Key Highlights
- Sales for the second quarter increased
3 percent to $2.1 billion; in local currencies, sales increased 4
percent
- Operating profit for the quarter grew 7
percent to $357 million; adjusted operating profit grew 4 percent
to $357 million
- Earnings per share for the quarter grew
9 percent to $0.49 per common share; adjusted earnings per share
grew 30 percent to $0.60 per common share
- Updating our 2017 earnings per share
target range to $1.93 to $2.00 from $1.90 to $2.00 per common
share
- Board announces intent to increase
annual dividend by $0.02 per share to $0.42 per share, beginning in
the fourth quarter
Masco Corporation (NYSE: MAS), one of the world’s leading
manufacturers of branded home improvement and building products,
reported solid net sales and operating profit growth in the second
quarter of 2017.
“We continued to execute on our strategic plan in the second
quarter,” said Masco President and CEO, Keith Allman. “Our Plumbing
Products and Decorative Architectural Products segments once again
delivered strong results, and I am extremely pleased with the
progress we have made in our Windows business. In our Cabinetry
Products segment, we exited certain lower margin builder business
and are now pivoting towards growth. Additionally, we continued our
disciplined capital allocation by returning approximately $74
million to shareholders through dividends and share repurchases in
the quarter.”
2017 Second Quarter
Commentary
- On a reported basis, compared to second
quarter 2016:
- Net sales increased 3 percent to $2.1
billion
- In local currency, North American sales
and international sales increased 4 percent
- Gross margins improved 80 basis points
to 35.8 percent from 35.0 percent
- Operating margins improved 70 basis
points to 17.4 percent from 16.7 percent
- Net income was $0.49 per common share
compared to $0.45 per common share
- Compared to second quarter 2016,
results for key financial measures, as adjusted for certain items
(see Exhibit A) and with a normalized tax rate of 34 percent (36
percent in 2016), were as follows:
- Gross margins improved to 35.8 percent
compared to 35.2 percent
- Operating margins improved to 17.4
percent compared to 17.1 percent
- Net income was $0.60 per common share,
compared to $0.46 per common share (which included $40 million, or
approximately $0.08 per share, in debt extinguishment costs in
2016)
- Liquidity at the end of the second
quarter was approximately $1.1 billion
- 1.2 million shares were repurchased in
the second quarter
2017 Second Quarter Operating Segment
Highlights
- Plumbing Products’ net sales increased
3 percent (5 percent excluding the impact of foreign currency
translation), driven by North America and international growth
- Decorative Architectural Products’ net
sales increased 5 percent with growth from builders’ hardware and
Behr’s pro initiative
- Cabinetry Products’ net sales decreased
4 percent (3 percent excluding the impact of foreign currency
translation) due to the previously announced exit of lower margin
business in the builder channel and lower sales in our United
Kingdom cabinet operation
- Windows and Other Specialty Products’
net sales increased 4 percent. Excluding the impact of foreign
currency translation, net sales increased 7 percent, driven by
strong sales of windows in North America
Outlook
“As we presented during our Investor Day in May, the demand
drivers underlying our business are strong and very supportive of
continued, long-term growth,” said Allman. “We are confident in our
plans to leverage our strong brands, industry leading positions,
and our Masco Operating System to capitalize on these robust,
long-term demand drivers. We are pleased with our performance this
year, and accordingly, we are updating our 2017 earnings per share
target to the range of $1.93 to $2.00. Looking forward, we are
committed to achieving our 2019 earnings per share target of $2.50
that we introduced at our Investor Day. Reflecting confidence in
our plans and Masco’s outlook, our Board of Directors intends to
increase our annual dividend by $0.02 per share to $0.42 per share,
beginning with the quarterly dividend to be paid in the fourth
quarter of 2017.”
About Masco
Headquartered in Livonia, 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 2017 second quarter supplemental material, including a
presentation in PDF format, is available on Masco’s website at
www.masco.com.
Conference Call Details
A conference call regarding items contained in this release is
scheduled for Thursday, July 27, 2017 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 36385520. The conference call will be webcast
simultaneously and in its entirety through Masco’s website.
