Highlights
- Operating profit was $383 million; adjusted operating profit
was $348 million
- Operating profit margin was 19.4 percent; adjusted operating
profit margin expanded 170 basis points to 17.6 percent
- Earnings per share was $1.10 per share; adjusted earnings per
share grew 1 percent to $1.00 per share
- Returned $109 million to shareholders through share repurchases
and dividends, and closed the acquisition of Sauna360 Group Oy for
€124 million
- Raising expected 2023 earnings per share to be in the range of
$3.76 – $3.86 per share, and on an adjusted basis, $3.65 – $3.75
per share
Masco Corporation (NYSE: MAS), one of the world’s leading
manufacturers of branded home improvement and building products,
reported its third quarter results.
2023 Third Quarter
Results
- On a reported basis, compared to third quarter 2022:
- Net sales decreased 10 percent to $1,979 million; in local
currency and excluding acquisitions, net sales decreased 11
percent
- In local currency, North American sales decreased 11 percent
and international sales decreased 11 percent
- Gross margin increased 610 basis points to 37.6 percent from
31.5 percent
- Operating profit increased 9 percent to $383 million from $351
million
- Operating margin increased 350 basis points to 19.4 percent
from 15.9 percent
- Net income increased to $1.10 per share, compared to $0.97 per
share
- Compared to third 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 430 basis points to 35.8 percent from
31.5 percent
- Operating profit decreased 1 percent to $348 million from $351
million
- Operating margin increased 170 basis points to 17.6 percent
from 15.9 percent
- Net income increased 1 percent to $1.00 per share, compared to
$0.99 per share
- Liquidity at the end of the third quarter was $1,560 million
(including availability under revolving credit facility)
- Plumbing Products’ net sales decreased 10 percent; in local
currency and excluding acquisitions, net sales decreased 11
percent
- Decorative Architectural Products’ net sales decreased 10
percent; in local currency, net sales decreased 11 percent
“Our continued ability to successfully execute in a challenging
demand environment, along with our continued focus on driving
productivity improvements led to strong margin performance and
earnings per share growth in the third quarter,” said Masco
President and CEO, Keith Allman. “Consistent with our focus on
disciplined capital allocation, we returned $109 million to
shareholders through dividends and share repurchases, and completed
our bolt-on acquisition of Sauna360 Group Oy for approximately €124
million.”
“With our strong operational performance, we now anticipate our
2023 adjusted earnings per share to be in the range of $3.65 to
$3.75 per share, increased from our previous expectation of $3.50
to $3.65 per share. While the near-term demand environment for
repair and remodel products remains uncertain, we are executing
well and demonstrating the earnings power of our business model. We
remain committed to investing in our brands and capabilities to
drive strong growth when market conditions improve, and are
well-positioned to create long-term shareholder value,” concluded
Allman.
Dividend Declaration
Masco’s Board of Directors declared a quarterly dividend of
$0.285 per share, payable on November 27, 2023 to shareholders of
record on November 10, 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 third 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, October 26, 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 888-259-6580 and from
outside the U.S. at 416-764-8624. Please use the conference
identification number 40185476.
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 185476#. The
telephone replay will be available approximately two hours after
the end of the call and continue through November 26, 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 Nine Months Ended
September 30, 2023 and 2022
(in millions, except per
common share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net sales
$
1,979
$
2,204
$
6,085
$
6,757
Cost of sales
1,235
1,509
3,903
4,589
Gross profit
744
695
2,182
2,168
Selling, general and administrative
expenses
361
344
1,081
1,056
Operating profit
383
351
1,101
1,112
Other income (expense), net:
Interest expense
(26
)
(29
)
(82
)
(82
)
Other, net
(11
)
(12
)
(14
)
4
(37
)
(41
)
(96
)
(78
)
Income before income taxes
346
310
1,005
1,034
Income tax expense
86
77
246
255
Net income
260
233
759
779
Less: Net income attributable to
noncontrolling interest
11
15
42
50
Net income attributable to Masco
Corporation
$
249
$
218
$
717
$
729
Income per common share attributable to
Masco Corporation (diluted):
Net income
$
1.10
$
0.97
$
3.17
$
3.13
Average diluted common shares
outstanding
226
227
226
233
Historical information is available on our website.
