Slide 1: Second Quarter 2020 Earnings Presentation
MASCO CORPORATION Second Quarter 2020 Earnings Presentation July 30, 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
Q2 2020 IN REVIEW Long-Term Shareholder Value Creation • Delivered strong top and bottom-line growth in Decorative Architectural Products • Focused execution on cost control Driving Shareholder • Expanded adjusted operating profit margin by 50 bps Value • Achieved adjusted EPS growth of 14% • Board
Slide 5: Agenda
Agenda Summary of Results Keith Allman Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 5
Slide 6: Delivered Strong Margin Expansion and EPS Growth
MASCO CORPORATION Delivered Strong Margin Expansion and EPS Growth Second Quarter ($ in Millions) 2020 Revenue $1,764 Y-O-Y Change (4%) Operating Profit* $344 Y-O-Y Change ($5) Operating Margin* 19.5% Y-O-Y Change 50 bps Adjusted EPS* $0.84 Y-O-Y Change 14% *See Appendix for GAAP reconciliation. Qua
Slide 7: North American Plumbing Exceeded Expectations
PLUMBING PRODUCTS North American Plumbing Exceeded Expectations Second Quarter ($ in Millions) 2020 Revenue $868 Y-O-Y Change (14%) Operating Profit* $159 Y-O-Y Change ($41) Operating Margin* 18.3% Y-O-Y Change (150) bps *Excludes business rationalization charges for the second quarter 2020 and 2019
Slide 8: DIY Paint Continued to Outperform
DECORATIVE ARCHITECTURAL PRODUCTS DIY Paint Continued to Outperform Second Quarter ($ in Millions) 2020 Revenue $896 Y-O-Y Change 8% Operating Profit* $202 Y-O-Y Change $29 Operating Margin* 22.5% Y-O-Y Change 160 bps * Excludes business rationalization charges for the second quarter 2020 of $1 mill
Slide 9: Strong Balance Sheet
Strong Balance Sheet Balance Sheet Metrics as of 6/30/2020 Cash and cash investments $1,089M Revolver availability $1,000M Total liquidity $2,089M Net leverage 1.3x Working capital as a % of sales 18.1% Highlights • Working capital as a percentage of sales improved 50 bps compared to prior year • Re
Slide 10: Agenda
Agenda Summary of Results Keith Allman Financial / Operations Review John Sznewajs Keith Allman Q&A John Sznewajs 10
Slide 11: Masco
MASCO
Slide 12: Appendix
Appendix MASCO
Slide 13: Profit Reconciliations – Second Quarter
Profit Reconciliations – Second Quarter ($ in Millions) Q2 2020 Q2 2019 Net sales $1,764 $1,839 Gross profit, as reported $628 $673 Rationalization charges 3 2 Gross profit, as adjusted $631 $675 Gross margin, as reported 35.6% 36.6% Gross margin, as adjusted 35.8% 36.7% Selling, general and adminis
Slide 14: EPS Reconciliation – Second Quarter
EPS Reconciliation – Second Quarter (in Millions, Except per Common Share Data) Q2 2020 Q2 2019 Income from continuing operations before income taxes, as reported $302 $303 Rationalization charges 5 2 Pension costs associated with expected terminated plans 5 — Income from continuing operations befor
Slide 15: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) June 30, 2020 Debt $2,779 Less: Cash and cash investments (1,089) Net Debt $1,690 ($ in Millions) TTM as of 6/30/2020 Operating profit, as reported $1,108 Rationalization charges 19 Operating profit, as adjusted $1,127 Depreciation and amortization 131 EBI
Slide 16: Working Capital as a % of Sales
Working Capital as a % of Sales (in Millions) As of June 30, 2020 Receivables $1,308 Inventories 750 Less: Accounts payable (845) Working Capital $1,213 Working capital as a % of sales (last 12 months) 18.1% 16
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: Q3 2020 Outlook
Q3 2020 Outlook Q3 2020 Q3 2020 Business Segment Sales Adjusted Operating Change Profit Margin Down 5% to Up 5% Similar to Q3 2019 Plumbing Products (ex currency) margin of 18.7% Similar to Q3 2019 Decorative Architectural Products Up 7 – 17% margin of 18.9% Flat to Up 10% Similar to Q3 2019 Total M
Slide 19: 2020 Estimates
2020 Estimates Item Assumption Rationalization charges ~$10m Tax rate 26% General corporate expense ~$85m Interest expense ~$140m Capital expenditures ~$100m (includes maintenance capex of ~$75m) Depreciation and amortization ~$135m Unfavorable foreign currency translation impact to sales1 ~$25m Sha