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Masco (MAS) Surpasses Q2 Earnings Estimates, Lifts View

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Masco Corporation’s (MAS - Free Report) adjusted earnings of 60 cents per share in second-quarter 2017 were in line with the Zacks Consensus Estimate. Adjusted earnings increased 30.4% year over year.
 
Masco’s net sales of $2,057 million, missed the analysts’ expectation of $2,070 million by 0.6%. Revenues, however, grew 3% year over year on the back of strong sales growth in Plumbing and Decorative Architectural Products.
 
North American sales increased 4% year over year to $1,660 million. However, international sales declined 1% (up 4% in local currency) to $397 million.

Margins

Adjusted gross profit grew 4.5% to $737 million, while adjusted gross margin improved 60 basis points (bps) to 35.8%.

Adjusted operating profit increased 4.4% to $357 million. Adjusted operating margin increased 30 bps to 17.4%.

As a percentage of net sales, selling, general and administrative expenses (adjusted) increased 40 bps to 18.5%.

Adjusted operating margin increased 90 bps to 19.9% in North America and decreased 100 bps to 14.4% in international markets.

Segmental Analysis

Plumbing Products: The segment recorded revenues of $949 million, reflecting an increase of 3%. Excluding the impact of foreign currency translation, revenues increased 5% on growth in North America and internationally.

Adjusted operating margin of 20.9% increased 50 bps year over year as well.

Decorative Architectural Products: Segmental revenues of $653 million were up 5%, on growth from builders’ hardware and Behr’s pro initiative.

However, operating margin decreased 80 bps to 21.6%.

Cabinets and Related Products: Segmental revenues of $251 million decreased 4% year over year, as the company exited from lower margin business in the builder channel. Again, lower sales in the U.K. cabinet operation also affected the result.

The company reported adjusted operating profit of $30 million (down from $37 million a year-ago). Adjusted operating margin was 12% in the quarter, down 220 bps from the year-ago quarter.

Windows and Other Specialty Products: Segmental revenues totaled $204 million, up 4% year over year. Excluding the impact of foreign currency translation, net sales increased 7%, led by North American windows business.

Operating margin was 8.8% in the quarter compared with negative 1% a year ago.

Financials

Masco ended the quarter with cash and cash investments of $1 billion, as of Jun 30, 2017 compared with $990 million as of Dec 31, 2016.

Guidance

For 2017, the company expects earnings per share in the range of $1.93 to $2.00. Earlier, the company had expected 2017 EPS in the range of $1.90 to $2.00. The company also remains focused on achieving its 2019 EPS target of $2.50.

Zacks Rank and Peer Releases

Masco carries a Zacks Rank #2 (Buy).

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

D.R. Horton, Inc. (DHI - Free Report) exhibited an impressive performance in the third quarter of fiscal 2017, with both earnings and revenues beating the Zacks Consensus Estimate by 1.3% and 5.2%, respectively.

PulteGroup Inc.’s (PHM - Free Report) second-quarter 2017 adjusted earnings of 47 cents per share beat the Zacks Consensus Estimate of 45 cents by 4.4%. Also, quarterly earnings reflected a solid 27% jump from the year-ago quarter’s adjusted figure of 37 cents (read more: PulteGroup Q2 Earnings & Revenues Beat, Backlog Strong).

Upcoming Release in the Construction Sector

Louisiana-Pacific Corp. (LPX - Free Report) is scheduled to release its quarterly numbers on Aug 1. The Zacks Consensus Estimate for earnings is pegged at 61 cents, an increase of 116.7% on a year-over-year basis.

Masco Corporation Price, Consensus and EPS Surprise

 

Masco Corporation Price, Consensus and EPS Surprise | Masco Corporation Quote

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