Slide 1: First Quarter 2022 Earnings Presentation
First Quarter 2022 Earnings Presentation April 27, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements that reflect our views about our future performance and constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “outlook,” “believe,”
Slide 3: Agenda
Agenda 1 Summary of Results Keith Allman 2 Financial/Operations Review John Sznewajs 3 Q&A Keith Allman John Sznewajs 3
Slide 4: Summary of Results
1 Summary of Results Keith Allman 4
Slide 5: Q1 2022 Review
Q1 2022 Review Long-Term Shareholder Value Creation Delivered strong top line growth of 12% Contained costs as SG&A as a percentage of sales declined 110 basis points Achieved adjusted EPS growth of 7% to $0.95 per share Repurchased 6.1 million shares for $364 million; expect to execute $500 million
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Achieved Strong Top Line and EPS Growth
Achieved Strong Top Line and EPS Growth Masco Corporation First Quarter Quarter Highlights ($ in Millions) 2022 • Total company sales increased 12% Revenue $2,201 Y-O-Y Change 12% • Sales increased 14% excluding the net impacts of acquisitions, divestitures and currency Operating Profit* $356 • In l
Slide 8: Delivered Growth Across Geographies
Delivered Growth Across Geographies Plumbing Products First Quarter Quarter Highlights ($ in Millions) 2022 • Total segment sales increased 9% Revenue $1,359 Y-O-Y Change 9% • Sales increased 12% excluding the net impacts of currency, acquisitions and divestitures Operating Profit* $228 • In local c
Slide 9: Continued Paint Momentum Drives Growth
Continued Paint Momentum Drives Growth Decorative Architectural Products First Quarter Quarter Highlights ($ in Millions) 2022 • Total segment sales increased 17% Revenue $842 Y-O-Y Change 17% • Revenue of paints and other coating products increased over 20% Operating Profit* $158 • DIY paint sales
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 3/31/2022 Cash and cash investments $479M Revolver availability $737M Total liquidity $1,216M Net leverage1 1.7x Working capital as a % of sales1 20.1% 1. See Appendix for reconciliation. 10 10
Slide 11: Full Year 2022 Outlook
Full Year 2022 Outlook 2022 Adjusted EPS $4.15 – $4.35 2022 Forecasted 2022 Forecasted Adjusted Business Segment Sales Growth Operating Profit Margin Organic: ~5-9% Plumbing Products FX: ~(2%) 18.5% - 19.0% TOTAL: ~3-7% Decorative Organic: ~10-14% 17.5% - 18.0% Architectural Products TOTAL: ~10-14%
Slide 12: Q&A
3 Q&A Keith Allman John Sznewajs 12
Slide 13: Appendix
Appendix 13 13
Slide 14: 2022 Estimates
2022 Estimates Item Assumption Rationalization charges $9m Tax rate 25% General corporate expense ~$100m Interest and other expense ~$110m Capital expenditures ~$250m (includes maintenance capex of ~$100m) Depreciation and amortization1 ~$150m Unfavorable foreign currency translation ~$95m impact to
Slide 15: Capital Allocation Strategy
Capital Allocation Strategy Balanced Approach to Continue to Drive Shareholder Value 1 Reinvest in the Business • • Capex: 2-2.5% of sales Working capital: ~16.5% of sales 2 Maintain investment grade credit rating • Gross debt to EBITDA below 2.5x 3 Maintain relevant dividend • • Current annual divi
Slide 16: Long-Term Outlook: Low ticket, repair and remodel products
Low ticket, repair and remodel products provide growth and stability LONG-TERM OUTLOOK through an economic cycle Average annual sales growth • Organic: ~3-5% • Acquisition: ~1-3% Market leading brands, Operating margin history of innovation, customer focus • Expand margins through cost productivity
Slide 17: Expected Dividend Schedule
Expected Dividend Schedule Declaration Date Record Date Payable Date The table reflects our expected dividend Week of February 7, 2022 Week of February 21, 2022 Week of March 14, 2022 schedule through November 2022. Dividend payments are subject to declaration by our Board of Directors, Week of May
Slide 18: 2021 Segment Mix
2021 Segment Mix* Business Segment 2021 Revenue R&R% vs. NC NA% v. Int’l Total Geographic Revenue Split Plumbing Products $5.1B 83% 66% 12% 79% Decorative 3% Architectural $3.3B 97% 100% 4% Products 2% North America Europe Total Company $8.4B 88% 79% Other China United Kingdom R&R = % of sales to re
Slide 19: 2021 Channel Mix
2021 Channel Mix* 2021 Channel Mix as a Percentage of Sales Plumbing Decorative Architectural Total Channel Products Products Masco Retail 20% 84% 45% Wholesale/trade 55% 11% 38% E-commerce 16% 5% 12% Specialty dealers/other 9% 0% 5% *Based on Company estimates 19
Slide 20: Profit Reconciliations – First Quarter
Profit Reconciliations – First Quarter ($ in Millions) Q1 2022 Q1 2021 Net sales $ 2,201 $ 1,970 Gross profit, as reported $ 704 $ 700 Rationalization charges 3 1 Gross profit, as adjusted $ 707 $ 701 Gross margin, as reported 32.0% 35.5% Gross margin, as adjusted 32.1% 35.6% Selling, general and ad
Slide 21: EPS Reconciliation – First Quarter
EPS Reconciliation – First Quarter (in Millions, Except per Common Share Data) Q1 2022 Q1 2021 Income before income taxes, as reported $ 327 $ 157 Rationalization charges 3 1 Pension costs associated with terminated plans - 9 (Earnings) from equity investments, net - (2) Loss on extinguishment of de
Slide 22: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2022 Low End High End Net income per common share $ 4.12 $ 4.32 Rationalization charges 0.03 0.03 Fair value adjustment to contingent earnout obligation (1) 0.01 0.01 (Gain) on sale of business (2) (0.01) (0.01) Allocation to participating securities per share (3) 0.00 0.0
Slide 23: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) March 31, 2022 Debt $ 3,219 Less: Cash and cash investments (479) Net Debt $ 2,740 ($ in Millions) TTM March 31, 2022 Operating profit, as reported $ 1,393 Rationalization charges 6 Impairment charge for goodwill 45 Operating profit, as adjusted $ 1,444 De
Slide 24: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) March 31, 2022 Receivables $ 1,502 Inventories 1,340 Less: Accounts payable (1,114) Working Capital $ 1,728 Working capital as a % of sales (last 12 months) 20.1% 24