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) October 30, 2018

	

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.)	

	
			
17450 College Parkway, Livonia, Michigan
(Address of Principal Executive Offices)	 	48152
(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 October 30, 2018 reporting Masco Corporation’s financial results for the third quarter of 2018 and certain other information and supplemental information prepared for use in connection with the financial results for the third quarter 2018 . On October 30, 2018 , Masco Corporation will hold an investor conference call and webcast to discuss financial results for the third quarter 2018 .
 
This information, including the Exhibit 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 October 30, 2018 reporting Masco Corporation’s financial results for the third quarter 2018 and certain other information and supplemental information prepared for use in connection with the financial results for the third quarter 2018 .

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, Chief Financial Officer	

October 30, 2018

	

2

Exhibit 99

MASCO CORPORATION REPORTS THIRD QUARTER 2018 RESULTS

Key Highlights

•	Sales increased 8 percent to $2.1 billion ; excluding acquisitions, divestitures and currency, sales increased 4 percent	
		
•	Earnings per share grew 21 percent to $0.58 per share; adjusted earnings per share grew 25 percent to $0.65 per share	
		
•	Returned approximately $122 million to shareholders through share repurchases and dividends	
		
•	Updating 2018 anticipated earnings per share to be in the range of $2.25-$2.30 per share, and on an adjusted basis, to be in the range of $2.39-$2.44 per share compared to a previous range of $2.48-$2.55	

LIVONIA, Mich. ( October 30, 2018 ) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported solid net sales and earnings per share growth in the third quarter of 2018 .

“Our growth this quarter was led by strong performance in North American Plumbing and Cabinetry, as well as our acquisition of Kichler Lighting,” said Masco President and CEO, Keith Allman. “We delivered adjusted operating profit growth during the quarter despite inflationary headwinds and softness in European markets, while returning approximately $122 million to shareholders through share repurchases and dividends.”

2018 Third Quarter Commentary

•	On a reported basis, compared to third quarter 2017 :	
		
•	Net sales increased 8 percent to $2.1 billion ; in local currency and excluding acquisitions and divestitures, net sales increased 4 percent	
		
•	In local currency, North American sales increased 12 percent and international sales decreased 6 percent	
		
•	Gross margins decreased 210 basis points to 31.7 percent from 33.8 percent	
		
•	Operating profit decreased 3 percent to $300 million	
		
•	Operating margins decreased 160 basis points to 14.3 percent from 15.9 percent	
		
•	Net income increased to $0.58 per share, compared to $0.48 per share	
		
•	Compared to third quarter 2017 , results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 26 percent (34 percent in 2017), were as follows:	
		
•	Gross margins decreased 110 basis points to 32.7 percent compared to 33.8 percent	
		
•	Operating profit increased 3 percent to $320 million from $310 million	
		
•	Operating margins decreased 70 basis points to 15.2 percent compared to 15.9 percent	
		
•	Net income increased to $0.65 per share, compared to $0.52 per share	
		
•	Liquidity at the end of the third quarter was $569 million	
		
•	2.3 million shares repurchased in the third quarter	

2018 Third Quarter Operating Segment Highlights

•	Plumbing Products’ net sales increased 4 percent ( 5 percent excluding the impact of foreign currency translation), driven by strong North American growth of 9 percent	
		
•	Decorative Architectural Products’ net sales increased 20 percent due to the acquisition of Kichler and growth in Behr’s pro initiative and builders’ hardware, partially offset by lower DIY paint sales; excluding the acquisition, net sales grew 1 percent	
		
•	Cabinetry Products’ net sales increased 4 percent driven by strong growth in the repair and remodel business, partially offset by the divestiture of Moores; excluding the divestiture, net sales increased 11 percent	
		
•	Windows and Other Specialty Products’ net sales decreased 3 percent due to lower international sales	

“While we delivered good top-line and earnings per share growth, we faced challenges that impacted our third quarter performance,” said Allman. “North American Plumbing and Cabinetry performed well; however, we experienced softness in our DIY paint and international markets. Additionally, we continued to face commodity and logistics cost pressures. As a result, we are lowering our full year EPS expectation to be in the range of $2.39-$2.44 from our previous range of $2.48-$2.55. Despite these challenges, we remain confident in the fundamentals of our business and will continue to execute on our strategies to create shareholder value. As such, we intend to deploy up to $300 million in share repurchases in the fourth quarter of this year,” concluded Allman.

