Key Highlights
- Sales for the first quarter increased 3
percent to $1.8 billion; in local currencies, sales increased 5
percent
- Operating profit for the quarter grew 8
percent to $253 million; adjusted operating profit grew 8 percent
to $255 million
- Operating profit margin for the quarter
increased to 14.2 percent, a 60 basis point expansion; adjusted
operating profit margin increased to 14.4 percent, a 60 basis point
expansion
- Earnings per share for the quarter grew
34 percent to $0.43 per common share; adjusted earnings per share
grew 28 percent to $0.41 per common share, which includes a $0.01
benefit due to a lower normalized tax rate
- Earnings per share target of $1.80 for
2017 updated to the range of $1.90 to $2.00 per common share, which
includes an estimated $0.06 benefit from a reduction in our
expected tax rate
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 first
quarter of 2017.
“Our strong operating performance continued in the first quarter
of 2017 as our leading brands coupled with our innovative products
and programs drove demand with consumers and pros alike, resulting
in profitable growth across our portfolio,” said Masco President
and CEO, Keith Allman. “Additionally, we returned over $120 million
to shareholders through dividends and share repurchases in the
quarter.”
2017 First Quarter
Commentary
- On a reported basis, compared to first
quarter 2016:
- Net sales increased 3 percent to $1.8
billion
- In local currency, North American sales
increased 4 percent and international sales increased 5
percent
- Gross margins improved 110 basis points
to 34.2 percent from 33.1 percent
- Operating margins improved 60 basis
points to 14.2 percent from 13.6 percent
- Net income was $0.43 per common share
compared to $0.32 per common share
- Compared to first 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 34.3 percent
compared to 33.1 percent
- Operating margins improved to 14.4
percent compared to 13.8 percent
- Net income was $0.41 per common share,
which includes a $0.01 benefit due to a lower normalized tax rate,
compared to $0.32 per common share
- Liquidity at the end of the first
quarter was $883 million
- 2.8 million shares were repurchased in
the first quarter
2017 First Quarter Operating Segment
Highlights
- Plumbing Products’ net sales increased
6 percent (8 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 builders’ hardware and
Behr’s pro initiative
- Cabinetry Products’ net sales decreased
2 percent due to the previously announced exit of lower margin
business in the builder channel
- Windows and Other Specialty Products’
net sales were flat. Excluding the impact of foreign currency
translation, net sales increased 3 percent, driven by sales of
windows in North America and internationally
Outlook
“The building products industry fundamentals remain favorable
and are expected to support long-term growth. Our outlook for
demand in both repair and remodel and new home construction
continues to be positive,” said Allman. “We will leverage these
favorable industry fundamentals along with our strong brand
portfolio, our industry-leading positions and our Masco Operating
System to achieve our long-term growth expectations. As such, we
are now updating our 2017 earnings per share target to the range of
$1.90 to $2.00 per common share, exceeding our $1.80 target that we
communicated at our last Investor Day in 2015. This updated target
includes an estimated $0.06 benefit from a reduction in our
expected tax rate. We look forward to updating you on our long-term
goals at our upcoming Investor Day on May 16 in New York City.”
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 2017 first 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, April 25, 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 90696233. 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 90696233.
The telephone replay will be available approximately two hours
after the end of the call and continue through May 25, 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
Ended March 31, 2017 and 2016
(in millions, except per common share
data)
Three Months Ended March 31, 2017
2016 Net sales $ 1,777 $ 1,720 Cost of sales 1,169
1,151 Gross profit 608 569 Selling, general and
administrative expenses 355 335 Operating profit 253
234 Other income (expense), net: Interest expense (43 ) (56
) Other, net 3 (1 ) (40 ) (57 ) Income before income taxes
213 177 Income tax expense 63 58 Net income
150 119 Less: Net income attributable to noncontrolling interest 10
10 Net income attributable to Masco Corporation $ 140
$ 109 Income per common share attributable to
Masco Corporation (diluted): Net income $ 0.43 $ 0.32
Average diluted common shares outstanding 321 333
Historical information is available on our website.
