Slide 1: Third Quarter 2021 Earnings Presentation
Third Quarter 2021 Earnings Presentation October 27, 2021
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: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation Driving Shareholder Value Q3 2021 IN REVIEW Fifth consecutive quarter of double-digit sales growth Achieved adjusted EPS of $0.99 per share Retired 3.1 million shares for $128 million (includes 0.9 million shares from final settlement of ASR) Continue to mitigate
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Delivered Strong Top Line Growth
Delivered Strong Top Line Growth Masco Corporation Third Quarter Quarter Highlights ($ in Millions) 2021 • Total company sales increased 11% Revenue $2,204 Y-O-Y Change 11% • Net acquisitions/divestitures increased sales by 2% and FX impact was minimal Operating Profit* $385 • In local currency, Nor
Slide 8: Robust North American and Int'l Demand
Robust North American and Int’l Demand Plumbing Products Third Quarter Quarter Highlights ($ in Millions) 2021 • Total segment sales increased 16% Revenue $1,329 Y-O-Y Change 16% • FX increased sales by 1% and net acquisitions/divestitures by 2% Operating Profit $248 • In local currency, North Ameri
Slide 9: Solid Sales Growth Against Tough Comp
Solid Sales Growth Against Tough Comp Decorative Architectural Products Third Quarter Quarter Highlights ($ in Millions) 2021 • Total segment sales increased 4% Revenue $875 Y-O-Y Change 4% • Acquisitions increased sales by 1% • Revenue of paints and other coating products Operating Profit* $166 inc
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 9/30/2021 Cash and cash investments $854M Revolver availability $1,000M Total liquidity $1,854M Net leverage1 1.3x Working capital as a % of sales1 17.0% 1. See Appendix for reconciliation. 10 10
Slide 11: Full Year 2021 Outlook
Full Year 2021 Outlook 2021 Adjusted EPS $3.67 – $3.73 2021 Forecasted 2021 Forecasted Adjusted Business Segment Sales Growth Operating Profit Margin Organic: ~17-19% Net Acquisitions: ~3% Plumbing Products ~18.5% FX: ~2% TOTAL: ~22-24% Organic: ~0-3% Decorative Acquisitions: ~1.5% ~19.0% Architectu
Slide 12: Q&A
3 Q&A Keith Allman John Sznewajs 12
Slide 13: Appendix
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Slide 14: 2021 Estimates
2021 Estimates Item Assumption Rationalization charges ~$5m Tax rate 25% General corporate expense ~$100m Interest and other expense1 ~$115m Capital expenditures ~$130m (includes maintenance capex of ~$75m) Depreciation and amortization2 ~$150m Favorable foreign currency translation ~$100m impact to
Slide 15: Capital Allocation Strategy
Capital Allocation Strategy Balanced Approach to Continue to Drive Shareholder Value 1 Reinvest in the Business • • Capex: 2-2.25% of sales Working capital: ~16.0% of sales 2 Maintain investment grade credit rating • Gross debt to EBITDA below 2.5x 3 Maintain relevant dividend • • Board increased an
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: Expected Dividend Schedule
Expected Dividend Schedule Declaration Date Record Date Payable Date The table reflects our expected dividend Week of May 10, 2021 Week of May 24, 2021 Week of June 14, 2021 schedule through March 2022. Dividend payments are subject to declaration by our Board of Directors, and the dates Week of Jul
Slide 18: 2020 Segment Mix
2020 Segment Mix* Business 2020 Revenue R&R% vs. NC NA% v. Int’l Total Geographic Revenue Split Segment Plumbing $4.1B 83% 67% Products Decorative Europe Architectural $3.1B 96% 100% North 12% Products America 81% Other 2% Total Company $7.2B 89% 81% China United 3% Kingdom R&R = % of sales to repai
Slide 19: 2020 Channel Mix
2020 Channel Mix* 2020 Channel Mix as a Percentage of Sales Decorative Architectural Total Channel Plumbing Products Products Masco Retail 24% 85% 50% Wholesale/trade 56% 11% 36% E-commerce 12% 4% 9% Specialty dealers/other 8% 0% 5% *Based on Company estimates 19
Slide 20: Profit Reconciliations – Third Quarter
Profit Reconciliations – Third Quarter ($ in Millions) Q3 2021 Q3 2020 Q3 2019 Net sales $ 2,204 $ 1,983 $ 1,716 Gross profit, as reported $ 753 $ 752 $ 611 Rationalization charges - 1 5 Gross profit, as adjusted $ 753 $ 753 $ 616 Gross margin, as reported 34.2% 37.9% 35.6% Gross margin, as adjusted
Slide 21: EPS Reconciliation – Third Quarter
EPS Reconciliation – Third Quarter (in Millions, Except per Common Share Data) Q3 2021 Q3 2020 Q3 2019 Income from continuing operations before income taxes, as reported $ 342 $ 380 $ 241 Rationalization charges - 1 9 Pension costs associated with terminated plans - 6 - Fair value adjustment to cont
Slide 22: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2021 Low End High End Income from continuing operations per common share $ 1.67 $ 1.73 Rationalization charges 0.01 0.01 Pension costs associated with terminated plans (1) 1.32 1.32 Fair value adjustment to contingent earnout obligation (2) 0.04 0.04 Loss on sale of busine
Slide 23: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) September 30, 2021 Debt $ 2,960 Less: Cash and cash investments (854) Net Debt $ 2,106 ($ in Millions) TTM September 30, 2021 Operating profit, as reported $ 1,494 Rationalization charges 4 Operating profit, as adjusted $ 1,498 Depreciation and amortizatio
Slide 24: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) September 30, 2021 Receivables $ 1,330 Inventories 1,107 Less: Accounts payable (1,037) Working Capital $ 1,400 Working capital as a % of sales (last 12 months) 17.0% 24