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, 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. Masco Q1 2012 Results – Agenda
Topic
• Summary of Results Tim Wadhams
• Financial/Operations Review John Sznewajs
• Outlook Tim Wadhams
• Q&A
3
4. Key Messages Today
• Sales driven by demand growth in key channels
• Margin improvement reflects operating leverage,
execution on pricing and total cost productivity
• Continued progress on strategic initiatives
4
6. Strategy Execution Highlights Q1 2012
1 • Increased international project work in Plumbing
Expand market • Strong residential new construction, retrofit and commercial
leadership channel growth in Installation Services
• New product introductions in Decorative Architecture
2
Reduce costs • Profit improvement initiatives positively impacting margins
3
Improve • Significant reduction in first quarter losses in our
underperforming Cabinet and Installation segments; on target for full
year improvement
businesses
4
Strengthen • Debt offering
Balance Sheet
6
7. Masco Q1 2012 Results – Agenda
Topic
• Summary of Results Tim Wadhams
• Financial/Operations Review John Sznewajs
• Outlook Tim Wadhams
• Q&A
7
8. Improved Results Impacted by Increased Demand
and Execution
First Quarter
($ in Millions)
2012
Revenue $1,875
Growth 7%
Adjusted Operating Profit* $112
Y-O-Y Change $54
Adjusted Operating Margin* 6.0%
Y-O-Y Change 270 bps
Adjusted EPS* $0.05
*As reported operating profit $102M; operating margin 5.4%; EPS $.11 per common share, see appendix for
reconciliation
8
9. Q1 2012 Operating Profit Reflects Successful Price/
Commodity Management and Profit Improvement
Activities
$14M $112M
$22M
$18M
$58M
Y-O-Y Change in
Operating Profit $54M
Q1 2011 Net Volume / Net Price / Profit Improvement Q1 2012
Adjusted Operating Mix Commodity & All Other Net Adjusted Operating
Profit* Profit*
*See appendix for reconciliation
9
10. Plumbing Products:
Strong Performance in North America; International
Sales Mix Impacting Margin
First Quarter
($ in Millions)
2012
Revenue $742
Growth 5%
Adjusted Operating Profit* $106
Y-O-Y Change $16
Adjusted Operating Margin* 14.3%
Y-O-Y Change 160 bps
*Excludes business rationalization charges of $9M and $6M in the first quarter of 2012 and 2011, respectively.
Highlights
• Top line growth driven by increased sales in retail, trade, and
international channels
• International growth and consumer preference in emerging markets
unfavorably impacting mix
• Unfavorable currency impact driven by conversion from the Euro
• Favorable price/commodity impact including positive hedge
10
11. Decorative Architectural Products:
Top Line Growth, Sequential Margin Improvement
First Quarter
($ in Millions)
2012
Revenue $434
Growth 16%
Adjusted Operating Profit* $73
Y-O-Y Change $3
Adjusted Operating Margin* 16.8%
Y-O-Y Change (190) bps
*Excludes business rationalization charges of $1M in the first quarter of 2011.
Highlights
• Sales driven by Behr Pro business growth, favorable weather, and
strong retail channel activity
• Margins impacted by the timing of price increases, commodity costs
and strategic growth spend
• New product introductions
11
12. Cabinets and Related Products:
Profit Improvement Initiatives Continue Positive Trend
First Quarter
($ in Millions)
2012
Revenue $297
Y-O-Y Change (3%)*
Adjusted Operating Loss** $(20)
Y-O-Y Change $9
Adjusted Operating Margin** (6.7%)
Y-O-Y Change 270 bps
*Excluding sales related to the planned exit of certain product lines and the effect of currency, first
quarter sales increased 1% compared to 2011
**Excludes business rationalization charges of $3M and $21M in the first quarter of 2012 and 2011,
respectively.
Highlights
• N.A. Builder and countertop sales growth offset by continued
aggressive promotional activity at retail
• Profit improvement initiatives reflected in margin improvement
12
13. Installation and Other Services:
Strong Execution Reflected in Top & Bottom Line
Performance
First Quarter
($ in Millions)
2012
Revenue $278
Growth 18%
Adjusted Operating Loss* $(14)
Y-O-Y Change $19
Adjusted Operating Margin* (5.0%)
Y-O-Y Change 900 bps
*Excludes business rationalization charges of $2M in the first quarter of 2011.
