Masco Corporation

10/29/2024 | Press release | Distributed by Public on 10/29/2024 05:07

Masco Corporation Reports Third Quarter 2024 Results

Highlights

  • Net sales were in line with prior year at $1,983 million
  • Operating profit decreased 7 percent to $357 million; adjusted operating profit increased 3 percent to $360 million
  • Operating profit margin decreased 140 basis points to 18.0 percent; adjusted operating profit margin increased 60 basis points to 18.2 percent
  • Earnings per share was $0.77 per share; adjusted earnings per share grew 8 percent to $1.08 per share
  • Repurchased 2.5 million shares for $192 million
  • Expect 2024 earnings per share in the range of $3.74 - $3.84 per share, and on an adjusted basis, $4.05 - $4.15 per share

LIVONIA, Mich.--(BUSINESS WIRE)-- Masco Corporation (NYSE: MAS), one of the world's leading manufacturers of branded home improvement and building products, reported its third quarter 2024 results.

2024 Third Quarter Results

  • On a reported basis, compared to third quarter 2023:
    • Net sales were in line with prior year at $1,983 million; in local currency net sales increased 1 percent
      • Plumbing Products' net sales increased 2 percent; in local currency and excluding acquisitions, net sales increased 1 percent
      • Decorative Architectural Products' net sales decreased 3 percent; in local currency and excluding divestitures, net sales decreased 1 percent
      • In local currency, North American sales were in line with prior year and International sales increased 3 percent
    • Gross margin decreased 100 basis points to 36.6 percent from 37.6 percent
    • Operating profit decreased 7 percent to $357 million from $383 million
    • Operating margin decreased 140 basis points to 18.0 percent from 19.4 percent
    • Net income decreased to $0.77 per share, compared to $1.10 per share
  • Compared to third 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 90 basis points to 36.7 percent from 35.8 percent
    • Operating profit increased 3 percent to $360 million from $348 million
    • Operating margin increased 60 basis points to 18.2 percent from 17.6 percent
    • Net income increased 8 percent to $1.08 per share, compared to $1.00 per share
  • Liquidity at the end of the third quarter was $1,646 million (including availability under our revolving credit facility)

"We delivered another quarter of strong operating results," said Masco President and CEO, Keith Allman. "Our adjusted operating margin expanded 60 basis points to 18.2 percent, marking the sixth consecutive quarter of year-over-year margin expansion, and our adjusted earnings per share grew by 8 percent. Additionally, we executed on our capital allocation strategy by returning $255 million to shareholders though dividends and share repurchases."

"We remain focused on driving the full potential of our portfolio with our leading brands, innovative products, and exceptional customer service. For the remainder of the year, we expect market demand to remain challenged and now anticipate our 2024 adjusted earnings per share to be in the range of $4.05 to $4.15, compared to our previous expectation of $4.05 to $4.20," said Allman. "With our ongoing focus on operational efficiencies and cost savings initiatives, we remain well positioned to drive operating margin expansion for the full year. Additionally, we remain confident in the long-term fundamentals of the repair and remodel market and our ability to deliver shareholder value."

Dividend Declaration

Masco's Board of Directors declared a quarterly dividend of $0.29 per share, payable on November 25, 2024 to shareholders of record on November 8, 2024.

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; 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 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 Tuesday, October 29, 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 800-549-8228 or 646-564-2877. Please use the conference identification number 72522.

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 888-660-6264 or 646-517-3975. Please use the playback passcode 72522#. The telephone replay will be available approximately two hours after the end of the call and continue through November 29, 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 and Nine Months Ended September 30, 2024 and 2023

(in millions, except per common share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

Net sales

$

1,983

$

1,979

$

6,000

$

6,085

Cost of sales

1,258

1,235

3,805

3,903

Gross profit

725

744

2,195

2,182

Selling, general and administrative expenses

368

361

1,123

1,081

Operating profit

357

383

1,073

1,101

Other income (expense), net:

Interest expense

(25

)

(26

)

(75

)

(82

)

Other, net

(85

)

(11

)

(95

)

(14

)

(109

)

(37

)

(170

)

(96

)

Income before income taxes

248

346

903

1,005

Income tax expense

68

86

222

246

Net income

180

260

681

759

Less: Net income attributable to noncontrolling interest

13

11

41

42

Net income attributable to Masco Corporation

$

167

$

249

$

640

$

717

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

Net income

$

0.77

$

1.10

$

2.91

$

3.17

Average diluted common shares outstanding

218

226

220

226

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

For the Three and Nine Months Ended September 30, 2024 and 2023

(dollars in millions)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

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

Net sales

$

1,983

$

1,979

$

6,000

$

6,085

Gross profit, as reported

$

725

$

744

$

2,195

$

2,182

Rationalization charges

2

5

6

2

Insurance settlement (1)

-

(40

)

-

(40

)

