Masco Corporation Reports Second Quarter 2022 Results

Rhea-AI Summary

Masco Corporation reported an 8% rise in net sales to $2,352 million for Q2 2022, with a notable 11% increase in local currency. Operating profit was $408 million, with an operating margin of 17.3%. Adjusted earnings per share remained steady at $1.14, while liquidity reached $1,440 million. A quarterly dividend of $0.28 per share was announced, payable on August 29, 2022. The company narrowed its adjusted EPS guidance for 2022 to $4.15 - $4.25, citing moderating demand and supply chain challenges.

Positive

• Net sales increased 8% to $2,352 million.
• Operating profit was $408 million.
• Liquidity was strong at $1,440 million.
• Quarterly dividend declared at $0.28 per share.

Negative

• Gross margin decreased 360 basis points to 32.7%.
• Operating profit decreased 7% from the prior year.
• International sales decreased 3%, despite North American sales increasing.

Highlights

• Sales increased 8 percent to $2,352 million; in local currency, sales increased 11 percent
• Operating profit was $408 million and operating margin was 17.3 percent; adjusted operating profit was $414 million and adjusted operating margin was 17.6 percent
• Earnings per share was $1.18; adjusted earnings per share matched prior year at $1.14
• Repurchased 10.4 million shares for $550 million
• Anticipate 2022 earnings per share in the range of $4.19 - $4.29 per share, and on an adjusted basis, in the range of $4.15 - $4.25 per share, narrowed from the previous range of $4.15 - $4.35 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 second quarter results.

2022 Second Quarter Results

• On a reported basis, compared to second quarter 2021:
  • Net sales increased 8 percent to $2,352 million; in local currency and excluding acquisitions and divestitures, net sales increased 11 percent
  • North American sales increased 11 percent and international sales decreased 3 percent; in local currency, North American sales increased 11 percent and international sales increased 8 percent
  • Gross margin decreased 360 basis points to 32.7 percent from 36.3 percent
  • Operating profit decreased 7 percent to $408 million
  • Operating margin decreased 280 basis points to 17.3 percent from 20.1 percent
  • Net income (loss) increased to $1.18 per share, compared to $(0.14) per share
• Compared to second quarter 2021, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 25 percent, were as follows:
  • Gross margin decreased 330 basis points to 33.0 percent compared to 36.3 percent
  • Operating profit decreased 5 percent to $414 million from $438 million
  • Operating margin decreased 250 basis points to 17.6 percent compared to 20.1 percent
  • Net income matched prior year at $1.14 per share
• Liquidity as of June 30, 2022 was $1,440 million (including availability under our revolving credit facility)
• Plumbing Products’ net sales increased 3 percent; in local currency and excluding acquisitions and divestitures, sales increased 8 percent
• Decorative Architectural Products’ net sales increased 15 percent; in local currency, sales increased 16 percent

“In this challenging environment, I am proud of the results our team has achieved in the first half of 2022,” said Masco President and CEO, Keith Allman. “We delivered another strong quarter with sales growth of 8 percent and continued to execute our capital deployment strategy by returning $614 million to shareholders through dividends and share repurchases during the quarter.”

“As we enter the second half of the year, we expect growth to be more modest than the first half and largely driven by pricing actions,” continued Allman. “We continue to position ourselves for profitable growth while mitigating the impacts of the challenging supply chain environment. Given moderating demand and additional foreign currency headwinds, we are narrowing our previous guidance and now anticipate our adjusted earnings per share for 2022 to be in the range of $4.15 to $4.25 per share, a 14 percent increase compared to 2021 at the midpoint, from our previous expectation of $4.15 to $4.35 per share,” concluded Allman.

Dividend Declaration

Masco’s Board of Directors declared a quarterly dividend of $0.28 per share payable on August 29, 2022 to shareholders of record on August 12, 2022.

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 2022 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 28, 2022 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 (844) 200-6205 from the U.S., (833) 950-0062 from Canada, and (929) 526-1599 from all other locations. Please use the conference identification number 593826. Alternatively, you can pre-register for the call using this link: https://ige.netroadshow.com/registration/q4inc/11232/masco-corporation-2022-second-quarter-conference-call/

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 (866) 813-9403 from the U.S., (226) 828-7578 from Canada, and +44 204 525 0658 from all other locations. Please use the conference identification number 256946. The telephone replay will be available approximately two hours after the end of the call and continue through August 28, 2022.

