Highlights
- Operating profit was $403 million; adjusted operating profit
was $404 million
- Operating profit margin was 18.9 percent; adjusted operating
profit margin expanded 140 basis points to 19.0 percent
- Earnings per share was $1.16 per share; adjusted earnings per
share grew 3 percent to $1.19 per share
- Entered into an agreement to acquire Sauna360 Group Oy, a
strategic bolt-on that expands the Company’s spa and wellness
product offerings
- Raising expected 2023 earnings per share to be in the range of
$3.48 – $3.63 per share, and on an adjusted basis, $3.50 – $3.65
per share
Masco Corporation (NYSE: MAS), one of the world’s leading
manufacturers of branded home improvement and building products,
reported its second quarter results.
2023 Second Quarter
Results
- On a reported basis, compared to second quarter 2022:
- Net sales decreased 10 percent to $2,127 million; in local
currency, net sales decreased 9 percent
- In local currency, North American sales decreased 10 percent
and international sales decreased 8 percent
- Gross margin increased 350 basis points to 36.2 percent from
32.7 percent
- Operating profit decreased 1 percent to $403 million from $408
million
- Operating margin increased 160 basis points to 18.9 percent
from 17.3 percent
- Net income decreased to $1.16 per share, compared to $1.18 per
share
- Compared to second quarter 2022, results for key financial
measures, as adjusted for certain items (see Exhibit A) and with a
normalized tax rate of 24 percent, were as follows:
- Gross margin increased 320 basis points to 36.2 percent from
33.0 percent
- Operating profit decreased 2 percent to $404 million from $414
million
- Operating margin increased 140 basis points to 19.0 percent
from 17.6 percent
- Net income increased 3 percent to $1.19 per share, compared to
$1.15 per share
- Liquidity at the end of the second quarter was $1,380 million
(including availability under revolving credit facility)
- Plumbing Products’ net sales decreased 11 percent; in local
currency, net sales decreased 10 percent
- Decorative Architectural Products’ net sales decreased 8
percent
“In the first half of the year, we demonstrated our ability to
mitigate the impacts of a lower demand environment with a focus on
productivity and shareholder returns,” said Masco President and
CEO, Keith Allman. “In the second quarter, our pricing actions and
improved operational efficiency helped drive adjusted operating
profit margin expansion of 140 basis points. At the same time, we
continued to execute on our balanced capital deployment strategy
and returned $89 million to shareholders through dividends and
share repurchases in the quarter, while announcing a strategic
bolt-on with the anticipated addition of Sauna360 Group Oy to
expand our spa and wellness product offerings.”
Allman continued, “As a result of our strong execution during
the first half of the year, we now anticipate adjusted earnings per
share in the range of $3.50 to $3.65 per share for 2023, up from
our previous expectation of $3.10 to $3.40 per share. While the
near-term demand environment remains challenging, the long-term
fundamentals of our repair and remodel markets continue to be
strong. We remain focused on investing in our brands and
capabilities and maintaining strong execution. Given Masco’s strong
free cash flow and disciplined capital deployment, we are well
positioned to drive shareholder value creation for the long-term,”
concluded Allman.
Agreement to Acquire Sauna360 Group
Oy
Masco has entered into an agreement to acquire Sauna360 Group
Oy, a leading global manufacturer of sauna solutions. Sauna360
Group Oy complements the Company’s spa business and will expand its
wellness product offerings with the addition of the Tyl�®, Helo®,
Kastor®, Finnleo® and Amerec® brands. The transaction is expected
to close in the third quarter, subject to regulatory approval.
Dividend Declaration
Masco’s Board of Directors declared a quarterly dividend of
$0.285 per share, payable on August 28, 2023 to shareholders of
record on August 11, 2023.
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; 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 2023 second 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 Thursday, July 27, 2023 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 888-886-7786 and from outside the
U.S. at 416-764-8658. Please use the conference identification
number 14959971.