Gross profit, as adjusted

$

727

$

709

$

2,202

$

2,144

Gross margin, as reported

36.6

%

37.6

%

36.6

%

35.9

%

Gross margin, as adjusted

36.7

%

35.8

%

36.7

%

35.2

%

Selling, general and administrative expenses, as reported

$

368

$

361

$

1,123

$

1,081

Rationalization charges

-

-

1

1

Selling, general and administrative expenses, as adjusted

$

368

$

361

$

1,121

$

1,080

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

18.6

%

18.2

%

18.7

%

17.8

%

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

18.6

%

18.2

%

18.7

%

17.7

%

Operating profit, as reported

$

357

$

383

$

1,073

$

1,101

Rationalization charges

2

5

8

3

Insurance settlement (1)

-

(40

)

-

(40

)

Operating profit, as adjusted

$

360

$

348

$

1,081

$

1,064

Operating margin, as reported

18.0

%

19.4

%

17.9

%

18.1

%

Operating margin, as adjusted

18.2

%

17.6

%

18.0

%

17.5

%

(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.

Amounts may not add due to rounding.

MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

For the Three and Nine Months Ended September 30, 2024 and 2023

(in millions, except per common share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

Income Per Common Share Reconciliations

Income before income taxes, as reported

$

248

$

346

$

903

$

1,005

Rationalization charges

2

5

8

3

Loss on sale of business (1)

81

-

81

-

Realized (gains) from private equity funds

(1

)

-

(1

)

(1

)

Loss from equity investments, net

-

1

-

1

Insurance settlement (2)

-

(40

)

-

(40

)

Income before income taxes, as adjusted

330

312

990

968

Tax at 24.5% rate

(81

)

(76

)

(243

)

(237

)

Less: Net income attributable to noncontrolling interest

13

11

41

42

Net income, as adjusted

$

236

$

225

$

706

$

689

Net income per common share, as adjusted

$

1.08

$

1.00

$

3.21

$

3.05

Average diluted common shares outstanding

218

226

220

226

(1)

Represents the preliminary loss for the three and nine months ended September 30, 2024 from the sale of our Kichler Lighting business.

(2)

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, 2024

Year Ended December 31, 2024

Low End

High End

Income Per Common Share Reconciliation

Net income per common share

$

3.74

$

3.84

Rationalization charges

0.03

0.03

Loss on sale of business (1)

0.28

0.28

Net income per common share, as adjusted

$

4.05

$

4.15

(1)

Represents the preliminary loss from the sale of our Kichler Lighting business.

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

September 30, 2024 and December 31, 2023

(dollars in millions)

September 30, 2024

December 31, 2023

Balance Sheet

Assets

Current assets:

Cash and cash investments

$

646

$

634

Receivables

1,152

1,090

Inventories

1,013

1,022

Prepaid expenses and other

153

110

Total current assets

2,965

2,856

Property and equipment, net

1,125

1,121

Goodwill

610

604

Other intangible assets, net

230

377

Operating lease right-of-use assets

238

268

Other assets

128

139

Total assets

$

5,296

$

5,363

Liabilities

Current liabilities:

Accounts payable

$

874

$

840

Notes payable

3

3

Accrued liabilities

742

852

Total current liabilities

1,618

1,695

Long-term debt

2,945

2,945

Noncurrent operating lease liabilities

230

258

Other liabilities

360

349

Total liabilities

5,154

5,247

Redeemable noncontrolling interest

-

18

Equity

142

98

Total liabilities and equity

$

5,296

$

5,363

As of September 30,

2024

2023

Other Financial Data

Working capital days

Receivable days

50

54

Inventory days

78

77

Payable days

70

71

Working capital

$

1,291

$

1,447

Working capital as a % of sales (LTM)

16.4

%

18.1

%

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 Nine Months Ended September 30, 2024 and 2023

(dollars in millions)

Nine Months Ended September 30,

2024

2023

Cash Flows From (For) Operating Activities:

Cash provided by operating activities

$

957

$

954

Working capital changes

(288

)

(26

)

Net cash from operating activities

668

928

Cash Flows From (For) Financing Activities:

Purchase of Company common stock

(482

)

(126

)

Cash dividends paid

(191

)

(193

)

Purchase of redeemable noncontrolling interest

(15

)

-

Dividends paid to noncontrolling interest

(25

)

(49

)

Proceeds from short-term borrowings

-

77

Payment of short-term borrowings

-

(11

)

Payment of term loan

-

(200

)

Proceeds from the exercise of stock options

76

37

Employee withholding taxes paid on stock-based compensation

(34

)

(29

)

Decrease in debt, net

(2

)

(4

)

Net cash for financing activities

(673

)

(498

)

Cash Flows From (For) Investing Activities:

Capital expenditures

(112

)

(181

)

Acquisition of business, net of cash acquired

(4

)

(136

)

Proceeds from disposition of business, net of cash disposed

131

-

Other, net

(3

)

(4

)

