2012 Goldman Sachs Global Retailing Conference Presentation

Goldman Sachs 19th Annual Global Retailing Conference

September 05, 2012

Written and oral statements made in this presentation that reflect our views about our future performance 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,” “should,” “will,” “forecast”, “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” and similar references to future periods. These views 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 our reliance on new home construction and home improvement, our reliance on key customers, the cost and availability of raw materials, shifts in consumer preferences and purchasing practices, and our ability to achieve cost savings through business rationalizations and other initiatives. These and other factors are discussed in detail in Item 1A, “Risk Factors” in our 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. Our forward-looking statements in this presentation speak only as of the date of this presentation. 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.

Certain of the financial and statistical data included in this presentation and the related materials are non-GAAP financial measures as defined under Regulation G. The Company believes that non-GAAP performance measures and ratios used in managing the business may provide attendees of this presentation with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Additional information about the Company is contained in the Company's filings with the SEC and is available on Masco’s Web Site, www.masco.com.

Safe Harbor Statement

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http://www.masco.com/

I N V E S T M E N T T H E S I S

Strong Fundamentals - Positioned to Outperform

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The strengths

The growth

The strategy

The company

Masco at a Glance

Revenue % renovation vs. new construction 75%

Employees 31,000

Market capitalization >$4.0B

Dividend yield 2.9%

Revenue $7.5B

Cumulative free cash flow last 3 years ~$1B

4

2011

Cash at 12/31/2011 $1.7B

Masco – Strong Brands with Market Leading Positions

BUSINESS SEGMENT

Cabinets and Related Products

Plumbing Products

Installation and Other Services

Decorative Architectural Products

$1.2B

$2.9B

$1.1B

$1.7B

REVENUE 2011 % OF TOTAL

39%

22%

17%

14%

$7.5B 100% Total company

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Other Specialty Products

$0.6B 8%

LEADING POSITIONS

#1 & #2 U.S. kitchen and bath cabinetry brands

#1 worldwide in faucets, fittings, showerheads

#1 in spas

#1 insulation and product installation for homebuilders

#1 DIY paint and stain

#1 windows and patio doors in western US and UK

http://www.youtube.com/watch?v=nzWcXubIHyk

Masco – Unique Scope and Scale

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manufacturer of faucets in the world Largest

non-commodity supplier to The Home Depot Largest

supplier to Lowe’s Kitchen and Bath segment Largest

supplier of architectural coatings to the U.S. DIY market Largest

installer of insulation products for the new home construction market Largest

We believe we are the…….



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The strengths

The growth

The strategy

The company

Strategic Initiatives to Improve Performance

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Outperform the

recovery

• Leverage brands

• Innovative products Expand market leadership

• Supply chain savings

• Drive lean benefits Reduce costs

• Focus on Cabinets, Installation

• Return to profitability

Improve underperforming businesses

1

2

3

4

Strengthen Balance Sheet

• Debt reduction

• Strong liquidity

1 . E X P A N D M A R K E T L E A D E R S H I P

Key Brands Gaining Share since 2010

Examples Gaining Share

• Delta®, Peerless®, and Brizo® brands in U.S.

• International plumbing growth with Hansgrohe

• Decorative Architectural: Behr® #1 ranking, Direct to Pro® service growth, Kilz Pro line

• Other Specialty: Milgard® windows outperforming market, UK growing share

• Masco Contractor Services gaining share with insulation, retrofit and commercial channels

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2 . R E D U C E C O S T S

Significant Progress Lowering Cost Structure Higher Margins

Cumulative Gross Fixed Cost Reductions

Headcount Reductions of ~50%

~$100M

$540M $560M

2007 2010 2011

62,500

32,500 31,000

2006 2010 2011

Includes 28 closed / mothballed facilities 10

3 . I M P R O V E U N D E R P E R F O R M I N G B U S I N E S S E S

Laser Focus on Achieving Breakeven Cabinets

First half operating profit improvement of $19M principally driven by cost reductions in North America

• Expect $10M - $15M of operating profit improvement in the second half of 2012

Benefits from increased housing starts offset by:

• Market conditions in European economies and North American repair/remodel activity

• Challenges implementing North American dealer and countertop strategies

Leadership changes for North American Cabinets have been implemented

Installation

First half operating profit improvement of $29M driven by new home construction activity and cost reductions from lean, ERP leverage, and supply chain

Continued penetration of retrofit and commercial channels

Assuming 725,000 (lagged) housing starts, should be close to breakeven for full year 2012

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4 . S T R E N G T H E N B A L A N C E S H E E T

