Slide 1: Fourth Quarter 2021 Earnings Presentation
Fourth Quarter 2021 Earnings Presentation February 8, 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: Q4 2021 Review
Q4 2021 Review Long-Term Shareholder Value Creation Delivered strong top line growth of 9% Contained costs as SG&A as a percentage of sales declined 140 basis points Achieved adjusted EPS of $0.67 per share Repurchased 2.3 million shares for $148 million 5
Slide 6: Full Year 2021 Review
Full Year 2021 Review Demonstrated Executional Excellence Drove top line growth of 17% Grew adjusted operating profit 11% Increased adjusted EPS by 19% to $3.70 per share Delivered adjusted free cash flow of ~$900 million with a conversion rate of ~90% Achieved a return on invested capital from cont
Slide 7: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 7
Slide 8: Finished Year With Strong Top Line Growth
Finished Year With Strong Top Line Growth Masco Corporation Fourth Quarter Full Year Quarter Highlights ($ in Millions) 2021 2021 • Total company sales increased 9% Revenue $2,022 $8,375 Y-O-Y Change 9% 17% • Net acquisitions/divestitures increased sales by 2% and FX impact was minimal Operating Pro
Slide 9: Delivered Solid Top Line Growth - Plumbing Products
Delivered Solid Top Line Growth Plumbing Products Fourth Quarter Full Year Quarter Highlights ($ in Millions) 2021 2021 • Total segment sales increased 5% Revenue $1,228 $5,135 Y-O-Y Change 5% 24% • Net acquisitions/divestitures increased sales by 3% and FX impact was minimal Operating Profit* $156
Slide 10: Exceptional Top and Bottom-Line Growth - Decorative Architectural
Exceptional Top and Bottom-Line Growth Decorative Architectural Products Fourth Quarter Full Year Quarter Highlights ($ in Millions) 2021 2021 • Total segment sales increased 15% Revenue $794 $3,240 Y-O-Y Change 15% 6% • Acquisitions increased sales by 1% • Revenue of paints and other coating produc
Slide 11: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 12/31/2021 Cash and cash investments $926M Revolver availability $1,000M Total liquidity $1,926M Net leverage1 1.3x Working capital as a % of sales1 16.0% Adjusted free cash flow1 $896M 1. See Appendix for reconciliation. 11 11
Slide 12: Full Year 2022 Outlook
Full Year 2022 Outlook 2022 Adjusted EPS $4.10 – $4.30 2022 Forecasted 2022 Forecasted Adjusted Business Segment Sales Growth Operating Profit Margin Organic: ~3-7% Plumbing Products FX: ~(2%) ~19.0% TOTAL: ~1-5% Decorative Organic: ~6-10% ~18.0% Architectural Products TOTAL: ~6-10% Organic: ~4-8% T
Slide 13: Q&A
3 Q&A Keith Allman John Sznewajs 13
Slide 14: Appendix
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Slide 15: 2022 Estimates
2022 Estimates Item Assumption Rationalization charges $7m Tax rate 25% General corporate expense ~$100m Interest and other expense ~$105m Capital expenditures ~$250m (includes maintenance capex of ~$100m) Depreciation and amortization1 ~$150m Unfavorable foreign currency translation ~$90m impact to
Slide 16: 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 • Gross debt to EBITDA below 2.5x 3 Maintain relevant dividend • • Board declared firs
Slide 17: 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 18: 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 19: 2021 Segment Mix
2021 Segment Mix* Business 2021 Revenue R&R% vs. NC NA% v. Int’l Total Geographic Revenue Split Segment Plumbing $5.1B 83% 66% Products Europe Decorative 12% Architectural $3.3B 97% 100% North Products America Other 79% 3% Total Company $8.4B 88% 79% China United 4% Kingdom R&R = % of sales to repai
Slide 20: 2021 Channel Mix
2021 Channel Mix* 2021 Channel Mix as a Percentage of Sales Plumbing Decorative Architectural Total Channel Products Products Masco Retail 20% 84% 45% Wholesale/trade 55% 11% 38% E-commerce 16% 5% 12% Specialty dealers/other 9% 0% 5% *Based on Company estimates 20
Slide 21: Profit Reconciliations – Fourth Quarter
Profit Reconciliations – Fourth Quarter ($ in Millions) Q4 2021 Q4 2020 Net sales $ 2,022 $ 1,860 Gross profit, as reported $ 619 $ 660 Rationalization charges 2 2 Gross profit, as adjusted $ 621 $ 662 Gross margin, as reported 30.6% 35.5% Gross margin, as adjusted 30.7% 35.6% Selling, general and a
Slide 22: Profit Reconciliations – Full Year
Profit Reconciliations – Full Year ($ in Millions) 2021 2020 Net sales $ 8,375 $ 7,188 Gross profit, as reported $ 2,863 $ 2,587 Rationalization charges 4 9 Gross profit, as adjusted $ 2,867 $ 2,596 Gross margin, as reported 34.2% 36.0% Gross margin, as adjusted 34.2% 36.1% Selling, general and admi
Slide 23: EPS Reconciliation – Fourth Quarter
EPS Reconciliation – Fourth Quarter (in Millions, Except per Common Share Data) Q4 2021 Q4 2020 Income from continuing operations before income taxes, as reported $ 192 $ 275 Rationalization charges 2 2 Impairment charge for goodwill 45 - Pension (reversion) charges associated with terminated plans
Slide 24: EPS Reconciliation – Full Year
EPS Reconciliation – Full Year (in Millions, Except per Common Share Data) 2021 2020 Income from continuing operations before income taxes, as reported $ 688 $ 1,131 Rationalization charges 4 11 Impairment charge for goodwill 45 - Pension (reversion) charges associated with terminated plans 415 23 F
Slide 25: Return on Invested Capital and Free Cash Flow Reconciliation
Return on Invested Capital and Free Cash Flow Reconciliation Return on Invested Capital Reconciliation ($ in Millions) December 31, 2021 Income from continuing operations, as adjusted $ 929 Average invested capital Average shareholders' equity $ 239 Average debt 2,877 Less: Average cash and cash inv
Slide 26: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2022 Low End High End Income from continuing operations per common share $ 4.06 $ 4.26 Rationalization charges 0.02 0.02 Allocation to participating securities per share (1) 0.02 0.02 Income from continuing operations per common share, as adjusted $ 4.10 $ 4.30 (1) Represe
Slide 27: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) December 31, 2021 Debt $ 2,959 Less: Cash and cash investments (926) Net Debt $ 2,033 Year Ended December 31, 2021 ($ in Millions) Operating profit, as reported $ 1,405 Rationalization charges 4 Impairment charge for goodwill 45 Operating profit, as adjust
Slide 28: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) December 31, 2021 Receivables $ 1,171 Inventories 1,216 Less: Accounts payable (1,045) Working Capital $ 1,342 Working capital as a % of sales (last 12 months) 16.0% 28