Masco Delivers Solid Fourth Quarter Resulting in a Strong Performance
February 10, 2014
Key Highlights – 2013 Fourth Quarter
• Sales increased 9 percent to $2.0 billion
• North American sales increased 9 percent
• International sales increased 7 percent in local currency
• All segments positively contributed to top-line growth
• Operating margin (as adjusted) expansion of 210 basis points
TAYLOR, Mich. (February 10, 2014) — 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.
The 2013 fourth 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, February 11, 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 31401362. 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 31401362. The telephone replay will be available approximately two hours after the end of the call and continue through February 25, 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, 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.
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