Q2 2013 final presentation1

425 views

Published on

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
425
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Q2 2013 final presentation1

  1. 1. Second Quarter 2013 Masco Earnings Presentation
  2. 2. 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,” “anticipate,” “appear,” “may,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements. Our future performance may be affected by our reliance on new home construction and home improvement, our reliance on key customers, the cost and availability of raw materials, uncertainty in the international economy, shifts in consumer preferences and purchasing practices, our ability to improve our underperforming businesses, and our ability to maintain our competitive position in our industries. These and other factors are discussed in detail in Item 1A, “Risk Factors” in our Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. Our forward-looking statements in this presentation speak only as of the date of this presentation. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise. 2 Certain of the financial and statistical data included in this presentation and the related materials are non-GAAP financial measures as defined under Regulation G. The Company believes that non-GAAP performance measures and ratios used in managing the business may provide attendees of this presentation with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Additional information about the Company is contained in the Company's filings with the SEC and is available on Masco’s web site, www.masco.com.
  3. 3. Masco Q2 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 3
  4. 4. 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 focus on cost control increased profits All segments positively contributed to top and bottom line growth 4
  5. 5. Strategy Execution Highlights Q2 2013 1 Expand market leadership • Continued success with new and previously introduced products and programs at retail with Plumbing Products and Decorative Architectural Products 2 Reduce costs • Continued commitment to cost control results in SG&A improvement 3 • Cabinetry continues to execute on strategic plan and delivers profit Improve underperforming businesses • Installation and Other Services capitalizes on strategic growth with new home construction, commercial, distribution and retrofit channels 4 Strengthen balance sheet 5 • Strong working capital management
  6. 6. Masco Q2 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 6
  7. 7. Margin Expansion Demonstrates Operating Leverage ($ in Millions) Second Quarter 2013 Revenue $2,149 Growth 10% Adjusted Operating Profit* $206 Adjusted Operating Margin* 9.6% Y-O-Y Change $75 Y-O-Y Change 290 bps Adjusted EPS* $0.23 *See appendix for reconciliation to GAAP information. Quarter Highlights • • Sales growth driven by increased sales at retail and new home construction • 7 North American sales increased 11%; International sales increased 6% in local currency Incremental margins ~37% achieved from operating leverage
  8. 8. Commitment to Cost Control and Leverage on Increased Volume Favorably Impacting Margins Y-O-Y Change in Operating Profit $75M * 8 *See appendix for reconciliation *
  9. 9. Plumbing Products: Strong Performance in North America and International ($ in Millions) Second Quarter 2013 Revenue $802 Adjusted Operating Profit* $110 Growth Y-O-Y Change Adjusted Operating Margin* Y-O-Y Change 9% $37 13.7% 380 bps *Excluding rationalization charges of $8 million and $3 million in the second quarters of 2013 and 2012, respectively. Quarter Highlights • • North American sales growth partially offset by lost bathware business • International sales increase 6% in local currency due to growth in all major channels including project work, DIY, and trade • 9 North American faucet and toilet sales growth percentage in the midteens Margins impacted by favorable price/commodity relationship and total cost productivity efforts
  10. 10. Decorative Architectural Products: Core Paint Sales Benefit from Healthy Repair and Remodel Activity and New Product Introductions ($ in Millions) Second Quarter 2013 Revenue $565 Adjusted Operating Profit* $105 Growth Y-O-Y Change Adjusted Operating Margin* Y-O-Y Change 9% $10 18.6% 20 bps *Excludes $1 million of rationalization charges in the second quarter of 2013. Quarter Highlights • • Behr Pro, Behr’s expansion into Mexico, and retail sales of Builder’s Hardware continue to grow • 10 Increased sales driven by volume growth of DIY core paint and new products Margins positively impacted by increased volume; partially offset by increased advertising costs and unfavorable price/commodity relationship
