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Q3 2012 Masco Earnings Presentation

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Q3 2012 Masco Earnings Presentation

  1. 1. Third Quarter 2012 Masco Earnings Presentation October 30, 2012
  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, and our ability to achieve cost savings through business rationalizations and other initiatives. 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. 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. 2
  3. 3. Masco Q3 2012 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 3
  4. 4. Key Messages Today • Sales growth in North America of 4% offset by challenging economic conditions in Europe • Strengthening new home construction activity positively impacting sales • Repair and remodel activity improved modestly; big ticket remodel remains weak • Successful execution on price/commodity relationships and total cost productivity continue to improve margins 4
  5. 5. Masco’s Strategic Initiatives 1 • Leverage brands Expand market leadership • Innovative products 2 • Total cost productivity Reduce costs • Drive lean benefits Outperform the 3 • Focus on recovery Improve Cabinets, Installation underperforming businesses • Return to profitability 4 Strengthen • Debt reduction Balance Sheet • Strong liquidity 5
  6. 6. Strategy Execution Highlights 1 • New Delta brand extensions at retail with toilets Expand market • Expansion of Behr Paint with The Home Depot Mexico leadership • New Builder’s Hardware programs driving share gains 2 • Exceeding total cost productivity targets Reduce costs • Additional headcount reductions and plant closures 3 • Installation segment nearly break even in Q3 Improve • Additional rationalization actions taken in the Cabinet underperforming segment businesses 4 • Debt pay down in July 2012 Strengthen • Cash at 9/30/2012 is $1.2 billion Balance Sheet 6
  7. 7. Laser Focus on Achieving Breakeven Cabinets  YTD operating profit improvement of $20M, principally driven by cost reductions in North America  Benefits from increased new home construction activity offset by: • Market conditions in European economies • Challenges implementing North American dealer and countertop strategies  Plant closure and headcount reduction actions announced in the third quarter expected to reduce costs by $20M annually Installation  Almost breakeven in Q3 2012  YTD operating profit improvement of $41M driven by new home construction activity, cost reductions from lean, ERP leverage, and supply chain management  Continued penetration of retrofit and commercial channels 7
  8. 8. Masco Q3 2012 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 8
  9. 9. Profit Margin Growth on Flat Sales Third Quarter ($ in Millions) 2012 Revenue $1,976 Y-O-Y Change (0%)* Adjusted Operating Profit** $142 Y-O-Y Change $14 Adjusted Operating Margin** 7.2% Y-O-Y Change 70 bps Adjusted EPS** $0.13 *Excluding the effect of currency, third quarter 2012 sales increased 2% compared to 2011. ** As reported operating profit $101M; operating margin 5.1%; E.P.S. of $.06; see appendix for reconciliation. 9
  10. 10. Plumbing Products: Strong Performance in North American Faucets Third Quarter ($ in Millions) 2012 Revenue $736 Y-O-Y Change (4%)* Adjusted Operating Profit** $81 Y-O-Y Change ($11) Adjusted Operating Margin** 11% Y-O-Y Change (100) bps *Excluding the effect of currency, third quarter sales 2012 increased 1% compared to 2011. **Excludes business rationalization charges of $6M and $1M in the third quarter of 2012 and 2011, respectively. Highlights • Sales of North American faucets increased high single digits • International sales flat in local currency • Margin negatively impacted by: • Incremental program costs of $5 million • Currency of $5 million 11
  11. 11. Decorative Architectural Products: Top Line Growth, Y-O-Y Margin Improvement Third Quarter ($ in Millions) 2012 Revenue $481 Growth 6% Operating Profit $96 Y-O-Y Change $8 Operating Margin 20.0% Y-O-Y Change 70 bps Highlights • Revenues benefitted by Behr Paint and Primer in One sales and price increases • Operating profit margin impacted by favorable price/commodity relationship and improved results in Builder’s Hardware 12
  12. 12. Cabinets and Related Products: International Weakness Slowing Segment Improvement Third Quarter ($ in Millions) 2012 Revenue $291 Y-O-Y Change (5%)* Adjusted Operating Loss** $(26) Y-O-Y Change $1 Adjusted Operating Margin** (8.9%) Y-O-Y Change (10) bps *Excluding the effect of currency, third quarter 2012 sales decreased 2% compared to 2011. **Excludes business rationalization charges of $9M and $7M in the third quarter of 2012 and 2011, respectively. Highlights • North American new home construction and home center sales strength offset by weaker dealer sales • International sales impacted by continued weak European macro- economic conditions • North American profit improvement partially offset by International results 13