Shareholders, media representatives and others interested in Masco
may participate in the webcast by registering through the Investor
Relations section on Masco’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 36385520.
The telephone replay will be available approximately two hours
after the end of the call and continue through August 27, 2017.
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 improve our under-performing U.S. window business, 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 Six Months Ended June 30, 2017 and 2016 (in
millions, except per common share data)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016 Net
sales $ 2,057 $ 2,001 $ 3,834 $ 3,721 Cost of sales 1,320
1,301 2,489 2,452 Gross profit 737 700 1,345
1,269 Selling, general and administrative expenses 380
365 735 700 Operating profit 357 335
610 569 Other income (expense), net: Interest expense (153 )
(87 ) (196 ) (143 ) Other, net 51 5 54 4
(102 ) (82 ) (142 ) (139 ) Income before income taxes 255
253 468 430 Income tax expense 84 90 147
148 Net income 171 163 321 282 Less: Net income
attributable to noncontrolling interest 13 13 23
23 Net income attributable to Masco Corporation $ 158
$ 150 $ 298 $ 259 Income per
common share attributable to Masco Corporation (diluted): Net
income $ 0.49 $ 0.45 $ 0.92 $ 0.77
Average diluted common shares outstanding 319 331
320 333
Historical information is available on our
website.
MASCO CORPORATION Exhibit A:
Reconciliations - Unaudited For the Three Months and Six
Months Ended June 30, 2017 and 2016 (in millions,
except per common share data) Three
Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Gross Profit,
Selling, General and Administrative Expenses, and Operating Profit
Reconciliations
Net sales $ 2,057 $
2,001 $ 3,834 $
3,721 Gross profit, as reported
$ 737 $ 700 $ 1,345
$ 1,269 Rationalization charges — 5 2
6
Gross profit, as adjusted $
737 $ 705 $ 1,347
$ 1,275 Gross margin, as
reported 35.8 % 35.0 % 35.1 % 34.1 % Gross margin, as adjusted 35.8
% 35.2 % 35.1 % 34.3 %
Selling, general and
administrative expenses, as reported $ 380
$ 365 $ 735 $ 700
Rationalization charges — 2 — 4
Selling, general and administrative expenses, as adjusted
$ 380 $ 363 $
735 $ 696 Selling,
general and administrative expenses as percent of net sales, as
reported 18.5 % 18.2 % 19.2 % 18.8 % Selling, general and
administrative expenses as percent of net sales, as adjusted 18.5 %
18.1 % 19.2 % 18.7 %
Operating profit, as reported
$ 357 $ 335 $ 610
$ 569 Rationalization charges — 7 2
10
Operating profit, as adjusted $
357 $ 342 $ 612
$ 579 Operating margin, as
reported 17.4 % 16.7 % 15.9 % 15.3 % Operating margin, as adjusted
17.4 % 17.1 % 16.0 % 15.6 %
Earnings Per
Common Share Reconciliations
Income before income taxes, as reported $
255 $ 253 $ 468 $
430 Rationalization charges — 7 2 10 (Gain) from auction
rate securities — (1 ) — (1 ) (Gains) from private equity funds,
net (1 ) (1 ) (2 ) (1 ) (Earnings) from equity investments, net (1
) — (1 ) (1 ) Loss on extinguishment of debt 107 — 107 — (Gain) on
sale of business (49 ) — (49 ) —
Income before
income taxes, as adjusted 311 258 525
437 Tax at 34% rate (36% for 2016) (106 ) (93 ) (179 ) (157
) Less: Net income attributable to noncontrolling interest 13
13 23 23
Net income, as adjusted
$ 192 $ 152 $
323 $ 257 Net income
per common share, as adjusted $ 0.60
$ 0.46 $ 1.01 $
0.77 Average diluted common shares outstanding
319 331 320 333
Historical information is available on our
website.
MASCO CORPORATION
Exhibit A: Reconciliations -
Unaudited
Outlook for the Twelve Months Ended
December 31, 2017
Twelve Months Ended
December 31, 2017
Low End High End
Outlook
Net income per common share $ 1.81
$ 1.88 Loss on extinguishment of debt 0.22 0.22
(Gain) on sale of business (0.10 ) (0.10 )
Net income per common
share, as adjusted $ 1.93 $
2.00
Historical information is available on our
website.
