01—Abstract
Summary
Summary of the 10-Q filed April 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Masco Corporation's first-quarter 2024 Form 10-Q shows net sales of $1,926 milliona, down from $1,979 million in the first quarter of 2023.
The filing attributes the decline primarily to lower sales volume, which decreased sales by four percent, partially offset by higher net selling prices that increased sales by one percent. Operating profit rose to $318 millionb from $315 million, and gross margin improved to 35.6% from 33.8%, which the company attributes to cost savings initiatives and higher net selling prices. Net income attributable to Masco Corporation was $215 million, or $0.97 per diluted share, compared with $205 million, or $0.90 per diluted share, a year earlier.
Cash flow was weaker in the quarter. Net cash used for operating activities was $94 millionc, compared with $33 million of cash provided a year earlier, driven mainly by working capital changes, including a $258 million increase in receivables. Cash and cash investments declined to $368 million at March 31, 2024 from $634 million at December 31, 2023.
Masco repurchased and retired approximately 2.1 million shares for about $148 milliond and paid $64 million in cash dividends. Long-term debt was unchanged at $2,945 million, and $1.5 billion remained under the 2022 share repurchase authorization.
The company stated that it is experiencing lower market demand for its products and elevated commodity, input and employee-related costs, though some costs have recently moderated. Management said its existing cash, operating cash flow and borrowing availability under its $1.0 billion revolving credit agreement are sufficient for near-term needs, and it reported compliance with all covenants.
02—Key points
Key Highlights
- Net sales were $1,926 million, down from $1,979 million, with lower sales volume decreasing sales by four percent and higher net selling prices increasing sales by one percent.
- Gross margin rose to 35.6% from 33.8%, driven by cost savings initiatives and higher net selling prices.
- Net income attributable to Masco Corporation was $215 million ($0.97 diluted EPS), up from $205 million ($0.90 diluted EPS).
- Net cash used for operating activities was $94 million, compared with $33 million provided in the prior-year quarter, primarily reflecting working capital changes.
- Cash and cash investments fell to $368 million from $634 million at December 31, 2023.
- Plumbing Products operating profit increased to $226 million from $206 million, while Decorative Architectural Products operating profit decreased to $124 million from $132 million.
- Masco repurchased about $148 million of common stock and paid $64 million in dividends, with approximately $1.5 billion remaining under its 2022 repurchase authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Masco kept $0.11.
- Revenue$1.93B100.0%
- Cost of revenue−$1.24B64.4%
- Gross profit$685.0M35.6%
- Operating costs−$367.0M19.1%
- Operating income$318.0M16.5%
- Interest, other & tax−$103.0M5.3%
- Net income$215.0M11.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 24, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.93B$1.98B | −2.7% |
| Cost of Revenue | $1.24B$1.31B | −5.3% |
| Gross Profit | $685.00M$669.00M | +2.4% |
| SG&A Expenses | $367.00M$354.00M | +3.7% |
| Operating Income | $318.00M$315.00M | +1.0% |
| Interest Expense | $25.00M$28.00M | −10.7% |
| Net Income | $215.00M$205.00M | +4.9% |
| EPS (Basic) | $0.97$0.91 | +6.6% |
| EPS (Diluted) | $0.97$0.90 | +7.8% |
| Shares Outstanding (Basic) | 221.00M226.00M | −2.2% |
| Shares Outstanding (Diluted) | 221.00M227.00M | −2.6% |
05—Questions
Frequently Asked Questions
How did Masco's sales and profitability change in the first quarter of 2024?
Net sales declined to $1,926 million from $1,979 million, mainly due to lower sales volume, partly offset by higher net selling prices. Operating profit rose slightly to $318 million from $315 million, and net income attributable to Masco Corporation increased to $215 million from $205 million.
Why did operating cash flow turn negative?
Net cash used for operating activities was $94 million, compared with $33 million provided in the prior-year quarter. The filing attributes this primarily to changes in working capital, including a $258 million increase in receivables and a $107 million decrease in accounts payable and accrued liabilities, partially offset by operating profit.
How is Masco using its cash and what is its liquidity position?
In the quarter, Masco used cash for share repurchases of about $145 million, dividends of $64 million, and capital expenditures of $31 million. Cash and cash investments were $368 million at March 31, 2024, and the company had $49 million borrowed under its $1.0 billion revolving credit agreement, with a stated current ratio of 1.7 to 1.
What risks does management highlight for the business?
Management cites lower market demand for its products and elevated commodity and other input costs, as well as employee-related cost inflation. It also notes that changing market conditions may affect customers and suppliers in ways it cannot fully estimate. The filing states there were no material changes to the risk factors in the 2023 Form 10-K.
06—Continue