Slide 1: First Quarter 2023 Earnings Presentation
First Quarter 2023 Earnings Presentation April 26, 2023
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 2023 Review
Q1 2023 Review Top line decreased 10% with lower volumes partially offset by pricing actions Strong execution resulted in gross margin expansion of 150 bps to 33.6% and a decremental operating margin of ~20% Achieved adjusted EPS of $0.87 per share Repurchased 1.1 million shares for $56 million Main
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Masco Corporation Quarter Highlights
Masco Corporation First Quarter Quarter Highlights ($ in Millions) 2023 • Total company sales decreased 10%, or 9% excluding Revenue $1,979 the impact of currency Y-O-Y Change (10%) • In local currency, North American sales decreased 10% Operating Profit* $312 • In local currency, international sale
Slide 8: Plumbing Products Segment
Plumbing Products Segment First Quarter Quarter Highlights ($ in Millions) 2023 • Total segment sales decreased 10%, or 8% excluding the Revenue $1,222 impact of currency Y-O-Y Change (10%) • In local currency, North American sales decreased 10% Operating Profit* $202 • In local currency, internatio
Slide 9: Decorative Architectural Products Segment
Decorative Architectural Products Segment First Quarter Quarter Highlights ($ in Millions) 2023 • Total segment sales decreased 10% against a 17% comp Revenue $757 Y-O-Y Change (10%) • Revenue of paints and other coating products decreased high single digits Operating Profit* $133 • PRO paint sales
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 3/31/2023 Cash and cash investments $510M Revolver availability $790M Total liquidity $1,300M Net leverage1 2.0x Working capital as a % of sales1 19.1% 1. See Appendix for reconciliation. 10 10
Slide 11: Full Year 2023 Outlook
Full Year 2023 Outlook 2023 Adjusted EPS $3.10 – $3.40 2023 Forecasted 2023 Forecasted Adjusted Business Segment Sales Change Operating Profit Margin Plumbing Products (10-14%) ~16% Decorative Architectural Products (5-10%) ~16% Total Masco (~10%) ~15% 11 11
Slide 12: Q&A
3 Q&A Keith Allman John Sznewajs 12
Slide 13: Appendix
Appendix 13 13
Slide 14: 2023 Estimates
2023 Estimates Item Assumption Rationalization charges ~$10m Tax rate 24% General corporate expense ~$90m Interest and other expense ~$115m Capital expenditures ~$250m (includes maintenance capex of ~$75m) Depreciation and amortization1 ~$150m Favorable foreign currency translation ~$15m impact to s
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 • Target gross debt to EBITDA below 2.5x 3 Maintain relevant dividend • • Current annu
Slide 16: Long-Term Outlook
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: 2022 Segment Mix
2022 Segment Mix* Business Segment 2022 Revenue R&R% vs. NC NA% v. Int’l Total Geographic Revenue Split Plumbing Products $5.3B 83% 68% 12% Decorative 80% Architectural $3.4B 97% 100% 2% Products 4% 2% Total Company $8.7B 89% 80% North America Europe R&R = % of sales to repair NA = % of sales within
Slide 18: 2022 Channel Mix
2022 Channel Mix* 2022 Channel Mix as a Percentage of Sales Plumbing Decorative Architectural Total Channel Products Products Masco Retail 21% 85% 47% Wholesale/trade/dealer 51% 11% 34% E-commerce 16% 4% 11% Specialty Dealer/Other 12% 0% 8% *Based on Company estimates 18
Slide 19: Profit Reconciliations – First Quarter
Profit Reconciliations – First Quarter ($ in Millions) Q1 2023 Q1 2022 Net sales $ 1,979 $ 2,201 Gross profit, as reported $ 669 $ 704 Rationalization (income) charges (1) (4) 3 Gross profit, as adjusted $ 665 $ 707 Gross margin, as reported 33.8% 32.0% Gross margin, as adjusted 33.6% 32.1% Selling,
Slide 20: EPS Reconciliation – First Quarter
EPS Reconciliation – First Quarter (in Millions, Except per Common Share Data) Q1 2023 Q1 2022 Income before income taxes, as reported $ 285 $ 327 Rationalization (income) charges (1) (3) 3 Fair value adjustment to contingent earnout obligation (2) - 4 (Gain) on sale of business (3) - (2) Realized (
Slide 21: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2023 Low End High End Net income per common share $ 3.06 $ 3.36 Rationalization charges 0.04 0.04 Net income per common share, as adjusted $ 3.10 $ 3.40 21
Slide 22: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) March 31, 2023 Debt $ 3,359 Less: Cash and cash investments (510) Net Debt $ 2,849 ($ in Millions) TTM March 31, 2023 Operating profit, as reported $ 1,259 Rationalization charges 26 Impairment charges for goodwill and other intangible assets 26 Operating
Slide 23: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) March 31, 2023 Receivables $ 1,329 Inventories 1,196 Less: Accounts payable (913) Working Capital $ 1,612 Working capital as a % of sales (last 12 months) 19.1% 23