Key Highlights
- Sales for the third quarter increased 2
percent to $1.9 billion; in local currencies, sales increased 3
percent
- Operating profit grew 4 percent to $269
million; adjusted operating profit grew 7 percent to $275
million
- Operating profit margin for the quarter
increased to 14.3 percent, a 30 basis point expansion; adjusted
operating profit margin increased to 14.7 percent, a 70 basis point
expansion
- Earnings per share for the quarter grew
25 percent to $0.40 per common share; adjusted earnings per share
grew 21 percent to $0.41 per common share (both figures included
the negative effect of a $21 million warranty reserve increase in
our Windows and Other Specialty Products segment, which reduced
earnings per share by approximately $0.04 per common share)
Masco Corporation (NYSE: MAS), one of the world’s leading
manufacturers of branded home improvement and building products,
reported strong net sales and operating profit growth in the third
quarter of 2016.
“Our performance in the third quarter reflects our continued
execution against our strategic initiatives,” said Masco’s
President and CEO, Keith Allman. “We invested in our industry
leading brands to drive growth, and continued to improve
profitability by leveraging our operations and selectively exiting
lower margin business in our Cabinetry segment. Additionally, we
continued our disciplined capital allocation by returning
approximately $110 million to shareholders through dividends and
share repurchases during the quarter.”
2016 Third Quarter
Commentary
- On a reported basis, compared to third
quarter 2015:
- Net sales from continuing operations
increased 2 percent to $1.9 billion
- In local currency, North American sales
increased 2 percent and international sales increased 6
percent
- Gross margins improved to 32.7 percent
from 32.0 percent
- Operating margins improved to 14.3
percent from 14.0 percent
- Income from continuing operations was
$0.40 per common share compared to $0.32 per common share
- Compared to third quarter 2015, results
for key financial measures, as adjusted for certain items (see
Exhibit A) and with a normalized tax rate of 36 percent, were as
follows:
- Gross margins improved to 32.9 percent
compared to 31.9 percent
- Operating margins improved to 14.7
percent compared to 14.0 percent
- Income from continuing operations was
$0.41 per common share compared to $0.34 per common share
- Liquidity at the end of the third
quarter was approximately $1.2 billion
- 2.3 million shares were repurchased in
the third quarter
2016 Third Quarter Operating Segment
Highlights
- Plumbing Products’ net sales increased
5 percent (6 percent excluding the impact of foreign currency
translation), driven by growth in North America and
internationally
- Decorative Architectural Products’ net
sales increased 2 percent with growth from paints and other coating
products partially offset by the timing and amount of
promotions
- Cabinetry Products’ net sales decreased
6 percent due to the exit of lower margin business in the builder
channel, which was partially offset by growth in the retail and
dealer channels
- Windows and Other Specialty Products’
net sales decreased 1 percent. Excluding the impact of foreign
currency translation, net sales increased 2 percent, led by our
North American windows business
Outlook
“Consumer demand for our market-leading products remains strong,
as the fundamentals for long-term demand in both repair and remodel
and new home construction continue to be positive,” said Allman.
“By leveraging our brand portfolio, our industry-leading positions
and our Masco Operating System, we will continue to successfully
execute against these positive industry fundamentals to achieve our
long-term growth strategies.”
About Masco
Headquartered in Taylor, Michigan, Masco Corporation is a global
leader in the design, manufacture and distribution of branded home
improvement and building products. Our portfolio of
industry-leading brands includes Behr® paint; Delta® and Hansgrohe®
faucets, bath and shower fixtures; KraftMaid® and Merillat®
cabinets; Milgard® windows and doors; and Hot Spring® spas. We
leverage our powerful brands across product categories, sales
channels and geographies to create value for our customers and
shareholders. For more information about Masco Corporation, visit
www.masco.com.
The 2016 third quarter supplemental material, including a
presentation in PDF format, is available on the Company’s website
at www.masco.com.
Conference Call Details
A conference call regarding items contained in this release is
scheduled for Tuesday, October 25, 2016 at 8:00 a.m. ET.
Participants in the call are asked to register five to ten minutes
prior to the scheduled start time by dialing (855) 226-2726
(855-22MASCO) and from outside the U.S. at (706) 679-3614. Please
use the conference identification number 86755759. The conference
call will be webcast simultaneously and in its entirety through the
Company’s website. Shareholders, media representatives and others
interested in Masco may participate in the webcast by registering
through the Investor Relations section on the Company’s
website.
A replay of the call will be available on Masco’s website or by
phone by dialing (855) 859-2056 and from outside the U.S. at (404)
537-3406. Please use the conference identification number 86755759.
