EX-99 2 a1231188-kex99.htm EXHIBIT 99 Exhibit


Exhibit 99
 mascoa07.jpg
 
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