Masco Announces Strategic Initiatives to Drive Shareholder Value: Company to Spin-Off Installation and Other Services Segment, Initiate Significant Share Repurchase Program and Reduce Corporate Expense
TAYLOR, Mich., Sept. 30, 2014 /PRNewswire/ -- Masco Corporation (NYSE: MAS) today announced its Board of Directors has approved the strategic initiatives recommended by management under the leadership of Keith Allman, its President and Chief Executive Officer.
The strategic initiatives, which are designed to drive shareholder value over the mid- to long-term, are comprised of:
- The spin-off of 100 percent of Masco's Installation and Other Services businesses ("Services Business") into an independent, publicly-traded company through a tax-free stock distribution to Masco's shareholders
- The implementation of a share repurchase program for an aggregate of 50 million shares of Masco's common stock
- The reduction of corporate expense and simplification of Masco's organizational structure, resulting in an estimated charge of approximately $30 million over the next several quarters with anticipated company-wide annual savings of $35-40 million
Mr. Allman stated, "Today's transformative actions reflect our continued commitment to enhance shareholder value through the active management of our portfolio, effective capital allocation, cost control, and organizational focus. As separate companies, both Masco and the Services Business will have greater flexibility to focus on and pursue their respective growth strategies. In addition, the actions we are taking at the corporate office are intended to improve our cost position and drive value across our enterprise. Masco remains committed to creating shareholder value by profitably growing in branded building products."
Mr. Allman continued, "Over the past several years, Masco has strengthened the Services Business by reducing fixed costs and implementing lean processes to achieve supply chain savings. As such, we believe the Services Business is now properly positioned to operate as a separate company. The Services Business will focus on growth by capitalizing on North American new home construction as well as further expanding into commercial and retrofit categories. Masco shareholders stand to benefit from the additional value created by the spin-off."
Masco is pleased to announce the Service Business management team:
- Jerry Volas, currently Masco Group President, will become the Chief Executive Officer
- Robert Buck, currently Masco Contractor Services' President, will become the President and Chief Operating Officer
- John Peterson, currently Masco Contractor Services' Chief Financial Officer, will become the Chief Financial Officer
All three have extensive industry experience and have been instrumental in positioning the Services Business for growth and profitability.
Masco also announced today that its Board has approved the repurchase of an aggregate of 50 million shares of the Company's common stock, which represents approximately 14 percent of Masco's currently outstanding shares. Repurchases are expected to be made over a multi-year period beginning in 2014. The repurchases will be funded through cash on hand and operating cash flow. As of June 30, 2014, cash on hand was $1.4 billion.
Mr. Allman added, "This authorization reflects the Board's continued confidence in Masco's future performance, our ability to generate long-term cash flow, the strength of Masco's liquidity, and our ongoing commitment to create shareholder value."
The Company will hold an investor day on February 9, 2015 in New York at which time it will discuss its outlook for 2015 and the long-term growth strategy for each of its businesses.
Masco
Following the separation, Masco will continue to be listed on the NYSE under "MAS," and will remain headquartered in Taylor, Michigan. Masco will continue to build on its leading positions in branded building products.
New Services Business
Masco's Installation and Other Services segment, which includes Masco Contractor Services, the leading installer of insulation in the U.S., and Service Partners, a leading distributor of residential insulation products and related accessories in the U.S., reported revenue of $1.4 billion in 2013. This segment is comprised of 190 branch locations and 70 distribution centers and its revenue has achieved a compounded annual growth rate of nearly 11 percent since 2010. The Services Business will be headquartered in Central Florida.
Next Steps
The proposed separation is subject to customary conditions, including receipt of any required regulatory approvals, an opinion of counsel regarding the tax-free nature of the separation, the effectiveness of a Form 10 filing with the Securities and Exchange Commission, and final approval by Masco's Board of Directors. Masco expects to complete the separation by mid- 2015.
Conference Call Details
A conference call regarding items contained in this release is scheduled for Tuesday, September 30, 2014 at 8:30 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (855) 226-2726 (855-22MASCO) or (706) 679-3614 from outside the U.S. Please use the conference identification number 12689434. 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 (855) 859-2056 or (404) 537-3406 from outside the U.S. Please use the conference identification number 12689434. The telephone replay will be available approximately two hours after the end of the call and continue through October 31, 2014.
About Masco
Headquartered in Taylor, Michigan, Masco Corporation is one of the world's leading manufacturers of branded building products, as well as a leading provider of services that include the installation of insulation and other building products.
Supplemental material, including a presentation in PDF format, is available on the Company's website at www.masco.com.
Safe Harbor Statement
Statements contained in this press release that reflect our views about our future performance constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "believe," "anticipate," "appear," "may," "will," "should," "intend," "plan," "estimate," "expect," "assume," "seek," "forecast," and similar references to future periods. These views 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 our reliance on new home construction and home improvement, our reliance on key customers, the cost and availability of raw materials, uncertainty in the international economy, shifts in consumer preferences and purchasing practices, our ability to improve our underperforming businesses, our ability to maintain our competitive position in our industries, risks associated with the proposed spin-off of our Services Business, our ability to realize the expected benefits of the spin-off, the timing and terms of our share repurchase program, and our ability to reduce corporate expense and simplify our organizational structure. We discuss many of the risks we face 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. Our forward-looking statements in this press release speak only as of the date of this press release. 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.
SOURCE Masco Corporation
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