Declining Debt to Capitalization Ratio

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84%

45%-55%

2011Year End

Future Target

• Reduction of $400M in 2012



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The strengths

The growth

The strategy

The company

Broad distribution 3

Industry innovator 2

Market-leading brands 1

Masco Business System 4

Strong financial position 5

Key Strengths we are Leveraging

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S T R E N G T H 1 : M A R K E T L E A D I N G B R A N D S

Unparalleled Brand Strength

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Installation & Other Services

Plumbing Products

Cabinets & Related Products



http://www.youtube.com/watch?v=nzWcXubIHyk

S T R E N G T H 2 : I N D U S T R Y I N N O V A T O R

Significant New Product Introductions – Last 3 Years

30%*

Examples of New Products/Technologies

Existing Products

2011 2010 2009

70% Touch2O®

Technology

Behr Premium Plus Ultra

Essence Windows

Arrow R.E.D.

ACE® Salt Water Sanitizing System

2011 Revenues

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Hansgrohe’s Axor® Urquiola

BehrProTM

Masco Cabinetry’s ProCisionTM Process

* Percentage of 2011 gross sales of manufactured products attributable to new products introduced in trailing 36 months

Kilz PRO-XTM

S T R E N G T H 3 : B R O A D D I S T R I B U T I O N

Broad Distribution Across Multiple Channels

Broad Portfolio

Big Box Retailers Homebuilders Wholesalers / Dealers

• Exclusive products and services for the direct to builder channel

• A leading insulation contractor in the US

• Dedicated customer-specific service organizations with over 1,000 field service employees

• Extensive training programs for branch and showroom associates

• Superior dealer support through display and technology expertise

• Premier brands drive traffic

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Customer focus

Lean Quality Talent

Innovation

S T R E N G T H 4 : M A S C O B U S I N E S S S Y S T E M S

A Continuous Improvement Culture – At the Center of Our Success

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MBS

S T R E N G T H 5 : S T R O N G F I N A N C I A L P O S I T I O N

Strong Liquidity and Improving Balance Sheet

Strong Liquidity (as of 6/30/2012)

• Cash and equivalents of ~$1.9B

• Borrowing availability of ~$560M

• A strong free cash flow business – ~$1B last 3 years – Maintenance capex of

~$110M annually

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Declining Debt to Capitalization Ratio

84%

45%-55%

2011Year End

Future Target

~$1.2B of cash and borrowing availability of ~$900M as of 7/31/2012

July 2012 debt repayment of $745M (net debt reduction of $400M in 2012)



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The strengths

The growth

The strategy

The company

Positioned to Outperform in the Recovery

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Leveraged to the recovery

Continued brand leverage and share expansion

Continued cost position improvement

Disciplined capital deployment

1

2

3

4

1. Leveraged to the Recovery

12%

6%

4%

10-14%

2006Last Peak

2010 2011 3-5 Years

Adjusted Operating Margin*

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Reflects

• lower fixed cost base of >$560M (gross)

• driving lean principles across the company

30% margin on incremental volume

Housing starts 2.1M 0.6M 0.6M ~1-1.5M

*See Appendix slide 31

2. Initiatives to Leverage Brands and Expand Share

Geographic Expansion


Plumbing Products




Product Introductions

Extend Categories

Strengthen Brand Loyalty

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3. Continue to Improve Cost Position

~$175M* of Total Cost Productivity

in 2012

24 * Gross

Sourcing

Lean Initiatives

Driven by: Driven by:

Distribution & Logistics

Actions Taken In Prior Years

• Plant Closures • Headcount

Reductions • System

Implementations

4. Disciplined Capital Deployment

Invest in the Business

• Maintenance capex: $110M annually

Strong Cash Flow Generation

Financial Flexibility

• Target 45%-55% debt to capitalization vs. ~84%

Dividend

• Maintain dividend yield ~2%

Acquisitions

• Potential acquisitions (<$100M) in support of international expansion

Maintain high cash balance ~$1B until markets firm up

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2012 Priorities

Investment in strategic growth initiatives

Geographic expansion

Total cost productivity

Reduce debt by ~$400M/refinance $400M

Cabinet profit improvement

Installation profit improvement

Grow share of key brands

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Successfully launch new products in Paint & Builders Hardware

Masco 3-5 Years Out – A “Normal” Housing Market

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• Estimate revenues of ~$10-12B, margin of 10-14%

• Growth outperforming the industry

• Optimized portfolio with a strong balance sheet

• International expansion

• Positive return from assets employed in – Cabinets – Installation

W H Y I N V E S T I N M A S C O


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Executing initiatives to improve performance • Continuing to reduce fixed costs, expand share and

improve underperformers The Strategy

Building on market-leading positions • Best brands, innovative products, lean practices,

strong financial position The Strengths

Well-positioned to outperform • Lower cost structure higher margins, leveraged

to recovery The Growth

Appendix

Operating Profit Reconciliation

31

As adjusted for impairment charges for goodwill and other intangible assets and business rationalization charges.