MASCO CORPORATION
Exhibit A: Reconciliations -
Unaudited
For the Three and Nine Months Ended
September 30, 2023 and 2022
(dollars in millions)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Gross Profit,
Selling, General and Administrative Expenses, and Operating Profit
Reconciliations
Net sales
$
1,979
$
2,204
$
6,085
$
6,757
Gross profit, as reported
$
744
$
695
$
2,182
$
2,168
Rationalization charges
5
—
2
9
Insurance settlement (1)
(40
)
—
(40
)
—
Gross profit, as adjusted
$
709
$
695
$
2,144
$
2,177
Gross margin, as reported
37.6
%
31.5
%
35.9
%
32.1
%
Gross margin, as adjusted
35.8
%
31.5
%
35.2
%
32.2
%
Selling, general and administrative
expenses, as reported
$
361
$
344
$
1,081
$
1,056
Rationalization charges
—
—
1
—
Selling, general and administrative
expenses, as adjusted
$
361
$
344
$
1,080
$
1,056
Selling, general and administrative
expenses as percent of net sales, as reported
18.2
%
15.6
%
17.8
%
15.6
%
Selling, general and administrative
expenses as percent of net sales, as adjusted
18.2
%
15.6
%
17.7
%
15.6
%
Operating profit, as reported
$
383
$
351
$
1,101
$
1,112
Rationalization charges
5
—
3
9
Insurance settlement (1)
(40
)
—
(40
)
—
Operating profit, as adjusted
$
348
$
351
$
1,064
$
1,121
Operating margin, as reported
19.4
%
15.9
%
18.1
%
16.5
%
Operating margin, as adjusted
17.6
%
15.9
%
17.5
%
16.6
%
(1)
Represents income for the three and nine
months ended September 30, 2023 from the receipt of an insurance
settlement payment.
Historical information is available on our website.
MASCO CORPORATION
Exhibit A: Reconciliations -
Unaudited
For the Three and Nine Months Ended
September 30, 2023 and 2022
(in millions, except per
common share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Income Per Common
Share Reconciliations
Income before income taxes, as
reported
$
346
$
310
$
1,005
$
1,034
Rationalization charges
5
—
3
9
Fair value adjustment to contingent
earnout obligation (1)
—
—
—
(24
)
(Gain) on sale of business (2)
—
—
—
(2
)
Realized (gains) from private equity
funds
—
—
(1
)
—
Loss from equity investments, net
1
6
1
6
Insurance settlement (3)
(40
)
—
(40
)
—
Income before income taxes, as
adjusted
312
316
968
1,023
Tax at 24% rate
(75
)
(76
)
(232
)
(246
)
Less: Net income attributable to
noncontrolling interest
11
15
42
50
Net income, as adjusted
$
226
$
225
$
694
$
727
Net income per common share, as
adjusted
$
1.00
$
0.99
$
3.07
$
3.12
Average diluted common shares
outstanding
226
227
226
233
(1)
Represents income for the nine months
ended September 30, 2022 from the revaluation of contingent
consideration related to a prior acquisition.
(2)
Represents a pre-tax post-closing gain
related to the finalization of working capital items related to the
divestiture of Hüppe GmbH for the nine months ended September 30,
2022.
(3)
Represents income for the three and nine
months ended September 30, 2023 from the receipt of an insurance
settlement payment.
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
3.76
$
3.86
Rationalization charges
0.02
0.02
Insurance settlement (1)
(0.13
)
(0.13
)
Net income per common share, as
adjusted
3.65
$
3.75
(1)
Represents income from the receipt of an
insurance settlement payment.
Historical information is available on our website.