The telephone replay will be available approximately two hours
after the end of the call and continue through November 25,
2016.
Safe Harbor Statement
This press release 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
“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 home
improvement activity and new home construction, our ability to
maintain our strong brands and to develop and introduce new and
improved products, our ability to maintain our competitive position
in our industries, our reliance on key customers, our ability to
achieve the anticipated benefits of our strategic initiatives, our
ability to sustain the performance of our cabinetry businesses, the
cost and availability of raw materials, our dependence on third
party suppliers, and risks associated with international operations
and global strategies. 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 our Quarterly Reports on Form 10-Q and
in other filings we make with the Securities and Exchange
Commission. The forward-looking statements in this press release
speak only as of the date of this press release. 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.
MASCO CORPORATION Condensed Consolidated
Statements of Operations - Unaudited For the Three Months
and Nine Months Ended September 30, 2016 and 2015
(in millions, except per common share
data)
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015 Net sales $ 1,877 $
1,839 $ 5,598 $ 5,427 Cost of sales 1,263 1,250 3,715
3,706 Gross profit 614 589 1,883 1,721
Selling, general and administrative expenses 345 331
1,045 1,019 Operating profit 269 258 838 702
Other income (expense), net: Interest expense (43 ) (54 ) (186 )
(171 ) Other, net 1 (6 ) 5 (2 ) (42 ) (60 ) (181 )
(173 ) Income from continuing operations before income taxes 227
198 657 529 Income tax expense (81 ) (77 ) (229 ) (219 )
Income from continuing operations 146 121 428 310 Loss from
discontinued operations, net — — — (1 ) Net
income 146 121 428 309 Less: Net income attributable to
noncontrolling interest 12 10 35 29 Net
income attributable to Masco Corporation $ 134 $ 111
$ 393 $ 280 Income per common share
attributable to Masco Corporation (diluted): Income from continuing
operations $ 0.40 $ 0.32 $ 1.17 $ 0.81 Loss from discontinued
operations, net — — — — Net income $
0.40 $ 0.32 $ 1.17 $ 0.80
Average diluted common shares outstanding 329 338 332
344 Amounts attributable to Masco Corporation:
Income from continuing operations $ 134 $ 111 $ 393 $ 281 Loss from
discontinued operations, net — — — (1 ) Net
income attributable to Masco Corporation $ 134 $ 111
$ 393 $ 280
Historical information is available on our website.
MASCO CORPORATION Exhibit A:
Reconciliations - Unaudited For the Three Months and Nine
Months Ended September 30, 2016 and 2015
(in millions, except per common share
data)
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 2016 2015
Gross Profit,
Selling, General and Administrative Expenses, and Operating Profit
Reconciliations
Net sales $ 1,877 $
1,839 $ 5,598 $
5,427 Gross profit, as reported
$ 614 $ 589 $ 1,883
$ 1,721 Rationalization charges 4 1 10 2 (Gain) on
sale of property and equipment — (3 ) — (3 )
Gross
profit, as adjusted $ 618 $
587 $ 1,893 $
1,720 Gross margin, as reported 32.7 % 32.0 %
33.6 % 31.7 % Gross margin, as adjusted 32.9 % 31.9 % 33.8 % 31.7 %
Selling, general and administrative expenses, as
reported $ 345 $ 331 $
1,045 $ 1,019 Rationalization charges 2
1 6 7
Selling, general and administrative
expenses, as adjusted $ 343 $
330 $ 1,039 $
1,012 Selling, general and administrative
expenses as percent of net sales, as reported 18.4 % 18.0 % 18.7 %
18.8 % Selling, general and administrative expenses as percent of
net sales, as adjusted 18.3 % 17.9 % 18.6 % 18.6 %
Operating profit, as reported $ 269 $
258 $ 838 $ 702 Rationalization
charges 6 2 16 9 (Gain) on sale of property and equipment —
(3 ) — (3 )
Operating profit, as adjusted $
275 $ 257 $ 854
$ 708 Operating margin, as
reported 14.3 % 14.0 % 15.0 % 12.9 % Operating margin, as adjusted
14.7 % 14.0 % 15.3 % 13.0 %
Earnings Per
Common Share Reconciliation
Income from continuing operations before income taxes, as
reported $ 227 $ 198 $
657 $ 529 Rationalization charges 6 2 16 9
(Gain) on sale of property and equipment — (3 ) — (3 ) (Gain) from
auction rate securities — — (1 ) — (Gains) from private equity
funds, net (1 ) (1 ) (2 ) (5 ) (Earnings) from equity investments,
net — — (1 ) (2 )
Income from continuing
operations before income taxes, as adjusted 232
196 669 528 Tax at 36% rate (84 ) (71 ) (241 )
(190 ) Less: Net income attributable to noncontrolling interest 12
10 35 29
Income from continuing
operations, as adjusted $ 136 $
115 $ 393 $ 309
Income per common share, as adjusted $
0.41 $ 0.34 $ 1.18
$ 0.90 Average diluted common
shares outstanding 329 338 332 344
Historical information is available on our website.
