Masco (MAS) 8-K Masco Continues Margin Expansion In Third Quarter 2013

MASCO CONTINUES MARGIN EXPANSION IN THIRD QUARTER 2013

Key Quarter Highlights

• Sales increased 12 percent to $2.2 billion

• North American sales increased 13 percent

• All segments positively contributed to top line growth

• Adjusted operating profit margin expanded 260 bps to 10.3 percent

• Retired $200 million debt maturity

Taylor, Michigan(October 28,2013) — Masco Corporation (NYSE: MAS) continued to deliver growth in the third quarter of 2013. All operating segments contributed to top line growth, accelerated by the strength of new home construction in North America and improvement in repair and remodel activity. Adjusted operating margins increased to 10.3 percent from 7.7 percent due to higher volumes and operating leverage.

2013 Third Quarter Commentary

• Net sales from continuing operations increased 12 percent to $2.2 billion, compared with $1.9 billion for third quarter 2012. North American sales increased 13 percent and international sales increased 9 percent in U.S. dollars and 5 percent in local currency

• Compared to third quarter 2012, results for key financial measures,as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, were as follows:

• Gross margins of 28.5 percent increased 120 bps

• Operating margins of 10.3 percent increased 260 bps

• Income from continuing operations was $0.27 per common share compared to $0.14 per common share

• Income from continuing operations,as reported, was $0.29 per common share compared to $0.07 per common share in the third quarter 2012

• We ended the third quarter with approximately $1.3 billion of cash, cash investments and short-term bank deposits

2013 Third Quarter Operating Segment Highlights

• Plumbing Products benefited from a North American faucet and toilet sales growth percentage in the mid-teens,with particular strength in the trade channel

• Decorative Architectural Products delivered gallon volume growth through recently introduced products and programs

• Cabinets and Related Products grew sales across all channels in North America, including direct to builder, dealer, and retail, and in all three brands: KraftMaid^®, Merillat^® and QualityCabinets^™

• Installation and Other Services delivered improved top line and bottom line performance, benefiting from the strength of new home construction

• Other Specialty Products continued top line growth, led by North American window sales growth percentage in the mid-teens

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“We are very pleased with our third quarter 2013 results, our eighth consecutive quarter of both sales growth and margin expansion (as adjusted). We continued to gain momentum across all segments,” said Masco’s President and CEO, Tim Wadhams. “Top line growth was delivered by each segment in the third quarter supported by continued growth in North American new home construction, improving repair and remodel activity and increased international sales. In our Decorative Architectural segment, sales benefited from BEHR PREMIUM DECKOVER^® launched earlier this year. New products and programs drove sales, particularly to the trade, across virtually all categories in our Plumbing Products segment. In our North American Cabinetry business, we remained focused on further improving profitability with sales growth across all three channels. Our strong performance reflects our success in leveraging the housing recovery and the continued execution of our strategic priorities company-wide, including our focus on cost containment.”

Outlook

“Economic uncertainties in the U.S. are impacting consumer confidence, making the pace of the U.S. economic recovery uneven,” said Mr. Wadhams. “Despite this, we believe that demand for our products will continue to improve. We expect new home construction demand to drive continued increases in housing starts and we are also very encouraged by the ongoing improvement in repair and remodel activity in the U.S. While still challenging, economic conditions in Europe are slowly improving. Our results reflect the benefits of the actions we have taken over the past several years, including investing in our brands and innovation, reducing our cost structure and paying down debt. We have strengthened our business by these actions, which should continue to positively impact our results going forward as we focus on successfully navigating through this recovery.”

About Masco

Headquartered in Taylor, Michigan, Masco Corporation is one of the world’s leading manufacturers of home improvement and building products, as well as a leading provider of services that include the installation of insulation and other building products.

The 2013 third quarter supplemental material, including a presentation in PDF format, is available on the Company’s website atwww.masco.com.

Conference Call Details

A conference call regarding items contained in this release is scheduled for Tuesday, October 29, 2013 at 8:00 a.m. EDT. 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 75879461. 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.

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 75879461. The telephone replay will be available approximately two hours after the end of the call and continue through November 12, 2013.

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Safe Harbor Statement

Statements contained in this press release 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,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” 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, uncertainty in the international economy, shifts in consumer preferences and purchasing practices, our ability to improve our underperforming businesses, and our ability to maintain our competitive position in our industries. 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. Our 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.

The Company believes that the non-GAAP performance measures and ratios that are contained herein, used in managing the business, may provide users of this financial information 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 Securities and Exchange Commission and is available on Masco’s website atwww.masco.com.

Investor / Media Contact

Maria Duey

Vice President – Investor Relations &

Corporate Communications

313.792.5500

maria_duey@mascohq.com

# # #

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MASCO CORPORATION

Condensed Consolidated Statements of Operations - Unaudited

For the Three Months and Nine Months Ended September 30, 2013 and 2012

(dollars in millions, except EPS)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net sales	$	2,150		$	1,913		$	6,175		$	5,664
Cost of sales		1,543			1,413			4,451			4,159
Gross profit		607			500			1,724			1,505
Selling, general and administrative expenses		395			391			1,192			1,160
Charge for litigation settlements, net		—			1			—			74
Operating profit		212			108			532			271
Other income (expense), net		(58	)		(59	)		(176	)		(190	)
Gains from financial investments, net		—			2			8			18
Income from continuing operations before income taxes		154			51			364			99
Income taxes		38			16			91			54
Income from continuing operations		116			35			273			45
Loss from discontinued operations		(2	)		(11	)		(16	)		(44	)
Net income		114			24			257			1
Less: Net income attributable to noncontrolling interest		11			9			30			28
Net income (loss) attributable to Masco Corporation	$	103		$	15		$	227		$	(27	)
Income (loss) per common share attributable to Masco Corporation (diluted):
Income from continuing operations	$	0.29		$	0.07		$	0.67		$	0.04
Loss from discontinued operations		(0.01	)		(0.03	)		(0.04	)		(0.12	)
Net income (loss)	$	0.29		$	0.04		$	0.63		$	(0.08	)
Average diluted common shares outstanding		352			350			352			350
Amounts attributable to Masco Corporation:
Income from continuing operations	$	105		$	26		$	243		$	17
Loss from discontinued operations		(2	)		(11	)		(16	)		(44	)
Net income (loss)	$	103		$	15		$	227		$	(27	)

MASCO CORPORATION

Exhibit A: Reconciliations - Unaudited

For the Three Months and Nine Months Ended September 30, 2013 and 2012

(dollars in millions, except EPS)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Gross Profit and Operating Profit Reconciliations
Net sales	$	2,150		$	1,913		$	6,175		$	5,664
Gross profit, as reported	$	607		$	500		$	1,724		$	1,505
Rationalization charges		6			10			23			23
Other Specialty Products - warranty		—			12			—			12
Gain from sale of fixed assets		—			—			—			(5	)
Gross profit, as adjusted	$	613		$	522		$	1,747		$	1,535
Gross margin, as reported		28.2	%		26.1	%		27.9	%		26.6	%
Gross margin, as adjusted		28.5	%		27.3	%		28.3	%		27.1	%
Operating profit, as reported	$	212		$	108		$	532		$	271
Rationalization charges		10			27			36			45
Other Specialty Products - warranty		—			12			—			12
Gain from sale of fixed assets		—			—			—			(5	)
Charge for litigation settlements, net		—			1			—			74
Operating profit, as adjusted	$	222		$	148		$	568		$	397
Operating margin, as reported		9.9	%		5.6	%		8.6	%		4.8	%
Operating margin, as adjusted		10.3	%		7.7	%		9.2	%		7.0	%
Earnings Per Common Share Reconciliation
Income from continuing operations before income taxes, as reported	$	154		$	51		$	364		$	99
Rationalization charges		10			27			36			45
Other Specialty Products - warranty		—			12			—			12
Gain from sale of fixed assets		—			—			—			(5	)
Charge for litigation settlements, net		—			1			—			74
Gains from financial investments, net		—			(2	)		(8	)		(18	)
Interest carry costs		—			—			—			7
Income from continuing operations before income taxes, as adjusted		164			89			392			214
Tax at 36% rate		(59	)		(32	)		(141	)		(77	)
Less: Net income attributable to noncontrolling interest		11			9			30			28
Net income, as adjusted	$	94		$	48		$	221		$	109
Income per common share, as adjusted	$	0.27		$	0.14		$	0.63		$	0.31
Average diluted common shares outstanding		352			350			352			350

MASCO CORPORATION

Condensed Consolidated Balance Sheets and

Other Financial Data - Unaudited

(dollars in millions)

	September 30, 2013			December 31, 2012
Balance Sheet
Assets
Current assets:
Cash and cash investments	$	1,011		$	1,040
Short-term bank deposits		277			311
Receivables		1,211			933
Inventories		777			726
Prepaid expenses and other		119			107
Assets held for sale		98			100
Total current assets		3,493			3,217
Property and equipment, net		1,257			1,326
Goodwill		1,900			1,894
Other intangible assets, net		149			151
Other assets		166			184
Assets held for sale		94			103
Total assets	$	7,059		$	6,875
Liabilities
Current liabilities:
Notes payable	$	5		$	206
Accounts payable		986			788
Accrued liabilities		847			823
Liabilities held for sale		49			45
Total current liabilities		1,887			1,862
Long-term debt		3,421			3,422
Deferred income taxes and other		1,065			1,053
Liabilities held for sale		—			4
Total liabilities		6,373			6,341
Shareholders’ equity		686			534
Total liabilities and shareholders’ equity	$	7,059		$	6,875
	Year To Date
	September 30, 2013			September 30, 2012
Other Financial Data
Working Capital Days
Receivable Days		49			51
Inventory Days		49			54
Payable Days		70			65
Working Capital	$	1,002		$	1,120
Working Capital as a % of Sales(LTM)		12.1	%		14.8	%

MASCO CORPORATION

Condensed Consolidated Statement of Cash Flows - Unaudited

(dollars in millions)

	September 30, 2013			September 30, 2012
Cash Flows From (For) Operating Activities:
Cash provided by operating activities	$	489		$	191
Working capital changes		(139	)		(101	)
Net cash from operating activities		350			90
Cash Flows From (For) Financing Activities:
Purchase of Company common stock		(35	)		(8	)
Cash dividends paid		(81	)		(80	)
Dividend paid to noncontrolling interest		(34	)		(40	)
Credit Agreement costs		(4	)		—
Debt, net		(202	)		(420	)
Net cash for financing activities		(356	)		(548	)
Cash Flows From (For) Investing Activities:
Capital expenditures		(88	)		(80	)
Other, net		67			63
Net cash for investing activities		(21	)		(17	)
Effects of exchange rate changes on cash and cash investments		(2	)		11
Cash and Cash Investments:
Decrease for the period		(29	)		(464	)
At January 1		1,040			1,353
At September 30	$	1,011		$	889
	As of September 30,
	2013			2012
Liquidity
Cash and cash investments	$	1,011		$	889
Short-term bank deposits		277			277
Total Liquidity	$	1,288		$	1,166

MASCO CORPORATION

Quarterly Segment Data - Unaudited

For the Three Months and Nine Months Ended September 30, 2013 and 2012

(dollars in millions)

