Masco Corporation Reports Second Quarter 2024 Results

July 25, 2024 at 07:00 AM EDT

Highlights

Net sales decreased 2 percent to $2,091 million
Operating profit decreased 1 percent to $397 million; adjusted operating profit decreased 1 percent to $399 million
Operating profit margin increased 10 basis points to 19.0 percent; adjusted operating profit margin increased 10 basis points to 19.1 percent
Earnings per share was $1.17 per share; adjusted earnings per share grew 1 percent to $1.20 per share
Repurchased 2.0 million shares for $143 million
Expect 2024 earnings per share in the range of $4.03 - $4.18 per share, and on an adjusted basis, $4.05 - $4.20 per share

Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported its second quarter 2024 results.

2024 Second Quarter Results

On a reported basis, compared to second quarter 2023:
- Net sales decreased 2 percent to $2,091 million; in local currency and excluding acquisitions, net sales decreased 2 percent
  - Plumbing Products’ net sales increased 2 percent; in local currency and excluding acquisitions, net sales increased 1 percent
  - Decorative Architectural Products’ net sales decreased 7 percent
  - In local currency, North American and International sales both decreased 1 percent
- Gross margin increased 130 basis points to 37.5 percent from 36.2 percent
- Operating profit decreased 1 percent to $397 million from $403 million
- Operating margin increased 10 basis points to 19.0 percent from 18.9 percent
- Net income increased to $1.17 per share, compared to $1.16 per share
Compared to second quarter 2023, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 24.5 percent, were as follows:
- Gross margin increased 140 basis points to 37.6 percent from 36.2 percent
- Operating profit decreased 1 percent to $399 million from $404 million
- Operating margin increased 10 basis points to 19.1 percent from 19.0 percent
- Net income increased 1 percent to $1.20 per share, compared to $1.19 per share
Liquidity at the end of the second quarter was $1,398 million (including availability under our revolving credit facility)

“During the first half of this year, we continued to deliver solid results and shareholder value, despite a challenging environment, through the strength of our operating performance,” said Masco President and CEO, Keith Allman. “In the second quarter, we delivered strong adjusted operating profit margin of 19.1 percent and grew adjusted earnings per share by 1 percent. Additionally, our capital allocation strategy enabled us to return $206 million to shareholders though dividends and share repurchases.”

“In the second half of the year, we anticipate ongoing demand headwinds as market conditions remain challenged. However, with our continued focus on execution and operational efficiencies, we are well positioned to drive operating margin expansion for the full year. Additionally, we remain confident in the long-term fundamentals of the repair and remodel market and the strength of our brands and product portfolio,” said Allman. “We now anticipate our 2024 adjusted earnings per share to be in the range of $4.05 to $4.20 per share, compared to our previous expectations of $4.00 to $4.25 per share.”

Dividend Declaration

Masco’s Board of Directors declared a quarterly dividend of $0.29 per share, payable on August 19, 2024 to shareholders of record on August 2, 2024.

About Masco

Headquartered in Livonia, Michigan, Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes Behr^® paint; Delta^® and hansgrohe^® faucets, bath and shower fixtures; Kichler^® decorative and outdoor lighting; Liberty® branded decorative and functional hardware; and HotSpring® spas. We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders. For more information about Masco Corporation, visit www.masco.com.

The 2024 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 Thursday, July 25, 2024 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 800-549-8228 or 646-564-2877. Please use the conference identification number 45864.

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 888-660-6264 or 646-517-3975. Please use the playback passcode 45864#. The telephone replay will be available approximately two hours after the end of the call and continue through August 25, 2024.

Safe Harbor Statement

This press release contains statements that reflect our views about our future performance and constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “outlook,” “believe,” “anticipate,” “appear,” “may,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” and similar references to future periods. Our views about future performance 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 the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands, to develop innovative products and respond to changing consumer purchasing practices and preferences, our ability to maintain our public image and reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials, our dependence on suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse workforce, risks associated with cybersecurity vulnerabilities, threats and attacks and risks associated with our reliance on information systems and technology. 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. Any forward-looking statement made by us speaks only as of the date on which it was made. 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.

