Masco Corporation Reports Second Quarter 2022 Results Highlights

The following excerpt is from the company's SEC filing.
Sales increased 8 percent to $2,352 million; in local currency, sales increased 11 percent
Operating profit was $408 million and operating margin was 17.3 percent; adjusted operating profit was $414 million and adjusted operating margin was 17.6 percent
Earnings per share was $1.18; adjusted earnings per share matched prior year at $1.14
Repurchased 10.4 million shares for $550 million
Anticipate 2022 earnings per share in the range of $4.19 - $4.29 per share, and on an adjusted basis, in the range of $4.15 - $4.25 per share, narrowed from the previous range of $4.15 - $4.35 per share
LIVONIA, Mich. (Jul y 28, 2022) -
Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported
its second quarter results.
2022 Second Quarter Results
On a reported basis, compared to second quarter 2021:
Net sales increased 8
percent to $2,352 million; in local currency and excluding acquisitions and divestitures, net sales increased 11 percent
North American sales increased 11 percent and international sales decreased 3 percent; in local currency, North American sales increased 11 percent and international sales increased 8 percent
Gross margin decreased 360 basis points to 32.7 percent from 36.3 percent
Operating profit decreased 7 percent to $408 million
Operating margin decreased 280 basis points to 17.3 percent from 20.1 percent
Net income (loss) increased to $1.18 per share, compared to $(0.14) per share
Compared to second quarter 2021, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 25 percent, were as follows:
Gross margin decreased 330 basis points to 33.0 percent compared to 36.3 percent
Operating profit decreased 5 percent to $414 million from $438 million
Operating margin decreased 250 basis points to 17.6 percent compared to 20.1 percent
Net income matched prior year at $1.14 per share
Liquidity as of June 30, 2022 was $1,440 million (including availability under our revolving credit facility)
Plumbing Products’ net sales increased 3 percent; in local currency and excluding acquisitions and divestitures, sales increased 8 percent
Decorative Architectural Products’ net sales increased 15 percent; in local currency, sales increased 16 percent
“In this challenging environment, I am proud of the results our team has achieved in the first half of 2022,” said Masco President and CEO, Keith Allman. “We delivered another strong quarter with sales growth of 8 percent and continued to execute our capital deployment strategy by returning $614 million to shareholders through dividends and share repurchases during the quarter.”
“As we enter the second half of the year, we expect growth to be more modest than the first half and largely driven by pricing actions,” continued Allman. “We continue to position ourselves for profitable growth while mitigating the impacts of the challenging supply chain environment. Given moderating demand and additional foreign currency headwinds, we are narrowing our previous guidance and now anticipate our adjusted earnings per share for 2022 to be in the range of $4.15 to $4.25 per share, a 14 percent increase compared to 2021 at the midpoint, from our previous expectation of $4.15 to $4.35 per share,” concluded Allman.
Dividend Declaration
Masco’s Board of Directors declared a quarterly dividend of $0.28 per share payable on August 29, 2022 to shareholders of record on August 12, 2022.
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; 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 second quarter 2022 supplemental material, including a presentation in PDF format, is available on Masco’s website at www.masco.com.
Conference Call Detail
A conference call regarding items contained in this release is scheduled for Thursday, July 28, 2022 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 (844) 200-6205 from the U.S., (833) 950-0062 from Canada, and (929) 526-1599 from all other locations. Please use the conference identification number 593826. Alternatively, you can pre-register for the call using this link:
https://ige.netroadshow.com/registration/q4inc/11232/masco-corporation-2022-second-quarter-conference-call/
The conference call will be webcast simultaneously and in its entirety through Masco’s website.
Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on Masco’s website.
A replay of the call will be available on Masco’s website or by phone by dialing (866) 813-9403 from the U.S., (226) 828-7578 from Canada, and +44 204 525 0658 from all other locations. Please use the conference identification number 256946. The telephone replay will be available approximately two hours after the end of the call and continue through August 28, 2022.
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 and reputation and to develop innovative products, our ability to maintain our competitive position in our industries, our reliance on key customers, the duration of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer discretionary spending, our employees and our supply chain, the cost and availability of materials, our dependence on third-party 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 and may acquire, our ability to attract, develop and retain talented and diverse personnel, risks associated with our reliance on information systems and technology, and risks associated with cybersecurity vulnerabilities, threats and attacks. 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.
Investor Contact
David Chaika
Vice President, Treasurer and Investor Relations    
313.792.5500
david_chaika@mascohq.com
MASCO CORPORATION
Condensed Consolidated Statements of Operations - Unaudited
For the Three and Six Months Ended June 30, 2022 and 2021
(in millions, except per common share data)
Three Months Ended June 30,
Six Months Ended June 30,
2,352 
2,179 
4,553 
4,149 
Cost of sales
1,583 
1,388 
3,080 
2,658 
Gross profit
1,473 
1,491 
Selling, general and administrative expenses
Other income (expense), net:
Interest expense
Other, net
 Income (loss) before income taxes
Income tax expense
Less: Net income attributable to noncontrolling interest
Net income (loss) attributable to Masco Corporation
 Income (loss) per common share attributable to Masco Corporation (diluted):
Average diluted common shares outstanding
Historical information is available on our website.
