Masco spinning off division, lays off 40% of HQ staff
Taylor — Building products maker Masco Corp. said Tuesday it will spin off its installation and other services division into a new, publicly traded company and will cut headquarters staff by more than 40 percent.
The company had about 400 employees at its Taylor headquarters before cuts began, spokeswoman Jamie McDaniel said. A 40 percent reduction means about 160 people are losing their jobs. McDaniel, who said employees have been laid off over the past few days, are receiving severance packages and outplacement services.
In fall 2011, the Taylor headquarters had about 500 employees; in 2000 it had 600. The headquarters has been in Taylor since the 1960s.
Masco President and CEO Keith Allman, in a call with industry analysts Tuesday, called the employee reduction decision “tough.” “This was a difficult but necessary step,” he said.
Allman said the restructuring will create a leaner company, with decision-making happening closer to the customers.“We believe wholeheartedly that our future is brighter,” Allman said.
The company also wants to lower its corporate expenses and simplify its organizational structure. It foresees annual savings of $35 million to $40 million, but will take an estimated charge of about $30 million over the next several quarters.
“As separate companies, both Masco and the Services Business will have greater flexibility to focus on and pursue their respective growth strategies,” Allman said in a statement.
The Masco family of more than 20 companies operates nearly 60 manufacturing facilities in the United States and more than 20 in other parts of the world. Shares of the maker of Delta faucets, Behr paint and Merillat cabinets climbed nearly 2.6 percent Tuesday to close at $23.92 a share.
The installation and other services unit includes Masco Contractor Services, which installs products such as insulation, gutters and garage doors, and Service Partners, a distributor of residential insulation gutters, fireplaces and roofing products. Masco named Jerry Volas, Masco Group president, to become CEO of the Services Business management team.
Masco will remain headquartered in Taylor and will continue to be listed on the New York Stock Exchange under the “MAS” ticker symbol.
Masco said the spun-off services business will be headquartered in central Florida, but did not give a proposed name for the company. Those businesses accounted for about $1.4 billion of Masco’s $8.17 billion in revenue in 2013 and have had a compounded annual growth rate of nearly 11 percent since 2010.
“The Services Business will focus on growth by capitalizing on North American new home construction as well as further expanding into commercial and retrofit categories,” Allman said in a statement. “Masco shareholders stand to benefit from the additional value created by the spin-off.”
The separation is expected to be completed by the middle of 2015. It still needs approval from Masco’s board.
Masco Corp. said that it is also starting a repurchase program for 50 million shares of its common stock,or about 14 percent of its outstanding stock. The repurchases, to be paid with cash, are expected to be made over several years, starting in 2014.
Staff Writer Melissa Burden and the Associated Press contributed.