UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

	

FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported) April 25, 2017

	

Masco Corporation
(Exact name of Registrant as Specified in Charter)

	
					
Delaware
(State or Other Jurisdiction
of Incorporation)	 	1-5794
(Commission File Number)	 	38-1794485
(IRS Employer
Identification No.)	

	
			
21001 Van Born Road, Taylor, Michigan
(Address of Principal Executive Offices)	 	48180
(Zip Code)	
 
(313) 274-7400
Registrant’s telephone number, including area code
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

o Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o  

	

Item 2.02.  Results of Operations and Financial Condition.
 
Attached and incorporated herein by reference as Exhibit 99 is a copy of the press release dated April 25, 2017 reporting Masco Corporation’s financial results for the first quarter of 2017 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter 2017 . On April 25, 2017 , Masco Corporation will hold an investor conference call and webcast to discuss financial results for the first quarter 2017 .
 
This information, including the Exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section.
 
Item 9.01.  Financial Statements and Exhibits.
 
(d) Exhibits.
 
99  Press Release of Masco Corporation dated April 25, 2017 reporting Masco Corporation’s financial results for the first quarter 2017 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter 2017 .
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	
			
 	MASCO CORPORATION	

 	By:	/s/ John G. Sznewajs	
 	Name:	John G. Sznewajs	
 	Title:	Vice President and Chief Financial Officer	

April 25, 2017

	

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EXHIBIT INDEX
 
99           Press Release of Masco Corporation dated April 25, 2017 reporting Masco Corporation’s financial results for the first quarter 2017 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter 2017 .

	

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Exhibit 99

MASCO CORPORATION REPORTS FIRST QUARTER 2017 RESULTS

Key Highlights

•	Sales for the first quarter increased 3 percent to $1.8 billion ; in local currencies, sales increased 5 percent	
		
•	Operating profit for the quarter grew 8 percent to $253 million ; adjusted operating profit grew 8 percent to $255 million	
		
•	Operating profit margin for the quarter increased to 14.2 percent, a 60 basis point expansion; adjusted operating profit margin increased to 14.4 percent, a 60 basis point expansion	
		
•	Earnings per share for the quarter grew 34 percent to $0.43 per common share; adjusted earnings per share grew 28 percent to $0.41 per common share, which includes a $0.01 benefit due to a lower normalized tax rate	
		
•	Earnings per share target of $1.80 for 2017 updated to the 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	

TAYLOR, Mich. (April 25, 2017) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported strong net sales and operating profit growth in the first quarter of 2017.

“Our strong operating performance continued in the first quarter of 2017 as our leading brands coupled with our innovative products and programs drove demand with consumers and pros alike, resulting in profitable growth across our portfolio,” said Masco President and CEO, Keith Allman. “Additionally, we returned over $120 million to shareholders through dividends and share repurchases in the quarter.”

2017 First Quarter Commentary

•	On a reported basis, compared to first quarter 2016 :	
		
•	Net sales increased 3 percent to $1.8 billion	
		
•	In local currency, North American sales increased 4 percent and international sales increased 5 percent	
		
•	Gross margins improved 110 basis points to 34.2 percent from 33.1 percent	
		
•	Operating margins improved 60 basis points to 14.2 percent from 13.6 percent	
		
•	Net income was $0.43 per common share compared to $0.32 per common share	
		
•	Compared to first quarter 2016 , results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 34 percent (36 percent in 2016), were as follows:	
		
•	Gross margins improved to 34.3 percent compared to 33.1 percent	
		
•	Operating margins improved to 14.4 percent compared to 13.8 percent	
		
•	Net income was $0.41 per common share, which includes a $0.01 benefit due to a lower normalized tax rate, compared to $0.32 per common share	
		
•	Liquidity at the end of the first quarter was $883 million	
		
•	2.8 million shares were repurchased in the first quarter	

2017 First Quarter Operating Segment Highlights

•	Plumbing Products’ net sales increased 6 percent ( 8 percent excluding the impact of foreign currency translation), driven by growth in North America and internationally	
		
•	Decorative Architectural Products’ net sales increased 2 percent with growth from builders’ hardware and Behr’s pro initiative	
		
•	Cabinetry Products’ net sales decreased 2 percent due to the previously announced exit of lower margin business in the builder channel	
		
•	Windows and Other Specialty Products’ net sales were flat. Excluding the impact of foreign currency translation, net sales increased 3 percent, driven by sales of windows in North America and internationally	

Outlook

“The building products industry fundamentals remain favorable and are expected to support long-term growth. Our outlook for demand in both repair and remodel and new home construction continues to be positive,” said Allman. “We will leverage these favorable industry fundamentals along with our strong brand portfolio, our industry-leading positions and our Masco Operating

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System to achieve our long-term growth expectations. As such, we are now updating our 2017 earnings per share target to the range of $1.90 to $2.00 per common share, exceeding our $1.80 target that we communicated at our last Investor Day in 2015. This updated target includes an estimated $0.06 benefit from a reduction in our expected tax rate. We look forward to updating you on our long-term goals at our upcoming Investor Day on May 16 in New York City.”