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 and from outside the U.S. at
416-764-8692. Please use the playback passcode 959971#. The
telephone replay will be available approximately two hours after
the end of the call and continue through August 27, 2023.
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
and to develop innovative products, our ability to maintain our
public 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, risks associated with our
reliance on information systems and technology and the impact of
the ongoing COVID-19 pandemic on our business and operations. 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 and Six Months Ended June
30, 2023 and 2022
(in millions, except per
common share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net sales
$
2,127
$
2,352
$
4,106
$
4,553
Cost of sales
1,358
1,583
2,668
3,080
Gross profit
769
769
1,438
1,473
Selling, general and administrative
expenses
366
361
720
712
Operating profit
403
408
718
761
Other income (expense), net:
Interest expense
(28
)
(28
)
(56
)
(53
)
Other, net
(1
)
17
(3
)
16
(29
)
(11
)
(59
)
(37
)
Income before income taxes
374
397
659
724
Income tax expense
96
103
160
178
Net income
278
294
499
546
Less: Net income attributable to
noncontrolling interest
15
16
31
35
Net income attributable to Masco
Corporation
$
263
$
278
$
468
$
511
Income per common share attributable to
Masco Corporation (diluted):
Net income
$
1.16
$
1.18
$
2.07
$
2.15
Average diluted common shares
outstanding
226
233
226
237
Historical information is available on our
website.
MASCO CORPORATION
Exhibit A: Reconciliations -
Unaudited
For the Three and Six Months Ended June
30, 2023 and 2022
(dollars in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Gross Profit,
Selling, General and Administrative Expenses, and Operating Profit
Reconciliations
Net sales
$
2,127
$
2,352
$
4,106
$
4,553
Gross profit, as reported
$
769
$
769
$
1,438
$
1,473
Rationalization charges (income)
(1)
1
6
(3
)
9
Gross profit, as adjusted
$
770
$
775
$
1,435
$
1,482
Gross margin, as reported
36.2
%
32.7
%
35.0
%
32.4
%
Gross margin, as adjusted
36.2
%
33.0
%
34.9
%
32.5
%
Selling, general and administrative
expenses, as reported
$
366
$
361
$
720
$
712
Rationalization charges
—
—
1
—
Selling, general and administrative
expenses, as adjusted
$
366
$
361
$
719
$
712
Selling, general and administrative
expenses as percent of net sales, as reported
17.2
%
15.3
%
17.5
%
15.6
%
Selling, general and administrative
expenses as percent of net sales, as adjusted
17.2
%
15.3
%
17.5
%
15.6
%
Operating profit, as reported
$
403
$
408
$
718
$
761
Rationalization charges (income)
(1)
1
6
(2
)
9
Operating profit, as adjusted
$
404
$
414
$
716
$
770
Operating margin, as reported
18.9
%
17.3
%
17.5
%
16.7
%
Operating margin, as adjusted
19.0
%
17.6
%
17.4
%
16.9
%
(1)
Represents income for the six months ended
June 30, 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.
MASCO CORPORATION
Exhibit A: Reconciliations -
Unaudited
For the Three and Six Months Ended June
30, 2023 and 2022
(in millions, except per
common share data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Income Per Common
Share Reconciliations
Income before income taxes, as
reported
$
374
$
397
$
659
$
724
Rationalization charges (income)
(1)
1
6
(2
)
9
Fair value adjustment to contingent
earnout obligation (2)
—
(28
)
—
(24
)
(Gain) on sale of business (3)
—
—
—
(2
)
Realized (gains) from private equity
funds
—
—
(1
)
—
Income before income taxes, as
adjusted
375
375
656
707
Tax at 24% rate
(90
)
(90
)
(157
)
(170
)
Less: Net income attributable to
noncontrolling interest
15
16
31
35
Net income, as adjusted
$
270
$
269
$
468
$
502
Net income per common share, as
adjusted
$
1.19
$
1.15
$
2.07
$
2.12
Average diluted common shares
outstanding
226
233
226
237
(1)
Represents income for the six months ended
June 30, 2023 due to the sale of excess and obsolete inventory that
was related to a rationalization activity, partially offset by
rationalization charges.
