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Masco (MAS) Q4 Earnings Miss Estimates, Fall Y/Y, Stock Down
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Masco Corporation (MAS - Free Report) reported mixed results for fourth-quarter 2022. The bottom line lagged the Zacks Consensus Estimate and declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.
Net sales surpassed the consensus mark but declined from the prior-year quarter’s level, thanks to demand softness across the product categories in North America, partially offset by selling price increases.
Shares of Masco fell 2.99% in the pre-market trading session on Feb 9.
Masco’s president and CEO Keith Allman, said, “In 2022, despite higher operational costs and softening demand, we delivered earnings growth for our shareholders and executed our capital deployment strategy by returning approximately $1.2 billion to shareholders in the form of share repurchases and dividends.”
Allman added, “In 2023, we believe the near-term demand environment will remain challenging. We are preparing for volumes overall to be down in the low double-digit range and anticipate adjusted earnings per share to be in the range of $3.10 to $3.40 per share. Despite the expected near-term market softness, we believe the long-term fundamentals of our repair and remodel markets remain strong. We are focused on capitalizing on these positive long-term demand trends by improving our margins and continuing to invest in growth opportunities.”
Masco hiked its quarterly dividend by 2% to 28.5 cents, payable Mar 13, 2023, to its shareholders of record on Feb 23.
Inside the Headlines
Masco reported adjusted earnings of 65 cents per share, which missed the consensus mark of 66 cents by 1.5% and declined 3% from the year-ago figure of 67 cents.
Masco Corporation Price, Consensus and EPS Surprise
Net sales of $1.92 billion slightly topped the consensus estimate of $1.91 billion but decreased 5% from the prior-year period. Net sales slipped 2% year over year in local currency. Sales in the North American region decreased 5% from the prior-year figure but grew 7% internationally, in local currency.
Segmental Analysis
Plumbing Products: Sales in the segment fell 3% year over year to $1,196 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 2% year over year. Yet, adjusted operating margin contracted 30 basis points (bps) year over year to 12.4%. Adjusted EBITDA decreased to $173 million from $181 million a year ago.
Decorative Architectural Products: The segment reported sales of $727 million, down 8% from the prior-year period’s number. Adjusted operating margin contracted 270 bps to 13.9%. Adjusted EBITDA also declined to $109 million from the prior-year figure of $141 million.
Margins Performance
Adjusted gross margin contracted 120 bps from the prior-year level to 29.5%. Selling, general and administrative expenses — as a percentage of net sales — were down 20 bps to 17.4% from the year-ago figure of 17.6%.
Adjusted operating margin contracted 90 bps on a year-over-year basis to 12.2% due to lower volumes, foreign currency and higher operational costs. Adjusted EBITDA also fell 10.6% year over year to $269 million.
Financials
As of Dec 31, 2022, Masco had total liquidity of $1.45 billion versus $1.93 billion in 2021. This includes cash and cash investments of $452 million compared with $926 million recorded at 2021-end. Long-term debt was $2.95 billion, flat from the previous year. Net cash for operating activities was $840 million for 2022 compared with $930 million in 2021.
2022 Highlights
Net revenues for the year came in at $8.68 billion, up 4% from $8.38 billion in 2021. Net sales increased 6% in local currency, excluding acquisitions and divestitures. The upside was backed by North American sales growth of 6% and international sales growth of 8% in local currency. Adjusted earnings of $3.77 per share improved 2% from the year-ago period’s figure of $3.70.
Adjusted gross and operating margins contracted 260 bps and 180 bps from the prior-year figures, respectively.
2023 Projections
For 2023, adjusted earnings are projected within $3.10-$3.40 per share. This indicates a decline from the 2022 level of $3.77 per share. The Zacks Consensus Estimate for 2023 earnings is currently pegged at $3.46 per share.
Jacobs Engineering Group Inc. (J - Free Report) reported first-quarter fiscal 2023 (ended Dec 30, 2022) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate and rising year over year.
The results reflect Jacobs’ ability to capture high growth opportunities emerging across Climate Response, Data Solutions and Consulting & Advisory.
United Rentals, Inc. (URI - Free Report) reported fourth-quarter 2022 results. Its earnings and revenues missed the Zacks Consensus Estimate but increased on a year-over-year basis on the back of sustained demand in its end markets and the strength of its core rental business.
URI provided solid full-year 2023 guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility. Also, it unveiled a quarterly dividend of $1.48 per share, with an annualized yield of approximately 1.5%. The company also plans to restart its share repurchase program, with the intention of buying back $1 billion of common stock in 2023.
Otis Worldwide Corporation (OTIS - Free Report) reported solid fourth-quarter 2022 results. Its earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected strong performance, including mid-single-digit organic sales growth in New Equipment and Service and continued operating profit margin expansion in the Service business.
Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
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Masco (MAS) Q4 Earnings Miss Estimates, Fall Y/Y, Stock Down
Masco Corporation (MAS - Free Report) reported mixed results for fourth-quarter 2022. The bottom line lagged the Zacks Consensus Estimate and declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.
Net sales surpassed the consensus mark but declined from the prior-year quarter’s level, thanks to demand softness across the product categories in North America, partially offset by selling price increases.
Shares of Masco fell 2.99% in the pre-market trading session on Feb 9.
Masco’s president and CEO Keith Allman, said, “In 2022, despite higher operational costs and softening demand, we delivered earnings growth for our shareholders and executed our capital deployment strategy by returning approximately $1.2 billion to shareholders in the form of share repurchases and dividends.”
Allman added, “In 2023, we believe the near-term demand environment will remain challenging. We are preparing for volumes overall to be down in the low double-digit range and anticipate adjusted earnings per share to be in the range of $3.10 to $3.40 per share. Despite the expected near-term market softness, we believe the long-term fundamentals of our repair and remodel markets remain strong. We are focused on capitalizing on these positive long-term demand trends by improving our margins and continuing to invest in growth opportunities.”
Masco hiked its quarterly dividend by 2% to 28.5 cents, payable Mar 13, 2023, to its shareholders of record on Feb 23.
Inside the Headlines
Masco reported adjusted earnings of 65 cents per share, which missed the consensus mark of 66 cents by 1.5% and declined 3% from the year-ago figure of 67 cents.
Masco Corporation Price, Consensus and EPS Surprise
Masco Corporation price-consensus-eps-surprise-chart | Masco Corporation Quote
Net sales of $1.92 billion slightly topped the consensus estimate of $1.91 billion but decreased 5% from the prior-year period. Net sales slipped 2% year over year in local currency. Sales in the North American region decreased 5% from the prior-year figure but grew 7% internationally, in local currency.
Segmental Analysis
Plumbing Products: Sales in the segment fell 3% year over year to $1,196 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 2% year over year. Yet, adjusted operating margin contracted 30 basis points (bps) year over year to 12.4%. Adjusted EBITDA decreased to $173 million from $181 million a year ago.
Decorative Architectural Products: The segment reported sales of $727 million, down 8% from the prior-year period’s number. Adjusted operating margin contracted 270 bps to 13.9%. Adjusted EBITDA also declined to $109 million from the prior-year figure of $141 million.
Margins Performance
Adjusted gross margin contracted 120 bps from the prior-year level to 29.5%. Selling, general and administrative expenses — as a percentage of net sales — were down 20 bps to 17.4% from the year-ago figure of 17.6%.
Adjusted operating margin contracted 90 bps on a year-over-year basis to 12.2% due to lower volumes, foreign currency and higher operational costs. Adjusted EBITDA also fell 10.6% year over year to $269 million.
Financials
As of Dec 31, 2022, Masco had total liquidity of $1.45 billion versus $1.93 billion in 2021. This includes cash and cash investments of $452 million compared with $926 million recorded at 2021-end. Long-term debt was $2.95 billion, flat from the previous year. Net cash for operating activities was $840 million for 2022 compared with $930 million in 2021.
2022 Highlights
Net revenues for the year came in at $8.68 billion, up 4% from $8.38 billion in 2021. Net sales increased 6% in local currency, excluding acquisitions and divestitures. The upside was backed by North American sales growth of 6% and international sales growth of 8% in local currency. Adjusted earnings of $3.77 per share improved 2% from the year-ago period’s figure of $3.70.
Adjusted gross and operating margins contracted 260 bps and 180 bps from the prior-year figures, respectively.
2023 Projections
For 2023, adjusted earnings are projected within $3.10-$3.40 per share. This indicates a decline from the 2022 level of $3.77 per share. The Zacks Consensus Estimate for 2023 earnings is currently pegged at $3.46 per share.
Zacks Rank & Recent Construction Releases
Masco currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jacobs Engineering Group Inc. (J - Free Report) reported first-quarter fiscal 2023 (ended Dec 30, 2022) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate and rising year over year.
The results reflect Jacobs’ ability to capture high growth opportunities emerging across Climate Response, Data Solutions and Consulting & Advisory.
United Rentals, Inc. (URI - Free Report) reported fourth-quarter 2022 results. Its earnings and revenues missed the Zacks Consensus Estimate but increased on a year-over-year basis on the back of sustained demand in its end markets and the strength of its core rental business.
URI provided solid full-year 2023 guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility. Also, it unveiled a quarterly dividend of $1.48 per share, with an annualized yield of approximately 1.5%. The company also plans to restart its share repurchase program, with the intention of buying back $1 billion of common stock in 2023.
Otis Worldwide Corporation (OTIS - Free Report) reported solid fourth-quarter 2022 results. Its earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected strong performance, including mid-single-digit organic sales growth in New Equipment and Service and continued operating profit margin expansion in the Service business.
Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.