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) February 7, 2019

	

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 February 7, 2019 reporting Masco Corporation’s financial results for the fourth quarter and full-year of 2018 and certain other information and supplemental information prepared for use in connection with the financial results for the fourth quarter and full-year of 2018 . On February 7, 2019 , Masco Corporation will hold an investor conference call and webcast to discuss financial results for the fourth quarter and full-year of 2018 .
 
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 February 7, 2019 reporting Masco Corporation’s financial results for the fourth quarter and full-year of 2018 and certain other information and supplemental information prepared for use in connection with the financial results for the fourth quarter and full-year of 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	

February 7, 2019

	

2

Exhibit 99

MASCO CORPORATION REPORTS FOURTH QUARTER
AND 2018 YEAR-END RESULTS

2018 Fourth Quarter Key Highlights

•	Sales for the fourth quarter increased 10 percent to $2.0 billion ; in local currency, sales increased 11 percent	
		
•	Operating profit for the quarter grew 21 percent to $309 million; adjusted operating profit grew 23 percent to $315 million	
		
•	Earnings per share for the quarter increased 156 percent to $0.64 per share; adjusted earnings per share grew 56 percent to $0.64 per share	
		
•	Returned $336 million to shareholders through share repurchases and dividends in the quarter	
		
•	Anticipate 2019 earnings per share to be in the range of $2.56 - $2.76 per share, and on an adjusted basis to be in the range of $2.60 - $2.80 per share	

LIVONIA, Mich. ( February 7, 2019 ) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported strong net sales and earnings per share growth for the fourth quarter and full year of 2018 .

2018 Fourth Quarter Commentary

•	On a reported basis, compared to fourth quarter 2017 :	
		
•	Net sales increased 10 percent to $2.0 billion ; in local currency, net sales increased 11 percent	
		
•	In local currency, North American sales increased 14 percent and International sales were flat	
		
•	Gross margin decreased 60 basis points to 32.0 percent from 32.6 percent	
		
•	Operating margin increased 130 basis points to 15.1 percent from 13.8 percent	
		
•	Net income was $0.64 per share compared to $0.25 per share	
		
•	Compared to fourth quarter 2017 , results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate in 2018 of 25 percent (reduced from previously estimated 26 percent due to recently updated IRS guidance, and 34 percent in 2017), were as follows:	
		
•	Gross margin decreased 30 basis points to 32.3 percent compared to 32.6 percent	
		
•	Operating margin increased 150 basis points to 15.4 percent compared to 13.9 percent	
		
•	Net income was $0.64 per share compared to $0.41 per share	
		
•	Liquidity at the end of the fourth quarter was $559 million	

2018 Fourth Quarter Operating Segment Highlights

•	Plumbing Products’ net sales increased 4 percent (6 percent excluding the impact of foreign currency translation), driven by 8 percent growth in North America	
		
•	Decorative Architectural Products’ net sales increased 30 percent; excluding the acquisition of Kichler, net sales increased 8 percent due to growth in paints and other coating products, partially due to sales pulled-forward from the first quarter of 2019	
		
•	Cabinetry Products’ net sales increased 1 percent; excluding the divestiture of Moores, sales increased 4 percent with growth in both the repair and remodel and new construction businesses	
		
•	Windows and Other Specialty Products’ net sales decreased 1 percent due to continued softness in the UK market, partially offset by growth in North America	

“We delivered strong sales and profit growth in the fourth quarter of 2018, despite an increasingly challenging environment,” said Keith Allman, Masco’s President and CEO. “This growth was led by our Plumbing and Decorative Architectural Products segments. Additionally, we returned $336 million to shareholders through share buybacks and dividends during the quarter.”