(2)
Represents income for the three and six
months ended June 30, 2022 from the revaluation of contingent
consideration related to a prior acquisition.
(3)
Represents a pre-tax post-closing gain
related to the finalization of working capital items related to the
divestiture of Hüppe GmbH for the six months ended June 30,
2022.
Outlook for the Year Ended December 31,
2023
Year Ended December 31,
2023
Low End
High End
Income Per Common
Share Reconciliation
Net income per common share
$
3.48
$
3.63
Rationalization charges
0.02
0.02
Net income per common share, as
adjusted
$
3.50
$
3.65
Historical information is available on our
website.
MASCO CORPORATION
Condensed Consolidated Balance Sheets
and Other Financial Data - Unaudited
June 30, 2023 and December 31,
2022
(dollars in millions)
June 30, 2023
December 31, 2022
Balance Sheet
Assets
Current assets:
Cash and cash investments
$
380
$
452
Receivables
1,371
1,149
Inventories
1,144
1,236
Prepaid expenses and other
112
109
Total current assets
3,007
2,946
Property and equipment, net
1,063
975
Goodwill
540
537
Other intangible assets, net
337
350
Operating lease right-of-use assets
264
266
Other assets
97
113
Total assets
$
5,308
$
5,187
Liabilities
Current liabilities:
Accounts payable
$
958
$
877
Notes payable
79
205
Accrued liabilities
712
807
Total current liabilities
1,749
1,889
Long-term debt
2,946
2,946
Noncurrent operating lease liabilities
252
255
Other liabilities
333
339
Total liabilities
5,280
5,429
Redeemable noncontrolling interest
21
20
Equity
7
(262
)
Total liabilities and equity
$
5,308
$
5,187
As of June 30,
2023
2022
Other Financial Data
Working capital days
Receivable days
54
52
Inventory days
80
88
Payable days
70
67
Working capital
$
1,557
$
1,660
Working capital as a % of sales (LTM)
18.9
%
18.9
%
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, 2023
and 2022
(dollars in millions)
Six Months Ended June
30,
2023
2022
Cash Flows From (For) Operating
Activities:
Cash provided by operating activities
$
632
$
662
Working capital changes
(184
)
(488
)
Net cash from operating activities
448
174
Cash Flows From (For) Financing
Activities:
Purchase of Company common stock
(81
)
(914
)
Cash dividends paid
(129
)
(131
)
Dividends paid to noncontrolling
interest
(49
)
—
Proceeds from short-term borrowings
77
—
Proceeds from term loan
—
500
Payment of term loan
(200
)
—
Proceeds from the exercise of stock
options
23
1
Employee withholding taxes paid on
stock-based compensation
(23
)
(17
)
Decrease in debt, net
(4
)
(7
)
Net cash for financing activities
(386
)
(568
)
Cash Flows From (For) Investing
Activities:
Capital expenditures
(133
)
(70
)
Other, net
(4
)
(4
)
Net cash for investing activities
(137
)
(74
)
Effect of exchange rate changes on cash
and cash investments
3
(18
)
Cash and Cash Investments:
Decrease for the period
(72
)
(486
)
At January 1
452
926
At June 30
$
380
$
440
As of June 30,
2023
2022
Liquidity
Cash and cash investments
$
380
$
440
Revolver availability
1,000
1,000
Total Liquidity
$
1,380
$
1,440
Historical information is available on our
website.
