- Masco reported strong first quarter 2017 results, with top line growth driven by its North American Plumbing segment. The company achieved 22 consecutive quarters of sales and operating profit growth.
- Operating leverage led to expanded margins and earnings per share exceeded expectations. The company updated its EPS target range provided in 2015.
- Plumbing Products sales increased 8% excluding foreign exchange impacts, fueled by record sales and profits at Delta. Decorative Architectural Products saw builders' hardware growth despite difficult comparisons.
Michiel van Katwijk, CFO of Transamerica, provides an update on how Aegon is delivering cash flows & returns in the US, at the December 2016 Aegon Analyst & Investors Conference in New York.
2. Safe Harbor Statement
This presentation contains statements that reflect our views about our future performance and 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. Our views
about future performance 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 the levels of home improvement activity and new home
construction, our ability to maintain our strong brands and to develop and introduce new and improved
products, our ability to maintain our competitive position in our industries, our reliance on key customers, our
ability to achieve the anticipated benefits of our strategic initiatives, our ability to improve our under-performing
U.S. window business, the cost and availability of raw materials, our dependence on third party suppliers, and
risks associated with international operations and global strategies. These and other factors are discussed in
detail in Item 1A, “Risk Factors” in our most recent 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. The
forward-looking statements in this press release speak only as of the date of this press release. 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
3. Masco Q1 2017 Results
Topic
● Summary of Results Keith Allman
● Financial/Operations Review John Sznewajs
● Q&A
3
4. Q1 2017 IN REVIEW
Strong Start to 2017
• Top line growth driven by North American Plumbing
• Strong operating leverage leads to margin expansion
• Industry fundamentals are strong
• Repurchased 2.8 million shares for $92 million
• Earnings per share target provided at our 2015 Investor
Day updated from $1.80 to a range of $1.90 to $2.00
per common share, which includes an estimated $0.06
benefit from a reduction in our expected tax rate*
4
Driving
Shareholder
Value
*Future performance reflects company estimates
5. Masco Q1 2017 Results
Topic
● Summary of Results Keith Allman
● Financial/Operations Review John Sznewajs
● Q&A
5
6. 22nd
Consecutive Quarter of Sales
and Operating Profit Growth
6
*See Appendix for GAAP reconciliation.
Quarter Highlights
• Total company sales increased 5% excluding the effects of foreign currency
translation
• In local currency, North American sales increased 4% and international sales
increased 5%
• FX negatively impacted sales by approximately $22 million
($ in Millions)
First Quarter
2017
Revenue $1,777
Y-O-Y Change 3%
Operating Profit* $255
Y-O-Y Change $18
Operating Margin* 14.4%
Y-O-Y Change 60 bps
Adjusted EPS* $0.41
Y-O-Y Change 28%
7. PLUMBING PRODUCTS
7
North American Plumbing Drives Profitable Growth
Quarter Highlights
• Total segment sales increased 8% excluding the impact of foreign currency
translation
• In local currency, North America sales increased 9% and international sales
increased 6%
• FX negatively impacted sales by approximately $15 million
• Performance fueled by a record quarter for sales and operating profit at Delta
($ in Millions)
First Quarter
2017
Revenue $863
Y-O-Y Change 6%
Operating Profit* $156
Y-O-Y Change $25
Operating Margin* 18.1%
Y-O-Y Change 200 bps
*Excludes business rationalization charges of $2 million for the first quarter 2016.
8. DECORATIVE ARCHITECTURAL PRODUCTS
8
Top Line Growth Despite Difficult Comp
Quarter Highlights
• Builders’ hardware benefited from shower door program expansion and growth in
core products
• Behr's pro initiative continues to gain momentum with strong double digit growth
• Operating profit impacted by the Behr pro hub store strategic investment, timing of
advertising spend, and unfavorable price to commodity relationship
($ in Millions)
First Quarter
2017
Revenue $505
Y-O-Y Change 2%
Operating Profit $101
Y-O-Y Change ($4)
Operating Margin 20.0%
Y-O-Y Change (130) bps
9. CABINETRY PRODUCTS
9
Continued Growth in Both Retail and Dealer Channels
Quarter Highlights
• KraftMaid®
brand delivered solid growth in both the retail and dealer channels
• Segment growth was more than offset by the planned exit of certain less profitable
direct-to-builder business
• Operating profit impacted by product launch and related expenses of approximately
$5 million
*Excludes business rationalization charges for the first quarter 2017 and 2016 of $2 million and $1 million, respectively.
