2014 masco corporation - db conference

Deutsche Bank Global Industrials and Basic Materials Conference

June 5, 2014

MASCO CORPORATION

Safe Harbor Statement

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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.

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.

http://www.masco.com/





Agenda

● Masco Performance - Momentum

● Powerful Capabilities – Strengths – Opportunities

● Go Forward Plan

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Masco – Strong Brands with Industry Leading Positions

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BUSINESS SEGMENT

Cabinets and Related Products

Plumbing Products

Installation and Other Services

Decorative Architectural Products

$1.0B

$3.2B

$1.4B

$1.9B

REVENUE 2013

$8.2B Total company

Other Specialty Products

$0.7B

LEADING POSITIONS

Leading U.S. kitchen and bath cabinetry brands

#1 worldwide in faucets, fittings, showerheads

#1 in spas

#1 insulation contractor for homebuilders

Leading DIY paint and stain provider

#1 in vinyl windows in the western U.S.

M A S C O P E R F O R M A N C E

Masco Drove Improvement During the Downturn

Reduced fixed costs

Strengthened management

Improved underperformers

Refined portfolio

• Installation profitable Q4 2012

• Cabinets profitable on an adjusted basis Q2 2013

• Reduced fixed gross costs by ~$600M, lowered breakeven

• Divested Danish cabinet business

• Aligned organization with strategic goal setting and improved planning process

• Topgraded talent at several BUs

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Masco is Delivering Growth and Strong Cash Flow Generation

6 *Operating Profit as adjusted, excluding goodwill, litigation, rationalization and other charges ($570M in 2011, $198M in 2012, and $48M in 2013). Operating (loss)/profit as reported, ($215M) in 2011, $302M in 2012 and $673 M in 2013.

$7.2

$7.5

$8.2

2011 2012 2013

Revenues ($B)

$355

$500

$721

2011 2012 2013

$75

$139

$514

2011 2012 2013

Cash Flow ($M)

Operating Profit* ($M)

M A S C O P E R F O R M A N C E

Masco Delivered a Solid Performance in 2013

Revenue $8.2B

Market cap >$7.9B

Dividend yield 1.4%

Free Cash Flow >$500M

Focused on Repair & Remodel (Breakdown of 2013 Revenue)

New Construction

Repair & Remodel 72% 28%

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12/31/2013

Liquidity $1.5B

Agenda



● Go Forward Plan

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Masco Strengths

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1 Unparalleled brand strength

2 Customer focused innovation

3 Broad market coverage

4 Strong financial position

M A S C O S T R E N G T H S

1. Unparalleled Brand Strength Drives Share Gains

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Masco Cabinetry (cabinet manufacturer

in U.S.)

Delta (faucet brand

in North America)

Masco Contractor Services (installer of

insulation in U.S.)

Behr (DIY architectural

coatings in North America)

Milgard (vinyl window

brand in Western U.S.)

Hansgrohe (global faucet

& mixer brand)

Arrow, Liberty, BrassCraft and

Watkins (in their respective market categories)

#2

#1

#1 #1

#1

#1

#2


2. Customer Focused Innovation

11 * Percentage of 2013 gross sales of manufactured products attributable to new products introduced in trailing 36 months

30%*

Examples of New Products/Technologies

Existing Products

2013 2012 2011

70%

Hansgrohe SelectTM

Collection

KraftMaid New Design Launch

2013 Revenues

BehrPro® Paint

Masco Cabinetry’s ProCision® Process

Kilz PRO-X® Paint

Delta® Toilets

Paint & Primer in One with Advanced Stain

Blocking Formula

KraftMaid® Vanities

Behr DeckOver®

Coating


3. Broad Coverage Across Segments, Price Points and Channels

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Segments Price Points Channels

New construction

28%

Repair / remodel 72%

International 19%

N. America 81%

• Low ticket value ~$20

• High ticket luxury ~$20K

• Direct-to-Builder

• Big box retail

• Wholesale / dealer trade


4. Strong Financial Position

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Strong Liquidity (as of 3/31/2014)

● A strong operating cash flow business – ~$1B last 3 years – Maintenance capex of ~$100M annually

● Valuation allowance of ~$550 million on deferred tax assets is expected to be reversed when our U.S. businesses return to sustained profitability

● Plan to reduce debt by $300M–$500M by 2016

Declining Debt to Capitalization Ratio

2013Year End

FutureTarget

Balance Sheet Liquidity

Cash and cash investments $0.9B

Short-term bank deposits $0.3B

Total $1.2B

82%

45%–55%

Agenda



● Go Forward Plan

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Masco Opportunities

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2. Leverage

opportunities across our portfolio

1. Drive full

potential of our core businesses

3. Actively manage portfolio

O P P O RT U N I T I E S

M A S C O O P P O R T U N I T I E S

1. Drive Full Potential of Our Core Businesses

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Current Examples:

● Extended Delta® brand to toilets and showers based on the power of the brand

● Increased Behr marketing to the professional painter to add a new channel

● Extended Hansgrohe into new international markets

1.


2. Leverage Opportunities Across Our Portfolio

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● Improved supply chain by implementing best practices across our portfolio

● Reduced material costs from integrated purchasing

● Applied value engineering across businesses

Current Examples:

2.


3. Actively Manage Portfolio

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● Divested underperforming Danish cabinet business

● Integrated Alsons® showerheads into Delta to provide cost savings and brand extensions

● Acquired opening price point spa business to augment Watkins’ spas

Current Examples:

3.

Agenda



● Go Forward Plan

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Go Forward Plan

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1

2 Immersion in the business

3

Strategic Plan

Listening tour • Customers • Investors • Employees

Short term plan • Assess team • Determine org structure • Implement operating model

Year-End 2014

Momentum Powerful Capabilities Go Forward Plan

Key Messages

● Masco is a strong company, and we believe we are positioned to outperform the recovery

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● Focused on execution to take advantage of strengths and drive opportunities faster

● Plan to communicate updated strategy by year-end 2014

Deutsche Bank Global Industrials and Basic Materials Conference

June 5, 2014

MASCO CORPORATION

Appendix

($ in Millions) 2014 Estimate 2013 Actual

Rationalization Charges1, 3 ~ $10 $48

Tax Rate ~ 17% 26%

Interest Expense ~ $225 $235

General Corp. Expense2 ~ $130 $134

Capital Expenditures ~ $200 $126

Depreciation & Amortization3

~ $175 $186

Shares Outstanding 352 million 352 million

2014 Guidance Estimates

1. Based on 2014 business plans.

2. Includes rationalization expenses of $3M for the year ended December 31, 2013.

3. Includes accelerated depreciation of $13M for the year ended December 31, 2013 and estimated accelerated depreciation for the year ended December 31, 2014 of ~$1M. Such expenses are also included in the rationalization charges.

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2013 Segment Mix*

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 *Based on Company estimates.

Business Segment

Plumbing Products

Installation and Other Services

Decorative Architectural Products

$3.2B

$1.4B

$1.9B

Revenue 2013 % of Total

39%

23%

17%

$8.2B 100% Total Company

Other Specialty Products $0.7B 9%

R&R% vs. NC NA% vs. Int’l

82% 59%

99% 100%

18% 100%

74% 76%

72% 81%

Cabinets and Related Products $1.0B 12% 57% 93%

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2013 International Revenue Split*

*Based on Company estimates.

International Sales Accounted for ~20% of Total 2013 Masco Sales

23%

7%

6%

31%

9%

14%

10%

UKNorthern EuropeSouthern EuropeCentral EuropeEastern EuropeEmerging marketsOther

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2014 masco corporation - db conference

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