What changed in this filing

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Item 1. Business

2022-02-08 compared with 2021-02-09 · 64 added, 49 removed, 79 unchanged (59% of the section changed)

Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products.

Masco Corporation and its subsidiaries (the “Company”) 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;

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We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders.

We believe that our solid results of operations and financial position for 2020 resulted from strong consumer demand for our lower ticket, repair and remodel-oriented products and increased spending on repair and remodel activity, along with our continued focus on our three strategic pillars:

We believe that our solid results of operations and financial position for 2021 resulted from strong consumer demand for our lower ticket, repair and remodel-oriented products along with our continued focus on our three strategic pillars:

• drive the full potential of our core businesses;

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• actively manage our portfolio.

In 2020, we completed the divestiture of our Masco Cabinetry business ("Cabinetry"), and completed the acquisitions of Kraus USA Inc.

("Kraus"), Work Tools International Inc.

and Elder & Jenks, LLC (collectively "Work Tools"), and SmarTap A.Y Ltd.

We also entered into an agreement in November 2020 to purchase a majority stake in Easy Sanitary Solutions B.V.

This transaction closed on January 4, 2021.

Additionally in 2020, we continued to return value to our shareholders by repurchasing approximately 18.8 million shares of our common stock and increasing our quarterly dividend by approximately 4 percent.

In 2021, we completed the divestiture of our Hüppe GmbH ("Hüppe") business.

We also completed the purchase of a 75.1 percent equity interest in Easy Sanitary Solutions B.V.

("ESS") and all of the share capital of Steamist, Inc.

("Steamist").

Additionally, we continued to return value to our shareholders by repurchasing approximately 17.6 million shares of our common stock and increasing our quarterly dividend by approximately 68 percent.

Our Business Segments

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The businesses in our Plumbing Products segment sell a wide variety of products that are manufactured or sourced by us.

• Our plumbing products include faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, sinks and toilets.

We sell these products to home center and online retailers and to wholesalers and distributors that, in turn, sell them to plumbers, building contractors, remodelers, smaller retailers and consumers.

The majority of our faucet, bathing and showering products are sold primarily in North America and Europe under the brand names DELTA ® , BRIZO ® , PEERLESS ® , HANSGROHE ® , AXOR ® , KRAUS ® , GINGER ® , NEWPORT BRASS ® , BRASSTECH ® and WALTEC ® .

• Our plumbing products include faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures, shower drains, steam shower systems, sinks, kitchen accessories and toilets.

We primarily sell these products to home center retailers, online retailers, mass merchandisers, wholesalers and distributors that, in turn, sell them to plumbers, building contractors, remodelers, smaller retailers and consumers.

The majority of our faucet, bathing and showering products are sold primarily in North America, Europe and China under the brand names DELTA ® , BRIZO ® , PEERLESS ® , HANSGROHE ® , AXOR ® , KRAUS ® , EASY DRAIN ® , STEAMIST ® , ELITESTEAM ® , GINGER ® , NEWPORT BRASS ® , BRASSTECH ® and WALTEC ® .

Our BRISTAN™ and HERITAGE™ products are sold primarily in the United Kingdom.

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Our MIROLIN products are also sold to wholesalers and distributors in Canada.

Our HÜPPE ® shower enclosures and shower trays are sold through wholesale channels primarily in Europe.

• Our spas, exercise pools and fitness systems are manufactured and sold under our HOT SPRING ® , CALDERA ® , FREEFLOW SPAS ® , FANTASY SPAS ® and ENDLESS POOLS ® brands, as well as under other trademarks.

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• Within our Plumbing Products segment we develop connected water products that enhance the experience with water in homes and businesses.

These systems include touchless activation, voice activation, controlled volume dispensing and provide for monitoring and controlling the temperature and flow of water and are compatible with a wide range of faucets, showerheads and other showering components.