1

2018 Full Year Key Highlights

•	Sales for the year increased 9 percent to $8.4 billion ; in local currency, sales increased 9 percent	
		
•	Operating profit grew 1 percent to $1,211 million ; adjusted operating profit grew 6 percent to $1,265 million	
		
•	Generated $803 million of free cash flow, for a free cash flow conversion rate of approximately 102 percent	
		
•	Returned $788 million to shareholders through share repurchases and dividends	
		
•	Earnings per share for the year grew 43 percent to $2.37 per share; adjusted earnings per share grew 29 percent to $2.50 per share	

2018 Full Year Commentary

•	On a reported basis, compared to full year 2017 :	
		
•	Net sales increased 9 percent to $8.4 billion	
		
•	In local currency, North American sales increased 11 percent and International sales decreased 2 percent	
		
•	Gross margin decreased 200 basis points to 32.2 percent from 34.2 percent	
		
•	Operating margin decreased 110 basis points to 14.5 percent from 15.6 percent	
		
•	Net income was $2.37 per share compared to $1.66 per share	
		
•	Compared to full year 2017 , results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate in 2018 of 25 percent (reduced from previously estimated 26 percent due to recently updated IRS guidance, and 34 percent in 2017), were as follows:	
		
•	Gross margin decreased 140 basis points to 32.8 percent compared to 34.2 percent	
		
•	Operating margin decreased 60 basis points to 15.1 percent compared to 15.7 percent	
		
•	Net income was $2.50 per share compared to $1.94 per share	
		
•	Free cash flow was $803 million	

“ We continued to execute on our long-term growth and capital allocation strategies to deliver strong sales, operating profit, and earnings per share growth in 2018, despite significant headwinds from increased commodity and logistics costs,” said Allman. “We achieved top- and bottom-line growth in our Plumbing Products segment led by strong 8 percent sales growth in North America. We grew sales and operating profit in our Decorative Architectural Products segment with the acquisition of Kichler Lighting, and continued growth in our paints and other coating products and builders’ hardware businesses. Our Cabinetry Products segment returned to growth in 2018 driven by its significant new retail program win, and we grew our Windows and Other Specialty Products segment excluding divestitures. We also continued our balanced capital allocation strategy by completing the $549 million acquisition of Kichler Lighting, repurchasing 18.6 million shares for $654 million, increasing our dividend for the fifth year in a row, and reducing debt by $106 million.”

“While we expect growth in some of our markets to moderate in 2019, we believe we are well positioned to drive profitable growth and create shareholder value by continuing to execute on our strategies in 2019,” continued Allman. “The fundamentals of the repair and remodel industry, which represents approximately 85% of our business, remain strong, and we anticipate our adjusted earnings per share to be in the range of $2.60 to $2.80 for 2019.”

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 fourth quarter and full year 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 Thursday, February 7, 2019 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 9775649. 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.

2

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 9775649. The telephone replay will be available approximately two hours after the end of the call and continue through March 9, 2019.

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 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 and increasing tariffs, 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, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. 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
# # #

3

MASCO CORPORATION
Condensed Consolidated Statements of Operations - Unaudited
For the Three Months and Years Ended December 31, 2018 and 2017

(in millions, except per common share data)

																	
 	 	Three Months Ended
December 31,	 	Year Ended
December 31,	
 	 	2018	 	2017	 	2018	 	2017	
Net sales	 	$	2,041		 	$	1,853		 	$	8,359		 	$	7,642		
Cost of sales	 	1,388		 	1,249		 	5,670		 	5,030		
Gross profit	 	653		 	604		 	2,689		 	2,612		
 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	344		 	348		 	1,478		 	1,418		
Operating profit	 	309		 	256		 	1,211		 	1,194		
 	 	 	 	 	 	 	 	 	
Other income (expense), net:	 	 	 	 	 	 	 	 	
Interest expense	 	(39	)	 	(39	)	 	(156	)	 	(278	)	
Other, net	 	(2	)	 	(69	)	 	(13	)	 	(32	)	
 	 	(41	)	 	(108	)	 	(169	)	 	(310	)	
Income before income taxes	 	268			148			1,042			884		
 	 	 	 	 	 	 	 	 	
Income tax expense	 	60		 	56		 	258		 	304		
Net income	 	208		 	92		 	784		 	580		
 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	14			12		 	50		 	47		
Net income attributable to Masco Corporation	 	$	194		 	$	80		 	$	734		 	$	533		
 	 	 	 	 	 	 	 	 	
Income per common share attributable to Masco Corporation (diluted):	 	 		 	 		 	 		 	 		
Net income	 	$	0.64		 	$	0.25		 	$	2.37		 	$	1.66		
 	 	 	 	 	 	 	 	 	
Average diluted common shares outstanding	 	299			314			307			318		
 
Historical information is available on our website.

