OK
The Universal Selection Source:
Coatings Ingredients
Industry News

Masco Corporation Reports Third Quarter Results and Increases Full-Year Guidance

Published on 2009-10-29. Author : SpecialChem

TAYLOR, Mich. -- Masco Corporation reported that net sales from continuing operations for the quarter ended September 30, 2009 declined 17 percent to $2.1 billion compared with $2.5 billion for the third quarter of 2008. North American sales declined 17 percent and International sales declined 13 percent. In local currencies, International sales declined seven percent compared with the third quarter of 2008.

The third quarter of 2009 results were adversely affected by significantly lower sales volume of new home construction products and services, as well as a decline in consumer spending for home improvement products in both North American and International markets. The negative market conditions were partially offset by increased sales volume of paints and stains, the improved relationship between selling prices and commodity costs and benefits associated with business rationalizations and other cost savings initiatives.

Income from continuing operations was $.14 per common share in the third quarter of 2009 compared to income from continuing operations of $.09 per common share in the third quarter of 2008. The third quarter of 2008 was impacted by an unusually high tax rate; a normalized tax rate of 36 percent would have increased earnings by $.12 per common share.

"Although market conditions remain challenging, we are encouraged by our third quarter operating performance, which exceeded our expectations. Our sales continue to benefit from new product introductions and market share gains. Our gross profit margins were the highest we have achieved in the last seven quarters, as we continue to see the positive impact on our cost structure of the business rationalization initiatives we have implemented and our focus on quality and driving lean principles across the Company. We are proud of the worldwide Masco Team for their outstanding effort and contributions in a difficult operating environment" said Masco's CEO Tim Wadhams.

The Company continues to focus on the rationalization of its businesses, including business consolidations, plant closures, headcount reductions, system implementations and other initiatives. During the third quarters of 2009 and 2008, the Company incurred costs and charges of $21 million pre-tax ($.04 per common share, after tax) and $15 million pre-tax ($.03 per common share, after tax), respectively, related to these initiatives.

Outlook

Business conditions remain difficult in the Company's markets. The Company continues to estimate that 2009 housing starts will decline 40 percent to approximately 550,000 units. The Company also anticipates that consumer spending for home improvement products in North American and International markets will continue at reduced levels in the near-term.

While global economic conditions make forecasting future business activity difficult, the Company currently estimates that its 2009 sales will decline approximately 18 to 20 percent compared to 2008. The Company's previous guidance estimated that its full-year 2009 sales decline would be 18 to 22 percent compared to 2008.

The Company currently estimates that its 2009 full-year income (loss) from continuing operations will approximate $.05 to $(.05) per common share. The full-year guidance includes approximately $92 million pretax ($.17 per common share, after tax) of costs and charges for plans undertaken to further rationalize the Company's business, but does not include any additional costs and charges that may result from the continued evaluation of the Company's businesses or any other charges. The Company's previous guidance was loss from continuing operations in a range of $(.05) to $(.25) per common share for the full-year 2009.

While the Company expects to operate near break-even, the guidance includes an estimate of income tax expense, principally related to income tax liabilities in certain jurisdictions and losses in other jurisdictions that provide no tax benefit. As a result, quarterly and full-year results for 2009 will reflect unusual relationships between income taxes and income (loss) before income taxes. In the third quarter of 2009, the Company reported pre-tax income of $89 million and $26 million of tax expense. A normalized tax rate of 36 percent would have reduced third quarter 2009 earnings by $.02 per common share.

The Company estimates that 2009 free cash flow (cash from operations, after capital expenditures and before dividends) will be relatively strong and approximate $450 million. This compares with the Company's previous guidance of free cash flow of approximately $360 million.

Although the Company is confident that the long-term fundamentals for the new home construction and home improvement markets are positive, the Company expects that market conditions will be challenging over the near-term, as global economies recover. The Company believes that its strong financial position (including cash of $1.2 billion at September 30, 2009, its ability to generate positive cash flow during 2009 and unused bank lines) together with its current strategy of re-aligning its cost structure, investing in leadership brands, driving innovation and re-engineering its supply chains, will allow it to drive long-term growth and create value for our shareholders.

Headquartered in Taylor, Michigan, Masco Corporation is one of the world's leading manufacturers of home improvement and building products, as well as a leading provider of services that include the installation of insulation and other building products.

Source: Masco Corporation


FEICA 2018 European Adhesive and Sealant Conference and EXPO
Back to Top