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Masco (MAS) Q2 Earnings Top, Stock Up on Solid Decorative Arm

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Masco Corporation (MAS - Free Report) reported impressive results for second-quarter 2020, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Strong Decorative Architectural Products and North American Plumbing segments helped it to deliver the better-than-expected results.

The company’s shares jumped 1.3% in the pre-market trading session on Jul 30. Notably, its board of directors intends to increase annual dividend by 2 cents per share to 56 cents in the beginning of the fourth quarter. Also, it anticipates strong demand for products to continue in the third quarter.

Inside the Headlines

Masco reported quarterly adjusted earnings of 84 cents per share, which beat the consensus mark of 71 cents by 18.3%. Net sales of $1,764 million topped the consensus estimate of $1,693 million by 4.2%.

Masco Corporation Price, Consensus and EPS Surprise

Masco Corporation Price, Consensus and EPS Surprise

Masco Corporation price-consensus-eps-surprise-chart | Masco Corporation Quote

On a year-over-year basis, the top and bottom lines declined 4.1% and 13.5%, respectively. Notably, net sales fell 3% year over year in local currency. Sales in the North American region were nearly flat with the prior-year figure but declined 19.1% internationally (17% in local currency).

Segmental Analysis

Plumbing Products: Sales in the segment decreased 14.2% year over year to $868 million, primarily due to lower volumes. In local currency, the segment’s sales dropped 13% year over year. Adjusted operating margin contracted 150 basis points (bps) year over year to 18.3%. Adjusted EBITDA declined 18.6% year over year to $179 million.

Decorative Architectural Products: The segment reported sales of $896 million, up 8.3% from the prior-year period. Growth in paints and other coating products supported the same. Adjusted operating margin increased 160 bps to 22.5%. Adjusted EBITDA also improved 15.8% from the prior-year period to $212 million.

Margins Performance

Adjusted gross margin came in at 35.8%, which contracted 90 bps from the prior year. Adjusted selling, general and administrative expenses — as a percentage of net sales — were down 140 bps from the year-ago figure.

Adjusted operating margin fell 50 bps on a year-over-year basis to 19.5%. Adjusted EBITDA also declined 1.6% year over year to $376 million.

Financials

At quarter-end, the company had cash and cash investments of $1,089 million compared with $697 million recorded at 2019-end. Long-term debt was $2.4 billion, down from $2.8 billion a year ago. Net cash from operating activities was $290 million in the first six months of 2020 compared with $213 million a year ago.

As of Jun 30, 2020, it had full availability of the $1-billion revolving credit facility.

Zacks Rank & Peer Releases

Masco currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Armstrong World Industries, Inc. (AWI - Free Report) reported disappointing second-quarter 2020 results. Earnings and revenues missed the respective Zacks Consensus Estimate, as well as declined year over year.

Owens Corning (OC - Free Report) reported impressive results for second-quarter 2020. The top and bottom lines surpassed the Zacks Consensus Estimate on the back of its market leading businesses, innovative product and process technologies, and capabilities.

United Rentals, Inc. (URI - Free Report) reported second-quarter 2020 results. Although earnings and revenues topped the respective Zacks Consensus Estimate, the metrics declined on a year-over-year basis, thanks to the COVID-19 pandemic.

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