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Masco Delivers Strong Start To 2016 With Consistent Execution Key Highlights

The following excerpt is from the company's SEC filing.

Sales for the first quarter increased 4 percent to $1.7 billion; sales increased 5 percent excluding the impact of foreign currency translation

Adjusted operating profit grew 39 percent to $237 million

Adjusted operating profit margin for the quarter increased to 13.8 percent, a 350 basis point expansion

Adjusted EPS for the quarter grew 78 percent to $.32 per common share

Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported net sales and adjusted operating profit growt h in the first quarter of 2016. Adjusted operating profit margin rose to 13.8 percent, representing a 350 basis point increase over the prior year.

“The year is off to a great start with strong performances from all of our businesses,” said Masco President and CEO Keith Allman. “Our industry-leading plumbing businesses maintained their positive momentum by delivering another quarter of top- and bottom-line growth both domestically and internationally. Our Decorative Architectural Products segment benefitted from increased demand for Behr’s core DIY, Behr Pro

and Liberty Hardware branded products. Our cabinetry business continued to make progress against its strategic plan to optimize sales mix and increase profitability. Finally, our windows businesses capitalized on repair and remodel and new home construction growth in the U.S. and U.K.”

2016 First Quarter Commentary

Compared to first quarter 2015, net sales from continuing operations increased 4 percent to $1.7 billion. In local currency, North American sales increased 6 percent and international sales increased 2 percent

Compared to first quarter 2015, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, were as follows:

Gross margins improved to 33.1 percent compared to 29.9 percent

Operating margins improved to 13.8 percent compared to 10.3 percent

Income from continuing operations was $.32 per common share compared to $.18 per common share

Income from continuing operations, as reported, was $.32 per common share

Liquidity at the end of the first quarter was approximately $2.4 billion (includes $900 million of cash from the issuance of notes in March 2016). Subsequently, $1.3 billion of cash was paid for the retirement of debt in April

3.2 million shares were repurchased in the first quarter

2016 First Quarter Operating Segment Highlights

Plumbing Products’ net sales increased 2 percent (4 percent excluding the impact of foreign currency translation) driven by growth in the wholesale/trade channel

Decorative Architectural Products’ net sales increased 9 percent, fueled by strong growth in Behr’s core DIY products and Behr Pro

Cabinetry Products’ net sales decreased 5 percent, due to the exit of lower margin business in the builder channel, which was partially offset by continued growth in the dealer channel

Windows and Other Specialty Products’ net sales increased 9 percent (11 percent excluding the impact of foreign currency translation) led by the strong performance of our North American windows business

Outlook

“The fundamentals driving our business are progressing in line with our expectations, and our performance this quarter demonstrates that we are fully focused on achieving our financial and operational objectives,” continued Mr. Allman. “We remain confident in our ability to successfully execute against our long-term growth strategies by leveraging our brand portfolio, industry-leading positions and our Masco Operating System. We expect that these growth strategies, coupled with our disciplined capital allocation approach and strengthening balance sheet, will continue to create shareholder value in 2016.”

About Masco

Headquartered in Taylor, Michigan, Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes Behr® paint; Delta® and Hansgrohe® faucets, bath and shower fixtures; KraftMaid® and Merillat® cabinets; Milgard® windows and doors; and Hot Spring® spas. We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders. For more information about Masco Corporation, visit www.masco.com.

The 2016 first quarter supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Tuesday, April 26, 2016 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 (855) 226-2726 (855-22MASCO) and from outside the U.S. at (706) 679-3614. Please use the conference identification number 75969468. 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 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 75969468. The telephone replay will be available approximately two hours after the end of the call and continue through May 26, 2016.