MASCO CORPORATION
Condensed Consolidated Balance Sheets
and Other Financial Data - Unaudited
September 30, 2023 and December 31,
2022
(dollars in millions)
September 30, 2023
December 31, 2022
Balance Sheet
Assets
Current assets:
Cash and cash investments
$
560
$
452
Receivables
1,245
1,149
Inventories
1,046
1,236
Prepaid expenses and other
113
109
Total current assets
2,964
2,946
Property and equipment, net
1,077
975
Goodwill
593
537
Other intangible assets, net
395
350
Operating lease right-of-use assets
270
266
Other assets
72
113
Total assets
$
5,371
$
5,187
Liabilities
Current liabilities:
Accounts payable
$
844
$
877
Notes payable
66
205
Accrued liabilities
752
807
Total current liabilities
1,662
1,889
Long-term debt
2,946
2,946
Noncurrent operating lease liabilities
260
255
Other liabilities
336
339
Total liabilities
5,204
5,429
Redeemable noncontrolling interest
19
20
Equity
148
(262
)
Total liabilities and equity
$
5,371
$
5,187
As of September 30,
2023
2022
Other Financial Data
Working capital days
Receivable days
54
51
Inventory days
77
87
Payable days
71
66
Working capital
$
1,447
$
1,621
Working capital as a % of sales (LTM)
18.1
%
18.5
%
Historical information is available on our website.
MASCO CORPORATION
Condensed Consolidated Statements of
Cash Flows and Other Financial Data - Unaudited
For the Nine Months Ended September 30,
2023 and 2022
(dollars in millions)
Nine Months Ended September
30,
2023
2022
Cash Flows From (For) Operating
Activities:
Cash provided by operating activities
$
954
$
954
Working capital changes
(26
)
(434
)
Net cash from operating activities
928
520
Cash Flows From (For) Financing
Activities:
Purchase of Company common stock
(126
)
(914
)
Cash dividends paid
(193
)
(195
)
Dividends paid to noncontrolling
interest
(49
)
(68
)
Proceeds from short-term borrowings
77
—
Payment of short-term borrowings
(11
)
—
Proceeds from term loan
—
500
Payment of term loan
(200
)
(100
)
Proceeds from the exercise of stock
options
37
1
Employee withholding taxes paid on
stock-based compensation
(29
)
(17
)
Decrease in debt, net
(4
)
(9
)
Net cash for financing activities
(498
)
(802
)
Cash Flows From (For) Investing
Activities:
Capital expenditures
(181
)
(137
)
Acquisition of business, net of cash
acquired
(136
)
—
Other, net
(4
)
(7
)
Net cash for investing activities
(321
)
(144
)
Effect of exchange rate changes on cash
and cash investments
(1
)
(36
)
Cash and Cash Investments:
Increase (decrease) for the period
108
(462
)
At January 1
452
926
At September 30
$
560
$
464
As of September 30,
2023
2022
Liquidity
Cash and cash investments
$
560
$
464
Revolver availability
1,000
1,000
Total Liquidity
$
1,560
$
1,464
Historical information is available on our website.