MASCO CORPORATION Exhibit A: Reconciliations -
Unaudited (in millions, except per common share
data) Three Months Ended March 31, 2017
2016
Gross Profit,
Selling, General and Administrative Expenses, and Operating Profit
Reconciliations
Net sales $ 1,777 $
1,720 Gross profit, as reported
$ 608 $ 569 Rationalization charges 2
1
Gross profit, as adjusted $
610 $ 570 Gross margin,
as reported 34.2 % 33.1 % Gross margin, as adjusted 34.3 % 33.1 %
Selling, general and administrative expenses, as
reported $ 355 $ 335
Rationalization charges — 2
Selling, general and
administrative expenses, as adjusted $ 355
$ 333 Selling, general and
administrative expenses as percent of net sales, as reported 20.0 %
19.5 % Selling, general and administrative expenses as percent of
net sales, as adjusted 20.0 % 19.4 %
Operating profit, as
reported $ 253 $ 234
Rationalization charges 2 3
Operating profit, as
adjusted $ 255 $ 237
Operating margin, as reported 14.2 % 13.6 % Operating
margin, as adjusted 14.4 % 13.8 %
Earnings Per
Common Share Reconciliations
Income before income taxes, as reported $
213 $ 177 Rationalization charges 2 3 (Gains)
from private equity funds, net (1 ) — (Earnings) from equity
investments, net — (1 )
Income before income taxes, as
adjusted 214 179 Tax at 34% rate (36% for 2016)
(73 ) (64 ) Less: Net income attributable to noncontrolling
interest 10 10
Net income, as adjusted
$ 131 $ 105 Net
income per common share, as adjusted $ 0.41
$ 0.32 Average diluted common
shares outstanding 321 333
Historical information is available on our website.
MASCO CORPORATION Condensed Consolidated
Balance Sheets and Other Financial Data - Unaudited
(dollars in millions) March 31, 2017
December 31, 2016 Balance Sheet Assets Current
Assets: Cash and cash investments $ 689 $ 990 Short-term bank
deposits 194 201 Receivables 1,144 917 Inventories 826 712 Prepaid
expenses and other 105 114 Total Current Assets 2,958
2,934 Property and equipment, net 1,074 1,060 Goodwill 835
832 Other intangible assets, net 154 154 Other assets 118
157 Total Assets $ 5,139 $ 5,137
Liabilities Current Liabilities: Accounts payable $ 903 $
800 Notes payable 3 2 Accrued liabilities 518 658
Total Current Liabilities 1,424 1,460 Long-term debt 2,996
2,995 Other liabilities 778 785 Total Liabilities
5,198 5,240
Equity (59 ) (103 ) Total Liabilities and
Equity $ 5,139 $ 5,137
As of March 31,
2017 2016 Other Financial Data
Working Capital Days Receivable days 53 50 Inventory days 61
56 Payable days 71 70 Working capital $ 1,067 $ 957 Working capital
as a % of sales (LTM) 14.4 % 13.3 %
Historical information is available on our website.
MASCO CORPORATION Condensed Consolidated
Statements of Cash Flows and Other Financial Data -
Unaudited (dollars in millions) Three
Months Ended March 31, 2017 2016 Cash
Flows From (For) Operating Activities: Cash provided by
operating activities $ 253 $ 219 Working capital changes (402 )
(289 ) Net cash for operating activities (149 ) (70 )
Cash Flows From (For) Financing Activities: Purchase of
Company common stock (87 ) (86 ) Cash dividends paid (32 ) (32 )
Issuance of notes, net of issuance costs — 889 Issuance of Company
common stock — 1 Employee withholding taxes paid on stock-based
compensation (14 ) (19 ) Decrease in debt, net — (2 ) Net
cash (for) from financing activities (133 ) 751
Cash Flows From (For) Investing Activities: Capital
expenditures (37 ) (37 ) Other, net 11 57 Net cash
(for) from investing activities (26 ) 20 Effect of
exchange rate changes on cash and cash investments 7 6
Cash and Cash Investments: (Decrease) increase for the
period (301 ) 707 At January 1 990 1,468 At March 31
$ 689 $ 2,175
As of March 31,
2017 2016 Liquidity Cash and cash
investments $ 689 $ 2,175 Short-term bank deposits 194 195
Total Liquidity $ 883 $ 2,370
Historical information is available on our website.
