Masco Corporation Reports First Quarter 2017 Results
April 25, 2017
- Sales for the first quarter increased 3 percent to $1.8 billion; in local currencies, sales increased 5 percent
- Operating profit for the quarter grew 8 percent to $253 million; adjusted operating profit grew 8 percent to $255 million
- Operating profit margin for the quarter increased to 14.2 percent, a 60 basis point expansion; adjusted operating profit margin increased to 14.4 percent, a 60 basis point expansion
- Earnings per share for the quarter grew 34 percent to $0.43 per common share; adjusted earnings per share grew 28 percent to $0.41 per common share, which includes a $0.01 benefit due to a lower normalized tax rate
- Earnings per share target of $1.80 for 2017 updated to the range of $1.90 to $2.00 per common share, which includes an estimated $0.06 benefit from a reduction in our expected tax rate
TAYLOR, Mich. (April 25, 2017) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported strong net sales and operating profit growth in the first quarter of 2017.
“Our strong operating performance continued in the first quarter of 2017 as our leading brands coupled with our innovative products and programs drove demand with consumers and pros alike, resulting in profitable growth across our portfolio,” said Masco President and CEO, Keith Allman. “Additionally, we returned over $120 million to shareholders through dividends and share repurchases in the quarter.”
2017 First Quarter Commentary
On a reported basis, compared to first quarter 2016:
- Net sales increased 3 percent to $1.8 billion
- In local currency, North American sales increased 4 percent and international sales increased 5 percent
- Gross margins improved 110 basis points to 34.2 percent from 33.1 percent
- Operating margins improved 60 basis points to 14.2 percent from 13.6 percent
- Net income was $0.43 per common share compared to $0.32 per common share
Compared to first 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 34.3 percent compared to 33.1 percent
- Operating margins improved to 14.4 percent compared to 13.8 percent
- Net income was $0.41 per common share, which includes a $0.01 benefit due to a lower normalized tax rate, compared to $0.32 per common share
Liquidity at the end of the first quarter was $883 million
2.8 million shares were repurchased in the first quarter
2017 First Quarter Operating Segment Highlights
- Plumbing Products’ net sales increased 6 percent (8 percent excluding the impact of foreign currency translation), driven by growth in North America and internationally
- Decorative Architectural Products’ net sales increased 2 percent with growth from builders’ hardware and Behr’s pro initiative
- Cabinetry Products’ net sales decreased 2 percent due to the previously announced exit of lower margin business in the builder channel
- Windows and Other Specialty Products’ net sales were flat. Excluding the impact of foreign currency translation, net sales increased 3 percent, driven by sales of windows in North America and internationally
“The building products industry fundamentals remain favorable and are expected to support long-term growth. Our outlook for demand in both repair and remodel and new home construction continues to be positive,” said Allman. “We will leverage these favorable industry fundamentals along with our strong brand portfolio, our industry-leading positions and our Masco Operating System to achieve our long-term growth expectations. As such, we are now updating our 2017 earnings per share target to the range of $1.90 to $2.00 per common share, exceeding our $1.80 target that we communicated at our last Investor Day in 2015. This updated target includes an estimated $0.06 benefit from a reduction in our expected tax rate. We look forward to updating you on our long-term goals at our upcoming Investor Day on May 16 in New York City.”
Headquartered in Taylor, 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 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 Tuesday, April 25, 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 90696233. 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 (855) 859-2056 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 90696233. The telephone replay will be available approximately two hours after the end of the call and continue through May 25, 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