1

About Masco

Headquartered in Livonia, 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; Kichler ® decorative and outdoor lighting; and HotSpring ® 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 2018 third quarter supplemental material, including a presentation in PDF format, is available on Masco’s website at www.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Tuesday, October 30, 2018 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 2398426. The conference call will be webcast simultaneously and in its entirety through Masco’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on Masco’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 2398426. The telephone replay will be available approximately two hours after the end of the call and continue through November 30, 2018.

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 “outlook,” “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 residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop new products, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of raw materials, our dependence on third-party suppliers, risks associated with international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, our ability to achieve the anticipated benefits from our investments in new technology, risks associated with our reliance on information systems and technology, and our ability to sustain the improved results of our U.S. window business. 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. Any forward-looking statement made by us speaks only as of the date on which it was made. 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
# # #

2

MASCO CORPORATION
Condensed Consolidated Statements of Operations - Unaudited
For the Three Months and Nine Months Ended September 30, 2018 and 2017

(in millions, except per common share data)

																
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
Net sales	$	2,101		 	$	1,945		 	$	6,318		 	$	5,789		
Cost of sales	1,434		 	1,288		 	4,282		 	3,781		
Gross profit	667		 	657		 	2,036		 	2,008		
 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	367		 	348		 	1,134		 	1,070		
Operating profit	300		 	309		 	902		 	938		
 	 	 	 	 	 	 	 	
Other income (expense), net:	 	 	 	 	 	 	 	
Interest expense	(38	)	 	(43	)	 	(117	)	 	(239	)	
Other, net	—		 	(2	)	 	(11	)	 	37		
 	(38	)	 	(45	)	 	(128	)	 	(202	)	
Income before income taxes	262		 	264		 	774		 	736		
 	 	 	 	 	 	 	 	
Income tax expense	71		 	100		 	198		 	248		
Net income	191		 	164		 	576		 	488		
 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	11		 	12		 	36		 	35		
Net income attributable to Masco Corporation	$	180		 	$	152		 	$	540		 	$	453		
 	 	 	 	 	 	 	 	
Income per common share attributable to Masco Corporation (diluted):	 		 	 		 	 		 	 		
Net income	$	0.58		 	$	0.48		 	$	1.73		 	$	1.41		
 	 	 	 	 	 	 	 	
Average diluted common shares outstanding	306		 	316		 	309		 	319		

Historical information is available on our website.

3

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months and Nine Months Ended September 30, 2018 and 2017

(dollars in millions)

																
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018		2017	
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
Net sales	$	2,101		 	$	1,945		 	$	6,318		 	$	5,789		
 	 	 	 	 	 	 	 	
Gross profit, as reported	$	667		 	$	657		 	$	2,036		 	$	2,008		
Rationalization charges	5		 	1		 	8		 	3		
Kichler inventory step up adjustment	15		 	—		 	40		 	—		
Gross profit, as adjusted	$	687		 	$	658		 	$	2,084		 	$	2,011		
 	 	 	 	 	 	 	 	
Gross margin, as reported	31.7	%	 	33.8	%		32.2	%		34.7	%	
Gross margin, as adjusted	32.7	%	 	33.8	%		33.0	%		34.7	%	
 	 	 	 	 	 	 	 	
Selling, general and administrative expenses, as reported	$	367		 	$	348		 	$	1,134		 	$	1,070		
 	 	 	 	 	 	 	 	
Selling, general and administrative expenses as percent of net sales, as reported	17.5	%	 	17.9	%		17.9	%		18.5	%	
 	 	 	 	 	 	 	 	
Operating profit, as reported	$	300		 	$	309		 	$	902		 	$	938		
Rationalization charges	5		 	1		 	8		 	3		
Kichler inventory step up adjustment	15		 	—		 	40		 	—		
Operating profit, as adjusted	$	320		 	$	310			$	950			$	941		
 	 	 	 	 	 	 	 	
Operating margin, as reported	14.3	%	 	15.9	%		14.3	%		16.2	%	
Operating margin, as adjusted	15.2	%	 	15.9	%		15.0	%		16.3	%	

Historical information is available on our website.