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 and reputation and to develop innovative products, our ability to maintain our competitive position in our industries, our reliance on key customers, the duration of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer discretionary spending, our employees and our supply chain, the cost and availability of materials, our dependence on third-party 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 and may acquire, our ability to attract, develop and retain talented and diverse personnel, risks associated with our reliance on information systems and technology, and risks associated with cybersecurity vulnerabilities, threats and attacks. 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
North American and International Data - Unaudited
For the Three and Six Months Ended June 30, 2022 and 2021
(in millions, except per common share data)
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Net sales	$	2,352			$	2,179			$	4,553			$	4,149
Cost of sales		1,583				1,388				3,080				2,658
Gross profit		769				791				1,473				1,491
Selling, general and administrative expenses		361				354				712				689
Operating profit		408				437				761				802
Other income (expense), net:
Interest expense		(28	)			(25	)			(53	)			(227	)
Other, net		17				(415	)			16				(421	)
		(11	)			(440	)			(37	)			(648	)
Income (loss) before income taxes		397				(3	)			724				154
Income tax expense		103				12				178				55
Net income (loss)		294				(15	)			546				99
Less: Net income attributable to noncontrolling interest		16				21				35				41
Net income (loss) attributable to Masco Corporation	$	278			$	(36	)		$	511			$	58
Income (loss) per common share attributable to Masco Corporation (diluted):
Net income (loss)	$	1.18			$	(0.14	)		$	2.15			$	0.20
Average diluted common shares outstanding		233				252				237				256
Historical information is available on our website.

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three and Six Months Ended June 30, 2022 and 2021
(dollars in millions)
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations
Net sales	$	2,352			$	2,179			$	4,553			$	4,149
Gross profit, as reported	$	769			$	791			$	1,473			$	1,491
Rationalization charges		6				1				9				2
Gross profit, as adjusted	$	775			$	792			$	1,482			$	1,493
Gross margin, as reported		32.7	%			36.3	%			32.4	%			35.9	%
Gross margin, as adjusted		33.0	%			36.3	%			32.5	%			36.0	%
Selling, general and administrative expenses, as reported	$	361			$	354			$	712			$	689
Selling, general and administrative expenses as percent of net sales, as reported		15.3	%			16.2	%			15.6	%			16.6	%
Operating profit, as reported	$	408			$	437			$	761			$	802
Rationalization charges		6				1				9				2
Operating profit, as adjusted	$	414			$	438			$	770			$	804
Operating margin, as reported		17.3	%			20.1	%			16.7	%			19.3	%
Operating margin, as adjusted		17.6	%			20.1	%			16.9	%			19.4	%
Historical information is available on our website.

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three and Six Months Ended June 30, 2022 and 2021
(in millions, except per common share data)
	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Income Per Common Share Reconciliations
Income (loss) before income taxes, as reported	$	397			$	(3	)		$	724			$	154
Rationalization charges		6				1				9				2
Pension costs associated with terminated plans		—				413				—				422
(Earnings) from equity investments, net		—				—				—				(2	)
Loss on extinguishment of debt		—				—				—				168
Fair value adjustment to contingent earnout obligation (1)		(28	)			—				(24	)			—
Loss (gain) on sale of business (2)		—				18				(2	)			18
(Gain) on preferred stock redemption		—				(14	)			—				(14	)
Income before income taxes, as adjusted		375				415				707				748
Tax at 25% rate		(94	)			(104	)			(177	)			(187	)
Less: Net income attributable to noncontrolling interest		16				21				35				41
Net income, as adjusted	$	265			$	290			$	495			$	520
Net income per common share, as adjusted	$	1.14			$	1.14			$	2.09			$	2.03
Average diluted common shares outstanding, as reported		233				252				237				256
Stock option dilution (3)		—				2				—				—
Average diluted common shares outstanding, as adjusted		233				254				237				256

(1)		Represents income from the revaluation of contingent consideration related to a prior acquisition.
(2)		Represents a loss related to the divestiture of Hüppe GmbH (“Hüppe”) for the three and six months ended June 30, 2021. Represents a pre-tax post-closing gain related to the finalization of working capital items related to the divestiture of Hüppe for the six months ended June 30, 2022.
(3)		For the three months ended June 30, 2021, 2 million of stock option dilution was included in the average diluted common shares outstanding, as adjusted to reflect what the average diluted common shares outstanding would have been if there was net income, as reported.

