TAYLOR, Mich., Feb. 10 /PRNewswire-FirstCall/ --
2009 Fourth Quarter Trends
- Markets for most of our products are showing modest improvement.
- Comparing the fourth quarter of 2009 to the fourth quarter of 2008:
- Sales to key retailers increased eight percent.
- Three of our five business segments had sales increases.
- Our International operations had another strong quarter.
- Operating profit (excluding impairment charges for goodwill and other intangible assets) improved.
2009 Full-Year Highlights
- Over $1.4 billion of cash at December 31, 2009.
- Free cash flow (cash from operations, less capital expenditures, before dividends) approximated $550 million.
- Net sales from continuing operations declined 18 percent to $7.8 billion.
- Income from continuing operations was $.11 per common share excluding non-cash impairment charges for goodwill.
- (Loss) from continuing operations, as reported, was ($.41) per common share.
Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the year ended December 31, 2009 declined 18 percent to $7.8 billion from $9.5 billion for 2008. North American sales declined 18 percent and International sales declined 17 percent. In local currencies, International sales declined ten percent compared with 2008.
Income from continuing operations was $.11 per common share and $.20 per common share for 2009 and 2008, respectively, excluding non-cash impairment charges for goodwill and other intangible assets. Including these charges, the loss from continuing operations, as reported, was ($140) million or ($.41) per common share and ($366) million or ($1.06) per common share for the years ended December 31, 2009 and 2008, respectively.
"We are very encouraged by our 2009 financial and operating performance in one of the more difficult economic environments Masco has ever experienced. Although our sales were down 18 percent, compared to 2008, we were able to offset a significant portion of our volume declines, primarily as a result of innovative new product introductions and market share gains," said Masco's CEO Tim Wadhams. "Obviously, forecasting business conditions and Company performance was extremely challenging in 2009, but having said that, we continued to exceed our expectations for sales, operating profit and cash flow as the year progressed. Ending the year with over $1.4 billion of cash is a testament to the world-wide Masco Team's dedication and commitment to our emphasis on cash generation. We are very proud of their accomplishments," added Wadhams.
Results for 2009 were adversely affected by lower sales volume of new home construction products and services, as well as a decline in consumer spending for home improvement products in both North American and International markets. The negative market conditions were partially offset by increased sales volume of paints and stains, market share gains, the improved relationship between selling prices and commodity costs and benefits associated with business rationalizations and other cost savings initiatives.
We continue to focus on the rationalization of our businesses, including business consolidations, plant closures, headcount reductions, system implementations and other initiatives. During 2009 and 2008, we incurred costs and charges of $94 million pre-tax ($.17 per common share, after tax) and $78 million pre-tax ($.14 per common share, after tax), respectively, related to these initiatives.
During 2009, we recognized non-cash, pre-tax impairment charges for goodwill (in the fourth quarter) aggregating $262 million ($.51 per common share, after tax), non-cash, pre-tax impairment charges for financial investments aggregating $10 million ($.02 per common share, after tax) and pre-tax currency transaction gains of $17 million ($.03 per common share, after tax). During 2008, we recognized non-cash, pre-tax impairment charges for goodwill and other intangible assets (in the fourth quarter) aggregating $467 million ($1.26 per common share, after tax), non-cash, pre-tax impairment charges for financial investments aggregating $58 million ($.10 per common share, after tax) and pre-tax currency transaction losses of $29 million ($.05 per common share, after tax).
Fourth Quarter 2009
Fourth quarter 2009 net sales from continuing operations declined three percent to $1.9 billion compared with $2.0 billion for the fourth quarter 2008. North American sales declined seven percent and International sales increased 12 percent. In local currencies, International sales increased one percent compared with the fourth quarter of 2008.
Income (loss) from continuing operations was $.02 per common share and ($.17) per common share for the fourth quarters of 2009 and 2008, respectively, excluding non-cash impairment charges for goodwill and other intangible assets. Including these charges, loss from continuing operations, as reported, was ($173) million or ($.49) per common share and ($504) million or ($1.44) per common share for the fourth quarters of 2009 and 2008, respectively.
During the fourth quarters of 2009 and 2008, we incurred costs and charges of $27 million pre-tax ($.05 per common share, after tax) and $39 million pre-tax ($.07 per common share, after tax), respectively, related to the rationalization of our businesses. In addition, in the fourth quarter of 2008, we recognized non-cash, pre-tax impairment charges for financial investments of $28 million ($.05 per common share, after tax).
