Masco Corporation Reports Second Quarter 2017 Results

July 27, 2017

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Key Highlights

  • Sales for the second quarter increased 3 percent to $2.1 billion; in local currencies, sales increased 4 percent
  • Operating profit for the quarter grew 7 percent to $357 million; adjusted operating profit grew 4 percent to $357 million
  • Earnings per share for the quarter grew 9 percent to $0.49 per common share; adjusted earnings per share grew 30 percent to $0.60 per common share
  • Updating our 2017 earnings per share target range to $1.93 to $2.00 from $1.90 to $2.00 per common share
  • Board announces intent to increase annual dividend by $0.02 per share to $0.42 per share, beginning in the fourth quarter

LIVONIA, Mich. (July 27, 2017) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported solid net sales and operating profit growth in the second quarter of 2017.

“We continued to execute on our strategic plan in the second quarter,” said Masco President and CEO, Keith Allman.  “Our Plumbing Products and Decorative Architectural Products segments once again delivered strong results, and I am extremely pleased with the progress we have made in our Windows business.  In our Cabinetry Products segment, we exited certain lower margin builder business and are now pivoting towards growth.  Additionally, we continued our disciplined capital allocation by returning approximately $74 million to shareholders through dividends and share repurchases in the quarter.”

2017 Second Quarter Commentary

On a reported basis, compared to second quarter 2016:

  • Net sales increased 3 percent to $2.1 billion
  • In local currency, North American sales and international sales increased 4 percent
  • Gross margins improved 80 basis points to 35.8 percent from 35.0 percent
  • Operating margins improved 70 basis points to 17.4 percent from 16.7 percent
  • Net income was $0.49 per common share compared to $0.45 per common share

Compared to second 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 35.8 percent compared to 35.2 percent
  • Operating margins improved to 17.4 percent compared to 17.1 percent
  • Net income was $0.60 per common share, compared to $0.46 per common share (which included $40 million, or approximately $0.08 per share, in debt extinguishment costs in 2016)

Liquidity at the end of the second quarter was approximately $1.1 billion
1.2 million shares were repurchased in the second quarter

2017 Second Quarter Operating Segment Highlights

  • Plumbing Products’ net sales increased 3 percent (5 percent excluding the impact of foreign currency translation), driven by North America and international growth
  • Decorative Architectural Products’ net sales increased 5 percent with growth from builders’ hardware and Behr’s pro initiative
  • Cabinetry Products’ net sales decreased 4 percent (3 percent excluding the impact of foreign currency translation) due to the previously announced exit of lower margin business in the builder channel and lower sales in our United Kingdom cabinet operation
  • Windows and Other Specialty Products’ net sales increased 4 percent. Excluding the impact of foreign currency translation, net sales increased 7 percent, driven by strong sales of windows in North America

Outlook

“As we presented during our Investor Day in May, the demand drivers underlying our business are strong and very supportive of continued, long-term growth,” said Allman.  “We are confident in our plans to leverage our strong brands, industry leading positions, and our Masco Operating System to capitalize on these robust, long-term demand drivers.  We are pleased with our performance this year, and accordingly, we are updating our 2017 earnings per share target to the range of $1.93 to $2.00.  Looking forward, we are committed to achieving our 2019 earnings per share target of $2.50 that we introduced at our Investor Day. Reflecting confidence in our plans and Masco’s outlook, our Board of Directors intends to increase our annual dividend by $0.02 per share to $0.42 per share, beginning with the quarterly dividend to be paid in the fourth quarter of 2017.”

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; 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 second quarter supplemental material, including a presentation in PDF format, is available on Masco’s website at www.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Thursday, July 27, 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 36385520. The conference call will be webcast simultaneously and in its entirety through Masco’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on Masco’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 36385520. The telephone replay will be available approximately two hours after the end of the call and continue through August 27, 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.

Investor Contact

David Chaika
Vice President, Treasurer and Investor Relations
313.792.5500
david_chaika@mascohq.com

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Click here to view the Q2 Investor Package.