EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact:
Samuel Cypert
313-792-6646
MASCO CORPORATION REPORTS
FIRST QUARTER SALES AND EARNINGS
AND FORECASTS RECORD SALES AND EARNINGS FOR 2003
Taylor, Michigan (May 6, 2003) -- Masco Corporation (NYSE:MAS)
today reported that net sales for the first quarter ended March 31, 2003, aided
by acquisitions, increased 19 percent to a first quarter record $2.5 billion,
compared with $2.1 billion for the first quarter of 2002. Net income for the
quarter was $165.8 million and earnings per common share increased to $.32,
compared with $.12 per common share for the 2002 first quarter (including a $.19
per common share non-cash goodwill impairment charge).
Operating profit margins in the 2003 first quarter were negatively
impacted by sales being somewhat lower than expected due to adverse weather
conditions in certain markets and by higher energy, insurance and pension costs.
The Company's favorable sales performance has continued early in the
current quarter, and, based on present business trends, the Company believes
that second quarter earnings should approximate $.43 to $.45 per common share
and, as previously forecast, expects to achieve record sales and earnings for
2003 with full-year earnings in a range of $1.65 to $1.70 per common share.
Headquartered in Taylor, Michigan, Masco Corporation is one of the
world's leading manufacturers of home improvement and building products as well
as a leading provider of services that include the installation of insulation
and other building products.
A conference call regarding the Company's first quarter 2003 sales and
earnings is scheduled for Tuesday, May 6, 2003 at 10:30 a.m. ET. Participants in
the call are asked to register five to ten minutes prior to the scheduled start
time by dialing (913) 981-4910 (confirmation #624313). The conference call will
be webcast simultaneously on the Company's website at www.masco.com and
supplemental material, including the financial data referred to on the call and
a reconciliation of all non-GAAP information provided on the call will also be
available on the website. A replay of the call will be available on Masco's
website or by phone by dialing (719) 457-0820 (replay access code #624313)
approximately two hours after the end of the call and will continue through May
12, 2003.
Masco Corporation's press releases and other information are available
through the Company's toll free number, 1-800-MAS-NEWS, or you may visit Masco's
website at www.masco.com.
# # # #
Statements contained herein may include certain forward-looking statements
regarding Masco's future sales, earnings growth potential and other
developments. Actual results may vary materially because of external factors
such as interest rate fluctuations, changes in consumer spending and other
factors over which management has no control. Additional information about our
products, markets and conditions, which could affect our future performance, is
contained in the Company's filings with the Securities and Exchange Commission
and is available on Masco's website at www.masco.com.
MASCO CORPORATION ANNOUNCES
FIRST QUARTER SALES AND EARNINGS
Amounts are in thousands, except per share data.
Three Months Ended
March 31
----------------------------
2003 2002
----------- -----------
Net Sales $ 2,498,300 $ 2,100,000
Cost of Sales 1,744,540 1,454,050
----------- -----------
Gross Profit 753,760 645,950
Selling, General and Administrative Expenses 452,380 355,350
(Income) Regarding Litigation Settlement (13,520) ---
----------- -----------
Operating Profit 314,900 290,600
Other Income (Expense), net (55,050) (63,000)
----------- -----------
Income before Income Taxes, Minority
Interest and Cumulative Effect of
Accounting Change, net 259,850 227,600
Income Taxes 90,400 77,400
----------- -----------
Income before Minority Interest and Cumulative
Effect of Accounting Change, net 169,450 150,200
Minority Interest 3,650 ---
----------- -----------
Income before Cumulative Effect of Accounting Change, net 165,800 150,200
Cumulative Effect of Accounting Change, net --- (92,400)
----------- -----------
Net Income $ 165,800 $ 57,800
=========== ===========
Earnings Per Common Share (Diluted):
Income before Cumulative Effect
of Accounting Change, net $ 0.32 $ 0.31
Cumulative Effect of Accounting
Change, net --- (0.19)
----------- -----------
As Reported $ 0.32 $ 0.12
----------- -----------
Average Diluted Common Shares
Outstanding 519,600 483,900
=========== ===========
EXHIBIT 99.2
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
The Company reports its financial results in accordance with generally accepted
accounting principles (GAAP). However, management believes that certain non-GAAP
performance measures and ratios, used in managing the business, may provide
users of this financial information with additional meaningful comparisons
between current results and results in prior periods. See the attached tables
for supplemental financial data and the corresponding reconciliations to GAAP
financial measures for the three months ended March 31, 2003 and March 31,
2002. Non-GAAP financial measures should be viewed in addition to, and not as an
alternative for the Company's reported results prepared in accordance with
GAAP.
