Masco Corporation Reports First Quarter 2024 Results

Rhea-AI Summary

Masco , a leading manufacturer of home improvement and building products, reported its first quarter 2024 results. Net sales decreased by 3% to $1.926 billion, while operating profit increased by 1% to $318 million. Adjusted operating profit grew by 3% to $322 million. Earnings per share was $0.97, with adjusted earnings per share increasing by 8% to $0.93. The company repurchased 2.1 million shares worth $148 million and expects 2024 earnings per share between $4.00 and $4.25. Gross margin increased, operating profit margin improved, and net income rose compared to the previous year. Liquidity stood at $1.319 billion at the end of the quarter.

Positive

• Net sales decreased by 3% to $1.926 billion
• Operating profit increased by 1% to $318 million
• Adjusted operating profit grew by 3% to $322 million
• Earnings per share was $0.97, with adjusted earnings per share increasing by 8% to $0.93
• The company repurchased 2.1 million shares worth $148 million
• Expects 2024 earnings per share between $4.00 and $4.25
• Gross margin, operating profit margin, and net income improved compared to the previous year
• Liquidity stood at $1.319 billion at the end of the quarter

Negative

• None.

Insights

Financial Analyst

In scrutinizing Masco Corporation's financial performance for Q1 2024, we observe a contraction in net sales by 3%, juxtaposed with an uptick in operating profit by 1%. Net sales slippage, particularly in a manufacturing giant, warrants attention as it can signal shifting demand or competitive pressures. The silver lining here lies in the operational efficiencies indicated by the increased operating profit margin of 16.5%. Investors typically cheer these margin expansions as they may imply a more effective control over costs or higher pricing power. Masco's financial strategy, marked by returning capital to shareholders through dividends and share repurchases totalling $212 million, aligns with shareholder-friendly policies that can be magnetising for investors. The maintained EPS guidance for 2024 suggests steady confidence from management in the company's trajectory, despite current headwinds.

Market Research Analyst

Analyzing sectorial implications, Masco's decreased sales in both Plumbing and Decorative Architectural Products might reflect broader industry trends, such as a potential softening in the home improvement sector. The localization of sales declines—less in North America versus more internationally—could imply varying economic conditions or consumer confidence levels across geographies. These insights can be important for investors gauging the company's market position and its ability to navigate geographically diverse challenges. Furthermore, the reference to operational efficiencies and execution focus hints at underlying strategic shifts which might be of interest for long-term-oriented stakeholders.

Highlights

• Net sales decreased 3 percent to $1,926 million
• Operating profit increased 1 percent to $318 million; adjusted operating profit increased 3 percent to $322 million
• Operating profit margin increased 60 basis points to 16.5 percent; adjusted operating profit margin increased 90 basis points to 16.7 percent
• Earnings per share was $0.97 per share; adjusted earnings per share grew 8 percent to $0.93 per share
• Repurchased 2.1 million shares for $148 million
• Continue to expect 2024 earnings per share in the range of $4.00 – $4.25 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 first quarter 2024 results.

2024 First Quarter Results

• On a reported basis, compared to first quarter 2023:
  • Net sales decreased 3 percent to $1,926 million; in local currency and excluding acquisitions, net sales decreased 4 percent
    • Plumbing Products’ net sales decreased 2 percent; in local currency and excluding acquisitions, net sales decreased 4 percent
    • Decorative Architectural Products’ net sales decreased 3 percent
    • In local currency, North American sales decreased 2 percent and international sales decreased 5 percent
  • Gross margin increased 180 basis points to 35.6 percent from 33.8 percent
  • Operating profit increased 1 percent to $318 million from $315 million
  • Operating margin increased 60 basis points to 16.5 percent from 15.9 percent
  • Net income increased to $0.97 per share, compared to $0.90 per share
• Compared to first 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 210 basis points to 35.7 percent from 33.6 percent
  • Operating profit increased 3 percent to $322 million from $312 million
  • Operating margin increased 90 basis points to 16.7 percent from 15.8 percent
  • Net income increased 8 percent to $0.93 per share, compared to $0.86 per share
• Liquidity at the end of the first quarter was $1,319 million (including availability under revolving credit facility)

“We delivered another quarter of strong results,” said Masco President and CEO, Keith Allman. “We expanded adjusted operating profit margin by 90 basis points and grew adjusted earnings per share by 8 percent through improved operational efficiencies and our continued focus on execution. Additionally, our balanced capital allocation strategy enabled us to return $212 million to shareholders through dividends and share repurchases during the quarter.”

“With the year beginning largely as expected, we continue to anticipate that 2024 adjusted earnings per share will be in the range of $4.00 to $4.25 per share,” said Allman. “Through our ongoing investments in our market leading brands, innovation, and service and our disciplined capital allocation strategy, we are confident in Masco’s ability to continue to deliver long-term shareholder value.”

