Raymond James
34th Annual Institutional
Investors Conference
March 6, 2013
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, 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.
2
INVESTMENT THESIS
Strong Fundamentals - Positioned for Growth
The company
The strategy
The strengths
The growth
3
Masco at a Glance
2012
Revenue
Revenue % renovation vs. new construction
4
$7.8B
73%
Cumulative free cash flow last 3 years
~$1B
Employees
30,000
Market capitalization
>$6.0B
Dividend yield
2.9%
Cash at 12/31/2012
$1.4B
Masco – Strong Brands with Industry Leading Positions
Business Segment
% of Total
R&R% vs. NC
NA% vs. Int’l
Plumbing
Products
$3.0B
38%
82%
59%
Decorative
Architectural
Products
$1.8B
24%
99%
100%
Cabinets and
Related Products
$1.2B
15%
69%
73%
Installation and
Other Services
$1.2B
16%
16%
100%
Other Specialty
Products
$0.6B
7%
75%
75%
73%
78%
Total company
5
Revenue 2012
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
$7.8B
100%
Masco – Unique Scope and Scale
We believe we are the……
6
Largest
manufacturer of faucets in the world
Largest
non-commodity supplier to The Home Depot
Largest
supplier to Lowe’s Kitchen and Bath segment
Largest
supplier of architectural coatings to the
U.S. DIY market
Largest
installer of insulation products for the new home
construction market
INVESTMENT THESIS
Strong Fundamentals - Positioned for Growth
The company
The strategy
The strengths
The growth
7
Masco’s Strategic Initiatives
1
Expand market
leadership
• Leverage brands
• Innovative products
2
Reduce costs
3
Improve
underperforming
businesses
• Total cost productivity
• Drive lean benefits
• Return Cabinets to
profitability
• Drive profitability and
growth in Installation
4
Strengthen
Balance Sheet
8
• Debt reduction
• Strong liquidity
Positioned
for Growth
1. EXPAND MARKET LEADERSHIP
Key Brands Gaining Share since 2010
Examples
• Delta®, Peerless®, and Brizo® brands in U.S.
• International plumbing growth with Hansgrohe
• Decorative Architectural: Behr® #1 DIY Paint at
The Home Depot, Direct to Pro® service growth,
Kilz Pro line
• Other Specialty: Milgard® windows outperforming
market, UK growing share
• Masco Contractor Services gaining share with
insulation, retrofit and commercial channels
• Merillat® and Quality® cabinet brands gaining share
with builders
9
Gaining Share
2. REDUCE COSTS
Significant Progress Lowering Cost Structure  Higher Margins
Cumulative Gross Fixed Cost
Reductions
~$600M
Headcount Reductions
of ~50%
62,500
30,000
~$100M
2006
2012
2006
2012
Includes 33 closed / mothballed facilities
10
3. IMPROVE UNDERPERFORMING BUSINESSES
Improved Profitability and Positioned for Growth
Cabinets
 New North American management team in place in 2012
 Achieved ~$32M operating profit improvement in 2012
 Disposition of Danish ready-to-assemble cabinet business

Revenue ~$250M and operating loss of ~$30M
Installation
 Continued penetration of retrofit and commercial channels
 Further cost reductions from lean, ERP leverage, supply
chain
 Achieved profitability in Q4 2012
11
4. STRENGTHEN BALANCE SHEET
Declining Debt to Capitalization Ratio
87%
• $400M reduction in 2012
45%-55%
• Planned reduction of
$200M in 2013
•
2012
Year End
12
Future Target
Valuation Allowance of
~$630 million on Deferred
Tax Assets is expected to be
reversed when our U.S.
businesses return to
sustained profitability
INVESTMENT THESIS
Strong Fundamentals - Positioned for Growth
The company
The strategy
The strengths
The growth
13
Key Strengths we are Leveraging
14
1
Market-leading brands
2
Industry innovator
3
Broad distribution
4
Masco Business System
5
Strong financial position
STRENGTH 1: MARKET LEADING BRANDS
Unparalleled Brand Strength
Cabinets & Related
Products
Plumbing
Products
Decorative
Architectural Products
Installation &
Other Services
15
Other Specialty
Products
STRENGTH 2: INDUSTRY INNOVATOR
Significant New Product Introductions – Last 3 Years
Examples of New Products/Technologies
2010
2011
2012
Arrow
R.E.D.
