MAS - Masco Corporation Reports First Quarter 2024 Results

April, 24 2024 07:00 AM Masco Corporation

Highlights

Net sales decreased 3 percent to $1,926 million
Operating profit increased 1 percent to $318 million; adjusted operating profit increased 3 percent to $322 million
Operating profit margin increased 60 basis points to 16.5 percent; adjusted operating profit margin increased 90 basis points to 16.7 percent
Earnings per share was $0.97 per share; adjusted earnings per share grew 8 percent to $0.93 per share
Repurchased 2.1 million shares for $148 million
Continue to expect 2024 earnings per share in the range of $4.00 – $4.25 per share

Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported its first quarter 2024 results.

2024 First Quarter Results

On a reported basis, compared to first quarter 2023:
- Net sales decreased 3 percent to $1,926 million; in local currency and excluding acquisitions, net sales decreased 4 percent
  - Plumbing Products’ net sales decreased 2 percent; in local currency and excluding acquisitions, net sales decreased 4 percent
  - Decorative Architectural Products’ net sales decreased 3 percent
  - In local currency, North American sales decreased 2 percent and international sales decreased 5 percent
- Gross margin increased 180 basis points to 35.6 percent from 33.8 percent
- Operating profit increased 1 percent to $318 million from $315 million
- Operating margin increased 60 basis points to 16.5 percent from 15.9 percent
- Net income increased to $0.97 per share, compared to $0.90 per share
Compared to first quarter 2023, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 24.5 percent, were as follows:
- Gross margin increased 210 basis points to 35.7 percent from 33.6 percent
- Operating profit increased 3 percent to $322 million from $312 million
- Operating margin increased 90 basis points to 16.7 percent from 15.8 percent
- Net income increased 8 percent to $0.93 per share, compared to $0.86 per share
Liquidity at the end of the first quarter was $1,319 million (including availability under revolving credit facility)

“We delivered another quarter of strong results,” said Masco President and CEO, Keith Allman. “We expanded adjusted operating profit margin by 90 basis points and grew adjusted earnings per share by 8 percent through improved operational efficiencies and our continued focus on execution. Additionally, our balanced capital allocation strategy enabled us to return $212 million to shareholders through dividends and share repurchases during the quarter.”

“With the year beginning largely as expected, we continue to anticipate that 2024 adjusted earnings per share will be in the range of $4.00 to $4.25 per share,” said Allman. “Through our ongoing investments in our market leading brands, innovation, and service and our disciplined capital allocation strategy, we are confident in Masco’s ability to continue to deliver long-term shareholder value.”

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; Kichler ^® decorative and outdoor lighting; Liberty® branded decorative and functional hardware; and HotSpring® 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 2024 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 Wednesday, April 24, 2024 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 888-259-6580 or 206-962-3782. Please use the conference identification number 73983883.

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 877-674-7070 or 416-764-8692. Please use the playback passcode 983883#. The telephone replay will be available approximately two hours after the end of the call and continue through May 23, 2024.

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 “outlook,” “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 residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands, to develop innovative products and respond to changing consumer purchasing practices and preferences, our ability to maintain our public image and reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials, our dependence on suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse workforce, risks associated with cybersecurity vulnerabilities, threats and attacks and risks associated with our reliance on information systems and technology. 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. Any forward-looking statement made by us speaks only as of the date on which it was made. 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, 2024 and 2023

(in millions, except per common share data)



Three Months Ended March 31,

2024

2023
Net sales
$
1,926


$
1,979

Cost of sales

1,241



1,310

Gross profit

685



669





Selling, general and administrative expenses

367



354

Operating profit

318



315





Other income (expense), net:



Interest expense

(25
)


(28
)
Other, net

(5
)


(2
)


(30
)


(30
)
Income before income taxes

289



285





Income tax expense

60



64

Net income

229



221





Less: Net income attributable to noncontrolling interest

14



16

Net income attributable to Masco Corporation
$
215


$
205





Income per common share attributable to Masco Corporation (diluted):



