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Plumbing Segment
Richard O’Reagan / Group President, Global Plumbing
Agenda
The Business Today
Growth Plan
2
Plumbing Products Segment Overview
Masco Corp. (Breakdown of 2014 Revenue)
Rest of
Masco
Plumbing
Segment 39% 61%
Revenue $3.3B
Margin as Adjusted* 15.6%
% of Masco EBIT as adjusted* 61%
% Revenue outside N. America 41%
12/31/2014
Currency Exposure USD / EUR
/ CAD
Commodity Exposure Copper
/ Zinc
% Repair & Remodel Sales 82%
3
*Operating profit, as adjusted excludes $5M of rationalization charges for Plumbing Products and $63M of net
rationalization changes for Masco.
Strong Brands with Industry Leading Positions
4
Bristan / Heritage (UK faucet market)
Hansgrohe® (Global shower brand)
Brizo® (Recommended premium faucet showroom brand)
Delta® (US DIY faucet brand)
BrassCraft® (NA plumber brand)
Axor® (Global designer
faucet brand)
Hot Spring® / Caldera® (Leading global brands in
portable spa market)
#1
#1
#1 #1
#1
#1
#1
Mirolin® (Acrylic bath-ware manufacturer in
Canada)
#1
Broad Product Range with Multiple
Opportunities for Growth
5
North America Int’l - ~40% Revenues
Faucets
& Showers
Bath
Systems
Sanitary
Wares
Rough
Plumbing
Bath Acc. /
Wellness
Markets
Diversified Portfolio Delivers a Solid
Performance Record
$338 $332
$418
$517
2011 2012 2013 2014
Adjusted Operating Profit ($M)
15% CAGR
6
*Excludes business rationalization charges for 2014, 2013, 2012, and 2011 of $5 million, $24 million, $25 million and $15 million,
respectively. Excludes 2011 other intangible asset impairment charge of $1 million.
Agenda
7
The Business Today
Growth Plan
• Pursue category expansion
• Extend leadership in North American plumbing
• Growth in priority international markets, both organically and inorganically
1
2
3
Strategic Priorities
8
$3.6B
$2.8B
$1.0B
$0.3B
Addressable US Plumbing Industry Size Masco Sales
9
S T R A T E G Y # 1 E X T E N D L E A D E R S H I P I N N O R T H A M E R I C A N P L U M B I N G
Target and Grow in Under-Penetrated Channels
Channel Breakdown
of Addressable Opportunity
Big Box, Trade / Showroom, All Other Retail
Commercial, Builder, Trade / Showroom Urban
Notes: Industry includes Faucets, Rough Plumbing Supplies and Portable Spas
Source: Company Estimates for Masco Addressable Opportunities
Masco opportunity
10
Brands
Innovation
Delta Faucet Company share #1
BrassCraft® products preferred choice by
Professional Plumber #1
Hot Spring® portable spa brand #1
KBIS – Brizo® articulating arm kitchen faucet Winner
The Home Depot Innovation Top 10
U.S. patent filings for faucets & fittings for the past 20 years vs. the competition 2X
Vitality Index >30%
Brizo®
Articulating Arm
Kitchen Faucet
S T R A T E G Y # 1 E X T E N D L E A D E R S H I P I N N O R T H A M E R I C A N P L U M B I N G
Our Strengths are Key Enablers for Success
11
S T R A T E G Y # 1 E X T E N D L E A D E R S H I P I N N O R T H A M E R I C A N P L U M B I N G
Key Execution Initiatives
+
+
Estimated
Sales Opportunity:
~$175-$250M over the next
three years
+
Preserve the core
Capitalize on new home
construction with key builders
Grow commercial sales
Grow urban showroom sales
12
S T R A T E G Y # 2 P U R S U E C A T E G O R Y E X P A N S I O N
Adjacent Categories Represent Significant Growth Potential
$28B
$48B
$2.7B $0.6B
Global Plumbing Industry Sales Masco Plumbing Sales
Faucets & Mixers, Portable Spas / Bath Accessories
Rough Plumbing, Bath Systems, Sanitary Wares
Product Breakdown
of Addressable Opportunity
Masco opportunity
Notes: Industry includes Faucets, Rough Plumbing Supplies and Portable Spas
Source: Company Estimates for Masco Addressable Opportunities
13
• Adjacent categories with highest
attachment rate to existing products
1. Toilet with purchase of both
vanity sink / faucet
2. Vanity sink with purchase
of a faucet
24
28
25
23
38
47
69
71
71
91
ShowerEnclosures
Accessories
Toilets
Sinks
Faucet
Delta Average
Source: DFC Brand Extension Study (Invoke). Aided awareness %.
