OREANDA-NEWS. 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 growth in the fourth quarter of 2015. Adjusted operating profit margin rose to 12.8 percent, representing a 280 basis point increase over the prior year.

2015 Fourth Quarter Commentary

  • Compared to fourth quarter 2014, net sales from continuing operations increased 3 percent to $1.7 billion. In local currency, North American sales increased 6 percent and international sales increased 4 percent
  • Compared to fourth quarter 2014, 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 31.3 percent compared to 29.1 percent
    • Operating margins improved to 12.8 percent compared to 10.0 percent
    • Income from continuing operations was $.29 per common share compared to $.18 per common share
  • Income from continuing operations, as reported, was $.22 per common share
  • Liquidity at the end of the fourth quarter was approximately $1.7 billion
  • 1.8 million shares were repurchased in the fourth quarter

2015 Fourth Quarter Operating Segment Highlights

  • Plumbing Products’ net sales increased 5 percent (10 percent excluding the impact of foreign currency translation) driven by growth across the segment
  • Decorative Architectural Products’ net sales decreased 4 percent, primarily due to challenging year-over-year comparisons driven by the timing of inventory replenishments in 2014
  • Cabinets and Related Products’ net sales increased 5 percent, fueled by continued growth in the retail and dealer channels
  • Other Specialty Products’ net sales increased 8 percent, led by the strong performance of our North American windows business

“Our fourth quarter results illustrate our ability to deliver consistent and profitable growth,” said Masco President and CEO, Keith Allman. “Exceptional improvement in our U.S. cabinet business drove increased revenue and profit. Our industry-leading plumbing businesses continued their excellent performance trend and delivered another quarter of outstanding results. In our Decorative Architectural Products segment, the ongoing momentum of Behr Pro® and Liberty Hardware was masked by challenging year-over-year comparisons, while our windows businesses benefitted from increased demand in the U.S. and U.K.”

2015 Full Year Key Highlights

  • Sales for the full year increased 2 percent to $7.1 billion; sales increased 6 percent excluding the impact of foreign currency translation
  • Adjusted operating profit grew 19 percent to $927 million
  • Adjusted operating profit margin for the full year increased to 13 percent, a 190 basis point expansion
  • Adjusted EPS for the year grew 35 percent to $1.19 per common share

2015 Full Year Commentary

  • Compared to full-year 2014, net sales increased 2 percent to $7.1 billion. In local currency, North American sales increased 6 percent and international sales increased 5 percent
  • Compared to full-year 2014, 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 profit margins were 31.6 percent compared to 29.9 percent
    • Operating profit margins were 13.0 percent compared to 11.1 percent
    • Income from continuing operations was $1.19 per common share compared to $0.88 per common share
  • Income from continuing operations, as reported, was $1.03 per common share compared to $2.28 per common share in 2014
  • Free cash flow was nearly $500 million

“2015 was a transformative year for Masco,” said Keith Allman. “On June 30, 2015, we successfully completed the spinoff of our services businesses, transforming Masco into a branded home improvement and building products company. Our clear strategy and focused execution enabled us to reach a number of milestones. We achieved record sales at Delta, Hansgrohe and Watkins and returned our U.S. cabinet business to profitability by improving adjusted operating profit over $80 million. We also strengthened our balance sheet by generating nearly half a billion dollars in free cash flow and we ended the year with $1.7 billion of liquidity. Furthermore, we demonstrated our continued commitment to return capital to shareholders by increasing our dividend and repurchasing over 17 million shares.”

2016 Outlook

“We look forward to capitalizing on the momentum we’ve built this past year,” continued Mr. Allman. “We remain confident in our ability to successfully execute against our long term growth strategies by leveraging our industry leading positions, robust innovation pipeline and our Masco Operating System. We expect that these growth strategies, coupled with our disciplined capital allocation approach, will continue to create shareholder value in 2016.”

About Masco

Headquartered in Taylor, Mich., 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.