MASCO CORPORATION
Segment Data - Unaudited
For the Three and Nine Months Ended
September 30, 2023 and 2022
(dollars in millions)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
Change
2023
2022
Change
Plumbing Products
Net sales
$
1,191
$
1,324
(10
)%
$
3,638
$
4,056
(10
)%
Operating profit, as reported
$
223
$
220
$
673
$
686
Operating margin, as reported
18.7
%
16.6
%
18.5
%
16.9
%
Rationalization charges (income)
2
—
(1
)
—
Operating profit, as adjusted
225
220
672
686
Operating margin, as adjusted
18.9
%
16.6
%
18.5
%
16.9
%
Depreciation and amortization
26
24
76
73
EBITDA, as adjusted
$
251
$
244
$
748
$
759
Decorative Architectural
Products
Net sales
$
788
$
880
(10
)%
$
2,447
$
2,701
(9
)%
Operating profit, as reported
$
181
$
151
$
493
$
498
Operating margin, as reported
23.0
%
17.2
%
20.1
%
18.4
%
Rationalization charges
3
—
4
8
Accelerated depreciation related to
rationalization activity
—
—
—
1
Insurance settlement
(40
)
—
(40
)
—
Operating profit, as adjusted
144
151
457
507
Operating margin, as adjusted
18.3
%
17.2
%
18.7
%
18.8
%
Depreciation and amortization
9
8
26
25
EBITDA, as adjusted
$
153
$
159
$
483
$
532
Total
Net sales
$
1,979
$
2,204
(10
)%
$
6,085
$
6,757
(10
)%
Operating profit, as reported -
segment
$
404
$
371
$
1,166
$
1,184
General corporate expense, net
(21
)
(20
)
(65
)
(72
)
Operating profit, as reported
383
351
1,101
1,112
Operating margin, as reported
19.4
%
15.9
%
18.1
%
16.5
%
Rationalization charges - segment
5
—
3
8
Accelerated depreciation related to
rationalization activity - segment
—
—
—
1
Insurance settlement
(40
)
—
(40
)
—
Operating profit, as adjusted
348
351
1,064
1,121
Operating margin, as adjusted
17.6
%
15.9
%
17.5
%
16.6
%
Depreciation and amortization -
segment
35
32
102
98
Depreciation and amortization - other
2
2
5
6
EBITDA, as adjusted
$
385
$
385
$
1,171
$
1,225
Historical information is available on our website.
MASCO CORPORATION
North American and International Data -
Unaudited
For the Three and Nine Months Ended
September 30, 2023 and 2022
(dollars in millions)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
Change
2023
2022
Change
North American
Net sales
$
1,602
$
1,792
(11
)%
$
4,875
$
5,431
(10
)%
Operating profit, as reported
$
348
$
305
$
972
$
961
Operating margin, as reported
21.7
%
17.0
%
19.9
%
17.7
%
Rationalization charges
5
—
3
8
Accelerated depreciation related to
rationalization activity
—
—
—
1
Insurance settlement
(40
)
—
(40
)
—
Operating profit, as adjusted
313
305
935
970
Operating margin, as adjusted
19.5
%
17.0
%
19.2
%
17.9
%
Depreciation and amortization
22
21
65
64
EBITDA, as adjusted
$
335
$
326
$
1,000
$
1,034
International
Net sales
$
377
$
412
(8
)%
$
1,210
$
1,326
(9
)%
Operating profit, as reported
$
56
$
66
$
194
$
223
Operating margin, as reported
14.9
%
16.0
%
16.0
%
16.8
%
Depreciation and amortization
13
11
37
34
EBITDA
$
69
$
77
$
231
$
257
Total
Net sales
$
1,979
$
2,204
(10
)%
$
6,085
$
6,757
(10
)%
Operating profit, as reported -
segment
$
404
$
371
$
1,166
$
1,184
General corporate expense, net
(21
)
(20
)
(65
)
(72
)
Operating profit, as reported
383
351
1,101
1,112
Operating margin, as reported
19.4
%
15.9
%
18.1
%
16.5
%
Rationalization charges - segment
5
—
3
8
Accelerated depreciation related to
rationalization activity - segment
—
—
—
1
Insurance settlement
(40
)
—
(40
)
—
Operating profit, as adjusted
348
351
1,064
1,121
Operating margin, as adjusted
17.6
%
15.9
%
17.5
%
16.6
%
Depreciation and amortization -
segment
35
32
102
98
Depreciation and amortization - other
2
2
5
6
EBITDA, as adjusted
$
385
$
385
$
1,171
$
1,225
Historical information is available on our website.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026936931/en/
Investor Contact David
Chaika Vice President, Treasurer and Investor Relations
313.792.5500 david_chaika@mascohq.com
Masco (NYSE:MAS)
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