"Although new home construction and big-ticket remodeling activity continues to be depressed, our other product groups experienced relatively solid top-line repair and remodel sales growth in the fourth quarter of 2009. The fourth quarter of 2009 is the first quarter in a long time where sales to key retailers and operating profit, adjusted for impairment charges, exceeded the prior year quarter. We are encouraged by these positive trends, and we continue to increase market share in key segments as we move into 2010," said Tim Wadhams.
2010 Outlook
We expect that business conditions in 2010 will improve compared to 2009. While we are concerned about the impact of current unemployment levels, foreclosure activity and access to financing, we believe that housing starts will improve in 2010 and will increase to a range of 600,000 to 700,000 units.
While we anticipate that expenditures on repair and remodel activity will improve modestly in 2010 from 2009 levels, we believe that big-ticket items will continue to be deferred, in the short-term, until general economic conditions, credit availability and home prices improve.
We are confident that the long-term fundamentals for the new home construction and home improvement markets are positive. We believe that our strong financial position, together with our current strategy of investing in leadership brands (including: KraftMaid and Merillat cabinets, Delta and Hansgrohe faucets, Behr paint and Milgard windows), our continued focus on innovation and our commitment to lean principles will allow us to drive long-term growth and create value for our shareholders.
Beginning with 2010, Masco will no longer provide definitive earnings per common share and cash flow guidance. Instead, we will provide additional segment detail, along with estimates of key financial data.
Headquartered in Taylor, Michigan, Masco Corporation is one of the world's leading manufacturers of home improvement and building products, as well as a leading provider of services that include the installation of insulation and other building products.
The 2009 fourth quarter and full-year supplemental material including a presentation in PDF format, will be distributed after the market closes on February 10, 2010 and will be available on the Company's Web site at www.masco.com.
A conference call regarding items contained in this release is scheduled for Thursday, February 11, 2010 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 (913) 312-0653 (confirmation #4115783).
The conference call will be webcast simultaneously and in its entirety through the Masco Corporation Web site. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on the Company's Web site.
A replay of the call will be available on Masco's Web site or by phone by dialing (719) 457-0820 (replay access code #4115783). The replay will be available approximately two hours after the end of the call and continue through February 18, 2010.
Masco Corporation's press releases and other information are available through the Company's toll free number, 1-888-MAS-NEWS, or under the Investor Relations section of Masco's Web site at www.masco.com.
Statements contained herein, or otherwise made available, that reflect the Company's views about its future performance may constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. These views involve risks and uncertainties that are difficult to predict and the Company's results may differ materially from the results discussed in such forward-looking statements. For further information, refer to our most recent Annual Report on Form 10-K (particularly the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections) and to any subsequent Quarterly Reports on Form 10-Q, all of which are on file with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Certain of the financial and statistical data made available are non-GAAP financial measures as defined by the SEC's Regulation G. The Company believes that such non-GAAP performance measures and ratios used in managing the business may provide users with meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Additional information about the Company is contained in the Company's filings with the SEC and is available on Masco's Web site.
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
