Decorative Architectural Products€¦ · awareness, consideration, purchase, and conversion •...
Transcript of Decorative Architectural Products€¦ · awareness, consideration, purchase, and conversion •...
Decorative Architectural ProductsJeff Filley / President Masco Coatings Group
Safe Harbor Statement
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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 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 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.
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Agenda
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The Business Today
Growth Plan
Future Outlook
Decorative Architectural Products Segment Overview
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Revenue $2.1B
Margin 20.6%
% of Masco Operating Profit, as Adjusted* 36%
% Revenue in N. America 100%
Masco Corp.(Breakdown of 2016 Revenue)
72%
12/31/2016
Currency Exposure USD/CAD/MX
Commodity Exposure TiO2 / Resins/ Zinc
% Repair & Remodel Sales 99%
28%Rest of Masco
Decorative Architectural
Products Segment
* Total Masco adjusted operating profit excludes $22M of rationalization charges and before general corp expense.
Well Positioned in Large U.S. Paint Market
5Source: 2007-2010 US Census, various annual reports, and internal estimates.
Mascoa leader
Masco opportunity
PRO$7.2B
DIY $4.6B
Total U.S. Architectural Coatings Market (2016) $11.8B
Our Brands are Industry Leaders
6Source: Reader’s Digest, Consumer Reports, JD Power (2017), GFK, and Traqline.
• #1 U.S. primer brand• 25,000 outlets• Most preferred and
highest loyalty consumer primer brand
• Strong PRO/DIY following
• DIY leader• #1 quality ranking• Innovation leader• #1 paint brand in
awareness, consideration, purchase, and conversion
• Most trusted paint brand in Canada
Leading provider of:
• Decorative hardware
• Bath hardware
• Cabinet hardware
• Shower doors
Initiated partnership with The Home Depot
Premium Plus® Paint &
Computer Color Matching
ColorSmart®digital color tool
Premium Plus Ultra® -
1st paint & primer in one
Creation of PRO business strategy
Behr DeckOver®
Stain
Behr Marquee®
Paint
Company formed
Long Track Record of Innovation and Leadership
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Granite Grip™ Coating
& PRO Hub Stores
1947
1978
1986
2003
2009
2010
2013
2014
2016
Solid Segment Operating Profit Performance
8* Excludes rationalization charges for 2013 of $2M.
$329 $353 $360
$403 $430
18.1% 18.3% 18.0%
20.0%20.6%
2012 2013 2014 2015 2016
7%CAGR
$M
Operating Profit
Operating Profit Margin
Agenda
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The Business Today
Growth Plan
Future Outlook
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Extend our DIY leadership position
Grow share in the PRO paint segments
Leverage the KILZ® and Liberty® Brands
Three Key Growth Strategies
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U.S. DIY Market – $4.6B
Leader in DIY Paint
11Source: Various annual reports and internal estimates.
Masco
DIY$4.6B
Aging U.S. housing stock
Favorable Trends Positioned to Drive Gallon Growth
12Source: US Census Bureau, National Association of Realtors, Home Depot annual reports, Home Improvement Research Institute, internal estimates.
First time home buyers
Big box revenue growth
Home improvement market
Increasing median homesales price
Existing home sales
Gallon Growth
Partnership and Innovation is a Behr Differentiator
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1978
2016
#1#1
S I N C E
Quality ranking:interior paint, exterior paint and exterior stain
J.D. Power & Associates: paint brand awareness, brand considered, brand purchased, conversion rate
Supplier to The Home Depot
The Home Depot Innovation Award winner
The Home Depot Partner of the Year
4T I M E S
Why is The Home Depot Partnering with Behr….
Video from The Home
Depot
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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
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Key Execution Initiatives
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Leverage Behr® Brand
Estimated Sales Opportunity:
~$100M-$140M over the next three years
Continued innovation andquality leadership
Improve the shopping experience
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Three Key Growth Strategies
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Extend our DIY leadership position
Grow share in the PRO paint segments
Leverage the KILZ® and Liberty® Brands
Masco
U.S. PRO Market – $7.2B
PRO Represents a Large Opportunity
18Source: Various annual reports and internal estimates.
5%
Pro$7.2B
2014 2015 2016
Partnering with The Home Depot to Capture Significant Segments of the U.S. PRO Market
19Source: Various annual reports and internal estimates.
Property Management
Residential Repaint
U.S. PRO Market$7.2B
25%
25%
Near Term Focus Future Potential
New HomeConstruction
Commercial
39%
11%
Strong Behr Sales GrowthIn PRO Segments
19%CAGR
Penetrating PRO Segments by Creating a Compelling Offering
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Product Service
Store Footprint Competitive Advantage
• Rebranded paint line• Extended PRO product offering• New, competitive price points• Formulations tailored
for the pro
• PRO Hub stores (~200)• PRO discounts • Flexible credit options• Robust CRM system• Job site deliveries• Purchase / color history• Outside sales reps (~150)
• Sherwin Williams ~4,200• The Home Depot ~2,200• PPG ~900• Kelly Moore ~145• Dunn Edwards ~130
• Convenience (The Home Depot Stores)• “One Stop” shopping• Value proposition (Quality + Price)• Leverage Interline Brands
Key Execution Initiatives
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Leverage Behr® & Kilz® brands and The Home Depot’s national scale
Estimated Sales Opportunity:
~$150M-$180M over the next three years
Enhance PRO service offerings
New customer acquisition
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Grow share of wallet
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Three Key Growth Strategies
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Extend our DIY leadership position
Grow share in the PRO paint segments
Leverage the KILZ® and Liberty® Brands
Kilz® Brand: Well Positioned for Growth
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Leverage Kilz® Brand equity
Core Products Extend into New Areas• #1 market share in
U.S. primers• 25,000 outlets• Strong brand equity
• Paint and specialty coatings• New distribution channels
Liberty Hardware’s Competitive Strengths are Enablers to Growth
LEVERAGE STRENGTHS GOAL
Consumer insights
Finish and design expertise
High service level capability
Expand category breadth
Create shopper inspiration
Expand with partners in E-commerce
Enhance channel partner performance
Key Execution Initiatives
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Grow core Kilz® & Liberty® business
Estimated Sales Opportunity:
~$50M-$80M over the next three years
Extend Kilz® to paint & specialty coatings
Fully leverage retail outlets & pursue alternative channels / retailers
& categories
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Inorganic growth
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Agenda
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The Business Today
Growth Plan
Future Outlook
Decorative Architectural Products (DAP) 3 Year Sales Outlook
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DAP is expected to generate 18-20% operating margins with sales growing at 4-6% CAGR during the next 3 years
2016 2019
$2,092M$150M-$180M
$100M-$140M$50M-$80M
~$2,400M-~$2,500M
Core Sales Growth (DIY)
PRO GrowthDiversified Products
(incl. Liberty Hardware)
Decorative Architectural Products (DAP) Net Sales
Recognized Leader with Multiple Levers for Growth
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• 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
Sales growing: 4-6% Margins: 18-20%2019 Targets: