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Masco (MAS) Misses on Q4 Earnings, Cabinet Sales Decline

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Masco Corporation’s (MAS - Free Report) adjusted earnings of 33 cents per share in the fourth quarter of 2016 missed the Zacks Consensus Estimate of 34 cents by 2.9%. Adjusted earnings increased 14% year over year.
Masco’s net sales of $1.76 billion surpassed the Zacks Consensus Estimate of $1.75 billion by 0.6%. Revenues also grew 3% year over year on the back of strong sales growth in Plumbing and Decorative Architectural Products. Organic revenues increased 4% year over year.

North American sales increased 3% year over year to $1.39 billion. International sales inched up 1% (up 8% in local currency) to $370 million.


Adjusted gross profit grew 7.6% to $577 million while adjusted gross margin improved to 32.8%.

Adjusted operating profit inched up 0.9% to $221 million.

Adjusted operating margin decreased 20 basis points (bps) to 12.6%. As a percentage of net sales, selling, general and administrative expenses (adjusted) increased 170 bps to 20.2%.

Adjusted operating margin rose 70 bps to 15.5% in North America and were down 150 bps to10.5% in international markets.

Segmental Analysis

Cabinets and Related Products: Segmental revenues of $234 million declined 8% year over year due to the exit of the company from lower margin business in the builder channel, which was partially compensated by growth in the retail and dealer channels.

The company reported adjusted operating profit of $19 million (in line with the year-ago figure). Adjusted operating margin was 8.1% in the quarter, up 30 bps from the year-ago quarter.
Plumbing Products: The segment recorded revenues of $891 million, up 5%. Excluding the impact of foreign currency translation, revenues increased 7% on growth in North America and internationally.

Adjusted operating margin of 17.2% increased 150 bps year over year.

Decorative Architectural Products: Segmental revenues of $443 million were up 5%, as strong volume growth was partially offset by promotional activity.

Operating margin decreased 330 bps to 16.9%.

Windows and Other Specialty Products: Segmental revenues totaled $191 million, down 2% year over year. Excluding the impact of foreign currency translation, net sales increased 2%, led by both the international and North American windows businesses.

Masco Corporation Price, Consensus and EPS Surprise


2016 Results

Masco’s adjusted earnings of $1.51 per share in 2016 missed the Zacks Consensus Estimate of $1.54 by 1.9%. Adjusted earnings increased 27% year over year.

Masco’s net sales of $7.36 billion surpassed the Zacks Consensus Estimate of $7.35 billion by 0.1%. Revenues, however, grew 3% year over year.


Masco ended the quarter with cash and cash investments of $0.99 billion, as of Dec 31, 2016, compared with $1.45 billion as of Dec 31, 2015.

Free cash flow was $535 million in 2016. The company repurchased $459 million of shares, thus generating solid returns for shareholders.

Zacks Rank and Peer Release

Masco carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

D.R. Horton, Inc. (DHI - Free Report) exhibited an impressive performance in the first quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 17% and 6.8%, respectively.

Upcoming Releases

Martin Marietta Materials, Inc. (MLM - Free Report) is slated to release its quarterly numbers on Feb 14, before the opening bell.

Toll Brothers Inc. (TOL - Free Report) is expected to release its quarterly numbers on Feb 22, before the opening bell.

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