4

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months and Years Ended December 31, 2018 and 2017

(dollars in millions)

																	
 	 	Three Months Ended
December 31,	 	Year Ended
December 31,	
 	 	2018	 	2017	 	2018	 	2017	
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations	 	 		 	 		 	 		 	 		
 	 	 	 	 	 	 	 	 	
Net sales	 	$	2,041		 	$	1,853		 	$	8,359		 	$	7,642		
 	 	 	 	 	 	 	 	 	
Gross profit, as reported	 	$	653		 	$	604		 	$	2,689		 	$	2,612		
Rationalization charges	 	6		 	1		 	14		 	4		
Kichler inventory step up adjustment	 	—		 	—		 	40		 	—		
Gross profit, as adjusted	 	$	659		 	$	605		 	$	2,743		 	$	2,616		
 	 	 	 	 	 	 	 	 	
Gross margin, as reported	 	32.0	%	 	32.6	%	 	32.2	%	 	34.2	%	
Gross margin, as adjusted	 	32.3	%	 	32.6	%	 	32.8	%	 	34.2	%	
 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses, as reported	 	$	344		 	$	348		 	$	1,478		 	$	1,418		
 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses as percent of net sales, as reported	 	16.9	%	 	18.8	%	 	17.7	%	 	18.6	%	
 	 	 	 	 	 	 	 	 	
Operating profit, as reported	 	$	309		 	$	256		 	$	1,211		 	$	1,194		
Rationalization charges	 	6		 	1		 	14		 	4		
Kichler inventory step up adjustment	 	—		 	—		 	40		 	—		
Operating profit, as adjusted	 	$	315		 	$	257			$	1,265		 	$	1,198		
 	 	 	 	 	 	 	 	 	
Operating margin, as reported	 	15.1	%	 	13.8	%	 	14.5	%	 	15.6	%	
Operating margin, as adjusted	 	15.4	%	 	13.9	%	 	15.1	%	 	15.7	%	

	
				
 	Year Ended
December 31, 2018	
Free Cash Flow Reconciliation and Free Cash Flow Conversion Rate	 		
 	 	
Net cash from operating activities	$	1,032		
Capital expenditures	(219	)	
Displays	(10	)	
Free Cash Flow	$	803		
 	 	
Net income	$	784		
 	 	
Free cash flow conversion rate	102	%	

Historical information is available on our website.

5

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months and Years Ended December 31, 2018 and 2017

(in millions, except per common share data)

																
 	Three Months Ended
December 31,	 	Year Ended
December 31,	
 	2018	 	2017	 	2018	 	2017	
Income Per Common Share Reconciliation	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
Income before income taxes, as reported	$	268		 	$	148		 	$	1,042		 	$	884		
Rationalization charges	6		 	1		 	14		 	4		
Kichler inventory step up adjustment	—		 	—		 	40		 	—		
(Gains) from private equity funds, net	(1	)	 	(1	)	 	(1	)	 	(3	)	
(Earnings) from equity investments, net	(1	)	 	—		 	(3	)	 	(1	)	
Impairment of private equity funds	—		 	—		 	—		 	2		
Loss on extinguishment of debt	—		 	—		 	—		 	107		
Loss on sales of businesses, net	—		 	64		 	—		 	13		
Income before income taxes, as adjusted	272		 	212		 	1,092		 	1,006		
Tax at 25% rate (34% for 2017)	(68	)	 	(72	)	 	(273	)	 	(342	)	
Less: Net income attributable to noncontrolling interest	14		 	12		 	50		 	47		
Net income, as adjusted	$	190		 	$	128		 	$	769		 	$	617		
 	 	 	 	 	 	 	 	
Net income per common share, as adjusted	$	0.64		 	$	0.41		 	$	2.50		 	$	1.94		
 	 	 	 	 	 	 	 	
Average diluted common shares outstanding	299		 	314		 	307		 	318		

Outlook for the Year Ended December 31, 2019

									
 	 	Year Ended
December 31, 2019	
 	 	Low End	 	High End	
Income Per Common Share Reconciliation	 	 	 	 	
 	 	 	 	 	
Net income per common share	 	$	2.56		 	$	2.76		
Rationalization charges	 	0.01		 	0.01		
Allocation to participating securities per share (1)	 	0.03		 	0.03		
Net income per common share, as adjusted	 	$	2.60		 	$	2.80		

(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.

