Masco Corp. Earnings: Net Income Wasn’t What Wall Street Wanted
S&P 500 (NYSE:SPY) component Masco Corporation (NYSE:MAS) reported a lower net income in third quarter, missing analysts’ estimates. Masco manufactures and installs building and home improvement products including faucets, cabinets, architectural coatings, and windows.
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Masco Corporation Earnings Cheat Sheet
Results: Net income for Masco Corporation fell to $15 million (4 cents per share) vs. $36 million (10 cents per share) a year earlier. This is a decline of 58.3% from the year-earlier quarter.
Revenue: Fell 0.3% to $2 billion from the year-earlier quarter.
Actual vs. Wall St. Expectations: Masco Corporation fell short of the mean analyst estimate of 12 cents per share. It fell short of the average revenue estimate of $2.08 billion.
Quoting Management: “Our top line in the third quarter benefitted from the increase in new home construction activity in North America, new product introductions, and from selling price increases,” said Masco`s CEO, Tim Wadhams. “These positives offset both the slow economic growth in North America and the continued weakening of Euro-Zone economies that we anticipated for the second half of 2012. On an adjusted basis, our margins improved on flat sales to 7.2 percent compared to 6.5 percent in third quarter 2011, driven by our focus on total cost productivity and improved price/commodity relationships. We are pleased with that outcome.During the third quarters of 2012 and 2011, we incurred pre-tax costs and charges of $28 million and $13 million, respectively, related to business rationalization initiatives. We expect full year 2012 business rationalization charges to be approximately $65 million. In the Other Specialty Products segment, as reported, one of the businesses was negatively impacted in the third quarter by a $12 million adjustment to its warranty expense as a result of the periodic review of warranty claim activity, sales volume, demographics and the estimated cost to service anticipated claims. We continue to make progress on our strategic initiatives, which include leveraging our brands, reducing our costs, improving our Installation and Cabinet segments and strengthening our balance sheet. We are encouraged by the continued strength in new home construction activity, driven by the stabilization and improvement of home prices in many areas of the U.S., increasing affordability and demographic trends. These factors should continue to drive demand for new homes over the next several years. Increased new home construction activity benefits virtually all of our businesses, particularly our Installation segment which has improved significantly this year, almost breaking even in the third quarter and which we expect to be profitable in the fourth quarter. In our Cabinet segment, we announced actions during the quarter, including the closure of a manufacturing location and a headcount reduction, which we expect will improve our efficiency and reduce costs by approximately $20 million on an annual basis. While we are committed to returning our Cabinet segment to profitability, we anticipate that big ticket remodeling will remain weak, even though we continue to see modest improvement in overall repair and remodeling activity,” said Tim Wadhams.
The company has fallen short of estimates for two consecutive quarters. In the second quarter, it missed expectations by one cent with net income of 10 cents versus a mean estimate of net income of 11 cents per share.
Revenue has fallen in the past two quarters. In the second quarter, revenue declined 0.9% to $2 billion from the year-earlier quarter.
The company reported a profit last quarter, following a quarter of being in the red. In the first quarter, the company booked a net loss of $33 million, or a loss of 9 cents per share.
At 27 cents per share, the average estimate for the fiscal year has fallen from 30 cents ninety days ago.
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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)
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