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Masco Corporation Reports First Quarter 2022 Results

Business Wire - Wed Apr 27, 6:00AM CDT

Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported its first quarter results.

2022 First Quarter Results

  • On a reported basis, compared to first quarter 2021:
    • Net sales increased 12 percent to $2,201 million; in local currency and excluding acquisitions and divestitures, net sales increased 14 percent
    • In local currency, North American sales increased 14 percent and international sales increased 12 percent
    • Gross margin decreased 350 basis points to 32.0 percent from 35.5 percent
    • Operating profit decreased 3 percent to $353 million
    • Operating margin decreased 250 basis points to 16.0 percent from 18.5 percent
    • Net income increased to $0.97 per share, compared to $0.34 per share
  • Compared to first 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 350 basis points to 32.1 percent from 35.6 percent
    • Operating profit decreased 3 percent to $356 million from $366 million
    • Operating margin decreased 240 basis points to 16.2 percent from 18.6 percent
    • Net income increased 7 percent to $0.95 per share from $0.89 per share
  • Liquidity at the end of the first quarter was $1,216 million (including availability under our revolving credit facility)
  • Plumbing Products’ net sales increased 9 percent; in local currency and excluding acquisitions and divestitures, sales increased 12 percent
  • Decorative Architectural Products’ net sales increased 17 percent

“We achieved solid first quarter results,” said Masco President and CEO, Keith Allman. “We delivered strong sales growth of 12 percent and increased adjusted earnings per share by 7 percent. We also furthered our capital deployment by returning $431 million to shareholders through dividends and share repurchases during the quarter.”

“We are off to a strong start in 2022,” continued Allman. “Demand for our products remains healthy, and we are executing well to offset ongoing inflation while still driving volume growth. With this continued solid demand and our strong first quarter performance, we now anticipate our adjusted earnings per share for 2022 to be in the range of $4.15 to $4.35 per share, increased from our previous expectation of $4.10 to $4.30 per share,” concluded Allman.

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 first 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 Wednesday, April 27, 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) 549-7577 and from outside the U.S. at (442) 275-1712. Please use the conference identification number 8072369. 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 8072369. The telephone replay will be available approximately two hours after the end of the call and continue through May 27, 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

Condensed Consolidated Statements of Operations - Unaudited

For the Three Months Ended March 31, 2022 and 2021

(in millions, except per common share data)

 

Three Months Ended March 31,

 

2022

 

2021

Net sales

$

2,201

 

 

$

1,970

 

Cost of sales

 

1,497

 

 

 

1,270

 

Gross profit

 

704

 

 

 

700

 

 

 

 

 

Selling, general and administrative expenses

 

351

 

 

 

335

 

Operating profit

 

353

 

 

 

365

 

 

 

 

 

Other income (expense), net:

 

 

 

Interest expense

 

(25

)

 

 

(202

)

Other, net

 

(1

)

 

 

(6

)

 

 

(26

)

 

 

(208

)

Income before income taxes

 

327

 

 

 

157

 

 

 

 

 

Income tax expense

 

75

 

 

 

43

 

Net Income

 

252

 

 

 

114

 

 

 

 

 

Less: Net income attributable to noncontrolling interest

 

19

 

 

 

20

 

Net income attributable to Masco Corporation

$

233

 

 

$

94

 

 

 

 

 

Income per common share attributable to Masco Corporation (diluted):

 

 

 

Net income

$

0.97

 

 

$

0.34

 

 

 

 

 

Average diluted common shares outstanding

 

241

 

 

 

257

 

 

Historical information is available on our website.

MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

For the Three Months Ended March 31, 2022 and 2021

(dollars in millions)

 

Three Months Ended March 31,

 

2022

 

2021

Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations

 

 

 

 

 

 

 

Net sales

$

2,201

 

 

$

1,970

 

 

 

 

 

Gross profit, as reported

$

704

 

 

$

700

 

Rationalization charges

 

3

 

 

 

1

 

Gross profit, as adjusted

$

707

 

 

$

701

 

 

 

 

 

Gross margin, as reported

 

32.0

%

 

 

35.5

%

Gross margin, as adjusted

 

32.1

%

 

 

35.6

%

 

 

 

 

Selling, general and administrative expenses, as reported

$

351

 

 

$

335

 

 

 

 

 

Selling, general and administrative expenses as percent of net sales, as reported

 

15.9

%

 

 

17.0

%

 

 

 

 

Operating profit, as reported

$

353

 

 

$

365

 

Rationalization charges

 

3

 

 

 

1

 

Operating profit, as adjusted

$

356

 

 

$

366

 

 

 

 

 

Operating margin, as reported

 

16.0

%

 

 

18.5

%

Operating margin, as adjusted

 

16.2

%

 

 

18.6

%

 

Historical information is available on our website.

MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

For the Three Months Ended March 31, 2022 and 2021 

(in millions, except per common share data)

 

Three Months Ended March 31,

 

2022

 

2021

Income Per Common Share Reconciliations

 

 

 

 

 

 

 

Income before income taxes, as reported

$

327

 

 

$

157

 

Rationalization charges

 

3

 

 

 

1

 

Pension costs associated with terminated plans

 

 

 

 

9

 

(Earnings) from equity investments, net

 

 

 

 

(2

)

Loss on extinguishment of debt

 

 

 

 

168

 

Fair value adjustment to contingent earnout obligation (1)

 

4

 

 

 

 

(Gain) on sale of business (2)

 

(2

)

 

 

 

Income before income taxes, as adjusted

 

332

 

 

 

333

 

Tax at 25% rate

 

(83

)

 

 

(83

)

Less: Net income attributable to noncontrolling interest

 

19

 

 

 

20

 

Net income, as adjusted

$

230

 

 

$

230

 

 

 

 

 

Net income per common share, as adjusted

$

0.95

 

 

$

0.89

 

 

 

 

 

Average diluted common shares outstanding

 

241

 

 

 

257

 

(1)

Represents expense 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 GmbH (“Hüppe”).

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

$

4.12

 

 

$

4.32

 

Rationalization charges

 

0.03

 

 

 

0.03

 

Fair value adjustment to contingent earnout obligation (1)

 

0.01

 

 

 

0.01

 

(Gain) on sale of business (2)

 

(0.01

)

 

 

(0.01

)

Allocation to participating securities per share (3)

 

0.00

 

 

 

0.00

 

Net income per common share, as adjusted

$

4.15

 

 

$

4.35

 

(1)

Represents expense 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

March 31, 2022 and December 31, 2021

(dollars in millions)

 

March 31, 2022

 

December 31, 2021

Balance Sheet

 

 

 

Assets

 

 

 

Current Assets:

 

 

 

Cash and cash investments

$

479

 

 

$

926

Receivables

 

1,502

 

 

 

1,171

Inventories

 

1,340

 

 

 

1,216

Prepaid expenses and other

 

107

 

 

 

109

Total Current Assets

 

3,428

 

 

 

3,422

 

 

 

 

Property and equipment, net

 

892

 

 

 

896

Goodwill

 

565

 

 

 

568

Other intangible assets, net

 

379

 

 

 

388

Operating lease right-of-use assets

 

195

 

 

 

187

Other assets

 

109

 

 

 

114

Total Assets

$

5,568

 

 

$

5,575

 

 

 

 

Liabilities

 

 

 

Current Liabilities:

 

 

 

Accounts payable

$

1,114

 

 

$

1,045

Notes payable

 

273

 

 

 

10

Accrued liabilities

 

749

 

 

 

884

Total Current Liabilities

 

2,136

 

 

 

1,939

 

 

 

 

Long-term debt

 

2,946

 

 

 

2,949

Noncurrent operating lease liabilities

 

179

 

 

 

172

Other liabilities

 

407

 

 

 

437

Total Liabilities

 

5,668

 

 

 

5,497

 

 

 

 

Redeemable noncontrolling interest

 

21

 

 

 

22

 

 

 

 

Equity

 

(121

)

 

 

56

Total Liabilities and Equity

$

5,568

 

 

$

5,575

 

As of March 31,

 

2022

 

2021

Other Financial Data

 

 

 

Working Capital Days

 

 

 

Receivable days

 

54

 

 

 

54

 

Inventory days

 

90

 

 

 

76

 

Payable days

 

67

 

 

 

68

 

Working capital

$

1,728

 

 

$

1,328

 

Working capital as a % of sales (LTM)

 

20.1

%

 

 

17.5

%

 

Historical information is available on our website.

