Masco Corporation Reports Third Quarter 2017 Results
October 24, 2017
- Sales for the third quarter increased 3 percent to $1.9 billion; in local currency, sales increased 2 percent
- Operating profit for the quarter grew 10 percent to $295 million; adjusted operating profit grew 8 percent to $296 million
- Earnings per share for the quarter grew 15 percent to $0.46 per common share; adjusted earnings per share grew 22 percent to $0.50 per common share
- Updating 2017 earnings per share target to $1.93 to $1.97 from $1.93 to $2.00 per common share which reflects the impact of the severe hurricanes
LIVONIA, Mich. (October 24, 2017) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported net sales and operating profit growth in the third quarter of 2017.
“We are pleased with our performance and the progress we made towards our growth initiatives during the quarter, especially in light of the impact from the severe hurricanes experienced in Texas, Florida, and Puerto Rico,” said Masco President and CEO, Keith Allman. “Growth was once again led by our Plumbing Products and Decorative Architectural Products segments, and we continued to invest in our strong plumbing brands and our pro paint initiative. Additionally, we returned approximately $210 million to shareholders through dividends and share repurchases in the quarter.”
2017 Third Quarter Commentary
On a reported basis, compared to third quarter 2016:
- Net sales increased 3 percent to $1.9 billion; in local currency net sales increased 2 percent
- In local currency, North American sales increased 2 percent and international sales increased 4 percent
- Gross margins improved 90 basis points to 33.6 percent from 32.7 percent
- Operating margins improved 90 basis points to 15.2 percent from 14.3 percent
- Net income was $0.46 per common share compared to $0.40 per common share
Compared to third 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 33.6 percent compared to 32.9 percent
- Operating margins improved to 15.3 percent compared to 14.7 percent
- Net income was $0.50 per common share, compared to $0.41 per common share
Liquidity at the end of the third quarter was approximately $1.2 billion
4.0 million shares were repurchased in the third quarter
2017 Third Quarter Operating Segment Highlights
- Plumbing Products’ net sales increased 6 percent (4 percent excluding the impact of foreign currency translation), driven by North American and international growth
- Decorative Architectural Products’ net sales increased 3 percent with growth from Behr’s pro initiative and Liberty’s builders’ hardware business
- Cabinetry Products’ net sales decreased 4 percent due to decreased sales to U.S. and U.K. builders
- Windows and Other Specialty Products’ net sales were flat due to the divestiture of Arrow Fastener. Excluding the impact of this divestiture, net sales increased 9 percent, driven by strong sales of windows in North America
“The demand drivers underlying our industry continue to be strong and very supportive of long-term growth,” said Allman. “The negative effects of the hurricanes are expected to be short-term for our business, and 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. Considering the impact of the severe weather experienced recently, we are updating our 2017 earnings per share target to a range of $1.93 to $1.97. Looking forward, we are committed to achieving our 2019 earnings per share target of $2.50 that we announced at our Investor Day in May.”
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 third 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 Tuesday, October 24, 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 89235746. 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 89235746. The telephone replay will be available approximately two hours after the end of the call and continue through November 24, 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.
Vice President, Treasurer and Investor Relations
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