), adjusted earnings of 15 cents per share in the fourth quarter
of 2013 missed the Zacks Consensus Estimate of 17 cents by 11.8%.
Earnings improved 150% from 6 cents in the year-ago quarter
driven by solid revenues and strong operating leverage.
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Masco's net sales of $2.0 billion, however, beat the Zacks
Consensus Estimate of $1.98 billion by 1.01%. Revenues rose 9.1%
year over year driven by strong sales from new products and
international markets. Revenue growth was supported by robust
top-line increase in all the segments.
North American sales increased 9% year over year to $1.60 billion
on the back of increasing new home construction activity,
increased repair and remodeling activities and new product
launches. International sales rose 11% (7% in constant currency)
to $395 million driven by an improvement in Europe.
Adjusted gross profit grew 13.2% to $541 million in the quarter.
Gross margin expanded 100 basis points (bps) year over year to
27.1% driven by top line growth, operating leverage and cost
Adjusted operating profit was $153 million in the quarter, up
48.5% from the prior-year quarter. Adjusted operating margin
increased 210 bps year over year to 7.7% in the quarter, driven
by increased operating leverage and solid gross margins.
Operating margins improved 210 bps in North America to 8.9% and
110 bps in the international markets to 10.1%.
Cabinets and Related Products:
The Cabinets and Related Products segment revenues were $251
million in the quarter, up 9% year over year, driven by increased
new housing starts, increased repair and remodeling activities
and improving demand in the U.K. Segment operating margin was
(1.6%), which is a 580 basis points improvement from the prior
The segment recorded revenues of $799 million in the quarter, up
8% year over year driven by increased repair and remodeling
activities, international growth and new programs. Adjusted
operating margin of 12.1% improved 240 bps year over year driven
by increased volume.
Installation and Other Services:
Installation and Other Services segment revenues were $373
million in the quarter, up 15% year over year driven by increased
volumes in new home construction, commercial, distribution and
retrofit channels. Adjusted segment operating margin was 4.0%, up
210 bps from the prior year quarter owing to operating leverage
and productivity improvements.
Decorative Architectural Products:
Decorative Architectural Products segment revenues increased 6%
to $408 million, driven by successful new product launches
coupled with gains in its Pro business and internationally.
Adjusted operating margin declined 60 bps to 16.2% hurt by higher
advertising and promotional investments.
Other Specialty Products:
Other Specialty Products segment revenues were $167 million in
the quarter, up 9% year over year, driven by low-teens volume
growth in the North American window business, favorable mix and
net product introductions. The segment adjusted operating margin
was 5.4%, up 80 bps due to operating leverage.
Full Year 2013
Masco's adjusted earnings of 77 cents per share in full year 2013
lagged the Zacks Consensus Estimate of 80 cents by 3.8%. Earnings
improved 108% year over year from 37 cents driven by solid
revenues and strong operating leverage.
Masco's net sales of $8.17 billion were up 9.0% year over year
driven by strong sales from new products and international
During 2014, the company expects further momentum in new home
construction and repair and remodel activity in North America and
the international markets. The company will continue to focus on
innovation and improve leverage during 2014.
Masco Corporation currently carries a Zacks Rank #3 (Hold).
Other better-ranked stocks in the industrial goods sector include
D. R. Horton Inc.
Standard Pacific Corp.
). While D. R. Horton sports a Zacks Rank #1 (Strong Buy), USG
Corporation and Standard Pacific carry a Zacks Rank #2 (Buy).