6

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

(dollars in millions)

									
 	 	December 31, 2018	 	December 31, 2017	
Balance Sheet	 	 		 	 		
Assets	 	 		 	 		
Current Assets:	 	 		 	 		
Cash and cash investments	 	$	559		 	$	1,194		
Short-term bank deposits	 	—		 	108		
Receivables	 	1,153		 	1,066		
Inventories	 	946		 	784		
Prepaid expenses and other	 	108		 	111		
Total Current Assets	 	2,766		 	3,263		
 	 	 	 	 	
Property and equipment, net	 	1,223		 	1,129		
Goodwill	 	898		 	841		
Other intangible assets, net	 	406		 	187		
Other assets	 	100		 	114		
Total Assets	 	$	5,393		 	$	5,534		
 	 	 	 	 	
Liabilities	 	 		 	 		
Current Liabilities:	 	 		 	 		
Accounts payable	 	$	926		 	$	824		
Notes payable	 	8		 	116		
Accrued liabilities	 	750		 	727		
Total Current Liabilities	 	1,684		 	1,667		
 	 	 	 	 	
Long-term debt	 	2,971		 	2,969		
Other liabilities	 	669		 	715		
Total Liabilities	 	5,324		 	5,351		
 	 	 	 	 	
Equity	 	69		 	183		
Total Liabilities and Equity	 	$	5,393		 	$	5,534		

	
									
 	 	As of	
 	 	December 31, 2018	 	December 31, 2017	
Other Financial Data	 	 		 	 		
Working Capital Days	 	 		 	 		
Receivable days	 	53		 	51		
Inventory days	 	64		 	59		
Payable days	 	71		 	72		
Working capital	 	$	1,173		 	$	1,026		
Working capital as a % of sales (LTM)	 	14.0	%	 	13.4	%	
 
Historical information is available on our website.

7

MASCO CORPORATION
Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited
For the Years Ended December 31, 2018 and 2017

(dollars in millions)

									
 	 	Year Ended
December 31,	
 	 	2018	 	2017	
Cash Flows From (For) Operating Activities:	 	 		 	 		
Cash provided by operating activities	 	$	981		 	$	902		
Working capital changes	 	51		 	(151	)	
Net cash from operating activities	 	1,032		 	751		
 	 	 	 	 	
Cash Flows From (For) Financing Activities:	 	 		 	 		
Retirement of notes	 	(114	)	 	(535	)	
Purchase of Company common stock	 	(654	)	 	(331	)	
Cash dividends paid	 	(134	)	 	(129	)	
Dividends paid to noncontrolling interest	 	(89	)	 	(35	)	
Issuance of notes, net of issuance costs	 	—		 	593		
Decrease in debt, net	 	(1	)	 	(3	)	
Debt extinguishment costs	 	—		 	(104	)	
Proceeds from the exercise of stock options	 	14		 	—		
Employee withholding taxes paid on stock-based compensation	 	(42	)	 	(33	)	
Net cash for financing activities	 	(1,020	)	 	(577	)	
 	 	 	 	 	
Cash Flows From (For) Investing Activities:	 	 		 	 		
Capital expenditures	 	(219	)	 	(173	)	
Acquisition of businesses, net of cash acquired	 	(549	)	 	(89	)	
Proceeds from disposition of businesses, net of cash disposed	 	—		 	128		
Other, net	 	117		 	109		
Net cash for investing activities	 	(651	)	 	(25	)	
 	 	 	 	 	
Effect of exchange rate changes on cash and cash investments	 	4		 	55		
 	 	 	 	 	
Cash and Cash Investments:	 	 		 	 		
(Decrease) increase for the period	 	(635	)	 	204		
At January 1	 	1,194		 	990		
At December 31	 	$	559		 	$	1,194		

	
									
 	 	As of	
 	 	December 31, 2018	 	December 31, 2017	
Liquidity	 	 		 	 		
Cash and cash investments	 	$	559		 	$	1,194		
Short-term bank deposits	 	—		 	108		
Total Liquidity	 	$	559		 	$	1,302		
 
Historical information is available on our website.