	Three Months Ended September 30,									Nine Months Ended September 30,
	2013			2012			Change			2013			2012			Change
Cabinets and Related Products
Net sales	$	262		$	228			15	%	$	763		$	709			8	%
Operating loss, as reported	$	(2	)	$	(28	)				$	(4	)	$	(49	)
Operating margin, as reported		-0.8	%		-12.3	%					-0.5	%		-6.9	%
Rationalization charges		1			6						4			9
Accelerated depreciation related to plant closures		2			2						6			2
Impairment of goodwill and other intangible assets		—			—						—			—
Operating profit (loss), as adjusted		1			(20	)					6			(38	)
Operating margin, as adjusted		0.4	%		-8.8	%					0.8	%		-5.4	%
Depreciation and amortization		9			10						28			30
EBITDA, as adjusted	$	10		$	(10	)				$	34		$	(8	)
Plumbing Products
Net sales	$	820		$	736			11	%	$	2,384		$	2,216			8	%
Operating profit, as reported	$	118		$	75					$	306		$	242
Operating margin, as reported		14.4	%		10.2	%					12.8	%		10.9	%
Rationalization charges		5			5						13			8
Accelerated depreciation related to plant closures		1			1						2			10
Impairment of goodwill and other intangible assets		—			—						—			—
Operating profit, as adjusted		124			81						321			260
Operating margin, as adjusted		15.1	%		11.0	%					13.5	%		11.7	%
Depreciation and amortization		15			15						45			44
EBITDA, as adjusted	$	139		$	96					$	366		$	304
Installation and Other Services
Net sales	$	370		$	312			19	%	$	1,039		$	886			17	%
Operating profit (loss), as reported	$	18		$	(2	)				$	22		$	(25	)
Operating margin, as reported		4.9	%		-0.6	%					2.1	%		-2.8	%
Rationalization charges		1			1						1			1
Accelerated depreciation related to plant closures		—			—						—			—
Impairment of goodwill and other intangible assets		—			—						—			—
Operating profit (loss), as adjusted		19			(1	)					23			(24	)
Operating margin, as adjusted		5.1	%		-0.3	%					2.2	%		-2.7	%
Depreciation and amortization		7			7						21			22
EBITDA, as adjusted	$	26		$	6					$	44		$	(2	)
Decorative Architectural Products
Net sales	$	522		$	481			9	%	$	1,519		$	1,432			6	%
Operating profit, as reported	$	93		$	96					$	286		$	264
Operating margin, as reported		17.8	%		20.0	%					18.8	%		18.4	%
Rationalization charges		—			—						1			—
Accelerated depreciation related to plant closures		—			—						—			—
Impairment of goodwill and other intangible assets		—			—						—			—
Operating profit, as adjusted		93			96						287			264
Operating margin, as adjusted		17.8	%		20.0	%					18.9	%		18.4	%
Depreciation and amortization		4			4						12			12
EBITDA, as adjusted	$	97		$	100					$	299		$	276

MASCO CORPORATION

Quarterly Segment Data - Unaudited

For the Three Months and Nine Months Ended September 30, 2013 and 2012

(dollars in millions)

	Three Months Ended September 30,									Nine Months Ended September 30,
	2013			2012			Change			2013			2012			Change
Other Specialty Products
Net sales	$	176		$	156			13	%	$	470		$	421			12	%
Operating profit, as reported	$	16		$	3					$	26		$	4
Operating margin, as reported		9.1	%		1.9	%					5.5	%		1.0	%
Rationalization charges		—			1						2			1
Accelerated depreciation related to plant closures		—			—						4			—
Impairment of goodwill and other intangible assets		—			—						—			—
Other - warranty		—			12						—			12
Operating profit, as adjusted		16			16						32			17
Operating margin, as adjusted		9.1	%		10.3	%					6.8	%		4.0	%
Depreciation and amortization*		5			5						14			16
EBITDA, as adjusted	$	21		$	21					$	46		$	33
Total
Net sales	$	2,150		$	1,913			12	%	$	6,175		$	5,664			9	%
Operating profit, as reported - segment	$	243		$	144					$	636		$	436
General corporate expense, net (GCE)		(31	)		(35	)					(104	)		(96	)
Gain from sales of fixed assets		—			—						—			5
Charge for litigation settlements, net		—			(1	)					—			(74	)
Operating profit, as reported		212			108						532			271
Operating margin, as reported		9.9	%		5.6	%					8.6	%		4.8	%
Rationalization charges - segment		7			13						21			19
Accelerated depreciation - segment		3			3						12			12
Rationalization charges - GCE		—			11						3			14
Accelerated depreciation - GCE		—			—						—			—
Gain from sales of fixed assets		—			—						—			(5	)
Charge for litigation settlements, net		—			1						—			74
Impairment of goodwill and other intangible assets		—			—						—			—
Other Specialty Products - warranty		—			12						—			12
Operating profit, as adjusted		222			148						568			397
Operating margin, as adjusted		10.3	%		7.7	%					9.2	%		7.0	%
Depreciation and amortization - segment		40			41						120			124
Depreciation and amortization - non-operating		3			3						9			10
EBITDA, as adjusted	$	265		$	192					$	697		$	531

