Slide 1: Second Quarter 2021 Earnings Presentation
Second Quarter 2021 Earnings Presentation July 29, 2021
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 Financial/Operations 2 Review John Sznewajs 3 Q&A Keith Allman John Sznewajs 3
Slide 4: Summary of Results
1 Summary of Results Keith Allman 4
Slide 5: Long-Term Shareholder Value Creation
Long-Term Shareholder Value Creation Driving Shareholder Value Q2 2021 IN REVIEW Delivered strong top and bottom-line growth Increased adjusted operating profit 27% and expanded margin 60 basis points Achieved adjusted EPS growth of 34% Repurchased 6.6 million shares for $447 million Mitigating raw
Slide 6: Financial / Operations Review
2 Financial / Operations Review John Sznewajs 6
Slide 7: Delivered Exceptional Growth
Delivered Exceptional Growth Masco Corporation Second Quarter Quarter Highlights ($ in Millions) 2021 • Total company sales increased 24% Revenue $2,179 Y-O-Y Change 24% • FX increased sales by 3% and net acquisitions by 3% • In local currency, North American sales increased Operating Profit* $438 1
Slide 8: Strong Growth Acceleration: Plumbing Products
Strong Growth Acceleration Plumbing Products Second Quarter Quarter Highlights ($ in Millions) 2021 • Total segment sales increased 53% Revenue $1,329 Y-O-Y Change 53% • FX increased sales by 5% and net acquisitions by 4% • In local currency, North American sales increased Operating Profit* $274 47%
Slide 9: Navigating Difficult Supply Environment
Navigating Difficult Supply Environment Decorative Architectural Products Second Quarter Quarter Highlights ($ in Millions) 2021 • Total segment sales decreased 5% Revenue $850 Y-O-Y Change (5%) • Acquisitions increased sales by 1% • Revenue of paints and other coating products Operating Profit* $18
Slide 10: Strong Balance Sheet
Strong Balance Sheet Masco Corporation Highlights Balance Sheet Metrics as of 6/30/2021 • Working capital as a percentage of sales, including Cash and cash investments $769M acquisitions, improved 120 bps compared to prior year Revolver availability $1,000M • Settled our domestic qualified defined-b
Slide 11: Full Year 2021 Outlook
Full Year 2021 Outlook 2021 Adjusted EPS $3.65 – $3.75 2021 Forecasted 2021 Forecasted Adjusted Business Segment Sales Growth Operating Profit Margin Organic: ~17-19% Net Acquisitions: ~3% Plumbing Products ~18.5% FX: ~2% TOTAL: ~22-24% Organic: ~0-3% Decorative Acquisitions: ~1.5% ~19.0% Architectu
Slide 12: Q&A
3 Q&A Keith Allman John Sznewajs 12
Slide 13: Appendix
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Slide 14: 2021 Estimates
2021 Estimates Item Assumption Rationalization charges ~$5m Tax rate 25% General corporate expense ~$95m Interest and other expense1 ~$115m Capital expenditures ~$150m (includes maintenance capex of ~$75m) Depreciation and amortization2 ~$150m Favorable foreign currency translation ~$110m impact to
Slide 15: Capital Allocation Strategy
Capital Allocation Strategy Balanced Approach to Continue to Drive Shareholder Value • Capex: 2-2.25% of sales 1 Reinvest in the Business • Working capital: ~16.0% of sales Maintain investment grade 2 credit rating • Gross debt to EBITDA below 2.5x • Board increased annual dividend to $0.94 per shar
Slide 16: Long-Term Outlook
Low ticket, repair and remodel products provide growth and stability LONG-TERM OUTLOOK through an economic cycle Average annual sales growth • Organic: ~3-5% • Acquisition: ~1-3% Market leading brands, Operating margin history of innovation, customer focus • Expand margins through cost productivity
Slide 17: Expected Dividend Schedule
Expected Dividend Schedule Declaration Date Record Date Payable Date The table reflects our expected dividend Week of May 10, 2021 Week of May 24, 2021 Week of June 14, 2021 schedule through March 2022. Dividend payments are subject to declaration by our Board of Directors, and the dates Week of Jul
Slide 18: 2020 Segment Mix
2020 Segment Mix* Business 2020 Revenue R&R% vs. NC NA% v. Int’l Total Geographic Revenue Split Segment Plumbing $4.1B 83% 67% Products Decorative Europe Architectural $3.1B 96% 100% North 12% Products America 81% Other 2% Total Company $7.2B 89% 81% China United 3% Kingdom R&R = % of sales to repai
Slide 19: 2020 Channel Mix
2020 Channel Mix* 2020 Channel Mix as a Percentage of Sales Decorative Architectural Total Channel Plumbing Products Products Masco Retail 24% 85% 50% Wholesale/trade 56% 11% 36% E-commerce 12% 4% 9% Specialty dealers/other 8% 0% 5% *Based on Company estimates 19
Slide 20: Profit Reconciliations – Second Quarter
Profit Reconciliations – Second Quarter ($ in Millions) Q2 2021 Q2 2020 Net sales $ 2,179 $ 1,764 Gross profit, as reported $ 791 $ 628 Rationalization charges 1 3 Gross profit, as adjusted $ 792 $ 631 Gross margin, as reported 36.3% 35.6% Gross margin, as adjusted 36.3% 35.8% Selling, general and a
Slide 21: EPS Reconciliation – Second Quarter
EPS Reconciliation – Second Quarter (in Millions, Except per Common Share Data) Q2 2021 Q2 2020 (Loss) income from continuing operations before income taxes, as reported $ (3) $ 302 Rationalization charges 1 5 Pension costs associated with terminated plans 413 5 Loss on sale of business 18 — (Gain)
Slide 22: EPS Outlook Reconciliation
EPS Outlook Reconciliation 2021 Low End High End Income from continuing operations per common share $ 1.74 $ 1.84 Rationalization charges 0.02 0.02 Pension costs associated with terminated plans (1) 1.32 1.32 Loss on sale of business 0.05 0.05 (Gain) on preferred stock redemption (0.04) (0.04) Loss
Slide 23: Net Leverage Reconciliation
Net Leverage Reconciliation ($ in Millions) June 30, 2021 Debt $ 2,960 Less: Cash and cash investments (769) Net Debt $ 2,191 ($ in Millions) TTM June 30, 2021 Operating profit, as reported $ 1,533 Rationalization charges 5 Operating profit, as adjusted $ 1,538 Depreciation and amortization 145 EBIT
Slide 24: Working Capital as a % of Sales
Working Capital as a % of Sales As Reported (in Millions) June 30, 2021 Receivables $ 1,352 Inventories 1,021 Less: Accounts payable (1,021) Working Capital $ 1,352 Working capital as a % of sales (last 12 months) 16.9% 24