8

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Years Ended December 31, 2018 and 2017

(dollars in millions)

																						
 	Three Months Ended
December 31,	 	 	 	Year Ended
December 31,	 	 	
 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
Plumbing Products	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	1,003		 	$	961		 	4	%	 	$	3,998		 	$	3,732		 	7	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	181		 	$	165		 	 		 	$	715		 	$	702		 	 		
Operating margin, as reported	18.0	%	 	17.2	%	 	 		 	17.9	%	 	18.8	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	3		 	1		 	 		 	7		 	1		 	 		
Accelerated depreciation related to rationalization activity	1		 	—		 	 	 	2		 	1		 	 	
Operating profit, as adjusted	185		 	166		 	 		 	724		 	704		 	 		
Operating margin, as adjusted	18.4	%	 	17.3	%	 	 		 	18.1	%	 	18.9	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	19		 	17		 	 		 	75		 	62		 	 		
EBITDA, as adjusted	$	204		 	$	183		 	 		 	$	799		 	$	766		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Decorative Architectural Products	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	632		 	$	487		 	30	%	 	$	2,656		 	$	2,206		 	20	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	118		 	$	83		 	 		 	$	456		 	$	438		 	 		
Operating margin, as reported	18.7	%	 	17.0	%	 	 		 	17.2	%	 	19.9	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Kichler inventory step up adjustment	—		 	—		 	 	 	40		 	—		 	 	
Operating profit, as adjusted	118		 	83		 	 	 	496		 	438		 	 	
Operating margin, as adjusted	18.7	%	 	17.0	%	 	 	 	18.7	%	 	19.9	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	10		 	4		 	 		 	35		 	16		 	 		
EBITDA, as adjusted	$	128		 	$	87		 	 		 	$	531		 	$	454		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Cabinetry Products	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	226		 	$	223		 	1	%	 	$	950		 	$	934		 	2	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	24		 	$	25		 	 		 	$	86		 	$	92		 	 		
Operating margin, as reported	10.6	%	 	11.2	%	 	 		 	9.1	%	 	9.9	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	—		 	—		 	 		 	—		 	2		 	 		
Operating profit, as adjusted	24		 	25		 	 		 	86		 	94		 	 		
Operating margin, as adjusted	10.6	%	 	11.2	%	 	 		 	9.1	%	 	10.1	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	3		 	3		 	 		 	13		 	14		 	 		
EBITDA, as adjusted	$	27		 	$	28		 	 		 	$	99		 	$	108		 	 		
 
Historical information is available on our website.

9

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Years Ended December 31, 2018 and 2017

(dollars in millions)

																						
 	Three Months Ended
December 31,	 	 	 	Year Ended
December 31,	 	 	
 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
Windows and Other Specialty Products	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	180		 	$	182		 	(1	)%	 	$	755		 	$	770		 	(2	)%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	6		 	$	4		 	 		 	$	34		 	$	54		 	 		
Operating margin, as reported	3.3	%	 	2.2	%	 	 		 	4.5	%	 	7.0	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	2		 	—		 	 		 	5		 	—		 	 		
Operating profit, as adjusted	8		 	4		 	 		 	39		 	54		 	 		
Operating margin, as adjusted	4.4	%	 	2.2	%	 	 		 	5.2	%	 	7.0	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	6		 	5		 	 		 	23		 	21		 	 		
EBITDA, as adjusted	$	14		 	$	9		 	 		 	$	62		 	$	75		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Total	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	2,041		 	$	1,853		 	10	 %	 	$	8,359		 	$	7,642		 	9	 %	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported - segment	$	329		 	$	277		 	 		 	$	1,291		 	$	1,286		 	 		
General corporate expense, net (GCE)	(20	)	 	(21	)	 	 		 	(80	)	 	(92	)	 	 		
Operating profit, as reported	309		 	256		 	 		 	1,211		 	1,194		 	 		
Operating margin, as reported	15.1	%	 	13.8	%	 	 		 	14.5	%	 	15.6	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges - segment	5		 	1		 	 		 	12		 	3		 	 		
Accelerated depreciation related to rationalization activity - segment	1		 	—		 	 		 	2		 	1		 	 		
Kichler inventory step up adjustment	—		 	—		 	 	 	40		 	—		 	 	
Operating profit, as adjusted	315		 	257		 	 		 	1,265		 	1,198		 	 		
Operating margin, as adjusted	15.4	%	 	13.9	%	 	 		 	15.1	%	 	15.7	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization - segment	38		 	29		 	 		 	146		 	113		 	 		
Depreciation and amortization - non-operating	2		 	3		 	 		 	8		 	13		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
EBITDA, as adjusted	$	355		 	$	289		 	 		 	$	1,419		 	$	1,324		 	 		
 