MASCO CORPORATION Condensed Consolidated Statements of Operations - Unaudited For the Three and Six Months Ended June 30, 2024 and 2023
(in millions, except per common share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Net sales	$	2,091		$	2,127		$	4,017		$	4,106
Cost of sales		1,306			1,358			2,547			2,668
Gross profit		785			769			1,470			1,438

Selling, general and administrative expenses		388			366			755			720
Operating profit		397			403			715			718

Other income (expense), net:
Interest expense		(26	)		(28	)		(50	)		(56	)
Other, net		(5	)		(1	)		(10	)		(3	)
		(31	)		(29	)		(61	)		(59	)
Income before income taxes		366			374			655			659

Income tax expense		94			96			154			160
Net income		272			278			501			499

Less: Net income attributable to noncontrolling interest		14			15			28			31
Net income attributable to Masco Corporation	$	258		$	263		$	473		$	468

Income per common share attributable to Masco Corporation (diluted):
Net income	$	1.17		$	1.16		$	2.14		$	2.07

Average diluted common shares outstanding		220			226			221			226

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION Exhibit A: Reconciliations - Unaudited For the Three and Six Months Ended June 30, 2024 and 2023
(dollars in millions)

	Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations

Net sales	$	2,091		$	2,127		$	4,017		$	4,106

Gross profit, as reported	$	785		$	769		$	1,470		$	1,438
Rationalization charges (income) (1)		1			1			5			(3	)
Gross profit, as adjusted	$	786		$	770		$	1,475		$	1,435

Gross margin, as reported		37.5	%		36.2	%		36.6	%		35.0	%
Gross margin, as adjusted		37.6	%		36.2	%		36.7	%		34.9	%

Selling, general and administrative expenses, as reported	$	388		$	366		$	755		$	720
Rationalization charges		1			—			1			1
Selling, general and administrative expenses, as adjusted	$	387		$	366		$	754		$	719

Selling, general and administrative expenses as a percent of net sales, as reported		18.6	%		17.2	%		18.8	%		17.5	%
Selling, general and administrative expenses as a percent of net sales, as adjusted		18.5	%		17.2	%		18.8	%		17.5	%

Operating profit, as reported	$	397		$	403		$	715		$	718
Rationalization charges (income) (1)		2			1			6			(2	)
Operating profit, as adjusted	$	399		$	404		$	721		$	716

Operating margin, as reported		19.0	%		18.9	%		17.8	%		17.5	%
Operating margin, as adjusted		19.1	%		19.0	%		17.9	%		17.4	%

(1)

Represents income for the six months ended June 30, 2023 due to the sale of excess and obsolete inventory that was related to a rationalization activity, partially offset by rationalization charges.

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION Exhibit A: Reconciliations - Unaudited For the Three and Six Months Ended June 30, 2024 and 2023
(in millions, except per common share data)

	Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Income Per Common Share Reconciliations

Income before income taxes, as reported	$	366		$	374		$	655		$	659
Rationalization charges (income) (1)		2			1			6			(2	)
Realized (gains) from private equity funds		—			—			—			(1	)
Income before income taxes, as adjusted		368			375			660			656
Tax at 24.5% rate		(90	)		(92	)		(162	)		(161	)
Less: Net income attributable to noncontrolling interest		14			15			28			31
Net income, as adjusted	$	264		$	268		$	470		$	464

Net income per common share, as adjusted	$	1.20		$	1.19		$	2.13		$	2.05

Average diluted common shares outstanding		220			226			221			226

(1)

Represents income for the six months ended June 30, 2023 due to the sale of excess and obsolete inventory that was related to a rationalization activity, partially offset by rationalization charges.

