Masco corporation reports fourth quarter and 2021 year-end 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 results for the fourth quarter and full year of 2021. 2021 fourth quarter results on a reported basis, compared to fourth quarter 2020: net sales increased 9 percent to $2,022 million; in local currency and excluding acquisitions and divestitures, net sales increased 7 percent in local currency, north american sales increased 11 percent and international sales increased 3 percent gross margin decreased 490 basis points to 30.6 percent from 35.5 percent operating margin decreased 570 basis points to 10.8 percent from 16.5 percent income from continuing operations decreased to $0.55 per share, compared to $0.73 per share net sales increased 9 percent to $2,022 million; in local currency and excluding acquisitions and divestitures, net sales increased 7 percent in local currency, north american sales increased 11 percent and international sales increased 3 percent gross margin decreased 490 basis points to 30.6 percent from 35.5 percent operating margin decreased 570 basis points to 10.8 percent from 16.5 percent income from continuing operations decreased to $0.55 per share, compared to $0.73 per share compared to fourth quarter 2020, 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 490 basis points to 30.7 percent from 35.6 percent operating margin decreased 350 basis points to 13.1 percent from 16.6 percent income from continuing operations decreased to $0.67 per share, compared to $0.75 per share gross margin decreased 490 basis points to 30.7 percent from 35.6 percent operating margin decreased 350 basis points to 13.1 percent from 16.6 percent income from continuing operations decreased to $0.67 per share, compared to $0.75 per share liquidity at the end of the fourth quarter was $1,926 million (including availability under revolving credit facility) plumbing products’ net sales increased 5 percent; excluding acquisitions and divestitures, sales increased 2 percent decorative architectural products’ net sales increased 15 percent; excluding acquisitions, sales increased 14 percent 2021 full year highlights sales for the year increased 17 percent to $8,375 million; in local currency, sales increased 15 percent operating profit grew 8 percent to $1,405 million; adjusted operating profit grew 11 percent to $1,454 million returned $1,237 million to shareholders through share repurchases and dividends earnings per share from continuing operations for the year declined 47 percent to $1.62 per share; adjusted earnings per share from continuing operations grew 19 percent to $3.70 per share 2021 full year results on a reported basis, compared to full year 2020: net sales increased 17 percent to $8,375 million; in local currency and excluding acquisitions and divestitures, net sales increased 13 percent in local currency, north american sales increased 14 percent and international sales increased 21 percent gross margin decreased 180 basis points to 34.2 percent from 36.0 percent operating profit increased 8 percent to $1,405 million from $1,295 million operating margin decreased 120 basis points to 16.8 percent from 18.0 percent income from continuing operations decreased 47 percent to $1.62 per share compared to $3.04 per share net sales increased 17 percent to $8,375 million; in local currency and excluding acquisitions and divestitures, net sales increased 13 percent in local currency, north american sales increased 14 percent and international sales increased 21 percent gross margin decreased 180 basis points to 34.2 percent from 36.0 percent operating profit increased 8 percent to $1,405 million from $1,295 million operating margin decreased 120 basis points to 16.8 percent from 18.0 percent income from continuing operations decreased 47 percent to $1.62 per share compared to $3.04 per share compared to full year 2020, 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 190 basis points to 34.2 percent from 36.1 percent operating profit increased 11 percent to $1,454 million from $1,306 million operating margin decreased 80 basis points to 17.4 percent from 18.2 percent income from continuing operations increased 19 percent to $3.70 per share compared to $3.12 per share gross margin decreased 190 basis points to 34.2 percent from 36.1 percent operating profit increased 11 percent to $1,454 million from $1,306 million operating margin decreased 80 basis points to 17.4 percent from 18.2 percent income from continuing operations increased 