Masco Corporation Reports Fourth Quarter and 2022 Year-End Results

Highlights

• Sales for the fourth quarter decreased 5 percent to $1,923 million

• Operating profit for the quarter was $185 million; adjusted operating profit was $234 million

• Earnings per share from continuing operations for the quarter was $0.51 per share; adjusted earnings per share from continuing operations was $0.65 per share

• 2023 earnings per share expected to be in the range of $3.06 – $3.36 per share, and on an adjusted basis, to be in the range of $3.10 – $3.40 per share

• Board declares a quarterly dividend of $0.285 per share, a 2 percent increase, payable on March 13, 2023 to shareholders of record on February 23, 2023

LIVONIA, Mich., February 09, 2023--(BUSINESS WIRE)--Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported its results for the fourth quarter and full year of 2022.

2022 Fourth Quarter Results

• On a reported basis, compared to fourth quarter 2021:

  • Net sales decreased 5 percent to $1,923 million; in local currency, net sales decreased 2 percent

  • In local currency, North American sales decreased 5 percent and international sales increased 7 percent

  • Gross margin decreased 230 basis points to 28.3 percent from 30.6 percent

  • Operating margin decreased 120 basis points to 9.6 percent from 10.8 percent

  • Net income decreased to $0.51 per share, compared to $0.55 per share

• Compared to fourth quarter 2021, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 24 percent (25 percent for 2021), were as follows:

  • Gross margin decreased 120 basis points to 29.5 percent from 30.7 percent

  • Operating margin decreased 90 basis points to 12.2 percent from 13.1 percent

  • Net income decreased to $0.65 per share, compared to $0.67 per share

• Liquidity at the end of the fourth quarter was $1,452 million (including availability under revolving credit facility)

• Plumbing Products’ net sales decreased 3 percent; in local currency, sales increased 2 percent

• Decorative Architectural Products’ net sales decreased 8 percent

2022 Full Year Highlights

• Sales for the year increased 4 percent to $8,680 million; in local currency, sales increased 6 percent

• Operating profit declined 8 percent to $1,297 million; adjusted operating profit declined 7 percent to $1,355 million

• Returned $1,172 million to shareholders through share repurchases and dividends

• Earnings per share from continuing operations for the year grew 124 percent to $3.63 per share; adjusted earnings per share increased 2 percent to $3.77 per share from $3.70 per share

2022 Full Year Results

• On a reported basis, compared to full year 2021:

  • Net sales increased 4 percent to $8,680 million; in local currency and excluding acquisitions and divestitures, net sales increased 6 percent

  • In local currency, North American sales increased 6 percent and international sales increased 8 percent

  • Gross margin decreased 290 basis points to 31.3 percent from 34.2 percent

  • Operating profit decreased 8 percent to $1,297 million from $1,405 million

  • Operating margin decreased 190 basis points to 14.9 percent from 16.8 percent

  • Net income increased to $3.63 per share, compared to $1.62 per share

• Compared to full year 2021, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 24 percent (25 percent for 2021), were as follows:

  • Gross margin decreased 260 basis points to 31.6 percent from 34.2 percent

  • Operating profit decreased 7 percent to $1,355 million from $1,454 million

  • Operating margin decreased 180 basis points to 15.6 percent from 17.4 percent

  • Net income increased to $3.77 per share, compared to $3.70 per share

"In the fourth quarter, demand softened across product categories in North America, partially offset by selling price increases," said Keith Allman, Masco’s President and Chief Executive Officer. "International markets remained strong with sales growth of 7 percent in local currency. Lower volumes, foreign currency and higher operational costs pressured operating margins in the quarter."

"For the full year 2022, we delivered 4 percent sales growth against a 17 percent comp in 2021, and 2 percent adjusted earnings per share growth," continued Allman. "In 2022, despite higher operational costs and softening demand, we delivered earnings growth for our shareholders and executed our capital deployment strategy by returning approximately $1.2 billion to shareholders in the form of share repurchases and dividends."

"In 2023, we believe the near-term demand environment will remain challenging," said Allman. "We are preparing for volumes overall to be down in the low double-digit range and anticipate adjusted earnings per share to be in the range of $3.10 to $3.40 per share. Despite the expected near-term market softness, we believe the long-term fundamentals of our repair and remodel markets remain strong. We are focused on capitalizing on these positive long-term demand trends by improving our margins and continuing to invest in growth opportunities. With our industry leading repair and remodel-oriented products in diverse channels, strong balance sheet, and disciplined capital allocation, we believe Masco is well positioned to deliver long-term shareholder value creation."

Dividend Declaration

Masco’s Board of Directors declared a quarterly dividend of $0.285 per share, a 2 percent increase, payable on March 13, 2023 to shareholders of record on February 23, 2023.

