Delaware (State or Other Jurisdiction of Incorporation) | 1-5794 (Commission File Number) | 38-1794485 (IRS Employer Identification No.) |
21001 Van Born Road, Taylor, Michigan (Address of Principal Executive Offices) | 48180 (Zip Code) |
MASCO CORPORATION | ||
By: | /s/ John G. Sznewajs | |
Name: | John G. Sznewajs | |
Title: | Vice President, Treasurer and Chief Financial Officer | |
• | Sales for the first quarter increased 4 percent to $1.7 billion; sales increased 5 percent excluding the impact of foreign currency translation |
• | Adjusted operating profit grew 39 percent to $237 million |
• | Adjusted operating profit margin for the quarter increased to 13.8 percent, a 350 basis point expansion |
• | Adjusted EPS for the quarter grew 78 percent to $.32 per common share |
• | Compared to first quarter 2015, net sales from continuing operations increased 4 percent to $1.7 billion. In local currency, North American sales increased 6 percent and international sales increased 2 percent |
• | Compared to first quarter 2015, 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 margins improved to 33.1 percent compared to 29.9 percent |
• | Operating margins improved to 13.8 percent compared to 10.3 percent |
• | Income from continuing operations was $.32 per common share compared to $.18 per common share |
• | Income from continuing operations, as reported, was $.32 per common share |
• | Liquidity at the end of the first quarter was approximately $2.4 billion (includes $900 million of cash from the issuance of notes in March 2016). Subsequently, $1.3 billion of cash was paid for the retirement of debt in April |
• | 3.2 million shares were repurchased in the first quarter |
• | Plumbing Products’ net sales increased 2 percent (4 percent excluding the impact of foreign currency translation) driven by growth in the wholesale/trade channel |
• | Decorative Architectural Products’ net sales increased 9 percent, fueled by strong growth in Behr’s core DIY products and Behr Pro® products |
• | Cabinetry Products’ net sales decreased 5 percent, due to the exit of lower margin business in the builder channel, which was partially offset by continued growth in the dealer channel |
• | Windows and Other Specialty Products’ net sales increased 9 percent (11 percent excluding the impact of foreign currency translation) led by the strong performance of our North American windows business |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net sales | $ | 1,720 | $ | 1,659 | ||||
Cost of sales | 1,151 | 1,164 | ||||||
Gross profit | 569 | 495 | ||||||
Selling, general and administrative expenses | 335 | 330 | ||||||
Operating profit | 234 | 165 | ||||||
Other income (expense), net: | ||||||||
Interest expense | (56 | ) | (56 | ) | ||||
Other, net | (1 | ) | 1 | |||||
(57 | ) | (55 | ) | |||||
Income from continuing operations before income taxes | 177 | 110 | ||||||
Income tax expense | (58 | ) | (40 | ) | ||||
Income from continuing operations | 119 | 70 | ||||||
Income from discontinued operations, net | — | 3 | ||||||
Net income | 119 | 73 | ||||||
Less: Net income attributable to noncontrolling interest | 10 | 9 | ||||||
Net income attributable to Masco Corporation | $ | 109 | $ | 64 | ||||
Income per common share attributable to Masco Corporation (diluted): | ||||||||
Income from continuing operations | $ | 0.32 | $ | 0.17 | ||||
Income from discontinued operations, net | — | 0.01 | ||||||
Net income | $ | 0.32 | $ | 0.18 | ||||
Average diluted common shares outstanding | 333 | 347 | ||||||
Amounts attributable to Masco Corporation: | ||||||||
Income from continuing operations | $ | 109 | $ | 61 | ||||
Income from discontinued operations, net | — | 3 | ||||||
Net income attributable to Masco Corporation | $ | 109 | $ | 64 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations | ||||||||
Net sales | $ | 1,720 | $ | 1,659 | ||||
Gross profit, as reported | $ | 569 | $ | 495 | ||||
Rationalization charges | 1 | 1 | ||||||
Gross profit, as adjusted | $ | 570 | $ | 496 | ||||
Gross margin, as reported | 33.1 | % | 29.8 | % | ||||
Gross margin, as adjusted | 33.1 | % | 29.9 | % | ||||
