Slide 1: Second Quarter 2022 Earnings Presentation
Second Quarter 2022 Earnings Presentation July 28, 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: Q2 2022 Review
Q2 2022 Review Long-Term Shareholder Value Creation Delivered strong top line growth of 8%, or 11% excluding currency Contained costs, with SG&A as a percentage of sales declining 90 basis points to 15.3% Achieved adjusted EPS of $1.14 per share Repurchased 10.4 million shares for $550 million, prim
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Achieved Strong Top Line Growth
Achieved Strong Top Line Growth Masco Corporation Second Quarter Quarter Highlights ($ in Millions) 2022 • Total company sales increased 8% Revenue $2,352 Y-O-Y Change 8% • Sales increased 11%, excluding the net impacts of acquisitions, divestitures and currency Operating Profit* $414 • In local cur
Slide 8: Delivered Sales Growth Against 53% Comp
Delivered Sales Growth Against 53% Comp Plumbing Products Second Quarter Quarter Highlights ($ in Millions) 2022 • Total segment sales increased 3% Revenue $1,373 Y-O-Y Change 3% • Sales increased 8% excluding the net impacts of currency, acquisitions and divestitures Operating Profit* $238 • In loc
Slide 9: Double Digit Sales Growth
Double Digit Sales Growth Decorative Architectural Products Second Quarter Quarter Highlights ($ in Millions) 2022 • Total segment sales increased 15% Revenue $979 Y-O-Y Change 15% • Revenue of paints and other coating products increased over 20% Operating Profit* $198 • DIY paint sales grew low tee
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 6/30/2022 Cash and cash investments $440M Revolver availability $1,000M Total liquidity $1,440M Net leverage1 1.9x Working capital as a % of sales1 18.9% 1. See Appendix for reconciliation. 10 10
Slide 11: Full Year 2022 Outlook
Full Year 2022 Outlook 2022 Adjusted EPS $4.15 – $4.25 2022 Forecasted 2022 Forecasted Adjusted Business Segment Sales Growth Operating Profit Margin Organic: ~6-8% Plumbing Products FX: ~(3%) ~18.0% TOTAL: ~3-5% Decorative Organic: ~9-11% ~18.0% Architectural Products TOTAL: ~9-11% Organic: ~7-9% T
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 ~$115m Capital expenditures ~$250m (includes maintenance capex of ~$100m) Depreciation and amortization2 ~$145m Unfavorable foreign currency translation ~$175m 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 $8.4B 88% 79% Other China United Kingdom R&R = % of sales to re
Slide 19: 2021 Channel Mix
2021 Channel Mix* 2021 Channel Mix as a Percentage of Sales Plumbing Decorative Architectural Total Channel Products Products Masco Retail 20% 84% 45% Wholesale/trade 55% 11% 38% E-commerce 16% 5% 12% Specialty dealers/other 9% 0% 5% *Based on Company estimates 19
Slide 20: Profit Reconciliations – Second Quarter
Profit Reconciliations – Second Quarter ($ in Millions) Q2 2022 Q2 2021 Net sales $ 2,352 $ 2,179 Gross profit, as reported $ 769 $ 791 Rationalization charges 6 1 Gross profit, as adjusted $ 775 $ 792 Gross margin, as reported 32.7% 36.3% Gross margin, as adjusted 33.0% 36.3% Selling, general and a
Slide 21: EPS Reconciliation – Second Quarter
EPS Reconciliation – Second Quarter (in Millions, Except per Common Share Data) Q2 2022 Q2 2021 Income (loss) before income taxes, as reported $ 397 $ (3) Rationalization charges 6 1 Pension costs associated with terminated plans - 413 Fair value adjustment to contingent earnout obligation (1) (28)
Slide 22: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2022 Low End High End Net income per common share $ 4.19 $ 4.29 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) Allocation to participating securities per share (3) 0.02
Slide 23: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) June 30, 2022 Debt $ 3,454 Less: Cash and cash investments (440) Net Debt $ 3,014 ($ in Millions) TTM June 30, 2022 Operating profit, as reported $ 1,364 Rationalization charges 11 Impairment charge for goodwill 45 Operating profit, as adjusted $ 1,420 Dep
Slide 24: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) June 30, 2022 Receivables $ 1,434 Inventories 1,354 Less: Accounts payable (1,128) Working Capital $ 1,660 Working capital as a % of sales (last 12 months) 18.9% 24