About Masco

Headquartered in Taylor, Michigan, Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes Behr® paint; Delta® and Hansgrohe® faucets, bath and shower fixtures; KraftMaid® and Merillat® cabinets; Milgard® windows and doors; and Hot Spring® spas. We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders. For more information about Masco Corporation, visit www.masco.com.

The 2017 first quarter supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Tuesday, April 25, 2017 at 8:00 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (855) 226-2726 (855-22MASCO) and from outside the U.S. at (706) 679-3614. Please use the conference identification number 90696233. The conference call will be webcast simultaneously and in its entirety through the Company’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on the Company’s website.

A replay of the call will be available on Masco’s website or by phone by dialing (855) 859-2056 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 90696233. The telephone replay will be available approximately two hours after the end of the call and continue through May 25, 2017.

Safe Harbor Statement

This press release 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.

Investor Contact

David Chaika
Vice President, Treasurer and Investor Relations    
313.792.5500
david_chaika@mascohq.com
# # #

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MASCO CORPORATION
Condensed Consolidated Statements of Operations - Unaudited
For the Three Months Ended March 31, 2017 and 2016

(in millions, except per common share data)

									
 	 	Three Months Ended March 31,	
 	 	2017	 	2016	
Net sales	 	$	1,777		 	$	1,720		
Cost of sales	 	1,169		 	1,151		
Gross profit	 	608		 	569		
 	 	 	 	 	
Selling, general and administrative expenses	 	355		 	335		
Operating profit	 	253		 	234		
 	 	 	 	 	
Other income (expense), net:	 	 	 	 	
Interest expense	 	(43	)	 	(56	)	
Other, net	 	3		 	(1	)	
 	 	(40	)	 	(57	)	
Income before income taxes	 	213		 	177		
 	 	 	 	 	
Income tax expense	 	63		 	58		
Net income	 	150		 	119		
Less: Net income attributable to noncontrolling interest	 	10		 	10		
Net income attributable to Masco Corporation	 	$	140		 	$	109		
 	 	 	 	 	
Income per common share attributable to Masco Corporation (diluted):	 	 		 	 		
Net income	 	$	0.43		 	$	0.32		
 	 	 	 	 	
Average diluted common shares outstanding	 	321		 	333		
 
Historical information is available on our website.

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MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited

(in millions, except per common share data)

								
 	Three Months Ended March 31,	
 	2017	 	2016	
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations	 		 	 		
 	 	 	 	
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	%	
 	 	 	 	
Earnings Per Common Share Reconciliations	 	 	 	
 	 	 	 	
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		

Historical information is available on our website.

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MASCO CORPORATION
Condensed Consolidated Balance Sheets and
Other Financial Data - Unaudited

(dollars in millions)

									
 	 	March 31, 2017	 	December 31, 2016	
Balance Sheet	 	 		 	 		
Assets	 	 		 	 		
Current Assets:	 	 		 	 		
Cash and cash investments	 	$	689		 	$	990		
Short-term bank deposits	 	194		 	201		
Receivables	 	1,144		 	917		
Inventories	 	826		 	712		
Prepaid expenses and other	 	105		 	114		
Total Current Assets	 	2,958		 	2,934		
 	 	 	 	 	
Property and equipment, net	 	1,074		 	1,060		
Goodwill	 	835		 	832		
Other intangible assets, net	 	154		 	154		
Other assets	 	118		 	157		
Total Assets	 	$	5,139		 	$	5,137		
 	 	 	 	 	
Liabilities	 	 		 	 		
Current Liabilities:	 	 		 	 		
Accounts payable	 	$	903		 	$	800		
Notes payable	 	3		 	2		
Accrued liabilities	 	518		 	658		
Total Current Liabilities	 	1,424		 	1,460		
 	 	 	 	 	
