Furniture Today,
TAYLOR, Mich. — Declining housing starts and uncertain economic conditions were behind a 9% drop in first-quarter sales at home

improvement and building supplies manufacturer Masco Corp., the company reported today.

Sales declined to $2.9 billion in the quarter, compared to $3.2 billion a year earlier. North American sales declined 15%, although international sales increased 21%. In local currencies, international sales increased 10% compared with the first quarter of 2013.

Income in the latest quarter was $142 million, or 37 cents per share, compared with $207 million, or 50 cents per share, in last year’s first quarter.

The company said first-quarter results, typically the weakest quarter of the year, were adversely affected by lower sales of installation services, assembled cabinets, windows and doors in the new home construction market, and a continued moderation in consumer spending for certain big-ticket home improvement items such as cabinets, as well as a less favorable product mix and increased commodity costs.

Results were aided by increased sales of paints and stains and increased sales from international operations, particularly plumbing products, Masco said.

While results in the first quarter were substantially below the strong first quarter of 2013, reflecting a decline of about 30% in housing starts, sales and earnings were better than the company anticipated when it issued its full-year 2014 earnings guidance in February. At that time, the company said it anticipated that first-quarter net sales would be down in the low double digits, compared with the actual decline of 9%.

Masco said economic conditions remain uncertain in the markets it serves. Housing starts have declined dramatically in the last 12 months due to previous excessive speculative buying, rapidly rising home prices in recent years that reduced affordability, and less attractive mortgage terms. Even with the recent decline in new home construction, the inventory of unsold new and existing homes has remained at unprecedented high levels, the company said.

As a result, Masco said it lowered its estimate of housing starts for this year to between 1.4 million to 1.5 million. A moderation in consumer spending for big-ticket items also is expected.

In a non-related move, the company said it has acquired Erickson Construction Co. and Guy Evans Inc. Erickson offers turnkey framing for residential homebuilders, providing pre-fabricated wall panels and millwork in Arizona, California and Nevada. Guy Evans is a leading installer of millwork, interior and exterior doors, windows and bath hardware for residential and commercial contractors in California and Nevada.