Slide 1: First Quarter 2021 Earnings Presentation
First Quarter 2021 Earnings Presentation April 28, 2021
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: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation Driving Shareholder Value Q1 2021 IN REVIEW Delivered strong top and bottom-line growth in both segments Increased adjusted operating profit 61% and expanded margin 420 basis points Achieved adjusted EPS growth of 89% Repurchased 5.5 million shares for $303 milli
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Strong Start to the Year
Strong Start to the Year Masco Corporation First Quarter Quarter Highlights ($ in Millions) 2021 • Total company sales increased 25% Revenue $1,970 Y-O-Y Change 25% • FX increased sales by 2% and acquisitions by 4% • In local currency, North American sales increased Operating Profit* $366 21%, or 17
Slide 8: Exceptional Growth and Margin Expansion
Exceptional Growth and Margin Expansion Plumbing Products First Quarter Quarter Highlights ($ in Millions) 2021 • Total segment sales increased 31% Revenue $1,249 Y-O-Y Change 31% • FX increased sales by 4% and acquisitions by 5% • In local currency, North American sales increased Operating Profit*
Slide 9: Double Digit Sales Growth Across Segment
Double Digit Sales Growth Across Segment Decorative Architectural Products First Quarter Quarter Highlights ($ in Millions) 2021 • Total segment sales increased 15% Revenue $721 Y-O-Y Change 15% • Acquisitions increased sales by 2% • Revenue of paints and other coating products Operating Profit* $14
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Highlights Balance Sheet Metrics as of 3/31/2021 • Repurchased ~5.5 million shares for ~$303 million Cash and cash investments $838M • Called our 2022, 2025, and 2026 debt maturities Revolver availability $1,000M and refinanced with a combination of new 7, 10,
Slide 11: Q&A
3 Q&A Keith Allman John Sznewajs 11
Slide 12: Appendix
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Slide 13: Full Year 2021 Outlook
Full Year 2021 Outlook 2021 Forecasted 2021 Forecasted Business Segment Adjusted Operating Sales Growth Profit Margin Organic: ~10-13% Acquisitions : ~3% 1 Plumbing Products FX: ~2% ~18.0% TOTAL: ~15-18% Organic: ~3-7% Decorative Acquisitions: ~1.5% ~19.0% Architectural Products TOTAL: ~4-9% Organic
Slide 14: 2021 Estimates
2021 Estimates Item Assumption Rationalization charges ~$5m Tax rate 25% General corporate expense ~$95m Interest and other expense1 ~$115m Capital expenditures ~$150m (includes maintenance capex of ~$75m) Depreciation and amortization2 ~$150m Favorable foreign currency translation ~$75m impact to s
Slide 15: Balanced Approach to Continue to Drive Shareholder Value
Balanced Approach to Continue to Drive Shareholder Value Capital Allocation Strategy 1 Reinvest in the Business • • Capex: 2-2.25% of sales Working capital: ~16.0% of sales 2 Maintain investment grade credit rating • Gross debt to EBITDA below 2.5x 3 Maintain relevant dividend • • Board intends to i
Slide 16: Growth Above Market
Growth Above Market Long-Term Outlook Organic: ~3-5% Average annual sales growth: Acquisitions: ~1-3% Low ticket, repair and remodel products provide growth and stability through an economic cycle Expand margins through cost Operating margin: productivity and volume leverage Market leading brands, h
Slide 17: Updated Expected Dividend Schedule
Updated Expected Dividend Schedule Declaration Date Record Date Payable Date The table reflects our expected dividend Week of May 10, 2021 Week of May 24, 2021 Week of June 14, 2021 schedule for the next four quarters. Dividend payments are subject to declaration by our Board of Directors, Week of J
Slide 18: 2020 Segment Mix
2020 Segment Mix* Business 2020 Revenue R&R% vs. NC NA% v. Int’l Total Geographic Revenue Split Segment Plumbing $4.1B 83% 67% Products Decorative Europe Architectural $3.1B 96% 100% North 12% Products America 81% Other 2% Total Company $7.2B 89% 81% China United 3% Kingdom R&R = % of sales to repai
Slide 19: 2020 Channel Mix
2020 Channel Mix* 2020 Channel Mix as a Percentage of Sales Decorative Architectural Total Channel Plumbing Products Products Masco Retail 24% 85% 50% Wholesale/trade 56% 11% 36% E-commerce 12% 4% 9% Specialty dealers/other 8% 0% 5% *Based on Company estimates 19
Slide 20: Profit Reconciliations – First Quarter
Profit Reconciliations – First Quarter ($ in Millions) Q1 2021 Q1 2020 Net sales $ 1,970 $ 1,581 Gross profit, as reported $ 700 $ 547 Rationalization charges 1 3 Gross profit, as adjusted $ 701 $ 550 Gross margin, as reported 35.5% 34.6% Gross margin, as adjusted 35.6% 34.8% Selling, general and ad
Slide 21: EPS Reconciliation – First Quarter
EPS Reconciliation – First Quarter (in Millions, Except per Common Share Data) Q1 2021 Q1 2020 Income from continuing operations before income taxes, as reported $ 157 $ 174 Rationalization charges 1 3 Pension costs associated with expected terminated plans 9 6 (Earnings) from equity investments, ne
Slide 22: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2021 Low End High End Income from continuing operations per common share $ 1.52 $ 1.72 Rationalization charges 0.01 0.01 Pension costs associated with expected terminated plans (1) 1.42 1.42 Loss on extinguishment of debt 0.52 0.52 Allocation to participating securities pe
Slide 23: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) March 31, 2021 Debt $ 2,961 Less: Cash and cash investments (838) Net Debt $ 2,123 ($ in Millions) TTM March 31, 2021 Operating profit, as reported $ 1,435 Rationalization charges 9 Operating profit, as adjusted $ 1,444 Depreciation and amortization 142 EB
Slide 24: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) March 31, 2021 Receivables $ 1,305 Inventories 948 Less: Accounts payable (925) Working Capital $ 1,328 Working capital as a % of sales (last 12 months) 17.5% 24