Masco Corporation Highlights:
Third Quarter 2007
- Net sales from continuing operations declined seven percent to $3.1 billion.
- Income from continuing operations was $209 million or $.57 per common share.
- The Company returned $251 million to shareholders through share repurchases and dividends.
- The Company had approximately $700 million of cash at September 30, 2007.
- The Company's Board of Directors, as previously announced,
authorized the repurchase of up to 50 million shares of Company common
stock for retirement.
Taylor, Mich., (Oct. 30, 2007) — Masco Corporation (NYSE: MAS)
today reported that net sales from continuing operations for the quarter
ended September 30, 2007 declined seven percent to $3.1 billion
compared with $3.3 billion for the third quarter of 2006. North
American sales declined 11 percent and International sales increased 13
percent. In local currencies, International sales increased five
percent compared with the third quarter of 2006.
Income from continuing operations was $209 million or $.57 per common
share and $225 million or $.57 per common share in the third quarters of
2007 and 2006, respectively.
Third quarter 2007 results were positively affected by increased sales
volume of paints and stains and International operations, particularly
plumbing products, and sales from recent acquisitions, as well as
benefits from the Company's profit improvement programs and selling
price increases (which partially offset commodity cost increases).
Third 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.
In addition, third quarter 2007 results benefited from a reduction in
the Company's anticipated income tax rate and net reductions in certain
variable expenses reflecting lower sales and operating performance.
These items aggregated $.04 per common share.
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 third quarters of 2007 and 2006, the Company
incurred costs and charges of $12 million pre-tax ($.02 per common
share, after tax, net of an $8 million gain from the sale of fixed
assets) and $9 million pre-tax ($.01 per common share, after tax),
respectively, related to profit improvement programs.
The Company also had non-cash impairment charges for financial
investments of $12 million pre-tax ($.02 per common share, after tax)
and $8 million pre-tax ($.01 per common share, after tax) in the third
quarters of 2007 and 2006, respectively. Results benefited from net
gains related to financial investments of $11 million pre-tax ($.02 per
common share, after tax) and $9 million pre-tax ($.01 per common share,
after tax) in the third quarters of 2007 and 2006, respectively.
Economic conditions remain uncertain in a number of the Company's
markets. Housing starts have declined dramatically in the last 18
months due to previous excessive speculative buying, reduced
affordability, excessive inventories of homes and less attractive
mortgage terms. The subprime mortgage issues that have plagued the new
home construction and credit markets in recent months have made it more
difficult to obtain a mortgage, adding to an already difficult housing
market. As a result, the Company, as previously communicated, reduced
its full-year 2007 housing starts estimate to approximately 1.35 million
from 1.4 million and the Company expects further declines in housing
starts over the next several quarters. 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 fourth quarter and full-year 2007 sales
will decline mid-to-high single digits compared with the same periods in
2006.
While forecasting future business conditions in the current environment
remains challenging, the Company currently believes that its stronger
than anticipated third quarter performance should result in 2007
full-year earnings from continuing operations approximating or modestly
exceeding the high end of its previous guidance of $1.55 to $1.65 per
common share. This guidance includes net costs of approximately $75
million pre-tax ($.13 per common share, after tax) related to plant
start-up, severance, systems implementations and other initiatives.
"Given the difficult housing environment, we are very pleased with our
third quarter operating performance, particularly our operating margins,
which approximated last year's third quarter operating performance on
sales that were down seven percent," said Tim Wadhams, Chief Executive
Officer of Masco Corporation. "While we expect market conditions in our
industry, in the next several quarters, to be even more challenging, we
are confident that the continued focus on our strategy of concentrating
on organic growth, improving returns and generating superior cash flow,
together with the leveraging of the combined market strength of our
retail service, distribution and installation capabilities, brands and
scale will allow the Masco team to continue to drive long-term value for
our shareholders."
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, October 30, 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) 981-5507 (confirmation #9477966). 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 #9477966) approximately two hours after the end of the call and
will continue through November 5, 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.
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Media Contact
Sharon Rothwell
Vice President – Corporate Affairs
313.792.6028
masco_corporatecommunication@mascohq.com
Investor Contact
Maria Duey
Vice President – Investor Relations
313.792.5500
maria_duey@mascohq.com