Historical information is available on our website.

10

MASCO CORPORATION
North American and International Data - Unaudited
For the Three Months and Years Ended December 31, 2018 and 2017

(dollars in millions)

																						
 	Three Months Ended December 31,	 	 	 	Year Ended
December 31,	 	 	
 	2018	 	2017	 	Change	 	2018	 	2017	 	Change	
North American	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	1,651		 	$	1,449		 	14	 %	 	$	6,763		 	$	6,067		 	11	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	281		 	$	226		 	 		 	$	1,094		 	$	1,080		 	 		
Operating margin, as reported	17.0	%	 	15.6	%	 	 		 	16.2	%	 	17.8	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	3		 	1		 	 		 	7		 	3		 	 		
Accelerated depreciation related to rationalization activity	1		 	—		 	 		 	2		 	1		 	 		
Kichler inventory step up adjustment	—		 	—		 	 	 	40		 	—		 	 	
Operating profit, as adjusted	285		 	227		 	 		 	1,143			1,084		 	 		
Operating margin, as adjusted	17.3	%	 	15.7	%	 	 		 	16.9	%	 	17.9	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	28		 	18		 	 		 	104		 	74		 	 		
EBITDA, as adjusted	$	313		 	$	245		 	 		 	$	1,247		 	$	1,158		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
International	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	390		 	$	404		 	(3	)%	 	$	1,596		 	$	1,575		 	1	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported	$	48		 	$	51		 	 		 	$	197		 	$	206		 	 		
Operating margin, as reported	12.3	%	 	12.6	%	 	 		 	12.3	%	 	13.1	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges	2		 	—		 	 		 	5		 	—		 	 		
Operating profit, as adjusted	50		 	51		 	 		 	202		 	206		 	 		
Operating margin, as adjusted	12.8	%	 	12.6	%	 	 		 	12.7	%	 	13.1	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	10		 	11		 	 		 	42		 	39		 	 		
EBITDA, as adjusted	$	60		 	$	62		 	 		 	$	244		 	$	245		 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Total	 		 	 		 	 		 	 		 	 		 	 		
Net sales	$	2,041		 	$	1,853		 	10	 %	 	$	8,359		 	$	7,642		 	9	%	
 	 	 	 	 	 	 	 	 	 	 	 	
Operating profit, as reported - segment	$	329		 	$	277		 	 		 	$	1,291		 	$	1,286		 	 		
General corporate expense, net (GCE)	(20	)	 	(21	)	 	 		 	(80	)	 	(92	)	 	 		
Operating profit, as reported	309		 	256		 	 		 	1,211		 	1,194		 	 		
Operating margin, as reported	15.1	%	 	13.8	%	 	 		 	14.5	%	 	15.6	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Rationalization charges - segment	5		 	1		 	 		 	12		 	3		 	 		
Accelerated depreciation related to rationalization activity - segment	1		 	—		 	 		 	2		 	1		 	 		
Kichler inventory step up adjustment	—		 	—		 	 	 	40		 	—		 	 	
Operating profit, as adjusted	315		 	257		 	 		 	1,265		 	1,198		 	 		
Operating margin, as adjusted	15.4	%	 	13.9	%	 	 		 	15.1	%	 	15.7	%	 	 		
 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization - segment	38		 	29		 	 		 	146		 	113		 	 		
Depreciation and amortization - non-operating	2		 	3		 	 		 	8		 	13		 	 		
EBITDA, as adjusted	$	355		 	$	289		 	 		 	$	1,419		 	$	1,324		 	 		
Historical information is available on our website.

11