Net income
$
0.97


$
0.90





Average diluted common shares outstanding

221



227

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months Ended March 31, 2024 and 2023

(dollars in millions)



Three Months Ended March 31,

2024

2023
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations







Net sales
$
1,926


$
1,979





Gross profit, as reported
$
685


$
669

Rationalization charges (income) (1)

3



(4
)
Gross profit, as adjusted
$
688


$
665





Gross margin, as reported

35.6
%


33.8
%
Gross margin, as adjusted

35.7
%


33.6
%




Selling, general and administrative expenses, as reported
$
367


$
354

Rationalization charges

—



1

Selling, general and administrative expenses, as adjusted
$
367


$
353





Selling, general and administrative expenses as percent of net sales, as reported

19.1
%


17.9
%
Selling, general and administrative expenses as percent of net sales, as adjusted

19.1
%


17.8
%




Operating profit, as reported
$
318


$
315

Rationalization charges (income) (1)

3



(3
)
Operating profit, as adjusted
$
322


$
312





Operating margin, as reported

16.5
%


15.9
%
Operating margin, as adjusted

16.7
%


15.8
%

(1)

Represents income for the three months ended March 31, 2023 due to the sale of excess and obsolete inventory that was related to a rationalization activity, partially offset by rationalization charges.

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months Ended March 31, 2024 and 2023

(in millions, except per common share data)



Three Months Ended March 31,

2024

2023
Income Per Common Share Reconciliations







Income before income taxes, as reported
$
289


$
285

Rationalization charges (income) (1)

3



(3
)
Realized (gains) from private equity funds

—



(1
)
Income before income taxes, as adjusted

292



281

Tax at 24.5% rate

(72
)


(69
)
Less: Net income attributable to noncontrolling interest

14



16

Net income, as adjusted
$
206


$
196





Net income per common share, as adjusted
$
0.93


$
0.86





Average diluted common shares outstanding

221



227

(1)

Outlook for the Year Ended December 31, 2024

Year Ended December 31, 2024

Low End

High End

Income Per Common Share Reconciliation

Net income per common share

4.00

4.25

Rationalization charges

—

Net income per common share, as adjusted

4.00

4.25

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Condensed Consolidated Balance Sheets and Other Financial Data - Unaudited
March 31, 2024 and December 31, 2023

(dollars in millions)







March 31, 2024

December 31, 2023
Balance Sheet




Assets




Current assets:




Cash and cash investments

$
368

$
634
Receivables


1,310


1,090
Inventories


1,059


1,022
Prepaid expenses and other


112


110
Total current assets


2,850


2,856





Property and equipment, net


1,111


1,121
Goodwill


598


604
Other intangible assets, net


367


377
Operating lease right-of-use assets


262


268
Other assets


148


139
Total assets

$
5,336

$
5,363





Liabilities




Current liabilities:




Accounts payable

$
899

$
840
Notes payable


52


3
Accrued liabilities


690


852
Total current liabilities


1,641


1,695





Long-term debt


2,945


2,945
Noncurrent operating lease liabilities


252


258
Other liabilities


340


349
Total liabilities


5,179


5,247





Redeemable noncontrolling interest


—


18





Equity


157


98
Total liabilities and equity

$
5,336

$
5,363


As of March 31,

2024

2023
Other Financial Data



Working capital days



Receivable days

55



54

Inventory days

81



80

Payable days

71



70

Working capital
$
1,470


$
1,612

Working capital as a % of sales (LTM)

18.6
%


19.1
%

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited
For the Three Months Ended March 31, 2024 and 2023

(dollars in millions)



Three Months Ended March 31,

2024

2023
Cash Flows From (For) Operating Activities:



Cash provided by operating activities
$
314


$
286

Working capital changes

(409
)


(253
)
Net cash (for) from operating activities

(94
)


33





Cash Flows From (For) Financing Activities:



Purchase of Company common stock

(145
)


(53
)
Cash dividends paid

(64
)


(65
)
Purchase of redeemable noncontrolling interest

(15
)