Outlook for the Twelve Months Ended December 31, 2022
	Twelve Months Ended December 31, 2022
	Low End				High End
Income Per Common Share Outlook
Net income per common share	$	4.19			$	4.29
Rationalization charges		0.03				0.03
Fair value adjustment to contingent earnout obligation (1)		(0.08	)			(0.08	)
(Gain) on sale of business (2)		(0.01	)			(0.01	)
Allocation to participating securities per share (3)		0.02				0.02
Net income per common share, as adjusted	$	4.15			$	4.25

(1)		Represents income from the revaluation of contingent consideration related to a prior acquisition.
(2)		Represents a pre-tax post-closing gain related to the finalization of working capital items related to the divestiture of Hüppe.
(3)		Represents the impact of distributed dividends and undistributed earnings to unvested restricted stock awards as well as an allocation to redeemable noncontrolling interest in accordance with the two-class method of calculating earnings per share.
Historical information is available on our website.

MASCO CORPORATION
Condensed Consolidated Balance Sheets and Other Financial Data - Unaudited
June 30, 2022 and December 31, 2021
(dollars in millions)
	June 30, 2022				December 31, 2021
Balance Sheet
Assets
Current Assets:
Cash and cash investments	$	440			$	926
Receivables		1,434				1,171
Prepaid expenses and other		131				109
Inventories		1,354				1,216
Total Current Assets		3,359				3,422
Property and equipment, net		884				896
Goodwill		554				568
Other intangible assets, net		369				388
Operating lease right-of-use assets		198				187
Other assets		103				114
Total Assets	$	5,467			$	5,575
Liabilities
Current Liabilities:
Accounts payable	$	1,128			$	1,045
Notes payable		508				10
Accrued liabilities		831				884
Total Current Liabilities		2,467				1,939
Long-term debt		2,946				2,949
Noncurrent operating lease liabilities		185				172
Other liabilities		410				437
Total Liabilities		6,008				5,497
Redeemable noncontrolling interest		22				22
Equity		(563	)			56
Total Liabilities and Equity	$	5,467			$	5,575
Other Financial Data
Working Capital Days
Receivable days		52				53
Inventory days		88				77
Payable days		67				69
Working capital	$	1,660			$	1,352
Working capital as a % of sales (LTM)		18.9	%			16.9	%
Historical information is available on our website.

MASCO CORPORATION
Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited
For the Six Months Ended June 30, 2022 and 2021
(dollars in millions)
	Six Months Ended June 30,
	2022				2021
Cash Flows From (For) Operating Activities:
Cash provided by operating activities	$	662			$	610
Working capital changes		(488	)			(371	)
Net cash from operating activities		174				239
Cash Flows From (For) Financing Activities:
Retirement of notes		—				(1,326	)
Purchase of Company common stock		(914	)			(750	)
Cash dividends paid		(131	)			(96	)
Dividends paid to noncontrolling interest		—				(43	)
Issuance of notes, net of issuance costs		—				1,481
Proceeds from term loan		500				—
Debt extinguishment costs		—				(160	)
Proceeds from the exercise of stock options		1				1
Employee withholding taxes paid on stock-based compensation		(17	)			(14	)
Decrease in debt, net		(7	)			(2	)
Net cash for financing activities		(568	)			(909	)
Cash Flows From (For) Investing Activities:
Capital expenditures		(70	)			(53	)
Acquisition of businesses, net of cash acquired		—				(1	)
Proceeds from disposition of businesses, net of cash disposed		—				5
Proceeds from disposition of other financial investments		1				168
Other, net		(5	)			3
Net cash (for) from investing activities		(74	)			122
Effect of exchange rate changes on cash and cash investments		(18	)			(9	)
Cash and Cash Investments:
Decrease for the period		(486	)			(557	)
At January 1		926				1,326
At June 30	$	440			$	769
	As of June 30,
	2022				2021
Liquidity
Cash and cash investments	$	440			$	769
Revolver availability		1,000				1,000
Total Liquidity	$	1,440			$	1,769
Historical information is available on our website.

