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. Masco Q2 2012 Results – Agenda
Topic
• Summary of Results Tim Wadhams
• Financial/Operations Review John Sznewajs
• Outlook Tim Wadhams
• Q&A
3
4. Key Messages Today
• Successful execution on pricing and total cost
productivity
• Sales benefitting from new construction activity in
North America
• Continued progress on strategic initiatives
4
6. Strategy Execution Highlights
1 • New faucet introductions at retail
Expand market • Continued residential new construction, retrofit and
leadership commercial channel growth in Installation Services
• Windows gaining share in Western U.S.
2
Reduce costs • Profit improvement initiatives positively impacting margins
• Overall decrease in SG&A
3
• Installation segment top and bottom line improvement
Improve • Continued Cabinet segment profit improvement;
underperforming addressing top line challenges
businesses
4
Strengthen • Working capital improvement
Balance Sheet • Debt pay down in July 2012
6
7. Laser Focus on Achieving Breakeven
Cabinets
First half operating profit improvement of $19M principally driven
by cost reductions in North America
• Expect $10M - $15M of operating profit improvement in the
second half of 2012
Benefits from increased housing starts offset by:
• Market conditions in European economies and North
American repair/remodel activity
• Challenges implementing North American dealer and
countertop strategies
Leadership changes for North American Cabinets have been
implemented
Installation
First half operating profit improvement of $29M driven by new
home construction activity and cost reductions from lean, ERP
leverage, and supply chain
Continued penetration of retrofit and commercial channels
Assuming 725,000 (lagged) housing starts, should be close to
breakeven for full year 2012
7
8. Masco Q2 2012 Results – Agenda
Topic
• Summary of Results Tim Wadhams
• Financial/Operations Review John Sznewajs
• Outlook Tim Wadhams
• Q&A
8
9. Sales Up 3% Excluding Currency
Second Quarter
($ in Millions)
2012
Revenue $2,004
Y-O-Y Change 0%*
Adjusted Operating Profit** $124
Y-O-Y Change $8
Adjusted Operating Margin** 6.2%
Y-O-Y Change 40 bps
Adjusted EPS** $0.10
*Excluding the effect of currency, second quarter 2012 sales increased 3% compared to 2011.
**As reported operating profit $47M; operating margin 2.3%; E.P.S of ($.17) see appendix for reconciliation
9
10. Q2 2012 Operating Profit Reflects Successful Price/
Commodity Management
$200
$150
$14M $4M $(10M)
$124M
$116M
$100
$50
$-
Q2 2011 Net Price / Profit Net Volume / Q2 2012
Adjusted Commodity Improvement & Mix Adjusted
Operating All Other, Net Operating
Profit* Profit*
Y-O-Y Change in Adjusted
Operating Profit $8M
*See appendix for reconciliation
10
11. Plumbing Products:
Increased N.A. Sales offset by Currency; International
Sales Mix Impacting Margin
Second Quarter
($ in Millions)
2012
Revenue $738
Y-O-Y Change (3%)*
Adjusted Operating Profit** $73
Y-O-Y Change ($27)
Adjusted Operating Margin** 9.9%
Y-O-Y Change (320) bps
*Excluding the effect of currency, second quarter sales 2012 increased 2% compared to 2011.
**Excludes business rationalization charges of $3M and $5M in the second quarter of 2012 and 2011, respectively.
Highlights
• Top line growth in North American faucets in the high-single digits offset
by unfavorable currency translation
• Margin negatively impacted by:
• Program costs and growth initiatives of $15 million
• Mix of $13 million
• Currency of $5 million
11 • Offset by favorable price/commodity of $12 million
12. Decorative Architectural Products:
Top Line Benefitting from Successful Product
Introductions
Second Quarter
($ in Millions)
2012
Revenue $517
Growth 5%
Adjusted Operating Profit $95
Y-O-Y Change $5
Adjusted Operating Margin 18.4%
Y-O-Y Change 10 bps
Highlights
• Increased revenues driven by Behr Pro business growth, price
increases, and Liberty Hardware share gains
• Operating profit margin impacted by unfavorable price/commodity
relationships of $5 million
12
13. Cabinets and Related Products:
Margin Expansion Reflects Profit Improvement Execution
Second Quarter
($ in Millions)
2012
Revenue $312
Y-O-Y Change (5%)*
Adjusted Operating Loss** $(11)
Y-O-Y Change $10
Adjusted Operating Margin** (3.5%)
Y-O-Y Change 290 bps
*Excluding the effect of currency, second quarter 2012 sales decreased 3% compared to 2011.