Selling, general and administrative expenses, as reported | $ | 335 | $ | 330 | ||||
Rationalization charges | 2 | 5 | ||||||
Selling, general and administrative expenses, as adjusted | $ | 333 | $ | 325 | ||||
Selling, general and administrative expenses as percent of net sales, as reported | 19.5 | % | 19.9 | % | ||||
Selling, general and administrative expenses as percent of net sales, as adjusted | 19.4 | % | 19.6 | % | ||||
Operating profit, as reported | $ | 234 | $ | 165 | ||||
Rationalization charges | 3 | 6 | ||||||
Operating profit, as adjusted | $ | 237 | $ | 171 | ||||
Operating margin, as reported | 13.6 | % | 9.9 | % | ||||
Operating margin, as adjusted | 13.8 | % | 10.3 | % | ||||
Earnings Per Common Share Reconciliation | ||||||||
Income from continuing operations before income taxes, as reported | $ | 177 | $ | 110 | ||||
Rationalization charges | 3 | 6 | ||||||
Gains from private equity funds, net | — | (2 | ) | |||||
Earnings from equity investments, net | (1 | ) | — | |||||
Income from continuing operations before income taxes, as adjusted | 179 | 114 | ||||||
Tax at 36% rate | (64 | ) | (41 | ) | ||||
Less: Net income attributable to noncontrolling interest | 10 | 9 | ||||||
Income from continuing operations, as adjusted | $ | 105 | $ | 64 | ||||
Income per common share, as adjusted | $ | 0.32 | $ | 0.18 | ||||
Average diluted common shares outstanding | 333 | 347 |
March 31, 2016 | December 31, 2015 | |||||||
Balance Sheet | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash investments | $ | 2,175 | $ | 1,468 | ||||
Short-term bank deposits | 195 | 248 | ||||||
Receivables | 1,036 | 853 | ||||||
Inventories | 755 | 687 | ||||||
Prepaid expenses and other | 87 | 72 | ||||||
Total Current Assets | 4,248 | 3,328 | ||||||
Property and equipment, net | 1,040 | 1,027 | ||||||
Goodwill | 844 | 839 | ||||||
Other intangible assets, net | 158 | 160 | ||||||
Other assets | 264 | 310 | ||||||
Total Assets | $ | 6,554 | $ | 5,664 | ||||
Liabilities | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 834 | $ | 749 | ||||
Notes payable | 1,303 | 1,004 | ||||||
Accrued liabilities | 652 | 752 | ||||||
Total Current Liabilities | 2,789 | 2,505 | ||||||
Long-term debt | 2,993 | 2,403 | ||||||
Other liabilities | 688 | 698 | ||||||
Total Liabilities | 6,470 | 5,606 | ||||||
Equity | 84 | 58 | ||||||
Total Liabilities and Equity | $ | 6,554 | $ | 5,664 |
As of | ||||||||
March 31, 2016 | March 31, 2015 | |||||||
Other Financial Data | ||||||||
Working Capital Days | ||||||||
Receivable days | 50 | 51 | ||||||
Inventory days | 56 | 56 | ||||||
Payable days | 70 | 68 | ||||||
Working capital | $ | 957 | $ | 968 | ||||
Working capital as a % of sales (LTM) | 13.3 | % | 13.8 | % |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Cash Flows From (For) Operating Activities: | ||||||||
Cash provided by operating activities | $ | 189 | $ | 144 | ||||
Working capital changes | (289 | ) | (296 | ) | ||||
Net cash for operating activities | (100 | ) | (152 | ) | ||||
Cash Flows From (For) Financing Activities: | ||||||||
Purchase of Company common stock | (86 | ) | (103 | ) | ||||
Cash dividends paid | (32 | ) | (32 | ) | ||||
Issuance of notes, net of issuance costs | 889 | 497 | ||||||
Issuance of Company common stock | 1 | — | ||||||
Excess tax benefit from stock-based compensation | 11 | — | ||||||
Decrease in debt, net | (2 | ) | — | |||||
Net cash from financing activities | 781 | 362 | ||||||
Cash Flows From (For) Investing Activities: | ||||||||
Capital expenditures | (37 | ) | (32 | ) | ||||
Other, net | 57 | 43 | ||||||
Net cash from investing activities | 20 | 11 | ||||||
Effect of exchange rate changes on cash and cash investments | 6 | (26 | ) | |||||
Cash and Cash Investments: | ||||||||
Increase for the period | 707 | 195 | ||||||
At January 1 | 1,468 | 1,383 | ||||||
At March 31 | $ | 2,175 | $ | 1,578 |
As of March 31, | ||||||||
2016 | 2015 | |||||||
Liquidity* | ||||||||
Cash and cash investments | $ | 2,175 | $ | 1,578 | ||||
Short-term bank deposits | 195 | 197 | ||||||
Total Liquidity | $ | 2,370 | $ | 1,775 |