BehrProTM
Delta Toilets
2012 Revenues
70%
Existing
Products
30%*
Milgard Essence™
Windows
ACE® Salt Water
Sanitizing System
16
Kilz
PRO-XTM
Masco Cabinetry’s
ProCisionTM Process
Paint & Primer in One
with Advanced Stain
Blocking Formula
KraftMaid Vanities
* Percentage of 2012 gross sales of manufactured products attributable to new products introduced in trailing 36 months
STRENGTH 3: BROAD DISTRIBUTION
Winning with Winning Customers
Broad Portfolio
Big Box Retailers
• Dedicated customer-
specific service
organizations with over
750 field service
employees
Homebuilders
Wholesalers / Dealers
• Exclusive products and
• Extensive training
• A leading insulation
• Superior dealer support
services for the direct to
builder channel
contractor in the US
programs for branch and
showroom associates
through display and
technology expertise
• Premier brands  drive traffic
17
STRENGTH 4: MASCO BUSINESS SYSTEMS
A Continuous Improvement Culture
– At the Center of Our Success
Customer focus
MBS
Innovation
Lean
Talent
Quality

18
STRENGTH 5: STRONG FINANCIAL POSITION
Strong Liquidity and Improving Balance Sheet
Strong Liquidity
(as of 12/31/2012)
Declining Debt to
Capitalization Ratio
87%
• Cash and equivalents of ~$1.4B
• Borrowing availability of ~$870M
45%-55%
• A strong free cash flow business
•
19
–
~$1B last 3 years
–
Maintenance capex of
~$100M annually
Valuation Allowance of ~$630 million on
Deferred Tax Assets is expected to be
reversed when our U.S. businesses return
to sustained profitability
2012
Year End
Future Target
• Paid down $400M in 2012
• Plan to reduce debt in 2013 by $200M
INVESTMENT THESIS
Strong Fundamentals - Positioned for Growth
The company
The strategy
The strengths
The growth
20
Positioned for Growth
21
1
Leveraged to the recovery
2
Continued brand leverage and share expansion
3
Continued cost position improvement
4
Disciplined capital deployment
1. Leveraged to the Recovery
Adjusted Operating Margin*
10-14%
12%
Reflects
• lower fixed cost base
of >$600M (gross)
6%
6%
• driving lean principles
across the company
4%
2006
Last Peak
Housing
starts
2.1M
2010
2011
2012
3-5 Years
0.6M
0.6M
0.7M
~1-1.5M
30% margin on incremental volume
22
*See Appendix slide 32 for GAAP reconciliation
2. Initiatives to Leverage Brands and Expand Share
Product
Introductions
Plumbing
Products
Decorative
Architectural
Products
Cabinets
and Related
Products
Installation
and Other
Services
Other
Specialty
Products
23
Strengthen
Brand Loyalty
Extend
Categories
Geographic
Expansion
3. Continue to Improve Cost Position
Driven by:
Sourcing
Lean
Initiatives
Distribution
& Logistics
24
* Gross
Driven by:
~$195M*
of Total Cost
Productivity
in 2012
Actions Taken In
Prior Years
•
•
•
Plant Closures
Headcount
Reductions
System
Implementations
4. Disciplined Capital Deployment
Invest in the Business
• Maintenance capex: $100M annually
Financial Flexibility
Strong Cash
Flow Generation
• Target 45%-55% debt to
capitalization vs. ~87%
Dividend
• Maintain dividend yield ~2%
Acquisitions
• Potential acquisitions (<$100M) in
support of international expansion
25
2013 Priorities
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
26
Masco 3-5 Years Out – A “Normal” Housing Market
•
Estimate revenues of ~$10-12B, margin of 10-14%
•
Positioned for Growth
•
International expansion
•
Positive return from assets employed in
–
–
•
27
Cabinets
Installation
Optimized portfolio with a strong balance sheet
WHY INVEST IN MASCO
Strong Fundamentals - Positioned for Growth
Executing initiatives to improve performance
The Strategy
The Strengths
The Growth
28
• Continuing to reduce fixed costs, expand share and
improve underperformers
Building on market-leading positions
• Best brands, innovative products, lean practices,
strong financial position
Well-positioned for growth
• Lower cost structure  higher margins, leveraged
to recovery
Appendix
Appendix – Profit Reconciliation – Fourth Quarter
($ in Millions)
