In March, Livonia’s Masco Corp. announced that it was “exploring options” for its cabinetry and window businesses. This week, the company decided to pursue the sales.
“We have worked with our external advisors, our cabinetry and windows business units, and our board of directors to evaluate alternatives to best deliver long-term value for our shareholders,” says Keith Allman, president and CEO of Masco. “We have determined that pursuing the sale of Masco Cabinetry, Milgard Windows, and UK Window Group in three separate transactions is the most appropriate path forward to accomplish this value creation.
Allman says he expects that the sales of the businesses will be concluded in six to nine months, assuming that each of these transactions can be completed on acceptable terms and conditions.
“Over the past five years, we have executed on our strategy to reduce our cyclicality by increasing our exposure to the repair and remodel segment of the housing market,” says Allman. “This began with the spin-off of our installation services business and continued with a focus on improving the operations of our cabinetry and windows businesses.
“The strategic actions we are announcing will complete the process of reducing our exposure to the new-construction segment of the market and position us to focus on our less cyclical plumbing products and decorative architectural products businesses going forward.”
Last year, Masco’s cabinetry products, windows, and other specialty products combined to report $1.7 billion in net sales, $120 million in operating profit, and $161 million in adjusted EBITDA (defined as operating profit plus depreciation and amortization expense of $36 million and excluding $5 million of rationalization charges). That represented 20 percent of Masco’s consolidated net sales, 10 percent of consolidated operating profit, and 11 percent of consolidated adjusted EBITDA.