—

Proceeds from revolving credit borrowings, net

49



210

Proceeds from the exercise of stock options

75



9

Employee withholding taxes paid on stock-based compensation

(33
)


(20
)
Decrease in debt, net

(1
)


(3
)
Net cash (for) from financing activities

(134
)


78





Cash Flows From (For) Investing Activities:



Capital expenditures

(31
)


(61
)
Other, net

(2
)


2

Net cash for investing activities

(33
)


(59
)




Effect of exchange rate changes on cash and cash investments

(6
)


6





Cash and Cash Investments:



(Decrease) increase for the period

(266
)


58

At January 1

634



452

At March 31
$
368


$
510


As of March 31,

2024

2023
Liquidity



Cash and cash investments
$
368

$
510
Revolver availability

951


790
Total Liquidity
$
1,319

$
1,300

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months Ended March 31, 2024 and 2023

(dollars in millions)





Three Months Ended March 31,



2024

2023

Change
Plumbing Products





Net sales
$
1,192


$
1,222


(2
)%
Operating profit, as reported
$
226


$
206



Operating margin, as reported

19.0
%


16.9
%


Rationalization charges (income)

3



(4
)


Operating profit, as adjusted

228



202



Operating margin, as adjusted

19.1
%


16.5
%


Depreciation and amortization

26



25



EBITDA, as adjusted
$
255


$
227









Decorative Architectural Products





Net sales
$
734


$
757


(3
)%
Operating profit, as reported
$
124


$
132



Operating margin, as reported

16.9
%


17.4
%


Rationalization charges

1



1



Operating profit, as adjusted

125



133



Operating margin, as adjusted

17.0
%


17.6
%


Depreciation and amortization

10



8



EBITDA, as adjusted
$
134


$
141









Total





Net sales
$
1,926


$
1,979


(3
)%
Operating profit, as reported - segment
$
350


$
338



General corporate expense, net

(31
)


(23
)


Operating profit, as reported

318



315



Operating margin, as reported

16.5
%


15.9
%


Rationalization charges (income) - segment

3



(3
)


Operating profit, as adjusted

322



312



Operating margin, as adjusted

16.7
%


15.8
%


Depreciation and amortization - segment

36



33



Depreciation and amortization - other

2



2



EBITDA, as adjusted
$
360


$
347

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
North American and International Data - Unaudited
For the Three Months Ended March 31, 2024 and 2023

(dollars in millions)





Three Months Ended March 31,



2024

2023

Change
North American





Net sales
$
1,526


$
1,555


(2
)%
Operating profit, as reported
$
285


$
266



Operating margin, as reported

18.7
%


17.1
%


Rationalization charges (income)

2



(3
)


Operating profit, as adjusted

287



263



Operating margin, as adjusted

18.8
%


16.9
%


Depreciation and amortization

23



21



EBITDA, as adjusted
$
311


$
284









International





Net sales
$
400


$
424


(6
)%
Operating profit, as reported
$
65


$
72



Operating margin, as reported

16.3
%


17.0
%


Rationalization charges

1



—



Operating profit, as adjusted

66



72



Operating margin, as adjusted

16.5
%


17.0
%


Depreciation and amortization

12



12



EBITDA, as adjusted
$
78


$
84









Total





Net sales
$
1,926


$
1,979


(3
)%
Operating profit, as reported - segment
$
350


$
338



General corporate expense, net

(31
)


(23
)


Operating profit, as reported

318



315



Operating margin, as reported

16.5
%


15.9
%


Rationalization charges (income) - segment

3



(3
)


Operating profit, as adjusted

322



312



Operating margin, as adjusted

16.7
%


15.8
%


Depreciation and amortization - segment

36



33



Depreciation and amortization - other

2



2



EBITDA, as adjusted
$
360


$
347

Historical information is available on our website.

Amounts may not add due to rounding.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424871631/en/

Robin Zondervan
Vice President, Investor Relations and FP&A
313.792.5500
robin_zondervan@mascohq.com

Company Name:	Masco Corporation
Stock Symbol:	MAS
Market:	NYSE
Website:	masco.com

Twitter