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Masco (MAS) Beats Q2 Earnings Estimates, Narrows EPS Outlook
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Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results. Shares of Masco gained 4.1% in the pre-market trading session on Jul 25.
However, net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases.
Masco narrowed its adjusted earnings per share (EPS) guidance while the mid-point remains unaffected.
Inside the Headlines
Masco reported adjusted EPS of $1.20, which beat the consensus mark of $1.16 by 3.5% and increased 0.8% from the year-ago figure of $1.19.
Masco Corporation Price, Consensus and EPS Surprise
Net sales of $2.09 billion missed the consensus estimate of $2.1 billion by 0.4% and decreased 1.7% from the prior-year period. Net sales fell 1% year over year in local currency. Acquisitions increased sales by 1%.
Sales in the North American region decreased 1% (2% excluding acquisitions) from the prior year. Internationally, sales decreased 1% in local currency.
Segmental Analysis
Plumbing Products: Sales in the segment grew 2% year over year to $1.25 billion. In local currency, net sales rose 3% year over year. North American sales rose 5% (up 2% excluding acquisitions) in local currency.
The adjusted operating margin declined 10 basis points (bps) year over year to 19.9%. Yet, adjusted EBITDA increased to $276 million from $270 million a year ago.
Decorative Architectural Products: The segment reported sales of $838 million, down 7% from the prior-year period. Paints and other coating products sales were down in the high single digits and DIY paint decreased in the low double digits, while PRO paint increased in the mid-single digits from a year ago.
Adjusted operating margin expanded 80 bps to 20.8% on the back of cost-savings initiatives and timing of marketing spend. Adjusted EBITDA, however, declined to $184 million from the prior-year figure of $189 million.
Margins Performance
Adjusted gross margin improved 140 bps from the prior-year level to 37.6%. Adjusted selling, general and administrative expenses — as a percentage of net sales — were up 130 bps to 18.5% from the year-ago figure of 17.2%.
Adjusted operating margin improved 10 bps on a year-over-year basis to 19.1% due to a favorable price/cost relationship and cost-savings initiatives, partially offset by volume/mix and higher employee-related costs. Adjusted EBITDA slipped 0.5% year over year to $437 million.
Financials
As of Jun 30, 2024, Masco had a total liquidity of $1.4 billion versus $1.63 billion at 2023-end. This includes cash and cash investments of $398 million compared with $634 million recorded at 2023-end. Long-term debt was $2.95 billion, flat from 2023-end.
Net cash from operating activities was $252 million in the first half of 2024 versus $448 million in the prior-year period.
During the reported period, the company repurchased 2 million shares for $143 million.
2024 Guidance
The company now expects its adjusted EPS in the range of $4.05-$4.20 versus $4.00-$4.25 expected earlier. The mid-point of the guidance was kept intact, indicating an increase from $3.86 in 2023.
Net sales are likely to be up/down by low single digits from the 2023 level of $7.97 billion. Net sales in the Plumbing segment are anticipated to increase/decrease in the low single digits, while those in Decorative Architectural are expected to be down in the low single digits.
Adjusted operating margin for the year is projected to be between 17% and 17.5% (versus the prior projection of 17%). It expects an adjusted operating margin of 19% in Plumbing (up from 18.5% expected earlier) and 18% in Decorative Architectural. In 2023, MAS generated an adjusted operating margin of 16.8%, wherein Plumbing reported 18% and Decorative Architectural posted 17.8%.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in the second quarter of 2024. Its adjusted earnings topped the Zacks Consensus Estimate and grew year over year. The company reported better-than-expected earnings in the trailing seven quarters.
However, quarterly net sales missed the consensus mark and declined on a year-over-year basis.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
The company performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
NVR, Inc. (NVR - Free Report) reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. On the other hand, both metrics increased on a year-over-year basis.
The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased during the quarter, growth in new orders and increased average selling price of new orders are encouraging for the company’s prospects.