FIRST QUARTER 2003
- - Net sales, aided by acquisitions, were a first quarter record, increasing
19 percent, with North American sales increasing 11 percent and
International sales increasing 66 percent. Stronger sales to non-retail
customers, sales of acquired companies (particularly Service Partners in
our Installation Group and Hansgrohe AG in our International Plumbing
Products Group) and the favorable impact of foreign currencies more than
offset slower sales growth with certain of the Company's retail customers.
- - Excluding acquisitions and divestitures, first quarter 2003 consolidated
net sales increased five percent compared with first quarter 2002 sales;
North American sales increased two percent and International sales
increased 20 percent. In local currencies, International sales were flat
compared with 2002.
- - The first quarter two percent organic growth in North America is below the
Company's historic rate of internal growth. Given the economic challenges
in the first quarter, including adverse weather conditions, the Iraqi war,
and higher energy costs reducing consumer disposable income, this lower
rate of growth compares favorably with most of our peer group. The Company
expects that its organic growth rate for the remainder of the year should
be higher than that achieved in the first quarter.
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MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2003 (CONTINUED)
- - The Company reported net income of $165.8 million or $.32 per common share,
at the higher end of the Company's previously forecast earnings guidance
range of $.30-$.32 per common share.
- - The Company estimates that adverse weather conditions (particularly
impacting new residential construction sites) reduced first quarter 2003
sales by approximately 2-3 percent from what was anticipated at the
beginning of the quarter, resulting in earnings per common share being
$.02-$.03 lower than originally expected. Historically, a substantial
portion of weather-deferred sales are usually recovered later in the year.
As previously announced, first quarter earnings were also adversely
affected by the expense resulting from the accelerated vesting of deferred
compensation due to the recent unexpected passing of Masco's President,
which reduced earnings by approximately $.03 per common share. In addition,
the Company estimates that higher energy prices impacting material, freight
and other operating costs during the quarter reduced earnings by
approximately $.02 per common share. The Company also incurred
higher-than-normal expenses in the quarter related to the installation of
new Color Solutions Centers at Home Depot stores, the planned rollout of a
new paint product line at Wal-Mart and certain plant start-up costs.
These reductions were partially offset by $.01 per common share of realized
gains from the sale of marketable securities and $.02 per common share of
insurance recovery income related to the Behr litigation. The Company
expects further insurance recoveries related to the Behr litigation later
in the year.
- - Key retailer sales growth in the quarter increased four percent, compared
with an increase of three percent in the fourth quarter of 2002. Combined
sales to Home Depot, Lowe's and Wal-Mart in the first quarter of 2003,
increased by approximately three percent compared with a strong 18 percent
in the 2002 first quarter.
2
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2003 (CONTINUED)
- - Sales by segment in the 2003 first quarter versus the 2002 first quarter
were:
- Cabinets and Related Products sales were up seven percent;
- Plumbing Products sales were up 32 percent;
- Installation and Other Services sales were up 39 percent;
- Decorative Architectural Products sales were relatively flat; and
- Other Specialty Products sales increased 23 percent.
- - Gross margins were 30.2 percent in the 2003 first quarter compared with
30.8 percent in 2002. The decrease reflects lower than expected sales due
to adverse weather and increased energy, insurance and pension costs as
well as relatively higher sales in product segments with somewhat lower
margins.
- - Operating margins decreased to 12.6 percent compared with 13.8 percent in
the first quarter of 2002. Lower operating margins reflect $21 million of
accelerated benefit expense related to the unexpected passing of the
Company's President as well as the items noted above which lowered gross
margins, partially offset by $14 million of Behr litigation insurance
recovery.
- - SG&A expense as a percent of sales was 18.1 percent compared with 16.9
percent in the 2002 first quarter. SG&A expense in the 2003 first quarter
included the above-mentioned accelerated benefit expense. Excluding the
benefit expense, SG&A expense would have been 17.3 percent of sales.