MASCO CORPORATION Segment Data -
Unaudited For the Three Months Ended March 31, 2017 and
2016 (dollars in millions) Three Months
Ended March 31, 2017 2016 Change
Plumbing Products Net sales $ 863 $ 813 6 %
Operating profit, as reported $ 156 $ 129 Operating margin,
as reported 18.1 % 15.9 % Rationalization charges — 2
Operating profit, as adjusted 156 131
Operating margin, as adjusted 18.1 % 16.1 %
Depreciation and amortization 14 14
EBITDA, as adjusted $ 170 $ 145
Decorative
Architectural Products Net sales $ 505 $ 493 2 %
Operating profit, as reported $ 101 $ 105
Operating margin, as reported 20.0 % 21.3 %
Depreciation and amortization 4 4
EBITDA $ 105 $ 109
Cabinetry Products
Net sales $ 231 $ 236 (2 )% Operating profit,
as reported $ 16 $ 24 Operating margin, as reported 6.9 % 10.2 %
Rationalization charges 2 1 Operating profit,
as adjusted 18 25
Operating margin, as adjusted 7.8 % 10.6 %
Depreciation and amortization 4 5
EBITDA, as adjusted $ 22 $ 30
Historical information is available on our website.
MASCO CORPORATION Segment Data -
Unaudited For the Three Months Ended March 31, 2017 and
2016 (dollars in millions) Three Months
Ended March 31, 2017 2016 Change
Windows and Other Specialty Products Net sales $ 178
$ 178 — % Operating profit, as reported $ 6 $ 3
Operating margin, as reported 3.4 % 1.7 % Depreciation and
amortization 5 5 EBITDA $ 11 $ 8
Total Net sales $ 1,777 $ 1,720 3 %
Operating profit, as reported - segment $ 279 $ 261 General
corporate expense, net (GCE) (26 ) (27 ) Operating profit, as
reported 253 234 Operating margin, as reported 14.2 % 13.6 %
Rationalization charges - segment 2 3 Operating
profit, as adjusted 255 237
Operating margin, as adjusted 14.4 % 13.8 %
Depreciation and amortization - segment 27 28 Depreciation
and amortization - non-operating 4 4 EBITDA,
as adjusted $ 286 $ 269
Historical information is available on our website.
MASCO CORPORATION North American and
International Data - Unaudited For the Three Months Ended
March 31, 2017 and 2016 (dollars in millions)
Three Months Ended March 31, 2017
2016 Change North American Net sales $ 1,411
$ 1,350 5 % Operating profit, as reported $
239 $ 215 Operating margin, as reported 16.9 % 15.9 %
Rationalization charges 2 2 Operating profit, as
adjusted 241 217 Operating margin, as adjusted 17.1 % 16.1 %
Depreciation and amortization 18 19 EBITDA, as
adjusted $ 259 $ 236
International Net
sales $ 366 $ 370 (1 )% Operating profit, as
reported $ 40 $ 46 Operating margin, as reported 10.9 % 12.4 %
Rationalization charges — 1 Operating profit,
as adjusted 40 47 Operating margin, as adjusted 10.9 % 12.7 %
Depreciation and amortization 9 9
EBITDA, as adjusted $ 49 $ 56
Total Net
sales $ 1,777 $ 1,720 3 % Operating profit, as
reported - segment $ 279 $ 261 General corporate expense, net (GCE)
(26 ) (27 ) Operating profit, as reported 253 234 Operating margin,
as reported 14.2 % 13.6 % Rationalization charges - segment
2 3 Operating profit, as adjusted 255 237 Operating
margin, as adjusted 14.4 % 13.8 % Depreciation and
amortization - segment 27 28 Depreciation and amortization -
non-operating 4 4 EBITDA, as adjusted $ 286
$ 269
Historical information is available on our website.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170425005425/en/
Masco CorporationInvestor
ContactDavid ChaikaVice President, Treasurer and
Investor Relations313.792.5500david_chaika@mascohq.com
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