19 percent to $3.70 per share compared to $3.12 per share “we ended 2021 with another quarter of strong top-line growth, capping off an exceptional year, with sales growth of 17 percent, adjusted operating profit growth of 11 percent, and adjusted earnings per share growth of 19 percent,” said masco president and ceo, keith allman. “these results demonstrate the strength and resilience of our company and our employees, who delivered for our customers and shareholders despite supply chain challenges and inflation headwinds. we also executed on our commitment to return capital to shareholders over the course of year, with $1.2 billion returned in 2021 in dividends and share repurchases, including $205 million returned during the fourth quarter.” ”looking ahead, we expect demand for our products to remain strong in 2022,” said allman. “we believe we are well positioned to outperform the market with our industry leading portfolio of branded, lower ticket, repair and remodel-oriented products that serve both the do-it-yourself and professional markets, favorable housing fundamentals, and demonstrated executional excellence. in 2022, we anticipate that we will achieve margin expansion, and expect to deliver adjusted earnings per share in the range of $4.10 to $4.30 per share,” concluded allman. dividend declaration masco’s board of directors declared a quarterly dividend of $0.28 per share, a 19 percent increase, payable on march 14, 2022 to shareholders of record on february 25, 2022. “this dividend increase is consistent with our capital allocation strategy to target a dividend payout ratio of approximately 30 percent, and underscores the strength of our financial position, our ability to generate consistent, strong free cash flow, and the board’s confidence in our future,” concluded allman. 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 2021 fourth quarter and full year 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 8, 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) 549-7577 and from outside the u.s. at (442) 275-1712. please use the conference identification number 5794675. 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 5794675. the telephone replay will be available approximately two hours after the end of the call and continue through march 10, 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" of this report. 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 months and years ended december 31, 2021 and 2020 three months ended december 31, year ended december 31, 2021 2020 2021 2020 net sales $ 2,022 $ 1,860 $ 8,375 $ 7,188 cost of sales 1,403 1,200 5,512 4,601 gross profit 619 660 2,863 2,587 selling, general and administrative expenses 356 353 1,413 1,292 impairment charge for goodwill 45 — 45 — operating profit 218 307 1,405 1,295 other income (expense), net: interest expense (25 ) (34 ) (278 ) (144 ) other, net (1 ) 2 (439 ) (20 ) (26 ) (32 ) (717 ) (164 ) income from continuing operations before income taxes 192 275 688 1,131 income tax expense 52 67 210 269 income from continuing operations 140 208 478 862 income from discontinued operations, net — 3 — 414 net income 140 211 478 1,276 less: net income attributable to noncontrolling interest 8 16 68 52 net income attributable to masco corporation $ 132 $ 195 $ 410 $ 1,224 income per common share attributable to masco corporation (diluted): income from continuing operations $ 0.55 $ 0.73 $ 1.62 $ 3.04 income from discontinued operations, net — 0.01 — 1.55 net income $ 0.55 $ 0.74 $ 1.62 $ 4.59 average diluted common shares outstanding 245 261 251 264 amounts attributable to masco corporation: income from continuing operations $ 132 $ 192 $ 410 $ 810 income from discontinued operations, net — 3 — 414 net income $ 132 $ 195 $ 410 $ 1,224 historical information is available on our website. masco corporation exhibit a: reconciliations - unaudited for the three months and years ended december 31, 2021 and 2020 (dollars in millions) three months ended december 31, year ended december 31, 2021 2020 2021 2020 gross profit, selling, general and administrative expenses, and operating profit reconciliations net sales $ 2,022 $ 1,860 $ 8,375 $ 7,188 gross profit, as reported $ 619 $ 660 $ 2,863 $ 2,587 rationalization charges 2 2 4 9 gross profit, as adjusted $ 621 $ 662 $ 2,867 $ 2,596 gross margin, as reported 30.6 % 35.5 % 34.2 % 36.0 % gross margin, as adjusted 30.7 % 35.6 % 34.2 % 36.1 % selling, general and administrative expenses, as reported $ 356 $ 353 $ 1,413 $ 