• We also supply high-quality, custom thermoplastic solutions, extruded plastic profiles and specialized fabrications, as well as PEX tubing, to manufacturers, distributors and wholesalers for use in diverse applications that include faucets and plumbing supplies, appliances, oil and gas equipment, building products and automotive components.

These systems include touchless activation, voice activation, controlled volume dispensing and provide for monitoring and controlling the temperature and flow of water and are compatible with a range of faucets, showerheads and other showering components.

We believe that our plumbing products are among the leaders in sales in North America and Europe.

Competitors of the majority of our products in this segment include Elkay Manufacturing Company, Fortune Brands Home & Security, Inc.'s Moen, Rohl and Riobel brands, Kohler Co., Lixil Group Corporation’s American Standard and Grohe brands and Spectrum Brands Holdings, Inc.’s Pfister faucets.

Competitors of our spas and exercise pools and systems include Artesian Spas, Jacuzzi and Master Spas brands.

Competitors of the majority of our products in this segment include Dornbracht AG & Co.

KG, Elkay Manufacturing Company, Fortune Brands Home & Security, Inc.'s Moen, Rohl and Riobel brands, Kohler Co., Lixil Group Corporation’s American Standard and Grohe brands, Spectrum Brands Holdings, Inc.'s Pfister faucets and private label brands.

Competitors of our spas and exercise pools and systems include Artesian Spas, Jacuzzi and Master Spas brands, among others.

Foreign manufacturers competing with us are located primarily in Europe and China.

We face significant competition from private label products and digitally native brands.

Many of the faucet and showering products with which our products compete are manufactured by foreign manufacturers that contribute to price competition.

Additionally, we face significant competition from private label products and digitally native brands.

The businesses in our Plumbing Products segment manufacture products primarily in North America and Europe as well as in Asia and source products from Asia and other regions.

Competition for our plumbing products is based largely on brand reputation, product features and innovation, product quality, customer service, breadth of product offering and price.

Many of the faucet and showering products with which our products compete are manufactured by low-cost foreign manufacturers that contribute to price competition.

Many of our plumbing products contain brass, the major components of which are copper and zinc.

We have multiple sources, both domestic and foreign, for the raw materials used in this segment.

We have multiple sources, both domestic and foreign, for our raw materials used in this segment.

We have encountered price volatility for brass, brass components and any components containing copper and zinc.

To help reduce the impact of this volatility, from time to time we may enter into long-term agreements with certain significant suppliers or, occasionally, use derivative instruments.

To help reduce the impact of this volatility, from time to time we may enter into long-term agreements with certain significant suppliers.

In addition, some of the products in this segment that we import have been and may in the future be subject to duties and tariffs.

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We believe that brand reputation is an important factor in consumer selection, and that competition in this industry is also based largely on product features and innovation, product quality, customer service, breadth of product offering and price.

Titanium dioxide and acrylic resins are principal raw materials in the manufacture of architectural coatings.

Acrylic resins and titanium dioxide are principal raw materials in the manufacture of architectural coatings.

The price of acrylic resins fluctuates based on the price of its components, which can have a material impact on our costs and results of operations in this segment.

The price for titanium dioxide can fluctuate as a result of global supply and demand dynamics and production capacity limitations, which can have a material impact on our costs and results of operations in this segment.

The price of acrylic resins fluctuates based on the price of its components, which can also have a material impact on our costs and results of operations in this segment.

In addition, the prices of crude oil, natural gas and certain petroleum by-products can impact our costs and results of operations in this segment.

We have agreements with certain significant suppliers for this segment that are intended to help assure continued supply.

In addition, the prices of crude oil, natural gas, propylene, methyl methacrylate (MMA), zinc and certain petroleum by-products can impact our costs and results of operations in this segment.

We have multiple sources, both domestic and foreign, for the raw materials used in this segment.

We have encountered price volatility for propylene and MMA and, to a lesser extent, zinc.

To help reduce the impact of this price volatility, we have and may in the future enter into long-term agreements with certain significant suppliers.