($ in Millions)
First Quarter
2017
Revenue $231
Y-O-Y Change (2%)
Operating Profit* $18
Y-O-Y Change ($7)
Operating Margin* 7.8%
Y-O-Y Change (280) bps
10. WINDOWS AND OTHER SPECIALTY PRODUCTS
10
Positioned to Deliver Improved Results in 2017
Quarter Highlights
• Sales increased 3% excluding the effects of foreign currency translation
• Positive mix and favorable pricing drove sales growth
• Operating margin benefited from cost saving initiatives
($ in Millions)
First Quarter
2017
Revenue $178
Y-O-Y Change 0%
Operating Profit $6
Y-O-Y Change $3
Operating Margin 3.4%
Y-O-Y Change 170 bps
*Excludes business rationalization charges of $0 million for the first quarter 2017.
11. Strong Balance Sheet
Liquidity as of 3/31/2017
Cash and cash investments $0.7B
Short-term bank deposits $0.2B
Total $0.9B
11
• Repurchased 2.8 million shares in Q1 for $92 million
Disciplined Capital Allocation
12. Masco Q1 2017 Results
Topic
● Summary of Results Keith Allman
● Financial/Operations Review John Sznewajs
● Q&A
12
15. Appendix – Profit Reconciliation – First Quarter
15
($ in millions) Q1 2017 Q1 2016
Net sales $ 1,777 $ 1,720
Gross profit, as reported $ 608 $ 569
Rationalization charges 2 1
Gross profit, as adjusted $ 610 $ 570
Gross margin, as reported 34.2% 33.1%
Gross margin, as adjusted 34.3% 33.1%
Selling, general and administrative expenses, as reported $ 355 $ 335
Rationalization charges — 2
Selling, general and administrative expenses, as adjusted $ 355 $ 333
Selling, general and administrative expenses as percent of net sales, as reported 20.0% 19.5%
Selling, general and administrative expenses as percent of net sales, as adjusted 20.0% 19.4%
Operating profit, as reported $ 253 $ 234
Rationalization charges 2 3
Operating profit, as adjusted $ 255 $ 237
Operating margin, as reported 14.2% 13.6%
Operating margin, as adjusted 14.4% 13.8%
16. Appendix – EPS Reconciliation – First Quarter
16
($ in millions, except per common share data) Q1 2017 Q1 2016
Income before income taxes, as reported $ 213 $ 177
Rationalization charges 2 3
(Gains) from private equity funds, net (1) —
(Earnings) from equity investments, net — (1)
Income before income taxes, as adjusted 214 179
Tax at 34% rate (36% for 2016) (73) (64)
Less: Net income attributable to noncontrolling interest 10 10
Net income, as adjusted $ 131 $ 105
Net income per common share, as adjusted $ 0.41 $ 0.32
Average diluted common shares outstanding 321 333
17. ($ in millions) 2017 Estimate 2016 Actual
Rationalization Charges1
~ $3 $22
Tax Rate2
~ 34% 36%
Interest Expense ~ $175 $229
General Corp. Expense ~ $100 $109
Capital Expenditures ~ $200 $180
Depreciation & Amortization ~ $130 $134
Foreign Currency Translation
Impact to Sales3 ~ ($100) ($68)
Shares Repurchased4
$400-500 $459
1. Based on 2017 business plans.
2. Reduction in tax rate from prior guidance primarily due to the adoption of ASU 2016-09 related to stock based compensation
3. Based on rates as of December 29, 2016.
4. 2017 and 2016 share repurchases include approximately 771,000 and 1.1 million shares, respectively, that were repurchased to offset grants of long-term stock awards.
17
2017 Guidance Estimates
18. 2016 Segment Mix*
Business Segment Revenue 2016 % of Total R&R % vs. NC NA% vs. Int'l
Plumbing Products $3.5B 48% 82% 63%
Decorative
Architectural Products
$2.1B 28% 99% 100%
Cabinetry Products $1.0B 13% 61% 94%
Windows and Other
Specialty Products
$0.8B 11% 71% 78%
Total Company $7.4B 100% 83% 79%
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 18
19. 2016 International Revenue Split*
*Based on Company estimates
International Sales Accounted for ~21%
of Total 2016 Masco Sales
19
United Kingdom
Northern Europe
Southern Europe
Central Europe
Eastern Europe
Emerging Markets
Other
27%
5%
8%
28%
6%
16%
10%