**Excludes business rationalization charges of $1M and $6M in the second quarter of 2012 and 2011, respectively.
Highlights
• North American new home construction strength offset by weaker
retail & dealer sales
• International sales impacted by continued weak Euro-zone macro-
economic conditions and currency translation
• Profit improvement initiatives reflected in margin improvement
13
14. Installation and Other Services:
Strong Execution Reflected in Top & Bottom Line
Performance
Second Quarter
($ in Millions)
2012
Revenue $296
Growth 10%
Adjusted Operating Loss $(9)
Y-O-Y Change* $10
Adjusted Operating Margin (3.0%)
Y-O-Y Change* 400 bps
*Excludes business rationalization charges of $2M in the second quarter of 2011.
Highlights
• Growth in all channels with installation of insulation up 20%
• Margins reflect successful profit improvement execution, including cost
reductions from lean, ERP leverage, and supply chain
14
15. Other Specialty Products:
Successful Price/Commodity Execution Reflected in
Margins
Second Quarter
($ in Millions)
2012
Revenue $141
Y-O-Y Change (3%)
Operating Profit $6
Y-O-Y Change $6
Operating Margin 4.3%
Y-O-Y Change 430 bps
Highlights
• Excluding the exit of select U.S. Window markets in late 2011, sales growth was
1%, driven by demand in the Western U.S., and new home construction
• Margin improvement fueled by successful price increases in U.K. and North
American Window businesses
15
16. Strengthening the Balance Sheet
• Working capital as a percentage of sales improved to 14.6%
• July debt repayment of $745 million
• Subsequent to the debt reduction, we have cash of $1.2 billion
and borrowing capacity of approximately $900 million
$1.9 billion of cash as of 6/30/2012
16
17. Masco Q2 2012 Results – Agenda
Topic
• Summary of Results Tim Wadhams
• Financial/Operations Review John Sznewajs
• Outlook Tim Wadhams
• Q&A
17
18. Delivering on 2012 Priorities – Q2 Highlights
Cabinet profit improvement
Installation profit improvement
Successfully launch new products and programs
Reduce debt by ~$400M/refinance $400M
Investment in strategic growth initiatives
Grow share of key brands
Total cost productivity
Geographic expansion
18
19. Outlook into 2012
Tailwinds Headwinds
• Improving demand in • Slowing economic activity in
residential new construction North America and European
economies
• Successful product
introductions at retail • Implementation of Cabinet
countertop and dealer
• Favorable price/commodity
strategies
relationships
• International Plumbing mix
• Eliminated litigation
impact
uncertainty
• Commodity cost volatility
• Additional profit improvement
opportunities identified • Composition of new
housing starts
19
22. Appendix – Profit Reconciliation
($ in Millions) Q2 2012 Q2 2011
Sales $ 2,004 $ 1,998
Gross Profit – As Reported $ 525 $ 532
Rationalization Charges 3 11
(Gain) From Sale of Fixed Assets (5) -
Gross Profit – As Adjusted $ 523 $ 543
Gross Margin - As Reported 26.2% 26.6%
Gross Margin - As Adjusted 26.1% 27.2%
Operating Income – As Reported $ 47 $ 96
Rationalization Charges 7 15
(Gain) From Sale of Fixed Assets (5) -
Charge for Litigation Settlements, Net 75 5
Operating Profit – As Adjusted $ 124 $ 116
Operating Margin - As Reported 2.3% 4.8%
Operating Margin - As Adjusted 6.2% 5.8%
22
23. Appendix – EPS Reconciliation
($ in Millions) Q2 2012 Q2 2011
(Loss) Income from Continuing Operations before Income Taxes – As $ (19) $ 64
Reported
Rationalization Charges 7 15
Charge for Litigation Settlements, Net 75 5
Financial Investment (Income) Expense - (33)
(Gain) From Sale of Fixed Assets (5) -
Interest Carry Costs 7 -
Income from Continuing Operations Before Income Taxes – As Adjusted 65 51
Tax at 36% Rate Benefit (Expense) (23) (18)
Less: Net Income Attributable to Non-Controlling Interest 8 12
Net Income – As Adjusted $ 34 $ 21
Income per Common Share – As Adjusted $ 0.10 $ 0.06
Shares 349 349
23
24. 2012 Guidance Estimates
($ in Millions) 2012 Estimate 2011 Actual
Rationalization Charges* ~ $30 $121
Tax Rate** ~ 50% 18%
Interest Expense ~ $250 $254
General Corp. Expense ~ $125 $118
Capital Expenditures ~ $150 $151
Depreciation & ~ $210 $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.
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