MASCO CORPORATION

Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited

For the Three Months Ended March 31, 2022 and 2021

(dollars in millions)

 

Three Months Ended March 31,

 

2022

 

2021

Cash Flows From (For) Operating Activities:

 

 

 

Cash provided by operating activities

$

334

 

 

$

323

 

Working capital changes

 

(561

)

 

 

(412

)

Net cash for operating activities

 

(227

)

 

 

(89

)

 

 

 

 

Cash Flows From (For) Financing Activities:

 

 

 

Retirement of notes

 

 

 

 

(1,326

)

Purchase of Company common stock

 

(364

)

 

 

(303

)

Proceeds from revolving credit borrowings, net

 

263

 

 

 

 

Cash dividends paid

 

(67

)

 

 

(36

)

Issuance of notes, net of issuance costs

 

 

 

 

1,481

 

Debt extinguishment costs

 

 

 

 

(160

)

Proceeds from the exercise of stock options

 

1

 

 

 

 

Employee withholding taxes paid on stock-based compensation

 

(17

)

 

 

(14

)

Decrease in debt, net

 

(3

)

 

 

(1

)

Net cash for financing activities

 

(187

)

 

 

(359

)

 

 

 

 

Cash Flows From (For) Investing Activities:

 

 

 

Capital expenditures

 

(27

)

 

 

(30

)

Proceeds from disposition of businesses, net of cash disposed

 

2

 

 

 

 

Other, net

 

(1

)

 

 

5

 

Net cash for investing activities

 

(26

)

 

 

(25

)

 

 

 

 

Effect of exchange rate changes on cash and cash investments

 

(7

)

 

 

(13

)

 

 

 

 

Cash and Cash Investments:

 

 

 

Decrease for the period

 

(447

)

 

 

(486

)

At January 1

 

926

 

 

 

1,326

 

At March 31

$

479

 

 

$

840

 

 

As of March 31,

 

2022

 

2021

Liquidity

 

 

 

Cash and cash investments

$

479

 

$

838

Revolver availability

 

737

 

 

1,000

Total Liquidity

$

1,216

 

$

1,838

Historical information is available on our website.

MASCO CORPORATION

Segment Data - Unaudited

For the Three Months Ended March 31, 2022 and 2021

(dollars in millions)

 

Three Months Ended March 31,

 

 

 

2022

 

2021

 

Change

Plumbing Products

 

 

 

 

 

Net sales

$

1,359

 

 

$

1,249

 

 

9

%

 

 

 

 

 

 

Operating profit, as reported

$

228

 

 

$

252

 

 

 

Operating margin, as reported

 

16.8

%

 

 

20.2

%

 

 

 

 

 

 

 

 

Rationalization charges

 

 

 

 

1

 

 

 

Operating profit, as adjusted

 

228

 

 

 

253

 

 

 

Operating margin, as adjusted

 

16.8

%

 

 

20.3

%

 

 

 

 

 

 

 

 

Depreciation and amortization

 

24

 

 

 

26

 

 

 

EBITDA, as adjusted

$

252

 

 

$

279

 

 

 

 

 

 

 

 

 

Decorative Architectural Products

 

 

 

 

 

Net sales

$

842

 

 

$

721

 

 

17

%

 

 

 

 

 

 

Operating profit, as reported

$

155

 

 

$

142

 

 

 

Operating margin, as reported

 

18.4

%

 

 

19.7

%

 

 

 

 

 

 

 

 

Rationalization charges

 

2

 

 

