Masco Corporation · NYSE:MAS
Masco — Q1 2011 Earnings Presentation
28 slides from Masco's earnings presentation, Apr 26, 2011
Slide 1: First Quarter 2011 Masco Earnings Presentation
First Quarter 2011 Masco Earnings Presentation Tuesday, April 26, 2011 8:00 a.m. ET 1
Slide 2: Forward-looking statements and non-GAAP disclaimer
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,” “anticipate,” “appea
Slide 3: Q1 2011 Overview
Q1 2011 Overview Net sales decreased 4% to $1.8 billion, reflecting: − Lower sales volume related to Cabinets, including planned product exits, and Installation Excluding business rationalization charges, gains from financial investments and adjusting for a normal tax rate of 36%, (loss) income,
Slide 4: Q1 2011 Profit Reconciliation
Q1 2011 Profit Reconciliation ($ in Millions) Q1 2011 Q1 2010 Sales $ 1,772 $ 1,852 Gross Profit – As Reported $ 425 $ 492 Rationalization Charges 24 3 Gross Profit – As Adjusted $ 449 $ 495 Gross Margin - As Reported 24.0% 26.6% Gross Margin - As Adjusted 25.3% 26.7% Operating Income – As Reported
Slide 5: Q1 2011 EPS Reconciliation
Q1 2011 EPS Reconciliation ($ in Millions) Q1 2011 Q1 2010 (Loss) Income before Income Taxes – As Reported $ (21) $ 22 Rationalization charges 32 14 Gains from financial investments (17) - (Loss) Income before Income Taxes – As Adjusted (6) 36 Tax at 36% rate benefit (expense) 2 (13) Less: Net incom
Slide 6: Cabinets and Related Products
Cabinets and Related Products Financial Performance Q1 2011 1st QTR 3/31/11 3 Months Ended vs. ($ in Millions) 3/31/11 3/31/10 3/31/2011 3/31/2010 $ % Net Sales $307 $403 ($96) (24%) Operating (Loss)* $(29) $(4) $(25) N/A Operating Margin (9.4%) (1.0%) Decremental (26%) Margin Commentary Brands Ex
Slide 7: Cabinets and Related Products Q1 2011 Update
Cabinets and Related Products Q1 2011 Update Benefitting from the North American cabinet integration − Gaining share, sequentially first quarter of 2011 versus fourth quarter of 2010 − New dealers are being added rapidly Reduced dealer set-up time Over 300 dealers have added a Masco Cabinetry
Slide 8: Plumbing Products
Plumbing Products Financial Performance Q1 2011 1st QTR 3/31/11 3 Months Ended vs. ($ in Millions) 3/31/11 3/31/10 3/31/2011 3/31/2010 $ % Net Sales $710 $663 $47 7% Operating Profit* $90 $85 $5 N/A Operating Margin 12.7% 12.8% Incremental 11% Margin Commentary Brands Increased sales volume in Nor
Slide 9: Plumbing Products Q1 2011 Update
Plumbing Products Q1 2011 Update Continue to invest in brand building, innovation and design Gaining share in faucets at wholesale and retail Innovative technology is resonating with the consumer − Touch2O® technology is launching in lavatory faucets in April 2011 Global expansion model is w
Slide 10: Installation and Other Services
Installation and Other Services Financial Performance Q1 2011 1st QTR 3/31/11 3 Months Ended vs. ($ in Millions) 3/31/2011 3/31/10 3/31/2011 3/31/2010 $ % Net Sales $254 $273 $(19) (7%) Operating (Loss)* $(38) $(40) $2 N/A Operating Margin (15.0%) (14.7%) Decremental N/A Margin Commentary Businesses
Slide 11: Installation and Other Services Q1 2011 Update
Installation and Other Services Q1 2011 Update Continuing to improve our insulation position − Added salespeople − Expanded strategic relationship with Owens Corning Gaining share, sequentially first quarter of 2011 versus fourth quarter of 2010 Continued retrofit sales gains in 2011 ERP sys
Slide 12: Decorative Architectural Products
Decorative Architectural Products Financial Performance Q1 2011 1st QTR 3/31/11 3 Months Ended vs. ($ in Millions) 3/31/2011 3/31/10 3/31/2011 3/31/2010 $ % Net Sales $375 $389 $(14) (4%) Operating Profit* $70 $87 $(17) N/A Operating Margin 18.7% 22.4% Decremental ( 121%) Margin Commentary Brands
Slide 13: Decorative Architectural Products Q1 2011 Update
Decorative Architectural Products Q1 2011 Update Leveraging our resources to expand top-line growth − Direct to Pro® program with The Home Depot continues to gain traction − Launched the Kilz® Pro-X™ coatings line program in first quarter of 2011 with all The Home Depot stores to be set by the end