MASCO CORPORATION
Condensed Consolidated Balance Sheets
and Other Financial Data - Unaudited
June 30, 2017 and December 31,
2016
(dollars in millions)
June 30, 2017 December 31, 2016 Balance
Sheet Assets Current Assets: Cash and cash investments $
992 $ 990 Short-term bank deposits 144 201 Receivables 1,231 917
Inventories 850 712 Prepaid expenses and other 89 114
Total Current Assets 3,306 2,934 Property and equipment, net
1,080 1,060 Goodwill 797 832 Other intangible assets, net 156 154
Other assets 150 157 Total Assets $ 5,489 $
5,137
Liabilities Current Liabilities:
Accounts payable $ 960 $ 800 Notes payable 117 2 Accrued
liabilities 615 658 Total Current Liabilities 1,692
1,460 Long-term debt 2,967 2,995 Other liabilities 760
785 Total Liabilities 5,419 5,240
Equity 70 (103 ) Total Liabilities and Equity $ 5,489
$ 5,137
As of June 30, 2017
2016 Other Financial Data Working Capital Days
Receivable days 52 50 Inventory days 63 57 Payable days 72 71
Working capital $ 1,121 $ 965 Working capital as a % of sales (LTM)
15.0 % 13.3 %
Historical information is available on our
website.
MASCO CORPORATION Condensed Consolidated
Statements of Cash Flows and Other Financial Data - Unaudited
For the Six Months Ended June 30, 2017 and 2016
(dollars in millions) Six
Months Ended June 30, 2017 2016 Cash
Flows From (For) Operating Activities: Cash provided by
operating activities $ 536 $ 433 Working capital changes (381 )
(243 ) Net cash from operating activities 155 190
Cash Flows From (For) Financing Activities:
Retirement of notes (535 ) (1,300 ) Purchase of Company common
stock (134 ) (168 ) Cash dividends paid (64 ) (63 ) Dividend paid
to noncontrolling interest (35 ) (31 ) Issuance of notes, net of
issuance costs 593 889 Debt extinguishment costs (104 ) (40 )
Issuance of Company common stock — 1 Employee withholding taxes
paid on stock-based compensation (27 ) (24 ) Increase (decrease) in
debt, net 1 (2 ) Net cash for financing activities (305 )
(738 )
Cash Flows From (For) Investing Activities:
Capital expenditures (77 ) (79 ) Proceeds from disposition of
business 126 — Other, net 75 124 Net cash from
investing activities 124 45 Effect of exchange
rate changes on cash and cash investments 28 (9 )
Cash
and Cash Investments: Increase (decrease) for the period 2 (512
) At January 1 990 1,468 At June 30 $ 992 $
956
As of June 30, 2017 2016
Liquidity Cash and cash investments $ 992 $ 956 Short-term
bank deposits 144 135
Total Liquidity $ 1,136
$ 1,091
Historical information is available on our
website.
MASCO CORPORATION Segment Data -
Unaudited For the Three Months and Six Months Ended June 30,
2017 and 2016 (dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30, 2017 2016
Change 2017 2016 Change
Plumbing Products Net sales $ 949 $ 923 3 % $
1,812 $ 1,736 4 % Operating profit, as
reported $ 198 $ 188 $ 354 $ 317 Operating margin, as reported 20.9
% 20.4 % 19.5 % 18.3 % Rationalization charges — 4
— 6 Operating profit, as adjusted 198 192
354 323 Operating margin, as adjusted 20.9 % 20.8 % 19.5 % 18.6 %
Depreciation and amortization 15 14 29
28 EBITDA, as adjusted $ 213 $ 206 $
383 $ 351
Decorative Architectural
Products Net sales $ 653 $ 620 5 % $ 1,158
$ 1,113 4 % Operating profit, as reported $ 141 $ 139
$ 242 $ 244 Operating margin, as reported 21.6 % 22.4 % 20.9 % 21.9
% Depreciation and amortization 4 4 8 8
EBITDA $ 145 $ 143 $ 250 $ 252
Cabinetry Products Net sales $ 251 $
261 (4 )% $ 482 $ 497 (3 )% Operating
profit, as reported $ 30 $ 34 $ 46 $ 58 Operating margin, as
reported 12.0 % 13.0 % 9.5 % 11.7 % Rationalization charges
— 3 2 4 Operating profit, as adjusted
30 37 48 62 Operating margin, as adjusted 12.0 % 14.2 % 10.0 % 12.5
% Depreciation and amortization 4 5 8
10 EBITDA, as adjusted $ 34 $ 42 $ 56
$ 72
Historical information is available on our
website.
