Masco (MAS) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $1,983 million, flat year-over-year, with local currency sales up 1% and demand stabilizing in plumbing.

• Adjusted operating profit rose 3% to $360 million; adjusted EPS grew 8% to $1.08, while reported net income fell 33% to $167 million due to higher costs and a preliminary $81 million loss on the Kichler Lighting divestiture.

• Decorative Architectural Products sales declined 3%, with pro paint sales up high single digits and DIY paint down mid-single digits; Plumbing Products sales rose 2%.

• Returned $255 million to shareholders via dividends and share repurchases in Q3; 2.5 million shares repurchased for $192 million.

• Completed the sale of Kichler Lighting to streamline the portfolio and focus on core businesses.

Financial highlights

• Adjusted gross margin rose 90 bps to 36.7%, while reported gross margin decreased 100 bps to 36.6%.

• Adjusted operating margin expanded 60 bps to 18.2%, marking the sixth consecutive quarter of margin expansion.

• Free cash flow remained strong; $668 million in net cash from operating activities for nine months.

• Gross debt-to-EBITDA at 2x; $1.6 billion liquidity at quarter end.

• Share repurchases totaled $486 million for 6.6 million shares in the nine months; $1.2 billion remains under authorization.

Outlook and guidance

• 2024 adjusted EPS expected at $4.05–$4.15, slightly narrowed from prior guidance; full-year reported EPS expected between $3.74–$3.84.

• Full-year sales now anticipated to be down low single digits due to Kichler divestiture and continued DIY paint weakness.

• Full-year operating margin expected at 17.5%, the top end of previous guidance.

• Capital expenditures projected at ~$180 million; share repurchases or acquisitions expected at ~$750 million for 2024.

• Market demand anticipated to remain challenged for the remainder of the year.