MASCO CORPORATION
Segment Data - Unaudited
For the Three and Six Months Ended June
30, 2023 and 2022
(dollars in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
Change
2023
2022
Change
Plumbing Products
Net sales
$
1,225
$
1,373
(11
)%
$
2,447
$
2,732
(10
)%
Operating profit, as reported
$
244
$
238
$
450
$
466
Operating margin, as reported
19.9
%
17.3
%
18.4
%
17.1
%
Rationalization charges (income)
1
—
(3
)
—
Operating profit, as adjusted
245
238
447
466
Operating margin, as adjusted
20.0
%
17.3
%
18.3
%
17.1
%
Depreciation and amortization
25
25
50
49
EBITDA, as adjusted
$
270
$
263
$
497
$
515
Decorative Architectural
Products
Net sales
$
902
$
979
(8
)%
$
1,659
$
1,821
(9
)%
Operating profit, as reported
$
180
$
192
$
312
$
347
Operating margin, as reported
20.0
%
19.6
%
18.8
%
19.1
%
Rationalization charges
—
6
1
8
Accelerated depreciation related to
rationalization activity
—
—
—
1
Operating profit, as adjusted
180
198
313
356
Operating margin, as adjusted
20.0
%
20.2
%
18.9
%
19.5
%
Depreciation and amortization
9
9
17
17
EBITDA, as adjusted
$
189
$
207
$
330
$
373
Total
Net sales
$
2,127
$
2,352
(10
)%
$
4,106
$
4,553
(10
)%
Operating profit, as reported -
segment
$
424
$
430
$
762
$
813
General corporate expense, net
(21
)
(22
)
(44
)
(52
)
Operating profit, as reported
403
408
718
761
Operating margin, as reported
18.9
%
17.3
%
17.5
%
16.7
%
Rationalization charges (income) -
segment
1
6
(2
)
8
Accelerated depreciation related to
rationalization activity - segment
—
—
—
1
Operating profit, as adjusted
404
414
716
770
Operating margin, as adjusted
19.0
%
17.6
%
17.4
%
16.9
%
Depreciation and amortization -
segment
34
34
67
66
Depreciation and amortization - other
1
2
3
4
EBITDA, as adjusted
$
439
$
450
$
786
$
840
Historical information is available on our
website.
MASCO CORPORATION
North American and International Data -
Unaudited
For the Three and Six Months Ended June
30, 2023 and 2022
(dollars in millions)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
Change
2023
2022
Change
North American
Net sales
$
1,718
$
1,905
(10
)%
$
3,273
$
3,639
(10
)%
Operating profit, as reported
$
358
$
356
$
624
$
656
Operating margin, as reported
20.8
%
18.7
%
19.1
%
18.0
%
Rationalization charges (income)
1
6
(2
)
8
Accelerated depreciation related to
rationalization activity
—
—
—
1
Operating profit, as adjusted
359
362
622
665
Operating margin, as adjusted
20.9
%
19.0
%
19.0
%
18.3
%
Depreciation and amortization
22
23
43
43
EBITDA, as adjusted
$
381
$
385
$
665
$
708
International
Net sales
$
409
$
447
(9
)%
$
833
$
914
(9
)%
Operating profit, as reported
$
66
$
74
$
138
$
157
Operating margin, as reported
16.1
%
16.6
%
16.6
%
17.2
%
Depreciation and amortization
12
11
24
23
EBITDA
$
78
$
85
$
162
$
180
Total
Net sales
$
2,127
$
2,352
(10
)%
$
4,106
$
4,553
(10
)%
Operating profit, as reported -
segment
$
424
$
430
$
762
$
813
General corporate expense, net
(21
)
(22
)
(44
)
(52
)
Operating profit, as reported
403
408
718
761
Operating margin, as reported
18.9
%
17.3
%
17.5
%
16.7
%
Rationalization charges (income) -
segment
1
6
(2
)
8
Accelerated depreciation related to
rationalization activity - segment
—
—
—
1
Operating profit, as adjusted
404
414
716
770
Operating margin, as adjusted
19.0
%
17.6
%
17.4
%
16.9
%
Depreciation and amortization -
segment
34
34
67
66
Depreciation and amortization - other
1
2
3
4
EBITDA, as adjusted
$
439
$
450
$
786
$
840
Historical information is available on our
website.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727124873/en/
David Chaika Interim Chief Financial Officer 313.792.5500
david_chaika@mascohq.com
Masco (NYSE:MAS)
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