Q4 2012
Q4 2011
Sales
$
1,890
$
1,738
Gross Profit – As Reported
$
446
$
332
Rationalization charges
Gross Profit – As Adjusted
27
$
$
380
Gross Margin - As Reported
23.6%
19.1%
Gross Margin - As Adjusted
25.0%
21.9%
Operating Profit (Loss) – As Reported
Impairment of goodwill and other intangible assets
$
21
$
42
Rationalization charges
Charge for litigation settlements, net
Gain from sales of fixed assets, net
Operating Profit – As Adjusted
31
473
48
$
$
$
(531)
494
31
61
3
3
(3)
-
94
$
27
Operating Margin - As Reported
1.1%
-30.6%
Operating Margin - As Adjusted
5.0%
1.6%
Appendix – Profit Reconciliation – Full-Year
($ in Millions)
YTD 12/31/12
Sales
$
7,745
$
7,467
Gross Profit – As Reported
$
1,951
$
1,784
Rationalization charges
Other Specialty Products - Warranty
Gross Profit – As Adjusted
52
12
$
Gross Margin - As Reported
Gross Margin - As Adjusted
Operating Profit (Loss) – As Reported
Operating Profit – As Adjusted
Operating Margin - As Reported
Operating Margin - As Adjusted
2,015
91
$
25.2%
26.0%
$
Rationalization charges
Charge for litigation settlements, net
Impairment of goodwill and other intangible assets
Other Specialty Products - Warranty
Gain from sales of fixed assets, net
32
YTD 12/31/11
271
23.9%
25.1%
$
78
77
42
12
(8)
$
472
3.5%
6.1%
1,875
(295)
121
9
494
$
329
-4.0%
4.4%
Appendix – EPS Reconciliation – Fourth Quarter
(in Millions)
Q4 2012
Loss from Continuing Operations before Income Taxes – As Reported
$
(37)
$
42
Impairment of goodwill and other intangible assets
Rationalization charges
$
$
(593)
494
31
61
3
3
Gain from sales of fixed assets, net
(3)
-
Gain from financial investments, net
(4)
(4)
Charge for litigation settlements, net
Income (Loss) from Continuing Operations before Income Taxes – As
Adjusted
$
Tax at 36% rate benefit (expense)
Less: Net income attributable to non-controlling interest
32
$
(39)
(12)
14
7
5
Net Income (Loss), as adjusted
$
13
$
(30)
Income (Loss) per common share, as adjusted
$
0.04
$
(0.09)
Shares Outstanding
33
Q4 2011
349
348
Appendix – EPS Reconciliation – Full-Year
($ in Millions)
Income (Loss) from Continuing Operations before Income Taxes – As
Reported
Rationalization charges
YTD 12/31/12
$
42
$
78
$
$
(472)
121
Charge for litigation settlements, net
77
9
Impairment of goodwill and other intangible assets
42
494
Other Specialty Products - Warranty
12
-
7
-
Gain from sales of fixed assets, net
(8)
-
Gain from financial investments, net
(22)
(73)
Interest carry costs
Income (Loss) from Continuing Operations before Income Taxes – As
Adjusted
$
Tax at 36% rate benefit (expense)
Less: Net income attributable to non-controlling interest
228
$
79
(82)
(28)
35
42
Net Income, as adjusted
$
111
$
9
Income per common share, as adjusted
$
0.32
$
0.02
Shares Outstanding
34
YTD 12/31/11
349
348
3. IMPROVE UNDERPERFORMING BUSINESSES
North America Cabinetry’s Strategic Initiatives
1
Customer Focus
• Dealers
• Builders
• Retail
• Consumers
2
• Channel strategies
Profitable
Revenue Growth
• Promotions
• Products
3
Cost Realignment
35
• Rationalize operational footprint
• Increase overhead efficiency
2013 Guidance Estimates
($ in Millions)
2013 Estimate
2012 Actual
Rationalization Charges1
~ $40
$78
Tax Rate
~ 25%
198%
Interest Expense
~ $240
$254
General Corp. Expense2
~ $130
$126
Capital Expenditures
~ $165
$119
Depreciation & Amortization3
~ $210
$214
349 million
349 million
Shares Outstanding
1 – Based on current business plans.
2 – Includes rationalization expenses of $14M for the year ended December 31, 2012.
3 – Includes accelerated depreciation of $28M for the year ended December 31, 2012. Such expenses are also
included in the rationalization charges.
2012 Masco International Revenue Split*
7%
14%
10%
23%
North America
United Kingdom
Northern Europe
Southern Europe
Central Europe
Eastern Europe
34%
8%
Emerging Markets
4%
International Sales Accounted for ~22%
of Total 2012 Masco Sales
37
*Based on company estimates