4

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months and Nine Months Ended September 30, 2018 and 2017

(in millions, except per common share data)

																
 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	2018	 	2017	 	2018	 	2017	
Income Per Common Share Reconciliations	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
Income before income taxes, as reported	$	262		 	$	264		 	$	774		 	$	736		
Rationalization charges	5		 	1		 	8		 	3		
Kichler inventory step up adjustment	15		 	—		 	40		 	—		
(Gains) from private equity funds, net	—		 	—		 	—		 	(2	)	
(Earnings) from equity investments, net	—		 	—		 	(2	)	 	(1	)	
Impairment of private equity funds	—		 	2		 	—		 	2		
Loss on extinguishment of debt	—		 	—		 	—		 	107		
(Gain) on sale of business	—		 	(2	)	 	—		 	(51	)	
Income before income taxes, as adjusted	282		 	265		 	820		 	794		
Tax at 26% rate (34% for 2017)	(73	)	 	(90	)	 	(213	)	 	(270	)	
Less: Net income attributable to noncontrolling interest	11		 	12		 	36		 	35		
Net income, as adjusted	$	198		 	$	163		 	$	571		 	$	489		
 	 	 	 	 	 	 	 	
Net income per common share, as adjusted	$	0.65			$	0.52		 	$	1.85		 	$	1.53		
 	 	 	 	 	 	 	 	
Average diluted common shares outstanding	306		 	316		 	309		 	319		

Outlook for the Twelve Months Ended December 31, 2018

								
 	Twelve Months Ended
December 31, 2018	
 	Low End	 	High End	
Income Per Common Share Outlook	 	 	 	
 	 	 	 	
Net income per common share	$	2.25		 	$	2.30		
Rationalization charges	0.02		 	0.02		
Kichler inventory step up adjustment	0.10		 	0.10		
Allocation to participating securities per share (1)	0.02		 	0.02		
Net income per common share, as adjusted	$	2.39		 	$	2.44		

(1) Represents the impact of distributed dividends and undistributed earnings to unvested restricted stock awards in accordance with the two-class method of calculating earnings per share.

Historical information is available on our website.

5

MASCO CORPORATION
Condensed Consolidated Balance Sheets and Other Financial Data - Unaudited
September 30, 2018 and December 31, 2017

(dollars in millions)

								
 	September 30, 2018	 	December 31, 2017	
Balance Sheet	 		 	 		
Assets	 		 	 		
Current Assets:	 		 	 		
Cash and cash investments	$	569		 	$	1,194		
Short-term bank deposits	—		 	108		
Receivables	1,298		 	1,066		
Inventories	1,005		 	784		
Prepaid expenses and other	118		 	111		
Total Current Assets	2,990		 	3,263		
 	 	 	 	
Property and equipment, net	1,211		 	1,129		
Goodwill	896		 	841		
Other intangible assets, net	412		 	187		
Other assets	101		 	114		
Total Assets	$	5,610		 	$	5,534		
 	 	 	 	
Liabilities	 		 	 		
Current Liabilities:	 		 	 		
Accounts payable	$	1,040		 	$	824		
Notes payable	2		 	116		
Accrued liabilities	711		 	727		
Total Current Liabilities	1,753		 	1,667		
 	 	 	 	
Long-term debt	2,971		 	2,969		
Other liabilities	679		 	715		
Total Liabilities	5,403		 	5,351		
 	 	 	 	
Equity	207		 	183		
Total Liabilities and Equity	$	5,610		 	$	5,534		

	
								
 	As of September 30,	
 	2018	 	2017	
Other Financial Data	 		 	 		
Working Capital Days	 		 	 		
Receivable days	55		 	51		
Inventory days	68		 	63		
Payable days	75		 	72		
Working capital	$	1,263		 	$	1,094		
Working capital as a % of sales (LTM)	15.5	%	 	14.5	%	
 
Historical information is available on our website.

6

MASCO CORPORATION
Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited
For the Nine Months Ended September 30, 2018 and 2017

(dollars in millions)

								
 	Nine Months Ended September 30,	
 	2018	 	2017	
Cash Flows From (For) Operating Activities:	 		 	 		
Cash provided by operating activities	$	729		 	$	749		
Working capital changes	(75	)	 	(282	)	
Net cash from operating activities	654		 	467		
 	 	 	 	
Cash Flows From (For) Financing Activities:	 		 	 		
Retirement of notes	(114	)	 	(535	)	
Purchase of Company common stock	(354	)	 	(312	)	
Cash dividends paid	(98	)	 	(96	)	
Dividends paid to noncontrolling interest	(89	)	 	(35	)	
Issuance of notes, net of issuance costs	—		 	593		
Decrease in debt, net	(1	)	 	—		
Debt extinguishment costs	—		 	(104	)	
Proceeds from the exercise of stock options	8		 	—		
Employee withholding taxes paid on stock-based compensation	(38	)	 	(29	)	
Net cash for financing activities	(686	)	 	(518	)	
 	 	 	 	
