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Masco (MAS) Q2 Earnings & Sales Miss, 2022 EPS View Tapered

Masco Corporation MAS reported results for second-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate after beating it in the preceding quarter. The top line increased, whereas the bottom line remained flat year over year. Following the results, the company’s shares were down 0.3% in the pre-market trading session.

Masco’s president and CEO Keith Allman, said, “As we enter the second half of the year, we expect growth to be more modest than the first half and largely driven by pricing actions. We continue to position ourselves for profitable growth while mitigating the impacts of the challenging supply chain environment. Given moderating demand and additional foreign currency headwinds, we are narrowing our previous guidance and now anticipate our adjusted earnings per share for 2022 to be in the range of $4.15 to $4.25 per share, a 14 percent increase compared to 2021 at the midpoint, from our previous expectation of $4.15 to $4.35 per share.”

Inside the Headlines

Masco reported adjusted earnings of $1.14 per share, which lagged the consensus mark of $1.19 by 4.2%. Adjusted earnings remained flat year over year.

Net sales of $2,352 million marginally missed the consensus estimate of $2,353 million but increased 8% from the prior-year quarter’s figure of $2,179 million. Net sales increased 11% year over year in local currency, excluding acquisitions and divestitures. Sales in the North American region increased 11% from the prior-year quarter’s figure and 8% internationally in local currency.

Segmental Analysis

Plumbing Products: Sales in the segment rose 3% year over year to $1,373 million. In local currency, the segment’s sales (excluding acquisitions and divestitures) increased 8% year over year. The adjusted operating margin contracted 330 basis points (bps) year over year to 17.3%. Adjusted EBITDA declined 11.7% year over year to $263 million.

Decorative Architectural Products: The segment reported sales of $979 million, up 15% from the prior-year period’s number. Although the adjusted operating margin declined 190 bps to 20.2%, adjusted EBITDA rose 5.1% from the prior-year period to $207 million.

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

Margins Performance

Adjusted gross margin contracted 330 bps from the prior-year level to 33%. Selling, general and administrative expenses — as a percentage of net sales — declined 90 bps to 15.3% from the year-ago quarter’s 16.2%.

Adjusted operating margin contracted 250 bps on a year-over-year basis to 17.6%. Adjusted EBITDA also fell 4.9% year over year to $450 million.

Financials

As of Jun 30, 2022, Masco had cash and cash investments of $440 million compared with $926 million recorded at 2021-end.

Long-term debt was $2.946 billion, slightly down from $2.949 billion at 2021-end. Net cash for operating activities was $174 million for the first six months of 2022 compared with $239 million in the year-ago period.

2022 Projections

For 2022, adjusted earnings are now projected in the range of $4.15-$4.25 per share compared with $4.15-$4.35 expected earlier. The projection indicates 14% growth compared to 2021 at the midpoint. The Zacks Consensus Estimate for 2022 earnings is currently pegged at $4.24 per share.

Zacks Rank

Masco currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Few Recent Construction Releases

PulteGroup Inc. PHM reported mixed results for second-quarter 2022, with earnings surpassing the Zacks Consensus Estimate but revenues missing the same.

Earnings for PHM grew 58.7%, from $1.72 per share a year ago. Revenues increased 16.9% from the year-ago figure of $3.36 billion.

RPM International Inc. RPM reported tepid fourth-quarter fiscal 2022 (ended May 31, 2022) results, with earnings missing the Zacks Consensus Estimate and sales beating the same.

Regarding the quarterly results, Frank C. Sullivan, RPM International chairman and CEO, stated, “Our nimble businesses quickly adapted to dynamically shifting supply chain constraints, inflationary challenges and foreign exchange headwinds to steadily generate momentum in the second half of fiscal 2022.”

D.R. Horton, Inc.’s DHI third-quarter fiscal 2022 earnings beat the Zacks Consensus Estimate but revenues missed the same.

DHI also lowered its revenue guidance for the full year, given the expected completion dates of homes under construction and current market conditions.


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