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Masco (MAS) Q4 Earnings & Sales Beat Estimates, Shares Rise

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Masco Corporation (MAS - Free Report) reported better-than-expected results for fourth-quarter 2023. Both top and bottom lines surpassed the Zacks Consensus Estimate and increased from the prior year. Strong pricing actions and operational efficiency helped it deliver solid results.

Shares of Masco gained 4.4% on Feb 8 following the earnings release.

Despite facing challenges in end markets and experiencing lower volume, Masco achieved 2% growth in adjusted earnings per share (EPS) in 2023. Looking ahead to 2024, Masco anticipates that sales will remain relatively unchanged throughout the year, reflecting a market that is expected to be flat to slightly declining in the low single digits.

Inside the Headlines

Masco reported adjusted EPS of 83 cents, which beat the consensus mark of 66 cents handily by 25.8% and increased 27.7% from the year-ago figure of 65 cents.

Net sales of $1.88 billion also surpassed the consensus estimate of $1.76 billion by 6% but declined 2% from the prior-year period. Net sales fell 4% year over year in local currency, excluding acquisitions. The growth was impacted by lower volumes, partially offset by pricing actions.

Sales in North America and internationally both experienced a 3% decline in local currency.

Masco Corporation Price, Consensus and EPS Surprise

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 grew 1% year over year to $1.2 billion, much ahead of our expectation of $1.09 billion. In local currency, the segment’s sales, excluding acquisitions, declined 2% year over year. The adjusted operating margin expanded 400 basis points (bps) year over year to 16.4% (versus our expectation of 13.4%). Adjusted EBITDA increased to $228 million from $173 million a year ago.

Decorative Architectural Products: The segment reported sales of $677 million (ahead of our projection of $668.3 million), down 7% from the prior-year period. Revenues from paints and other coating products witnessed a mid-single-digit decrease. PRO paint sales experienced a slight decline compared to mid-single-digit comps. Meanwhile, sales of DIY paints declined by high single digits. Adjusted operating margin expanded 90 bps to 14.8% (versus our expectation of 12.5%). Adjusted EBITDA improved to $110 million from the prior-year figure of $109 million.

Margins Performance

Adjusted gross margin improved 560 bps from the prior-year level to 35.1%. Adjusted operating margin improved 230 bps on a year-over-year basis to 14.5% due to a favorable price/cost relationship and cost savings initiatives, partially offset by lower volumes and more employee-related expenses. Adjusted EBITDA grew 16.7% year over year at $314 million.

2023 Highlights

Earnings came in at $3.86 per share, an increase of 2% from 2022. The top line saw an 8% decrease to $7.97 billion, attributed to lower volumes, albeit partially mitigated by pricing adjustments. The adjusted gross margin increased 360 bps year over year to reach 35.2%. Additionally, the adjusted operating margin showed a rise of 120 bps, reaching 16.8%.

Financials

As of Dec 31, 2023, Masco had a total liquidity of $1.63 billion versus $1.45 billion at 2022-end. This includes cash and cash investments of $634 million compared with $452 million recorded at 2022-end. Long-term debt was $2.95 billion, flat from 2022-end.

Net cash from operating activities was $1.41 billion for 2023 compared with $840 million in the prior-year period.

During 2023, shareholders received returns through both share repurchases and dividends, totaling $610 million.

2024 Guidance

The company expects its adjusted EPS in the range of $4.00-$4.25. Net sales are likely to remain flat from the 2023 level.

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.

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