Twelve Months Ended

December 31,

2011 2010 2006

Sales $ 7,467 $ 7,486 $ 12,390

Operating (loss) profit , as reported $ (295) $ (463) $ 1,115

Rationalization charges 121 208 47

Impairment of goodwill and other intangible assets 494 698 317

Litigation charge 9 - -

Operating profit, as adjusted $ 329 $ 443 $ 1,479

Operating margin, as reported -4.0% -6.2% 9.0%

Operating margin, as adjusted 4.4% 5.9% 11.9%

Q2 2012 – Sales Up 3% Excluding Currency

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($ in Millions) Second Quarter

2012

Revenue Y-O-Y Change

$2,004 0%*

Adjusted Operating Profit** Y-O-Y Change

$124 $8

Adjusted Operating Margin** Y-O-Y Change

6.2% 40 bps

Adjusted EPS** $0.10

*Excluding the effect of currency, second quarter 2012 sales increased 3% compared to 2011. **As reported operating profit $47M; operating margin 2.3%; E.P.S of ($.17) see appendix for reconciliation

Q2 2012 – Profit Reconciliation

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($ in Millions) Q2 2012 Q2 2011 Sales $ 2,004 $ 1,998

Gross Profit – As Reported $ 525 $ 532 Rationalization Charges 3 11 (Gain) From Sale of Fixed Assets (5) - Gross Profit – As Adjusted $ 523 $ 543 Gross Margin - As Reported 26.2% 26.6% Gross Margin - As Adjusted 26.1% 27.2%

Operating Income – As Reported $ 47 $ 96 Rationalization Charges 7 15 (Gain) From Sale of Fixed Assets (5) - Charge for Litigation Settlements, Net 75 5 Operating Profit – As Adjusted $ 124 $ 116 Operating Margin - As Reported 2.3% 4.8% Operating Margin - As Adjusted 6.2% 5.8%

Q2 2012 – EPS Reconciliation

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($ in Millions) Q2 2012 Q2 2011

(Loss) Income from Continuing Operations before Income Taxes – As Reported

$ (19) $ 64

Rationalization Charges 7 15

Charge for Litigation Settlements, Net 75 5

Financial Investment (Income) Expense - (33)

(Gain) From Sale of Fixed Assets (5) -

Interest Carry Costs 7 -

Income from Continuing Operations Before Income Taxes – As Adjusted 65 51

Tax at 36% Rate Benefit (Expense) (23) (18)

Less: Net Income Attributable to Non-Controlling Interest 8 12

Net Income – As Adjusted $ 34 $ 21

Income per Common Share – As Adjusted $ 0.10 $ 0.06

Shares 349 349

Outlook into 2012

Tailwinds Headwinds

• Improving demand in residential new construction

• Successful product introductions at retail

• Favorable price/commodity relationships

• Eliminated litigation uncertainty

• Additional profit improvement opportunities identified

• Slowing economic activity in North America and European economies

• Implementation of Cabinet countertop and dealer strategies

• International Plumbing mix impact

• Commodity cost volatility

• Composition of new housing starts

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($ in Millions) 2012 Estimate 2011 Actual

Rationalization Charges* ~ $30 $121

Tax Rate** ~ 50% 18%

Interest Expense ~ $250 $254

General Corp. Expense ~ $125 $118

Capital Expenditures ~ $150 $151

Depreciation & Amortization

~ $210 $263***

Outstanding Shares 348 million 348 million

2012 Guidance Estimates

*Based on current business plans. **Tax rate for 2011 excludes the valuation allowance on the Federal deferred income tax assets and the impairment charge for goodwill and other intangible assets. ***2011 includes $58M of accelerated depreciation, which is also included in the rationalization charges.

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Segment Mix Full Year 2011 Estimate

Business Segment


Plumbing Products



$1.2B

$2.9B

$1.1B

$1.7B

Revenue 2011 % of Total

39%

22%

17%

14%

$7.5B 100% Total company

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Other Specialty Products $0.6B 8%

RR% vs. NC NA% vs. Int’l

80% 55%

95% 100%

75% 75%

20% 100%

75% 75%

75% 76%

2011 Masco International Revenue Split*

38 *Based on company estimates

International Sales Accounted for ~24% of Total 2011 Masco Sales

2012 Goldman Sachs Global Retailing Conference Presentation

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