• Adjusted operating profit margin increased to 11 percent
• Adjusted operating profit grew by 21 percent
• Adjusted EPS grew 39 percent to $.32 per common share
TAYLOR, Mich. (July 28, 2014) — Masco Corporation (NYSE: MAS) delivered sales and operating profit growth in the second quarter of 2014 driven primarily by the Plumbing Products, Installation and Other Services and Decorative Architectural Products segments. Increased international sales were strengthened by the plumbing businesses benefitting from an improving European economic landscape and strong operational performance. Adjusted operating profit margin rose to 11 percent, reflecting the Company’s strong operating leverage and focused cost control.
2014 Second Quarter Commentary
• Net sales from continuing operations increased 5 percent to $2.3 billion, compared with $2.1 billion for second quarter 2013. North American sales increased 4 percent and international sales increased 9 percent in U.S. dollars and 2 percent in local currency
• Compared to second 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 29.2 percent compared to 28.9 percent
• Operating margins improved to 11.0 percent compared to 9.6 percent
• Income from continuing operations was $0.32 per common share compared to $0.23 per common share
• Income from continuing operations, as reported, was $.39 per common share compared to $.23 per common share in the second quarter of 2013
• Liquidity at the end of the second quarter was approximately $1.4 billion
2014 Second Quarter Operating Segment Highlights
• Plumbing Products’ net sales increased 6 percent, fueled by growth in all channels and international
• Decorative Architectural Products’ net sales increased 5 percent, driven by new products and programs
• Cabinets and Related Products’ net sales decreased 5 percent, as a mid-single-digit percentage increase in sales to dealers was more than offset by lower sales to home centers
• Installation and Other Services’ net sales increased 8 percent, driven by growth in new home construction, commercial, and distribution channels
• Other Specialty Products’ net sales increased 11 percent, led by a strong performance from our North American window business
“We delivered a solid second quarter marked by revenue growth and strong profitability,” said Masco’s President and CEO, Keith Allman. “Our focus on our key priorities, which include growing share of our market-leading brands, accelerating our customer-focused innovation pipeline, further penetrating international markets and driving operational leverage through cost containment, was demonstrated in our performance despite a more moderate housing recovery.”
“As we move into the third quarter, we continue to see growing demand for our products and services across our end markets. Our outlook remains positive with the belief that new home construction and repair and remodel activity will show steady growth in 2014. We believe we are well positioned to grow our key brands and to gain market share in this environment. While there is pent-up demand for high-ticket items such as cabinets, we expect that this category will continue to lag in the short term compared to other segments as consumers defer discretionary high-ticket expenditures. We remain committed to realizing the full potential of our core businesses, leveraging opportunities across our portfolio and actively managing the portfolio to drive long-term shareholder value.”
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 2014 second quarter supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.
Conference Call Details
A conference call regarding items contained in this release is scheduled for Tuesday, July 29, 2014 at 8:00 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (855) 226-2726 (855-22MASCO) and from outside the U.S. at (706) 679-3614. Please use the conference identification number 63079982. The conference call will be webcast simultaneously and in its entirety through the Company’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on the Company’s website.
A replay of the call will be available on Masco’s website or by phone by dialing (855) 859-2056 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 63079982. The telephone replay will be available approximately two hours after the end of the call and continue through August 12, 2014.
Safe Harbor Statement
Statements contained in this press release that reflect our views about our future performance constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believe,” “anticipate,” “appear,” “may,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements. Our future performance may be affected by our reliance on new home construction and home improvement, our reliance on key customers, the cost and availability of raw materials, uncertainty in the international economy, shifts in consumer preferences and purchasing practices, our ability to improve our underperforming businesses, and our ability to maintain our competitive position in our industries. These and other factors are discussed in detail in Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. Our forward-looking statements in this press release speak only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.
The Company believes that the non-GAAP performance measures and ratios that are contained herein, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Additional information about the Company is contained in the Company's filings with the Securities and Exchange Commission and is available on Masco's website at www.masco.com.