Masco Corporation Highlights:
First Quarter 2007
- Net sales from continuing operations declined nine percent to $2.9 billion.
- Income from continuing operations was $142 million or $.37 per common share.
- The quarterly dividend was increased from $.22 to $.23 per
common share, making 2007 the 49th consecutive year in which dividends
have been increased.
- The Company returned $361 million to shareholders through share repurchases and dividends.
- The Company had $1.2 billion in cash and marketable securities at March 31.
Taylor, Michigan (May 1, 2007) – Masco Corporation (NYSE: MAS) today
reported that net sales from continuing operations for the quarter ended
March 31, 2007 declined nine percent to $2.9 billion compared with $3.2
billion for the first quarter of 2006. North American sales declined
15 percent and International sales increased 21 percent. In local
currencies, International sales increased 10 percent compared with the
first quarter of 2006.
Income from continuing operations was $142 million or $.37 per common
share and $207 million or $.50 per common share in the first quarters of
2007 and 2006, respectively. Results benefited from net gains of $.04
and $.01 per common share related to financial investments in the first
quarters of 2007 and 2006, respectively.
First quarter 2007 results, seasonally the lowest quarter of the year,
were adversely affected by lower sales volume of installation and other
services, assembled cabinets and windows and doors in the new home
construction market and a continued moderation in consumer spending for
certain "big ticket" home improvement items, such as cabinets, as well
as a less favorable product mix and increased commodity costs. Results
were aided by increased sales volume of paints and stains and increased
sales from International operations, particularly plumbing products.
As part of its profit improvement programs, the Company has been focused
on the rationalization of its businesses, including sourcing programs,
business consolidations, plant closures, headcount reductions and other
initiatives. During the first quarters of 2007 and 2006, the Company
incurred costs and charges of $25 million pre-tax ($.04 per common
share, after tax) and $17 million pre-tax ($.03 per common share, after
tax), respectively, related to profit improvement programs. Offsetting
these charges in the first quarter of 2007 were lower stock-based
compensation expense and gain on the sale of corporate fixed assets
aggregating $12 million pre-tax ($.02 per common share, after tax) and
the previously discussed income related to financial investments of $.04
per common share, after tax.
While results in the first quarter of 2007 were substantially below the
strong first quarter of 2006, reflecting a decline of approximately 30
percent in housing starts, sales and earnings were better than the
Company anticipated when it issued its full-year 2007 earnings guidance
in February. At that time, the Company anticipated that first quarter
net sales would be down low-double digits, compared with the actual
decline of nine percent.
Economic conditions, however, remain uncertain in the Company's markets,
and certain commodity costs, which had stabilized or declined, have
recently increased once again. Housing starts have declined
dramatically in the last 12 months due to previous excessive speculative
buying, rapidly rising home prices in recent years reducing
affordability and less attractive mortgage terms. Even with the recent
decline in new home construction, the inventory of unsold new and
existing homes has remained at unprecedented high levels. As a result,
the Company has lowered its 2007 housing starts estimate to between
approximately 1.4 million to 1.5 million. In addition, we continue to
see a moderation in consumer spending for certain "big ticket" home
improvement items, such as cabinets, and currently estimate that 2007
full-year sales will decline low-to-mid single digits compared with
2006.
The Company believes that the negative impacts of its downward revision
in estimated housing starts to a range of approximately 1.4 million to
1.5 million from approximately 1.5 million to 1.7 million, assumed in
its original guidance given in February, and increased commodity costs
will be largely offset by a combination of the stronger-than-expected
first quarter results, the continued strength related to International
operations, including the favorable effect of currency translation,
share repurchases and the profit improvement programs we are pursuing.
Accordingly, at this time the Company, assuming no further escalation in
commodity costs, estimates that 2007 full-year earnings will
approximate $1.50 to $1.70 per common share, instead of its original
guidance of "$1.50 or less to $1.80 per common share or more." The above
guidance includes approximately $60 million pre-tax ($.10 per common
share, after tax) of costs related to plant start-up, severance, systems
implementations and plant closures.
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.
A conference call regarding items contained in this release is scheduled
for Tuesday, May 1, 2007 at 11:00 a.m. ET. Participants in the call
are asked to register five to ten minutes prior to the scheduled start
time by dialing (719) 457-2649 (confirmation #8812460). The conference
call will be webcast simultaneously on the Company's website 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 website. A replay of the call will
be available on Masco's website or by phone by dialing (719) 457-0820
(replay access code #8812460) approximately two hours after the end of
the call and will continue through May 8, 2007.
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 website at www.masco.com.
Statements contained herein that reflect the Company's views about its
future performance constitute "forward-looking statements" under the
Private Securities Litigation Reform Act of 1995. These views involve
risks and uncertainties that are difficult to predict and, accordingly,
the Company's results may differ materially from the results discussed
in such forward-looking statements. For an explanation of various
factors that may affect our performance, refer to our most recent Annual
Report on Form 10-K (particularly the "Risk Factors" section) and to
any subsequent Quarterly Reports on Form 10-Q, all of which are on file
with the Securities and Exchange Commission. The Company undertakes no
obligation to update any forward-looking statements, whether as a result
of new information, future events or otherwise. The Company believes
that certain non-GAAP performance measures and ratios that may be
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
website at www.masco.com.
Media Contact:
Sharon Rothwell
Vice President, Corporate Affairs
313.792.6028
Investor Contact:
Maria Duey
Vice President, Investor Relations
313.792.5500
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