Decorative Architectural Products. Jeff Filley / President Masco Coatings Group

Transcription

1 Decorative Architectural Products Jeff Filley / President Masco Coatings Group

2 Safe Harbor Statement This presentation contains statements that reflect our views about our future performance and constitute forward-looking statements under the Private Securities Litigation Reform Act of 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 forwardlooking statements. Our future performance may be affected by the levels of home improvement activity and new home construction, our ability to maintain 13% 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 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. 2

3 Agenda The Business Today Growth Plan Future Outlook 3

4 Decorative Architectural Products Segment Overview Masco Corp. (Breakdown of 2016 Revenue) Revenue 12/31/2016 $2.1B Margin 20.6% Rest of Masco 72% 28% Decorative Architectural Products Segment % of Masco Operating Profit, as Adjusted* 36% % Revenue in N. America 100% % Repair & Remodel Sales 99% Currency Exposure Commodity Exposure USD/CAD/MX TiO2 / Resins / Zinc * Total Masco adjusted operating profit excludes $22M of rationalization charges and before general corp expense. 4

5 Well Positioned in Large U.S. Paint Market Total U.S. Architectural Coatings Market (2016) $11.8B Masco opportunity PRO $7.2B DIY $4.6B Masco a leader Source: US Census, various annual reports, and internal estimates. 5

6 Our Brands are Industry Leaders DIY leader #1 quality ranking Innovation leader #1 paint brand in awareness, consideration, purchase, and conversion Most trusted paint brand in Canada #1 U.S. primer brand 25,000 outlets Most preferred and highest loyalty consumer primer brand Strong PRO/DIY following Leading provider of: Decorative hardware Bath hardware Cabinet hardware Shower doors Source: Reader s Digest, Consumer Reports, JD Power (2017), GFK, and Traqline. 6

7 Long Track Record of Innovation and Leadership Initiated partnership with The Home Depot ColorSmart digital color tool Creation of PRO business strategy Behr Marquee Paint Company formed Premium Plus Paint & Computer Color Matching Premium Plus Ultra - 1 st paint & primer in one Behr DeckOver Stain Granite Grip Coating & PRO Hub Stores 7

8 Solid Segment Operating Profit Performance $M 7% CAGR $403 $430 $353 $360 $ % 18.3% 18.0% 20.0% 20.6% Operating Profit Margin Operating Profit * Excludes rationalization charges for 2013 of $2M. 8

9 Agenda The Business Today Growth Plan Future Outlook 9

10 Three Key Growth Strategies Extend our DIY leadership position Grow share in the PRO paint segments Leverage the KILZ and Liberty Brands 10

11 Leader in DIY Paint U.S. DIY Market $4.6B Masco DIY $4.6B Source: Various annual reports and internal estimates. 11

12 Favorable Trends Positioned to Drive Gallon Growth Gallon Growth Existing home sales Increasing median home sales price Aging U.S. housing stock Home improvement market Big box revenue growth First time home buyers Source: US Census Bureau, National Association of Realtors, Home Depot annual reports, Home Improvement Research Institute, internal estimates. 12

13 Partnership and Innovation is a Behr Differentiator SINCE 1978 #1 #1 4 TIMES 2016 Supplier to The Home Depot Quality ranking: interior paint, exterior paint and exterior stain J.D. Power & Associates: paint brand awareness, brand considered, brand purchased, conversion rate The Home Depot Innovation Award winner The Home Depot Partner of the Year 13

14 Why is The Home Depot Partnering with Behr. Video from The Home Depot 14

15 Well Positioned to Take Share in DIY Drive traffic to 2,200 The Home Depot locations Maintain industry leading quality and value proposition Accelerate media advertising Improving Shopping Experience Consumer research/insight (> 6,000 mystery shops) Understanding key drivers to customer satisfaction New training curriculum developed and deployed Grow DIY Share 15

16 Key Execution Initiatives Leverage Behr Brand + Continued innovation and quality leadership + Estimated Sales Opportunity: ~$100M-$140M over the next three years Improve the shopping experience 16

17 Three Key Growth Strategies Extend our DIY leadership position Grow share in the PRO paint segments Leverage the KILZ and Liberty Brands 17

18 PRO Represents a Large Opportunity U.S. PRO Market $7.2B Masco 5% Pro $7.2B Source: Various annual reports and internal estimates. 18

19 Partnering with The Home Depot to Capture Significant Segments of the U.S. PRO Market U.S. PRO Market $7.2B Strong Behr Sales Growth In PRO Segments Residential Repaint 25% New Home Construction 11% 19% CAGR 39% Property Management 25% Commercial Near Term Focus Future Potential Source: Various annual reports and internal estimates. 19

20 Penetrating PRO Segments by Creating a Compelling Offering Product Rebranded paint line Extended PRO product offering New, competitive price points Formulations tailored for the pro Service PRO Hub stores (~200) PRO discounts Flexible credit options Robust CRM system Job site deliveries Purchase / color history Outside sales reps (~150) Store Footprint Sherwin Williams ~4,200 The Home Depot ~2,200 PPG ~900 Kelly Moore ~145 Dunn Edwards ~130 Competitive Advantage Convenience (The Home Depot Stores) One Stop shopping Value proposition (Quality + Price) Leverage Interline Brands 20

21 Key Execution Initiatives Leverage Behr & Kilz brands and The Home Depot s national scale + Enhance PRO service offerings + New customer acquisition Estimated Sales Opportunity: ~$150M-$180M over the next three years + Grow share of wallet 21

22 Three Key Growth Strategies Extend our DIY leadership position Grow share in the PRO paint segments Leverage the KILZ and Liberty Brands 22

23 Kilz Brand: Well Positioned for Growth Core Products #1 market share in U.S. primers 25,000 outlets Strong brand equity Extend into New Areas Paint and specialty coatings New distribution channels Leverage Kilz Brand equity 23

24 Liberty Hardware s Competitive Strengths are Enablers to Growth LEVERAGE STRENGTHS GOAL Consumer insights Finish and design expertise High service level capability Enhance channel partner performance Expand category breadth Expand with partners in E-commerce Create shopper inspiration

25 Key Execution Initiatives Grow core Kilz & Liberty business + Extend Kilz to paint & specialty coatings + Fully leverage retail outlets & pursue alternative channels / retailers & categories Estimated Sales Opportunity: ~$50M-$80M over the next three years + Inorganic growth 25

26 Agenda The Business Today Growth Plan Future Outlook 26

27 Decorative Architectural Products (DAP) 3 Year Sales Outlook Decorative Architectural Products (DAP) Net Sales $2,092M $100M-$140M Core Sales Growth (DIY) $150M-$180M PRO Growth $50M-$80M Diversified Products (incl. Liberty Hardware) ~$2,400M- ~$2,500M DAP is expected to generate 18-20% operating margins with sales growing at 4-6% CAGR during the next 3 years 27

28 Recognized Leader with Multiple Levers for Growth Behr s track record market leader with long record of innovation Behr s strategy clear growth strategies in DIY, PRO segments Expand Kilz and Liberty Hardware into new product categories, channels and geographies 2019 Targets: Sales growing: 4-6% Margins: 18-20% 28