  11. 11. Cabinets and Related Products: Focus on Profitability Drives Performance ($ in Millions) Second Quarter 2013 Revenue Growth Adjusted Operating Profit* Y-O-Y Change Adjusted Operating Margin* Y-O-Y Change $265 5% $5 $9 1.9% 350 bps *Excludes rationalization charges of $3 million and $1 million in the second quarters of 2013 and 2012, respectively. Quarter Highlights • • Results positively impacted by pricing and promotional strategies, cost control, and productivity improvements; partially offset by mix • 11 Strong direct-to-builder sales Excludes Danish RTA business, which is in discontinued operations
  12. 12. Installation and Other Services: Top and Bottom Line Growth Demonstrate Solid Execution ($ in Millions) Revenue Growth Operating Profit Y-O-Y Change Operating Margin Y-O-Y Change Second Quarter 2013 $357 21% $8 $17 2.2% 520 bps Quarter Highlights • • Installation sales to residential new home construction increased ~34% • 12 Sales growth driven by higher volumes in residential new home construction, commercial, distribution, and retrofit channels Margin improvement driven by operating leverage and continued cost control
  13. 13. Other Specialty Products: Strong Performance Reflects Window Share Gains and Profit Improvement ($ in Millions) Second Quarter 2013 Revenue $160 Adjusted Operating Profit* $14 Growth Y-O-Y Change Adjusted Operating Margin* Y-O-Y Change 13% $8 8.8% 450 bps *Excludes rationalization charges of $3 million in the second quarter of 2013. Quarter Highlights • • Sales growth driven by increased new home construction and repair & remodel sales, and new product introductions • 13 North American window sales increased ~20% Margin expansion fueled by increased volume and favorable price/commodity relationship
  14. 14. 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
  15. 15. Masco Q2 2013 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 15
  16. 16. Delivering on 2013 Priorities – Q2 Highlights Cabinet profit improvement Profitably grow Installation Successfully launch new products and programs Reduce debt by ~$200M Investment in strategic growth initiatives Grow share of key brands Total cost productivity Geographic expansion 16
  17. 17. 2013 Outlook Risks Opportunities • Velocity of U.S. economic recovery • Improving demand in new home construction • European economic uncertainty • Successful new product and program launches at retail • Mix shifts • Share gains at retail and with big builders • Commodity volatility • Strong liquidity • Capitalize on operating leverage 17
  18. 18. Q&A
  19. 19. Appendix
  20. 20. Appendix – Profit Reconciliation – Second Quarter ($ in Millions) Q2 2013 Q2 2012 Sales $ 2,149 $ 1,945 Gross Profit – As Reported $ 609 $ 521 Rationalization charges Gross Profit – As Adjusted 11 $ 620 3 $ 524 Gross Margin - As Reported 28.3% 26.8% Gross Margin - As Adjusted 28.9% 26.9% Operating Profit – As Reported $ Rationalization charges 188 $ 54 18 7 Gain from sale of fixed assets - (5) Charge for litigation settlements, net - 75 Operating Profit – As Adjusted $ 206 $ 131 Operating Margin - As Reported 2.8% Operating Margin - As Adjusted 20 8.7% 9.6% 6.7%
  21. 21. Appendix – EPS Reconciliation – Second Quarter (in Millions) Q2 2013 Q2 2012 Income (loss) from Continuing Operations before Income Taxes – As Reported $ $ 131 (12) Rationalization charges 18 7 Gain from financial investments, net (5) - Gain from sale of fixed assets - (5) Charge for litigation settlements, net - 75 Interest carry costs - 7 Income from Continuing Operations before Income Taxes – As Adjusted $ Tax at 36% rate benefit (expense) 144 $ 72 (52) 10 Less: Net income attributable to non-controlling interest (26) 8 Net Income, as adjusted $ 82 $ 38 Income per common share, as adjusted $ 0.23 $ 0.11 Average Diluted Shares Outstanding 21 352 349
  22. 22. 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 $214 352 million 349 million Shares Outstanding 1 – Based on current business plans. 2 – Excludes rationalization expenses of $14M for the year ended December 31, 2012. 3 – Includes accelerated depreciation of $28M for the year ended December 31, 2012. Estimate for accelerated depreciation for the year ended December 31, 2013 is ~$17M. Such expenses are also included in the rationalization charges.
  23. 23. 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 Products $1.8B 24% 99% 100% Cabinets and Related Products $0.9B 12% 69% 92% Installation and Other Services $1.2B 16% 16% 100% Other Specialty Products $0.6B 8% 75% 75% 73% 80% Total company 23 R&R = % of sales to repair and remodel channels NC = % of sales to new construction channels NA = % of sales within North America Int’l = % of sales outside North America $7.5B 100%
  24. 24. 2012 Masco International Revenue Split* 6% 15% 26% 11% Other United Kingdom Northern Europe Southern Europe Central Europe Eastern Europe 34% 3% 5% Emerging Markets International Sales Accounted for ~20% of Total 2012 Masco Sales 24 *Based on company estimates

×