8-K

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) July 27, 2017

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 Masco Way, 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 July 27, 2017 reporting Masco Corporation’s financial results for the second quarter of 2017 and certain other information and supplemental information prepared for use in connection with the financial results for the second quarter 2017. On July 27, 2017, Masco Corporation will hold an investor conference call and webcast to discuss financial results for the second quarter 2017.

This information, including the Exhibit 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 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 21, 2017, Masco Corporation’s (“the Company”) Board of Directors appointed Ms. Marie A. Ffolkes as a Class I director effective September 1, 2017. She will serve on the Audit Committee and on the Corporate Governance and Nominating Committee of the Company’s Board of Directors. Ms. Ffolkes, 46, has served as the President, Industrial Gases, Americas since joining Air Products and Chemicals, Inc. (“Air Products”) in 2015. In this role, she is responsible for leading the strategy implementation and profitability of Air Products’ industrial gases operation in North and South America. Ms. Ffolkes has over twenty years of manufacturing experience and has held senior executive positions with increasing responsibilities at several companies.

There are no understandings or arrangements between Ms. Ffolkes and any other person pursuant to which Ms. Ffolkes was selected as a director of the Company. From time to time the Company and its consolidated subsidiaries purchase goods or services from Air Products and its subsidiaries. The aggregate amount of these purchases approximated $1.4 million in 2016. The Board does not believe that Ms. Ffolkes has a material interest in these transactions. In connection with her service on the Company’s Board of Directors, Ms. Ffolkes will receive compensation in accordance with the Company’s standard compensation arrangements for non-employee Directors.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits.

99  Press Release of Masco Corporation dated July 27, 2017 reporting Masco Corporation’s financial results for the second quarter 2017 and certain other information and supplemental information prepared for use in connection with the financial results for the second quarter 2017.

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

July 27, 2017

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EXHIBIT INDEX

99           Press Release of Masco Corporation dated July 27, 2017 reporting Masco Corporation’s financial results for the second quarter 2017 and certain other information and supplemental information prepared for use in connection with the financial results for the second quarter 2017.

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EX-99

Exhibit 99

MASCO CORPORATION REPORTS SECOND QUARTER 2017 RESULTS

Key Highlights

• Sales for the second quarter increased 3 percent to $2.1 billion; in local currencies, sales increased 4 percent

• Operating profit for the quarter grew 7 percent to $357 million; adjusted operating profit grew 4 percent to $357 million

• Earnings per share for the quarter grew 9 percent to $0.49 per common share; adjusted earnings per share grew 30 percent to $0.60 per common share

• Updating our 2017 earnings per share target range to $1.93 to $2.00 from $1.90 to $2.00 per common share

• Board announces intent to increase annual dividend by $0.02 per share to $0.42 per share, beginning in the fourth quarter

LIVONIA, Mich. (July 27, 2017) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported solid net sales and operating profit growth in the second quarter of 2017.

“We continued to execute on our strategic plan in the second quarter,” said Masco President and CEO, Keith Allman. “Our Plumbing Products and Decorative Architectural Products segments once again delivered strong results, and I am extremely pleased with the progress we have made in our Windows business. In our Cabinetry Products segment, we exited certain lower margin builder business and are now pivoting towards growth. Additionally, we continued our disciplined capital allocation by returning approximately $74 million to shareholders through dividends and share repurchases in the quarter.”

2017 Second Quarter Commentary

• On a reported basis, compared to second quarter2016:

• Net sales increased 3 percent to $2.1 billion

• In local currency, North American sales and international sales increased 4 percent

• Gross margins improved 80 basis points to 35.8 percent from 35.0 percent

• Operating margins improved 70 basis points to 17.4 percent from 16.7 percent

• Net income was $0.49 per common share compared to $0.45 per common share

• Compared to second quarter2016, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 34 percent (36 percent in 2016), were as follows:

• Gross margins improved to 35.8 percent compared to 35.2 percent

• Operating margins improved to 17.4 percent compared to 17.1 percent

• Net income was $0.60 per common share, compared to $0.46 per common share (which included $40 million, or approximately $0.08 per share, in debt extinguishment costs in 2016)

• Liquidity at the end of the second quarter was approximately $1.1 billion

• 1.2 million shares were repurchased in the second quarter

2017 Second Quarter Operating Segment Highlights

• Plumbing Products’ net sales increased 3 percent (5 percent excluding the impact of foreign currency translation), driven by North America and international growth

• Decorative Architectural Products’ net sales increased 5 percent with growth from builders’ hardware and Behr’s pro initiative