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; 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 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 Wednesday, April 24, 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 888-259-6580 or 206-962-3782. Please use the conference identification number 73983883.

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 or 416-764-8692. Please use the playback passcode 983883#. The telephone replay will be available approximately two hours after the end of the call and continue through May 23, 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 Months Ended March 31, 2024 and 2023
(in millions, except per common share data)
	Three Months Ended March 31,
	2024				2023
Net sales	$	1,926			$	1,979
Cost of sales		1,241				1,310
Gross profit		685				669
Selling, general and administrative expenses		367				354
Operating profit		318				315
Other income (expense), net:
Interest expense		(25	)			(28	)
Other, net		(5	)			(2	)
		(30	)			(30	)
Income before income taxes		289				285
Income tax expense		60				64
Net income		229				221
Less: Net income attributable to noncontrolling interest		14				16
Net income attributable to Masco Corporation	$	215			$	205
Income per common share attributable to Masco Corporation (diluted):
Net income	$	0.97			$	0.90
Average diluted common shares outstanding		221				227

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months Ended March 31, 2024 and 2023
(dollars in millions)
	Three Months Ended March 31,
	2024				2023
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations
Net sales	$	1,926			$	1,979
Gross profit, as reported	$	685			$	669
Rationalization charges (income) (1)		3				(4	)
Gross profit, as adjusted	$	688			$	665
Gross margin, as reported		35.6	%			33.8	%
Gross margin, as adjusted		35.7	%			33.6	%
Selling, general and administrative expenses, as reported	$	367			$	354
Rationalization charges		—				1
Selling, general and administrative expenses, as adjusted	$	367			$	353
Selling, general and administrative expenses as percent of net sales, as reported		19.1	%			17.9	%
Selling, general and administrative expenses as percent of net sales, as adjusted		19.1	%			17.8	%
Operating profit, as reported	$	318			$	315
Rationalization charges (income) (1)		3				(3	)
Operating profit, as adjusted	$	322			$	312
Operating margin, as reported		16.5	%			15.9	%
Operating margin, as adjusted		16.7	%			15.8	%

(1)	Represents income for the three months ended March 31, 2023 due to the sale of excess and obsolete inventory that was related to a rationalization activity, partially offset by rationalization charges.

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months Ended March 31, 2024 and 2023
(in millions, except per common share data)
	Three Months Ended March 31,
	2024				2023
Income Per Common Share Reconciliations
Income before income taxes, as reported	$	289			$	285
Rationalization charges (income) (1)		3				(3	)
Realized (gains) from private equity funds		—				(1	)
Income before income taxes, as adjusted		292				281
Tax at 24.5% rate		(72	)			(69	)
Less: Net income attributable to noncontrolling interest		14				16
Net income, as adjusted	$	206			$	196
Net income per common share, as adjusted	$	0.93			$	0.86
Average diluted common shares outstanding		221				227

(1)	Represents income for the three months ended March 31, 2023 due to the sale of excess and obsolete inventory that was related to a rationalization activity, partially offset by rationalization charges.

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	$	4.00		$	4.25
Rationalization charges		—			—
Net income per common share, as adjusted	$	4.00		$	4.25

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
March 31, 2024 and December 31, 2023
(dollars in millions)
		March 31, 2024			December 31, 2023
Balance Sheet
Assets
Current assets:
Cash and cash investments		$	368		$	634
Receivables			1,310			1,090
Inventories			1,059			1,022
Prepaid expenses and other			112			110
Total current assets			2,850			2,856
Property and equipment, net			1,111			1,121
Goodwill			598			604
Other intangible assets, net			367			377
Operating lease right-of-use assets			262			268
Other assets			148			139
Total assets		$	5,336		$	5,363
Liabilities
Current liabilities:
Accounts payable		$	899		$	840
Notes payable			52			3
Accrued liabilities			690			852
Total current liabilities			1,641			1,695
Long-term debt			2,945			2,945
Noncurrent operating lease liabilities			252			258
Other liabilities			340			349
Total liabilities			5,179			5,247
Redeemable noncontrolling interest			—			18
Equity			157			98
Total liabilities and equity		$	5,336		$	5,363

	As of March 31,
	2024				2023
Other Financial Data
Working capital days
Receivable days		55				54
Inventory days		81				80
Payable days		71				70
Working capital	$	1,470			$	1,612
Working capital as a % of sales (LTM)		18.6	%			19.1	%

