Masco reports 167% increase in Q2 net income to US$8M on net sales 1% lower at US$2Bm as new home construction, big ticket remodeling projects decline further
August 3, 2011
– 2011 Second Quarter Commentary
Income was $.05 per common share and $.16 per common share for the second quarters of 2011 and 2010, respectively, excluding the items in Exhibit A and with a normalized tax rate of 36 percent. Including these items, income, as reported was $.02 per common share and $.01 per common share for the second quarters ended June 30, 2011 and 2010, respectively.
"Our sales would have increased one percent (excluding cabinet products that we have exited, as previously announced) compared to second quarter 2010, reflecting strong sales of plumbing related products driven by share gains of our Hansgrohe and Delta brands and foreign currency translation. The second quarter of 2011 was negatively impacted by continued declines in new home construction and in the deferral of "big ticket" repair and remodel activity," said Tim Wadhams. "We completed several of the major initiatives that have been underway in our installation services and North American cabinet operations which marked significant milestones for these businesses. We believe that our installation business gained share sequentially in the second quarter of 2011 and our North American cabinet business maintained share in the second quarter of 2011, continuing the momentum from the first quarter of 2011. In addition, we further reduced cabinet capacity by idling another manufacturing facility."
Income for the three months ended June 30, 2011 included $33 million of pre-tax gains ($.06 per common share, after tax) related to the sale of financial investments. Income for the three months ended June 30, 2010 included $33 million of pre-tax charges ($.06 per common share, after tax) related to the impairment of financial investments.
We continue to focus on the rationalization of our businesses, including business consolidations, plant closures, headcount reductions, system implementations and other initiatives. During the second quarters of 2011 and 2010, we incurred costs and charges of $15 million pre-tax ($.03 per common share, after tax) and $51 million pre-tax ($.09 per common share, after tax), respectively, related to these initiatives.
"The lack of job creation, high cost of energy and declining consumer confidence have made forecasting the timing and strength of the recovery extremely difficult. Most economists have reduced their forecasts for 2011, including housing start levels which are now projected to be flat with 2010. As such, we believe that growth in the second half of 2011 will be challenged. Longer-term however, we are confident about the fundamentals for the new home construction and home improvement markets and we are optimistic about the future," said Tim Wadhams. "We will continue to focus on the things we can control to improve our execution and strengthen our brands. We have several new programs that we are funding today that we believe will drive future growth opportunities across our businesses. We are very encouraged with the progress we are making to increase our penetration with North American cabinet dealers and with the professional painter. We also have exciting new programs that will launch later this year in plumbing, cabinets and builders hardware and we continue to invest in the development of international opportunities for paint and plumbing. We expect that improvements in our markets and in consumer spending, together with the changes we are driving across Masco and our financial strength will create significant value for our 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 2011 second quarter supplemental material, including a presentation in PDF format, will be distributed after the market closes on July 25, 2011 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 Tuesday, July 26, 2011 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) 312-9304 (confirmation #6636952). The conference call will be webcast simultaneously on the Company's Web site at 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 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 #6636952) approximately two hours after the end of the call and will continue through August 2, 2011.
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.
Forestweb Editor's Note: In an omitted table, the company reported Q2 net income attributable to the company of US$8 million. For the same quarter a year ago, the company reported net income attributable to the company of $3 million.
For comprehensive company financial overviews, please visit our Financial Center.