Masco corporation reports second quarter 2022 results
Livonia, mich.--(business wire)--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 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 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. masco corporation north american and international data - 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, 2022 2021 2022 2021 net sales $ 2,352 $ 2,179 $ 4,553 $ 4,149 cost of sales 1,583 1,388 3,080 2,658 gross profit 769 791 1,473 1,491 selling, general and administrative expenses 361 354 712 689 operating profit 408 437 761 802 other income (expense), net: interest expense (28 ) (25 ) (53 ) (227 ) other, net 17 (415 ) 16 (421 ) (11 ) (440 ) (37 ) (648 ) income (loss) before income taxes 397 (3 ) 724 154 income tax expense 103 12 178 55 net income (loss) 294 (15 ) 546 99 less: net income attributable to noncontrolling interest 16 21 35 41 net income (loss) attributable to masco corporation $ 278 $ (36 ) $ 511 $ 58 income (loss) per common share attributable to masco corporation (diluted): net income (loss) $ 1.18 $ (0.14 ) $ 2.15 $ 0.20 average diluted common shares outstanding 233 252 237 256 historical information is available on our website. masco corporation exhibit a: reconciliations - unaudited for the three and six months ended june 30, 2022 and 2021 (dollars in millions) three months ended june 30, six months ended june 30, 2022 2021 2022 2021 gross profit, selling, general and administrative expenses, and operating profit reconciliations net sales $ 2,352 $ 2,179 $ 4,553 $ 4,149 gross profit, as reported $ 769 $ 791 $ 1,473 $ 1,491 rationalization charges 6 1 9 2 gross profit, as adjusted $ 775 $ 792 $ 1,482 $ 1,493 gross margin, as reported 32.7 % 36.3 % 32.4 % 35.9 % gross margin, as adjusted 33.0 % 36.3 % 32.5 % 36.0 % selling, general and administrative expenses, as reported $ 361 $ 354 $ 712 $ 689 selling, general and administrative expenses as percent of net sales, as reported 15.3 % 16.2 % 15.6 % 16.6 % operating profit, as reported $ 408 $ 437 $ 761 $ 802 rationalization charges 6 1 9 2 operating profit, as adjusted $ 414 $ 438 $ 770 $ 804 operating margin, as reported 17.3 % 20.1 % 16.7 % 19.3 % operating margin, as adjusted 17.6 % 20.1 % 16.9 % 19.4 % historical information is available on our website. masco corporation exhibit a: reconciliations - 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, 2022 2021 2022 2021 income per common share reconciliations income (loss) before income taxes, as reported $ 397 $ (3 ) $ 724 $ 154 rationalization charges 6 1 9 2 pension costs associated with terminated plans — 413 — 422 (earnings) from equity investments, net — — — (2 ) loss on extinguishment of debt — — — 168 fair value adjustment to contingent earnout obligation (1) (28 ) — (24 ) — loss (gain) on sale of business (2) — 18 (2 ) 18 (gain) on preferred stock redemption — (14 ) — (14 ) income before income taxes, as adjusted 375 415 707 748 tax at 25% rate (94 ) (104 ) (177 ) (187 ) less: net income attributable to noncontrolling interest 16 21 35 41 net income, as adjusted $ 265 $ 290 $ 495 $ 520 net income per common share, as adjusted $ 1.14 $ 1.14 $ 2.09 $ 2.03 average diluted common shares outstanding, as reported 233 252 237 256 stock option dilution (3) — 2 — — average diluted common shares outstanding, as adjusted 233 254 237 256 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 twelve months ended december 31, 2022 low end high end income per common share outlook net income per common share $ 4.19 $ 4.29 rationalization charges 0.03 0.03 fair value adjustment to contingent earnout obligation (1) (0.08 ) (0.08 ) (gain) on sale of business (2) (0.01 ) (0.01 ) allocation to participating securities per share (3) 0.02 0.02 net income per common share, as adjusted $ 4.15 $ 4.25 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. masco corporation condensed consolidated balance sheets and other financial data - unaudited june 30, 2022 and december 31, 2021 (dollars in millions) june 30, 2022 december 31, 2021 balance sheet assets current assets: cash and cash investments $ 440 $ 926 receivables 1,434 1,171 prepaid expenses and other 131 109 inventories 1,354 1,216 total current assets 3,359 3,422 property and equipment, net 884 896 goodwill 554 568 other intangible assets, net 369 388 operating lease right-of-use assets 198 187 other assets 103 114 total assets $ 5,467 $ 5,575 liabilities current liabilities: accounts payable $ 1,128 $ 1,045 notes payable 508 10 accrued liabilities 831 884 total current liabilities 2,467 1,939 long-term debt 2,946 2,949 noncurrent operating lease liabilities 185 172 other liabilities 410 437 total liabilities 6,008 5,497 redeemable noncontrolling interest 22 22 equity (563 ) 56 total liabilities and equity $ 5,467 $ 5,575 other financial data working capital days receivable days 52 53 inventory days 88 77 payable days 67 69 working capital $ 1,660 $ 1,352 working capital as a % of sales (ltm) 18.9 % 16.9 % historical information is available on our