Masco earnings up 52.8% in 4Q
By Furniture Today Staff -- Furniture Today, February 24, 2003
Taylor, Mich. — Strong sales in some sectors helped Masco to a 52.8% increase in earnings in the fourth quarter, the building and home improvement products company reported.
Masco, whose holdings include furniture producers Mill's Pride, Tvilum-Scanbirk and dScan, posted net income of $195 million in the quarter on sales of $2.5 billion, up 18.6% from the comparable quarter a year earlier.
Sales to non-retail customers, sales of acquired companies and a favorable impact from foreign currencies helped offset slower sales growth to some retail customers, the company said. Earnings per share for the quarter, at 37 cents, were at the high end of management's forecast.
For the full year, Masco's net income of $589.7 million was nearly triple the $198.5 million earned the previous year. The 2001 income was held down by a $530 million non-cash charge to write down the value of securities, including the company's interest in the parent of LifeStyle Furnishings International, which was broken up and sold.
Excluding the effect of unusual items in 2002, mainly a lawsuit settlement involving products from its Behr subsidiary, a non-cash accounting change and impairment of goodwill, net income was $780 million or $1.52 per share.
Sales have started strong this year, but the company said it was toning down its forecasting for planning purposes to anticipate a possible slowdown in housing starts and a moderation of consumer spending.
Higher operating expenses, a new-product launch and one-time items — including accelerated vesting of deferred compensation programs because of the recent death of company President Raymond Kennedy — will reduce first-quarter earnings by about 5 cents per share, Masco said. The company is looking for first-quarter earnings of 30 to 32 cents per share, about even with the 2002 quarter's 31 cents.
Masco also said it had boosted its ownership in Hansgrohe AG, a German manufacturer of faucets and related products, from 27% to about 64% in December, and early this year acquired U.S. tool maker PowerShot Tool Co. Combined annual sales of the two companies are about $400 million. Masco's payment in the two deals amounted to $190 million in cash and assumed debt, and 1.6 million shares of Masco stock.
| Masco Corp. | |||
|---|---|---|---|
| Owns d-Scan, Mill's Pride, Tvilum-Scanbirk and a minority interest in LifeStyle Furnishings Intl. | |||
| Earnings per share are fully diluted. | |||
| Quarter ended 12/31 | 2002 | 2001 | Change |
| (a) Includes a $15.6 million pretax credit for the reversal of a charge for the planned disposition of business in both 2002 periods. The 2002 quarter also includes $19.2 million in pretax income from a litigation settlement. The 2002 year also includes a $146.8 million pretax charge for a litigation settlement and a $92.4 million extraordinary charge, the cumulative effect of an accounting change. (b) Based on average shares outstanding of 528.5 million in the 2002 quarter, 484.2 million in the 2001 quarter, 514.1 million in the 2002 year and 474.9 million in the 2001 year. | |||
| Sales | $2,487,400,000 | $2,097,000,000 | 18.6% |
| Operating income | 355,070,000 | 265,150,000 | 33.9% |
| Net income | (a)194,800,000 | 127,500,000 | 52.8% |
| Earnings per share (b) | 0.37 | 0.26 | 42.3% |
| Year ended 12/31 | 2002 | 2001 | Change |
| Sales | $9,419,400,000 | $8,284,000,000 | 13.7% |
| Operating income | 1,462,270,000 | 1,133,000,000 | 29.1% |
| Net income | (a)589,700,000 | 198,500,000 | 197.1% |
| Earnings per share (b) | 1.15 | 0.42 | 173.8% |