  13. 13. Installation and Other Services: Strong Execution Reflected in Top & Bottom Line Performance Third Quarter ($ in Millions) 2012 Revenue $312 Growth 9% Adjusted Operating Loss ($1) Y-O-Y Change* $12 Adjusted Operating Margin (0.3%) Y-O-Y Change* 420 bps *Excludes business rationalization charges of $1M and $2M in the third quarter of 2012 and 2011, respectively. Highlights • Continued growth in new home construction, commercial and retrofit • Strong insulation installation sales growth of ~20% • Margins reflect operating leverage and profit improvement initiatives 14
  14. 14. Other Specialty Products: Strong North American Window Performance Third Quarter ($ in Millions) 2012 Revenue $156 Y-O-Y Change (3%) Adjusted Operating Profit* $16 Y-O-Y Change $2 Adjusted Operating Margin* 10.3% Y-O-Y Change 160 bps *Excludes business rationalization charges of $1M and $2M in the third quarter of 2012 and 2011, respectively. Also excludes warranty change in estimate of $12M in the third quarter of 2012. Highlights • North American window sales increased high single digits driven by new home construction and replacement window sales, partially offset by the exit of select US window markets in late 2011 • Margin improvement fueled by profit improvement initiatives • Softness in hand tools sales principally driven by a weaker roofing market 15
  15. 15. Masco Q3 2012 Results – Agenda Topic • Summary of Results Tim Wadhams • Financial/Operations Review John Sznewajs • Outlook Tim Wadhams • Q&A 16
  16. 16. Delivering on 2012 Priorities – Q3 Highlights Cabinet profit improvement Installation profit improvement Successfully launch new products and programs Reduce debt by ~$400M/refinance $400M Investment in strategic growth initiatives Grow share of key brands Total cost productivity Geographic expansion 17
  17. 17. Outlook Tailwinds Headwinds • Improving demand in new • Continued slow economic home construction activity in European economies • Successful product introductions at retail • Aggressive promotional environment at retail • Favorable price/commodity relationships • International Plumbing mix impact • Improved balance sheet • Commodity cost volatility • Additional profit improvement opportunities identified and • Slow and uneven recovery in actions taken U.S. repair and remodel activity 18
  18. 18. Q&A
  19. 19. Appendix
  20. 20. Appendix – Profit Reconciliation ($ in Millions) Q3 2012 Q3 2011 Sales $ 1,976 $ 1,978 Gross Profit – As Reported $ 500 $ 495 Rationalization Charges 11 8 Other Specialty Products - Warranty 12 - Gross Profit – As Adjusted $ 523 $ 503 Gross Margin - As Reported 25.3% 25.0% Gross Margin - As Adjusted 26.5% 25.4% Operating Income – As Reported $ 101 $ 114 Rationalization Charges 28 13 Litigation Charge 1 1 Other Specialty Products - Warranty 12 - Operating Profit – As Adjusted $ 142 $ 128 Operating Margin - As Reported 5.1% 5.8% Operating Margin - As Adjusted 7.2% 6.5% 21
  21. 21. Appendix – EPS Reconciliation (in Millions) Q3 2012 Q3 2011 Income from Continuing Operations before Income Taxes – As Reported $ 45 $ 73 Rationalization Charges 28 13 Litigation Charge 1 1 Financial Investment (Income), Net (2) (19) Other Specialty Products - Warranty 12 - Income from Continuing Operations before Income Taxes – As Adjusted 84 68 Tax at 36% rate benefit (expense) (30) (24) Less: Net income attributable to non-controlling interest (9) (13) Net Income – as adjusted $ 45 $ 31 Income per common share – as adjusted $ 0.13 $ 0.09 Shares 350 348 22
  22. 22. 2012 Guidance Estimates ($ in Millions) 2012 Estimate 2011 Actual Rationalization Charges1 ~ $65 $121 Tax Rate2 ~ 110% 18% Interest Expense ~ $250 $254 General Corp. Expense3 ~ $125 $118 Capital Expenditures ~ $130 $151 Depreciation & ~ $210 $263 Amortization4 Outstanding Shares 350 million 348 million 1 – Based on current business plans. 2 – Tax rate for 2011 excludes the valuation allowance on the Federal deferred income tax assets and the impairment charge for goodwill and other intangible assets. 3 – Excludes rationalization expenses of $11M incurred through September 30, 2012. 4 – Includes accelerated depreciation of $58M for the year ended December 31, 2011 and $12M for the nine months ended September 30, 2012. Such expenses are also included in the rationalization charges. 23

Notes de l'éditeur

  • We began 2012 by communicating the Strategic Initiatives which we would focus on in 2012 to deliver greater performance and outperform a housing recovery.
  • Changed the cabinet picture please adjust
  • Added and deleted categories
  • Added and deleted categories

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