* Depreciation and amortization for the nine months ended September 30, 2013 reflects the reclassification of $4 million within Cost of Sales.

MASCO CORPORATION

North American and International Data - Unaudited

For the Three Months and Nine Months Ended September 30, 2013 and 2012

(dollars in millions)

	Three Months Ended September 30,									Nine Months Ended September 30,
	2013			2012			Change			2013			2012			Change
North American
Net sales	$	1,756		$	1,553			13	%	$	5,031		$	4,571			10	%
Operating profit, as reported	$	193		$	112					$	518		$	325
Operating margin, as reported		11.0	%		7.2	%					10.3	%		7.1	%
Rationalization charges		7			9						14			15
Accelerated depreciation related to plant closures		3			2						8			11
Impairment of goodwill and other intangible assets		—			—						—			—
Other - warranty		—			12						—			12
Operating profit, as adjusted		203			135						540			363
Operating margin, as adjusted		11.6	%		8.7	%					10.7	%		7.9	%
Depreciation and amortization		30			32						90			96
EBITDA, as adjusted	$	233		$	167					$	630		$	459
International
Net sales	$	394		$	360			9	%	$	1,144		$	1,093			5	%
Operating profit, as reported	$	50		$	32					$	118		$	111
Operating margin, as reported		12.7	%		8.9	%					10.3	%		10.2	%
Rationalization charges		—			4						7			4
Accelerated depreciation related to plant closures		—			1						4			1
Impairment of goodwill and other intangible assets		—			—						—			—
Operating profit, as adjusted		50			37						129			116
Operating margin, as adjusted		12.7	%		10.3	%					11.3	%		10.6	%
Depreciation and amortization*		10			9						30			28
EBITDA, as adjusted	$	60		$	46					$	159		$	144
Total
Net sales	$	2,150		$	1,913			12	%	$	6,175		$	5,664			9	%
Operating profit, as reported - segment	$	243		$	144					$	636		$	436
General corporate expense, net (GCE)		(31	)		(35	)					(104	)		(96	)
Gain from sales of fixed assets		—			—						—			5
Charge for litigation settlements, net		—			(1	)					—			(74	)
Operating profit, as reported		212			108						532			271
Operating margin, as reported		9.9	%		5.6	%					8.6	%		4.8	%
Rationalization charges - segment		7			13						21			19
Accelerated depreciation - segment		3			3						12			12
Rationalization charges - GCE		—			11						3			14
Accelerated depreciation - GCE		—			—						—			—
Gain from sales of fixed assets		—			—						—			(5	)
Charge for litigation settlements, net		—			1						—			74
Impairment of goodwill and other intangible assets		—			—						—			—
Other - warranty		—			12						—			12
Operating profit, as adjusted		222			148						568			397
Operating margin, as adjusted		10.3	%		7.7	%					9.2	%		7.0	%
Depreciation and amortization - segment		40			41						120			124
Depreciation and amortization - non-operating		3			3						9			10
EBITDA, as adjusted	$	265		$	192					$	697		$	531

* Depreciation and amortization for the nine months ended September 30, 2013 reflects the reclassification of $4 million within Cost of Sales