Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Masonite International Corporation Reports 2023 Fourth Quarter and Full Year Financial Results By: Masonite International Corporation via Business Wire February 19, 2024 at 16:44 PM EST Reported full year 2023 net sales of $2.8 billion and net income attributable to Masonite of $118 million Delivered full year adjusted EBITDA* of $419 million and a record high $408 million of operating cash flow Enhanced portfolio of product solutions with acquisitions of Endura Products and Fleetwood during 2023 Subsequent to year end, announced definitive agreement under which Owens Corning (NYSE: OC) will acquire all outstanding shares of Masonite for $133.00 per share in cash Masonite International Corporation ("Masonite" or "the Company") (NYSE: DOOR) today announced results for the three months and full year ended December 31, 2023. ($ in millions, except per share amounts) 4Q23 4Q22 % Change FY23 FY22 % Change Net sales $661 $676 (2)% $2,831 $2,892 (2)% Net income (loss) attributable to Masonite ($10) $31 nm $118 $214 (45)% Diluted earnings (loss) per share ($0.46) $1.38 nm $5.29 $9.41 (44)% Adjusted EPS* $1.29 $1.72 (25%) $7.53 $9.73 (23)% Adjusted EBITDA* $87 $91 (5%) $419 $446 (6)% Adjusted EBITDA margin* 13.1% 13.5% (40 bps) 14.8% 15.4% (60 bps) "Thanks to strong execution of our 2023 playbook, Masonite was able to deliver net sales and adjusted EBITDA* within the guidance we announced at the beginning of the year and cash flow that significantly exceeded our initial guidance," said Howard Heckes, President and CEO. "Subsequent to year end, we announced a deal that will make Masonite a part of the Owens Corning family in 2024. We see this combination as a tremendous opportunity to accelerate our Doors That Do More™ strategy with an industry leader, while delivering substantial value to our shareholders.” * See "Non-GAAP Financial Measures and Related Information" for definition and reconciliation of non-GAAP measures. Fourth Quarter 2023 Discussion (All references to percent increase or decrease in the discussion below compare current fourth quarter 2023 results to those realized in the fourth quarter of 2022 unless otherwise noted.) Consolidated net sales were $661 million in the fourth quarter of 2023, a 2% decrease resulting from an 11% decrease in organic volume and a 2% decrease in average unit price (AUP), partially offset by a 10% increase from acquisitions and a 1% increase from favorable foreign exchange. North American Residential net sales were $538 million, a 2% increase, driven by a 13% increase from acquisitions, partially offset by a 9% decrease in organic volume and 2% lower AUP. Europe net sales were $53 million, a 13% decrease, driven by a 14% decrease in volume and a 4% decrease in AUP, partially offset by a 5% increase due to favorable foreign exchange. Architectural net sales were $67 million, a 19% decrease, driven by a 24% decrease in volume and component sales, partially offset by a 5% increase in AUP. Total Company gross profit was $151 million in the fourth quarter of 2023, an increase of 6%. Gross profit margin increased 170 basis points year over year to 22.9%, due to effective price-cost management, which was enough to offset the impact of lower volumes and inflation on wages, benefits and overhead. Selling, general and administration (SG&A) expenses were $113 million in the fourth quarter of 2023, an increase of 27%. The increase in SG&A was primarily driven by the addition of SG&A from acquisitions as well as year-over-year differences in the timing of adjustments to variable compensation expense. SG&A as a percentage of net sales was 17.0%. Net loss attributable to Masonite was $10 million in the fourth quarter of 2023 compared to net income of $31 million in the fourth quarter of 2022. The decrease was primarily driven by $33 million in charges related to goodwill impairment in the Europe reporting unit. Adjusted EBITDA* of $87 million in the fourth quarter of 2023 decreased 5% from $91 million. Diluted loss per share was $0.46 in the fourth quarter of 2023 compared to earnings of $1.38 in the comparable 2022 period. Adjusted EPS* was $1.29 in the fourth quarter of 2023 compared to $1.72 in the comparable 2022 period. Full Year 2023 Discussion (All references to percent increase or decrease in the discussion below compare current full year 2023 results to those realized in full year 2022 unless otherwise noted.) Consolidated net sales were $2,831 million in the year ended December 31, 2023, a 2% decrease resulting from