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press release

July 30, 2020, 7:00 a.m. EDT

Masco Corporation Reports Second Quarter 2020 Results

Key Results Sales decreased 4 percent to $1.8 billion; in local currency, sales decreased 3 percent Operating profit for the quarter decreased 2 percent to $339 million; adjusted operating profit decreased 1 percent to $344 million Operating margin increased 30 basis points to 19.2 percent; adjusted operating margin increased 50 basis points to 19.5 percent Earnings per share from continuing operations increased 11 percent to $0.80 per share; adjusted earnings per share from continuing operations increased 14 percent to $0.84 per share Board announces intent to increase annual dividend by $.02 per share to $.56 per share, beginning in the fourth quarter

Masco Corporation /zigman2/quotes/202412472/composite MAS +0.24% , one of the world’s leading manufacturers of branded home improvement and building products, reported its second quarter results.

“I am extremely proud of our team’s response during these unprecedented times,” said Masco President and CEO, Keith Allman. “We have worked tirelessly to ensure the safety of our employees, to support our customers and communities, and to effectively manage our business. We delivered strong top and bottom-line growth in our Decorative Architectural Products segment and better than anticipated performance in North American Plumbing,” continued Allman. “As restrictions eased, production at our closed facilities resumed, and demand for our products accelerated throughout the quarter. We leveraged increasing demand with focused cost control to expand margins in the quarter.”

2020 Second Quarter Commentary

  • On a reported basis, compared to second quarter 2019:

  • Compared to second quarter 2019, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 26 percent, were as follows:

  • Liquidity at the end of the second quarter was $2.1 billion, including full availability on $1.0 billion revolving credit facility

  • Plumbing Products’ net sales decreased 14 percent (13 percent excluding the impact of foreign currency) primarily due to lower volumes resulting from the impact of COVID-19

  • Decorative Architectural Products’ net sales increased 8 percent due to strong growth in paints and other coatings products

“We remain focused on employee safety and customer support as this pandemic continues to evolve,” said Allman. “While there are a number of unknowns, and assuming no additional shutdowns due to COVID, we expect strong demand for our products to continue in the third quarter. Additionally, our Board of Directors demonstrated confidence in our future by announcing its intention to raise our annual dividend 4 percent to $.56 per share beginning in the fourth quarter.”

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 second quarter 2020 supplemental material, including a presentation in PDF format, is available on Masco’s website at www.masco.com .

Conference Call Detail

A conference call regarding items contained in this release is scheduled for Thursday, July 30, 2020 at 9:00 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 9048068. 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 9048068. The telephone replay will be available approximately two hours after the end of the call and continue through August 30, 2020.

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 new home construction, our ability to maintain our strong brands and reputation and to develop innovative products, our ability to maintain our competitive position in our industries, our reliance on key customers, the length and severity of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer demand for our products, our production capabilities, our employees and our supply chain; the cost and availability of materials and the imposition of tariffs, our dependence on third-party suppliers, 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 and may acquire, our ability to attract, develop and retain talented personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. These and other factors are discussed in detail 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
 
(in millions, except per common share data)
  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Net sales $ 1,764     $ 1,839     $ 3,345     $ 3,352  
Cost of sales 1,136     1,166     2,170     2,157  
Gross profit 628     673     1,175     1,195  
               
Selling, general and administrative expenses 289     326     611     642  
Impairment charge for other intangible assets             9  
Operating profit 339     347     564     544  
               
Other income (expense), net:              
Interest expense (35)     (41)     (70)     (80)  
Other, net (2)     (3)     (18)     (8)  
  (37)     (44)     (88)     (88)  
Income from continuing operations before income taxes 302     303     476     456  
               
Income tax expense 82     80     115     115  
Income from continuing operations 220     223     361     341  
               
Income from discontinued operations, net 14     29     411     38  
Net income 234     252     772     379  
               
Less: Net income attributable to noncontrolling interest 10     12     18     23  
Net income attributable to Masco Corporation $ 224     $ 240     $ 754     $ 356  
               
Income per common share attributable to Masco Corporation (diluted):              
Income from continuing operations $ 0.80     $ 0.72     $ 1.27     $ 1.08  
Income from discontinued operations, net 0.05     0.10     1.53     0.13  
Net income $ 0.85     $ 0.82     $ 2.80     $ 1.21  
               
Average diluted common shares outstanding 263     290     268     292  
               
Amounts attributable to Masco Corporation:              
Income from continuing operations $ 210     $ 211     $ 343     $ 318  
Income from discontinued operations, net 14     29     411     38  
Net income attributable to Masco Corporation $ 224     $ 240     $ 754     $ 356  
 
MASCO CORPORATION
(dollars in millions)
  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations              
               
Net sales $ 1,764     $ 1,839     $ 3,345     $ 3,352  
               
Gross profit, as reported $ 628     $ 673     $ 1,175     $ 1,195  
Rationalization charges 3     2     6     2  
Gross profit, as adjusted $ 631     $ 675     $ 1,181     $ 1,197  
               