We import certain materials and products for this segment that have been and may in the future be subject to duties and tariffs.

We also have agreements with certain significant suppliers for this segment that are intended to help assure continued supply.

Our Decorative Architectural Products segment includes branded cabinet and door hardware, functional hardware, wall plates, hook and hook rail products, closet organization systems and picture hanging accessories, which are manufactured for us and sold to home center retailers, mass retailers, online retailers, other specialty retailers, original equipment manufacturers and wholesalers.

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Competitors of these products include Acuity, FX Luminaire, Generation Brands, Hinkley Lighting, Inc., Hubbell Incorporated's Progress Lighting brand, Hunter Fan Company and private label brands.

Certain products in our Decorative Architectural Products segment contain propylene, methyl methacrylate (MMA), titanium dioxide and zinc.

We have multiple sources, both domestic and foreign, for the raw materials used in this segment.

We have encountered price volatility for propylene and MMA and, to a lesser extent in this segment, zinc.

To help reduce the impact of this volatility, from time to time we may enter into long-term agreements with certain significant suppliers or, occasionally, use derivative instruments.

We import certain materials and products for this segment that have been and may in the future be subject to duties and tariffs.

Additional Information

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Human Capital Management

We believe that the performance of our Company is impacted by our human capital management, and as a result we consistently work to attract, select, develop, engage and retain strong, diverse talent.

We are focused on three key strategic talent priorities:

leadership, diversity, equity and inclusion, and our future workforce .

Our Chief Human Resources Officer is responsible for developing and executing our human capital strategy and provides regular updates to our Board of Directors’ Organization and Compensation Committee on our progress toward the achievement of our strategic initiatives.

We believe that all of our human capital initiatives work together to assure we have an environment where our employees are engaged, feel a sense of belonging, and can reach their full potential.

We support and grow our employees by providing continuous development practices and tools that build and strengthen leadership capabilities.

Our leadership framework is designed to serve as the foundation for how we select, develop and measure the performance of our leaders.

We have also placed a specific focus on building a coaching culture by enabling frequent and candid feedback discussions about performance and development between employees and their managers, across peers, and within teams.

We believe the performance of our Company is impacted by our human capital management, and as a result we are focused on attracting, developing and retaining highly qualified, engaged and diverse employees.

We have developed three strategic talent priorities:

leadership, diversity, equity and inclusion, and future workforce.

We believe that our human capital initiatives work together to help our employees grow and thrive, cultivate a culture where our employees feel like they belong and keep our employees healthy and safe in the workplace.

We support and foster the growth of our employees by providing development opportunities and tools that build and strengthen leadership capabilities.

We use our Leadership Framework, which is our internal leadership evaluation framework, to define the capabilities and attributes and behaviors that serve as the foundation for how we select, develop and measure the performance of our leaders.

To develop a sustainable pipeline of leaders, we have robust and proactive talent management and succession planning processes to support our businesses.

In addition, our Board of Directors and executive management team regularly review our Company’s critical leadership roles and succession plans.

We are focused on building a continuous learning culture by enabling frequent and candid feedback discussions about performance and development between employees and their managers, across peers, and within teams.

Diversity, Equity and Inclusion ("DE&I")

We believe a workplace that encourages different voices, perspectives and backgrounds creates better teams, better solutions and more innovation.

For the past several years, we have strived to create a culture of inclusion, reduce bias in our talent practices, and invest in and engage with our communities.

We strive to cultivate a sense of belonging for our employees.

We are focused on the following three key areas:

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who we are and how it feels to work at Masco

• Our communities:

how we can help increase access, equity, and inclusion with our diverse community partners

• Our marketplace:

how we represent our consumers and use our buying power to support advancing economic equity

We are refining strategic objectives and expectations within each of these focus areas.

We are also developing multiple internal channels to increase communication and opportunity for engagement among our employees.

