stock award shares	$ 7
Stock options
Stock-based compensation
Weighted average remaining vesting period	2 years	3 years
Performance Restricted Stock Units
Stock-based compensation
Period for recognition	3 years
LTIP Program | Performance Restricted Stock Units
Stock-based compensation
Granted (in shares)	85,360	133,390
Granted (in dollars per share)	$ 53	$ 34
Forfeited (in shares)	0
Shares issued in period (in shares)	104,757	151,724

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Employee Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Qualified Plan [Member]
Net periodic pension cost for the company's defined-benefit pension plans
Service cost	$ 1	$ 1
Defined Benefit Plan, Interest Cost	8	6
Defined Benefit Plan, Expected Return (Loss) on Plan Assets	(4)	(6)
Defined Benefit Plan, Amortization of Gain (Loss)	6	6
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Total	11	7
Nonqualified Plan [Member]
Net periodic pension cost for the company's defined-benefit pension plans
Service cost	0	0
Defined Benefit Plan, Interest Cost	1	1
Defined Benefit Plan, Expected Return (Loss) on Plan Assets	0	0
Defined Benefit Plan, Amortization of Gain (Loss)	1	1
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Total	$ 2	$ 2

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Reclassifications From Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 22, 2021
Reclassifications from accumulated other comprehensive (loss) income
Other income (expense), net	$ 208	$ 51
Tax (benefit)	43	33
Reclassifications, after tax	(114)	(538)
Interest Expense	202	35
5.95 Notes and Debentures Due March 15, 2022
Reclassifications from accumulated other comprehensive (loss) income
Debt Instrument, Interest Rate, Stated Percentage			5.95%
Reclassification out of Accumulated Other Comprehensive Income | Actuarial losses, net
Reclassifications from accumulated other comprehensive (loss) income
Other income (expense), net	7	7
Tax (benefit)	(2)	(2)
Reclassifications, after tax	5	5
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
Reclassifications from accumulated other comprehensive (loss) income
Tax (benefit)	5	0
Reclassifications, after tax	(7)	0
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | Interest Rate Swap
Reclassifications from accumulated other comprehensive (loss) income
Interest Expense	$ 2	$ 0

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Segment Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Segment Information
Net sales	$ 1,970	$ 1,581
Operating Profit (Loss)	365	225
Other income (expense), net	(208)	(51)
Income from continuing operations before income taxes	157	174
North America
Segment Information
Net sales	1,529	1,258
International, principally Europe
Segment Information
Net sales	441	323
Plumbing Products (A)
Segment Information
Net sales	1,249	955
Plumbing Products (A) | North America
Segment Information
Net sales	808	632
Plumbing Products (A) | International, principally Europe
Segment Information
Net sales	441	323
Decorative Architectural Products
Segment Information
Net sales	721	626
Decorative Architectural Products | North America
Segment Information
Net sales	721	626
Decorative Architectural Products | International, principally Europe
Segment Information
Net sales	0	0
Operating Segments
Segment Information
Net sales	1,970	1,581
Operating Profit (Loss)	394	252
Operating Segments | Plumbing Products (A)
Segment Information
Net sales	1,249	955
Operating Profit (Loss)	252	157
Operating Segments | Decorative Architectural Products
Segment Information
Net sales	721	626
Operating Profit (Loss)	142	95
Geographic Areas
Segment Information
Net sales	1,970	1,581
Operating Profit (Loss)	394	252
Geographic Areas | North America
Segment Information
Net sales	1,529	1,258
Operating Profit (Loss)	308	210
Geographic Areas | International, principally Europe
Segment Information
Net sales	441	323
Operating Profit (Loss)	86	42
Corporate, Non-Segment
Segment Information
General corporate expense, net	$ (29)	$ (27)

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Other Income (Expense), Net (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Other Income and Expenses [Abstract]
Income from cash and cash investments	$ 0	$ 1
Income (Loss) from Equity Method Investments	2	0
Foreign currency transaction losses	0	(9)
Net periodic pension and post-retirement benefit cost	(11)	(8)
Dividend income	3	0
Total other, net	$ (6)	$ (16)

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Income Per Common Share (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Numerator (basic and diluted):
Income from continuing operations	$ 94	$ 133
Less: Allocation to redeemable noncontrolling interest	6	0
Less: Allocation to unvested restricted stock awards	0	1
Income from continuing operations attributable to common shareholders	88	132
Income from discontinued operations, net	0	397
Less: Allocation to unvested restricted stock awards	0	3
Income from discontinued operations, net attributable to common shareholders	0	394
Net income attributable to common shareholders	$ 88	$ 526
Denominator:
Basic common shares (based upon weighted average) (in shares)	256	273
Add: Stock option dilution (in shares)	1	1
Diluted common shares (in shares)	257	274

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Income Per Common Share - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Feb. 10, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount authorized for repurchase			$ 2,000
Stock repurchased during period (in shares)	5,500,000
Stock repurchased and retired during period	$ 303	$ 602
Remaining authorized repurchase amount	$ 1,900
Dividends
Cash dividends per common share paid (in dollars per share)	$ 0.140	$ 0.135
Cash dividends per common share declared (in dollars per share)		$ 0.135
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive effect on computation of diluted earnings per common share (in shares)	188,000	582,000
Long-term stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive effect on computation of diluted earnings per common share (in shares)		7,000
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock repurchased and retired during period to offset dilutive impact of awards granted (in shares)	600,000

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	27.00%	19.00%
Income tax expense, elimination of disproportionate tax	$ 5
Income tax expense from anticipated loss	$ 5
Income tax expense on stock-based compensation		$ 4