(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
MASCO CORPORATION | ||||||||
By: | /s/ John G. Sznewajs | |||||||
Name: | John G. Sznewajs | |||||||
Title: | Vice President, Chief Financial Officer | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net sales | $ | 1,983 | $ | 1,716 | $ | 5,328 | $ | 5,068 | |||||||||||||||
Cost of sales | 1,231 | 1,105 | 3,401 | 3,262 | |||||||||||||||||||
Gross profit | 752 | 611 | 1,927 | 1,806 | |||||||||||||||||||
Selling, general and administrative expenses | 328 | 322 | 939 | 964 | |||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||
Operating profit | 424 | 289 | 988 | 833 | |||||||||||||||||||
Other income (expense), net: | |||||||||||||||||||||||
Interest expense | (40) | (39) | (110) | (119) | |||||||||||||||||||
Other, net | (4) | (9) | (22) | (17) | |||||||||||||||||||
(44) | (48) | (132) | (136) | ||||||||||||||||||||
Income from continuing operations before income taxes | 380 | 241 | 856 | 697 | |||||||||||||||||||
Income tax expense | 87 | 66 | 202 | 181 | |||||||||||||||||||
Income from continuing operations | 293 | 175 | 654 | 516 | |||||||||||||||||||
(Loss) income from discontinued operations, net | — | (37) | 411 | 1 | |||||||||||||||||||
Net income | 293 | 138 | 1,065 | 517 | |||||||||||||||||||
Less: Net income attributable to noncontrolling interest | 18 | 12 | 36 | 35 | |||||||||||||||||||
Net income attributable to Masco Corporation | $ | 275 | $ | 126 | $ | 1,029 | $ | 482 | |||||||||||||||
Income (loss) per common share attributable to Masco Corporation (diluted): | |||||||||||||||||||||||
Income from continuing operations | $ | 1.05 | $ | 0.56 | $ | 2.31 | $ | 1.65 | |||||||||||||||
(Loss) income from discontinued operations, net | — | (0.12) | 1.54 | — | |||||||||||||||||||
Net income | $ | 1.05 | $ | 0.44 | $ | 3.85 | $ | 1.65 | |||||||||||||||
Average diluted common shares outstanding | 261 | 287 | 266 | 290 | |||||||||||||||||||
Amounts attributable to Masco Corporation: | |||||||||||||||||||||||
Income from continuing operations | $ | 275 | $ | 163 | $ | 618 | $ | 481 | |||||||||||||||
(Loss) income from discontinued operations, net | — | (37) | 411 | 1 | |||||||||||||||||||
Net income attributable to Masco Corporation | $ | 275 | $ | 126 | $ | 1,029 | $ | 482 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations | |||||||||||||||||||||||
Net sales | $ | 1,983 | $ | 1,716 | $ | 5,328 | $ | 5,068 | |||||||||||||||
Gross profit, as reported | $ | 752 | $ | 611 | $ | 1,927 | $ | 1,806 | |||||||||||||||
Rationalization charges | 1 | 5 | 7 | 7 | |||||||||||||||||||
Gross profit, as adjusted | $ | 753 | $ | 616 | $ | 1,934 | $ | 1,813 | |||||||||||||||
Gross margin, as reported | 37.9 | % | 35.6 | % | 36.2 | % | 35.6 | % | |||||||||||||||
Gross margin, as adjusted | 38.0 | % | 35.9 | % | 36.3 | % | 35.8 | % | |||||||||||||||
Selling, general and administrative expenses, as reported | $ | 328 | $ | 322 | $ | 939 | $ | 964 | |||||||||||||||
Rationalization charges | — | 4 | 2 | 4 | |||||||||||||||||||
Selling, general and administrative expenses, as adjusted | $ | 328 | $ | 318 | $ | 937 | $ | 960 | |||||||||||||||
Selling, general and administrative expenses as percent of net sales, as reported | 16.5 | % | 18.8 | % | 17.6 | % | 19.0 | % | |||||||||||||||
Selling, general and administrative expenses as percent of net sales, as adjusted | 16.5 | % | 18.5 | % | 17.6 | % | 18.9 | % | |||||||||||||||
Operating profit, as reported | $ | 424 | $ | 289 | $ | 988 | $ | 833 | |||||||||||||||
Rationalization charges | 1 | 9 | 9 | 11 | |||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||
