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Masco (MAS) Q2 Earnings & Sales Top, Up Y/Y, Margins Rise

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Masco Corporation (MAS - Free Report) reported second-quarter 2021 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate as well as improved year over year. Strong North American Plumbing business helped it deliver impressive results. The company’s shares jumped 2.6% in the pre-market trading session on Jul 29.

Masco’s President and CEO, Keith Allman, said, “We continue to see robust demand for our products across our end markets. We are effectively managing supply chain tightness and escalating logistics inflation to deliver value for our customers and our shareholders.”

Inside the Headlines

The company reported adjusted earnings of $1.14 per share, surpassing the consensus mark of $1.04 by 9.6%. Its bottom line also grew 34% from year-ago figure of 84 cents per share.

Masco Corporation Price, Consensus and EPS Surprise

Masco Corporation Price, Consensus and EPS Surprise

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

Net sales of $2,179 million marginally topped the consensus estimate of $2,171 million. On a year-over-year basis, the top line increased 24% (21% in local currency). Excluding acquisitions and divestitures impact, net sales rose 18% in local currency. Sales in the North American region increased 15% and the same in the international market grew 50% from the prior year, in local currency.

Segmental Analysis

Plumbing Products: Sales in the segment rose 53% year over year to $1,329 million. In local currency and excluding acquisitions and divestitures, the segment’s sales increased 44% year over year. Adjusted operating margin expanded 230 basis points (bps) year over year to 20.6%. Adjusted EBITDA increased 66.5% year over year to $298 million.

Decorative Architectural Products: The segment reported sales of $721 million, down 5% from the prior-year period. In local currency and excluding acquisitions and divestitures, the segment’s sales decreased 7% year over year. Adjusted operating margin contracted 40 bps to 22.1%. Adjusted EBITDA also declined 7.1% from the prior-year period to $197 million.

Margins Performance

Adjusted gross margin came in at 36.3%, which expanded 50 bps from the prior year. Adjusted selling, general and administrative expenses — as a percentage of net sales — improved 10 bps from the year-ago figure.

Adjusted operating margin expanded 60 bps on a year-over-year basis to 20.1%. Adjusted EBITDA also increased 25.8% year over year to $473 million.

Financials

At June-end, the company had cash and cash investments of $769 million compared with $1,326 million recorded at 2020-end. At June-end, total liquidity (including availability under its revolving credit facility) was $1,769 million. Long-term debt was $2.95 billion, up from $2.79 billion at 2020-end. Net cash from operating activities was $239 million for first-half 2021 compared with $290 million in the comparable year-ago period.

It repurchased 6.6 million shares for approximately $447 million during the quarter.

2021 Projections Lifted

Based on strong performance for first-half 2021 and continued strong demand in the international business and trade channel, Masco lifted earnings projection. The company now expects earnings in the range of $1.74-$1.84, up from prior projection of $1.52-$1.72 per share. Adjusted earnings are now projected within $3.65-$3.75 per share, up from prior expectation of $3.50-$3.70. In 2020, adjusted earnings were $3.12 per share.

Zacks Rank

Masco — which shares space with Armstrong World Industries, Inc. (AWI - Free Report) , Owens Corning (OC - Free Report) and United Rentals, Inc. (URI - Free Report) in the Zacks Building Products - Miscellaneous industry — currently carries a Zacks Rank #4 (Sell).

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