- - General corporate expense was 1.1 percent of sales in the first quarter of
both 2003 and 2002.
- - Inventory days were 60 days at March 31, 2003 compared with 55 days at
March 31, 2002.
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MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2003 (CONTINUED)
- - Accounts receivable at the end of the first quarter were 56 days compared
with 58 days a year ago, despite extended payment terms with certain
customers.
- - Accounts payable days at the end of the first quarter improved to 35 days
from 24 days a year ago, as we continue to negotiate more favorable
supplier terms.
- - Working capital at March 31, 2003 (defined as accounts receivable and
inventories less accounts payable) improved to 21.9 percent of the last
twelve months of sales from 22.1 percent a year earlier.
- - Internal growth and working capital management all contributed to
improvement in the last twelve months of operating profit return (excluding
the charge for the Behr litigation, net) on net operating assets (defined
as accounts receivable, inventory, property and equipment, goodwill and
other intangibles less accounts payable) to 17.9 percent for the 2003 first
quarter compared with 16.9 percent for the comparable period in 2002.
- - The Company's tax rate was 34.8 percent in the first quarter of 2003
compared with 34.0 for the comparable period of the prior year. The rate
increase is principally the result of recent acquisitions increasing the
proportion of domestic income, which is generally taxed at higher rates
than foreign income. The Company anticipates that its tax rate for 2003
will approximate 35 percent.
- - At the end of the quarter, the Company had a strong balance sheet, with
approximately $1.1 billion in cash and marketable securities and $2 billion
in unused bank lines.
- - Debt as a percent of total capitalization was 47 percent at both March 31,
2003 and December 31, 2002.
- - The Company repurchased approximately 14 million common shares during the
quarter. Approximately two million of these shares were used for employee
long-term stock incentive plans.
4
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2003 (CONCLUDED)
- - As previously announced, beginning January 1, 2003, the Company will
expense stock options on a prospective basis.
- - The weighted average diluted shares outstanding for the quarter were 519.6
million (528.5 million for the quarter ended December 31, 2002). Shares
outstanding at the end of the quarter, including the reduction for shares
repurchased and for the portion not included in the first quarter weighted
average shares outstanding, would have been approximately 514 million.
Contingently issuable shares utilized in the calculation of earnings per
share in the first quarter were based on a quarter end share price of
$18.62.
- - As previously announced, in late January 2003 the Company acquired
PowerShot Tool Company, Inc., a leading manufacturer of fastening products,
including staple guns, glue guns, hammer tackers and riveting products,
headquartered in Florham Park, New Jersey.
FULL-YEAR OUTLOOK
- - In the second quarter of 2003, the Company completed the sale of its 42
percent equity interest in Emco Limited for cash proceeds of approximately
$75 million. The sale resulted in a pre-tax gain of approximately $5
million to the Company.
- - In early May 2003, Masterchem, makers of KILZ(R) brand primers, announced a
new product launch, KILZ(TM) Casual Colors(TM) one-coat latex paint.
Available in a variety of finishes and colors for interior and exterior
use, this line will be offered in select Wal-Mart stores throughout the
United States. The line will be sold in a new non-traditional container
designed specifically for ease of carrying, lifting and pouring.
- - Because the first quarter is seasonally a low quarter for Masco, sales and
earnings per common share in the last three quarters of 2003 should average
higher than the first quarter results, contributing to significantly
improved sales and earnings for the full-year 2003.
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MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR OUTLOOK (CONCLUDED)
- - Masco's favorable sales performance has continued early in the current
quarter, and, based on present business trends, the Company continues to be
guardedly optimistic and anticipates that its earnings per common share for
the second quarter of 2003 should approximate $.43 to $.45 per common share
and, as previously forecast, expects to achieve record sales and earnings
for 2003 with full-year earnings in a range of $1.65 to $1.70 per common
share.
Statements contained herein may include certain forward-looking statements
regarding Masco's future sales, earnings growth potential and other
developments. Actual results may vary materially because of external factors
such as interest rate fluctuations, changes in consumer spending and other
factors over which management has no control. Additional information about our
products, markets and conditions, which could affect our future performance, is
contained in the Company's filings with the Securities and Exchange Commission
and is available on Masco's website at www.masco.com.
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