Masco Corp (MAS) Reports Mixed Results Amid Market Challenges
Quarterly Sales: Q4 sales decreased by 2% to $1,882 million.
Adjusted Operating Profit: Increased 16% to $272 million in Q4.
Adjusted Earnings Per Share: Grew 28% to $0.83 in Q4.
Annual Performance: Full-year sales decreased 8% to $7,967 million, with a slight adjusted operating profit decline.
Dividend Increase: Quarterly dividend declared at $0.29 per share, a 2% increase.
2024 Outlook: Earnings per share expected to be in the range of $4.00 $4.25.
Masco Corp (NYSE:MAS), a global leader in the design, manufacture, and distribution of branded home improvement and building products, released its 8-K filing on February 8, 2024, detailing its financial performance for the fourth quarter and full year of 2023. The company, known for its Behr paint and Delta faucets, faced a challenging market environment, with a decrease in sales but managed to increase its adjusted operating profit and earnings per share in the fourth quarter.
Financial Performance Overview
In Q4, Masco Corp reported a 2% decrease in sales to $1,882 million, with a notable 640 basis point increase in gross margin to 34.7%. Adjusted for certain items, the gross margin was even higher at 35.1%. Operating profit saw a significant increase of 34% to $247 million, with an adjusted operating profit of $272 million, up 16% from the previous year. This resulted in a 28% increase in adjusted earnings per share to $0.83.
For the full year, sales dipped by 8% to $7,967 million. Despite this, the company achieved a 4% increase in operating profit to $1,348 million and an 11% increase in earnings per share to $4.02. Adjusted earnings per share saw a modest increase of 2% to $3.86 from $3.77 per share.
Segment Performance and Challenges
The Plumbing Products segment, which includes the Delta and Hansgrohe brands, saw a 1% increase in net sales, while the Decorative Architectural Products segment experienced a 7% decrease. The company's liquidity at the end of the fourth quarter stood at $1,634 million, including availability under its revolving credit facility.
President and CEO Keith Allman commented on the results, stating,
We finished the year strong by delivering fourth quarter adjusted operating profit margin expansion of 230 basis points and adjusted earnings per share growth of 28 percent."
He also highlighted the company's disciplined capital allocation and the return of $291 million to shareholders through dividends and share repurchases.
Looking Ahead
For 2024, Masco Corp anticipates a stabilization in demand with sales expected to be approximately flat for the full year in a market that is flat to down low single digits. The company's outlook for adjusted earnings per share is in the range of $4.00 to $4.25. Allman expressed confidence in the company's position to deliver long-term shareholder value, citing its strong balance sheet and disciplined capital allocation.
The company's Board of Directors declared a quarterly dividend of $0.29 per share, payable on March 11, 2024, to shareholders of record on February 22, 2024, marking a 2% increase from the previous dividend.
Masco Corp's financial stability and strategic focus on operational efficiencies, pricing discipline, and shareholder returns, despite a decrease in sales, reflect its resilience in a challenging market. The company's performance and strategic outlook are likely to continue attracting interest from value investors looking for stable returns and long-term growth potential.
Explore the complete 8-K earnings release (here) from Masco Corp for further details.
This article first appeared on GuruFocus.