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 Three Months Ended March 31, 2024 and 2023
(dollars in millions)
	Three Months Ended March 31,
	2024				2023
Cash Flows From (For) Operating Activities:
Cash provided by operating activities	$	314			$	286
Working capital changes		(409	)			(253	)
Net cash (for) from operating activities		(94	)			33
Cash Flows From (For) Financing Activities:
Purchase of Company common stock		(145	)			(53	)
Cash dividends paid		(64	)			(65	)
Purchase of redeemable noncontrolling interest		(15	)			—
Proceeds from revolving credit borrowings, net		49				210
Proceeds from the exercise of stock options		75				9
Employee withholding taxes paid on stock-based compensation		(33	)			(20	)
Decrease in debt, net		(1	)			(3	)
Net cash (for) from financing activities		(134	)			78
Cash Flows From (For) Investing Activities:
Capital expenditures		(31	)			(61	)
Other, net		(2	)			2
Net cash for investing activities		(33	)			(59	)
Effect of exchange rate changes on cash and cash investments		(6	)			6
Cash and Cash Investments:
(Decrease) increase for the period		(266	)			58
At January 1		634				452
At March 31	$	368			$	510

	As of March 31,
	2024			2023
Liquidity
Cash and cash investments	$	368		$	510
Revolver availability		951			790
Total Liquidity	$	1,319		$	1,300

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months Ended March 31, 2024 and 2023
(dollars in millions)
	Three Months Ended March 31,
	2024				2023				Change
Plumbing Products
Net sales	$	1,192			$	1,222			(2	)%
Operating profit, as reported	$	226			$	206
Operating margin, as reported		19.0	%			16.9	%
Rationalization charges (income)		3				(4	)
Operating profit, as adjusted		228				202
Operating margin, as adjusted		19.1	%			16.5	%
Depreciation and amortization		26				25
EBITDA, as adjusted	$	255			$	227
Decorative Architectural Products
Net sales	$	734			$	757			(3	)%
Operating profit, as reported	$	124			$	132
Operating margin, as reported		16.9	%			17.4	%
Rationalization charges		1				1
Operating profit, as adjusted		125				133
Operating margin, as adjusted		17.0	%			17.6	%
Depreciation and amortization		10				8
EBITDA, as adjusted	$	134			$	141
Total
Net sales	$	1,926			$	1,979			(3	)%
Operating profit, as reported - segment	$	350			$	338
General corporate expense, net		(31	)			(23	)
Operating profit, as reported		318				315
Operating margin, as reported		16.5	%			15.9	%
Rationalization charges (income) - segment		3				(3	)
Operating profit, as adjusted		322				312
Operating margin, as adjusted		16.7	%			15.8	%
Depreciation and amortization - segment		36				33
Depreciation and amortization - other		2				2
EBITDA, as adjusted	$	360			$	347

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 Months Ended March 31, 2024 and 2023
(dollars in millions)
	Three Months Ended March 31,
	2024				2023				Change
North American
Net sales	$	1,526			$	1,555			(2	)%
Operating profit, as reported	$	285			$	266
Operating margin, as reported		18.7	%			17.1	%
Rationalization charges (income)		2				(3	)
Operating profit, as adjusted		287				263
Operating margin, as adjusted		18.8	%			16.9	%
Depreciation and amortization		23				21
EBITDA, as adjusted	$	311			$	284
International
Net sales	$	400			$	424			(6	)%
Operating profit, as reported	$	65			$	72
Operating margin, as reported		16.3	%			17.0	%
Rationalization charges		1				—
Operating profit, as adjusted		66				72
Operating margin, as adjusted		16.5	%			17.0	%
Depreciation and amortization		12				12
EBITDA, as adjusted	$	78			$	84
Total
Net sales	$	1,926			$	1,979			(3	)%
Operating profit, as reported - segment	$	350			$	338
General corporate expense, net		(31	)			(23	)
Operating profit, as reported		318				315
Operating margin, as reported		16.5	%			15.9	%
Rationalization charges (income) - segment		3				(3	)
Operating profit, as adjusted		322				312
Operating margin, as adjusted		16.7	%			15.8	%
Depreciation and amortization - segment		36				33
Depreciation and amortization - other		2				2
EBITDA, as adjusted	$	360			$	347

Historical information is available on our website.

Amounts may not add due to rounding.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424871631/en/

Robin Zondervan

Vice President, Investor Relations and FP&A

313.792.5500

robin_zondervan@mascohq.com

Source: Masco Corporation

FAQ

What were Masco 's first quarter 2024 net sales?

Masco 's net sales in the first quarter of 2024 decreased by 3% to $1.926 billion.

What was the operating profit for Masco in the first quarter of 2024?

Masco 's operating profit in the first quarter of 2024 increased by 1% to $318 million.

How much did Masco repurchase in shares during the first quarter of 2024?

Masco repurchased 2.1 million shares worth $148 million during the first quarter of 2024.

What is Masco 's expected range for earnings per share in 2024?

Masco expects earnings per share to be in the range of $4.00 to $4.25 in 2024.

What was the percentage increase in adjusted earnings per share for Masco in the first quarter of 2024?

Adjusted earnings per share for Masco increased by 8% to $0.93 in the first quarter of 2024.