Strong Consumer Association with Delta® Brand
and Adjacent Bathing Products
Delta Brand Awareness % Attachment Rates
S T R A T E G Y # 2 P U R S U E C A T E G O R Y E X P A N S I O N
Brand Recognition Drives Our Right to Win
14
S T R A T E G Y # 2 P U R S U E C A T E G O R Y E X P A N S I O N
Key Execution Initiatives
+
+
Estimated
Sales Opportunity:
~$75-$125M over the next
three years
+
Expand into sanitary wares
Extend rough plumbing categories
Grow bath systems sales
Pursue inorganic growth
15
S T R A T E G Y # 3 G R O W I N P R I O R I T Y I N T E R N A T I O N A L M A R K E T S
Leverage our Leadership Position in Global Faucets and Mixers for Greater Growth
Notes:All figures based on Wholesale Pricing Source: BRG, Fredonia and Company estimates for 2014
88%
Global Faucet Industry
$22B
12% Masco global
faucet sales
Masco is the #1 global faucet player with
significant opportunity to grow
Competitor
sales
Source: Masco
Delta Faucet (>60 Countries) Hansgrohe (>140 Countries) Multiple Business Units in N. America
• Delta Faucet
• Hansgrohe
• BrassCraft (USA, Canada)
• Brasstech (USA)
• Masco Canada (Canada)
• Mirolin (Canada)
• Watkins
16
#1 globally in faucets and mixers
S T R A T E G Y # 3 G R O W I N P R I O R I T Y I N T E R N A T I O N A L M A R K E T S
Masco Plumbing – Competitive Global Footprint
S T R A T E G Y # 3 G R O W I N P R I O R I T Y I N T E R N A T I O N A L M A R K E T S
Growth in Priority International Markets
17
UK Netherlands
France
Germany
Turkey Brazil China
18
S T R A T E G Y # 3 G R O W I N P R I O R I T Y I N T E R N A T I O N A L M A R K E T S
Key Execution Initiatives
+
+
Estimated
Sales Opportunity:
~$125-$225M over the next
three years
+
Focus international growth
in key markets
Leverage Delta and
Hansgrohe’s innovation
Leverage Hansgrohe’s
distribution capabilities
Pursue inorganic growth
Plumbing Segment 3 Year Outlook
19
Plumbing segment is expected to generate 16-17% operating margins
in 2017 with sales growing at 4%-6% CAGR during the next 3 years
2014 PlumbingNet Sales*
2017 PlumbingNet Sales
~$3,100M Extend NA
plumbing
Pursue
category
expansion
Grow priority
international
markets
~$175M-$250M ~$75M-$125M ~$125M-$225M
~$3,500M-
$3,700M
*2014 Plumbing net sales as reported was $3.3B. Using a $1.10 euro to USD foreign exchange rate, net sales would have been reduced by
approximately $200M
I N S U M M A R Y
Masco’s Plumbing Segment is a Powerhouse of Global Industry Leading Brands
20
• Masco’s Plumbing segment has a strong track
record of execution – which has consistently delivered above industry growth and margins
• Portfolio has broad product depth and leadership
positions in the industries served – represent tremendous opportunities for growth
• Plumbing segment has identified clear strategies – to leverage the portfolio’s brand strengths, innovation, and global
capabilities to achieve its growth targets
