Masco Corporation · NYSE:MAS
Masco — Q2 2013 Earnings Presentation
24 slides from Masco's earnings presentation, Sep 11, 2013
Slide 1: Second Quarter 2013 Masco Earnings Presentation
Second Quarter 2013 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 Q2 2013 Results – Agenda
Masco Q2 2013 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 North American sales increase was driven by new home construction activity and retail performance; International sales grew despite challenging market conditions Cabinets and Installation capitalized on market dynamics delivering top and bottom line growth Operating leverage and f
Slide 5: Strategy Execution Highlights Q2 2013
Strategy Execution Highlights Q2 2013 1 • Continued success with new and previously introduced Expand market products and programs at retail with Plumbing Products and leadership Decorative Architectural Products 2 • Continued commitment to cost control results in SG&A Reduce costs improvement 3 • C
Slide 6: Masco Q2 2013 Results – Agenda
Masco Q2 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 6
Slide 7: Margin Expansion Demonstrates Operating Leverage
Margin Expansion Demonstrates Operating Leverage Second Quarter ($ in Millions) 2013 Revenue $2,149 Growth 10% Adjusted Operating Profit* $206 Y-O-Y Change $75 Adjusted Operating Margin* 9.6% Y-O-Y Change 290 bps Adjusted EPS* $0.23 *See appendix for reconciliation to GAAP information. Quarter Highl
Slide 8: Commitment to Cost Control and Leverage on Increased Volume Favorably Impacting Margins
Commitment to Cost Control and Leverage on Increased Volume Favorably Impacting Margins Y-O-Y Change in Operating Profit $75M * * *See appendix for reconciliation 8
Slide 9: Plumbing Products: Strong Performance in North America and International
Plumbing Products: Strong Performance in North America and International Second Quarter ($ in Millions) 2013 Revenue $802 Growth 9% Adjusted Operating Profit* $110 Y-O-Y Change $37 Adjusted Operating Margin* 13.7% Y-O-Y Change 380 bps *Excluding rationalization charges of $8 million and $3 million i
Slide 10: Decorative Architectural Products: Core Paint Sales Benefit from Healthy Repair and Remodel Activity
Decorative Architectural Products: Core Paint Sales Benefit from Healthy Repair and Remodel Activity and New Product Introductions Second Quarter ($ in Millions) 2013 Revenue $565 Growth 9% Adjusted Operating Profit* $105 Y-O-Y Change $10 Adjusted Operating Margin* 18.6% Y-O-Y Change 20 bps *Exclude
Slide 11: Cabinets and Related Products: Focus on Profitability Drives Performance
Cabinets and Related Products: Focus on Profitability Drives Performance Second Quarter ($ in Millions) 2013 Revenue $265 Growth 5% Adjusted Operating Profit* $5 Y-O-Y Change $9 Adjusted Operating Margin* 1.9% Y-O-Y Change 350 bps *Excludes rationalization charges of $3 million and $1 million in the
Slide 12: Installation and Other Services: Top and Bottom Line Growth Demonstrate Solid Execution
Installation and Other Services: Top and Bottom Line Growth Demonstrate Solid Execution Second Quarter ($ in Millions) 2013 Revenue $357 Growth 21% Operating Profit $8 Y-O-Y Change $17 Operating Margin 2.2% Y-O-Y Change 520 bps Quarter Highlights • Sales growth driven by higher volumes in residentia
Slide 13: Other Specialty Products: Window Share Gains and Profit Improvement
Other Specialty Products: Strong Performance Reflects Window Share Gains and Profit Improvement Second Quarter ($ in Millions) 2013 Revenue $160 Growth 13% Adjusted Operating Profit* $14 Y-O-Y Change $8 Adjusted Operating Margin* 8.8% Y-O-Y Change 450 bps *Excludes rationalization charges of $3 mill
Slide 14: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Continued strong working capital execution • Will retire $200M debt maturity in August with existing cash $1.2 billion of cash as of 6/30/2013 14
Slide 15: Masco Q2 2013 Results – Agenda
Masco Q2 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 15
Slide 16: Delivering on 2013 Priorities – Q2 Highlights
Delivering on 2013 Priorities – Q2 Highlights Cabinet profit improvement Profitably grow Installation Successfully launch new products and programs Reduce debt by ~$200M Investment in strategic growth initiatives Grow share of key brands Total cost productivity Geographic expansion 16
Slide 17: 2013 Outlook
2013 Outlook Risks Opportunities • Velocity of U.S. economic • Improving demand in new recovery home construction • European economic • Successful new product and uncertainty program launches at retail • Mix shifts • Share gains at retail and with big builders • Commodity volatility • Strong liquidi
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Appendix – Profit Reconciliation – Second Quarter
Appendix – Profit Reconciliation – Second Quarter ($ in Millions) Q2 2013 Q2 2012 Sales $ 2,149 $ 1,945 Gross Profit – As Reported $ 609 $ 521 Rationalization charges 11 3 Gross Profit – As Adjusted $ 620 $ 524 Gross Margin - As Reported 28.3% 26.8% Gross Margin - As Adjusted 28.9% 26.9% Operating P
Slide 21: Appendix – EPS Reconciliation – Second Quarter
Appendix – EPS Reconciliation – Second Quarter (in Millions) Q2 2013 Q2 2012 Income (loss) from Continuing Operations before Income Taxes – As $ 131 $ (12) Reported Rationalization charges 18 7 Gain from financial investments, net (5) - Gain from sale of fixed assets - (5) Charge for litigation sett
Slide 22: 2013 Guidance Estimates
2013 Guidance Estimates ($ in Millions) 2013 Estimate 2012 Actual Rationalization Charges1 ~ $55 $78 Tax Rate ~ 25% 198% Interest Expense ~ $240 $254 General Corp. Expense2 ~ $130 $126 Capital Expenditures ~ $150 $119 Depreciation & Amortization3 ~ $190 $214 Shares Outstanding 352 million 349 millio
Slide 23: 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 40% 82% 59% Decorative Architectural $1.8B 24% 99% 100% Products Cabinets and Related Products $0.9B 12% 69% 92% Installation and Other Services $1.2B 16% 16% 100% Other Spe
Slide 24: 2012 Masco International Revenue Split
2012 Masco International Revenue Split* 6% 15% Other 11% 26% United Kingdom Northern Europe Southern Europe Central Europe Eastern Europe 3% Emerging Markets 34% 5% International Sales Accounted for ~20% of Total 2012 Masco Sales 24 *Based on company estimates