Masco Corporation Reports Third Quarter 2011 Results

TAYLOR, Mich., Oct. 24, 2011 /PRNewswire/ --

2011 Third Quarter Commentary

  • Sales increased three percent to $2.0 billion compared to the third quarter of 2010.
  • Results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, compared to the third quarter of 2010 were as follows:
    • Gross profit margins were 25.1 percent compared to 26.9 percent.
    • Operating profit margins were 6.1 percent compared to 7.2 percent.
    • Income was $.08 per common share compared to $.11 per common share.
  • Income (loss), as reported, was $.10 per common share compared to $(.02) per common share for the third quarter of 2010.
  • Working capital as a percent of sales improved to 14.8 percent at September 30, 2011, compared to 16.2 percent at September 30, 2010.
  • We retired approximately $60 million in zero coupon notes.
  • We ended the third quarter of 2011 with over $1.6 billion of cash.

Masco Corporation (NYSE: MAS) today reported that net sales for the third quarter ended September 30, 2011 increased three percent to $2.0 billion compared to the third quarter of 2010.  North American sales were flat and International sales increased 12 percent.  In local currencies, International sales increased four percent compared with the third quarter of 2010.

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Income was $.08 per common share and $.11 per common share for the third quarters of 2011 and 2010, respectively, excluding the items in Exhibit A and with a normalized tax rate of 36 percent.  As reported, income (loss) was $.10 per common share and $(.02) per common share for the third quarters ended September 30, 2011 and 2010, respectively.

Income for the three months ended September 30, 2011 included $19 million of pre-tax gains ($.03 per common share, after tax) related to distributions from private equity funds.  Income for the three months ended September 30, 2010 included $3 million of pre-tax losses ($.01 per common share, after tax) related to the sale of financial investments.

Income also included the impact of mark-to-market changes on certain metal commodity hedges aggregating $10 million of pre-tax losses ($.02 per common share, after tax) and $4 million of pre-tax gains ($.01 per common share, after tax), for the three month periods ended September 30, 2011 and 2010, respectively.

"Our sales increased three percent compared to third quarter 2010, reflecting strong sales of plumbing-related products driven by share gains of our Hansgrohe and Delta brands, share gains in our Installation segment  and foreign currency translation.  The third quarter of 2011 was negatively impacted by continued depressed conditions in new home construction and by the deferral of "big ticket" repair and remodel activity," said Masco's President and CEO Tim Wadhams. "We have continued to take aggressive steps to address these challenging market dynamics and further reduce our cost structure.  In October, we closed multiple facilities and reduced headcount in those businesses most affected by these economic conditions.  In addition, we identified four businesses within the Installation and Other Services segment for divestiture. These businesses were focused on noncore diversified products which include framing, commercial drywall installation, and millwork."

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 2011 and 2010, we incurred costs and charges of $13 million pre-tax ($.02 per common share, after tax) and $39 million pre-tax ($.07 per common share, after tax), respectively, related to these initiatives.

Outlook 2011

"The foreclosure process, credit availability, declining home values, and consumer confidence continue to dampen the U.S. economy and hinder any housing recovery.  We continue to believe that housing start levels in 2011 will be flat with 2010. Longer-term, however, we are confident about the fundamentals for the new home construction and home improvement markets and we are optimistic about the future," said Tim Wadhams.  "We continue to focus on the things we can control, including managing our cost structure and business portfolio, and launching exciting new programs in paint, plumbing, cabinets and builder hardware. In addition, we are funding global initiatives in our paint and plumbing businesses. We expect that improvements in our markets and in consumer spending, together with the changes we are driving across Masco and our financial strength, will create significant value for our shareholders in the future."

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 2011 third quarter supplemental material, including a presentation in PDF format, will be distributed after the market closes on October 24, 2011 and will be available on the Company's Web site at www.masco.com.

A conference call regarding items contained in this release is scheduled for Tuesday, October 25, 2011 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 (719) 457-1529 (confirmation #7673584).  The conference call will be webcast simultaneously on the Company's Web site at www.masco.com and supplemental material, including the financial data referred to on the call and a reconciliation of non-GAAP information provided on the call, will also be available on the Web site.  

A replay of the call will be available on Masco's Web site or by phone by dialing (719) 457-0820 (replay access code #7673584) approximately two hours after the end of the call and will continue through November 1, 2011.

Masco Corporation's press releases and other information are available through the Company's toll free number, 1-888-MAS-NEWS, or under the Investor Relations section of Masco's Web site at www.masco.com.  

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," "intend," "plan," "estimate," "expect," "assume," "seek," 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, and our ability to achieve cost savings through the Masco Business System and other initiatives.  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 Web site at www.masco.com.

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

For the Three Months and Nine Months Ended September 30, 2011 and 2010

(In Millions, Except Per Common Share Data)





















Three Months Ended


Nine Months Ended



September  30,


September  30,



2011


2010


2011


2010










Net sales


$                 2,006


$                 1,957


$                 5,800


$                 5,857

Cost of Sales


1,511


1,463


4,348


4,325

       Gross profit


495


494


1,452


1,532










Selling, general and administrative expenses


393


392


1,238


1,233

       Operating profit


102


102


214


299










Other income (expense), net


(41)


(64)


(116)


(223)

       Income before income taxes


61


38


98


76










Income tax expense


12


31


63


53

       Net income (loss)


49


7


35


23










Less: Net income attributable to non-controlling interest


13


12


37


32

       Net income (loss) attributable to Masco Corporation


$                      36


$                      (5)


$                      (2)


$                      (9)










Income (loss) per common share attributable to Masco









   Corporation (diluted):









       Net income (loss) attributable to Masco Corporation


$                   0.10


$                 (0.02)


$                 (0.01)


$                 (0.03)










Average diluted common shares outstanding


348


349


348


349










Amounts attributable to Masco Corporation:









       Net income (loss) attributable to Masco Corporation


$                      36


$                      (5)


$                      (2)


$                      (9)



MASCO CORPORATION

Reconciliations - Exhibit A - UNAUDITED

For the Three Months Ended September 30, 2011 and 2010

(In Millions, Except Per Common Share Data)







Gross Profit and Operating Profit Reconciliations









Three Months Ended




September  30,




2011


2010

Sales



$         2,006


$         1,957







Gross profit, as reported



$            495


$            494







Rationalization charges



8


32







Gross profit, as adjusted



$            503


$            526







Gross margin, as reported



24.7%


25.2%

Gross margin, as adjusted



25.1%


26.9%













Operating profit, as reported


$            102


$            102







Rationalization charges



13


39







Impairment of intangible assets


7


-







Litigation charge



1


-







Operating profit, as adjusted


$            123


$            141







Operating margin, as reported


5.1%


5.2%

Operating margin, as adjusted


6.1%


7.2%













Earnings Per Common Share Reconciliation









Three Months Ended




September  30,




2011


2010

Income before income taxes - as reported

$              61


$              38







Rationalization charges



13


39







Impairment of intangible assets


7


-







Litigation charge



1


-







(Gains) losses from financial investments


(19)


3







Impairment of financial investments


-


-







Income before income taxes - as adjusted

$              63


$              80







Tax at 36% rate



(23)


(29)







Less: Net income attributable to non-controlling interest

(13)


(12)







Net income - as adjusted



$              27


$              39







Earnings per common share - as adjusted

$           0.08


$           0.11







Shares outstanding



348


349















The Company believes that certain non-GAAP performance measures and ratios used in managing the business may provide 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.



SOURCE Masco Corporation



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