Operating profit, as adjusted | $ | 425 | $ | 298 | $ | 997 | $ | 853 | |||||||||||||||
Operating margin, as reported | 21.4 | % | 16.8 | % | 18.5 | % | 16.4 | % | |||||||||||||||
Operating margin, as adjusted | 21.4 | % | 17.4 | % | 18.7 | % | 16.8 | % | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Income Per Common Share Reconciliations | |||||||||||||||||||||||
Income from continuing operations before income taxes, as reported | $ | 380 | $ | 241 | $ | 856 | $ | 697 | |||||||||||||||
Rationalization charges | 1 | 9 | 9 | 11 | |||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||
Pension costs associated with expected terminated plans | 6 | — | 17 | — | |||||||||||||||||||
(Earnings) from equity investments, net | (1) | (1) | (1) | (1) | |||||||||||||||||||
Loss on extinguishment of debt | 6 | — | 6 | — | |||||||||||||||||||
Income from continuing operations before income taxes, as adjusted | 392 | 249 | 887 | 716 | |||||||||||||||||||
Tax at 26% rate | (102) | (65) | (231) | (186) | |||||||||||||||||||
Less: Net income attributable to noncontrolling interest | 18 | 12 | 36 | 35 | |||||||||||||||||||
Income from continuing operations, as adjusted | $ | 272 | $ | 172 | $ | 620 | $ | 495 | |||||||||||||||
Income from continuing operations per common share, as adjusted | $ | 1.04 | $ | 0.60 | $ | 2.33 | $ | 1.71 | |||||||||||||||
Average diluted common shares outstanding | 261 | 287 | 266 | 290 |
September 30, 2020 | December 31, 2019 | ||||||||||
Balance Sheet | |||||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash investments | $ | 1,326 | $ | 697 | |||||||
Receivables | 1,262 | 997 | |||||||||
Prepaid expenses and other | 88 | 90 | |||||||||
Inventories | 811 | 754 | |||||||||
Assets held for sale | — | 173 | |||||||||
Total Current Assets | 3,487 | 2,711 | |||||||||
Property and equipment, net | 878 | 878 | |||||||||
Operating lease right-of-use assets | 156 | 176 | |||||||||
Goodwill | 528 | 509 | |||||||||
Other intangible assets, net | 253 | 259 | |||||||||
Other assets | 273 | 139 | |||||||||
Assets held for sale | — | 355 | |||||||||
Total Assets | $ | 5,575 | $ | 5,027 | |||||||
Liabilities | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable | $ | 933 | $ | 697 | |||||||
Notes payable | 5 | 2 | |||||||||
Accrued liabilities | 799 | 700 | |||||||||
Liabilities held for sale | — | 149 | |||||||||
Total Current Liabilities | 1,737 | 1,548 | |||||||||
Long-term debt | 2,787 | 2,771 | |||||||||
Noncurrent operating lease liabilities | 143 | 162 | |||||||||
Other liabilities | 567 | 589 | |||||||||
Liabilities held for sale | — | 13 | |||||||||
Total Liabilities | 5,234 | 5,083 | |||||||||
Equity | 341 | (56) | |||||||||
Total Liabilities and Equity | $ | 5,575 | $ | 5,027 |
As of September 30, | |||||||||||
2020 | 2019 | ||||||||||
Other Financial Data | |||||||||||
Working Capital Days | |||||||||||
Receivable days | 55 | 55 | |||||||||
Inventory days | 70 | 72 | |||||||||
Payable days | 74 | 68 | |||||||||
Working capital | $ | 1,140 | $ | 1,146 | |||||||
Working capital as a % of sales (LTM) | 16.4 | % | 17.1 | % |
Nine Months Ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash Flows From (For) Operating Activities: | |||||||||||
Cash provided by operating activities | $ | 590 | $ | 754 | |||||||
Working capital changes | (17) | (149) | |||||||||
Net cash from operating activities | 573 | 605 | |||||||||
Cash Flows From (For) Financing Activities: | |||||||||||
Retirement of notes | (400) | — | |||||||||
Purchase of Company common stock | (602) | (440) | |||||||||
Cash dividends paid | (108) | (105) | |||||||||