For the Three Months and Twelve Months Ended December 31, 2009 and 2008
(In Millions, Except Per Common Share Data)
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $1,898 $1,956 $7,792 $9,484
Cost of sales 1,403 1,559 5,774 7,125
----- ----- ----- -----
Gross profit 495 397 2,018 2,359
Selling, general and administrative
expenses 430 414 1,693 1,802
Impairment charges for goodwill and
other intangible assets 262 467 262 467
Charge for defined-benefit plan
curtailment - - 8 -
--- --- --- ---
Operating (loss) profit (197) (484) 55 90
Other income (expense), net (49) (87) (206) (283)
--- --- ---- ----
(Loss) income from continuing
operations before income taxes (246) (571) (151) (193)
Income tax (benefit) expense (84) (71) (49) 134
--- --- --- ---
(Loss) income from continuing
operations (162) (500) (102) (327)
(Loss) from discontinued operations, net (12) (4) (43) (25)
--- --- --- ---
Net (loss) income (174) (504) (145) (352)
Less: Net income attributable to non-
controlling interest 11 4 38 39
--- --- --- ---
Net (loss) income attributable to
Masco Corporation $(185) $(508) $(183) $(391)
===== ===== ===== =====
Earnings (loss) per common share
attributable to Masco
Corporation (diluted):
(Loss) income from continuing
operations $(0.49) $(1.44) $(0.41) $(1.06)
(Loss) from discontinued
operations, net (0.03) (0.01) (0.12) (0.07)
----- ----- ----- -----
Net (loss) income attributable to
Masco Corporation $(0.53) $(1.45) $(0.53) $(1.13)
====== ====== ====== ======
Average diluted common shares
outstanding 352 351 351 353
=== === === ===
Amounts attributable to Masco Corporation:
(Loss) income from continuing
operations $(173) $(504) $(140) $(366)
(Loss) from discontinued
operations, net (12) (4) (43) (25)
--- --- --- ---
Net (loss) income attributable to
Masco Corporation $(185) $(508) $(183) $(391)
===== ===== ===== =====
Masco Corporation
Key Financial Data As Reported - Unaudited
Q4 - 2009 and 2008 (In Millions, Except Earnings Per Share)
Sales & Earnings 12/31/2009 12/31/2008 Change
---------------- ---------- ---------- ------
Net Sales $1,898 $1,956 -3%
Operating (Loss) $(197) $(484) N/A
Operating (Loss) % of Net Sales -10.4% -24.7% 1,430 bps
Other Income (Expense), Net $(49) $(87) 44%
Income Tax (Benefit) $(84) $(71) N/A
(Loss) From Continuing Operations
Attributable to Masco Corporation $(173) $(504) N/A
Diluted EPS from Continuing Operations $(0.49) $(1.44) N/A
Operating Expenses 12/31/2009 12/31/2008 Change
------------------ ---------- ---------- ------
Cost of Sales $1,403 $1,559 -10%
Gross Margin 26.1% 20.3% 580 bps
SG&A Expenses (Including GCE) $430 $414 4%
SG&A as a % of net sales 22.7% 21.2% (150) bps
General Corporate Expense (GCE) $44 $34 29%
General Corp Expense as a % of net sales 2.3% 1.7% 60 bps
------------------------------------------ --- --- ---
Business Segments 12/31/2009 12/31/2008 Change
----------------- ---------- ---------- ------
Cabinets and Related Products:
Net Sales $426 $488 -13%
Operating (Loss) $(8) $(84) N/A
Operating (Loss) % of Net Sales -1.9% -17.2% 1,530 bps
Plumbing Products:
Net Sales $671 $612 10%
Operating Profit (Loss) $35 $(193) N/A
Operating Profit (Loss) % of Net Sales 5.2% -31.5% 3,670 bps
Installation and Other Services:
Net Sales $295 $375 -21%
Operating (Loss) $(27) $(54) N/A
Operating (Loss) % of Net Sales -9.2% -14.4% 520 bps
Decorative Architectural Products:
Net Sales $349 $328 6%
Operating Profit $62 $42 N/A
Operating Profit % of Net Sales 17.8% 12.8% 500 bps
Other Specialty Products:
Net Sales $157 $153 3%
Operating (Loss) $(215) $(161) N/A
Operating (Loss) % of Net Sales -136.9% -105.2% (3,170) bps
Total Segment Reported:
Net Sales $1,898 $1,956 -3%
Operating (Loss) $(153) $(450) N/A
Operating (Loss) % of Net Sales -8.1% -23.0% 1,490 bps
Change in Key Retailer Sales 8% -14%
---------------------------- --- ---
Masco Corporation
Key Financial Data As Reported - Unaudited
Q4 - 2009 and 2008 (In Millions, Except Earnings Per Share)
Business Regions 12/31/2009 12/31/2008 Change
----------------- ---------- ---------- ------
North America
Net Sales $1,441 $1,547 -7%
Operating (Loss) $(168) $(49) N/A
Operating (Loss) % of Net Sales -11.7% -3.2% (850) bps
International, principally Europe
Net Sales $457 $409 12%
Operating Profit (Loss) $15 $(401) N/A
Operating Profit (Loss) % of Net Sales 3.3% -98.0% 10,130 bps
------------------------------------------ --- ----- ------