"The Board’s decision to once again increase Masco’s quarterly cash dividend is consistent with our capital allocation strategy of targeting a dividend payout ratio of approximately 30 percent with annual increases through a cycle," said Allman. "This increase underscores the strength of our company’s financial position, our ability to generate consistent, strong free cash flow, and the Board’s confidence in Masco’s future."

About Masco

Headquartered in Livonia, Michigan, Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes Behr® paint; Delta® and Hansgrohe® faucets, bath and shower fixtures; Kichler® decorative and outdoor lighting; and HotSpring® spas. We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders. For more information about Masco Corporation, visit www.masco.com.

The 2022 fourth quarter and full year supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Thursday, February 9, 2023 at 8:00 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (844) 200-6205 and from outside the U.S. at (929) 526-1599. Please use the access code 290858. The conference call will be webcast simultaneously and in its entirety through the Company’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on the Company’s website.

A replay of the call will be available on Masco’s website or by phone by dialing (866) 813-9403 from the U.S., (226) 828-7578 from Canada, and +44 204 525 0658 from all other locations. Please use access code 511416. The telephone replay will be available approximately two hours after the end of the call and continue through March 10, 2023.

Safe Harbor Statement

This press release contains statements that reflect our views about our future performance and constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "outlook," "believe," "anticipate," "appear," "may," "will," "should," "intend," "plan," "estimate," "expect," "assume," "seek," "forecast," and similar references to future periods. Our views about future performance involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements.

Our future performance may be affected by the levels of residential repair and remodel activity, and to a lesser extent, new home construction, our ability to maintain our strong brands and to develop innovative products, our ability to maintain our public reputation, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of materials, our dependence on suppliers and service providers, extreme weather events and changes in climate, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have acquired and may in the future acquire, our ability to attract, develop and retain a talented and diverse workforce, risks associated with cybersecurity vulnerabilities, threats and attacks, risks associated with our reliance on information systems and technology and the impact of the ongoing COVID-19 pandemic on our business and operations. These and other factors are discussed in detail in Item 1A. "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. Any forward-looking statement made by us speaks only as of the date on which it was made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.

MASCO CORPORATION Condensed Consolidated Statements of Operations - Unaudited For the Three Months and Years Ended December 31, 2022 and 2021
		(in millions, except per common share data)
		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Net sales		$	1,923			$	2,022			$	8,680			$	8,375
Cost of sales			1,378				1,403				5,967				5,512
Gross profit			545				619				2,713				2,863
Selling, general and administrative expenses			334				356				1,390				1,413
Impairment charges for goodwill and other intangible assets			26				45				26				45
Operating profit			185				218				1,297				1,405
Other income (expense), net:
Interest expense			(26	)			(25	)			(108	)			(278	)
Other, net			—				(1	)			4				(439	)
			(26	)			(26	)			(104	)			(717	)
Income before income taxes			159				192				1,193				688
Income tax expense			33				52				288				210
Net income			126				140				905				478
Less: Net income attributable to noncontrolling interest			11				8				61				68
Net income attributable to Masco Corporation		$	115			$	132			$	844			$	410
Income per common share attributable to Masco Corporation (diluted):
Net income		$	0.51			$	0.55			$	3.63			$	1.62
Average diluted common shares outstanding			227				245				232				251
Historical information is available on our website.

MASCO CORPORATION Exhibit A: Reconciliations - Unaudited For the Three Months and Years Ended December 31, 2022 and 2021
		(dollars in millions)
		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations
Net sales		$	1,923			$	2,022			$	8,680			$	8,375
Gross profit, as reported		$	545			$	619			$	2,713			$	2,863
Rationalization charges			23				2				32				4
Gross profit, as adjusted		$	568			$	621			$	2,745			$	2,867
Gross margin, as reported			28.3	%			30.6	%			31.3	%			34.2	%
Gross margin, as adjusted			29.5	%			30.7	%			31.6	%			34.2	%
Selling, general and administrative expenses, as reported		$	334			$	356			$	1,390			$	1,413
Selling, general and administrative expenses as percent of net sales, as reported			17.4	%			17.6	%			16.0	%			16.9	%
Operating profit, as reported		$	185			$	218			$	1,297			$	1,405
Rationalization charges			23				2				32				4
Impairment charges for goodwill and other intangible assets			26				45				26				45
Operating profit, as adjusted		$	234			$	265			$	1,355			$	1,454
Operating margin, as reported			9.6	%			10.8	%			14.9	%			16.8	%
Operating margin, as adjusted			12.2	%			13.1	%			15.6	%			17.4	%
Historical information is available on our website.

MASCO CORPORATION Exhibit A: Reconciliations - Unaudited For the Three Months and Years Ended December 31, 2022 and 2021
		(in millions, except per common share data)
		Three Months Ended December 31,								Year Ended December 31,
			2022				2021				2022				2021
Income Per Common Share Reconciliation
Income before income taxes, as reported		$	159			$	192			$	1,193			$	688
Rationalization charges			23				2			...