website. masco corporation condensed consolidated statements of cash flows and other financial data - unaudited for the six months ended june 30, 2022 and 2021 (dollars in millions) six months ended june 30, 2022 2021 cash flows from (for) operating activities: cash provided by operating activities $ 662 $ 610 working capital changes (488 ) (371 ) net cash from operating activities 174 239 cash flows from (for) financing activities: retirement of notes — (1,326 ) purchase of company common stock (914 ) (750 ) cash dividends paid (131 ) (96 ) dividends paid to noncontrolling interest — (43 ) issuance of notes, net of issuance costs — 1,481 proceeds from term loan 500 — debt extinguishment costs — (160 ) proceeds from the exercise of stock options 1 1 employee withholding taxes paid on stock-based compensation (17 ) (14 ) decrease in debt, net (7 ) (2 ) net cash for financing activities (568 ) (909 ) cash flows from (for) investing activities: capital expenditures (70 ) (53 ) acquisition of businesses, net of cash acquired — (1 ) proceeds from disposition of businesses, net of cash disposed — 5 proceeds from disposition of other financial investments 1 168 other, net (5 ) 3 net cash (for) from investing activities (74 ) 122 effect of exchange rate changes on cash and cash investments (18 ) (9 ) cash and cash investments: decrease for the period (486 ) (557 ) at january 1 926 1,326 at june 30 $ 440 $ 769 as of june 30, 2022 2021 liquidity cash and cash investments $ 440 $ 769 revolver availability 1,000 1,000 total liquidity $ 1,440 $ 1,769 historical information is available on our website. masco corporation segment data - unaudited for the three and six months ended june 30, 2022 and 2021 (dollars in millions) three months ended june 30, six months ended june 30, 2022 2021 change 2022 2021 change plumbing products net sales $ 1,373 $ 1,329 3 % $ 2,732 $ 2,578 6 % operating profit, as reported $ 238 $ 273 $ 466 $ 525 operating margin, as reported 17.3 % 20.5 % 17.1 % 20.4 % rationalization charges — 1 — 2 operating profit, as adjusted 238 274 466 527 operating margin, as adjusted 17.3 % 20.6 % 17.1 % 20.4 % depreciation and amortization 25 24 49 50 ebitda, as adjusted $ 263 $ 298 $ 515 $ 577 decorative architectural products net sales $ 979 $ 850 15 % $ 1,821 $ 1,571 16 % operating profit, as reported $ 192 $ 188 $ 347 $ 330 operating margin, as reported 19.6 % 22.1 % 19.1 % 21.0 % rationalization charges 6 — 8 — accelerated depreciation related to rationalization activity - segment — — 1 — operating profit, as adjusted 198 188 356 330 operating margin, as adjusted 20.2 % 22.1 % 19.5 % 21.0 % depreciation and amortization 9 9 17 19 ebitda, as adjusted $ 207 $ 197 $ 373 $ 349 total net sales $ 2,352 $ 2,179 8 % $ 4,553 $ 4,149 10 % operating profit, as reported - segment $ 430 $ 461 $ 813 $ 855 general corporate expense, net (22 ) (24 ) (52 ) (53 ) operating profit, as reported 408 437 761 802 operating margin, as reported 17.3 % 20.1 % 16.7 % 19.3 % rationalization charges - segment 6 1 8 2 accelerated depreciation related to rationalization activity - segment — — 1 — operating profit, as adjusted 414 438 770 804 operating margin, as adjusted 17.6 % 20.1 % 16.9 % 19.4 % depreciation and amortization - segment 34 33 66 69 depreciation and amortization - other 2 2 4 9 ebitda, as adjusted $ 450 $ 473 $ 840 $ 882 historical information is available on our website. masco corporation north american and international data - unaudited for the three and six months ended june 30, 2022 and 2021 (dollars in millions) three months ended june 30, six months ended june 30, 2022 2021 change 2022 2021 change north american net sales $ 1,905 $ 1,717 11 % $ 3,639 $ 3,246 12 % operating profit, as reported $ 356 $ 370 $ 656 $ 678 operating margin, as reported 18.7 % 21.5 % 18.0 % 20.9 % rationalization charges 6 1 8 2 accelerated depreciation related to rationalization activity — — 1 — operating profit, as adjusted 362 371 665 680 operating margin, as adjusted 19.0 % 21.6 % 18.3 % 20.9 % depreciation and amortization 23 21 43 44 ebitda, as adjusted $ 385 $ 392 $ 708 $ 724 international net sales $ 447 $ 462 (3 )% $ 914 $ 903 1 % operating profit, as reported $ 74 $ 91 $ 157 $ 177 operating margin, as reported 16.6 % 19.7 % 17.2 % 19.6 % depreciation and amortization 11 12 23 25 ebitda $ 85 $ 103 $ 180 $ 202 total net sales $ 2,352 $ 2,179 8 % $ 4,553 $ 4,149 10 % operating profit, as reported - segment $ 430 $ 461 $ 813 $ 855 general corporate expense, net (22 ) (24 ) (52 ) (53 ) operating profit, as reported 408 437 761 802 operating margin, as reported 17.3 % 20.1 % 16.7 % 19.3 % rationalization charges - segment 6 1 8 2 accelerated depreciation related to rationalization activity - segment — — 1 — operating profit, as adjusted 414 438 770 804 operating margin, as adjusted 17.6 % 20.1 % 16.9 % 19.4 % depreciation and amortization – segment 34 33 66 69 depreciation and amortization - other 2 2 4 9 ebitda, as adjusted $ 450 $ 473 $ 840 $ 882 historical information is available on our website.