MASCO CORPORATION Segment Data -
Unaudited For the Three Months and Six Months Ended June 30,
2017 and 2016 (dollars in millions)
Three Months Ended June 30,
Six Months Ended June 30, 2017 2016
Change 2017 2016 Change
Windows and Other Specialty Products Net sales $ 204
$ 197 4 % $ 382 $ 375 2 % Operating
profit (loss), as reported $ 18 $ (2 ) $ 24 $ 1 Operating margin,
as reported 8.8 % (1.0 )% 6.3 % 0.3 % Depreciation and
amortization 6 5 11 10 EBITDA $
24 $ 3 $ 35 $ 11
Total
Net sales $ 2,057 $ 2,001 3 % $ 3,834 $ 3,721
3 % Operating profit, as reported - segment $ 387 $
359 $ 666 $ 620 General corporate expense, net (GCE) (30 ) (24 )
(56 ) (51 ) Operating profit, as reported 357 335 610 569 Operating
margin, as reported 17.4 % 16.7 % 15.9 % 15.3 %
Rationalization charges - segment — 7 2 10
Operating profit, as adjusted 357 342
612 579
Operating margin, as adjusted 17.4 % 17.1 % 16.0 % 15.6 %
Depreciation and amortization - segment 29 28 56 56 Depreciation
and amortization - non-operating 4 6 8 10
EBITDA, as adjusted $ 390 $ 376 $ 676
$ 645
Historical information is available on our
website.
MASCO CORPORATION North American and
International Data - Unaudited For the Three Months and Six
Months Ended June 30, 2017 and 2016 (dollars in
millions) Three
Months Ended June 30, Six Months Ended June 30,
2017 2016 Change 2017
2016 Change North American Net sales $ 1,660
$ 1,598 4 % $ 3,071 $ 2,948 4 %
Operating profit, as reported $ 330 $ 299 $ 569 $ 514 Operating
margin, as reported 19.9 % 18.7 % 18.5 % 17.4 %
Rationalization charges — 5 2 7
Operating profit, as adjusted 330 304 571 521 Operating margin, as
adjusted 19.9 % 19.0 % 18.6 % 17.7 % Depreciation and
amortization 20 19 38 38 EBITDA,
as adjusted $ 350 $ 323 $ 609 $ 559
International Net sales $ 397 $ 403 (1
)% $ 763 $ 773 (1 )% Operating profit, as
reported $ 57 $ 60 $ 97 $ 106 Operating margin, as reported 14.4 %
14.9 % 12.7 % 13.7 % Rationalization charges — 2
— 3 Operating profit, as adjusted 57 62 97 109
Operating margin, as adjusted 14.4 % 15.4 % 12.7 % 14.1 %
Depreciation and amortization 9 9 18 18
EBITDA, as adjusted $ 66 $ 71 $ 115 $
127
Total Net sales $ 2,057 $ 2,001
3 % $ 3,834 $ 3,721 3 % Operating
profit, as reported - segment $ 387 $ 359 $ 666 $ 620 General
corporate expense, net (GCE) (30 ) (24 ) (56 ) (51 ) Operating
profit, as reported 357 335 610 569 Operating margin, as reported
17.4 % 16.7 % 15.9 % 15.3 % Rationalization charges -
segment — 7 2 10 Operating profit, as
adjusted 357 342 612 579 Operating margin, as adjusted 17.4 % 17.1
% 16.0 % 15.6 % Depreciation and amortization - segment 29
28 56 56 Depreciation and amortization - non-operating 4 6
8 10 EBITDA, as adjusted $ 390 $
376 $ 676 $ 645
Historical information is available on our
website.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005237/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