Slide 1: Third Quarter 2023 Earnings Presentation
Third Quarter 2023 Earnings Presentation October 26, 2023
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 David Chaika 3 Q&A Keith Allman David Chaika 3
Slide 4: Summary of Results
1 Summary of Results Keith Allman 4
Slide 5: Q3 2023 Review
Q3 2023 Review Top line decreased 10% with lower volumes partially offset by pricing actions Grew adjusted gross margin 430 bps to 35.8% Expanded adjusted operating profit margin 170 bps to 17.6% Achieved adjusted EPS growth of 1% to $1.00 per share Repurchased 0.8 million shares for $45 million Com
Slide 6: Financial / Operations Review
2 Financial / Operations Review David Chaika 6
Slide 7: Masco Corporation Third Quarter Highlights
Masco Corporation Third Quarter Quarter Highlights ($ in Millions) 2023 • Total company sales decreased 10%, or 11% Revenue $1,979 excluding the impact of currency Y-O-Y Change (10%) • In local currency, North American sales Operating Profit* $348 decreased 11% Y-O-Y Change ($3) • In local currency,
Slide 8: Plumbing Products Segment
Plumbing Products Segment Third Quarter Quarter Highlights ($ in Millions) 2023 • Total segment sales decreased 10%, or 11% Revenue $1,191 excluding the impact of currency Y-O-Y Change (10%) • In local currency, North American sales Operating Profit* $225 decreased 11% Y-O-Y Change $5 • In local cur
Slide 9: Decorative Architectural Products Segment
Decorative Architectural Products Segment Third Quarter Quarter Highlights ($ in Millions) 2023 • Total segment sales decreased 10%, or 11% Revenue $788 excluding the impact of currency Y-O-Y Change (10%) • Revenue of paints and other coating products Operating Profit* $144 decreased high single dig
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Balance Sheet Metrics as of 9/30/2023 Cash and cash investments $560M Revolver availability $1,000M Total liquidity $1,560M Net leverage1 1.7x Working capital as a % of sales1 18.1% 1. See Appendix for reconciliation. 10
Slide 11: Full Year 2023 Outlook
Full Year 2023 Outlook 2023 Adjusted EPS $3.65 – $3.75 2023 Forecasted 2023 Forecasted Adjusted Business Segment Sales Change Operating Profit Margin Plumbing Products (9-10%) ~17.5% Decorative Architectural Products (8-10%) ~17.5% Total Masco (~10%) ~16.5% 11 11
Slide 12: Q&A
3 Q&A Keith Allman David Chaika 12 12
Slide 13: Appendix
x O C O OQ. QO a MASCO
Slide 14: 2023 Estimates
2023 Estimates Item Assumption Rationalization charges ~$5m Tax rate 24% General corporate expense ~$90m Interest and other expense ~$115m Capital expenditures ~$250m (includes maintenance capex of ~$75m) Depreciation and amortization1 ~$150m Unfavorable foreign currency translation ~$10m impact to
Slide 15: Capital Allocation Strategy
Capital Allocation Strategy Balanced Approach to Continue to Drive Shareholder Value • 1 Capex: 2-2.5% of sales Reinvest in the Business • Working capital: ~16.5% of sales 2 Maintain investment grade credit rating • Target gross debt to EBITDA below 2.5x 3 Maintain relevant dividend • • Current annu
Slide 16: Long-Term Outlook
Low ticket, repair and remodel products provide growth and stability through LONG-TERM OUTLOOK an economic cycle Average annual sales growth • Organic: ~3-5% • Acquisition: ~1-3% Market-leading brands, Operating margin history of innovation, • Expand margins through cost productivity customer focus
Slide 17: 2022 Segment Mix
2022 Segment Mix* Business Total Geographic 2022 Revenue R&R% vs. NC NA% v. Int’l Segment Revenue Split Plumbing Products $5.3B 83% 68% 12% Decorative 80% Architectural $3.4B 97% 100% 2% Products 4% 2% Total Company $8.7B 89% 80% North America Europe R&R = % of sales to repair NA = % of sales within
Slide 18: 2022 Channel Mix
2022 Channel Mix* 2022 Channel Mix as a Percentage of Sales Plumbing Decorative Architectural Total Channel Products Products Masco Retail 21% 85% 47% Wholesale/trade/dealer 51% 11% 34% E-commerce 16% 4% 11% Specialty Dealer/Other 12% 0% 8% *Based on Company estimates 18
Slide 19: Profit Reconciliations – Third Quarter
Profit Reconciliations – Third Quarter ($ in Millions) Q3 2023 Q3 2022 Net sales $ 1,979 $ 2,204 Gross profit, as reported $ 744 $ 695 Rationalization charges 5 - Insurance settlement (1) (40) - Gross profit, as adjusted $ 709 $ 695 Gross margin, as reported 37.6% 31.5% Gross margin, as adjusted 35.
Slide 20: EPS Reconciliation – Third Quarter
EPS Reconciliation – Third Quarter (in Millions, Except per Common Share Data) Q3 2023 Q3 2022 Income before income taxes, as reported $ 346 $ 310 Rationalization charges 5 - Loss from equity investments, net 1 6 Insurance settlement (1) (40) - Income before income taxes, as adjusted $ 312 $ 316 Tax
Slide 21: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2023 Low End High End Net income per common share $ 3.76 $ 3.86 Rationalization charges 0.02 0.02 Insurance settlement (1) (0.13) (0.13) Net income per common share, as adjusted $ 3.65 $ 3.75 (1) Represents income from the receipt of an insurance settlement payment. 21
Slide 22: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) September 30, 2023 Debt $ 3,012 Less: Cash and cash investments (560) Net Debt $ 2,452 ($ in Millions) TTM September 30, 2023 Operating profit, as reported $ 1,286 Rationalization charges 26 Impairment charges for goodwill and other intangible assets 26 In
Slide 23: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) September 30, 2023 Receivables $ 1,245 Inventories 1,046 Less: Accounts payable (844) Working Capital $ 1,447 Working capital as a % of sales (last 12 months) 18.1% 23