Slide 14: Other Specialty Products
Other Specialty Products Financial Performance Q1 2011 1st QTR 3/31/11 3 Months Ended vs. ($ in Millions) 3/31/2011 3/31/10 3/31/2011 3/31/2010 $ % Net Sales $126 $124 $2 2% Operating (Loss) $(10) ($6) $(4) N/A Operating Margin (7.9%) (4.8%) Decremental N/A Margin Commentary Brands Sales increases
Slide 15: Other Specialty Products Q1 2011 Update
Other Specialty Products Q1 2011 Update Milgard Manufacturing continuing to gain share in the Western United States housing market in the first quarter of 2011 Milgard Manufacturing is expanding into new geographies including Texas and Western Canada U.K. Window Group continuing to gain share
Slide 16: Q1 2011 Working Capital
Q1 2011 Working Capital 16.3% 50 51 15.5% Working Capital % of Sales Accounts Receivable Days 55 53 57 49 Inventory Days Accounts Payable Days Q1 -2011 Q1 - 2010 Q1 - 2011 Q1 -2010 16
Slide 17: Wrap-Up Comments
Wrap-Up Comments Anticipate slow start but improving market conditions in 2011 − 2011 total housing starts forecast – up approximately 10% − Expect modest improvement in repair and remodel activity Will continue to focus on what we can control to improve execution and strengthen our brands − Emb
Slide 18: Questions & Answers
Questions & Answers 18
Slide 19: Appendix
Appendix 19
Slide 20: Masco Credit Facility
Masco Credit Facility $1.25 billion line established in June 2010 (amended in February 2011) with two financial covenants − Total debt to adjusted total capitalization threshold (65%) − Interest coverage (adjusted EBITDA/Interest Expense) In compliance with all covenants and had no borrowings ou
Slide 21: Outstanding Debt Maturities
Outstanding Debt Maturities March 31, 2011 ($ In Millions) Zero Coupon Fixed $1,200 $800 $400 $0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Zero Coupon Notes have a put date of July 20, 2011. 21
Slide 22: Q1 2011 Results (As Reported)
Q1 2011 Results (As Reported) ($ In Millions) Net Sales Change in Sales Operating Margin* Q1 2011 Q1 2010 2011 vs. 2010 Q1 2011 Q1 2010 Cabinets and Related Products $307 $403 (24%) (16.3%) (3.7%) Plumbing Products 710 663 7% 11.8% 12.7% Installation and Other Services 254 273 ( 7%) ( 15.7%) (15.4%)
Slide 23: Q1 2011 Gross Profit/SG&A
Q1 2011 Gross Profit/SG&A ($ in Millions) First Quarter Gross profit negatively impacted by: $492 − Increased rationalization charges $425 26.6% − Less favorable relationship between 24.0% selling prices and commodity costs − Lower sales volume Gross Profit / Margin SG&A as a percent of sales in
Slide 24: Q1 2011 Segment Rationalization Charges
Q1 2011 Segment Rationalization Charges Rationalization Charges - Q1 2011 Q1 2010 ($ in Millions) Plant Total - Total - Severance ERP RTA Exit Closures Q1 2011 Q1 2010 Cabinets and Related Products $ - $ (2) $ - $ (19) $ (21) $ (11) Plumbing Products - (6) - - (6) (1) Installation and Other Services
Slide 25: Cabinets & Related Products Q1 2011 Segment Dynamics
Cabinets & Related Products Q1 2011 Segment Dynamics Drivers of Q1 2011 Sales Decline Product Reduced Exit Activity Currency Total North America $53 $27 $-- $80 International --- 15 1 16 $53 $42 $1 $96 25
Slide 26: 2011 Estimate - Other Financial Data
2011 Estimate - Other Financial Data ($ in Millions) 2011 Estimate 2010 Actual Rationalization Charges* ~ $65 $208 Tax Rate** ~ 60% 32% Interest Expense ~ $250 $251 General Corp. Expense ~ $140 $110 Capital Expenditures ~ $190 $137 Depreciation & Amortization ~ $260 $279 Outstanding Shares 349 milli
Slide 27: Segment Mix Full-Year 2010 - Estimate
Segment Mix Full-Year 2010 - Estimate New Segment International North America Construction Cabinets and 25% 75% 25% - 30% Related Products Plumbing 40% 60% 20% - 25% Products Installation and -- 100% 90+% Other Services Decorative -- 100% <5% Architectural Products Other Specialty 25% 75% 20% - 30%
Slide 28: Masco International Revenue Split
Masco International Revenue Split* 6% 6% 7% 36% Central Europe United Kingdom Emerging Markets 9% Eastern Europe Northern Europe North America Southern Europe 11% 25% *Based on company estimates as of 12/31/2010. 28