Masco Corporation · NYSE:MAS
Masco — Q4 2012 Earnings Presentation
27 slides from Masco's earnings presentation, February 2013
Slide 1: Fourth Quarter and Full Year 2012 Masco Earnings Presentation
Fourth Quarter and Full Year 2012 Masco Earnings Presentation
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 Q4 & Full Year 2012 Results – Agenda
Masco Q4 & Full Year 2012 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 3
Slide 4: Key Messages Today
Key Messages Today Improved Q4 results provide momentum going into 2013 Sales growth driven by increased North American new home construction activity and successful product & program introductions Margin improvement reflects operating leverage, execution on pricing and total cost productivity Stron
Slide 5: Delivered on 2012 Priorities
Delivered on 2012 Priorities Cabinet profit improvement Installation profit improvement Successfully launched new products and programs Reduced debt by ~$400M/refinanced $400M Invested in strategic growth initiatives Grew share of key brands Total cost productivity Geographic expansion 5
Slide 6: Strategy Execution Highlights Full Year 2012
Strategy Execution Highlights Full Year 2012 • New product and program introductions at retail with 1 Plumbing and Decorative Architecture Expand market • Strong residential new construction, retrofit and commercial leadership channel growth in Installation Services • Window share gains in the Weste
Slide 7: North America Cabinetry's Strategic Initiatives
North America Cabinetry’s Strategic Initiatives 1 • Dealers • Builders Customer Focus • Retail • Consumers 2 • Channel strategies Profitable • Promotions Revenue Growth • Products 3 • Rationalize operational footprint Cost Realignment • Increase overhead efficiency 7
Slide 8: Masco Q4 and Full Year 2012 Results – Agenda
Masco Q4 and Full Year 2012 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 8
Slide 9: Positive Contribution from All Segments in Q4
Positive Contribution from All Segments in Q4 Fourth Quarter Full Year ($ in Millions) 2012 2012 Revenue $1,890 $7,745 Growth 9% 4% Adjusted Operating $94 $472 Profit* $67 $143 Y-O-Y Change Adjusted Operating 5.0% 6.1% Margin* 340 bps 170 bps Y-O-Y Change Adjusted EPS* $0.04 $0.32 *See appendix for
Slide 10: Fourth Quarter 2012 Operating Profit Reflects Successful Price/Commodity Management and Increased Volume
Fourth Quarter 2012 Operating Profit Reflects Successful Price/Commodity Management and Increased Volume $32M $(2M) $94M $37M $27M Y-O-Y Change in Operating Profit $67M Q4 2011 Net Net Volume/Mix Profit Q4 2012 Operating Profit* Price/Commodity Improvement & Operating Profit* All Other Net *See appe
Slide 11: Plumbing Products: Strong Performance in both North America and International
Plumbing Products: Strong Performance in both North America and International Fourth Quarter Full Year ($ in Millions) 2012 2012 Revenue* $739 $2,955 Growth 10% 1% Adjusted Operating $72 $332 Profit** $16 ($6) Y-O-Y Change Adjusted Operating 9.7% 11.2% Margin** 140 bps (40) bps Y-O-Y Change *Excludi
Slide 12: Decorative Architectural Products: Core Products and New Programs Drive Sales Growth
Decorative Architectural Products: Core Products and New Programs Drive Sales Growth Fourth Quarter Full Year ($ in Millions) 2012 2012 Revenue $386 $1,818 Growth 11% 9% Adjusted Operating $65 $329 Profit* $30 $46 Y-O-Y Change Adjusted Operating 16.8% 18.1% Margin* 670 bps 120 bps Y-O-Y Change *Excl
Slide 13: Cabinets and Related Products: North American Sales Grew 13% in Q4
Cabinets and Related Products: North American Sales Grew 13% in Q4 Fourth Quarter Full Year ($ in Millions) 2012 2012 Revenue* $289 $1,189 Y-O-Y Change 1% (3%) Adjusted Operating $(26) $(83) Loss** $12 $32 Y-O-Y Change Adjusted Operating (9.0%) (7.0%) Margin** 420 bps 230 bps Y-O-Y Change *Excluding
Slide 14: Installation and Other Services: A Return to Profitability in Q4
