Masco Corporation · NYSE:MAS
Masco — Q1 2014 Earnings Presentation
23 slides from Masco's earnings presentation, Apr 25, 2014
Slide 1: First Quarter 2014 Earnings Presentation
MASCO CORPORATION First Quarter 2014 Earnings Presentation April 25, 2014
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 2014 Results
Masco Q1 2014 Results Topic • Summary of Results Keith Allman • Financial/Operations Review John Sznewajs • Outlook Keith Allman • Q&A 3
Slide 4: Key Messages Today
Key Messages Today North American sales driven by new products and programs, coupled with new home construction and repair and remodel activity International sales strengthened by new products and strong execution in an improving environment Focus on execution dampened impact of weather in much of N
Slide 5: 2014 Priorities
2014 Priorities Grow share of market-leading brands Accelerate customer-focused innovation pipeline Focus on execution to drive profitable growth in cabinets and installation Further penetrate international markets Drive operational leverage through focus on cost containment Strengthen the balance s
Slide 6: Masco Q1 2014 Results
Masco Q1 2014 Results Topic • Summary of Results Keith Allman • Financial/Operations Review John Sznewajs • Outlook Keith Allman • Q&A 6
Slide 7: Ten Consecutive Quarters of Sales and Profit Growth
Ten Consecutive Quarters of Sales and Profit Growth First Quarter ($ in Millions) 2014 Revenue $1,965 Change 5% Adjusted Operating Profit* $157 Y-O-Y Change 12% Adjusted Operating Margin* 8.0% Y-O-Y Change 50 bps Adjusted EPS* $0.15 *See Appendix for GAAP reconciliation. Quarter Highlights • 10th co
Slide 8: Continued Improvement in Operating Margins
Continued Improvement in Operating Margins Y-O-Y Change in Operating Profit $17M *See appendix for GAAP reconciliation. 8
Slide 9: Plumbing Products: International Drives Sales and Profit Growth
PLUMBING PRODUCTS International Drives Sales and Profit Growth First Quarter ($ in Millions) 2014 Revenue $800 Change 5% Adjusted Operating Profit* $121 Y-O-Y Change 39% Adjusted Operating Margin* 15.1% Y-O-Y Change 370 bps *Excluding business rationalization charges of $2 million and $1 million in
Slide 10: Decorative Architectural Products: Pro Sales Continue to Expand
D E C O R AT I V E A R C H I T E C T U R A L P R O D U C T S Pro Sales Continue to Expand First Quarter ($ in Millions) 2014 Revenue $441 Change 2% Operating Profit $76 Y-O-Y Change (15%) Operating Margin 17.2% Y-O-Y Change (340) bps Quarter Highlights • New products and Pro initiative continue to d
Slide 11: Cabinets and Related Products: Business Stabilization Work Continues
C A B I N E T S A N D R E LAT E D P R O D U C T S Business Stabilization Work Continues First Quarter ($ in Millions) 2014 Revenue $237 Change --% Adjusted Operating Loss* $(9) Y-O-Y Change N/M Adjusted Operating Margin* (3.8%) Y-O-Y Change (380) bps *Excluding business rationalization charges of $3
Slide 12: Installation and Other Services: Strong Growth Despite Weather
I N S TA L LAT I O N A N D OT H E R S E R V I C E S Strong Growth Despite Difficult Weather Conditions First Quarter ($ in Millions) 2014 Revenue $335 Change 7% Operating Loss $(4) Y-O-Y Change --% Operating Margin (1.2%) Y-O-Y Change 10 bps Quarter Highlights • Sales growth driven by improvement in
Slide 13: Other Specialty Products: Share Expansion Drives Strong Growth
O T H E R S P E C I A LT Y P R O D U C T S Share Expansion Drives Strong Growth First Quarter ($ in Millions) 2014 Revenue $152 Change 13% Adjusted Operating Profit* $5 Y-O-Y Change 150% Adjusted Operating Margin* 3.3% Y-O-Y Change 180 bps *Excluding business rationalization charge of $3 million in
Slide 14: Strong Balance Sheet
Strong Balance Sheet Q1 2014 Accomplishments • Working capital as a percent of sales improved to 13.3% in Q1 2014, compared to 14.2% in Q1 2013 Balance Sheet Liquidity as of 3/31/2014 Cash and cash investments $0.9B Short-term bank deposits $0.3B Total $1.2B 14
Slide 15: Masco Q1 2014 Results
Masco Q1 2014 Results Topic • Summary of Results Keith Allman • Financial/Operations Review John Sznewajs • Outlook Keith Allman • Q&A 15
Slide 16: Outlook
Outlook RISKS OPPORTUNITIES • Velocity of global economic • Share gains in all channels recovery • Continued international • Consumer confidence market penetration • Commodity volatility • New product adjacencies • Housing affordability/ • Operating leverage financing costs/mortgage • Improving repa
Slide 17: Masco
MASCO
Slide 18: Appendix
_— Appendix MASCO —
Slide 19: Appendix – Profit Reconciliation – First Quarter
Appendix – Profit Reconciliation – First Quarter ($ in M illions) Q1 2014 Q1 2013 Sales $ 1,965 $ 1,876 Gross Profit – As Reported $ 547 $ 508 Rationalization Charges 4 6 Gross Profit – As Adjusted $ 551 $ 514 Gross Margin - As Reported 27.8% 27.1% Gross Margin - As Adjusted 28.0% 27.4% Operating Pr
Slide 20: Appendix – EPS Reconciliation – First Quarter
Appendix – EPS Reconciliation – First Quarter (in M illions, Ex cept per Com m on Share Data) Q1 2014 Q1 2013 Income from Continuing Operations before Income Taxes – As Reported $ 93 $ 85 Rationalization charges 5 8 Gains from financial investments, net - (3) Equity investments loss (earnings),net 2
Slide 21: 2014 Guidance Estimates
2014 Guidance Estimates ($ in Millions) 2014 Estimate 2013 Actual Rationalization Charges1, 3 ~ $10 $48 Tax Rate ~ 17% 26% Interest Expense ~ $225 $235 General Corp. Expense2 ~ $130 $134 Capital Expenditures ~ $200 $126 Depreciation & ~ $175 $186 Amortization3 Shares Outstanding 352 million 352 mill
Slide 22: 2013 Segment Mix
2013 Segment Mix* Business Segment Revenue 2013 % of Total R&R% vs. NC NA% vs. Int’l Plumbing Products $3.2B 39% 82% 59% Decorative Architectural $1.9B 23% 99% 100% Products Installation and Other Services $1.4B 17% 18% 100% Cabinets and Related Products $1.0B 12% 57% 93% Other Specialty Products $0
Slide 23: 2013 International Revenue Split
2013 International Revenue Split* 10% 23% 14% UK Northern Europe Southern Europe Central Europe 7% Eastern Europe 9% Emerging markets Other 6% 31% International Sales Accounted for ~20% of Total 2013 Masco Sales *Based on Company estimates. 23