Masco Corporation · NYSE:MAS
Masco — Q1 2013 Earnings Presentation
24 slides from Masco's earnings presentation, Sep 11, 2013
Slide 1: First Quarter 2013 Masco Earnings Presentation
First Quarter 2013 Masco Earnings Presentation
Slide 2: Safe Harbor Statement
Safe Harbor Statement Written and oral statements made in this presentation that reflect our views about our future performance constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believe,”
Slide 3: Masco Q1 2013 Results – Agenda
Masco Q1 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 3
Slide 4: Key Messages Today
Key Messages Today Sales growth driven by increased North American new home construction activity Cabinet segment improves profitability to break-even Continued margin expansion Continued weakness in the Eurozone 4
Slide 5: Strategy Execution Highlights Q1 2013
Strategy Execution Highlights Q1 2013 • Continued success with new product and program 1 introductions at retail with Plumbing and Decorative Expand market Architectural Products leadership • Additional greenfield locations added in Installation and Other Services 2 • Continued commitment to cost co
Slide 6: Masco Q1 2013 Results – Agenda
Masco Q1 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 6
Slide 7: Best First Quarter Operating Margin Since 2007
Best First Quarter Operating Margin Since 2007 First Quarter ($ in Millions) 2013 Revenue $1,876 Growth 4% Adjusted Operating Profit* $140 Y-O-Y Change $22 Adjusted Operating Margin* 7.5% Y-O-Y Change 100 bps Adjusted EPS* $0.13 *See appendix for reconciliation to GAAP information. Quarterly Highlig
Slide 8: Commitment to Cost Control and Leverage on Increased Volume Favorably Impacting Margins
Commitment to Cost Control and Leverage on Increased Volume Favorably Impacting Margins Y-O-Y Change in Operating Profit $22M $5M $140M $11M $6M $118M Q1 2012 Net Price/Commodity Net Volume/Mix Profit Improvement Q1 2013 Operating Profit* & All Other Net Operating Profit* *See appendix for reconcili
Slide 9: Plumbing Products: Strong Performance in North America Partially offset by International
Plumbing Products: Strong Performance in North America Partially offset by International First Quarter ($ in Millions) 2013 Revenue $762 Growth 3% Adjusted Operating Profit* $87 Y-O-Y Change ($19) Adjusted Operating Margin* 11.4% Y-O-Y Change (290) bps *Excluding business rationalization charges of
Slide 10: Decorative Architectural Products: Weather Impacts Core Paint Sales Comparables
Decorative Architectural Products: Weather Impacts Core Paint Sales Comparables; Direct to Pro and Expansion into Mexico Continue to Grow First Quarter ($ in Millions) 2013 Revenue $432 Growth 0% Operating Profit $89 Y-O-Y Change $16 Operating Margin 20.6% Y-O-Y Change 380 bps Quarterly Highlights •
Slide 11: Cabinets and Related Products: Segment Breaks Even; Profitable in North America
Cabinets and Related Products: Segment Breaks Even; Profitable in North America First Quarter ($ in Millions) 2013 Revenue $236 Y-O-Y Change 4% Adjusted Operating Profit* $- Y-O-Y Change $14 Adjusted Operating Margin* 0% Y-O-Y Change 610 bps *Excluding business rationalization charges of $4 million
Slide 12: Installation and Other Services: Continued Positive Momentum on Top and Bottom Line
Installation and Other Services: Continued Positive Momentum on Top and Bottom Line First Quarter ($ in Millions) 2013 Revenue $312 Growth 12% Operating Loss ($4) Y-O-Y Change $10 Operating Margin (1.3%) Y-O-Y Change 370 bps Quarterly Highlights • Sales growth driven by higher volumes in residential
Slide 13: Other Specialty Products: Strong Performance Reflects Share Gains and Profit Improvement
Other Specialty Products: Strong Performance Reflects Share Gains and Profit Improvement First Quarter ($ in Millions) 2013 Revenue $134 Y-O-Y Change 8% Adjusted Operating Profit* $2 Y-O-Y Change $7 Adjusted Operating Margin* 1.5% Y-O-Y Change 550 bps *Excluding business rationalization charges of $
Slide 14: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Continued strong working capital execution • We successfully entered into a new five year $1.25 billion unsecured revolving credit facility $1.0 billion of cash as of 3/31/2013 14
Slide 15: Masco Q1 2013 Results – Agenda
Masco Q1 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 15
Slide 16: Delivering on 2013 Priorities - Q1 Highlights
Delivering on 2013 Priorities - Q1 Highlights Cabinet profit improvement Profitably grow Installation Successfully launch new products and programs Reduce debt by ~$200M Investment in strategic growth initiatives Grow share of key brands Total cost productivity Geographic expansion 16
Slide 17: 2013 Outlook
2013 Outlook Risks Opportunities • European economic • Improving demand in new uncertainty home construction • Mix shifts • Successful new product and program launches at retail • Commodity volatility • Share gains at retail and with big builders • Strong liquidity • Capitalize on operating leverage
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Appendix – Profit Reconciliation – First Quarter
Appendix – Profit Reconciliation – First Quarter ($ in Millions) Q1 2013 Q1 2012 Sales $ 1,876 $ 1,806 Gross Profit – As Reported $ 508 $ 484 Rationalization charges 6 10 Gross Profit – As Adjusted $ 514 $ 494 Gross Margin - As Reported 27.1% 26.8% Gross Margin - As Adjusted 27.4% 27.4% Operating Pr
Slide 21: Appendix – EPS Reconciliation – First Quarter
Appendix – EPS Reconciliation – First Quarter (in Millions) Q1 2013 Q1 2012 Income from Continuing Operations before Income Taxes – As Reported $ 79 $ 60 Rationalization charges 8 11 Charge (income) for litigation settlements, net - (2) Gain from financial investments, net (3) (16) Income from Conti
Slide 22: 2013 Guidance Estimates
2013 Guidance Estimates ($ in Millions) 2013 Estimate1 2012 Actual Rationalization Charges ~ $40 $78 Tax Rate ~ 25% 198% Interest Expense ~ $240 $254 General Corp. Expense2 ~ $130 $126 Capital Expenditures ~ $165 $119 Depreciation & Amortization3 ~ $200 $214 Shares Outstanding for EPS 352 million 34
Slide 23: Segment Mix Full Year 2012 Estimate
Segment Mix Full Year 2012 Estimate Business Segment Revenue 2012 % of Total R&R% vs. NC NA% vs. Int’l Plumbing Products $3.0B 40% 82% 59% Decorative Architectural $1.8B 24% 99% 100% Products Cabinets and Related Products $0.9B 12% 69% 92% Installation and Other Services $1.2B 16% 16% 100% Other Spe
Slide 24: 2012 Masco International Revenue Split
2012 Masco International Revenue Split* 6% 15% Other 11% 26% United Kingdom Northern Europe Southern Europe Central Europe Eastern Europe 3% Emerging Markets 34% 5% International Sales Accounted for ~20% of Total 2012 Masco Sales 24 *Based on company estimates