Highlights
• Strong growth in residential new construction, distribution, retrofit and
commercial channels as well as insulation sales
• Profit improvement initiatives reflected in margin improvement
13
14. Other Specialty Products:
2011 Plant Closures Improve Margins
First Quarter
($ in Millions)
2012
Revenue $124
Y-O-Y Change (2%)
Adjusted Operating Loss ($5)
Y-O-Y Change $5
Adjusted Operating Margin (4.0%)
Y-O-Y Change 390 bps
Highlights
• Reduced revenues were due to the exit of select U.S. Window markets in late
2011, which offset U.K. new home construction growth and increased tool sales
at retail
• Profit improvement initiatives reflected in margin improvement
14
15. Strengthening the Balance Sheet
• Debt Offering
– In March 2012, Masco issued $400M of 5.95% Notes due March, 2022
– Effective interest rate of 6.5% includes impact of swap termination
– The Notes were issued in anticipation of our debt maturity in July 2012 of $745M
• Working Capital as a percent of sales improved to 14.7% in Q1 2012
compared to 15.5% in Q1 2011
$1.8 billion of cash as of 3/31/2012
15
16. Masco Q1 2012 Results – Agenda
Topic
• Summary of Results Tim Wadhams
• Financial/Operations Review John Sznewajs
• Outlook Tim Wadhams
• Q&A
16
17. Delivering on 2012 Priorities – Q1 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
18. Outlook into 2012
Tailwinds Headwinds
• Solid 1Q 2012 performance – • Competitive promotional
off to a good start environment for Cabinets
• Successful price increases in • International expansion cost
key businesses and mix impact
• Major restructuring activities • Commodity cost volatility
complete
• Composition of new
• Debt offering housing starts
• Improving demand in • European Economies
residential new construction &
repair and remodel
18
22. Appendix – EPS Reconciliation
(in Millions) Q1 2012 Q1 2011
Income (Loss) from Continuing Operations before Income
Taxes – As Reported $ 53 $ (16)
Rationalization Charges 12 32
Litigation (Income) Charge (2) -
Financial Investment (Income) Expense (16) (17)
Income (Loss) from Continuing Operations before Income
Taxes – As Adjusted 47 (1)
Tax at 36% rate benefit (expense) (17) 0
Less: Net income attributable to non-controlling interest 11 12
Net Income (Loss) – as adjusted $ 19 $ (13)
Income (Loss) per common share – as adjusted $ 0.05 $ (0.04)
Shares 350 349
22
23. 2012 Outlook – Cabinets Estimated Improvement
*As communicated 2/14/2012
(in Millions) Sales Operating Profit
2011 Total Segment $1,230 ($115)
1
Less: 2011 International ($370) ($40)
2011 North America Cabinet Actual $860 ($75)
Product Exit (10) $13
2011 N.A. Operating Loss ($62)
2
2012 Profit Improvements, Net $30
2
2012 Revenue Opportunities, Net $30 $10
2012 N.A. Cabinet Estimate $880 ($22)
1
Uncertain economic environments, identified cost reductions of ~$7M net in 2012
2
Management estimates
Opportunities:
• Adding new dealers and additional brands with existing dealers in 2011 starting to show solid results
• New 2011 vanity/top programs at retail now generating growth opportunities
• New 2011 kitchen countertop program at retail expanding throughout the East Coast
*Assumptions:
• Reflects a flat retail and housing start environment of 600k starts with
constant mix
• Every 50k increase in lagged US starts = ~$25M in revenues (assuming
23 constant mix) which converts to ~$8-$10M in profits
24. 2012 Outlook – Installation Estimated Improvement
*As communicated 2/14/2012
(in Millions) Sales Operating Profit
2011 Total Segment $1,077 ($71)
2011 Branch Closures ($30) $6
2011 Adjusted Segment $1,047 ($65)
1
2012 Profit Improvements, Net $20
1
2012 Revenue Opportunities, Net $40 $10
2012 Installation Segment
Estimate $1,087 ($35)
1
Management Estimates
Opportunities:
• Segment continues to add profitable retrofit and residential/commercial business
• Further cost reductions from lean implementation, ERP leverage, vendor partnership and supply
chain benefits
*Assumptions
• Reflects a flat housing start environment of 600k starts with constant mix
• Every 50k increase in lagged US starts = ~$50M in revenues (assuming constant mix) which converts to ~$12M-$15M in profits
24
25. 2012 Guidance Estimates
($ in Millions) 2012 Estimate 2011 Actual
Rationalization Charges* ~ $20 $121
Tax Rate** ~ 50% 18%
Interest Expense ~ $250 $254
General Corp. Expense ~ $140 $118
Capital Expenditures ~ $180 $151
Depreciation & ~ $220 $263***
Amortization
Outstanding Shares 348 million 348 million
*Based on current business plans.
**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.
***2011 includes $58M of accelerated depreciation, which is also included in the rationalization charges.