Gross margin, as reported 35.6 %   36.6 %   35.1 %   35.7 %
Gross margin, as adjusted 35.8 %   36.7 %   35.3 %   35.7 %
               
Selling, general and administrative expenses, as reported $ 289     $ 326     $ 611     $ 642  
Rationalization charges 2         2      
Selling, general and administrative expenses, as adjusted $ 287     $ 326     $ 609     $ 642  
               
Selling, general and administrative expenses as percent of net sales, as reported 16.4 %   17.7 %   18.3 %   19.2 %
Selling, general and administrative expenses as percent of net sales, as adjusted 16.3 %   17.7 %   18.2 %   19.2 %
               
Operating profit, as reported $ 339     $ 347     $ 564     $ 544  
Rationalization charges 5     2     8     2  
Impairment charge for other intangible assets             9  
Operating profit, as adjusted $ 344     $ 349     $ 572     $ 555  
               
Operating margin, as reported 19.2 %   18.9 %   16.9 %   16.2 %
Operating margin, as adjusted 19.5 %   19.0 %   17.1 %   16.6 %
 
MASCO CORPORATION
 
(in millions, except per common share data)
  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Income Per Common Share Reconciliations              
               
Income from continuing operations before income taxes, as reported $ 302     $ 303     $ 476     $ 456  
Rationalization charges 5     2     8     2  
Impairment charge for other intangible assets             9  
Pension costs associated with expected terminated plans 5         11      
Income from continuing operations before income taxes, as adjusted 312     305     495     467  
Tax at 26% rate (81)     (79)     (129)     (121)  
Less: Net income attributable to noncontrolling interest 10     12     18     23  
Income from continuing operations, as adjusted $ 221     $ 214     $ 348     $ 323  
               
Income from continuing operations per common share, as adjusted $ 0.84     $ 0.74     $ 1.30     $ 1.11  
               
Average diluted common shares outstanding 263     290     268     292  
 
MASCO CORPORATION
 
(dollars in millions)
  June 30, 2020   December 31, 2019
Balance Sheet      
Assets      
Current Assets:      
Cash and cash investments $ 1,089     $ 697  
Receivables 1,308     997  
Prepaid expenses and other 78     90  
Inventories 750     754  
Assets held for sale     173  
Total Current Assets 3,225     2,711  
       
Property and equipment, net 861     878  
Operating lease right-of-use assets 163     176  
Goodwill 521     509  
Other intangible assets, net 259     259  
Other assets 273     139  
Assets held for sale     355  
Total Assets $ 5,302     $ 5,027  
       
Liabilities      
Current Liabilities:      
Accounts payable $ 845     $ 697  
Notes payable 407     2  
Accrued liabilities 902     700  
Liabilities held for sale     149  
Total Current Liabilities 2,154     1,548  
       
Long-term debt 2,372     2,771  
Noncurrent operating lease liabilities 150     162  
Other liabilities 589     589  
Liabilities held for sale     13  
Total Liabilities 5,265     5,083  
       
Equity 37     (56)  
Total Liabilities and Equity $ 5,302     $ 5,027  
  As of June 30,
  2020   2019
Other Financial Data      
Working Capital Days      
Receivable days 58     58  
Inventory days 66     74  
Payable days 74     70  
Working capital $ 1,213     $ 1,236  
Working capital as a % of sales (LTM) 18.1 %   18.6 %
 
MASCO CORPORATION
 
(dollars in millions)
  Six Months Ended June 30,
  2020   2019
Cash Flows From (For) Operating Activities:      
Cash provided by operating activities $ 283     $ 510  
Working capital changes 7     (297)  
Net cash from operating activities 290     213  
       
Cash Flows From (For) Financing Activities:      
Purchase of Company common stock (602)     (289)  
Cash dividends paid (73)     (70)  
Dividends paid to noncontrolling interest (23)     (42)  
Proceeds from the exercise of stock options 21     13  
Employee withholding taxes paid on stock-based compensation (22)     (16)  
Increase in debt, net 5     20  
Credit Agreement and other financing costs     (2)  
Net cash for financing activities (694)     (386)  
       
Cash Flows From (For) Investing Activities:      
Capital expenditures (45)     (71)  
Acquisition of business, net of cash acquired (24)      
Proceeds from disposition of businesses, net of cash disposed 865      
Other, net 3     8  
Net cash from (for) investing activities 799     (63)  
       
Effect of exchange rate changes on cash and cash investments (3)     2  
       
Cash and Cash Investments:      
Increase (decrease) for the period 392     (234)  
At January 1 697     559  
At June 30 $ 1,089     $ 325  
  As of June 30,
  2020   2019
Liquidity      
Cash and cash investments $ 1,089     $ 325  
Revolver availability 1,000     1,000  
Total Liquidity $ 2,089     $ 1,325  
 
