Taylor, Michigan — Masco Corporation (NYSE: MAS) continued to deliver growth in the third quarter of 2013. All operating segments contributed to top line growth, accelerated by the strength of new home construction in North America and improvement in repair and remodel activity. Adjusted operating margins increased to 10.3 percent from 7.7 percent due to higher volumes and operating leverage.
Key Quarter Highlights
• Sales increased 12 percent to $2.2 billion
• North American sales increased 13 percent
• All segments positively contributed to top line growth
• Adjusted operating profit margin expanded 260 bps to 10.3 percent
• Retired $200 million debt maturity
2013 Third Quarter Commentary
• Net sales from continuing operations increased 12 percent to $2.2 billion, compared with $1.9 billion for third quarter 2012. North American sales increased 13 percent and international sales increased 9 percent in U.S. dollars and 5 percent in local currency
• Compared to third quarter 2012, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, were as follows:
• Gross margins of 28.5 percent increased 120 bps
• Operating margins of 10.3 percent increased 260 bps
• Income from continuing operations was $0.27 per common share compared to $0.14 per common share
• Income from continuing operations, as reported, was $0.29 per common share compared to $0.07 per common share in the third quarter 2012
• We ended the third quarter with approximately $1.3 billion of cash, cash investments and short-term bank deposits
2013 Third Quarter Operating Segment Highlights
• Plumbing Products benefited from a North American faucet and toilet sales growth percentage in the mid-teens, with particular strength in the trade channel
• Decorative Architectural Products delivered gallon volume growth through recently introduced products and programs
• Cabinets and Related Products grew sales across all channels in North America, including direct to builder, dealer, and retail, and in all three brands: KraftMaid®, Merillat® and QualityCabinets™
• Installation and Other Services delivered improved top line and bottom line performance, benefiting from the strength of new home construction
• Other Specialty Products continued top line growth, led by North American window sales growth percentage in the mid-teens
“We are very pleased with our third quarter 2013 results, our eighth consecutive quarter of both sales growth and margin expansion (as adjusted). We continued to gain momentum across all segments,” said Masco’s President and CEO, Tim Wadhams. “Top line growth was delivered by each segment in the third quarter supported by continued growth in North American new home construction, improving repair and remodel activity and increased international sales. In our Decorative Architectural segment, sales benefited from BEHR PREMIUM DECKOVER® launched earlier this year. New products and programs drove sales, particularly to the trade, across virtually all categories in our Plumbing Products segment. In our North American Cabinetry business, we remained focused on further improving profitability with sales growth across all three channels. Our strong performance reflects our success in leveraging the housing recovery and the continued execution of our strategic priorities company-wide, including our focus on cost containment.”
“Economic uncertainties in the U.S. are impacting consumer confidence, making the pace of the U.S. economic recovery uneven,” said Mr. Wadhams. “Despite this, we believe that demand for our products will continue to improve. We expect new home construction demand to drive continued increases in housing starts and we are also very encouraged by the ongoing improvement in repair and remodel activity in the U.S. While still challenging, economic conditions in Europe are slowly improving. Our results reflect the benefits of the actions we have taken over the past several years, including investing in our brands and innovation, reducing our cost structure and paying down debt. We have strengthened our business by these actions, which should continue to positively impact our results going forward as we focus on successfully navigating through this recovery.”
Headquartered in Taylor, Michigan, Masco Corporation is one of the world’s leading manufacturers of home improvement and building products, as well as a leading provider of services that include the installation of insulation and other building products.
The 2013 third quarter supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.
Have something to say? Share your thoughts with us in the comments below.