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Masco's net income drops 11.2%, EPS misses expectations

Masco Corp.'s earnings for the fourth quarter of 2017 came in below expectations, but sales were up 6.5% from a year earlier as the company's plumbing products and decorative architectural products posted strong growth.

Net income was $87 million, or 27 cents per share, for the fourth quarter of 2017, down from $98 million, or 30 cents per share, in the year-ago quarter. The S&P Capital IQ consensus GAAP EPS estimate for the quarter was 43 cents.

The manufacturer of home improvement and building products reported operating profit of $264 million for the quarter, up from $215 million in the year-ago period. Adjusted net income for the period was $137 million, or 44 cents per share, up from $105 million, or 33 cents per share, in the prior-year quarter.

Net sales rose 6.5% year over year to $1.87 billion from $1.76 billion, with sales in North America rising by 5% and international sales increasing by 3% in local currency.

Operating profit at the company's plumbing products business increased to $169 million in the quarter from $151 million in the prior-year quarter, as net sales increased 9.1% year over year to $972 million from $891 million due to growth in North America and internationally.

Decorative architectural products posted an operating profit of $88 million, up from $75 million in the year-ago quarter. Strong volume growth in coatings and builders' hardware drove an 11.5% year-over-year increase in the segment's net sales to $494 million from $443 million in the year-ago period.

Masco said it closed the acquisition of Mercury Plastics Inc., a provider of thermoforming, plastic fabrication and printing services which will become part of Masco's plumbing products segment. The company also announced that it signed an agreement to acquire The L.D. Kichler Co., a provider of lighting, ceiling fans, and home accessories.

For full-year 2017, net income was $533 million, or $1.66 per share, up from $491 million, or $1.47 per share, in 2016 but below the S&P Capital IQ consensus GAAP EPS estimate of $1.82. Adjusted net income was $618 million, or $1.94 per share, in the year, up from $498 million, or $1.51 per share, in the previous year.

For 2018, Masco expects GAAP EPS to be in the range of $2.36 to $2.51 and adjusted EPS to be between $2.48 and $2.63.