masco 2015 investor day - keith ceo address
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K E Y M E S S A G E S T O D A Y
The New Masco: Transformation, Focus, Results
2
A Transforming
Business
Delivering
Strengthened
Performance
Clear Strategic
Focus
Organization
Operational Excellence
Portfolio and Capital
Allocation
A Transforming Business
Formed a new management team
Implemented talent framework
Instituted a center led business model
Restructured HQ
Made key business unit management changes
Increased dividend
Authorized share buy back of 50 million shares
Announced spin off of TopBuild
Reduced costs and increased efficiencies
Standardized planning processes
Prioritized capability building
Drove cost improvement culture
Transformational Initiatives
3
Revenue Breakdown – R&R vs. New Home Construction*
Revenue Breakdown – International vs. North America*
R E S U L T S
Creating a Less Cyclical Business
4
N. America
81%
Int’l
19%
R&R
71%
New home
29%
N. America
77%
Int’l
23%
R&R
82%
New home
18%
Post-Spin
More Global Diversification
Less Cyclicality
Post-Spin
Pre-Spin
Pre-Spin
*Based on 2014 revenue and company estimates. See appendix for GAAP reconciliation
K E Y M E S S A G E S T O D A Y
The New Masco: Transformation, Focus, Results
5
A Transforming
Business
Delivering
Strengthened
Performance
Clear Strategic
Focus
Drive full potential of our
core businesses
Clear Strategic Focus
6
Leverage opportunities across
our portfolio
Actively manage portfolio
Drive full potential of our
core businesses
S T R A T E G I C F O C U S # 1 D R I V E F U L L P O T E N T I A L O F O U R C O R E B U S I N E S S
Leverage Our Brands
7
Masco Cabinetry (cabinet manufacturer
in U.S.)
Delta® (faucet brand
in North America)
Behr® (DIY architectural
coatings in
North America)
Milgard® (vinyl window
brand in Western U.S.)
Hansgrohe® (global faucet
and mixer brand)
Arrow®, Liberty®, BrassCraft® and
Watkins® (in their respective
categories)
#2
#1
#1 #1
#1
#2
S T R A T E G I C F O C U S # 1 D R I V E F U L L P O T E N T I A L O F O U R C O R E B U S I N E S S
Lead in Innovation
8
30%*
Examples of New Products / Technologies
Existing
Products
2014 2013 2012
70%
Hansgrohe SelectTM
Collection
KraftMaid® New Design Launch
2014 Revenues
Delta® Toilets
Paint & Primer in One
KraftMaid® Vanities
Behr DeckOver®
Coating
KraftMaid® VantageTM Cabinetry
Behr Marquee®
Coating
Delta Temp2OTM
Showerhead
2015
Hansgrohe® Rain XLTM
Showerhead
Behr Textured DeckOver™
Coating
Axor® Starck V Collection
*Based on company estimates
9
S T R A T E G I C F O C U S # 1 D R I V E F U L L P O T E N T I A L O F O U R C O R E B U S I N E S S
Drive Operational Excellence
Aligned
on Key
Financial
Metrics
Capitalize on
our Strong
Operating
Leverage
Strong
Management
Team
Culture of
Accountability
Clear Strategic Focus
10
Drive full potential of our
core businesses
Leverage opportunities across
our portfolio
Actively manage portfolio
Leverage opportunities across
our portfolio
S T R A T E G I C F O C U S # 2 L E V E R A G E A C R O S S O U R P O R T F O L I O
Leverage Opportunities Across Our Portfolio
11
• Talent • Purchasing • Innovation • Sales • Brands
Actively manage portfolio Actively manage portfolio
Clear Strategic Focus
12
Drive full potential of our
core businesses
Leverage opportunities across
our portfolio
• Financially attractive
• Differentiated / leadership position
• Aligned with other Masco businesses
• Attractive end markets*
• Accelerate organic strategies
• Meet financial hurdles
13
S T R A T E G I C F O C U S # 3 A C T I V E L Y M A N A G E P O R T F O L I O
Disciplined Portfolio Management
*Repair and Remodel, Global Segments, Low Cyclicality, Brand and Innovation Drive Value
Driving
Value
Creation
Portfolio Refinements
Strategic Acquisitions
+
K E Y M E S S A G E S T O D A Y
The New Masco: Transformation, Focus, Results
14
A Transforming
Business
Delivering
Strengthened
Performance
Clear Strategic
Focus
Delivering Strengthened Performance:
Consistent Profitability
15
$7.5
$8.2
$8.5
2012 2013 2014
Revenues ($B)
$500
$721
$851
2012 2013 2014
$0.37
$0.77
$1.02
2012 2013 2014
EPS* ($)
Operating Profit* ($M)
6.5%
CAGR 30%
CAGR 66%
CAGR
*Operating Profit as adjusted, excluding intangible assets, litigation, rationalization and other charges ($198M in 2012, $48M in 2013 and $63M in 2014). Operating profit as reported was $302M in
2012, $673M in 2013 and $788M in 2014. EPS as reported was ($0.16) in 2012, $0.83 in 2013 and $2.39 in 2014.
Delivering Strengthened Performance: Strong FCF
16
Invest in the business
Pay down debt
Bolt on acquisitions
Return Capital to
Shareholders
Disciplined
capital
deployment of
~$2B FCF
2015 - 2017
17
ROIC WACC
ROIC exceeded WACC by 160 bps in 2014
H I G H P E R F O R M A N C E
Delivering Strengthened Performance: Solid Returns
3.8%
5.8%
9.2% 10.6%
0%
2%
4%
6%
8%
10%
12%
2011 2012 2013 2014
18
Note: Future performance reflects company estimates and excludes the Installation Segment.
7% CAGR
15% CAGR
26% CAGR
Revenue* ($B)
Operating Profit* ($B)
EPS* ($)
$6.8
$8.3
2014 2017
$0.91
$1.80
2014 2017
$0.8
$1.15
2014 2017
*2014 revenue and operating profit uses a $1.10 Euro to USD foreign exchange rate . See appendix for GAAP reconciliation
Delivering Strengthened Performance:
Profitable Growth
+
+
New Masco. Positioned to Outperform
Leveraging a portfolio of industry leading
global brands with compelling growth
strategies
Aligned management team with a clear
strategic focus
Strong free cash flow generation and capital
management driving value to shareholders
+
Transformative actions have delivered
strengthened results
19
Positioned to
Outperform
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