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Masco (MAS) Q3 Earnings & Sales Lag Estimates, 2022 View Down
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Masco Corporation (MAS - Free Report) reported results for third-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate. The company has been grappling with lower demand, higher operational costs and additional foreign currency headwinds.
Following the results, the company’s shares were down 5.2% in the pre-market trading session.
Inside the Headlines
Masco reported adjusted earnings of 98 cents per share, which lagged the consensus mark of $1.07 by 8.4%. Adjusted earnings declined by a cent from the year ago.
Net sales of $2,204 million missed the consensus estimate of $2,264 million by 2.7% but remained flat from the prior-year quarter. Net sales increased 3% year over year in local currency, excluding acquisitions and divestitures. Sales in the North American region increased 3% from the prior-year quarter’s figure and 5% internationally in local currency.
Masco Corporation Price, Consensus and EPS Surprise
Plumbing Products: Sales in the segment remained flat year over year to $1,324 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 5% year over year. The operating margin contracted 210 basis points (bps) year over year to 16.6% due to lower volumes, higher operational costs and currency. Adjusted EBITDA declined 10.9% year over year.
Decorative Architectural Products: The segment reported sales of $880 million, up 1% from the prior-year period’s number. The operating margin declined 180 bps to 17.2% due to lower volumes and higher freight and material costs, partially offset by higher net selling prices. Adjusted EBITDA declined 8.6% year over year.
Margins Performance
Adjusted gross margin contracted 270 bps from the prior-year level to 31.5%. Selling, general and administrative expenses — as a percentage of net sales — declined to 15.6% from the year-ago quarter’s 16.7%.
Adjusted operating margin contracted 160 bps on a year-over-year basis to 15.9%. Adjusted EBITDA also fell 8.6% year over year to $385 million.
Financials
As of Sep 30, 2022, Masco had cash and cash investments of $464 million compared with $926 million recorded at 2021-end.
Long-term debt was $2.946 billion, slightly down from $2.949 billion at 2021-end. Net cash for operating activities was $520 million for the first nine months of 2022 compared with $595 million in the year-ago period.
2022 Projections Lowered
The company expects lower market demand, elevated operational costs and additional foreign currency headwinds in the fourth quarter due to the evolving market conditions.
Owing to these challenges, the company has lowered full-year adjusted earnings per share guidance to $3.70 - $3.80 per share from $$4.11-$4.25 expected earlier. The Zacks Consensus Estimate for 2022 earnings is currently pegged at $4.15 per share.
RPM International Inc. (RPM - Free Report) reported impressive results in first-quarter fiscal 2023 (ended Aug 31, 2022), with earnings and sales surpassing their respective Zacks Consensus Estimate and increasing on a year-over-year basis.
The upside was driven by the continued implementation of MAP operational improvement initiatives, double-digit sales growth across the segments, strong pricing offset supply-chain woes, cost inflation, macroeconomic challenges and foreign exchange headwinds.
Acuity Brands, Inc. (AYI - Free Report) reported solid fourth-quarter fiscal 2022 results. The top and bottom lines surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
The upside was backed by strong demand across the end markets along with price increases and product and productivity improvement.
Watsco, Inc. (WSO - Free Report) reported third-quarter 2022 results, wherein the company’s earnings missed the Zacks Consensus Estimate, but sales beat the same.
Nonetheless, WSO achieved higher sales and profitability, reflecting normalized residential HVAC equipment volumes, effective price realization, a continued shift toward higher-efficiency HVAC equipment and expansion in sales of other higher-margin HVAC products.
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Masco (MAS) Q3 Earnings & Sales Lag Estimates, 2022 View Down
Masco Corporation (MAS - Free Report) reported results for third-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate. The company has been grappling with lower demand, higher operational costs and additional foreign currency headwinds.
Following the results, the company’s shares were down 5.2% in the pre-market trading session.
Inside the Headlines
Masco reported adjusted earnings of 98 cents per share, which lagged the consensus mark of $1.07 by 8.4%. Adjusted earnings declined by a cent from the year ago.
Net sales of $2,204 million missed the consensus estimate of $2,264 million by 2.7% but remained flat from the prior-year quarter. Net sales increased 3% year over year in local currency, excluding acquisitions and divestitures. Sales in the North American region increased 3% from the prior-year quarter’s figure and 5% internationally in local currency.
Masco Corporation Price, Consensus and EPS Surprise
Masco Corporation price-consensus-eps-surprise-chart | Masco Corporation Quote
Segmental Analysis
Plumbing Products: Sales in the segment remained flat year over year to $1,324 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 5% year over year. The operating margin contracted 210 basis points (bps) year over year to 16.6% due to lower volumes, higher operational costs and currency. Adjusted EBITDA declined 10.9% year over year.
Decorative Architectural Products: The segment reported sales of $880 million, up 1% from the prior-year period’s number. The operating margin declined 180 bps to 17.2% due to lower volumes and higher freight and material costs, partially offset by higher net selling prices. Adjusted EBITDA declined 8.6% year over year.
Margins Performance
Adjusted gross margin contracted 270 bps from the prior-year level to 31.5%. Selling, general and administrative expenses — as a percentage of net sales — declined to 15.6% from the year-ago quarter’s 16.7%.
Adjusted operating margin contracted 160 bps on a year-over-year basis to 15.9%. Adjusted EBITDA also fell 8.6% year over year to $385 million.
Financials
As of Sep 30, 2022, Masco had cash and cash investments of $464 million compared with $926 million recorded at 2021-end.
Long-term debt was $2.946 billion, slightly down from $2.949 billion at 2021-end. Net cash for operating activities was $520 million for the first nine months of 2022 compared with $595 million in the year-ago period.
2022 Projections Lowered
The company expects lower market demand, elevated operational costs and additional foreign currency headwinds in the fourth quarter due to the evolving market conditions.
Owing to these challenges, the company has lowered full-year adjusted earnings per share guidance to $3.70 - $3.80 per share from $$4.11-$4.25 expected earlier. The Zacks Consensus Estimate for 2022 earnings is currently pegged at $4.15 per share.
Zacks Rank
Masco currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Construction Releases
RPM International Inc. (RPM - Free Report) reported impressive results in first-quarter fiscal 2023 (ended Aug 31, 2022), with earnings and sales surpassing their respective Zacks Consensus Estimate and increasing on a year-over-year basis.
The upside was driven by the continued implementation of MAP operational improvement initiatives, double-digit sales growth across the segments, strong pricing offset supply-chain woes, cost inflation, macroeconomic challenges and foreign exchange headwinds.
Acuity Brands, Inc. (AYI - Free Report) reported solid fourth-quarter fiscal 2022 results. The top and bottom lines surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.
The upside was backed by strong demand across the end markets along with price increases and product and productivity improvement.
Watsco, Inc. (WSO - Free Report) reported third-quarter 2022 results, wherein the company’s earnings missed the Zacks Consensus Estimate, but sales beat the same.
Nonetheless, WSO achieved higher sales and profitability, reflecting normalized residential HVAC equipment volumes, effective price realization, a continued shift toward higher-efficiency HVAC equipment and expansion in sales of other higher-margin HVAC products.