MASCO CORPORATION
Segment Data - Unaudited
For the Three and Six Months Ended June 30, 2022 and 2021
(dollars in millions)
	Three Months Ended June 30,											Six Months Ended June 30,
	2022				2021				Change			2022				2021				Change
Plumbing Products
Net sales	$	1,373			$	1,329			3	%		$	2,732			$	2,578			6	%
Operating profit, as reported	$	238			$	273						$	466			$	525
Operating margin, as reported		17.3	%			20.5	%						17.1	%			20.4	%
Rationalization charges		—				1							—				2
Operating profit, as adjusted		238				274							466				527
Operating margin, as adjusted		17.3	%			20.6	%						17.1	%			20.4	%
Depreciation and amortization		25				24							49				50
EBITDA, as adjusted	$	263			$	298						$	515			$	577
Decorative Architectural Products
Net sales	$	979			$	850			15	%		$	1,821			$	1,571			16	%
Operating profit, as reported	$	192			$	188						$	347			$	330
Operating margin, as reported		19.6	%			22.1	%						19.1	%			21.0	%
Rationalization charges		6				—							8				—
Accelerated depreciation related to rationalization activity - segment		—				—							1				—
Operating profit, as adjusted		198				188							356				330
Operating margin, as adjusted		20.2	%			22.1	%						19.5	%			21.0	%
Depreciation and amortization		9				9							17				19
EBITDA, as adjusted	$	207			$	197						$	373			$	349
Total
Net sales	$	2,352			$	2,179			8	%		$	4,553			$	4,149			10	%
Operating profit, as reported - segment	$	430			$	461						$	813			$	855
General corporate expense, net		(22	)			(24	)						(52	)			(53	)
Operating profit, as reported		408				437							761				802
Operating margin, as reported		17.3	%			20.1	%						16.7	%			19.3	%
Rationalization charges - segment		6				1							8				2
Accelerated depreciation related to rationalization activity - segment		—				—							1				—
Operating profit, as adjusted		414				438							770				804
Operating margin, as adjusted		17.6	%			20.1	%						16.9	%			19.4	%
Depreciation and amortization - segment		34				33							66				69
Depreciation and amortization - other		2				2							4				9
EBITDA, as adjusted	$	450			$	473						$	840			$	882
Historical information is available on our website.

MASCO CORPORATION
North American and International Data - Unaudited
For the Three and Six Months Ended June 30, 2022 and 2021
(dollars in millions)
	Three Months Ended June 30,											Six Months Ended June 30,
	2022				2021				Change			2022				2021				Change
North American
Net sales	$	1,905			$	1,717			11	%		$	3,639			$	3,246			12	%
Operating profit, as reported	$	356			$	370						$	656			$	678
Operating margin, as reported		18.7	%			21.5	%						18.0	%			20.9	%
Rationalization charges		6				1							8				2
Accelerated depreciation related to rationalization activity		—				—							1				—
Operating profit, as adjusted		362				371							665				680
Operating margin, as adjusted		19.0	%			21.6	%						18.3	%			20.9	%
Depreciation and amortization		23				21							43				44
EBITDA, as adjusted	$	385			$	392						$	708			$	724
International
Net sales	$	447			$	462			(3	)%		$	914			$	903			1	%
Operating profit, as reported	$	74			$	91						$	157			$	177
Operating margin, as reported		16.6	%			19.7	%						17.2	%			19.6	%
Depreciation and amortization		11				12							23				25
EBITDA	$	85			$	103						$	180			$	202
Total
Net sales	$	2,352			$	2,179			8	%		$	4,553			$	4,149			10	%
Operating profit, as reported - segment	$	430			$	461						$	813			$	855
General corporate expense, net		(22	)			(24	)						(52	)			(53	)
Operating profit, as reported		408				437							761				802
Operating margin, as reported		17.3	%			20.1	%						16.7	%			19.3	%
Rationalization charges - segment		6				1							8				2
Accelerated depreciation related to rationalization activity - segment		—				—							1				—
Operating profit, as adjusted		414				438							770				804
Operating margin, as adjusted		17.6	%			20.1	%						16.9	%			19.4	%
Depreciation and amortization – segment		34				33							66				69
Depreciation and amortization - other		2				2							4				9
EBITDA, as adjusted	$	450			$	473						$	840			$	882
Historical information is available on our website.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220728005139/en/

Investor Contact

David Chaika

Vice President, Treasurer and Investor Relations

313.792.5500

david_chaika@mascohq.com

Source: Masco Corporation

FAQ

What were Masco's Q2 2022 earnings per share (EPS)?

Masco reported earnings per share of $1.18 for Q2 2022.

What is Masco's adjusted EPS guidance for 2022?

The adjusted EPS guidance for 2022 is narrowed to $4.15 - $4.25 per share.

How much did Masco's net sales increase in Q2 2022?

Masco's net sales increased by 8% to $2,352 million in Q2 2022.

What was Masco's operating profit for Q2 2022?

Masco's operating profit for Q2 2022 was $408 million.

Did Masco declare a dividend in Q2 2022?

Yes, Masco declared a quarterly dividend of $0.28 per share.