Shares of Masco Corp. (MAS: Quote) declined more than 9 percent in extended trade Monday after the home improvement and building products company reported a loss for the second quarter on flat sales and higher expenses. However, adjusted earnings per share rose from last year.
Looking ahead, Masco said it now expects the second half of 2012 to be less robust than previously anticipated, due to weakening economic conditions in the U.S. and Europe.
Tim Wadhams, CEO of Masco said, "While general economic activity slowed in the second quarter and our sales were flat compared to last year, our top line benefitted from increased new home construction activity and sales of plumbing products in North America, and from selling price increases. Also, despite the weakening economic environment in Europe, our international sales were flat in local currencies."
Cabinet and related products net sales for the second quarter declined 5 percent to $312 million, while plumbing products net sales decreased 3 percent to $738 million.
Installation and other services net sales rose 10 percent to $296 million and decorative architectural products net sales increased 5 percent to $517 million.
Gross profit margin declined to 26.1 percent from 27.2 percent in the year-ago period. Meanwhile, operating profit margin improved to 6.2 percent from 5.8 percent last year.
Taylor, Michigan-based Masco's second-quarter net loss was $75 million or $0.22 per share, compared to net income of $8 million or $0.02 per share in the year-ago period.
Excluding special items, adjusted earnings rose to $34 million or $0.10 per share from $21 million or $0.06 per share in the year-ago period.
On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter edged up to $2.004 billion from $1.998 billion in prior-year period. Analysts had a consensus revenue estimate of $2.08 billion.
Excluding the impact of currency translation, net sales rose 3 percent. North American sales increased 3 percent, while international sales declined 9 percent.
Looking ahead, Masco said it expects its installation and cabinet segments to benefit in the second half of 2012 from the continued improvement in North America new home construction activity.
Wadhams said, "However, implementing our countertop and dealer strategies for Cabinets has been challenging and will reduce our second half expectations for Cabinet segment improvement. In addition, while we are relatively pleased with our first half results, we expect the second half of 2012 to be less robust than previously anticipated, as the U.S. economy appears to be losing momentum and Euro-zone economies continue to struggle."
Masco also said that it has agreed to pay $75 million to settle the Columbus Drywall Inc. litigation.
MAS closed Monday's regular trading at $13.12, down $0.18 or 1.35 percent on a volume of 7.48 million shares. In after-hours, the stock further declined $1.15 or 8.77 percent to $11.97.
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by RTT Staff Writer
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