Net cash from (for) investing activities

12

(321

)

Effect of exchange rate changes on cash and cash investments

5

(1

)

Cash and Cash Investments:

Increase for the period

12

108

At January 1

634

452

At September 30

$

646

$

560

As of September 30,

2024

2023

Liquidity

Cash and cash investments

$

646

$

560

Revolver availability

1,000

1,000

Total Liquidity

$

1,646

$

1,560

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION

Segment Data - Unaudited

For the Three and Nine Months Ended September 30, 2024 and 2023

(dollars in millions)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

Change

2024

2023

Change

Plumbing Products

Net sales

$

1,219

$

1,191

2

%

$

3,665

$

3,638

1

%

Operating profit, as reported

$

240

$

223

$

713

$

673

Operating margin, as reported

19.7

%

18.7

%

19.5

%

18.5

%

Rationalization charges (income)

2

2

7

(1

)

Operating profit, as adjusted

242

225

720

672

Operating margin, as adjusted

19.9

%

18.9

%

19.6

%

18.5

%

Depreciation and amortization

26

26

80

76

EBITDA, as adjusted

$

269

$

251

$

799

$

748

Decorative Architectural Products

Net sales

$

764

$

788

(3

)%

$

2,336

$

2,447

(5

)%

Operating profit, as reported

$

138

$

181

$

436

$

493

Operating margin, as reported

18.1

%

23.0

%

18.7

%

20.1

%

Rationalization charges

-

3

1

4

Insurance settlement

-

(40

)

-

(40

)

Operating profit, as adjusted

138

144

437

457

Operating margin, as adjusted

18.1

%

18.3

%

18.7

%

18.7

%

Depreciation and amortization

9

9

28

26

EBITDA, as adjusted

$

147

$

153

$

465

$

483

Total

Net sales

$

1,983

$

1,979

-

%

$

6,000

$

6,085

(1

)%

Operating profit, as reported - segment

$

378

$

404

$

1,149

$

1,166

General corporate expense, net

(21

)

(21

)

(76

)

(65

)

Operating profit, as reported

357

383

1,073

1,101

Operating margin, as reported

18.0

%

19.4

%

17.9

%

18.1

%

Rationalization charges - segment

2

5

8

3

Insurance settlement

-

(40

)

-

(40

)

Operating profit, as adjusted

360

348

1,081

1,064

Operating margin, as adjusted

18.2

%

17.6

%

18.0

%

17.5

%

Depreciation and amortization - segment

36

35

108

102

Depreciation and amortization - other

2

2

5

5

EBITDA, as adjusted

$

397

$

385

$

1,194

$

1,171

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 and Nine Months Ended September 30, 2024 and 2023

(dollars in millions)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

Change

2024

2023

Change

North American

Net sales

$

1,595

$

1,602

-

%

$

4,815

$

4,875

(1

)%

Operating profit, as reported

$

322

$

348

$

967

$

972

Operating margin, as reported

20.2

%

21.7

%

20.1

%

19.9

%

Rationalization charges

2

5

5

3

Insurance settlement

-

(40

)

-

(40

)

Operating profit, as adjusted

324

313

973

935

Operating margin, as adjusted

20.3

%

19.5

%

20.2

%

19.2

%

Depreciation and amortization

23

22

69

65

EBITDA, as adjusted

$

347

$

335

$

1,042

$

1,000

International

Net sales

$

388

$

377

3

%

$

1,185

$

1,210

(2

)%

Operating profit, as reported

$

56

$

56

$

182

$

194

Operating margin, as reported

14.4

%

14.9

%

15.4

%

16.0

%

Rationalization charges

-

-

2

-

Operating profit, as adjusted

56

56

184

194

Operating margin, as adjusted

14.4

%

14.9

%

15.5

%

16.0

%

Depreciation and amortization

13

13

38

37

EBITDA, as adjusted

$

69

$

69

$

222

$

231

Total

Net sales

$

1,983

$

1,979

-

%

$

6,000

$

6,085

(1

)%

Operating profit, as reported - segment

$

378

$

404

$

1,149

$

1,166

General corporate expense, net

(21

)

(21

)

(76

)

(65

)

Operating profit, as reported

357

383

1,073

1,101

Operating margin, as reported

18.0

%

19.4

%

17.9

%

18.1

%

Rationalization charges - segment

2

5

8

3

Insurance settlement

-

(40

)

-

(40

)

Operating profit, as adjusted

360

348

1,081

1,064

Operating margin, as adjusted

18.2

%

17.6

%

18.0

%

17.5

%

Depreciation and amortization - segment

36

35

108

102

Depreciation and amortization - other

2

2

5

5

EBITDA, as adjusted

$

397

$

385

$

1,194

$

1,171

Historical information is available on our website.

Amounts may not add due to rounding.

Investor Contact
Robin Zondervan
Vice President, Investor Relations and FP&A
313.792.5500
[email protected]

Source: Masco Corporation