• Cabinetry Products’ net sales decreased 4 percent (3 percent excluding the impact of foreign currency translation) due to the previously announced exit of lower margin business in the builder channel and lower sales in our United Kingdom cabinet operation

• Windows and Other Specialty Products’ net sales increased 4 percent. Excluding the impact of foreign currency translation, net sales increased 7 percent, driven by strong sales of windows in North America

Outlook

“As we presented during our Investor Day in May, the demand drivers underlying our business are strong and very supportive of continued, long-term growth,” said Allman. “We are confident in our plans to leverage our strong brands, industry leading positions, and our Masco Operating System to capitalize on these robust, long-term demand drivers. We are pleased with our pe

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rformance this year, and accordingly, we are updating our 2017 earnings per share target to the range of $1.93 to $2.00. Looking forward, we are committed to achieving our 2019 earnings per share target of $2.50 that we introduced at our Investor Day. Reflecting confidence in our plans and Masco’s outlook, our Board of Directors intends to increase our annual dividend by $0.02 per share to $0.42 per share, beginning with the quarterly dividend to be paid in the fourth quarter of 2017.”

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; and Hot Spring® 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 2017second quarter supplemental material, including a presentation in PDF format, is available on Masco’s website at www.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Thursday, July 27, 2017 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 36385520. The conference call will be webcast simultaneously and in its entirety through Masco’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on Masco’s website.

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 36385520. The telephone replay will be available approximately two hours after the end of the call and continue through August 27, 2017.

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 home improvement activity and new home construction, our ability to maintain our strong brands and to develop and introduce new and improved products, our ability to maintain our competitive position in our industries, our reliance on key customers, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to improve our under-performing U.S. window business, the cost and availability of raw materials, our dependence on third party suppliers, and risks associated with international operations and global strategies. 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. The forward-looking statements in this press release speak only as of the date of this press release. 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

# # #

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MASCO CORPORATION

Condensed Consolidated Statements of Operations - Unaudited

For the Three Months and Six Months Ended June 30, 2017 and 2016

(in millions, except per common share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net sales	$	2,057		$	2,001		$	3,834		$	3,721
Cost of sales	1,320			1,301			2,489			2,452
Gross profit	737			700			1,345			1,269
Selling, general and administrative expenses	380			365			735			700
Operating profit	357			335			610			569
Other income (expense), net:
Interest expense	(153		)	(87		)	(196		)	(143		)
Other, net	51			5			54			4
	(102		)	(82		)	(142		)	(139		)
Income before income taxes	255			253			468			430
Income tax expense	84			90			147			148
Net income	171			163			321			282
Less: Net income attributable to noncontrolling interest	13			13			23			23
Net income attributable to Masco Corporation	$	158		$	150		$	298		$	259
Income per common share attributable to Masco Corporation (diluted):
Net income	$	0.49		$	0.45		$	0.92		$	0.77
Average diluted common shares outstanding	319			331			320			333

Historical information is available on our website.

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MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

For the Three Months and Six Months Ended June 30, 2017 and 2016

(in millions, except per common share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations
Net sales	$	2,057		$	2,001		$	3,834		$	3,721
Gross profit, as reported	$	737		$	700		$	1,345		$	1,269
Rationalization charges	—			5			2			6
Gross profit, as adjusted	$	737		$	705		$	1,347		$	1,275
Gross margin, as reported	35.8		%	35.0		%	35.1		%	34.1		%
Gross margin, as adjusted	35.8		%	35.2		%	35.1		%	34.3		%
Selling, general and administrative expenses, as reported	$	380		$	365		$	735		$	700
Rationalization charges	—			2			—			4
Selling, general and administrative expenses, as adjusted	$	380		$	363		$	735		$	696
Selling, general and administrative expenses as percent of net sales, as reported	18.5		%	18.2		%	19.2		%	18.8		%
Selling, general and administrative expenses as percent of net sales, as adjusted	18.5		%	18.1		%	19.2		%	18.7		%
Operating profit, as reported	$	357		$	335		$	610		$	569
Rationalization charges	—			7			2			10
Operating profit, as adjusted	$	357		$	342		$	612		$	579
Operating margin, as reported	17.4		%	16.7		%	15.9		%	15.3		%
Operating margin, as adjusted	17.4		%	17.1		%	16.0		%	15.6		%
Earnings Per Common Share Reconciliations
Income before income taxes, as reported	$	255		$	253		$	468		$	430
Rationalization charges	—			7			2			10
(Gain) from auction rate securities	—			(1		)	—			(1		)
(Gains) from private equity funds, net	(1		)	(1		)	(2		)	(1		)
(Earnings) from equity investments, net	(1		)	—			(1		)	(1		)
Loss on extinguishment of debt	107			—			107			—
(Gain) on sale of business	(49		)	—			(49		)	—
Income before income taxes, as adjusted	311			258			525			437
Tax at 34% rate (36% for 2016)	(106		)	(93		)	(179		)	(157		)
Less: Net income attributable to noncontrolling interest	13			13			23			23
Net income, as adjusted	$	192		$	152		$	323		$	257
Net income per common share, as adjusted	$	0.60		$	0.46		$	1.01		$	0.77
Average diluted common shares outstanding	319			331			320			333

Historical information is available on our website.