Outlook for the Year Ended December 31, 2024
	Year Ended December 31, 2024
	Low End		High End
Income Per Common Share Reconciliation

Net income per common share	$	4.03	$	4.18
Rationalization charges		0.02		0.02
Net income per common share, as adjusted	$	4.05	$	4.20

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION Condensed Consolidated Balance Sheets and Other Financial Data - Unaudited June 30, 2024 and December 31, 2023
(dollars in millions)

	June 30, 2024		December 31, 2023
Balance Sheet
Assets
Current assets:
Cash and cash investments	$	398	$	634
Receivables		1,314		1,090
Inventories		1,057		1,022
Prepaid expenses and other		129		110
Total current assets		2,898		2,856

Property and equipment, net		1,116		1,121
Goodwill		601		604
Other intangible assets, net		359		377
Operating lease right-of-use assets		254		268
Other assets		137		139
Total assets	$	5,365	$	5,363

Liabilities
Current liabilities:
Accounts payable	$	924	$	840
Notes payable		3		3
Accrued liabilities		718		852
Total current liabilities		1,645		1,695

Long-term debt		2,945		2,945
Noncurrent operating lease liabilities		245		258
Other liabilities		347		349
Total liabilities		5,183		5,247

Redeemable noncontrolling interest		—		18

Equity		182		98
Total liabilities and equity	$	5,365	$	5,363

	As of June 30,
		2024			2023
Other Financial Data
Working capital days
Receivable days		54			54
Inventory days		82			80
Payable days		71			70
Working capital	$	1,447		$	1,557
Working capital as a % of sales (LTM)		18.4	%		18.9	%

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited For the Six Months Ended June 30, 2024 and 2023
(dollars in millions)

	Six Months Ended June 30,
		2024			2023
Cash Flows From (For) Operating Activities:
Cash provided by operating activities	$	648		$	632
Working capital changes		(395	)		(184	)
Net cash from operating activities		252			448

Cash Flows From (For) Financing Activities:
Purchase of Company common stock		(290	)		(81	)
Cash dividends paid		(128	)		(129	)
Dividends paid to noncontrolling interest		(12	)		(49	)
Purchase of redeemable noncontrolling interest		(15	)		—
Proceeds from short-term borrowings		—			77
Payment of term loan		—			(200	)
Proceeds from the exercise of stock options		75			23
Employee withholding taxes paid on stock-based compensation		(33	)		(23	)
Decrease in debt, net		(1	)		(4	)
Net cash for financing activities		(404	)		(386	)

Cash Flows From (For) Investing Activities:
Capital expenditures		(74	)		(133	)
Acquisition of business		(4	)		—
Other, net		(1	)		(4	)
Net cash for investing activities		(80	)		(137	)

Effect of exchange rate changes on cash and cash investments		(5	)		3

Cash and Cash Investments:
Decrease for the period		(236	)		(72	)
At January 1		634			452
At June 30	$	398		$	380

	As of June 30,
	2024		2023
Liquidity
Cash and cash investments	$	398	$	380
Revolver availability		1,000		1,000
Total Liquidity	$	1,398	$	1,380

Historical information is available on our website.

Amounts may not add due to rounding.

MASCO CORPORATION Segment Data - Unaudited For the Three and Six Months Ended June 30, 2024 and 2023
(dollars in millions)

	Three Months Ended June 30,								Six Months Ended June 30,
		2024			2023		Change			2024			2023		Change
Plumbing Products
Net sales	$	1,253		$	1,225		2	%	$	2,445		$	2,447		—	%
Operating profit, as reported	$	247		$	244				$	472		$	450
Operating margin, as reported		19.7	%		19.9	%				19.3	%		18.4	%
Rationalization charges (income)		2			1					5			(3	)
Operating profit, as adjusted		249			245					477			447
Operating margin, as adjusted		19.9	%		20.0	%				19.5	%		18.3	%
Depreciation and amortization		27			25					53			50
EBITDA, as adjusted	$	276		$	270				$	530		$	497

