Third Quarter 2009
- Net sales from continuing operations declined 17 percent to $2.1 billion.
- Income from continuing operations, as reported, was $.14 per common share.
- The Company had $1.2 billion of cash at September 30, 2009.
- The Company has increased its estimate for 2009 full-year income
(loss) from continuing operations to approximately $.05 to $(.05) per
common share.
- The Company has increased its estimate of 2009 free cash flow (before dividends) to approximately $450 million.
Taylor, Mich., (October 26, 2009) - Masco Corporation (NYSE:
MAS) today reported that net sales from continuing operations for the
quarter ended September 30, 2009 declined 17 percent to $2.1 billion
compared with $2.5 billion for the third quarter of 2008. North
American sales declined 17 percent and International sales declined 13
percent. In local currencies, International sales declined seven
percent compared with the third quarter of 2008.
The third quarter of 2009 results were adversely affected by
significantly lower sales volume of new home construction products and
services, as well as a decline in consumer spending for home improvement
products in both North American and International markets. The negative
market conditions were partially offset by increased sales volume of
paints and stains, the improved relationship between selling prices and
commodity costs and benefits associated with business rationalizations
and other cost savings initiatives.
Income from continuing operations was $.14 per common share in the
third quarter of 2009 compared to income from continuing operations of
$.09 per common share in the third quarter of 2008. The third quarter of
2008 was impacted by an unusually high tax rate; a normalized tax rate
of 36 percent would have increased earnings by $.12 per common share.
"Although market conditions remain challenging, we are encouraged by
our third quarter operating performance, which exceeded our
expectations. Our sales continue to benefit from new product
introductions and market share gains. Our gross profit margins were the
highest we have achieved in the last seven quarters, as we continue to
see the positive impact on our cost structure of the business
rationalization initiatives we have implemented and our focus on quality
and driving lean principles across the Company. We are proud of the
worldwide Masco Team for their outstanding effort and contributions in a
difficult operating environment" said Masco's CEO Tim Wadhams.
The Company continues to focus on the rationalization of its
businesses, including business consolidations, plant closures, headcount
reductions, system implementations and other initiatives. During the
third quarters of 2009 and 2008, the Company incurred costs and charges
of $21 million pre-tax ($.04 per common share, after tax) and $15
million pre-tax ($.03 per common share, after tax), respectively,
related to these initiatives.
Outlook 2009
Business conditions remain difficult in the Company's markets. The
Company continues to estimate that 2009 housing starts will decline 40
percent to approximately 550,000 units. The Company also anticipates
that consumer spending for home improvement products in North American
and International markets will continue at reduced levels in the
near-term.
While global economic conditions make forecasting future business
activity difficult, the Company currently estimates that its 2009 sales
will decline approximately 18 to 20 percent compared to 2008. The
Company's previous guidance estimated that its full-year 2009 sales
decline would be 18 to 22 percent compared to 2008.
The Company currently estimates that its 2009 full-year income (loss)
from continuing operations will approximate $.05 to $(.05) per common
share. The full-year guidance includes approximately $92 million pretax
($.17 per common share, after tax) of costs and charges for plans
undertaken to further rationalize the Company's business, but does not
include any additional costs and charges that may result from the
continued evaluation of the Company's businesses or any other charges.
The Company's previous guidance was loss from continuing operations in a
range of $(.05) to $(.25) per common share for the full-year 2009.
While the Company expects to operate near break-even, the guidance
includes an estimate of income tax expense, principally related to
income tax liabilities in certain jurisdictions and losses in other
jurisdictions that provide no tax benefit. As a result, quarterly and
full-year results for 2009 will reflect unusual relationships between
income taxes and income (loss) before income taxes. In the third quarter
of 2009, the Company reported pre-tax income of $89 million and $26
million of tax expense. A normalized tax rate of 36 percent would have
reduced third quarter 2009 earnings by $.02 per common share.
The Company estimates that 2009 free cash flow (cash from operations,
after capital expenditures and before dividends) will be relatively
strong and approximate $450 million. This compares with the Company's
previous guidance of free cash flow of approximately $360 million.
Although the Company is confident that the long-term fundamentals for
the new home construction and home improvement markets are positive,
the Company expects that market conditions will be challenging over the
near-term, as global economies recover. The Company believes that its
strong financial position (including cash of $1.2 billion at September
30, 2009, its ability to generate positive cash flow during 2009 and
unused bank lines) together with its current strategy of re-aligning its
cost structure, investing in leadership brands, driving innovation and
re-engineering its supply chains, will allow it to drive long-term
growth and create 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.
The 2009 third quarter results and supplemental material, including a
presentation in PDF format, will be distributed after the market closes
on October 26, 2009 and will be available on the Company's Web site at www.masco.com.
A conference call regarding items contained in this release is
scheduled for Tuesday, October 27, 2009 at 8:00 a.m. ET. Participants in
the call are asked to register five to ten minutes prior to the
scheduled start time by dialing (913) 312-0407 (confirmation #5313403).
The conference call will be webcast simultaneously on the Company's Web
site 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 Web site. A replay of the call will be
available on Masco's Web site or by phone by dialing (719) 457-0820
(replay access code #5313403) approximately two hours after the end of
the call and will continue through November 3, 2009.
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 Web site at www.masco.com.
# # #
Statements contained herein, or otherwise made available, that
reflect the Company's views about its future performance may 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 the Company's results may differ materially
from the results discussed in such forward-looking statements. For
further information, refer to our most recent Annual Report on Form 10-K
(particularly the "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections) 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. Certain of the
financial and statistical data made available are non-GAAP financial
measures as defined by the SEC's Regulation G. The Company believes that
such non-GAAP performance measures and ratios used in managing the
business may provide users with 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 SEC and is available on
Masco's Web site.
Investor / Media Contact
Maria Duey
Vice President - Investor Relations
313.792.5500
maria_duey@mascohq.com
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