1,292 rationalization charges — — — 2 selling, general and administrative expenses, as adjusted $ 356 $ 353 $ 1,413 $ 1,290 selling, general and administrative expenses as percent of net sales, as reported 17.6 % 19.0 % 16.9 % 18.0 % selling, general and administrative expenses as percent of net sales, as adjusted 17.6 % 19.0 % 16.9 % 17.9 % operating profit, as reported $ 218 $ 307 $ 1,405 $ 1,295 rationalization charges 2 2 4 11 impairment charge for goodwill 45 — 45 — operating profit, as adjusted $ 265 $ 309 $ 1,454 $ 1,306 operating margin, as reported 10.8 % 16.5 % 16.8 % 18.0 % operating margin, as adjusted 13.1 % 16.6 % 17.4 % 18.2 % historical information is available on our website. masco corporation exhibit a: reconciliations - unaudited for the three months and years ended december 31, 2021 and 2020 (in millions, except per common share data) three months ended december 31, year ended december 31, 2021 2020 2021 2020 income per common share reconciliation income from continuing operations before income taxes, as reported $ 192 $ 275 $ 688 $ 1,131 rationalization charges 2 2 4 11 impairment charge for goodwill 45 — 45 — pension (reversion) charges associated with terminated plans (7 ) 6 415 23 fair value adjustment to contingent earnout obligation 2 — 16 — loss on sale of business — — 18 — (gain) on preferred stock redemption — — (14 ) — income related to an escrow settlement — (9 ) — (9 ) currency translation loss on liquidation of dormant entities — 9 — 9 (earnings) from equity investments, net (4 ) (2 ) (11 ) (3 ) loss on extinguishment of debt — — 168 6 income from continuing operations before income taxes, as adjusted 230 281 1,329 1,168 tax at 25% rate (57 ) (70 ) (332 ) (292 ) less: net income attributable to noncontrolling interest 8 16 68 52 income from continuing operations, as adjusted $ 165 $ 195 $ 929 $ 824 income from continuing operations per common share, as adjusted $ 0.67 $ 0.75 $ 3.70 $ 3.12 average diluted common shares outstanding 245 261 251 264 outlook for the year ended december 31, 2022 year ended december 31, 2022 low end high end income per common share reconciliation income from continuing operations per common share $ 4.06 $ 4.26 rationalization charges 0.02 0.02 allocation to participating securities per share (1) 0.02 0.02 income from continuing operations per common share, as adjusted $ 4.10 $ 4.30 (1) 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. historical information is available on our website. masco corporation condensed consolidated balance sheets and other financial data - unaudited december 31, 2021 and 2020 (dollars in millions) december 31, 2021 december 31, 2020 balance sheet assets current assets: cash and cash investments $ 926 $ 1,326 receivables 1,171 1,138 inventories 1,216 876 prepaid expenses and other 109 149 total current assets 3,422 3,489 property and equipment, net 896 908 goodwill 568 563 other intangible assets, net 388 357 operating lease right-of-use assets 187 166 other assets 114 294 total assets $ 5,575 $ 5,777 liabilities current liabilities: accounts payable $ 1,045 $ 893 notes payable 10 3 accrued liabilities 884 1,038 total current liabilities 1,939 1,934 long-term debt 2,949 2,792 noncurrent operating lease liabilities 172 149 other liabilities 437 481 total liabilities 5,497 5,356 redeemable noncontrolling interest 22 — equity 56 421 total liabilities and equity $ 5,575 $ 5,777 as of december 31, 2021 2020 other financial data working capital days receivable days 51 54 inventory days 85 72 payable days 66 71 working capital $ 1,342 $ 1,121 working capital as a % of sales (ltm) 16.0 % 15.6 % historical information is available on our website. masco corporation condensed consolidated statements of cash flows and other financial data - unaudited for the years ended december 31, 2021 and 2020 (dollars in millions) year ended december 31, 2021 2020 cash flows from (for) operating activities: cash provided by operating activities $ 1,154 $ 851 working capital changes (224 ) 102 net cash from operating activities 930 953 cash flows from (for) financing activities: retirement of notes (1,326 ) (400 ) purchase of company common stock (1,026 ) (727 ) cash dividends paid (211 ) (145 ) dividends paid to noncontrolling interest (43 ) (23 ) issuance of notes, net of issuance costs 1,481 415 debt extinguishment costs (160 ) (5 ) proceeds from the exercise of stock options 5 26 employee withholding taxes paid on stock-based compensation (15 ) (25 ) decrease in debt, net (3 ) (2 ) net