The quarterly dividend was increased by 10 percent, the 48th consecutive year in which dividends have been increased.
Taylor, Michigan (February 14, 2007) – Masco Corporation (NYSE: MAS)
today reported that net sales from continuing operations for the year
ended December 31, 2006 increased two percent to a record $12.8 billion
compared with $12.6 billion for 2005.
Income from continuing operations was $2.22 per common share and $2.26
per common share for 2006 and 2005, respectively, excluding non-cash
impairment charges for goodwill and financial investments and costs and
charges related to profit improvement programs. Including these
charges, income from continuing operations, as reported, was $461
million or $1.15 per common share and $866 million or $2.01 per common
share for 2006 and 2005, respectively.
Fourth quarter 2006 net sales from continuing operations declined six
percent to
$2.9 billion. Results for 2006 were adversely affected by an
accelerating decline in the new home construction market in the last six
months of the year, a moderation in consumer spending for certain "big
ticket" home improvement items, such as cabinets, and the continuing
negative impact of higher commodity costs, partially offset by profit
improvement programs and selling price increases.
Income from continuing operations was $.38 per common share and $.50 per
common share for the fourth quarters of 2006 and 2005, respectively,
excluding non-cash impairment charges for goodwill in 2006 and 2005 and
financial investments and costs and charges related to profit
improvement programs in 2006. Including these charges, (loss) income
from continuing operations was $(186) million or $(.48) per common
share, and $140 million or $.33 per common share, for the fourth
quarters of 2006 and 2005, respectively. In 2006, the Company recognized
non-cash, pre-tax impairment charges for goodwill aggregating $331
million ($331 million after tax). These charges, principally related to
the Company's European manufacturer of ready-to-assemble cabinets
(Tvilum-Scanbirk), reflect the long-term outlook for the business unit,
including declining demand for certain products, as well as decreased
operating profit margins. The Company also recognized non-cash, pre-tax
impairment charges for financial investments aggregating $101 million
($66 million after tax). In 2005, the Company recognized non-cash,
pre-tax impairment charges for goodwill aggregating $69 million ($69
million after tax), and non-cash, pre-tax impairment charges for
financial investments aggregating $45 million ($29 million after tax).
The Company originally estimated that 2006 costs and charges related to
profit improvement programs in the Plumbing Products segment would
approximate $70 million pre-tax compared with the actual costs and
charges of $39 million pre-tax. The reduction in anticipated cost
resulted from the sale of an operation originally scheduled for closure,
and was partially offset by costs and charges aggregating $8 million
pre-tax for the closure of a relatively small ready-to-assemble cabinet
manufacturing facility in the Cabinets and Related Products segment.
Outlook 2007
New home construction has 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 single-family housing starts,
the inventory of unsold new homes has increased to unprecedented levels.
The uncertainty that home builders may cut production even further to
reduce this inventory, and given the large percentage of Masco sales
that go to the new home construction market, combined with the
unpredictability of commodity costs, make it very difficult for the
Company to provide earnings per common share guidance for 2007.
Also negatively impacting the Company's earnings outlook for 2007 are
plant and system implementation start-up costs, costs and charges
related to additional profit improvement programs, including severance
costs from headcount reductions, higher interest expense, a moderation
at retail of sales of certain "big ticket" home improvement items, such
as cabinets, and as yet unrecovered commodity cost increases.
Housing starts declined by approximately 13 percent in 2006 compared
with 2005 to 1.8 million units. Late in 2006, the housing starts run
rate was between approximately 1.5 to 1.6 million units, which is more
than 20 percent below the 2005 levels. If housing starts improve from
these levels, commodity costs moderate, and home improvement retail
sales improve, then the Company's earnings per common share could be
$1.80 or even higher for 2007. On the other hand, if housing starts
decline even further than current depressed levels, as some observers
predict, and commodity costs escalate, the Company's earnings per common
share for 2007 could decline to $1.50 or less.
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 today, Wednesday, February 14, 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 (913) 981-4912 (confirmation #1786247).
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 #1786247) approximately two hours after the end of
the call and will continue through February 21, 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 may include certain forward-looking
statements regarding Masco's future sales, earnings growth potential and
other developments. Actual results may vary materially because of
external factors such as interest rate fluctuations, changes in consumer
spending and other factors over which management has no control. The
Company believes that certain non-GAAP performance measures and ratios,
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's products, markets and conditions, which could affect the
Company's future performance, is contained in the Company's filings with
the Securities and Exchange Commission and is available on Masco's
website at www.masco.com. Masco
undertakes no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Contact:
Maria Duey
313-792-5500