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MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

Outlook for the Twelve Months Ended December 31, 2017

	Twelve Months Ended December 31, 2017
	Low End			High End
Outlook
Net income per common share	$	1.81		$	1.88
Loss on extinguishment of debt	0.22			0.22
(Gain) on sale of business	(0.10		)	(0.10		)
Net income per common share, as adjusted	$	1.93		$	2.00

Historical information is available on our website.

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MASCO CORPORATION

Condensed Consolidated Balance Sheets and Other Financial Data - Unaudited

June 30, 2017 and December 31, 2016

(dollars in millions)

	June 30, 2017		December 31, 2016
Balance Sheet
Assets
Current Assets:
Cash and cash investments	$	992	$	990
Short-term bank deposits	144		201
Receivables	1,231		917
Inventories	850		712
Prepaid expenses and other	89		114
Total Current Assets	3,306		2,934
Property and equipment, net	1,080		1,060
Goodwill	797		832
Other intangible assets, net	156		154
Other assets	150		157
Total Assets	$	5,489	$	5,137
Liabilities
Current Liabilities:
Accounts payable	$	960	$	800
Notes payable	117		2
Accrued liabilities	615		658
Total Current Liabilities	1,692		1,460
Long-term debt	2,967		2,995
Other liabilities	760		785
Total Liabilities	5,419		5,240
Equity	70		(103		)
Total Liabilities and Equity	$	5,489	$	5,137

	As of June 30,
	2017			2016
Other Financial Data
Working Capital Days
Receivable days	52			50
Inventory days	63			57
Payable days	72			71
Working capital	$	1,121		$	965
Working capital as a % of sales (LTM)	15.0		%	13.3		%

Historical information is available on our website.

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MASCO CORPORATION

Condensed Consolidated Statements of Cash Flows and Other Financial Data - Unaudited

For the Six Months Ended June 30, 2017 and 2016

(dollars in millions)

	Six Months Ended June 30,
	2017			2016
Cash Flows From (For) Operating Activities:
Cash provided by operating activities	$	536		$	433
Working capital changes	(381		)	(243		)
Net cash from operating activities	155			190
Cash Flows From (For) Financing Activities:
Retirement of notes	(535		)	(1,300		)
Purchase of Company common stock	(134		)	(168		)
Cash dividends paid	(64		)	(63		)
Dividend paid to noncontrolling interest	(35		)	(31		)
Issuance of notes, net of issuance costs	593			889
Debt extinguishment costs	(104		)	(40		)
Issuance of Company common stock	—			1
Employee withholding taxes paid on stock-based compensation	(27		)	(24		)
Increase (decrease) in debt, net	1			(2		)
Net cash for financing activities	(305		)	(738		)
Cash Flows From (For) Investing Activities:
Capital expenditures	(77		)	(79		)
Proceeds from disposition of business	126			—
Other, net	75			124
Net cash from investing activities	124			45
Effect of exchange rate changes on cash and cash investments	28			(9		)
Cash and Cash Investments:
Increase (decrease) for the period	2			(512		)
At January 1	990			1,468
At June 30	$	992		$	956

	As of June 30,
	2017		2016
Liquidity
Cash and cash investments	$	992	$	956
Short-term bank deposits	144		135
Total Liquidity	$	1,136	$	1,091

Historical information is available on our website.

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MASCO CORPORATION

Segment Data - Unaudited

For the Three Months and Six Months Ended June 30, 2017 and 2016

(dollars in millions)