Dividends paid to noncontrolling interest | (23) | (42) | |||||||||
Issuance of notes, net of issuance costs | 415 | — | |||||||||
Debt extinguishment costs | (5) | — | |||||||||
Proceeds from the exercise of stock options | 26 | 23 | |||||||||
Employee withholding taxes paid on stock-based compensation | (25) | (21) | |||||||||
Increase (decrease) in debt, net | 1 | (3) | |||||||||
Credit Agreement and other financing costs | — | (2) | |||||||||
Net cash for financing activities | (721) | (590) | |||||||||
Cash Flows From (For) Investing Activities: | |||||||||||
Capital expenditures | (72) | (111) | |||||||||
Acquisition of business, net of cash acquired | (24) | — | |||||||||
Proceeds from disposition of businesses, net of cash disposed | 868 | 2 | |||||||||
Other, net | (2) | 5 | |||||||||
Net cash from (for) investing activities | 770 | (104) | |||||||||
Effect of exchange rate changes on cash and cash investments | 7 | 10 | |||||||||
Cash and Cash Investments: | |||||||||||
Increase (decrease) for the period | 629 | (79) | |||||||||
At January 1 | 697 | 559 | |||||||||
At September 30 | $ | 1,326 | $ | 480 |
As of September 30, | |||||||||||
2020 | 2019 | ||||||||||
Liquidity | |||||||||||
Cash and cash investments | $ | 1,326 | $ | 480 | |||||||
Revolver availability | 1,000 | 1,000 | |||||||||
Total Liquidity | $ | 2,326 | $ | 1,480 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||||||||||||
Plumbing Products | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,141 | $ | 1,006 | 13 | % | $ | 2,964 | $ | 2,958 | — | % | |||||||||||||||||||||||
Operating profit, as reported | $ | 271 | $ | 179 | $ | 583 | $ | 530 | |||||||||||||||||||||||||||
Operating margin, as reported | 23.8 | % | 17.8 | % | 19.7 | % | 17.9 | % | |||||||||||||||||||||||||||
Rationalization charges | — | 9 | 5 | 11 | |||||||||||||||||||||||||||||||
Accelerated depreciation related to rationalization activity | — | — | 1 | — | |||||||||||||||||||||||||||||||
Operating profit, as adjusted | 271 | 188 | 589 | 541 | |||||||||||||||||||||||||||||||
Operating margin, as adjusted | 23.8 | % | 18.7 | % | 19.9 | % | 18.3 | % | |||||||||||||||||||||||||||
Depreciation and amortization | 21 | 20 | 61 | 59 | |||||||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 292 | $ | 208 | $ | 650 | $ | 600 | |||||||||||||||||||||||||||
Decorative Architectural Products | |||||||||||||||||||||||||||||||||||
Net sales | $ | 842 | $ | 710 | 19 | % | $ | 2,364 | $ | 2,110 | 12 | % | |||||||||||||||||||||||
Operating profit, as reported | $ | 179 | $ | 134 | $ | 475 | $ | 380 | |||||||||||||||||||||||||||
Operating margin, as reported | 21.3 | % | 18.9 | % | 20.1 | % | 18.0 | % | |||||||||||||||||||||||||||
Rationalization charges | 1 | — | 3 | — | |||||||||||||||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||||||||||||||
Operating profit, as adjusted | 180 | 134 | 478 | 389 | |||||||||||||||||||||||||||||||
Operating margin, as adjusted | 21.4 | % | 18.9 | % | 20.2 | % | 18.4 | % | |||||||||||||||||||||||||||
Depreciation and amortization | 10 | 11 | 31 | 31 | |||||||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 190 | $ | 145 | $ | 509 | $ | 420 | |||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,983 | $ | 1,716 | 16 | % | $ | 5,328 | $ | 5,068 | 5 | % | |||||||||||||||||||||||
Operating profit, as reported - segment | $ | 450 | $ | 313 | $ | 1,058 | $ | 910 | |||||||||||||||||||||||||||
General corporate expense, net | (26) | (24) | (70) | (77) | |||||||||||||||||||||||||||||||
Operating profit, as reported | 424 | 289 | 988 | 833 | |||||||||||||||||||||||||||||||
