01—Abstract
Summary
Summary of the 10-Q filed October 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Masco Corporation's third-quarter 2024 Form 10-Q shows net sales of $1.98 billiona for the three months ended September 30, 2024, flat versus $1.98 billion in the prior-year quarter, and $6.00 billion for the nine months, down from $6.09 billion.
Operating profit fell to $357 millionb from $383 million in the quarter and to $1.07 billion from $1.10 billion for the nine months. Net income attributable to Masco Corporation was $167 million for the quarter, down from $249 million, and diluted income per common share was $0.77 versus $1.10. The filing attributes the quarterly decline mainly to a preliminary $81 million loss on the sale of the Kichler Lighting business, recorded in other, net, along with the non-recurrence of a 2023 insurance settlement, higher marketing costs and commodity costs.
Management said lower demand is being experienced and may continue, with elevated commodity and input costs and employee-related cost inflation. Cash flow and capital allocation were central in the period. Net cash from operating activities was $668 millionc for the nine months, versus $928 million a year earlier.
Masco repurchased common stock for $482 milliond in cash during the nine months and paid $191 million in dividends, and management anticipates about $750 million of share repurchases in 2024 outside any acquisitions. Cash and cash investments were $646 million at September 30, 2024, and the company had $1.2 billion remaining under its 2022 repurchase authorization. Total equity rose to $142 million from $98 million at year-end 2023, while long-term debt was unchanged at $2.95 billion.
The 2022 Credit Agreement provides a $1.0 billion revolving facility maturing April 26, 2027, with no borrowings outstanding at quarter-end, and the company stated it was in compliance with its covenants. The Kichler divestiture reduced Decorative Architectural Products net sales and goodwill, and the company disclosed no material changes to risk factors from its 2023 Form 10-K.
02—Key points
Key Highlights
- Net sales were $1.98 billion for Q3 2024, flat versus $1.98 billion in Q3 2023; nine-month net sales were $6.00 billion versus $6.09 billion.
- Operating profit declined to $357 million in Q3 2024 from $383 million, and to $1.07 billion for the nine months from $1.10 billion.
- Other, net expense of $85 million in Q3 2024 included a preliminary $81 million loss on the sale of Kichler Lighting.
- Diluted income per common share was $0.77 for Q3 2024 versus $1.10 a year earlier; nine-month diluted EPS was $2.91 versus $3.17.
- Operating cash flow was $668 million for the nine months, down from $928 million, while Masco repurchased $482 million of common stock in cash.
- Management anticipates approximately $750 million of share repurchases in 2024 outside any acquisitions, with $1.2 billion remaining under the 2022 authorization.
- No borrowings were outstanding under the $1.0 billion 2022 Credit Agreement at September 30, 2024, and the company was in compliance with its covenants.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Masco kept $0.08.
- Revenue$1.98B100.0%
- Cost of revenue−$1.26B63.4%
- Gross profit$725.0M36.6%
- Operating costs−$368.0M18.6%
- Operating income$357.0M18.0%
- Interest, other & tax−$190.0M9.6%
- Net income$167.0M8.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 29, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $1.98B$1.98B | +0.2% |
| Cost of Revenue | $1.26B$1.24B | +1.9% |
| Gross Profit | $725.00M$744.00M | −2.6% |
| SG&A Expenses | $368.00M$361.00M | +1.9% |
| Operating Income | $357.00M$383.00M | −6.8% |
| Net Income | $167.00M$249.00M | −32.9% |
| EPS (Basic) | $0.77$1.11 | −30.6% |
| EPS (Diluted) | $0.77$1.10 | −30.0% |
| Shares Outstanding (Basic) | 217.00M225.00M | −3.6% |
| Shares Outstanding (Diluted) | 218.00M226.00M | −3.5% |
05—Questions
Frequently Asked Questions
Why did quarterly net income and EPS decline so sharply?
Net income attributable to Masco fell to $167 million from $249 million, and diluted EPS fell to $0.77 from $1.10. The filing ties the decline largely to a preliminary $81 million loss on the Kichler Lighting sale recorded in other, net, along with the non-recurrence of a 2023 insurance settlement that added $40 million to gross and operating profit, higher marketing costs and higher commodity costs.
How did the Kichler Lighting divestiture affect the results?
Masco sold Kichler Lighting in the third quarter of 2024 for preliminary consideration of $125 million, net of cash disposed, subject to final adjustments. The company recognized a preliminary loss of $81 million, and the sale reduced Decorative Architectural Products net sales and goodwill. Proceeds from the disposition were $131 million in the nine-month cash flow statement.
How is Masco returning cash to shareholders?
During the nine months ended September 30, 2024, Masco repurchased and retired about 6.6 million shares for approximately $486 million, including excise tax, and paid $191 million in cash dividends. Cash dividends were $0.290 per share for Q3 2024. Management expects to use about $750 million for share repurchases in 2024, outside any acquisitions.
What is Masco's liquidity and debt position?
Cash and cash investments were $646 million at September 30, 2024, and long-term debt was $2.945 billion. The $1.0 billion revolving credit agreement, which matures April 26, 2027, had no borrowings outstanding. The fair value of short- and long-term debt was approximately $2.7 billion versus a carrying value of $3.0 billion.
What operating trends does management highlight for the rest of the business?
Management said lower market demand, elevated commodity and other input costs, and employee-related cost inflation are being experienced and may continue. Plumbing Products net sales rose 2% in the quarter, while Decorative Architectural Products fell 3%. Management aims to offset these pressures with productivity improvements, pricing and other initiatives.
06—Continue