a 14% decrease in organic volume and a 1% decrease in component sales, partially offset by a 9% increase from acquisitions and a 4% increase in AUP. North American Residential net sales were $2,245 million, a 2% decrease, driven by a 15% decrease in organic volume and a 1% decrease due to unfavorable foreign exchange, partially offset by an 11% increase from acquisitions and a 3% increase in AUP. Europe net sales were $247 million, a 12% decrease, driven by an 11% decrease in volume and a 1% decrease in component sales. AUP was flat year over year. Architectural net sales were $323 million, a 5% increase, driven by an 18% increase in AUP, partially offset by a 9% decrease in volume, a 3% decrease in the sale of components and a 1% decrease due to unfavorable foreign exchange. Total company gross profit was $666 million in the year ended December 31, 2023, a decrease of 1%. Gross profit margin increased 20 basis points to 23.5%, as higher AUP and cost savings initiatives were enough to offset the impact of lower volumes and inflation on wages, benefits and overhead. SG&A expenses were $412 million in the year ended December 31, 2023, an increase of 19% due largely to the year-over-year addition of SG&A from acquisitions, as well as wage and benefits inflation, higher professional fees, information technology costs and additional investments in strategic initiatives. SG&A as a percentage of net sales was 14.5%. Net income attributable to Masonite was $118 million in 2023 compared to $214 million in 2022. The decrease was primarily driven by higher SG&A expenses and $33 million in charges related to goodwill impairment in the Europe reporting unit. Adjusted EBITDA* of $419 million in 2023 decreased 6% from $446 million in 2022. Diluted earnings per share were $5.29 in the 2023 fiscal year compared to $9.41 in the comparable 2022 period. Adjusted EPS* was $7.53 in the 2023 fiscal year compared to $9.73 in the comparable 2022 period. Balance Sheet, Cash Flow and Capital Allocation At the end of the fourth quarter, total available liquidity was $437 million, inclusive of $300 million of availability under our ABL Facility and AR Sales Program and $137 million in unrestricted cash. Cash flow from operations was $408 million in 2023, up from $189 million in the comparable period of 2022. Capital expenditures were $113 million in the year ended December 31, 2023, down from $114 million in the comparable period of 2022. During the fourth quarter, Masonite repurchased approximately 84 thousand shares of stock for $7 million, at an average price of $88.88. In fiscal 2023, the Company repurchased approximately 518 thousand shares of stock for $47 million, at an average price of $89.96 per share. Acquisition by Owens Corning On February 8, 2024, Masonite and Owens Corning entered into a definitive agreement under which Owens Corning will acquire all of the outstanding shares of Masonite for $133.00 per share in cash. The transaction has been unanimously approved by both companies' Board of Directors and is subject to Masonite shareholders' approval, as well as various regulatory approvals and other customary closing conditions. The transaction is anticipated to close by the middle of 2024. In light of this pending transaction, Masonite has cancelled plans to hold a live conference call to discuss fourth quarter results. Additional information on the Company's results can be found in our Annual Report on Form 10-K to be filed with the SEC by February 29, 2024. About Masonite Masonite International Corporation is a leading global designer, manufacturer, marketer and distributor of interior and exterior doors, door system components and door systems for the new construction and repair, renovation and remodeling sectors of the residential and non-residential building construction markets. Since 1925, Masonite has provided its customers with innovative products and superior service at compelling values. Masonite currently serves approximately 6,600 customers globally. Additional information about Masonite can be found at www.masonite.com. Forward-looking Statements This press release contains forward-looking information and other forward-looking statements within the meaning of applicable Canadian and/or U.S. securities laws, including statements regarding the proposed transaction between us and Owens Corning (the “Acquisition”), including statements regarding the expected timetable for completing the Acquisition, the ability to complete the Acquisition and the expected benefits of the Acquisition. When used in this