In 2020, we established a global, enterprise DE&I Council and several local councils and employee resource groups at our business units and our corporate headquarters to help implement action plans tailored to their specific needs and challenges.

how we deliver innovative solutions that meet the needs of all our consumers and customers

• Our communities:

how we can help increase access, equity, and inclusion through strong community partners and business partnerships

Each strategic focus area has a series of enterprise-wide initiatives, and our businesses have aligned plans that are tailored to meet their specific needs.

Our enterprise DE&I Council along with business unit councils and employee resource groups serve as advisors, ambassadors and change agents in implementing our enterprise-wide initiatives and their business unit plans.

Our workforce representation statistics are one indicator of our performance in advancing a diverse workforce.

Following is our workforce representation statistics as of December 31, 2021:

• In the U.S., our leadership team is comprised of 31 percent women and 26 percent racially / ethnically diverse individuals, as compared to the EEO-1 benchmark of 24 percent and 20 percent, respectively.

The EEO-1 leadership benchmark includes executive-level/senior-officials and managers, and first-level officials and managers.

• In the U.S., our salaried workforce is comprised of approximately 36 percent women and 29 percent racially / ethnically diverse individuals, as compared to the EEO-1 benchmark of 27 percent and 26 percent, respectively.

The EEO-1 salaried employees benchmark includes leadership, professionals and technicians.

• In the U.S., our hourly workforce, which includes hourly and exception hourly, is comprised of 38 percent women and 53 percent racially / ethnically diverse individuals, as compared to the EEO-1 benchmark of 28 percent and 37 percent, respectively.

The EEO-1 hourly employees benchmark includes all other EEO categories we did not include in the EEO-1 leadership and salaried benchmark.

We have established specific aspirational workforce representation goals for our U.S.

workforce along with goals linked to employees’ experiences related to inclusion and belonging.

Progress towards these goals is measured on an annual basis and is reviewed by our Organization and Compensation Committee of our Board of Directors and executive management team.

We describe those goals in our Corporate Social Responsibility report, which is not incorporated by reference into this Annual Report on Form 10-K.

Future Workforce

We are consistently working to identify the critical capabilities our employees and the organization need to help us achieve our businesses objectives.

We leverage our Masco Operating System to ensure our businesses are focused on the right capabilities and are providing the right tools, training and structure to building these new and important skills.

There are critical capabilities that our employees and our organization need to help us achieve our businesses objectives.

We leverage our Masco Operating System, our methodology to drive growth and productivity, to ensure that our businesses are focused on building these critical organizational capabilities by ensuring they have the right structure, talent, tools, and training in place.

Employee Engagement

In order to engage and retain our employees, we listen to our employees to understand their perspectives, needs and ideas by leveraging various forums, tools, and methods including surveys to measure key insights related to employee engagement, inclusion, well-being, and leadership, among others.

Employee Health and Safety

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In support of our safety efforts, we identify, assess, and investigate incidents and injury data, and each year set a goal to improve key safety performance indicators.

We train, promote, consult and communicate with our workforce in this process.

In 2020, the Coronavirus Disease 2019 ("COVID-19") pandemic highlighted the importance of employee welfare.

Our cross-functional Infectious Illness Response Team reacted quickly to keep our employees safe through the implementation of policies and safety measures that adhered to best practices from the World Health Organization and the Centers for Disease Control.

We communicate and train our workforce on the importance of safe work practices.

We also regularly consult with our employees on safety-related improvements to our operations.

Throughout 2021, our cross-functional Infectious Illness Response Team updated protocols and procedures to continue to help keep our employees safe during the ongoing COVID-19 pandemic.

We continued to implement the best practices and recommendations from the World Health Organization, the Centers for Disease Control, and the Department of Labor (OSHA).

We encouraged our employees to receive COVID-19 vaccinations across our organization through educational outreach, on-site vaccination clinics, and paid time off to receive the COVID-19 vaccine.

Our Workforce

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business