Long-term debt	 	2,996		 	2,995		
Other liabilities	 	778		 	785		
Total Liabilities	 	5,198		 	5,240		
 	 	 	 	 	
Equity	 	(59	)	 	(103	)	
Total Liabilities and Equity	 	$	5,139		 	$	5,137		

	
									
 	 	As of March 31,	
 	 	2017	 	2016	
Other Financial Data	 	 		 	 		
Working Capital Days	 	 		 	 		
Receivable days	 	53		 	50		
Inventory days	 	61		 	56		
Payable days	 	71		 	70		
Working capital	 	$	1,067		 	$	957		
Working capital as a % of sales (LTM)	 	14.4	%	 	13.3	%	
 
Historical information is available on our website.

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MASCO CORPORATION
Condensed Consolidated Statements of Cash Flows
and Other Financial Data - Unaudited

(dollars in millions)

									
 	 	Three Months Ended March 31,	
 	 	2017	 	2016	
Cash Flows From (For) Operating Activities:	 	 		 	 		
Cash provided by operating activities	 	$	253		 	$	219		
Working capital changes	 	(402	)	 	(289	)	
Net cash for operating activities	 	(149	)	 	(70	)	
 	 	 	 	 	
Cash Flows From (For) Financing Activities:	 	 		 	 		
Purchase of Company common stock	 	(87	)	 	(86	)	
Cash dividends paid	 	(32	)	 	(32	)	
Issuance of notes, net of issuance costs	 	—		 	889		
Issuance of Company common stock	 	—		 	1		
Employee withholding taxes paid on stock-based compensation	 	(14	)	 	(19	)	
Decrease in debt, net	 	—		 	(2	)	
Net cash (for) from financing activities	 	(133	)	 	751		
 	 	 	 	 	
Cash Flows From (For) Investing Activities:	 	 		 	 		
Capital expenditures	 	(37	)	 	(37	)	
Other, net	 	11		 	57		
Net cash (for) from investing activities	 	(26	)	 	20		
 	 	 	 	 	
Effect of exchange rate changes on cash and cash investments	 	7		 	6		
 	 	 	 	 	
Cash and Cash Investments:	 	 		 	 		
(Decrease) increase for the period	 	(301	)	 	707		
At January 1	 	990		 	1,468		
At March 31	 	$	689		 	$	2,175		

	
									
 	 	As of March 31,	
 	 	2017	 	2016	
Liquidity	 	 		 	 		
Cash and cash investments	 	$	689		 	$	2,175		
Short-term bank deposits	 	194		 	195		
Total Liquidity	 	$	883		 	$	2,370		
 
Historical information is available on our website.

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MASCO CORPORATION
Segment Data - Unaudited
For the Three Months Ended March 31, 2017 and 2016

(dollars in millions)

											
 	Three Months Ended March 31,	 	 	
 	2017	 	2016	 	Change	
Plumbing Products	 		 	 		 	 		
Net sales	$	863		 	$	813		 	6	 %	
 	 	 	 	 	 	
Operating profit, as reported	$	156		 	$	129		 	 		
Operating margin, as reported	18.1	%	 	15.9	%	 	 		
 	 	 	 	 	 	
Rationalization charges	—		 	2		 	 		
Operating profit, as adjusted	156		 	131		 	25		
Operating margin, as adjusted	18.1	%	 	16.1	%	 	200		
 	 	 	 	 	 	
Depreciation and amortization	14		 	14		 	 		
 	 	 	 	 	 	
EBITDA, as adjusted	$	170		 	$	145		 	 		
 	 	 	 	 	 	
Decorative Architectural Products	 		 	 		 	 		
Net sales	$	505		 	$	493		 	2	 %	
 	 	 	 	 	 	
Operating profit, as reported	$	101		 	$	105		 	(4	)	
Operating margin, as reported	20.0	%		21.3	%	 	-130		
 	 	 	 	 	 	
Depreciation and amortization	4		 	4		 	 		
 	 	 	 	 	 	
EBITDA	$	105		 	$	109		 	 		
 	 	 	 	 	 	
Cabinetry Products	 		 	 		 	 		
Net sales	$	231		 	$	236		 	(2	)%	
 	 	 	 	 	 	
Operating profit, as reported	$	16		 	$	24		 	 		
Operating margin, as reported	6.9	%		10.2	%	 	 		
 	 	 	 	 	 	
Rationalization charges	2		 	1		 	 		
Operating profit, as adjusted	18		 	25		 	(7	)	
Operating margin, as adjusted	7.8	%	 	10.6	%	 	-280		
 	 	 	 	 	 	
Depreciation and amortization	4		 	5		 	 		
 	 	 	 	 	 	
EBITDA, as adjusted	$	22		 	$	30		 	 		
 
Historical information is available on our website.