Installation and Other Services: A Return to Profitability in Q4 with Strong Operating Leverage Fourth Quarter Full Year ($ in Millions) 2012 2012 Revenue $323 $1,209 Growth 13% 12% Adjusted Operating $6 ($18) Profit/Loss* $12 $53 Y-O-Y Change Adjusted Operating 1.9% (1.5%) Margin* 400 bps 510 bps Y
Slide 15: Other Specialty Products: Strong Performance Reflects Share Gains
Other Specialty Products: Strong Performance Reflects Share Gains and Profit Improvement Fourth Quarter Full Year ($ in Millions) 2012 2012 Revenue $153 $574 Y-O-Y Change 6% - Adjusted Operating $7 $24 Profit* $7 $20 Y-O-Y Change Adjusted Operating 4.6% 4.2% Margin 460 bps 350 bps Y-O-Y Change *Excl
Slide 16: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Continued strong working capital execution • Net debt reduction of $400M • Bank line availability of $873M $1.4 billion of cash as of 12/31/2012 16
Slide 17: Masco Q4 and Full Year 2012 Results – Agenda
Masco Q4 and Full Year 2012 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 17
Slide 18: 2013 Outlook
2013 Outlook Risks Opportunities • Impact of reduced consumer • Positive momentum coming disposable income out of 2012 • Commodity cost volatility • Improving demand in new home construction • European economic uncertainty • Successful new product and program launches at retail • Leadership changes
Slide 19: Focus on 2013 Priorities
Focus on 2013 Priorities Cabinet profit improvement Profitably grow Installation Successfully launch new products and programs Reduce debt by ~$200M Investment in strategic growth initiatives Grow share of key brands Total cost productivity Geographic expansion 19
Slide 20: Q&A
Q&A
Slide 21: Appendix – Profit Reconciliation – Fourth Quarter
Appendix – Profit Reconciliation – Fourth Quarter ($ in Millions) Q4 2012 Q4 2011 Sales $ 1,890 $ 1,738 Gross Profit – As Reported $ 446 $ 332 Rationalization charges 27 48 Gross Profit – As Adjusted $ 473 $ 380 Gross Margin - As Reported 23.6% 19.1% Gross Margin - As Adjusted 25.0% 21.9% Operating
Slide 22: Appendix – Profit Reconciliation – Full-Year
Appendix – Profit Reconciliation – Full-Year ($ in Millions) YTD 12/31/12 YTD 12/31/11 Sales $ 7,745 $ 7,467 Gross Profit – As Reported $ 1,951 $ 1,784 Rationalization charges 52 91 Other Specialty Products - Warranty 12 - Gross Profit – As Adjusted $ 2,015 $ 1,875 Gross Margin - As Reported 25.2% 2
Slide 23: Appendix – EPS Reconciliation – Fourth Quarter
Appendix – EPS Reconciliation – Fourth Quarter (in Millions) Q4 2012 Q4 2011 Loss from Continuing Operations before Income Taxes – As Reported $ (37) $ (593) Impairment of goodwill and other intangible assets $ 42 $ 494 Rationalization charges 31 61 Charge for litigation settlements, net 3 3 Gain fr
Slide 24: Appendix – EPS Reconciliation – Full-Year
Appendix – EPS Reconciliation – Full-Year ($ in Millions) YTD 12/31/12 YTD 12/31/11 Income (Loss) from Continuing Operations before Income Taxes – As $ 42 $ (472) Reported Rationalization charges $ 78 $ 121 Charge for litigation settlements, net 77 9 Impairment of goodwill and other intangible asset
Slide 25: 2013 Guidance Estimates
2013 Guidance Estimates ($ in Millions) 2013 Estimate 2012 Actual Rationalization Charges1 ~ $40 $78 Tax Rate ~ 25% 198% Interest Expense ~ $240 $254 General Corp. Expense2 ~ $130 $126 Capital Expenditures ~ $165 $119 Depreciation & Amortization3 ~ $210 $214 Shares Outstanding 349 million 349 millio
Slide 26: Segment Mix Full Year 2012 Estimate
Segment Mix Full Year 2012 Estimate Business Segment Revenue 2012 % of Total R&R% vs. NC NA% vs. Int’l Plumbing Products $3.0B 38% 82% 59% Decorative Architectural $1.8B 24% 99% 100% Products Cabinets and Related Products $1.2B 15% 69% 73% Installation and Other Services $1.2B 16% 16% 100% Other Spe
Slide 27: 2012 Masco International Revenue Split
2012 Masco International Revenue Split* 7% 14% 10% 23% North America United Kingdom Northern Europe Southern Europe Central Europe Eastern Europe 34% 8% Emerging Markets 4% International Sales Accounted for ~22% of Total 2012 Masco Sales 27 *Based on company estimates