	Three Months Ended June 30,								Six Months Ended June 30,
	2017			2016			Change		2017			2016			Change
Plumbing Products
Net sales	$	949		$	923		3	%	$	1,812		$	1,736		4	%
Operating profit, as reported	$	198		$	188				$	354		$	317
Operating margin, as reported	20.9		%	20.4		%			19.5		%	18.3		%
Rationalization charges	—			4					—			6
Operating profit, as adjusted	198			192			(192	)	354			323
Operating margin, as adjusted	20.9		%	20.8		%			19.5		%	18.6		%
Depreciation and amortization	15			14					29			28
EBITDA, as adjusted	$	213		$	206				$	383		$	351
Decorative Architectural Products
Net sales	$	653		$	620		5	%	$	1,158		$	1,113		4	%
Operating profit, as reported	$	141		$	139				$	242		$	244
Operating margin, as reported	21.6		%	22.4		%			20.9		%	21.9		%
Depreciation and amortization	4			4					8			8
EBITDA	$	145		$	143				$	250		$	252
Cabinetry Products
Net sales	$	251		$	261		(4	)%	$	482		$	497		(3	)%
Operating profit, as reported	$	30		$	34				$	46		$	58
Operating margin, as reported	12.0		%	13.0		%			9.5		%	11.7		%
Rationalization charges	—			3					2			4
Operating profit, as adjusted	30			37					48			62
Operating margin, as adjusted	12.0		%	14.2		%			10.0		%	12.5		%
Depreciation and amortization	4			5					8			10
EBITDA, as adjusted	$	34		$	42				$	56		$	72

Historical information is available on our website.

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MASCO CORPORATION

Segment Data - Unaudited

For the Three Months and Six Months Ended June 30, 2017 and 2016

(dollars in millions)

	Three Months Ended June 30,								Six Months Ended June 30,
	2017			2016			Change		2017			2016			Change
Windows and Other Specialty Products
Net sales	$	204		$	197		4	%	$	382		$	375		2	%
Operating profit (loss), as reported	$	18		$	(2	)			$	24		$	1
Operating margin, as reported	8.8		%	(1.0		)%			6.3		%	0.3		%
Depreciation and amortization	6			5					11			10
EBITDA	$	24		$	3				$	35		$	11
Total
Net sales	$	2,057		$	2,001		3	%	$	3,834		$	3,721		3	%
Operating profit, as reported - segment	$	387		$	359				$	666		$	620
General corporate expense, net (GCE)	(30		)	(24		)			(56		)	(51		)
Operating profit, as reported	357			335					610			569
Operating margin, as reported	17.4		%	16.7		%			15.9		%	15.3		%
Rationalization charges - segment	—			7					2			10
Operating profit, as adjusted	357			342			-$336,000,000		612			579			-$336,000,000
Operating margin, as adjusted	17.4		%	17.1		%			16.0		%	15.6		%
Depreciation and amortization - segment	29			28					56			56
Depreciation and amortization - non-operating	4			6					8			10
EBITDA, as adjusted	$	390		$	376				$	676		$	645

Historical information is available on our website.

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MASCO CORPORATION

North American and International Data - Unaudited

For the Three Months and Six Months Ended June 30, 2017 and 2016

(dollars in millions)

	Three Months Ended June 30,								Six Months Ended June 30,
	2017			2016			Change		2017			2016			Change
North American
Net sales	$	1,660		$	1,598		4	%	$	3,071		$	2,948		4	%
Operating profit, as reported	$	330		$	299				$	569		$	514
Operating margin, as reported	19.9		%	18.7		%			18.5		%	17.4		%
Rationalization charges	—			5					2			7
Operating profit, as adjusted	330			304					571			521
Operating margin, as adjusted	19.9		%	19.0		%			18.6		%	17.7		%
Depreciation and amortization	20			19					38			38
EBITDA, as adjusted	$	350		$	323				$	609		$	559
International
Net sales	$	397		$	403		(1	)%	$	763		$	773		(1	)%
Operating profit, as reported	$	57		$	60				$	97		$	106
Operating margin, as reported	14.4		%	14.9		%			12.7		%	13.7		%
Rationalization charges	—			2					—			3
Operating profit, as adjusted	57			62					97			109
Operating margin, as adjusted	14.4		%	15.4		%			12.7		%	14.1		%
Depreciation and amortization	9			9					18			18
EBITDA, as adjusted	$	66		$	71				$	115		$	127
Total
Net sales	$	2,057		$	2,001		3	%	$	3,834		$	3,721		3	%
Operating profit, as reported - segment	$	387		$	359				$	666		$	620
General corporate expense, net (GCE)	(30		)	(24		)			(56		)	(51		)
Operating profit, as reported	357			335					610			569
Operating margin, as reported	17.4		%	16.7		%			15.9		%	15.3		%
Rationalization charges - segment	—			7					2			10
Operating profit, as adjusted	357			342					612			579
Operating margin, as adjusted	17.4		%	17.1		%			16.0		%	15.6		%
Depreciation and amortization - segment	29			28					56			56
Depreciation and amortization - non-operating	4			6					8			10
EBITDA, as adjusted	$	390		$	376				$	676		$	645

Historical information is available on our website.

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