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Masco (MAS) Q1 Earnings & Sales Top Estimates, Stock Up

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Masco Corporation MAS reported impressive results for first-quarter 2021. Both earnings and revenues surpassed the Zacks Consensus Estimate as well as improved year over year. Strong Decorative Architectural Products and North American Plumbing segments helped it deliver better-than-expected results.

The company’s shares jumped 2.3% in the pre-market trading session on Apr 28.

“Our markets remain strong, and we continue to demonstrate our ability to execute extremely well in this dynamic environment. We have taken actions and developed further plans to offset the raw material and logistics inflation that we are experiencing.

"While we anticipate these challenges will continue for the next few quarters, we believe we are well prepared and will continue to adjust to deliver value for our customers and our shareholders.” said Masco President and CEO, Keith Allman.

Inside the Headlines

Masco reported adjusted earnings of 89 cents per share, which topped the consensus mark of 66 cents by 34.9%. Its bottom line grew an impressive 89.3% from year-ago figure of 46 cents per share.

Masco Corporation Price, Consensus and EPS Surprise

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

Masco Corporation price-consensus-eps-surprise-chart | Masco Corporation Quote

Net sales of $1,970 million topped the consensus estimate of $1,827.3 million by 7.8%. On a year-over-year basis, the top line increased 24.6%. Notably, net sales jumped 22% year over year in local currency. In local currency, sales in the North American region increased 21% from prior-year figure and 27% internationally.

Segmental Analysis

Plumbing Products: Sales in the segment rose 31% year over year to $1,249 million. In local currency, the segment’s sales (excluding acquisitions) increased 22% year over year. Adjusted operating margin expanded 370 basis points (bps) year over year to 20.3%. Adjusted EBITDA increased 55.9% year over year to $279 million.

Decorative Architectural Products: The segment reported sales of $721 million, up 15% from the prior-year period. Adjusted operating margin expanded 440 bps to 19.7%. Adjusted EBITDA also improved 42.1% from the prior-year period to $152 million.

Margins Performance

Adjusted gross margin came in at 35.6%, which expanded 80 bps from the prior year. Selling, general and administrative expenses — as a percentage of net sales — were down 340 bps from the year-ago figure.

Adjusted operating margin expanded 420 bps on a year-over-year basis to 18.6%. Adjusted EBITDA also increased 56.7% year over year to $409 million.

Financials

At quarter-end, the company had cash and cash investments of $838 million compared with $1,326 million recorded at 2020-end. Long-term debt was $2.96 billion, up from $2.79 billion at 2020-end. Net cash for operating activities was $89 million for the first three months of 2021 compared with $92 million in the comparable year-ago period.

It repurchased 5.5 million shares for approximately $303 million during the quarter.

Lifted 2021 Projections

The company expects earnings for 2021 in the range of $1.52-$1.72 per share, as reported. Adjusted earnings are now projected within $3.50-$3.70 per share, up from prior expectation of $3.25-$3.45. In 2020, adjusted earnings were $3.12 per share.

Zacks Rank

Masco — which share space with Armstrong World Industries, Inc. AWI, Owens Corning OC and United Rentals, Inc. URI 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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