Masco Corporation Reports Second Quarter Results and Affirms Full-Year Guidance
July 29 2008 - 7:00AM
PR Newswire (US)
Second Quarter 2008 TAYLOR, Mich., July 29 /PRNewswire-FirstCall/
-- Masco Corporation (NYSE: MAS) today reported that net sales from
continuing operations for the quarter ended June 30, 2008 declined
15 percent to $2.6 billion compared with $3.1 billion for the
second quarter of 2007. North American sales declined 19 percent
and International sales increased six percent. In local currencies,
International sales declined six percent compared with the second
quarter of 2007. Income from continuing operations was $72 million
or $.20 per common share and $182 million or $.49 per common share
in the second quarters of 2008 and 2007, respectively. The second
quarter of 2008 results were adversely affected by significantly
lower sales volume to the new home construction market and a
continued decline in consumer spending for home improvement
products. The second quarter of 2008 was impacted by a higher tax
rate (as previously communicated) which reduced earnings by $.05
per common share compared with the second quarter of 2007. The
second quarter of 2008 results also included non-cash impairment
charges for financial investments of $3 million pre-tax and
currency losses of $5 million pre-tax which in aggregate, reduced
the second quarter of 2008 earnings by $.01 per common share. The
second quarter of 2007 results included non-cash impairment charges
related to financial investments of $10 million pre-tax ($.02 per
common share, after tax). The Company has been focused on the
rationalization of its businesses, including sourcing programs,
business consolidations, plant closures, headcount reductions and
other initiatives. During the second quarters of 2008 and 2007, the
Company incurred costs and charges of $15 million pre-tax ($.03 per
common share, after tax) and $23 million pre-tax ($.04 per common
share, after tax), respectively, related to these initiatives.
Since late 2006, the Company has aggressively reduced its cost
structure including closing 11 manufacturing facilities, reducing
headcount by 17,000 (which approximates 30 percent of its North
American workforce) and reducing installation branches by over 25
percent. As previously disclosed, in the first quarter of 2008, the
Company determined that several European business units were not
core to the Company's long-term growth strategy and, accordingly,
embarked on a plan of disposition. During the second quarter of
2008, the Company completed the sale of The Heating Group for net
proceeds of $146 million; the remaining dispositions are expected
to be completed by the end of the first quarter of 2009. Business
conditions remain difficult in the Company's markets. The Company
continues to estimate that 2008 housing starts will decline to a
range of 900,000 to one million units, compared to 1.3 million
units in 2007. In the first half of 2008, housing starts declined
30 percent from 2007. The Company also anticipates that consumer
spending for home improvement products and demand for certain of
the Company's International products will not improve from the
depressed levels experienced in the first half of the year. As a
result, the Company continues to estimate that its 2008 percentage
sales decline will be low-double digits to mid-teens compared to
2007. While forecasting future business conditions in the current
uncertain economic environment remains challenging, the Company
continues to estimate that 2008 earnings will be in a range of $.50
to $.65 per common share. The Company also estimates that free cash
flow (cash from operations, after capital expenditures and before
dividends) will continue to be strong and approximate $640 million.
The Company's guidance also reflects increasingly competitive
market conditions for its services and products and increasing
costs for freight and logistics and for certain materials,
including commodities impacted by energy costs. The Company's
guidance includes the Company's estimate that its full-year tax
rate will approximate 48 to 49 percent (due to the U.S. tax on the
anticipated repatriation of low-taxed foreign earnings to utilize
favorable provisions of the U.S. tax law) which, compared to the
Company's normalized tax rate of approximately 36 percent, will
reduce earnings by approximately $.17 per common share. The Company
estimates that its tax rate on income from continuing operations
for 2009 will approximate 35 to 36 percent. The Company's guidance
includes impairment charges for financial investments and currency
losses incurred in the first half of 2008 which, together with the
expected increase in the tax rate, decrease full-year estimated
earnings by approximately $.25 per common share, net. Although the
Company expects market conditions in its industry, over the next
several quarters, to be very challenging, the Company is confident
that the long-term fundamentals for the new home construction and
home improvement products markets are positive. The Company
believes that its current strategy of dividend increases and share
repurchases, concentrating on organic growth, improving returns and
generating superior cash flow, together with the leveraging of the
combined market strength of its retail service, distribution and
installation capabilities, brands and scale, will allow Masco to
continue to drive long-term growth and value for its shareholders.
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
Company is providing an Earnings Presentation, in a PDF format, on
its website by 9:00 a.m. ET, July 29, 2008, that can be viewed as
part of the conference call. Please refer to the Earnings
Presentation for additional Business Highlights. A conference call
regarding items contained in this release is scheduled for Tuesday,
July 29, 2008 at 11:00 a.m. ET. Participants in the call are asked
to register five to ten minutes prior to the scheduled start time
by dialing (913) 312-0851 (confirmation #2641213). The conference
call will be webcast simultaneously on the Company's website at
http://www.masco.com/ and supplemental material, including the
financial data referred to on the call and a reconciliation of
non-GAAP information provided on the call, will also be available
on the website. A replay of the call will be available on Masco's
website or by phone by dialing (719) 457-0820 (replay access code
#2641213) approximately two hours after the end of the call and
will continue through August 5, 2008. 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 website at http://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 website. MASCO CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF INCOME - UNAUDITED For the Three Months and Six
Months Ended June 30, 2008 and 2007 (In Millions Except Per Common
Share Data) Three Months Ended Six Months Ended June 30, June 30,
2008 2007 2008 2007 Net sales $2,640 $3,089 $5,086 $5,892 Cost of
sales 1,941 2,198 3,759 4,265 Gross profit 699 891 1,327 1,627
Selling, general and administrative expenses 484 530 952 1,014
Operating profit 215 361 375 613 Other income (expense), net (56)
(64) (140) (85) Income from continuing operations before income
taxes and minority interest 159 297 235 528 Income taxes 75 108 115
193 Income from continuing operations before minority interest 84
189 120 335 Minority interest 12 7 24 16 Income from continuing
operations 72 182 96 319 Income (loss) from discontinued
operations, net 10 7 (12) 13 Net income $82 $189 $84 $332 Earnings
per common share (diluted): Income from continuing operations $0.20
$0.49 $0.27 $0.84 Income (loss) from discontinued operations, net
0.03 0.02 (0.03) 0.03 Net income $0.23 $0.51 $0.24 $0.87 Average
diluted common shares outstanding 354 374 355 381 DATASOURCE: Masco
Corporation CONTACT: Media, Sharon Rothwell, Vice President -
Corporate Affairs, +1-313-792-6028, ; Investors, Maria Duey, Vice
President - Investor Relations, +1-313-792-5500, , both of Masco
Corporation Web site: http://www.masco.com/ Company News On-Call:
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