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Masco (MAS) Q1 Earnings & Sales Beat, Ups 2022 EPS Guidance

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Masco Corporation (MAS - Free Report) reported solid results for first-quarter 2022. The top and the bottom line surpassed the Zacks Consensus Estimate and improved on a year-over-year basis. The upside was mainly backed by solid demand for its products and operational efficiencies.

Shares of Masco grew 2.41% in the pre-market trading session on Apr 27.

Masco’s president and CEO Keith Allman, said, “We are off to a strong start in 2022. Demand for our products remains healthy, and we are executing well to offset ongoing inflation while still driving volume growth. With this continued solid demand and our strong first quarter performance, we now anticipate our adjusted earnings per share for 2022 to be in the range of $4.15 to $4.35 per share, increased from our previous expectation of $4.10 to $4.30 per share.”

Inside the Headlines

Masco reported adjusted earnings of 95 cents per share, which topped the consensus mark of 88 cents by 8% and increased 6.7% from the year-ago quarter’s figure of 89 cents.

Net sales of $2.20 billion topped the consensus estimate of $2.08 billion by 5.9% and increased 12% from the prior-year quarter’s figure of $1.97 billion. Net sales increased 14% year over year in local currency, excluding acquisitions and divestitures. Sales in the North American region increased 14% from the prior-year quarter’s figure and 12% internationally in local currency.

Segmental Analysis

Plumbing Products: Sales in the segment rose 9% year over year to $1,359 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 12% year over year. The adjusted operating margin contracted 350 basis points (bps) year over year to 16.8%. Adjusted EBITDA declined 9.7% year over year to $252 million.

Decorative Architectural Products: The segment reported sales of $842 million, up 17% from the prior-year period’s number. Although the adjusted operating margin declined 90 bps to 18.8%, adjusted EBITDA rose 9.2% from the prior-year period’s reading to $166 million.

Margins Performance

Adjusted gross margin contracted 350 bps from the prior-year level to 32.1%. Selling, general and administrative expenses — as a percentage of net sales — improved 110 bps to 15.9% from the year-ago quarter’s figure of 17%.

Adjusted operating margin contracted 240 bps on a year-over-year basis to 16.2%. Adjusted EBITDA also fell 4.6% year over year to $390 million.

Financials

As of Mar 31, 2022, Masco had cash and cash investments of $479 million compared with $926 million recorded at 2021 end. Also, it had $737 million available in revolving credit facility at the first quarter-end.

Long-term debt was $2.946 billion, slightly down from $2.949 billion at 2021-end. Net cash for operating activities was $227 million for first three months of 2022 compared with $89 million in the year-ago period.

2022 Projections Lifted

For 2022, adjusted earnings are now projected in the range of $4.15-$4.35 per share compared with $4.10-$4.30 expected earlier. The projection indicates 12.2-17.6% growth from the 2021 level. The Zacks Consensus Estimate for 2022 earnings is currently pegged at $4.17 per share.

Zacks Rank

Masco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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