cash for financing activities (1,298 ) (886 ) cash flows from (for) investing activities: capital expenditures (128 ) (114 ) acquisition of businesses, net of cash acquired (57 ) (227 ) proceeds from disposition of businesses, net of cash disposed 5 870 proceeds from disposition of financial investments 171 3 other, net (3 ) (1 ) net cash (for) from investing activities (12 ) 531 effect of exchange rate changes on cash and cash investments (20 ) 31 cash and cash investments: (decrease) increase for the year (400 ) 629 at january 1 1,326 697 at december 31 $ 926 $ 1,326 as of december 31, 2021 2020 liquidity cash and cash investments $ 926 $ 1,326 revolver availability 1,000 1,000 total liquidity $ 1,926 $ 2,326 historical information is available on our website. masco corporation segment data - unaudited for the three months and years ended december 31, 2021 and 2020 (dollars in millions) three months ended december 31, year ended december 31, 2021 2020 change 2021 2020 change plumbing products net sales $ 1,228 $ 1,172 5 % $ 5,135 $ 4,136 24 % operating profit, as reported $ 156 $ 223 $ 929 $ 806 operating margin, as reported 12.7 % 19.0 % 18.1 % 19.5 % rationalization charges — 1 2 6 accelerated depreciation related to rationalization activity — — — 1 operating profit, as adjusted 156 224 931 813 operating margin, as adjusted 12.7 % 19.1 % 18.1 % 19.7 % depreciation and amortization 25 22 101 83 ebitda, as adjusted $ 181 $ 246 $ 1,032 $ 896 decorative architectural products net sales $ 794 $ 688 15 % $ 3,240 $ 3,052 6 % operating profit, as reported $ 85 $ 108 $ 581 $ 583 operating margin, as reported 10.7 % 15.7 % 17.9 % 19.1 % rationalization charges 1 1 1 4 accelerated depreciation related to rationalization activity 1 — 1 — impairment charge for goodwill 45 — 45 — operating profit, as adjusted 132 109 628 587 operating margin, as adjusted 16.6 % 15.8 % 19.4 % 19.2 % depreciation and amortization 9 10 36 41 ebitda, as adjusted $ 141 $ 119 $ 664 $ 628 total net sales $ 2,022 $ 1,860 9 % $ 8,375 $ 7,188 17 % operating profit, as reported - segment $ 241 $ 331 $ 1,510 $ 1,389 general corporate expense, net (23 ) (24 ) (105 ) (94 ) operating profit, as reported 218 307 1,405 1,295 operating margin, as reported 10.8 % 16.5 % 16.8 % 18.0 % rationalization charges - segment 1 2 3 10 accelerated depreciation related to rationalization activity - segment 1 — 1 1 impairment charge for goodwill 45 — 45 — operating profit, as adjusted 265 309 1,454 1,306 operating margin, as adjusted 13.1 % 16.6 % 17.4 % 18.2 % depreciation and amortization - segment 34 32 137 124 depreciation and amortization - non-operating 2 2 13 8 ebitda, as adjusted $ 301 $ 343 $ 1,604 $ 1,438 historical information is available on our website. masco corporation north american and international data - unaudited for the three months and years ended december 31, 2021 and 2020 (dollars in millions) three months ended december 31, year ended december 31, 2021 2020 change 2021 2020 change north american net sales $ 1,625 $ 1,468 11 % $ 6,624 $ 5,805 14 % operating profit, as reported $ 204 $ 268 $ 1,214 $ 1,167 operating margin, as reported 12.6 % 18.3 % 18.3 % 20.1 % rationalization charges 1 2 3 10 accelerated depreciation related to rationalization activity 1 — 1 1 impairment charge for goodwill 45 — 45 — operating profit, as adjusted 251 270 1,263 1,178 operating margin, as adjusted 15.4 % 18.4 % 19.1 % 20.3 % depreciation and amortization 21 20 87 80 ebitda, as adjusted $ 272 $ 290 $ 1,350 $ 1,258 international net sales $ 397 $ 392 1 % $ 1,751 $ 1,383 27 % operating profit, as reported $ 37 $ 63 $ 296 $ 222 operating margin, as reported 9.3 % 16.1 % 16.9 % 16.1 % depreciation and amortization 13 12 50 44 ebitda $ 50 $ 75 $ 346 $ 266 total net sales $ 2,022 $ 1,860 9 % $ 8,375 $ 7,188 17 % operating profit, as reported - segment $ 241 $ 331 $ 1,510 $ 1,389 general corporate expense, net (23 ) (24 ) (105 ) (94 ) operating profit, as reported 218 307 1,405 1,295 operating margin, as reported 10.8 % 16.5 % 16.8 % 18.0 % rationalization charges - segment 1 2 3 10 accelerated depreciation related to rationalization activity - segment 1 — 1 1 impairment charge for goodwill 45 — 45 — operating profit, as adjusted 265 309 1,454 1,306 operating margin, as adjusted 13.1 % 16.6 % 17.4 % 18.2 % depreciation and amortization - segment 34 32 137 124 depreciation and amortization - non-operating 2 2 13 8 ebitda, as adjusted $ 301 $ 343 $ 1,604 $ 1,438 historical information is available on our website.