Cash Flows From (For) Investing Activities:	 		 	 		
Capital expenditures	(160	)	 	(113	)	
Acquisition of business, net of cash acquired	(549	)	 	—		
Proceeds from disposition of business, net of cash disposed	—		 	128		
Other, net	108		 	142		
Net cash (for) from investing activities	(601	)	 	157		
 	 	 	 	
Effect of exchange rate changes on cash and cash investments	8		 	45		
 	 	 	 	
Cash and Cash Investments:	 		 	 		
(Decrease) increase for the period	(625	)	 	151		
At January 1	1,194		 	990		
At September 30	$	569		 	$	1,141		

	
								
 	As of September 30,	
 	2018	 	2017	
Liquidity	 		 	 		
Cash and cash investments	$	569		 	$	1,141		
Short-term bank deposits	—		 	77		
Total Liquidity	$	569		 	$	1,218		
 
Historical information is available on our website.

7

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Nine Months Ended September 30, 2018 and 2017

(dollars in millions)

																						
 	Three Months Ended September 30,	 	 	 	Nine Months Ended September 30,	 	 	
 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
Plumbing Products	 		 	 		 	 		 	 	 	 	 	 	
Net sales	$	992		 	$	950		 	4	%	 	$	2,995		 	$	2,771		 	8	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	177		 	$	175		 	 		 	$	534		 	$	537		 	 	
Operating margin, as reported	17.8	%	 	18.4	%					17.8	%		19.4	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	2		 	—		 	 		 	4		 	—		 	 	
Accelerated depreciation related to rationalization activity	—		 	1		 	 	 	1		 	1		 	 	
Operating profit, as adjusted	179		 	176						539			538		 	 	
Operating margin, as adjusted	18.0	%	 	18.5	%					18.0	%		19.4	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	20		 	16		 	 		 	56		 	45		 	 	
EBITDA, as adjusted	$	199		 	$	192						$	595			$	583		 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Decorative Architectural Products	 		 	 		 	 		 	 	 	 	 	 	
Net sales	$	673		 	$	562		 	20	%	 	$	2,024		 	$	1,719		 	18	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	104		 	$	112		 	 	 	$	338		 	$	355		 	 	
Operating margin, as reported	15.5	%		19.9	%					16.7	%		20.7	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Kichler inventory step up adjustment	15		 	—		 	 	 	40		 	—		 	 	
Operating profit, as adjusted	119		 	112						378			355		 	 	
Operating margin, as adjusted	17.7	%	 	19.9	%					18.7	%		20.7	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	10		 	4		 	 		 	25		 	12		 	 	
EBITDA, as adjusted	$	129		 	$	116						$	403			$	367		 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Cabinetry Products	 		 	 		 	 		 	 	 	 	 	 	
Net sales	$	239		 	$	229		 	4	%	 	$	724		 	$	711		 	2	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	23		 	$	20		 	 		 	$	62		 	$	67		 	 	
Operating margin, as reported	9.6	%		8.7	%					8.6	%		9.4	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	—		 	—		 	 		 	—		 	2		 	 	
Operating profit, as adjusted	23		 	20						62			69		 	 	
Operating margin, as adjusted	9.6	%	 	8.7	%					8.6	%		9.7	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	3		 	3		 	 		 	10		 	11		 	 	
EBITDA, as adjusted	$	26		 	$	23						$	72			$	80		 	 	
 
Historical information is available on our website.

8

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Nine Months Ended September 30, 2018 and 2017

(dollars in millions)

																						
 	Three Months Ended September 30,	 	 	 	Nine Months Ended September 30,	 	 	
 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
Windows and Other Specialty Products	 		 	 		 	 		 	 	 	 	 	 		
Net sales	$	197		 	$	204		 	(3	)%	 	$	575		 	$	588		 	(2	)%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	16		 	$	24		 	 		 	$	28		 	$	50		 	 		
Operating margin, as reported	8.1	%		11.8	%					4.9	%		8.5	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	3		 	—		 	 		 	3		 	—		 	 		
Operating profit, as adjusted	19		 	24						31			50		 			
Operating margin, as adjusted	9.6	%	 	11.8	%	 			 	5.4	%	 	8.5	%	 			
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	6		 	5		 	 		 	17		 	16		 	 		
EBITDA, as adjusted	$	25		 	$	29						$	48			$	66			 		
 	 	 	 	 	 	 	 	 	 	 	 	
