Masco (MAS) Tops Q1 Earnings & Sales, Cabinet Sales Down

Masco Corporation’s (NYSE:MAS) adjusted earnings of 41 cents per share in the first quarter of 2017 surpassed the Zacks Consensus Estimate of 35 cents by 17.1%. Adjusted earnings increased 28.1% year over year.

Masco’s net sales of $1.78 billion beat the Zacks Consensus Estimate of $1.75 billion by 1.7%. Revenues also grew 3% year over year on the back of strong sales growth in Plumbing and Decorative Architectural Products.

North American sales increased 4% year over year to $1.41 billion. But international sales declined 1% (up 5% in local currency) to $366 million.

Margins

Adjusted gross profit grew 7.0% to $610 million, while adjusted gross margin improved to 34.3%.

Adjusted operating profit increased 7.6% to $255 million.

Adjusted operating margin increased 60 basis points (bps) to 14.4%. As a percentage of net sales, selling, general and administrative expenses (adjusted) increased 60 bps to 20.0%.

Adjusted operating margin rose 100 bps to 17.1% in North America and was down 180 bps to 10.9% in international markets.

Segmental Analysis

Cabinets and Related Products: Segmental revenues of $231 million declined 2% year over year, as the company exited from lower margin business in the builder channel.

The company reported adjusted operating profit of $18 million (down 28% from the year-ago figure). Adjusted operating margin was 7.8% in the quarter, down 280 bps from the year-ago quarter.

Plumbing Products: The segment recorded revenues of $863 million, up 6%. Excluding the impact of foreign currency translation, revenues increased 8% on growth in North America and internationally.

Adjusted operating margin of 18.1% increased 200 bps year over year as well.

Decorative Architectural Products: Segmental revenues of $505 million were up 2%, on growth from builders’ hardware and Behr’s pro initiative.

However, operating margin decreased 130 bps to 20.0%.

Windows and Other Specialty Products: Segmental revenues totaled $178 million, remaining flat year over year. Excluding the impact of foreign currency translation, net sales increased 3%, led by both the international and North American windows businesses.

Operating margin also increased 170 bps to 3.4%.

Masco Corporation Price, Consensus and EPS Surprise

Financials

Masco ended the quarter with cash and cash investments of $689 million, as of Mar 31, 2017 compared with $990 million as of Dec 31, 2016.

The company returned over $120 million to shareholders through dividends and share repurchases.

Zacks Rank and Peer Releases

Masco carries a Zacks Rank #4 (Sell).

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

D.R. Horton, Inc. (NYSE:DHI) exhibited an impressive performance in the second quarter of fiscal 2017, with earnings and revenues beating the Zacks Consensus Estimate by 1.7% and 5.2%, respectively.

NVR, Inc. (NYSE:NVR) , reported first-quarter 2017 earnings of $25.12 per share, surpassing the Zacks Consensus Estimate by 27.3%. The reported figure also rose 59% from the year-ago profit level.

Upcoming Release in the Construction Sector

Louisiana-Pacific Corp. (NYSE:LPX) is scheduled to release its quarterly numbers on May 5. The Zacks Consensus Estimate for earnings is pegged at 29 cents, an increase of 319.1% on a year-over-year basis.

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