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Masco (MAS) Beats Q2 Earnings Estimates, Narrows EPS Outlook
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results. Shares of Masco gained 4.1% in the pre-market trading session on Jul 25.
However, net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases.
Masco narrowed its adjusted earnings per share (EPS) guidance while the mid-point remains unaffected.
Inside the Headlines
Masco reported adjusted EPS of $1.20, which beat the consensus mark of $1.16 by 3.5% and increased 0.8% from the year-ago figure of $1.19.
Masco Corporation Price, Consensus and EPS Surprise
Masco Corporation price-consensus-eps-surprise-chart | Masco Corporation Quote
Net sales of $2.09 billion missed the consensus estimate of $2.1 billion by 0.4% and decreased 1.7% from the prior-year period. Net sales fell 1% year over year in local currency. Acquisitions increased sales by 1%.
Sales in the North American region decreased 1% (2% excluding acquisitions) from the prior year. Internationally, sales decreased 1% in local currency.
Segmental Analysis
Plumbing Products: Sales in the segment grew 2% year over year to $1.25 billion. In local currency, net sales rose 3% year over year. North American sales rose 5% (up 2% excluding acquisitions) in local currency.
The adjusted operating margin declined 10 basis points (bps) year over year to 19.9%. Yet, adjusted EBITDA increased to $276 million from $270 million a year ago.
Decorative Architectural Products: The segment reported sales of $838 million, down 7% from the prior-year period. Paints and other coating products sales were down in the high single digits and DIY paint decreased in the low double digits, while PRO paint increased in the mid-single digits from a year ago.
Adjusted operating margin expanded 80 bps to 20.8% on the back of cost-savings initiatives and timing of marketing spend. Adjusted EBITDA, however, declined to $184 million from the prior-year figure of $189 million.
Margins Performance
Adjusted gross margin improved 140 bps from the prior-year level to 37.6%. Adjusted selling, general and administrative expenses — as a percentage of net sales — were up 130 bps to 18.5% from the year-ago figure of 17.2%.
Adjusted operating margin improved 10 bps on a year-over-year basis to 19.1% due to a favorable price/cost relationship and cost-savings initiatives, partially offset by volume/mix and higher employee-related costs. Adjusted EBITDA slipped 0.5% year over year to $437 million.
Financials
As of Jun 30, 2024, Masco had a total liquidity of $1.4 billion versus $1.63 billion at 2023-end. This includes cash and cash investments of $398 million compared with $634 million recorded at 2023-end. Long-term debt was $2.95 billion, flat from 2023-end.
Net cash from operating activities was $252 million in the first half of 2024 versus $448 million in the prior-year period.
During the reported period, the company repurchased 2 million shares for $143 million.
2024 Guidance
The company now expects its adjusted EPS in the range of $4.05-$4.20 versus $4.00-$4.25 expected earlier. The mid-point of the guidance was kept intact, indicating an increase from $3.86 in 2023.
Net sales are likely to be up/down by low single digits from the 2023 level of $7.97 billion. Net sales in the Plumbing segment are anticipated to increase/decrease in the low single digits, while those in Decorative Architectural are expected to be down in the low single digits.
Adjusted operating margin for the year is projected to be between 17% and 17.5% (versus the prior projection of 17%). It expects an adjusted operating margin of 19% in Plumbing (up from 18.5% expected earlier) and 18% in Decorative Architectural. In 2023, MAS generated an adjusted operating margin of 16.8%, wherein Plumbing reported 18% and Decorative Architectural posted 17.8%.
Zacks Rank
Masco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Construction Releases
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in the second quarter of 2024. Its adjusted earnings topped the Zacks Consensus Estimate and grew year over year. The company reported better-than-expected earnings in the trailing seven quarters.
However, quarterly net sales missed the consensus mark and declined on a year-over-year basis.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
The company performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
NVR, Inc. (NVR - Free Report) reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. On the other hand, both metrics increased on a year-over-year basis.
The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased during the quarter, growth in new orders and increased average selling price of new orders are encouraging for the company’s prospects.