Decorative Architectural Products. Jeff Filley/ President Masco Coatings Group

Transcription

1 Decorative Architectural Products Jeff Filley/ President Masco Coatings Group

2 Agenda The Business Today Growth Plan 2

3 Decorative Architectural Products Segment Overview Masco Corp. (Breakdown of 2014 Revenue) Revenue 12/31/2014 $2.0B Margin 18.0% Rest of Masco 77% 23% Decorative Architectural Products Segment % of Masco EBIT, As adjusted 42% % Revenue outside N. America 0% % Repair & Remodel Sales 99% Currency Exposure Commodity Exposure USD/CAD TiO2 / Resins / Zinc *Operating profit, as adjusted excluded $63M of net rationalization charges or Masco. 3

4 Our Brands are Industry Leaders Most trusted paint brand in US and Canada Quality leader Innovation leader Strategic partner to The Home Depot J.D. Power & Assoc. - # 1 Interior Paint Satisfaction #1 primer brand in North America Strong Pro and Consumer following Consistent winner of the Harris Poll Brand of the Year Award Leading provider of Decorative hardware Bath hardware Cabinet hardware 4

5 Behr has a Long Track Record of Innovation and Leadership in the Paint Aisle Introduction of Premium Plus Ultra, the first paint & primer in one Creation of PRO business strategy Introduction of Behr DeckOver Stain Introduction of Behr Marquee Paint Introduction of ColorSmart digital color tool Company formed Introduction of Initiated Premium Plus partnership with Paint & THD Computer Color Matching Masco acquisitions of Behr & Masterchem /

6 Solid Performance Record Adjusted Operating Profit ($M) $283 $329 8% CAGR $353 $ *Excludes business rationalization charges for 2013 and 2011 of $2 million and $12 million, respectively. Excludes 2011 goodwill impairment charge of $75 million. 6

7 Agenda The Business Today Growth Plan 7

8 Three Key Growth Strategies 1 Extend our Consumer leadership position 2 Grow share in the PRO paint segment 3 Leverage the KILZ and Liberty family of brands 8

9 Paint is a Large and Growing Growth Opportunity Total U.S. Architectural Market $11.5B Total U.S. Shipments (millions of gallons) ~3% CAGR Masco untapped opportunity Pro Market $6.6B Consumer Market $4.9B Masco a leader * Source: US Census, Various Annual Reports, Internal Estimates *2007 denotes market peak and 2009 market trough 9

10 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Behr is a Clear Leader in the Consumer Paint Industry U.S. Consumer Market $4.9B 28% Behr # 1 Consumer Market $4.9B Source: Various Annual Reports and Internal Estimates 10

11 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Behr s Unmatched Leadership is a Differentiator Share of consumer segment vs. closest competitor ~2X Home Depot Innovation Award in 2013 & 2014 Winner Product quality rating last 6 years in a row Vitality Index - % of Sales from products introduced in the last 3 years J.D. Power & Assoc. Interior Paint Satisfaction #1 56% #1 11

12 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Behr is The Leading Consumer Paint Brand Comparison of Behr Interior Paint vs. Other Interior Paints BEHR Paint #2 Paint Ranking Avg. Other Paints Total brand awareness 85% 79% 57% Considered 60% 37% 24% Conversion rate 65% 65% 49% Purchased 39% 24% 12% Source: JD Power & Assoc. Study

13 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Behr Invests to Enhance the Consumer Experience

14 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Behr Invests to Enhance the Consumer Experience Next Generation Merchandising Innovation

15 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Behr Positioned as Home Depot s Best Paint Paint Center within Color Solutions Display 15

16 S T R A T E G Y # 1 E X T E N D O U R C O N S U M E R L E A D E R S H I P P O S I T I O N Key Execution Initiatives Leverage Behr brand + Elevate the consumer experience + Continue innovation leadership Estimated Sales Opportunity: ~$150-$250M over the next three years + Maintain quality value proposition 16

17 S T R A T E G Y # 2 G R O W S H A R E I N T H E P R O P A I N T S E G M E N T Pro Market Represents a Large Untapped Opportunity for Behr U.S. Pro Market $6.6B Masco 4% Pro Market $6.6B Source: Various Annual Reports and Internal Estimates 17

18 S T R A T E G Y # 2 G R O W S H A R E I N T H E P R O P A I N T S E G M E N T Behr has Partnered with Home Depot to Capture Significant Segments of the U.S. Pro Market U.S. Pro Market $6.6B Strong Behr Growth In Pro Segment Residential Repaint 25% 11% New Home Construction 20% CAGR Property Management 25% 39% Commercial Near Term Focus Future Potential E Source: Various Annual Reports and Internal Estimates 18

19 S T R A T E G Y # 2 G R O W S H A R E I N T H E P R O P A I N T S E G M E N T Key Execution Initiatives Leverage Behr brand to drive Pro business + Dedicated sales force + Innovate for the Pro Estimated Sales Opportunity: ~$125-$175M over the next three years + Design service model 19

20 S T R A T E G Y # 3 L E V E R A G E T H E K I L Z B R A N D Key Execution Initiatives Strong Platform #1 market share in primers in N. America Sold in 25,000 outlets in US & Canada Strong brand equity with consumers and pros 20

21 S T R A T E G Y # 3 L E V E R A G E T H E K I L Z B R A N D Key Execution Initiatives Defend the core + Develop Kilz branded paint + Expand into adjacent categories Estimated Sales Opportunity: ~$80-$110M over the next three years + Pursue acquisitions 21

22 S T R A T E G Y # 3 L E V E R A G E T H E L I B E R T Y F A M I L Y O F B R A N D S Liberty Hardware s Competitive Strengths are Enablers to Growth Masco scale & leverage Category management Innovation Design 22

23 S T R A T E G Y # 3 L E V E R A G E T H E L I B E R T Y F A M I L Y O F B R A N D S Key Execution Initiatives Grow core business + Expand into new channels, categories and geographies Estimated Sales Opportunity: ~$35-$50M over the next three years 23

24 Decorative Architectural Products (DAP) 3 Year Sales Outlook $1,998M $150M-$250M Core Sales Growth (Consumer) $125M-$175M Pro Growth $115M-$160M Diversified Products (incl. Liberty Hardware) ~$2,400M- ~$2,600M 2014 DAP Net Sales 2017 DAP Net Sales DAP is expected to generate ~18% operating margins in 2017 with sales growing at 6%-9% CAGR during the next 3 years 24

25 I N S U M M A R Y Recognized Leader in Consumer Paint with Multiple Avenues for Growth Behr has strong track record of execution recognized by our strategic channel partner The Home Depot and the industry Behr has identified clear strategies to drive gallon growth through Consumer and Pro by leveraging it s strong brand, category leadership, innovation and quality with The Home Depot Kilz and Liberty Hardware will leverage their capabilities to expand into new product categories, channels and geographies 25