 

 

 

 

Accelerated depreciation related to rationalization activity

 

1

 

 

 

 

 

 

Operating profit, as adjusted

 

158

 

 

 

142

 

 

 

Operating margin, as adjusted

 

18.8

%

 

 

19.7

%

 

 

 

 

 

 

 

 

Depreciation and amortization

 

8

 

 

 

10

 

 

 

EBITDA, as adjusted

$

166

 

 

$

152

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

Net sales

$

2,201

 

 

$

1,970

 

 

12

%

 

 

 

 

 

 

Operating profit, as reported - segment

$

383

 

 

$

394

 

 

 

General corporate expense, net

 

(30

)

 

 

(29

)

 

 

Operating profit, as reported

 

353

 

 

 

365

 

 

 

Operating margin, as reported

 

16.0

%

 

 

18.5

%

 

 

 

 

 

 

 

 

Rationalization charges - segment

 

2

 

 

 

1

 

 

 

Accelerated depreciation related to rationalization activity

 

1

 

 

 

 

 

 

Operating profit, as adjusted

 

356

 

 

 

366

 

 

 

Operating margin, as adjusted

 

16.2

%

 

 

18.6

%

 

 

 

 

 

 

 

 

Depreciation and amortization - segment

 

32

 

 

 

36

 

 

 

Depreciation and amortization - other

 

2

 

 

 

7

 

 

 

EBITDA, as adjusted

$

390

 

 

$

409

 

 

 

 

Historical information is available on our website.

MASCO CORPORATION

North American and International Data - Unaudited

For the Three Months Ended March 31, 2022 and 2021

(dollars in millions)

 

Three Months Ended March 31,

 

 

 

2022

 

2021

 

Change

North American

 

 

 

 

 

Net sales

$

1,734

 

 

$

1,529

 

 

13

%

 

 

 

 

 

 

Operating profit, as reported

$

300

 

 

$

308

 

 

 

Operating margin, as reported

 

17.3

%

 

 

20.1

%

 

 

 

 

 

 

 

 

Rationalization charges

 

2

 

 

 

1

 

 

 

Accelerated depreciation related to rationalization activity

 

1

 

 

 

 

 

 

Operating profit, as adjusted

 

303

 

 

 

309

 

 

 

Operating margin, as adjusted

 

17.5

%

 

 

20.2

%

 

 

 

 

 

 

 

 

Depreciation and amortization

 

20

 

 

 

23

 

 

 

EBITDA, as adjusted

$

323

 

 

$

332

 

 

 

 

 

 

 

 

 

International

 

 

 

 

 

Net sales

$

467

 

 

$

441

 

 

6

%

 

 

 

 

 

 

Operating profit, as reported

$

83

 

 

$

86

 

 

 

Operating margin, as reported

 

17.8

%

 

 

19.5

%

 

 

 

 

 

 

 

 

Depreciation and amortization

 

12

 

 

 

13

 

 

 

EBITDA

$

95

 

 

$

99

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

Net sales

$

2,201

 

 

$

1,970

 

 

12

%

 

 

 

 

 

 

Operating profit, as reported - segment

$

383

 

 

$

394

 

 

 

General corporate expense, net

 

(30

)

 

 

(29

)

 

 

Operating profit, as reported

 

353

 

 

 

365

 

 

 

Operating margin, as reported

 

16.0

%

 

 

18.5

%

 

 

 

 

 

 

 

 

Rationalization charges - segment

 

2

 

 

 

1

 

 

 

Accelerated depreciation related to rationalization activity

 

1

 

 

 

 

 

 

Operating profit, as adjusted

 

356

 

 

 

366

 

 

 

Operating margin, as adjusted

 

16.2

%

 

 

18.6

%

 

 

 

 

 

 

 

 

Depreciation and amortization - segment

 

32

 

 

 

36

 

 

 

Depreciation and amortization - other

 

2

 

 

 

7

 

 

 

EBITDA, as adjusted

$

390

 

 

$

409

 

 

 

 

Historical information is available on our website.

 

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