Taylor, Mich. — Masco Corporation (NYSE: MAS) increased profit in the fourth quarter of 2012 with strong sales and operating margin growth in North America, including continued improvement in Installation Services. All five operating segments delivered positive sales growth and improved operating profit for the first time since the housing downturn.
• Sales increased 9 percent to $1.9 billion
• North American sales increased 12 percent
• Installation segment returned to profitability
• All segments contributed to an adjusted operating margin expansion of 340 basis points
2012 Fourth Quarter Commentary
• Net sales from continuing operations increased 9 percent to $1.9 billion, compared with $1.7 billion for fourth quarter 2011. North American sales increased 12 percent and international sales decreased 1 percent. In local currencies, international sales increased 2 percent compared with fourth quarter 2011.
• Compared to fourth quarter 2011, 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 25.0 percent compared to 21.9 percent
• Operating profit margins were 5.0 percent compared to 1.6 percent
• Income (loss) from continuing operations was $0.04 per common share compared to $(0.09) per common share
• Loss from continuing operations, as reported, was $(0.23) per common share compared to $(1.42) per common share in the fourth quarter of 2011
• We ended the fourth quarter with approximately $1.4 billion of cash
2012 Fourth Quarter Operating Segment Results
• Plumbing Products’ net sales increased 10 percent, fueled by strong performance in North America and internationally
• Decorative Architectural Products’ net sales increased 11 percent, driven by growth in core products and new programs
• North American Cabinetry’s sales increased 13 percent and operating margins improved
• Installation and Other Services achieved profitability for the first time since the fourth quarter of 2008
• Other Specialty Products’ net sales increased 6 percent and segment margins expanded, reflecting share gains and profit improvement initiatives
“Our solid fourth quarter results reflect the successful execution of our strategic initiatives, including leveraging our brands, reducing our costs, improving our Installation and Cabinet segments and strengthening our balance sheet,” said Masco’s President and CEO, Tim Wadhams. “Our sales and margin growth represent strong performance across all of our operating segments, including a return to profitability in our Installation segment. We believe this momentum will continue into 2013.”
2012 Full-Year Commentary
• Net sales increased 4 percent to $7.7 billion, compared to 2011. Excluding currency, net sales increased 5 percent
• Compared to full-year 2011, results for key financial measures, as adjusted for certain items (see Exhibit B) and with a normalized tax rate of 36 percent, were as follows:
• Gross profit margins were 26.0 percent compared to 25.1 percent
• Operating profit margins were 6.1 percent compared to 4.4 percent
• Income from continuing operations was $0.32 per common share compared to $0.02 per common share
• Loss from continuing operations, as reported, was $(0.22) per common share compared to $(1.34) per common share in 2011
In early February we determined that our Danish ready-to-assemble cabinet business is not core to our long-term growth strategy and, accordingly, we have commenced a plan of disposition for this business. This business unit had sales of approximately $250 million in 2012.
“We expect new home construction to show strong growth in 2013, and anticipate repair and remodel to grow modestly, with big ticket items continuing to lag. Our focus this year is to successfully execute new product programs, improve profitability in Cabinets and Installation Services, and expand our brand leadership positions. We believe the actions we have taken over the past several years, including investing in our brands, reducing our cost structure and paying down debt, have strengthened our business. We believe these actions have positively positioned us to take advantage of the upturn in the housing cycle,” said Mr. Wadhams.
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