Exhibit A: Reconciliations - Unaudited
(dollars in millions)
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations
Gross profit, as reported
Rationalization charges
Gross profit, as adjusted
Gross margin, as reported
Gross margin, as adjusted
Selling, general and administrative expenses, as reported
Selling, general and administrative expenses as percent of net sales, as reported
Operating profit, as reported
Operating profit, as adjusted
Operating margin, as reported
Operating margin, as adjusted
Income Per Common Share Reconciliations
Income (loss) before income taxes, as reported
Pension costs associated with terminated plans
(Earnings) from equity investments, net
Loss on extinguishment of debt
Fair value adjustment to contingent earnout obligation
Loss (gain) on sale of business
(Gain) on preferred stock redemption
Income before income taxes, as adjusted
Tax at 25% rate
Net income, as adjusted
Net income per common share, as adjusted
Average diluted common shares outstanding, as reported
Stock option dilution
Average diluted common shares outstanding, as adjusted
Represents income from the revaluation of contingent consideration related to a prior acquisition.
Represents a loss related to the divestiture of Hüppe GmbH (“Hüppe”) for the three and six months ended June 30, 2021. Represents a pre-tax post-closing gain related to the finalization of working capital items related to the divestiture of Hüppe for the six months ended June 30, 2022.
For the three months ended June 30, 2021, 2 million of stock option dilution was included in the average diluted common shares outstanding, as adjusted to reflect what the average diluted common shares outstanding would have been if there was net income, as reported.
Outlook for the Twelve Months Ended December 31, 2022
Low End
High End
Income Per Common Share Outlook
(0.08)
(Gain) on sale of business
(0.01)
Allocation to participating securities per share
Represents income from the revaluation of contingent consideration related to a prior acquisition.
Represents a pre-tax post-closing gain related to the finalization of working capital items related to the divestiture of Hüppe.
Represents the impact of distributed dividends and undistributed earnings to unvested restricted stock awards as well as an allocation to redeemable noncontrolling interest in accordance with the two-class method of calculating earnings per share.
Condensed Consolidated Balance Sheets and Other Financial Data - Unaudited
June 30, 2022 and December 31, 2021
Assets
Current Assets:
Cash and cash investments
Receivables
1,434 
1,171 
Prepaid expenses and other
Inventories
1,354 
1,216 
Total Current Assets
3,359 
3,422 
Property and equipment, net
Goodwill
Other intangible assets, net
Operating lease right-of-use assets
Other assets
Total Assets
5,467 
5,575 
Liabilities
Current Liabilities:
Accounts payable
1,128 
1,045 
Notes payable
Accrued liabilities
Total Current Liabilities
2,467 
1,939 
Long-term debt
2,946 
2,949 
Noncurrent operating lease liabilities
Other liabilities
Total Liabilities
6,008 
5,497 
Redeemable noncontrolling interest
Equity
Total Liabilities and Equity
As of June 30,
Working Capital Days
Receivable days
Inventory days
Payable days
Working capital
1,660 
1,352 
Working capital as a % of sales
Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited
For the Six Months Ended June 30, 2022 and 2021
(dollars in millions)
Cash Flows From (For) Operating Activities:
Cash provided by operating activities
Working capital changes
Net cash from operating activities
Cash Flows From (For) Financing Activities:
Retirement of notes
(1,326)
Purchase of Company common stock
Cash dividends paid
Dividends paid to noncontrolling interest
Issuance of notes, net of issuance costs
1,481 
Proceeds from term loan
Debt extinguishment costs
Proceeds from the exercise of stock options
Employee withholding taxes paid on stock-based compensation
Decrease in debt, net
Net cash for financing activities
Cash Flows From (For) Investing Activities:
Capital expenditures
Acquisition of businesses, net of cash acquired
Proceeds from disposition of businesses, net of cash disposed
Proceeds from disposition of other financial investments
Net cash (for) from investing activities
Effect of exchange rate changes on cash and cash investments
Cash and Cash Investments:
Decrease for the period
At January 1
1,326 
At June 30
Revolver availability
1,000 
Total Liquidity
1,440 
1,769 
Segment Data - Unaudited
Change
1,373 
1,329 
2,732 
2,578 
Depreciation and amortization
EBITDA, as adjusted
1,821 
1,571 
Accelerated depreciation related to rationalization activity - segment
Operating profit, as reported - segment
General corporate expense, net
Rationalization charges - segment
Depreciation and amortization - segment
Depreciation and amortization - other
Historical information is available on our website.
North American and International Data - Unaudited
1,905 
1,717 
3,639 
3,246 

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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