Three Months Ended March 31, | |||||||||||
2016 | 2015 | Change | |||||||||
Plumbing Products | |||||||||||
Net sales | $ | 813 | $ | 796 | 2 | % | |||||
Operating profit, as reported | $ | 129 | $ | 111 | |||||||
Operating margin, as reported | 15.9 | % | 13.9 | % | |||||||
Rationalization charges | 2 | 1 | |||||||||
Operating profit, as adjusted | 131 | 112 | |||||||||
Operating margin, as adjusted | 16.1 | % | 14.1 | % | |||||||
Depreciation and amortization | 14 | 14 | |||||||||
EBITDA, as adjusted | $ | 145 | $ | 126 | |||||||
Decorative Architectural Products | |||||||||||
Net sales | $ | 493 | $ | 451 | 9 | % | |||||
Operating profit, as reported | $ | 105 | $ | 83 | |||||||
Operating margin, as reported | 21.3 | % | 18.4 | % | |||||||
Depreciation and amortization | 4 | 4 | |||||||||
EBITDA | $ | 109 | $ | 87 | |||||||
Cabinetry Products | |||||||||||
Net sales | $ | 236 | $ | 249 | (5 | )% | |||||
Operating profit (loss), as reported | $ | 24 | $ | (4 | ) | ||||||
Operating margin, as reported | 10.2 | % | (1.6 | )% | |||||||
Rationalization charges | 1 | 2 | |||||||||
Operating profit (loss), as adjusted | 25 | (2 | ) | ||||||||
Operating margin, as adjusted | 10.6 | % | (0.8 | )% | |||||||
Depreciation and amortization | 5 | 7 | |||||||||
EBITDA, as adjusted | $ | 30 | $ | 5 |
Three Months Ended March 31, | |||||||||||
2016 | 2015 | Change | |||||||||
Windows and Other Specialty Products | |||||||||||
Net sales | $ | 178 | $ | 163 | 9 | % | |||||
Operating profit, as reported | $ | 3 | $ | 6 | |||||||
Operating margin, as reported | 1.7 | % | 3.7 | % | |||||||
Depreciation and amortization | 5 | 4 | |||||||||
EBITDA | $ | 8 | $ | 10 | |||||||
Total | |||||||||||
Net sales | $ | 1,720 | $ | 1,659 | 4 | % | |||||
Operating profit, as reported - segment | $ | 261 | $ | 196 | |||||||
General corporate expense, net (GCE) | (27 | ) | (31 | ) | |||||||
Operating profit, as reported | 234 | 165 | |||||||||
Operating margin, as reported | 13.6 | % | 9.9 | % | |||||||
Rationalization charges - segment | 3 | 3 | |||||||||
Rationalization charges - GCE | — | 3 | |||||||||
Operating profit, as adjusted | 237 | 171 | |||||||||
Operating margin, as adjusted | 13.8 | % | 10.3 | % | |||||||
Depreciation and amortization - segment | 28 | 29 | |||||||||
Depreciation and amortization - non-operating | 4 | 2 | |||||||||
EBITDA, as adjusted | $ | 269 | $ | 202 |
Three Months Ended March 31, | |||||||||||
2016 | 2015 | Change | |||||||||
North American | |||||||||||
Net sales | $ | 1,350 | $ | 1,282 | 5 | % | |||||
Operating profit, as reported | $ | 215 | $ | 151 | |||||||
Operating margin, as reported | 15.9 | % | 11.8 | % | |||||||
Rationalization charges | 2 | 2 | |||||||||
Operating profit, as adjusted | 217 | 153 | |||||||||
Operating margin, as adjusted | 16.1 | % | 11.9 | % | |||||||
Depreciation and amortization | 19 | 20 | |||||||||
EBITDA, as adjusted | $ | 236 | $ | 173 | |||||||
International | |||||||||||
Net sales | $ | 370 | $ | 377 | (2 | )% | |||||
Operating profit, as reported | $ | 46 | $ | 45 | |||||||
Operating margin, as reported | 12.4 | % | 11.9 | % | |||||||
Rationalization charges | 1 | 1 | |||||||||
Operating profit, as adjusted | 47 | 46 | |||||||||
Operating margin, as adjusted | 12.7 | % | 12.2 | % | |||||||
Depreciation and amortization | 9 | 9 | |||||||||
EBITDA, as adjusted | $ | 56 | $ | 55 | |||||||
Total | |||||||||||
Net sales | $ | 1,720 | $ | 1,659 | 4 | % | |||||
Operating profit, as reported - segment | $ | 261 | $ | 196 | |||||||
General corporate expense, net (GCE) | (27 | ) | (31 | ) | |||||||
Operating profit, as reported | 234 | 165 | |||||||||
Operating margin, as reported | 13.6 | % | 9.9 | % | |||||||
Rationalization charges - segment | 3 | 3 | |||||||||
Rationalization charges - GCE | — | 3 | |||||||||
Operating profit, as adjusted | 237 | 171 | |||||||||
Operating margin, as adjusted | 13.8 | % | 10.3 | % | |||||||
Depreciation and amortization - segment | 28 | 29 | |||||||||
Depreciation and amortization - non-operating | 4 | 2 | |||||||||
EBITDA, as adjusted | $ | 269 | $ | 202 |
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