Taylor, Mich.-- Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the quarter ended September 30, 2010 decreased six percent to $2.0 billion. North American sales and International sales each decreased six percent. In local currencies, International sales increased four percent compared with the third quarter of 2009.
"The slowing economic activity related to our markets, particularly consumer spending and new home construction in North America that we experienced late in the second quarter, continued into the third quarter of 2010. Four of our five product segments had sales declines compared to the third quarter of 2009. Our plumbing products segment was up modestly in sales, principally due to continued strong international results, as Hansgrohe continues to expand globally. Given the decline in sales, we were pleased with our performance from a profitability standpoint, as cost reductions partially offset the impact of volume declines and a less favorable relationship between selling prices and commodity costs compared to third quarter 2009," said Masco's CEO Tim Wadhams. (Loss) income from continuing operations, as reported, was $(.02) per common share in the third quarter of 2010 compared to $.14 per common share in the third quarter of 2009.
We continue to focus on the rationalization of our businesses, including business consolidations, plant closures, headcount reductions, system implementations and other initiatives. During the third quarters of 2010 and 2009, we incurred costs and charges of $39 million pre-tax ($.07 per common share, after tax) and $21 million pre-tax ($.04 per common share, after tax), respectively, related to these initiatives.
Although we continue to be concerned about foreclosure activity and access to financing, we believe that housing starts will improve in 2010 from 554,000 units in 2009 and continue to believe that total starts will be in a range of 575,000 to 625,000 units. In addition, we anticipate that expenditures on repair and remodel activity will be challenged in the near-term, and that big-ticket items will continue to be deferred until general economic conditions, unemployment, consumer confidence, credit availability and home prices improve.
"We are confident that the long-term fundamentals for the new home construction and home improvement markets continue to be positive. However, it appears that the recovery in certain of our markets will be slower than previously anticipated. Given that, we will continue our intense focus on the things that we can control including driving the Masco Business System and aggressively managing our cost structure. We thank and appreciate our employees, world-wide, for their continued focus and dedication as we continue to address the challenging economic environment," said Tim Wadhams.
We believe that our strong financial position, together with our current strategy of investing in leadership brands (including: KraftMaid and Merillat cabinets, Delta and Hansgrohe faucets, Behr paint and Milgard windows), our continued focus on innovation and our commitment to lean principles will allow us to drive long-term growth and create value for our shareholders.
2010 Third Quarter Commentary
Sales decreased six percent to $2.0 billion.
Excluding charges for business rationalizations and litigation, and with a normalized tax rate of 36 percent, our key financial measures were as follows, compared to the third quarter of 2009:
Gross profit margins were 26.9 percent compared to 27.7 percent
Operating profit margins were 7.2 percent compared to 8.0 percent
Income, as adjusted, would have been $.11 per common share, compared to $.18 per common share.
(Loss) income from continuing operations, as reported, was $(.02) per common share compared to $.14 per common share in the third quarter of 2009.
Working capital, as a percent of sales, improved to 16.2 percent at September 30, 2010 compared to 17.3 percent at September 30, 2009.
Cash was $1.5 billion at September 30, 2010.
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 2010 third quarter supplemental material, including a presentation in PDF format, will be distributed after the market closes on October 25, 2010 and will be available on the Company's Web site at www.masco.com.
Source: Masco Corporation
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