Operating margin, as reported | 21.4 | % | 16.8 | % | 18.5 | % | 16.4 | % | |||||||||||||||||||||||||||
Rationalization charges - segment | 1 | 9 | 8 | 11 | |||||||||||||||||||||||||||||||
Accelerated depreciation related to rationalization activity - segment | — | — | 1 | — | |||||||||||||||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||||||||||||||
Operating profit, as adjusted | 425 | 298 | 997 | 853 | |||||||||||||||||||||||||||||||
Operating margin, as adjusted | 21.4 | % | 17.4 | % | 18.7 | % | 16.8 | % | |||||||||||||||||||||||||||
Depreciation and amortization - segment | 31 | 31 | 92 | 90 | |||||||||||||||||||||||||||||||
Depreciation and amortization - non-operating | 2 | 2 | 6 | 7 | |||||||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 458 | $ | 331 | $ | 1,095 | $ | 950 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||||||||||||
North American | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,599 | $ | 1,374 | 16 | % | $ | 4,337 | $ | 4,033 | 8 | % | |||||||||||||||||||||||
Operating profit, as reported | $ | 368 | $ | 262 | $ | 899 | $ | 759 | |||||||||||||||||||||||||||
Operating margin, as reported | 23.0 | % | 19.1 | % | 20.7 | % | 18.8 | % | |||||||||||||||||||||||||||
Rationalization charges | 1 | 9 | 8 | 11 | |||||||||||||||||||||||||||||||
Accelerated depreciation related to rationalization activity | — | — | 1 | — | |||||||||||||||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||||||||||||||
Operating profit, as adjusted | 369 | 271 | 908 | 779 | |||||||||||||||||||||||||||||||
Operating margin, as adjusted | 23.1 | % | 19.7 | % | 20.9 | % | 19.3 | % | |||||||||||||||||||||||||||
Depreciation and amortization | 21 | 21 | 60 | 61 | |||||||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 390 | $ | 292 | $ | 968 | $ | 840 | |||||||||||||||||||||||||||
International | |||||||||||||||||||||||||||||||||||
Net sales | $ | 384 | $ | 342 | 12 | % | $ | 991 | $ | 1,035 | (4) | % | |||||||||||||||||||||||
Operating profit, as reported | $ | 82 | $ | 51 | $ | 159 | $ | 151 | |||||||||||||||||||||||||||
Operating margin, as reported | 21.4 | % | 14.9 | % | 16.0 | % | 14.6 | % | |||||||||||||||||||||||||||
Depreciation and amortization | 10 | 10 | 32 | 29 | |||||||||||||||||||||||||||||||
EBITDA | $ | 92 | $ | 61 | $ | 191 | $ | 180 | |||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||||
Net sales | $ | 1,983 | $ | 1,716 | 16 | % | $ | 5,328 | $ | 5,068 | 5 | % | |||||||||||||||||||||||
Operating profit, as reported - segment | $ | 450 | $ | 313 | $ | 1,058 | $ | 910 | |||||||||||||||||||||||||||
General corporate expense, net | (26) | (24) | (70) | (77) | |||||||||||||||||||||||||||||||
Operating profit, as reported | 424 | 289 | 988 | 833 | |||||||||||||||||||||||||||||||
Operating margin, as reported | 21.4 | % | 16.8 | % | 18.5 | % | 16.4 | % | |||||||||||||||||||||||||||
Rationalization charges - segment | 1 | 9 | 8 | 11 | |||||||||||||||||||||||||||||||
Accelerated depreciation related to rationalization activity | — | — | 1 | — | |||||||||||||||||||||||||||||||
Impairment charge for other intangible assets | — | — | — | 9 | |||||||||||||||||||||||||||||||
Operating profit, as adjusted | 425 | 298 | 997 | 853 | |||||||||||||||||||||||||||||||
Operating margin, as adjusted | 21.4 | % | 17.4 | % | 18.7 | % | 16.8 | % | |||||||||||||||||||||||||||
Depreciation and amortization - segment | 31 | 31 | 92 | 90 | |||||||||||||||||||||||||||||||
Depreciation and amortization - non-operating | 2 | 2 | 6 | 7 | |||||||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 458 | $ | 331 | $ | 1,095 | $ | 950 |
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