Total	 		 	 		 	 		 	 	 	 	 	 		
Net sales	$	2,101		 	$	1,945		 	8	 %	 	$	6,318		 	$	5,789		 	9	 %	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported - segment	$	320		 	$	331		 	 		 	$	962		 	$	1,009		 	 		
General corporate expense, net (GCE)	(20	)	 	(22	)	 	 		 	(60	)	 	(71	)	 	 		
Operating profit, as reported	300		 	309						902			938		 	 		
Operating margin, as reported	14.3	%	 	15.9	%					14.3	%		16.2	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges - segment	5		 	—		 	 		 	7		 	2		 	 		
Accelerated depreciation related to rationalization activity - segment	—		 	1		 	 	 	1		 	1		 	 	
Kichler inventory step up adjustment	15		 	—		 	 		 	40		 	—		 	 		
Operating profit, as adjusted	320		 	310		 	 	 	950			941		 	-$336,000,000	
Operating margin, as adjusted	15.2	%	 	15.9	%					15.0	%		16.3	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization - segment	39		 	28		 	 		 	108		 	84		 	 		
Depreciation and amortization - non-operating	2		 	2		 	 		 	6		 	10		 	 		
EBITDA, as adjusted	$	361		 	$	340						$	1,064			$	1,035		 	 		
 
Historical information is available on our website.

9

MASCO CORPORATION
North American and International Data - Unaudited
For the Three Months and Nine Months Ended September 30, 2018 and 2017

(dollars in millions)

																						
 	Three Months Ended September 30,	 	 	 	Nine Months Ended September 30,	 	 	
 	2018		2017	 	Change	 	2018	 	2017	 	Change	
North American	 		 	 		 	 		 	 		 	 		 	 	
Net sales	$	1,724		 	$	1,538		 	12	 %	 	$	5,112		 	$	4,618		 	11	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	272		 	$	276		 	 		 	$	813		 	$	854		 	 	
Operating margin, as reported	15.8	%	 	17.9	%					15.9	%		18.5	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	2		 	—		 	 		 	4		 	2		 	 	
Accelerated depreciation related to rationalization activity	—		 	1		 	 	 	1		 	1		 	 	
Kichler inventory step up adjustment	15		 	—		 	 		 	40		 	—		 	 	
Operating profit, as adjusted	289		 	277						858			857		 	 	
Operating margin, as adjusted	16.8	%	 	18.0	%					16.8	%		18.6	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	28		 	18		 	 		 	76		 	56		 	 	
EBITDA, as adjusted	$	317		 	$	295						$	934			$	913		 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
International	 		 	 		 	 		 	 		 	 		 	 	
Net sales	$	377		 	$	407		 	(7	)%	 	$	1,206		 	$	1,171		 	3	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	48		 	$	55		 	 		 	$	149		 	$	155		 	 	
Operating margin, as reported	12.7	%	 	13.5	%					12.4	%		13.2	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	3		 	—		 	 		 	3		 	—		 	 	
Operating profit, as adjusted	51		 	55						152			155		 	 	
Operating margin, as adjusted	13.5	%	 	13.5	%					12.6	%		13.2	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	11		 	10		 	 		 	32		 	28		 	 	
EBITDA, as adjusted	$	62		 	$	65						$	184			$	183		 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Total	 		 	 		 	 		 	 		 	 		 	 	
Net sales	$	2,101		 	$	1,945		 	8	 %	 	$	6,318		 	$	5,789		 	9	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported - segment	$	320		 	$	331		 	 		 	$	962		 	$	1,009		 	 	
General corporate expense, net (GCE)	(20	)	 	(22	)	 	 		 	(60	)	 	(71	)	 	 	
Operating profit, as reported	300		 	309						902			938		 	 	
Operating margin, as reported	14.3	%	 	15.9	%					14.3	%		16.2	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges - segment	5		 	—		 	 		 	7		 	2		 	 	
Accelerated depreciation related to rationalization activity - segment	—		 	1		 	 	 	1		 	1		 	 	
Kichler inventory step up adjustment	15		 	—		 	 		 	40		 	—		 	 	
Operating profit, as adjusted	320		 	310						950			941		 	 	
Operating margin, as adjusted	15.2	%	 	15.9	%					15.0	%		16.3	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization - segment	39		 	28		 	 		 	108		 	84		 	 	
Depreciation and amortization - non-operating	2		 	2		 	 		 	6		 	10		 	 	
EBITDA, as adjusted	$	361		 	$	340		 	 		 	$	1,064		 	$	1,035		 	 	
Historical information is available on our website.

10