Masco Corporation Reports Third Quarter Results and a Reduction in Anticipated Earnings for 2006
October 31 2006 - 7:00AM
PR Newswire (US)
Masco Corporation Highlights: TAYLOR, Mich., Oct. 31
/PRNewswire-FirstCall/ -- Masco Corporation (NYSE: MAS) today
reported that net sales from continuing operations for the quarter
ended September 30, 2006 increased one percent to $3.3 billion.
North American net sales decreased one percent and International
net sales increased 10 percent. In local currencies, International
net sales increased five percent compared with the third quarter of
2005. Income from continuing operations, excluding the non-cash
impairment charge for financial investments and costs and charges
related to profit improvement programs in the third quarters of
2006 and 2005, was $236 million or $.60 per common share and $290
million or $.68 per common share, respectively. The third quarters
of 2006 and 2005 benefited from net gains from the sale of
financial investments of $.01 and $.04 per common share,
respectively. Income from continuing operations for the third
quarter of 2006 was $225 million or $.57 per common share,
including an $8 million non-cash, pre-tax impairment charge for
financial investments and $9 million pre-tax of costs and charges
related to profit improvement programs. Income from continuing
operations for the third quarter of 2005 was $254 million or $.59
per common share, including a $43 million non-cash, pre-tax
impairment charge for financial investments and $12 million pre-tax
of costs and charges related to profit improvement programs. Net
income for the third quarter of 2006 was $252 million or $.64 per
common share and included a $50 million pre-tax net gain ($.07 per
common share, after tax) from discontinued operations. Net income
for the third quarter of 2005 was $262 million or $.61 per common
share and included $8 million of after-tax income ($.02 per common
share) from discontinued operations. In September 2006, the Company
completed the sale of Computerized Security Systems ("CSS"). CSS
supplies electronic locksets primarily to hospitality markets in
the United States and had annual sales of $73 million. This
disposition was completed pursuant to the Company's determination
that this business unit was not core to the Company's long-term
strategy. Under generally accepted accounting principles, the net
gain on this transaction, along with 2006 year-to-date and
prior-period operating results, are reflected in discontinued
operations. Total net proceeds from the sale were $91 million; the
Company recognized a $51 million pre-tax net gain (included in
discontinued operations) on the disposition of CSS. As part of its
profit improvement programs, the Company announced a plant closure
in the Plumbing Products segment in January 2006. In the third
quarter of 2006, the Company incurred $9 million pre-tax ($52
million year-to- date) of costs and charges related to this plant
closure and other profit improvement programs in the Plumbing
Products and the Cabinets and Related Products segments. The
Company expects to incur additional costs and charges during the
fourth quarter of 2006 for its profit improvement programs and
currently anticipates that total costs and charges related to these
programs for the full-year 2006 will aggregate approximately $70
million pre- tax, as previously announced. Implementing these
programs should improve the Company's earnings outlook for 2007 and
beyond. The Company's results continued to be adversely affected by
accelerating declines in housing activity, a moderation in consumer
spending and increased commodity costs, partially offset by profit
improvement programs and selling price increases. The Company has
implemented additional selling price increases in an effort to at
least partially offset commodity cost increases. A softening of
incoming orders for building products and services along with a
forecasted deeper-than-expected decline in year-over-year single
family housing starts for the last several months of 2006 are
expected to result in the Company's fourth quarter net sales being
down mid-single digits compared with the fourth quarter of 2005.
Accordingly, full-year earnings from continuing operations,
excluding costs and charges related to profit improvement programs,
impairment charges for investments and any other items, may be
closer to $2.20 per common share rather than the Company's most
recent guidance of $2.25 to $2.30 per common share. Including such
charges, earnings from continuing operations may be closer to $1.95
per common share for the full-year 2006. Headquartered in Taylor,
Michigan, Masco Corporation is one of the world's leading
manufacturers of home improvement and building products, as well as
a leading provider of services that include the installation of
insulation and other building products. A conference call regarding
items contained in this release is scheduled for Tuesday, October
31, 2006 at 11:00 a.m. ET. Participants in the call are asked to
register five to ten minutes prior to the scheduled start time by
dialing (913) 981-5584 (confirmation #3471288). The conference call
will be webcast simultaneously on the Company's website at
http://www.masco.com/ and supplemental material, including the
financial data referred to on the call and a reconciliation of
non-GAAP information provided on the call, will also be available
on the website. A replay of the call will be available on Masco's
website or by phone by dialing (719) 457-0820 (replay access code
#3471288) approximately two hours after the end of the call and
will continue through November 7, 2006. Masco Corporation's press
releases and other information are available through the Company's
toll free number, 1-888-MAS-NEWS, or under the Investor Relations
section of Masco's website at http://www.masco.com/. Statements
contained herein may include certain forward-looking statements
regarding Masco's future sales, earnings growth potential and other
developments. Actual results may vary materially because of
external factors such as housing starts, commodity costs, interest
rate fluctuations, changes in consumer spending and other factors
over which management has no control. The Company believes 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, the
Company's reported results under accounting principles generally
accepted in the United States. Additional information about the
Company's products, markets and conditions, which could affect the
Company's future performance, is contained in the Company's filings
with the Securities and Exchange Commission and is available on
Masco's website at http://www.masco.com/. Masco undertakes no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. MASCO
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the
Three Months and Nine Months Ended September 30, 2006 and 2005 (In
Millions Except Per Common Share Data) Three Months Ended Nine
Months Ended September 30, September 30, 2006 2005 2006 2005 Net
sales $3,295 $3,278 $9,832 $9,441 Cost of sales 2,372 2,338 7,056
6,718 Gross profit 923 940 2,776 2,723 Selling, general and
administrative expenses 523 486 1,571 1,480 Goodwill impairment
charge - - 10 - (Income) regarding litigation settlement - (1) -
(6) Operating profit 400 455 1,195 1,249 Other income (expense),
net (44) (59) (173) (122) Income from continuing operations before
income taxes, minority interest and cumulative effect of accounting
change, net 356 396 1,022 1,127 Income taxes 124 136 354 385 Income
from continuing operations before minority interest and cumulative
effect of accounting change, net 232 260 668 742 Minority interest
7 6 21 16 Income from continuing operations before cumulative
effect of accounting change, net 225 254 647 726 Income from
discontinued operations, net 27 8 31 41 Cumulative effect of
accounting change, net - - (3) - Net income $252 $262 $675 $767
Earnings per common share (diluted): Income from continuing
operations before cumulative effect of accounting change, net $0.57
$0.59 $1.61 $1.67 Income from discontinued operations, net 0.07
0.02 0.08 0.09 Cumulative effect of accounting change, net - -
(0.01) - Net income $0.64 $0.61 $1.68 $1.77 Average diluted common
shares outstanding 393 427 402 434 DATASOURCE: Masco Corporation
CONTACT: Maria Duey, +1-313-792-5500, for Masco Corporation Web
site: http://www.masco.com/ Company News On-Call:
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