MASCO CORPORATION
 
(dollars in millions)
  Three Months Ended June 30,       Six Months Ended June 30,    
  2020   2019   Change   2020   2019   Change
Plumbing Products                      
Net sales $ 868     $ 1,012     (14) %   $ 1,823     $ 1,952     (7) %
                       
Operating profit, as reported $ 155     $ 198         $ 312     $ 351      
Operating margin, as reported 17.9 %   19.6 %       17.1 %   18.0 %    
                       
Rationalization charges 3     2         5     2      
Accelerated depreciation related to rationalization activity 1             1          
Operating profit, as adjusted 159     200         318     353      
Operating margin, as adjusted 18.3 %   19.8 %       17.4 %   18.1 %    
                       
Depreciation and amortization 20     20         40     39      
EBITDA, as adjusted $ 179     $ 220         $ 358     $ 392      
                       
Decorative Architectural Products                      
Net sales $ 896     $ 827     8 %   $ 1,522     $ 1,400     9 %
                       
Operating profit, as reported $ 201     $ 173         $ 296     $ 246      
Operating margin, as reported 22.4 %   20.9 %       19.4 %   17.6 %    
                       
Rationalization charges 1             2          
Impairment charge for other intangible assets                 9      
Operating profit, as adjusted 202     173         298     255      
Operating margin, as adjusted 22.5 %   20.9 %       19.6 %   18.2 %    
                       
Depreciation and amortization 10     10         21     20      
EBITDA, as adjusted $ 212     $ 183         $ 319     $ 275      
                       
Total                      
Net sales $ 1,764     $ 1,839     (4) %   $ 3,345     $ 3,352     %
                       
Operating profit, as reported - segment $ 356     $ 371         $ 608     $ 597      
General corporate expense, net (17)     (24)         (44)     (53)      
Operating profit, as reported 339     347         564     544      
Operating margin, as reported 19.2 %   18.9 %       16.9 %   16.2 %    
                       
Rationalization charges - segment 4     2         7     2      
Accelerated depreciation related to rationalization activity - segment 1             1          
Impairment charge for other intangible assets                 9      
Operating profit, as adjusted 344     349         572     555      
Operating margin, as adjusted 19.5 %   19.0 %       17.1 %   16.6 %    
                       
Depreciation and amortization - segment 30     30         61     59      
Depreciation and amortization - non-operating 2     3         4     5      
EBITDA, as adjusted $ 376     $ 382         $ 637     $ 619      
 
MASCO CORPORATION
(dollars in millions)
  Three Months Ended June 30,       Six Months Ended June 30,    
  2020   2019   Change   2020   2019   Change
North American                      
Net sales $ 1,480     $ 1,488     (1) %   $ 2,738     $ 2,659     3 %
                       
Operating profit, as reported $ 321     $ 316         $ 531     $ 497      
Operating margin, as reported 21.7 %   21.2 %       19.4 %   18.7 %    
                       
Rationalization charges 4     2         7     2      
Accelerated depreciation related to rationalization activity 1             1          
Impairment charge for other intangible assets                 9      
Operating profit, as adjusted 326     318         539     508      
Operating margin, as adjusted 22.0 %   21.4 %       19.7 %   19.1 %    
                       
Depreciation and amortization 19     20         39     40      
EBITDA, as adjusted $ 345     $ 338         $ 578     $ 548      
                       
International                      
Net sales $ 284     $ 351     (19) %   $ 607     $ 693     (12) %
                       
Operating profit, as reported $ 35     $ 55         $ 77     $ 100      
Operating margin, as reported 12.3 %   15.7 %       12.7 %   14.4 %    
                       
Depreciation and amortization 11     10         22     19      
EBITDA $ 46     $ 65         $ 99     $ 119      
                       
Total                      
Net sales $ 1,764     $ 1,839     (4) %   $ 3,345     $ 3,352     %
                       
Operating profit, as reported - segment $ 356     $ 371         $ 608     $ 597      
General corporate expense, net (17)     (24)         (44)     (53)      
Operating profit, as reported 339     347         564     544      
Operating margin, as reported 19.2 %   18.9 %       16.9 %   16.2 %    
                       
Rationalization charges - segment 4     2         7     2      
Accelerated depreciation related to rationalization activity 1             1          
Impairment charge for other intangible assets                 9      
Operating profit, as adjusted 344     349         572     555      
Operating margin, as adjusted 19.5 %   19.0 %       17.1 %   16.6 %    
                       
Depreciation and amortization - segment 30     30         61     59      
Depreciation and amortization - non-operating 2     3         4     5      
EBITDA, as adjusted $ 376     $ 382         $ 637     $ 619      
 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200730005112/en/

SOURCE: Masco Corporation

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

COMTEX_368640392/2456/2020-07-30T07:00:25

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/zigman2/quotes/202412472/composite
US : U.S.: NYSE
$ 57.69
+0.14 +0.24%
Volume: 3.34M
Sept. 18, 2020 4:04p
P/E Ratio
35.89
Dividend Yield
0.97%
Market Cap
$15.02 billion
Rev. per Employee
$321,500
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