Masco Corporation · NYSE:MAS
Masco — Q4 2013 Earnings Presentation
26 slides from Masco's earnings presentation, February 2014
Slide 1: Fourth Quarter 2013 Masco Earnings Presentation
Fourth Quarter 2013 Masco Earnings Presentation
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements contained 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,” “anticipate
Slide 3: Masco Q4 and Full-Year 2013 Results – Agenda
Masco Q4 and Full-Year 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Keith Allman • Q&A 3
Slide 4: Key Messages Today
Key Messages Today New home construction and improved repair and remodel activity drive North American sales; international sales continue growth momentum New product introductions in Paint and Plumbing drive consumer demand and sales growth Cabinets and Installation return to profitability in 2013
Slide 5: Delivering on 2013 Priorities
Delivering on 2013 Priorities Cabinet profit improvement Profitably grow Installation Successfully launch new products and programs Reduce debt by ~$200M Investment in strategic growth initiatives Grow share of key brands Total cost productivity Geographic expansion 5
Slide 6: Strategy Execution Highlights Q4 2013
Strategy Execution Highlights Q4 2013 1 • Innovation drives successful product and program introductions • Wholesale/dealer channel sales continue to increase Expand market leadership • Focused execution delivers share gains 2 • Continued commitment to cost control results in SG&A Reduce costs lever
Slide 7: Masco Q4 and Full-Year 2013 Results – Agenda
Masco Q4 and Full-Year 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Keith Allman • Q&A 7
Slide 8: Ninth Consecutive Quarter of Sales & Profit Growth
Ninth Consecutive Quarter of Sales & Profit Growth Fourth Quarter Full Year ($ in Millions) 2013 2013 Revenue $1,998 $8,173 Y-O-Y Growth 9% 9% Adjusted Operating $153 $721 Profit* 49% 44% Y-O-Y Growth Adjusted Operating 7.7% 8.8% Margin* 210 bps 210 bps Y-O-Y Growth Adjusted EPS* $0.15 $0.77 *See ap
Slide 9: Continued Improvement in Operating Profit
Continued Improvement in Operating Profit Y-O-Y Change in Adjusted Operating Profit $221M* *See appendix for GAAP reconciliation 9
Slide 10: Plumbing Products: Strong Faucet Sales Drive Segment Growth
Plumbing Products: Strong Faucet Sales Drive Segment Growth Fourth Quarter Full Year ($ in Millions) 2013 2013 Revenue $799 $3,183 Y-O-Y Growth 8% 8% Adjusted Operating $97 $418 Profit* 35% 26% Y-O-Y Growth Adjusted Operating 12.1% 13.1% Margin* 240 bps 190 bps Y-O-Y Growth *Excluding business ratio
Slide 11: Decorative Architectural Products: New Products Continue to Drive Growth
Decorative Architectural Products: New Products Continue to Drive Growth Fourth Quarter Full Year ($ in Millions) 2013 2013 Revenue $408 $1,927 Y-O-Y Growth 6% 6% Adjusted Operating $66 $353 Profit* 2% 7% Y-O-Y Growth Adjusted Operating 16.2% 18.3% Margin* (60) bps 20 bps Y-O-Y Growth *Excluding bus
Slide 12: Cabinets and Related Products: Focused Execution Drives Profitable Growth
Cabinets and Related Products: Focused Execution Drives Profitable Growth Fourth Quarter Full Year ($ in Millions) 2013 2013 Revenue $251 $1,014 Y-O-Y Growth 9% 8% Adjusted Operating ($4) $2 (Loss) Profit* 76% 104% Y-O-Y Growth Adjusted Operating (1.6%) 0.2% Margin* 580 bps 610 bps Y-O-Y Growth *Exc
Slide 13: Installation and Other Services: Ten Quarters of Consecutive Growth
Installation and Other Services: Ten Quarters of Consecutive Y-O-Y Sales and Profit Growth Fourth Quarter Full Year ($ in Millions) 2013 2013 Revenue $373 $1,412 Y-O-Y Growth 15% 17% Adjusted Operating $15 $38 Profit* 150% 311% Y-O-Y Growth Adjusted Operating 4.0% 2.7% Margin* 210 bps 420 bps Y-O-Y
Slide 14: Other Specialty Products: Strong Performance by North American Windows
