Masco Corporation · NYSE:MAS
Masco — Q1 2020 Earnings Presentation
22 slides from Masco's earnings presentation, Apr 29, 2020
Slide 1: First Quarter 2020 Earnings Presentation
MASCO CORPORATION First Quarter 2020 Earnings Presentation April 29, 2020
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 COVID-19 Impact Summary of Results Keith Allman Outlook Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 3
Slide 4: Taking Action to Mitigate Impacts
COVID-19 RESPONSE Taking Action to Mitigate Impacts • Health and safety of employees • Formed cross-functional COVID-19 task force • Following best practices from WHO and CDC • Implemented alternative work arrangements and modified work areas • Community outreach • Purchasing and donating protective
Slide 5: Long-Term Shareholder Value Creation
Q1 2020 IN REVIEW Long-Term Shareholder Value Creation • Delivered strong top and bottom-line growth in both Plumbing Products and Decorative Architectural segments • Expanded adjusted operating profit margin by 80 bps Driving Shareholder • Achieved adjusted EPS growth of 24% Value • Completed sale
Slide 6: Managing the Business for the Long-Term
MASCO OUTLOOK Managing the Business for the Long-Term • Maintaining strong liquidity • Cutting discretionary spending • Implementing hiring and wage freeze • Delaying discretionary capital expenditures • Suspending our share buyback activity indefinitely • Positioning to win in the recovery • Focusi
Slide 7: Agenda
Agenda COVID-19 Impact Summary of Results Keith Allman Outlook Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 7
Slide 8: Delivered Strong Sales, Profit and EPS Growth
MASCO CORPORATION Delivered Strong Sales, Profit and EPS Growth First Quarter ($ in Millions) 2020 Revenue $1,581 Y-O-Y Change 4% Operating Profit* $228 Y-O-Y Change $22 Operating Margin* 14.4% Y-O-Y Change 80 bps Adjusted EPS* $0.46 Y-O-Y Change 24% *See Appendix for GAAP reconciliation. Quarter Hi
Slide 9: Record Sales Quarter at Delta Faucet Drove Growth
PLUMBING PRODUCTS Record Sales Quarter at Delta Faucet Drove Growth First Quarter ($ in Millions) 2020 Revenue $955 Y-O-Y Change 2% Operating Profit* $159 Y-O-Y Change $6 Operating Margin* 16.6% Y-O-Y Change 30 bps *Excludes business rationalization charges for the first quarter 2020 of $2 million.
Slide 10: Strong Results Driven by DIY Paint
DECORATIVE ARCHITECTURAL PRODUCTS Strong Results Driven by DIY Paint First Quarter ($ in Millions) 2020 Revenue $626 Y-O-Y Change 9% Operating Profit* $96 Y-O-Y Change $14 Operating Margin* 15.3% Y-O-Y Change 100 bps * Excludes business rationalization charges for the first quarter 2020 of $1 millio
Slide 11: Strong Balance Sheet
Strong Balance Sheet Balance Sheet Metrics as of 3/31/2020 Cash and cash investments $767M Revolver availability $1,000M Total liquidity $1,767M Covenants on credit agreement: Net Debt/TTM Adjusted EBITDA < 4.0 1.6x TTM Adjusted EBITDA / TTM Interest > 2.5x 8.5x Net leverage 1.6x Working capital as
Slide 12: Agenda
Agenda COVID-19 Impact Summary of Results Keith Allman Outlook Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 12
Slide 13: Masco
MASCO
Slide 14: Appendix
RAGES LITT TI TT) “Taha ee x Appendix MASCO
Slide 15: Profit Reconciliations – First Quarter
Profit Reconciliations – First Quarter ($ in Millions) Q1 2020 Q1 2019 Net sales $1,581 $1,513 Gross profit, as reported $547 $522 Rationalization charges 3 — Gross profit, as adjusted $550 $522 Gross margin, as reported 34.6% 34.5% Gross margin, as adjusted 34.8% 34.5% Selling, general and administ
Slide 16: EPS Reconciliation – First Quarter
EPS Reconciliation – First Quarter (in Millions, Except per Common Share Data) Q1 2020 Q1 2019 Income from continuing operations before income taxes, as reported $174 $153 Rationalization charges 3 — Impairment charge for other intangible assets — 9 Pension costs associated with expected terminated
Slide 17: Working Capital as a % of Sales
Working Capital as a % of Sales (in Millions) As of March 31, 2020 Receivables $1,142 Inventories 756 Less: Accounts payable (743) Working Capital $1,155 Working capital as a % of sales (last 12 months) 17.0% 17
Slide 18: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) March 31, 2020 Debt $2,776 Less: Cash and cash investments (767) Net Debt $2,009 ($ in Millions) TTM as of 3/31/2020 Operating profit, as reported $1,116 Rationalization charges 16 Operating profit, as adjusted $1,132 Depreciation and amortization 132 EBIT
Slide 19: Credit Agreement Covenant: Net Debt Leverage
Credit Agreement Covenant: Net Debt Leverage ($ in Millions) March 31, 2020 Debt $ 2,776 Net Cash Total cash and cash investments $ 767 Less: $25 million (per Credit Agreement) (25) Net cash $ 742 Net Debt: $ 2,034 EBITDA per Credit Agreement Calculation $ 1,279 Net Debt / TTM Adjusted EBITDA 1.6X 1
Slide 20: Credit Agreement Covenant: Interest Coverage
Credit Agreement Covenant: Interest Coverage Total - TTM ($ in Millions) March 31, 2020 Adjusted EBITDA Per Credit Agreement: Income from continuing operations $ 707 Add back: Interest expense $ 155 Income tax expense 228 Depreciation and amortization 132 Cash rationalization charges 14 Non-cash exp
Slide 21: 2019 Segment Mix
2019 Segment Mix* Total Geographic Business 2019 Revenue Split Segment Revenue R&R% vs. NC NA% vs. Int’l Plumbing Products $4.0B 84% 65% North America 79% Decorative $2.7B 100% 96% Architectural Products Europe 12% Total Company $ 6.7B 89% 79% China Other United Kingdom 3% 3% 3% R&R = % of sales to
Slide 22: 2020 Estimates
2020 Estimates Item Assumption Rationalization charges ~$10m Tax rate 26% General corporate expense ~$85m Interest expense ~$140m Capital expenditures ~$120m (includes maintenance capex of ~$75m) Depreciation and amortization ~$135m Unfavorable foreign currency translation impact to sales1 ~$30m Sha