Masco Corporation Highlights:
Second Quarter 2007
- Net sales from continuing operations declined six percent to $3.1 billion.
- Income from continuing operations was $186 million or $.50 per common share.
- The Company returned $454 million to shareholders through share repurchases and dividends.
- The Company had over $900 million in cash and marketable securities at June 30 2007.
- The Company, as previously announced, acquired Erickson
Construction Company and Guy Evans, Inc. which provide products and
installation services to the new home construction market. These
acquisitions have annual net sales of approximately $200 million.
- Today, the Company's Board of Directors authorized the
repurchase of up to 50 million shares for retirement of the Company's
common stock.
Taylor, Michigan (July 31, 2007) – Masco Corporation (NYSE: MAS) today
reported that net sales from continuing operations for the quarter ended
June 30, 2007, including the positive effect of acquisitions and
currency translation, declined six percent to $3.1 billion compared with
$3.4 billion for the second quarter of 2006. North American sales
declined 10 percent and International sales increased 14 percent. In
local currencies, International sales increased six percent compared
with the second quarter of 2006.
Income from continuing operations was $186 million or $.50 per common
share and $215 million or $.53 per common share in the second quarters
of 2007 and 2006, respectively.
Second quarter 2007 results 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 recent
acquisitions, increased sales volume of paints and stains and
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 second quarters of 2007 and 2006, the Company
incurred costs and charges of $23 million pre-tax ($.04 per common
share, after tax) and $26 million pre-tax ($.05 per common share, after
tax), respectively, related to profit improvement programs. The Company
also had non-cash impairment charges related to financial investments of
$10 million pre-tax ($.02 per common share, after tax) and $78 million
pre-tax ($.13 per common share, after tax) in the second quarters of
2007 and 2006, respectively. Results benefited from net gains related to
financial investments of $6 million pre-tax ($.01 per common share,
after tax) and $11 million pre-tax ($.02 per common share, after tax) in
the second quarters of 2007 and 2006, respectively.
While results in the second quarter of 2007 were below the second
quarter of 2006, reflecting a decline of over 20 percent in housing
starts (following a first quarter comparative decline of 30 percent),
results were better than the Company anticipated when it updated its
full-year 2007 earnings guidance in May. Results in the second quarter
of 2007 were aided by recent acquisitions, the favorable effect of
currency translation, profit improvement programs and selling price
increases, partially offsetting commodity cost increases and lower sales
volume.
Economic conditions, however, remain uncertain in the Company's markets.
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.
The subprime mortgage issues that have plagued the new home
construction market in recent months have made it more difficult to
obtain a mortgage, adding to an already difficult market for new homes.
As a result, the Company has reduced its 2007 housing starts estimate
to approximately 1.4 million, or the low end of its previous range of
1.4 to 1.5 million. In addition, the Company continues to see a
moderation in consumer spending for certain "big ticket" home
improvement items, such as cabinets, and currently estimates that the
Company's 2007 full-year sales will decline mid single digits compared
with 2006, a change from the Company's previous estimate of a decline of
low-to-mid single digits.
The Company believes that the negative impact to its results of this
reduction in estimated housing starts to approximately 1.4 million will
be largely offset by a combination of the stronger-than-expected first
half results, the continued favorable effect of currency translation,
share repurchases, recent acquisitions, selling price increases, market
share gains and the profit improvement programs it is pursuing.
Accordingly, at this time, the Company, assuming no escalation in
commodity costs, estimates that 2007 full-year earnings from continuing
operations will approximate $1.60 to $1.70 per common share, instead of
its guidance given in May of approximately $1.50 to $1.70 per common
share. This guidance includes costs of approximately $70 million
pre-tax ($.12 per common share, after tax) related to plant start-up,
severance, systems implementations and other initiatives.
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, July 31, 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) 981-5558 (confirmation #2422691). 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 #2422691) approximately two hours
after the end of the call and will continue through August 7, 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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