2014 Fourth Quarter Key Highlights

• Sales for the fourth quarter increased 3 percent to $2.1 billion; sales increased 5 percent excluding the impact of foreign currency translation
• Adjusted operating profit grew 32 percent to $202 million
• Adjusted operating profit margin for the quarter increased to 9.8 percent
• Adjusted EPS for the quarter grew 60 percent to $.24 per common share

TAYLOR, MI - Masco Corporation (NYSE: MAS) reported net sales and adjusted operating profit growth in the fourth quarter of 2014 driven primarily by the Plumbing Products, Decorative Architectural Products and Installation and Other Services segments. Adjusted operating profit margin rose to 9.8 percent, reflecting the Company’s execution on cost management and strong operating leverage.

2014 Fourth Quarter Commentary

• Net sales from continuing operations increased 3 percent to $2.1 billion. North American sales increased 4 percent and international sales decreased 2 percent in U.S. dollars, but increased 6 percent in local currency
• Compared to fourth quarter 2013, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, were as follows:
  • Gross margins improved to 27.7 percent compared to 27.1 percent
  • Operating margins improved to 9.8 percent compared to 7.7 percent
  • Income from continuing operations was $.24 per common share compared to $.15 per common share

• Income from continuing operations, as reported, was $.29 per common share
• Liquidity at the end of the fourth quarter was approximately $1.7 billion
• Five million shares were repurchased in the fourth quarter

2014 Fourth Quarter Operating Segment Highlights

• Plumbing Products’ net sales increased 1 percent (5 percent excluding the impact of currency translation) fueled by growth across the segment and continued strength in the wholesale channel
• Decorative Architectural Products’ net sales increased 7 percent, driven by new products and program wins across the businesses
• Cabinets and Related Products’ net sales decreased 3 percent due to challenges in retail and dealer channels
• Installation and Other Services’ net sales increased 7 percent with continued growth in custom homes and the commercial channel
• Other Specialty Products’ net sales increased 8 percent, fueled by growth in repair and remodeling

“We capped off 2014 with another solid quarter as sales increased 3 percent for the total company and, importantly, adjusted operating income increased 32 percent,” said Masco’s President and CEO, Keith Allman. “Our portfolio of industry-leading plumbing businesses continues to perform, delivering increased revenue and profit growth, which resulted in a record sales year for both Delta Faucet and Hansgrohe. New products and program wins at Behr Process and Liberty Hardware drove the performance of our Decorative Architectural segment, and our Installation and Other Services segment capitalized on the housing recovery and ongoing growth of its commercial business. Our window businesses also benefitted from improving macro trends in their respective markets and continued success from recently introduced products. While our Cabinet and Related Products segment faced lingering demand challenges from an ERP implementation, we believe we are taking the necessary actions to position it for profitability in 2015.”

2014 Full-Year Commentary

• Net sales increased 4 percent to $8.5 billion, compared to 2013
• Compared to full-year 2013, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, were as follows:
  • Gross profit margins were 28.4 percent compared to 28.0 percent
  • Operating profit margins were 10.0 percent compared to 8.8 percent
  • Income from continuing operations was $1.02 per common share compared to $0.77 per common share
• Income from continuing operations, as reported, was $2.39 per common share compared to $0.83 per common share in 2013
• Free cash flow exceeded $440 million

“2014 was a notable year for Masco,” said Keith Allman. “Our customer-focused innovation as well as our productivity improvements and cost control yielded steady sales growth and substantially improved margins. Our balance sheet continues to improve as we ended the year with $1.7 billion of liquidity. Throughout the year we also took a number of actions to drive shareholder value. In September, we announced the spin-off of our Services Business and remain on-track for it to be complete by mid-year 2015. Additionally, the restructuring of our corporate office has resulted in a leaner operating model, yielding annual savings of approximately $35-40 million. Furthermore, our commitment to returning capital to shareholders was enhanced through an increase in our dividend and a new share repurchase authorization. During the fourth quarter of 2014 we repurchased 1.4 percent of our outstanding shares or 5 million shares.”

2015 Outlook

“Our strong execution in 2014 gives us momentum as we enter 2015,” continued Mr. Allman. “We remain committed to serving the customer by accelerating our innovation pipeline and continuing our strong operating performance. We expect to gain share and drive consumer demand as we leverage our industry-leading brands and new products. We are confident in our ability to execute in this improving environment and believe the strategic initiatives we announced in 2014 will drive shareholder value as we move into 2015.”

About Masco

Headquartered in Taylor, Michigan, Masco Corporation is one of the world’s leading manufacturers of branded building products, as well as a leading provider of services that include the installation of insulation and other building products.

The 2014 fourth quarter supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.

Source: Masco Corporation