TAYLOR, Mich. — Masco Corporation (NYSE: MAS) achieved increased sales and profit in the fourth quarter of 2013. All five operating segments positively contributed to top-line growth and benefited from North American new home construction activity, repair and remodel activity, new product sales and further stabilization of European economies.
2013 Fourth Quarter Commentary
• Net sales from continuing operations increased 9 percent to $2.0 billion, compared with $1.8 billion for fourth quarter 2012. North American sales increased 9 percent, and international sales increased 11 percent in U.S. dollars and 7 percent in local currency, compared to fourth quarter 2012
• Compared to fourth 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 profit margins of 27.1 percent increased 100 bps
• Operating profit margins of 7.7 percent increased 210 bps
• Income from continuing operations was $0.15 per common share compared to $0.06 per common share
• Income (loss) from continuing operations, as reported, was $0.11 per common share compared to $(0.20) per common share in the fourth quarter of 2012
• In December, we completed the sale of our Danish ready-to-assemble cabinet business, previously included in discontinued operations
• We ended the fourth quarter with approximately $1.5 billion of balance sheet liquidity
2013 Fourth Quarter Operating Segment Results
• Plumbing Products’ net sales increased 8 percent, fueled by growth in new products at retail from repair and remodel activity and international sales
• Decorative Architectural Products’ net sales increased 6 percent, driven by new products and programs
• Cabinets and Related Products’ net sales increased 9 percent, strengthened by increased North American cabinetry dealer channel sales from repair and remodel activity
• Installation and Other Services’ net sales increased 15 percent, due to growth in new home construction, commercial and retrofit activity
• Other Specialty Products’ net sales increased 9 percent, led by North American window sales percentage growth in the low teens
“We delivered a strong fourth quarter with improved top and bottom line growth across all five operating segments,” said Masco’s president and CEO, Timothy Wadhams. “Sales growth was driven by new products and increased international sales that outperformed the Eurozone economies. In North America, we continued to benefit from the growth of new home construction and improved repair and remodel activity and our operating leverage. Our strong fourth quarter performance reflects our ongoing commitment to successfully deliver on our strategic initiatives, which include leveraging our brands, reducing our costs, improving our Installation and Cabinet segments and strengthening our balance sheet.”
2013 Full-Year Commentary
• Net sales increased 9 percent to $8.2 billion, compared to 2012
• Compared to full-year 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 profit margins were 28.0 percent compared to 26.9 percent
• Operating profit margins were 8.8 percent compared to 6.7 percent
• Income from continuing operations was $0.77 per common share compared to $0.37 per common share
• Income (loss) from continuing operations, as reported, was $0.78 per common share compared to $(0.16) per common share in 2012
• Free cash flow exceeded $500 million
“I am very pleased with our full-year 2013 performance,” said Timothy Wadhams. “We delivered on all of the priorities we identified and communicated at the beginning of the year. In particular, our strong top-line growth and operating leverage increased our return on sales by over 200 basis points. In addition, while we were cash flow positive throughout the recession, we generated in excess of $500 million of free cash flow in 2013. I want to personally thank our associates across the enterprise for delivering a great year in 2013. Masco is well positioned and Keith will lead an outstanding team into the future.”
On January 8, 2014, we announced that Masco’s Board of Directors elected Keith J. Allman to succeed Timothy Wadhams upon his retirement as president and CEO, effective February 14, 2014.
Mr. Allman, who currently serves as a Masco group president, joined Masco in 1998 as vice president of manufacturing for cabinetmaker Merillat Industries. In 2007, Mr. Allman became president of Delta Faucet Company. In 2011, he was promoted to group president and has responsibility for Masco’s Plumbing and North American Cabinet businesses.
“I am pleased and excited that Keith will succeed me as Masco’s president and CEO,” said Timothy Wadhams. “I believe that Keith’s proven track record and leadership skills make him the right person at the right time to take Masco to the next level in terms of execution and performance.”
“In 2014, we expect new home construction and repair and remodel activity to show continued improvement in North America and internationally,” said Keith Allman. “Our focus will be to continue to maximize the benefits of this activity and maintain the positive momentum that started for us in the fourth quarter of 2012. We believe we are well positioned to grow our key brands and to gain market share in 2014. We will continue to focus on developing our innovation pipeline, improving our enterprise leverage, driving a high performance culture and focusing on continuous improvement in all we do.”
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.
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