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MASCO CORPORATION
Segment Data - Unaudited
For the Three Months Ended March 31, 2017 and 2016

(dollars in millions)

											
 	Three Months Ended March 31,	 	 	
 	2017	 	2016	 	Change	
Windows and Other Specialty Products	 		 	 		 	 		
Net sales	$	178		 	$	178		 	—	%	
 	 	 	 	 	 	
Operating profit, as reported	$	6		 	$	3		 	 		
Operating margin, as reported	3.4	%		1.7	%	 	 		
 	 	 	 	 	 	
Depreciation and amortization	5		 	5		 	 		
 	 	 	 	 	 	
EBITDA	$	11		 	$	8		 	 		
 	 	 	 	 	 	
Total	 		 	 		 	 		
Net sales	$	1,777		 	$	1,720		 	3	%	
 	 	 	 	 	 	
Operating profit, as reported - segment	$	279		 	$	261		 	 		
General corporate expense, net (GCE)	(26	)	 	(27	)	 	 		
Operating profit, as reported	253		 	234		 	 		
Operating margin, as reported	14.2	%	 	13.6	%	 	 		
 	 	 	 	 	 	
Rationalization charges - segment	2		 	3		 	 		
Operating profit, as adjusted	255		 	237		 	$18,000,000	
Operating margin, as adjusted	14.4	%	 	13.8	%	 	60		
 	 	 	 	 	 	
Depreciation and amortization - segment	27		 	28		 	 		
Depreciation and amortization - non-operating	4		 	4		 	 		
 	 	 	 	 	 	
EBITDA, as adjusted	$	286		 	$	269		 	 		
 
Historical information is available on our website.

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MASCO CORPORATION
North American and International Data - Unaudited
For the Three Months Ended March 31, 2017 and 2016

(dollars in millions)

											
 	Three Months Ended March 31,	 	 	
 	2017	 	2016	 	Change	
North American	 		 	 		 	 		
Net sales	$	1,411		 	$	1,350		 	5	 %	
 	 	 	 	 	 	
Operating profit, as reported	$	239		 	$	215		 	 		
Operating margin, as reported	16.9	%	 	15.9	%	 	 		
 	 	 	 	 	 	
Rationalization charges	2		 	2		 	 		
Operating profit, as adjusted	241		 	217		 	 		
Operating margin, as adjusted	17.1	%	 	16.1	%	 	 		
 	 	 	 	 	 	
Depreciation and amortization	18		 	19		 	 		
 	 	 	 	 	 	
EBITDA, as adjusted	$	259		 	$	236		 	 		
 	 	 	 	 	 	
International	 		 	 		 	 		
Net sales	$	366		 	$	370		 	(1	)%	
 	 	 	 	 	 	
Operating profit, as reported	$	40		 	$	46		 	 		
Operating margin, as reported	10.9	%	 	12.4	%	 	 		
 	 	 	 	 	 	
Rationalization charges	—		 	1		 	 		
Operating profit, as adjusted	40		 	47		 	 		
Operating margin, as adjusted	10.9	%	 	12.7	%	 	 		
 	 	 	 	 	 	
Depreciation and amortization	9		 	9		 	 		
 	 	 	 	 	 	
EBITDA, as adjusted	$	49		 	$	56		 	 		
 	 	 	 	 	 	
Total	 		 	 		 	 		
Net sales	$	1,777		 	$	1,720		 	3	 %	
 	 	 	 	 	 	
Operating profit, as reported - segment	$	279		 	$	261		 	 		
General corporate expense, net (GCE)	(26	)	 	(27	)	 	 		
Operating profit, as reported	253		 	234		 	 		
Operating margin, as reported	14.2	%	 	13.6	%	 	 		
 	 	 	 	 	 	
Rationalization charges - segment	2		 	3		 	 		
Operating profit, as adjusted	255		 	237		 	 		
Operating margin, as adjusted	14.4	%	 	13.8	%	 	 		
 	 	 	 	 	 	
Depreciation and amortization - segment	27		 	28		 	 		
Depreciation and amortization - non-operating	4		 	4		 	 		
 	 	 	 	 	 	
EBITDA, as adjusted	$	286		 	$	269		 	 		

Historical information is available on our website.

9