Other Specialty Products: Strong Performance by North American Windows Fourth Quarter Full Year ($ in Millions) 2013 2013 Revenue $167 $637 Y-O-Y Growth 9% 11% Adjusted Operating $9 $41 Profit* 29% 71% Y-O-Y Growth Adjusted Operating 5.4% 6.4% Margin* 80 bps 220 bps Y-O-Y Growth *Excluding business
Slide 15: Strengthening the Balance Sheet
Strengthening the Balance Sheet 2013 Accomplishments • Retired $200M debt maturity in August with existing cash • Working capital as a percent of LTM sales improved to 10.6% in 2013, compared to 12.1% in 2012 • Free cash flow exceeds $500M Balance Sheet Liquidity as of 12/31/2013 Cash and cash inves
Slide 16: Masco Q4 and Full-Year 2013 Results – Agenda
Masco Q4 and Full-Year 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Keith Allman • Q&A 16
Slide 17: Outlook
Outlook Risks Opportunities • Velocity of global economic • Improving repair and remodel recovery demand, including big ticket items • Consumer confidence • Continued growth/demand in • Commodity volatility new home construction • Housing affordability/financing • Share gains at retail and with cost
Slide 18: 2014 Priorities
2014 Priorities Grow share of market-leading brands Accelerate customer-focused innovation pipeline Focus on execution to drive profitable growth in cabinets and installation Further penetrate international markets Drive operational leverage through focus on cost containment Strengthen the balance s
Slide 19: Q&A
Q&A
Slide 20: Appendix – Profit Reconciliation – Fourth Quarter
Appendix – Profit Reconciliation – Fourth Quarter ($ in M illions) Q4 2013 Q4 2012 Sales $ 1,998 $ 1,831 Gross Profit – As Reported $ 531 $ 451 Rationalization charges 10 27 Gross Profit – As Adjusted $ 541 $ 478 Gross Margin - As Reported 26.6% 24.6% Gross Margin - As Adjusted 27.1% 26.1% Operating
Slide 21: Appendix – Profit Reconciliation – Full-Year
Appendix – Profit Reconciliation – Full-Year ($ in M illions) 2013 2012 Sales $ 8,173 $ 7,495 Gross Profit – As Reported $ 2,255 $ 1,956 Rationalization charges 33 50 Other Specialty Products - Warranty - 12 Gross Profit – As Adjusted $ 2,288 $ 2,018 Gross Margin - As Reported 27.6% 26.1% Gross Marg
Slide 22: Appendix – EPS Reconciliation – Fourth Quarter
Appendix – EPS Reconciliation – Fourth Quarter (in M illions, Ex cept per Com m on Share Data) Q4 2013 Q4 2012 Income (Loss) from Continuing Operations before Income Taxes – As Reported $ 70 $ (26) Rationalization charges 12 30 Currency translation expense – Masco Denmark 18 - Gains from financial i
Slide 23: Appendix – EPS Reconciliation – Full-Year
Appendix – EPS Reconciliation – Full-Year (in M illions, Ex cept per Com m on Share Data) 2013 2012 Income from Continuing Operations before Income Taxes – As Reported $ 434 $ 73 Rationalization charges 48 75 Currency translation expense – Masco Denmark 18 - Gains from financial investments, net (11
Slide 24: 2014 Guidance Estimates
2014 Guidance Estimates ($ in Millions) 2014 Estimate 2013 Actual Rationalization Charges1, 3 ~ $10 $48 Tax Rate ~ 17% 26% Interest Expense ~ $225 $235 General Corp. Expense2 ~ $130 $134 Capital Expenditures ~ $200 $126 Depreciation & Amortization3 ~ $175 $186 Shares Outstanding 352 million 352 mill
Slide 25: 2013 Segment Mix
2013 Segment Mix* Business Segment Revenue 2013 % of Total R&R% vs. NC NA% vs. Int’l Plumbing Products $3.2B 39% 82% 59% Decorative Architectural $1.9B 23% 99% 100% Products Installation and Other Services $1.4B 17% 18% 100% Cabinets and Related Products $1.0B 12% 57% 93% Other Specialty Products $0
Slide 26: 2013 International Revenue Split
2013 International Revenue Split* 10% 23% 14% UK Northern Europe Southern Europe Central Europe 7% Eastern Europe 9% Emerging markets Other 6% 31% International Sales Accounted for ~20% of Total 2013 Masco Sales 26 *Based on Company estimates.