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Masco (MAS) Q1 Earnings & Revenues Top Estimates, Margins Up

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Masco Corporation’s (MAS - Free Report) first-quarter 2020 earnings and revenues handily beat the Zacks Consensus Estimate and improved year over year, courtesy of strong contributions of North American plumbing products as well as paint and other coatings products. The company’s shares gained 0.7% in the pre-market trading session on Apr 29, following the earnings release.

Inside the Headlines

Masco reported adjusted earnings of 46 cents per share, beating the consensus mark of 36 cents by 27.8%. Moreover, the metric increased 24.3% from the year-ago figure.

Net sales of $1,581 million topped analysts’ expectation of $1,521 million by 3.6% and grew 4% from the year-ago figure of $1,531 million. Notably, the metric grew 5% year over year in local currency.

In local currency, sales in the North American region rose 8% from the prior-year period but fell 3% internationally.

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 inched up 2% year over year to $955 million, driven by 7% sales growth in North America. In local currency, the segment’s sales grew 3% year over year. Adjusted operating margin expanded 30 basis points (bps) year over year to 16.6%. Adjusted EBITDA improved 4.1% year over year to $179 million.

Decorative Architectural Products: The segment reported sales of $626 million, up 9% from the prior-year period, driven by growth in paints and other coating products. Adjusted operating margin increased 100 bps to 15.3%. Adjusted EBITDA also grew 16.3% from the prior-year period to $107 million.

Margins Performance

Adjusted gross margin came in at 34.8%, which expanded 30 bps from the prior year. Selling, general and administrative expenses — as a percentage of net sales — were down 50 bps from the year-ago figure.

Adjusted operating margin expanded 80 bps on a year-over-year basis to 14.4%. Adjusted EBITDA also increased 10.1% year over year to $261 million.

Financials

As of Mar 31, 2020, the company had cash and cash investments of $767 million compared with $697 million at 2019-end. At the quarter-end, long-term debt was $2.77 billion, on par with 2019-end level. Net cash used for operating activities was $92 million in the first quarter compared with $131 million a year ago. It returned $639 million to shareholders through share repurchases and dividends. Liquidity at the end of the first quarter was $1,767 million, including full availability on $1 billion revolving credit facility.

Zacks Rank

Masco — which shares space with Armstrong World Industries, Inc. (AWI - Free Report) , Louisiana-Pacific Corp. (LPX - Free Report) and Owens Corning (OC - Free Report) in the Zacks Building Products - Miscellaneous industry — 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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