Slide 1: Third Quarter 2022 Earnings Presentation
Third Quarter 2022 Earnings Presentation October 26, 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: Q3 2022 Review
Q3 2022 Review Long-Term Shareholder Value Creation Sales matched prior year, increased 3% excluding currency SG&A as a percentage of sales declined 110 basis points to 15.6% Achieved adjusted EPS of $0.98 per share Anticipate full year adjusted EPS to be $3.70-$3.80 per share from previous guidance
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Sales Growth of 3% in Local Currency
Sales Growth of 3% in Local Currency Masco Corporation Third Quarter Quarter Highlights ($ in Millions) 2022 • Total company sales matched prior year Revenue $2,204 Y-O-Y Change 0% • Sales increased 3%, excluding the impact of currency • In local currency, North American sales increased 3% Operating
Slide 8: Pricing Actions Mitigate Lower Volumes
Pricing Actions Mitigate Lower Volumes Plumbing Products Third Quarter Quarter Highlights ($ in Millions) 2022 • Total segment sales were flat versus prior year Revenue $1,324 Y-O-Y Change 0% • Sales increased 5% excluding the impact of currency • In local currency, North American sales increased 4%
Slide 9: PRO Paint Delivers Strong Sales Growth
PRO Paint Delivers Strong Sales Growth Decorative Architectural Products Third Quarter Quarter Highlights ($ in Millions) 2022 • Total segment sales increased 1% Revenue $880 Y-O-Y Change 1% • Revenue of paints and other coating products increased low single digits Operating Profit $151 • PRO paint
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 9/30/2022 Cash and cash investments $464M Revolver availability $1,000M Total liquidity $1,464M Net leverage1 1.9x Working capital as a % of sales1 18.5% 1. See Appendix for reconciliation. 10 10
Slide 11: Full Year 2022 Outlook
Full Year 2022 Outlook 2022 Adjusted EPS $3.70 – $3.80 2022 Forecasted 2022 Forecasted Adjusted Business Segment Sales Growth Operating Profit Margin Organic: ~5-6% Plumbing Products FX: ~(4%) ~16.5% TOTAL: ~1-2% Decorative Organic: ~7-8% ~17.5% Architectural Products TOTAL: ~7-8% Organic: ~6-7% Tot
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 expense1 ~$120m Capital expenditures ~$225m (includes maintenance capex of ~$100m) Depreciation and amortization2 ~$140m Unfavorable foreign currency translation ~$215m impact
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: 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: EPS Reconciliation – Third Quarter
EPS Reconciliation – Third Quarter (in Millions, Except per Common Share Data) Q3 2022 Q3 2021 Income before income taxes, as reported $ 310 $ 342 Loss (earnings) from equity investments, net 6 (5) Fair value adjustment to contingent earnout obligation (1) - 14 Income before income taxes, as adjuste
Slide 21: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2022 Low End High End Net income per common share $ 3.73 $ 3.83 Rationalization charges 0.03 0.03 Fair value adjustment to contingent earnout obligation (1) (0.08) (0.08) (Gain) on sale of business (2) (0.01) (0.01) Loss from equity investments, net 0.02 0.02 Allocation to
Slide 22: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) September 30, 2022 Debt $ 3,351 Less: Cash and cash investments (464) Net Debt $ 2,887 ($ in Millions) TTM September 30, 2022 Operating profit, as reported $ 1,330 Rationalization charges 11 Impairment charge for goodwill 45 Operating profit, as adjusted $
Slide 23: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) September 30, 2022 Receivables $ 1,330 Inventories 1,339 Less: Accounts payable (1,048) Working Capital $ 1,621 Working capital as a % of sales (last 12 months) 18.5% 23