Safe Harbor Statement

This press release contains statements that reflect our views about our future performance and 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. Our views about future performance 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 the levels of home improvement activity and new home construction, our ability to maintain our strong brands and to develop and introduce new and improved products, our ability to maintain our competitive position in our industries, our reliance on key customers, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to sustain the performance of our cabinetry businesses, the cost and availability of raw materials, our dependence on third party suppliers, and risks associated with international operations and global strategies. These and other factors are discussed in detail 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. The 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.

Investor Contact

Irene Tasi

Director - Investor Relations

313.792.5500

irene_tasi@mascohq.com

MASCO CORPORATION

Condensed Consolidated Statements of Operations - Unaudited

For the Three Months Ended March 31, 2016 and 2015

(in millions, except per common share data)

Three Months Ended March 31,

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Operating profit

Other income (expense), net:

Interest expense

Other, net

Income from continuing operations before income taxes

Income tax expense

Income from discontinued operations, net

Net income

Less: Net income attributable to noncontrolling interest

Net income attributable to Masco Corporation

Income per common share attributable to Masco Corporation (diluted):

Average diluted common shares outstanding

Amounts attributable to Masco Corporation:

Historical information is available on our website.

Exhibit A: Reconciliations - Unaudited

For the Three Months Ended March 31, 2016 and 2015

Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations

Gross profit, as reported

Rationalization charges

Gross profit, as adjusted

Gross margin, as reported

Gross margin, as adjusted

Selling, general and administrative expenses, as reported

Selling, general and administrative expenses, as adjusted

Selling, general and administrative expenses as percent of net sales, as reported

Selling, general and administrative expenses as percent of net sales, as adjusted

Operating profit, as reported

Operating profit, as adjusted

Operating margin, as reported

Operating margin, as adjusted

Earnings Per Common Share Reconciliation

Income from continuing operations before income taxes, as reported

Gains from private equity funds, net

Earnings from equity investments, net

Income from continuing operations before income taxes, as adjusted

Tax at 36% rate

Income from continuing operations, as adjusted

Income per common share, as adjusted

Condensed Consolidated Balance Sheets and

Other Financial Data - Unaudited

(dollars in millions)

March 31, 2016

December 31, 2015

Assets

Current Assets:

Cash and cash investments

Short-term bank deposits

Receivables

Inventories

Prepaid expenses and other

Total Current Assets

Property and equipment, net

Goodwill

Other intangible assets, net

Other assets

Total Assets

Liabilities

Current Liabilities:

Accounts payable

Notes payable

Accrued liabilities

Total Current Liabilities

Long-term debt

Other liabilities

Total Liabilities

Equity

Total Liabilities and Equity

March 31, 2015

Working Capital Days

Receivable days

Inventory days

Payable days

Working capital

Working capital as a % of sales

Condensed Consolidated Statements of Cash Flows*

and Other Financial Data - Unaudited

Cash Flows From (For) Operating Activities:

Cash provided by operating activities

Working capital changes

Net cash for operating activities

Cash Flows From (For) Financing Activities:

Purchase of Company common stock

Cash dividends paid

Issuance of notes, net of issuance costs

Issuance of Company common stock

Excess tax benefit from stock-based compensation

Decrease in debt, net

Net cash from financing activities

Cash Flows From (For) Investing Activities:

Capital expenditures

Net cash from investing activities

Effect of exchange rate changes on cash and cash investments

Cash and Cash Investments:

Increase for the period

At January 1

At March 31

As of March 31,

Liquidity*

Total Liquidity

* Prior period amounts not restated for spin off of TopBuild Corp.

Segment Data - Unaudited

For the Three Months Ended March 31, 2016 and 2015

Change

Depreciation and amortization

EBITDA, as adjusted

Operating profit (loss), as reported

Operating profit (loss), as adjusted

Operating profit, as reported - segment

General corporate expense, net (GCE)

Rationalization charges - segment

Rationalization charges - GCE

Depreciation and amortization - segment

Depreciation and amortization - non-operating

North American and International Data - Unaudited

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Masco Corporation director just cashed-in 9,117 options - April 4, 2016