press release, such forward-looking statements may be identified by the use of such words as “may,” “might,” “could,” “will,” “would,” “should,” “expect,” “believes,” “outlook,” “predict,” “forecast,” “objective,” “remain,” “anticipate,” “estimate,” “potential,” “continue,” “plan,” “project,” “targeting,” or the negative of these terms or other similar terminology. Forward-looking statements involve significant known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Masonite, or industry results, to be materially different from any future plans, goals, targets, objectives, results, performance or achievements expressed or implied by such forward-looking statements. As a result, such forward-looking statements should not be read as guarantees of future performance or results, should not be unduly relied upon, and will not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the forward-looking statements include, but are not limited to, restrictions during the pendency of the Acquisition that may impact our ability to pursue certain business opportunities or strategic transactions; risks related to diverting management’s attention from ongoing business operations and disrupting our relationships with third-parties and employees during the pendency of the Acquisition; the risk that the Acquisition may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the outcome of any legal proceedings that may be instituted against us related to the Acquisition or the agreement pursuant to which the Acquisition would be effected, downward trends in our end markets and in economic conditions; volatility and uncertainty in general business, economic conditions or financial markets, including the impact on the building product industries and housing markets; challenges pertaining to financing and the impact on reduced levels of residential new construction, residential repair, renovation and remodeling, and non-residential building construction activity due to increases in mortgage rates, changes in mortgage interest deductions and related tax changes and reduced availability of financing; the impact of energy and transportation price fluctuations; competition; the continued success of, and our ability to maintain relationships with, certain key customers in light of customer concentration and consolidation; our ability to innovate and accurately anticipate demand for our products; availability of raw materials, price fluctuations and supply chain disruptions; impacts on our business from weather and climate change; our ability to successfully consummate and integrate acquisitions; increases in labor costs, the availability of labor, or labor relations (i.e., disruptions, strikes or work stoppages); our ability to manage our operations including potential disruptions and manufacturing realignments (including related restructuring charges); product liability claims and product recalls; retention of key management personnel; the continuous operation of our information technology and enterprise resource planning systems and management of potential cyber security threats and attacks and data privacy requirements; our ability to generate sufficient cash flows to fund our capital expenditure requirements and to meet our debt service obligations, including our obligations under our senior notes, our term loan credit agreement (the "Term Loan Facility") and our asset-based revolving credit facility (the "ABL Facility"); limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes, the Term Loan Facility and the ABL Facility; fluctuating foreign exchange and interest rates; environmental and other government regulations, including the United States Foreign Corrupt Practices Act ("FCPA"), and any changes in such regulations; tariffs and evolving trade policy and friction between the United States and other countries, including China, and the impact of anti-dumping and countervailing duties; our ability to replace our expiring patents and to innovate and keep pace with technological developments. For additional information on identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see Masonite’s reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Masonite undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Non-GAAP Financial Measures and Related Information Our management reviews net sales and adjusted EBITDA (as defined below) to evaluate segment performance and allocate resources. Net assets are not allocated to the reportable segments. Adjusted EBITDA is a non-GAAP financial measure which does not have a standardized