Decorative Architectural Products
Net sales	$	838		$	902		(7	)%	$	1,572		$	1,659		(5	)%
Operating profit, as reported	$	174		$	180				$	299		$	312
Operating margin, as reported		20.8	%		20.0	%				19.0	%		18.8	%
Rationalization charges		—			—					1			1
Operating profit, as adjusted		174			180					299			313
Operating margin, as adjusted		20.8	%		20.0	%				19.0	%		18.9	%
Depreciation and amortization		9			9					19			17
EBITDA, as adjusted	$	184		$	189				$	318		$	330

Total
Net sales	$	2,091		$	2,127		(2	)%	$	4,017		$	4,106		(2	)%
Operating profit, as reported - segment	$	421		$	424				$	771		$	762
General corporate expense, net		(24	)		(21	)				(55	)		(44	)
Operating profit, as reported		397			403					715			718
Operating margin, as reported		19.0	%		18.9	%				17.8	%		17.5	%
Rationalization charges (income) - segment		2			1					6			(2	)
Operating profit, as adjusted		399			404					721			716
Operating margin, as adjusted		19.1	%		19.0	%				17.9	%		17.4	%
Depreciation and amortization - segment		36			34					72			67
Depreciation and amortization - other		2			1					4			3
EBITDA, as adjusted	$	437		$	439				$	797		$	786

Historical information is available on our website.

Amounts may not add due to rounding

MASCO CORPORATION North American and International Data - Unaudited For the Three and Six Months Ended June 30, 2024 and 2023
(dollars in millions)

	Three Months Ended June 30,								Six Months Ended June 30,
		2024			2023		Change			2024			2023		Change
North American
Net sales	$	1,695		$	1,718		(1	)%	$	3,220		$	3,273		(2	)%
Operating profit, as reported	$	360		$	358				$	645		$	624
Operating margin, as reported		21.2	%		20.8	%				20.0	%		19.1	%
Rationalization charges (income)		1			1					4			(2	)
Operating profit, as adjusted		361			359					649			622
Operating margin, as adjusted		21.3	%		20.9	%				20.2	%		19.0	%
Depreciation and amortization		23			22					47			43
EBITDA, as adjusted	$	385		$	381				$	695		$	665

International
Net sales	$	397		$	409		(3	)%	$	797		$	833		(4	)%
Operating profit, as reported	$	61		$	66				$	126		$	138
Operating margin, as reported		15.4	%		16.1	%				15.8	%		16.6	%
Rationalization charges		1			—					2			—
Operating profit, as adjusted		62			66					128			138
Operating margin, as adjusted		15.6	%		16.1	%				16.1	%		16.6	%
Depreciation and amortization		13			12					25			24
EBITDA, as adjusted	$	75		$	78				$	153		$	162

Total
Net sales	$	2,091		$	2,127		(2	)%	$	4,017		$	4,106		(2	)%
Operating profit, as reported - segment	$	421		$	424				$	771		$	762
General corporate expense, net		(24	)		(21	)				(55	)		(44	)
Operating profit, as reported		397			403					715			718
Operating margin, as reported		19.0	%		18.9	%				17.8	%		17.5	%
Rationalization charges (income) - segment		2			1					6			(2	)
Operating profit, as adjusted		399			404					721			716
Operating margin, as adjusted		19.1	%		19.0	%				17.9	%		17.4	%
Depreciation and amortization - segment		36			34					72			67
Depreciation and amortization - other		2			1					4			3
EBITDA, as adjusted	$	437		$	439				$	797		$	786

Historical information is available on our website.

Amounts may not add due to rounding.

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Contacts

Investor Contact

Robin Zondervan

Vice President, Investor Relations and FP&A

313.792.5500

robin_zondervan@mascohq.com