Masco Corporation · NYSE:MAS
Masco — Q3 2020 Earnings Presentation
19 slides from Masco's earnings presentation, Oct 28, 2020
Slide 1: Third Quarter 2020 Earnings Presentation
MASCO CORPORATION Third Quarter 2020 Earnings Presentation October 28, 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 Summary of Results Keith Allman Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 3
Slide 4: Long-Term Shareholder Value Creation
Q3 2020 IN REVIEW Long-Term Shareholder Value Creation • Delivered strong top and bottom-line growth in both segments • Focused execution on cost control Driving • Expanded adjusted operating profit margin by 400 bps Shareholder • Achieved adjusted EPS growth of 73% Value • Further strengthened bala
Slide 5: Agenda
Agenda Summary of Results Keith Allman Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 5
Slide 6: Robust Margin Expansion, Sales and EPS Growth
MASCO CORPORATION Robust Margin Expansion, Sales and EPS Growth Third Quarter ($ in Millions) 2020 Revenue $1,983 Y-O-Y Change 16% Operating Profit* $425 Y-O-Y Change $127 Operating Margin* 21.4% Y-O-Y Change 400 bps Adjusted EPS* $1.04 Y-O-Y Change 73% *See Appendix for GAAP reconciliation. Quarter
Slide 7: Exceptional North American and Int'l Performance
PLUMBING PRODUCTS Exceptional North American and Int’l Performance Third Quarter ($ in Millions) 2020 Revenue $1,141 Y-O-Y Change 13% Operating Profit* $271 Y-O-Y Change $83 Operating Margin* 23.8% Y-O-Y Change 510 bps *Excludes business rationalization charges for the third quarter 2019 of $9 milli
Slide 8: DIY Paint Drove Outstanding Performance
DECORATIVE ARCHITECTURAL PRODUCTS DIY Paint Drove Outstanding Performance Third Quarter ($ in Millions) 2020 Revenue $842 Y-O-Y Change 19% Operating Profit* $180 Y-O-Y Change $46 Operating Margin* 21.4% Y-O-Y Change 250 bps * Excludes business rationalization charges for the third quarter 2020 of $1
Slide 9: Strong Balance Sheet
Strong Balance Sheet Balance Sheet Metrics as of 9/30/2020 Cash and cash investments $1,326M Revolver availability $1,000M Total liquidity $2,326M Net leverage* 1.1x Working capital as a % of sales* 16.4% Adjusted free cash flow* $691M * See Appendix for reconciliation. Highlights • Working capital
Slide 10: Agenda
Agenda Summary of Results Keith Allman Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 10
Slide 11: Masco
MASCO
Slide 12: Appendix
Appendix MASCO
Slide 13: Profit Reconciliations – Third Quarter
Profit Reconciliations – Third Quarter ($ in Millions) Q3 2020 Q3 2019 Net sales $1,983 $1,716 Gross profit, as reported $752 $611 Rationalization charges 1 5 Gross profit, as adjusted $753 $616 Gross margin, as reported 37.9% 35.6% Gross margin, as adjusted 38.0% 35.9% Selling, general and administ
Slide 14: EPS Reconciliation – Third Quarter
EPS Reconciliation – Third Quarter (in Millions, Except per Common Share Data) Q3 2020 Q3 2019 Income from continuing operations before income taxes, as reported $380 $241 Rationalization charges 1 9 Pension costs associated with expected terminated plans 6 — (Earnings) from equity investments, net
Slide 15: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) September 30, 2020 Debt $2,792 Less: Cash and cash investments (1,326) Net Debt $1,466 ($ in Millions) TTM as of 9/30/2020 Operating profit, as reported $1,243 Rationalization charges 11 Operating profit, as adjusted $1,254 Depreciation and amortization 13
Slide 16: Working Capital as a % of Sales and Free Cash Flow Reconciliation
Working Capital as a % of Sales and Free Cash Flow Reconciliation As of September 30, (in Millions) 2020 Receivables $1,262 Inventories 811 Less: Accounts payable (933) Working Capital $1,140 Working capital as a % of sales (last 12 months) 16.4% Nine Months Ended September 30, Free Cash Flow Reconc
Slide 17: 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 18: Q4 2020 Outlook
Q4 2020 Outlook Q4 2020 Q4 2020 Business Segment Sales Adjusted Operating Change Profit Margin + ~8-10% Plumbing Products ~ 19.0% (ex currency) Decorative Architectural Products + ~8-10% ~ 17.0% + ~8-10% Total Masco ~ 17.0% (ex currency) 18
Slide 19: 2020 Estimates
2020 Estimates Item Assumption Rationalization charges ~$10m Tax rate 26% General corporate expense ~$90m Interest expense ~$140m Capital expenditures ~$100m (includes maintenance capex of ~$75m) Depreciation and amortization ~$135m Favorable foreign currency translation impact to sales1 ~$5m Share