Masco's earnings of $0.32 per share in the second quarter of 2014
beat the Zacks Consensus Estimate by 14.3% and rose 39.0% year over
year, owing to strong margins and revenue. Masco's net sales of
$2.26 billion were in line with the Consensus mark, however grew
5.1% year over year owing to successful new products and program
launches. North American sales and profitability increased due to
improvement in new home construction activity. International sales
rose due to improvement in Europe and strong performance by
international plumbing. Masco expects new home construction and
repair and remodel activity to improve in 2014, which will boost
the demand for the company's products and services. However, the
cabinet business remained soft during the quarter. Masco expects
the cabinet segment to remain soft in the upcoming quarters as the
consumers continue to defer big ticket expenses. Despite the
near-term weakness, we have faith in the company's strong
fundamentals. We, therefore, maintain our Neutral recommendation on
Headquartered in Taylor, ML, Masco Corporation (MAS)
manufactures, sells and installs home improvement and building
products. These products are sold through mass merchandisers,
hardware stores, home centers, homebuilders, distributors and other
outlets for consumers and contractors and direct to the
Approximately 80% of the company's sales are generated from
operations in North America, primarily in the U.S. Around 20% of
the company's sales is generated outside the U.S., mainly in
Europe. The company's largest customer is The Home Depot Inc.
Masco operates through five business segments: Plumbing
Products, Cabinets and Related Products, Installation and Other
Services, Decorative Architectural Products and Other Specialty
Plumbing Products (38% of 2013 revenues): The segment
manufactures and markets an array of faucets, bathing and showering
devices, valves, bathtubs, spas and toilets (launched in 2012).
Cabinets and Related Products (13%): The segment manufactures
and sells stock and semi-custom, assembled cabinetry for kitchen,
bath, storage, home office and home entertainment applications in
both North America and Europe. In North America, the company also
sells kitchen countertops, integrated bathroom vanity and
countertop solution. In Europe, it also sells ready-to-assemble
cabinetry for kitchen.
Installation and Other Services (1 %): In this segment, Masco
sells installed building products, installed gutters, after-paint
products, fireplaces and garage doors. The company also distributes
building products in the new home construction market.
Decorative Architectural Products (24%): The segment
manufactures architectural coatings, including paints, primers,
specialty paint products, stains and waterproofing products. These
products are sold in the U.S., Canada, China, Mexico and South
America. The company's Behr branded products are principally sold
through The Home Depot. The segment also manufactures Liberty and
Brainerd branded cabinets, doors, windows and other hardwares which
are sold to home centers, retailers, wholesalers and original
Other Specialty Products (8%): The segment manufactures a full
range of windows and doors, manual and electric staple gun tackers,
staples and other fastening tools.
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