Other 12/31/2009 12/31/2008
----- ---------- ----------
Dividend Payments $27 $85
Cash Paid for Share Repurchases $- $-
Common Shares Repurchased - -
CAPEX $55 $58
Depreciation and Amortization $64 $59
Average diluted common shares outstanding 352 351
----------------------------------------- --- ---
Masco Corporation
Key Financial Data As Reported - Unaudited
Full Year - 2009 and 2008 (In Millions, Except Earnings Per Share and
Working Capital Days)
Sales & Earnings 12/31/2009 12/31/2008 Change
---------------- ---------- ---------- ------
Net Sales $7,792 $9,484 -18%
Operating Profit $55 $90 N/A
Operating Profit % of Net Sales 0.7% 0.9% (20) bps
Other Income (Expense), Net $(206) $(283) 27%
Income Tax (Benefit) Expense $(49) $134 N/A
(Loss) From Continuing Operations
Attributable to Masco Corporation $(140) $(366) N/A
Diluted EPS from Continuing Operations $(0.41) $(1.06) N/A
Operating Expenses 12/31/2009 12/31/2008 Change
------------------ ---------- ---------- ------
Cost of Sales $5,774 $7,125 -19%
Gross Margin 25.9% 24.9% 100 bps
SG&A Expenses (Including GCE) $1,701 $1,802 -6%
SG&A as a % of net sales 21.8% 19.0% (280) bps
General Corporate Expense (GCE) $140 $144 -3%
General Corp Expense as a % of net sales 1.8% 1.5% (30) bps
------------------------------------------ --- --- ---
Business Segments 12/31/2009 12/31/2008 Change
----------------- ---------- ---------- ------
Cabinets and Related Products:
Net Sales $1,674 $2,276 -26%
Operating (Loss) Profit $(64) $4 N/A
Operating (Loss) Profit % of Net Sales -3.8% 0.2% (400) bps
Plumbing Products:
Net Sales $2,564 $3,002 -15%
Operating Profit $237 $110 N/A
Operating Profit % of Net Sales 9.2% 3.7% 550 bps
Installation and Other Services:
Net Sales $1,256 $1,861 -33%
Operating (Loss) $(131) $(46) N/A
Operating (Loss) % of Net Sales -10.4% -2.5% (790) bps
Decorative Architectural Products:
Net Sales $1,714 $1,629 5%
Operating Profit $375 $299 N/A
Operating Profit % of Net Sales 21.9% 18.4% 350 bps
Other Specialty Products:
Net Sales $584 $716 -18%
Operating Loss $(199) $(124) N/A
Operating (Loss) % of Net Sales -34.1% -17.3% (1,680) bps
Total Segment Reported:
Net Sales $7,792 $9,484 -18%
Operating Profit $218 $243 N/A
Operating Profit % of Net Sales 2.8% 2.6% 20 bps
Change in Key Retailer Sales -4% -12%
---------------------------- --- ---
Masco Corporation
Key Financial Data As Reported - Unaudited
Full Year - 2009 and 2008 (In Millions, Except Earnings Per Share and
Working Capital Days)
Business Regions 12/31/2009 12/31/2008 Change
----------------- ---------- ---------- ------
North America
Net Sales $6,135 $7,482 -18%
Operating Profit $93 $493 N/A
Operating Profit % to Net Sales 1.5% 6.6% (510) bps
International, principally Europe
Net Sales $1,657 $2,002 -17%
Operating Profit (Loss) $125 $(250) N/A
Operating Profit (Loss) % to Net Sales 7.5% -12.5% 2,000 bps
------------------------------------------ --- ----- -----
Working Capital 12/31/2009 12/31/2008 Change
--------------- ---------- ---------- ------
Receivable Days 48 50 (2)
Inventory Days 48 48 -
Payable Days 47 43 4
Working Capital
(Receivables+Inventory-
Payables) $1,148 $1,409 -19%
Working Capital as a % of Sales (As
Reported TTM(1)) 14.7% 14.7% - bps
-------------------------------------- ---- ---- ---
Other 12/31/2009 12/31/2008
----- ---------- ----------
Dividend Payments $166 $336
Cash Paid for Share Repurchases(2) $11 $160
Common Shares Repurchased(2) 2 9
CAPEX $125 $200
Depreciation and Amortization $254 $238
Return on Invested Capital (As
Reported TTM(1)) 0.5% 0.8%
Return on Invested Capital (As
Reconciled TTM(1)) 3.6% 5.3%
Average diluted common shares outstanding 351 353
Average diluted common shares outstanding
(January 1) 350 359
----------------------------------------- --- ---
Debt Ratio 12/31/2009 12/31/2008
---------- ---------- ----------
Long-Term Debt $3,604 $3,915
Notes Payable $364 $71
Total Debt $3,968 $3,986
Shareholders' Equity(3) $2,817 $2,981
Debt to Capital 58% 57%
--------------- --- ---
(1) Trailing twelve months.
(2) Common shares were repurchased to offset the effect of stock award
grants in the first quarter of 2009.
(3) Shareholders' Equity at 12/31/08 includes $135 million related to the
noncontrolling interest reclassification.
SOURCE Masco Corporation
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