MASCO CORPORATION Condensed Consolidated
Balance Sheets and Other Financial Data - Unaudited
(dollars in millions)
September 30, December 31, 2016
2015 Balance Sheet Assets Current Assets: Cash
and cash investments $ 1,041 $ 1,468 Short-term bank deposits 182
248 Receivables 1,054 853 Inventories 758 687 Prepaid expenses and
other 87 72 Total Current Assets 3,122 3,328 Property
and equipment, net 1,049 1,027 Goodwill 841 839 Other intangible
assets, net 155 160 Other assets 206 310 Total Assets $
5,373 $ 5,664
Liabilities Current Liabilities:
Accounts payable $ 866 $ 749 Notes payable 3 1,004 Accrued
liabilities 642 650 Total Current Liabilities 1,511 2,403
Long-term debt 2,993 2,403 Other liabilities 766 800
Total Liabilities 5,270 5,606
Equity 103 58
Total Liabilities and Equity $ 5,373 $ 5,664
As
of September 30, September 30, 2016
2015 Other Financial Data Working Capital Days
Receivable days 50 49 Inventory days 56 56 Payable days 72 71
Working capital $ 946 $ 928 Working capital as a % of sales (LTM)
12.9 % 13.1 %
Historical information is available on our website.
MASCO CORPORATION Condensed Consolidated
Statements of Cash Flows and Other Financial Data -
Unaudited
(dollars in millions)
Nine Months Ended September 30, 2016
2015 Cash Flows From (For) Operating
Activities: Cash provided by operating activities $ 569 $ 581
Working capital changes (187 ) (159 ) Net cash from operating
activities 382 422
Cash Flows From (For)
Financing Activities: Retirement of notes (1,300 ) (500 )
Purchase of Company common stock (242 ) (407 ) Cash dividends paid
(95 ) (94 ) Dividend paid to noncontrolling interest (31 ) (36 )
Cash distributed to TopBuild Corp. — (63 ) Issuance of TopBuild
Corp. debt — 200 Issuance of notes, net of issuance costs 889 497
Issuance of Company common stock 1 2 Excess tax benefit from
stock-based compensation 21 32 Credit Agreement and other financing
costs — (3 ) Decrease in debt, net (2 ) (1 ) Net cash for financing
activities (759 ) (373 )
Cash Flows From (For) Investing
Activities: Capital expenditures (117 ) (112 ) Other, net 77
(32 ) Net cash for investing activities (40 ) (144 )
Effect of exchange rate changes on cash and cash investments (10 )
(9 )
Cash and Cash Investments: Decrease for the
period (427 ) (104 ) At January 1 1,468 1,383 At
September 30 $ 1,041 $ 1,279
As of
September 30, 2016 2015 Liquidity
Cash and cash investments $ 1,041 $ 1,279 Short-term bank deposits
182 255
Total Liquidity $ 1,223 $ 1,534
Historical information is available on our website.
MASCO CORPORATION Segment
Data - Unaudited For the Three Months and Nine Months Ended
September 30, 2016 and 2015
(dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 Change 2016 2015
Change Plumbing Products Net sales $ 899 $ 853
5 % $ 2,635 $ 2,495 6 % Operating
profit, as reported $ 174 $ 137 $ 491 $ 386 Operating margin, as
reported 19.4 % 16.1 % 18.6 % 15.5 % Rationalization charges
5 1 11 2 Operating profit, as adjusted
179 138 502 388 Operating margin, as adjusted 19.9 % 16.2 % 19.1 %
15.6 % Depreciation and amortization 14 14 42
42 EBITDA, as adjusted $ 193 $ 152
$ 544 $ 430
Decorative Architectural
Products Net sales $ 536 $ 527 2 % $ 1,649
$ 1,600 3 % Operating profit, as reported $ 111 $ 102
$ 355 $ 318 Operating margin, as reported 20.7 % 19.4 % 21.5 % 19.9
% Depreciation and amortization 4 4 12
12 EBITDA $ 115 $ 106 $ 367 $
330
Cabinetry Products Net sales $ 239
$ 253 (6 )% $ 736 $ 771 (5 )% Operating
profit, as reported $ 19 $ 21 $ 77 $ 32 Operating margin, as
reported 7.9 % 8.3 % 10.5 % 4.2 % Rationalization charges 1
1 5 3 (Gain) on sale of property and equipment — (3 ) —
(3 ) Operating profit, as adjusted 20 19 82 32 Operating
margin, as adjusted 8.4 % 7.5 % 11.1 % 4.2 % Depreciation
and amortization 5 5 15 18
EBITDA, as adjusted $ 25 $ 24 $ 97 $ 50
Historical information is available on our website.
MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Nine Months
Ended September 30, 2016 and 2015
(dollars in millions)
Three Months Ended Nine Months Ended
September 30, September 30, 2016
2015 Change 2016 2015
Change Windows and Other Specialty Products Net sales
$ 203 $ 206 (1 )% $ 578 $ 561 3 %
Operating (loss) profit, as reported $ (10 ) $ 23 $ (9 ) $
50
Operating margin, as reported
(4.9 )% 11.2 % (1.6 )% 8.9 % Depreciation and amortization 6
5 16 13 EBITDA $ (4 ) $ 28
$ 7 $ 63
Total Net sales $ 1,877
$ 1,839 2 % $ 5,598 $ 5,427 3 %
Operating profit, as reported - segment $ 294 $ 283 $ 914 $ 786
General corporate expense, net (GCE) (25 ) (25 ) (76 ) (84 )
Operating profit, as reported 269 258 838 702 Operating margin, as
reported 14.3 % 14.0 % 15.0 % 12.9 % Rationalization charges
- segment 6 2 16 5 Rationalization charges - GCE — — — 4 (Gain) on
sale of property and equipment — (3 ) — (3 )
Operating profit, as adjusted 275 257 854 708 Operating margin, as
adjusted 14.7 % 14.0 % 15.3 % 13.0 % Depreciation and
amortization - segment 29 28 85 85 Depreciation and amortization -
non-operating 5 4 15 9 EBITDA,
as adjusted $ 309 $ 289 $ 954 $ 802
Historical information is available on our website.
MASCO CORPORATION North
American and International Data - Unaudited For the Three
Months and Nine Months Ended September 30, 2016 and 2015
(dollars in millions) Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 Change
2016 2015 Change North American
Net sales $ 1,497 $ 1,462 2 % $ 4,445 $ 4,298
3 % Operating profit, as reported $ 235 $ 234 $ 749 $
645 Operating margin, as reported 15.7 % 16.0 % 16.9 % 15.0 %
Rationalization charges 5 2 12 4 (Gain) on sale of property
and equipment — (3 ) — (3 ) Operating profit, as
adjusted 240 233 761 646 Operating margin, as adjusted 16.0 % 15.9
% 17.1 % 15.0 % Depreciation and amortization 20 19
58 58 EBITDA, as adjusted $ 260
$ 252 $ 819 $ 704
International
Net sales $ 380 $ 377 1 % $ 1,153 $ 1,129
2 % Operating profit, as reported $ 59 $ 49 $ 165 $
141 Operating margin, as reported 15.5 % 13.0 % 14.3 % 12.5 %
Rationalization charges 1 — 4 1
Operating profit, as adjusted 60 49 169 142 Operating margin, as
adjusted 15.8 % 13.0 % 14.7 % 12.6 % Depreciation and
amortization 9 9 27 27 EBITDA,
as adjusted $ 69 $ 58 $ 196 $ 169
Total Net sales $ 1,877 $ 1,839 2 % $
5,598 $ 5,427 3 % Operating profit, as
reported - segment $ 294 $ 283 $ 914 $ 786 General corporate
expense, net (GCE) (25 ) (25 ) (76 ) (84 ) Operating profit, as
reported 269 258 838 702 Operating margin, as reported 14.3 % 14.0
% 15.0 % 12.9 % Rationalization charges - segment 6 2 16 5
Rationalization charges - GCE — — — 4 (Gain) on sale of property
and equipment — (3 ) — (3 ) Operating profit, as
adjusted 275 257 854 708 Operating margin, as adjusted 14.7 % 14.0
% 15.3 % 13.0 % Depreciation and amortization - segment 29
28 85 85 Depreciation and amortization - non-operating 5 4
15 9 EBITDA, as adjusted $ 309 $
289 $ 954 $ 802
Historical information is available on our website.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161025005358/en/
Masco CorporationInvestor
ContactDavid ChaikaVice President, Treasurer and
Investor Relations313.792.5500david_chaika@mascohq.com
Masco (NYSE:MAS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Masco (NYSE:MAS)
Historical Stock Chart
From Sep 2023 to Sep 2024