meaning under GAAP and is unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA should not be considered as an alternative to either net income or operating cash flows determined in accordance with GAAP. Additionally, adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not include certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA is defined as net income attributable to Masonite adjusted to exclude the following items: depreciation; amortization; share based compensation expense; loss (gain) on disposal of property, plant and equipment; registration and listing fees; restructuring costs; asset impairment; loss (gain) on disposal of subsidiaries; interest expense (income), net; loss on extinguishment of debt; other (income) expense, net; income tax expense (benefit); other items; loss (income) from discontinued operations, net of tax; and net income (loss) attributable to non-controlling interest. This definition of adjusted EBITDA differs from the definitions of EBITDA contained in the indentures governing the 2028 and 2030 Notes and the credit agreements governing the ABL Facility and Term Loan Facility. Adjusted EBITDA, as calculated under our ABL Facility or senior notes would also include, among other things, additional add-backs for amounts related to: cost savings projected by us in good faith to be realized as a result of actions taken or expected to be taken prior to or during the relevant period; fees and expenses in connection with certain plant closures and layoffs; and the amount of any restructuring charges, integration costs or other business optimization expenses or reserve deducted in the relevant period in computing consolidated net income, including any one-time costs incurred in connection with acquisitions. Adjusted EBITDA is used to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. Intersegment sales are recorded using market prices. We believe that adjusted EBITDA, from an operations standpoint, provides an appropriate way to measure and assess segment performance. Our management team has established the practice of reviewing the performance of each segment based on the measures of net sales and adjusted EBITDA. We believe that adjusted EBITDA is useful to users of the consolidated financial statements because it provides the same information that we use internally to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. The tables below set forth a reconciliation of net income (loss) attributable to Masonite to adjusted EBITDA for the periods indicated. Adjusted EBITDA margin is defined as adjusted EBITDA divided by Net Sales. Management believes this measure provides supplemental information on how successfully we operate our business. Adjusted EPS is diluted earnings (loss) per common share attributable to Masonite (EPS) less restructuring costs, asset impairment charges, loss (gain) on disposal of subsidiaries, loss on extinguishment of debt and other items, if any, that do not relate to Masonite’s underlying business performance (each net of related tax expense (benefit)). Management uses this measure to evaluate the overall performance of the Company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the Company from period to period. This measure may be inconsistent with similar measures presented by other companies. Free cash flow is a non-GAAP liquidity measure used by investors, financial analysts and management to help evaluate the Company's ability to generate cash to pursue opportunities that enhance shareholder value. Free cash flow is not a measure of residual cash flow available for discretionary expenditures due to our mandatory debt service requirements. As a conversion ratio, free cash flow is compared to adjusted net income (loss) attributable to Masonite. Free cash flow and free cash flow conversion are used internally by the Company for various purposes, including reporting results of operations to the Board of Directors of the Company and analysis of performance. Management believes that these measures provide a useful representation of our operational performance and liquidity; however, the measures should not be considered in isolation or as a substitute for net cash flow provided by operating activities or net income attributable to Masonite as prepared in accordance with GAAP. Certain amounts in the Condensed Consolidated Financial Statements and associated tables may not foot due to rounding. All percentages have been calculated using unrounded amounts. MASONITE INTERNATIONAL CORPORATION SALES RECONCILIATION AND ADJUSTED EBITDA