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Masco Corporation Message Board

  • nick.mach nick.mach Mar 4, 2009 11:04 AM Flag

    OK Jay, let's cut the B.S. and drill down on the numbers

    Look at Contractual Obligations, Cash flows 2009-2011, Housing starts and new home inventories.



    Masco's estimate of 300M Free cash for 2009 seems reasonable based on the above. 2010, housing starts should climb, estimate: 900K. Masco's free cash: 600M(conservative), 2011 1B(free cash)

    Also they have 1B cash on B/S, their A/R and inventory should cover payables.

    Contractual obligations (per 2008 10K)

    2009: 623 - 224 (interest)= 399M
    2010&2011: 953 - 435 (interest)= 518M

    They will generate in free cash of 1.9B-2B in 2009,2010 & 2011 plus they have 1B in cash on the B/S. I'M NOT INCLUDEING DIVIDENDS THEY ARE NOT AN OBLIGATION.

    I don't see them in BK in 2009 & 2010. The housing starts for 2010 are very conservative. OBAMA is throwing 50b at the housing mess. Reminiscent of Nixon in the Mid 70s which had a housing boom comparable to this one.

    The only variable are the tax payments and this lawsuit (have my doubts payment will be required in 2009 or 2010, if it goes against MASCO)

    This company currently is valued at 3B dollars by Mr. Market.

    And we all know given past performance, what a bipolar mess he can be.

    Refute it, or lump it!

    Good Luck

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    • Nicky,

      this is very simple

      EBITDA $395MM
      Capex 170MM
      Int Exp 240
      W/C 80MM
      Cash Tx 3MM
      FCF (pre-divs) neg $98MM
      Divs $105MM
      FCF, Net of Divs negative $203MM

      Total Debt $3.975Bn
      Cash Balance, Net of $350MM in Eur / Operate Biz -- $470
      Net Debt $3.5Bn

      Leverage -- Gross 10x. Net 8.8x.

      Liquidity: 473MM cash + $175MM availability = $650MM

      $300MM debt maturity in March 2010

      TEV/EBITDA at current stock price of $4 is still 12x. it is a depressed EBITDA value, but you can't tell me when it is going to recover or even stabilize. company will be forced to eliminate dividend later this year, further pressuring the stock. it's going under $3...but i guess you like watching it fall

      • 2 Replies to jaytrevor1
      • Oh excuse me your REGALNESS.

        EBITA: based on 8B 2009 sales, 500M
        CAPX 150M ( W/C= + 180M) to get to their forecast of 300 M Free cash.

        Look, we can go over this B.S. about best guesses for housing starts stabilizing etc...

        The 600K housing starts for 2009 is an extremely conservative forecast (it's 33% lower than 2008 (at this time the lowest in history)

        Ya know what, quote me, housing starts pick up in the 2nd half of the year. The new home inventory is plummeting!

        When you throw 50B at housing, something will stick.

        And based on the past, housing has a nasty habit of ticking up during the last half of the most abysmal year in a recession!

        1975, 1982 & 1991.

        And about your price estimate using a very depressed EBITA. It's useless! Either they go bankrupt in 2009 or 2010 or try using around 1.0M housing starts in 2010, 1.3M in 2011 etc.

        Guess in the short run, you may be right on price. But to sell at these depressed levels is kind of like the inverse of buying circa Nov. 1999!

        Good Luck

      • Big Green showoff. Analyzed like a True Tucker.

23.46-0.84(-3.46%)Feb 8 4:02 PMEST