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Masco (MAS) Q1 Earnings & Net Sales Beat Estimates, Stock Up

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Masco Corporation (MAS - Free Report) reported better-than-expected results for first-quarter 2023. The top and bottom line surpassed the Zacks Consensus Estimate. The company has been benefiting from strong pricing actions and operational improvements. Shares of Masco jumped 7.34% in the pre-market trading session on Apr 26.

On the other hand, adjusted earnings and net sales declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.

Masco’s president and CEO, Keith Allman, said, “While the headwinds we discussed last quarter continue, including softening demand trends, persistent inflation and tighter consumer spending, we have moved quickly to adjust our costs and successfully mitigated margin impact in the first quarter.”

Inside the Headlines

Masco reported adjusted earnings of 87 cents per share, which strongly beat the consensus mark of 65 cents by 33.9% but declined 10.3% from the year-ago figure of 97 cents.

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 $1.98 billion topped the consensus estimate of $1.92 billion by 3.1% but decreased 10% from the prior-year period. Net sales fell 9% year over year in local currency. Sales in the North American region decreased 10% from the prior-year figure. Internationally, sales decreased by 9% as reported and by 3% in local currency.

Segmental Analysis

Plumbing Products: Sales in the segment fell 10% year over year to $1,222 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) declined 8% year over year. The adjusted operating margin contracted 30 basis points (bps) year over year to 16.5%. Adjusted EBITDA decreased to $227 million from $252 million a year ago.

Decorative Architectural Products: The segment reported sales of $757 million, down 10% from the prior-year period’s number. Adjusted operating margin contracted 120 bps to 17.6%. Adjusted EBITDA declined to $141 million from the prior-year figure of $166 million.

Margins Performance

Adjusted gross margin improved 150 bps from the prior-year level to 33.6%. Adjusted selling, general and administrative expenses — as a percentage of net sales — were up 190 bps to 17.8% from the year-ago figure of 15.9%.

Adjusted operating margin contracted 40 bps on a year-over-year basis to 15.8% due to lower volumes, foreign currency and higher operational costs. Adjusted EBITDA also fell 11% year over year to $347 million.

Financials

As of Mar 31, 2023, Masco had total liquidity of $1.3 billion versus $1.45 billion in 2022 and $1.22 billion at March 2022-end. This includes cash and cash investments of $510 million compared with $452 million recorded at 2022-end. Long-term debt was $2.95 billion, flat from 2022-end. Net cash to operating activities was $33 million for the first quarter versus net cash for operating activities of $227 million in the prior-year period.

During the reported period, the company repurchased 1.1 million shares for $56 million.

2023 Guidance Maintained

Adjusted earnings are projected within $3.10-$3.40 per share. This indicates a decline from the 2022 level of $3.77 per share. Net sales are likely to decrease 10% in 2023, with Plumbing Products falling 10-14% and Decorative Architectural Products declining 5-10%.

Adjusted operating margin for the year is projected to be 15%, including 16% for both segments.

Zacks Rank & Recent Construction Releases

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

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