TAYLOR, Mich. — Masco Corporation (NYSE: MAS) reported net sales and adjusted operating profit growth in the third quarter of 2014 driven primarily by the Plumbing Products, Other Specialty and Installation and Other Services segments. Adjusted operating profit margin rose to 10.9 percent, reflecting the Company’s continued focus on cost management and strong operational leverage on growth.
2014 Third Quarter Commentary
• Net sales from continuing operations increased 4 percent to $2.2 billion. North American sales increased 4 percent and international sales increased 5 percent in U.S. dollars and 3 percent in local currency
• Compared to third quarter 2013, 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 improved to 28.6 percent compared to 28.5 percent
• Operating margins improved to 10.9 percent compared to 10.3 percent
• Income from continuing operations was $.31 per common share compared to $.27 per common share
• As a result of the continued profitability of the Company’s U.S. operations, a $466 million ($1.32 per share) net tax benefit was recorded in the third quarter 2014 primarily from the release of the $517 million valuation allowance against its U.S. Federal and certain state deferred tax assets. This reversal was offset by an additional $51 million of tax expense to adjust taxes recorded in the first half of 2014 to the higher third quarter effective tax rate
• Income from continuing operations, as reported, was $1.51 per common share
• Liquidity at the end of the third quarter was approximately $1.6 billion
2014 Third Quarter Operating Segment Highlights
• Plumbing Products’ net sales increased 4 percent, fueled by growth in the wholesale channel
• Decorative Architectural Products’ net sales were flat against the third quarter of 2013 which experienced increased sales from last year’s successful new product launches
• Cabinets and Related Products’ net sales increased 2 percent, driven by sales growth to dealers, offset by lower sales to home centers
• Installation and Other Services’ net sales increased 8 percent with continued growth in all channels
• Other Specialty Products’ net sales increased 8 percent, led by a strong performance from our North American window business
“We delivered improved top- and bottom- line results in the third quarter,” said Masco’s President and CEO, Keith Allman. “The positive trends we saw in the second quarter continued in the third with particular strength in our Plumbing wholesale channel, ongoing growth in all channels of our Installation segment, and solid momentum in our North American and international window businesses. In our Cabinet business, we remain steadfast in our efforts to strengthen our performance and are actively positioning the business for future growth and profitability.”
“Our performance this year has been solid and reflects our ability to successfully execute against our 2014 priorities,” continued Mr. Allman. “We are committed to continuously improving our operating performance and, despite a slower than anticipated housing recovery, our long-term outlook remains positive. We are focused on growing market share with our leading brands, accelerating our innovation pipeline, and driving operational leverage. This focus, coupled with our recently-announced strategic initiatives to enhance shareholder value through the active management of our portfolio, effective capital allocation, cost control and execution, will further position us for long-term, profitable growth.”
Headquartered in Taylor, Michigan, Masco Corporation is one of the world’s leading manufacturers of branded building products, as well as a leading provider of services that include the installation of insulation and other building products.
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