BY REPORTABLE SEGMENT (In millions of U.S. dollars) (Unaudited) North America Residential Europe Architectural Corporate and Other Consolidated % Change Fourth quarter 2022 net sales $ 527.9 $ 60.7 $ 82.7 $ 4.7 $ 676.0 Acquisitions, net of divestitures 69.2 — — — 69.2 10.2 % Base volume (46.6 ) (8.3 ) (17.0 ) — (71.9 ) (10.6 )% Average unit price (12.9 ) (2.3 ) 4.4 (0.3 ) (11.1 ) (1.6 )% Components 0.4 (0.3 ) (3.0 ) (1.5 ) (4.4 ) (0.7 )% Foreign exchange (0.1 ) 2.9 — — 2.8 0.4 % Fourth quarter 2023 net sales $ 537.9 $ 52.7 $ 67.1 $ 2.9 $ 660.6 Year over year change, net sales 1.9 % (13.2 )% (18.9 )% (38.3 ) % (2.3 )% Fourth quarter 2022 Adjusted EBITDA $ 94.0 $ 4.5 $ (0.7 ) $ (6.8 ) $ 91.0 Fourth quarter 2023 Adjusted EBITDA 106.4 (0.8 ) (2.3 ) (16.5 ) 86.8 Year over year change, Adjusted EBITDA 13.2 % (118.6 )% (225.2 )% nm (4.6 )% North America Residential Europe Architectural Corporate and Other Consolidated % Change Year to date 2022 net sales $ 2,283.6 $ 280.8 $ 307.0 $ 20.3 $ 2,891.7 Acquisitions, net of divestitures 248.1 — — — 248.1 8.6 % Base volume (340.0 ) (32.0 ) (28.0 ) — (400.0 ) (13.8 )% Average unit price 61.1 (0.2 ) 56.4 0.9 118.2 4.1 % Components 1.4 (2.9 ) (10.4 ) (5.7 ) (17.6 ) (0.6 )% Foreign exchange (9.3 ) 1.3 (1.6 ) (0.1 ) (9.7 ) (0.3 )% Year to date 2023 net sales $ 2,244.9 $ 247.0 $ 323.4 $ 15.4 $ 2,830.7 Year over year change, net sales (1.7 )% (12.0 )% 5.3 % (24.1 ) % (2.1 ) % Year to date 2022 Adjusted EBITDA $ 461.8 $ 28.8 $ (3.7 ) $ (41.0 ) $ 445.8 Year to date 2023 Adjusted EBITDA 440.9 10.7 15.5 (48.4 ) 418.6 Year over year change, Adjusted EBITDA (4.5 )% (62.8 )% 512.5 % nm (6.1 )% MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of U.S. dollars, except share and per share amounts) (Unaudited) Three Months Ended Twelve months ended December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net sales $ 660,580 $ 675,970 $ 2,830,695 $ 2,891,687 Cost of goods sold 509,420 532,993 2,164,978 2,217,792 Gross profit 151,160 142,977 665,717 673,895 Gross profit as a % of net sales 22.9 % 21.2 % 23.5 % 23.3 % Selling, general and administration expenses 112,503 88,348 411,579 344,614 Selling, general and administration expenses as a % of net sales 17.0 % 13.1 % 14.5 % 11.9 % Restructuring costs 1,487 2,125 10,130 1,904 Asset impairment 33,063 — 33,063 — Loss on disposal of subsidiaries — 850 — 850 Operating income 4,107 51,654 210,945 326,527 Interest expense, net 11,169 10,233 50,822 41,331 Other (income) expense, net (506 ) (3,397 ) (2,087 ) (5,001 ) Income (loss) before income tax expense (6,556 ) 44,818 162,210 290,197 Income tax expense 2,867 12,251 40,941 71,753 Net income (loss) (9,423 ) 32,567 121,269 218,444 Less: net income attributable to non-controlling interests 572 1,468 3,042 4,211 Net income (loss) attributable to Masonite $ (9,995 ) $ 31,099 $ 118,227 $ 214,233 Basic earnings (loss) per common share attributable to Masonite $ (0.46 ) $ 1.40 $ 5.37 $ 9.51 Diluted earnings (loss) per common share attributable to Masonite $ (0.46 ) $ 1.38 $ 5.29 $ 9.41 Shares used in computing basic earnings per share 21,877,423 22,256,398 22,031,168 22,532,722 Shares used in computing diluted earnings per share 21,877,423 22,484,901 22,345,480 22,772,465 MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share amounts) (Unaudited) ASSETS December 31, 2023 January 1, 2023 Current assets: Cash and cash equivalents $ 137,414 $ 296,922 Restricted cash 11,926 11,999 Accounts receivable, net 326,224 375,918 Inventories, net 391,199 406,828 Prepaid expenses and other assets 60,092 55,051 Income taxes receivable 26,544 16,922 Total current assets 953,399 1,163,640 Property, plant and equipment, net 747,970 652,329 Operating lease right-of-use assets 202,806 160,695 Investment in equity investees 20,378 16,111 Goodwill 294,710 69,868 Intangible assets, net 402,941 136,056 Deferred income taxes 26,658 16,133 Other assets 36,517 33,346 Total assets $ 2,685,379 $ 2,248,178 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 113,208 $ 111,526 Accrued expenses 240,476 223,046 Income taxes payable 3,400 14,361 Current portion of long-term debt 37,500 — Total current liabilities 394,584 348,933 Long-term debt 1,049,384 866,116 Long-term operating lease liabilities 186,647 151,242 Deferred income taxes 120,278 79,590 Other liabilities 75,158 59,515 Total liabilities 1,826,051 1,505,396 Commitments and Contingencies Equity: Share capital: unlimited shares authorized, no par value, 21,835,474 and 22,155,035 shares issued and outstanding as of December 31, 2023, and January 1, 2023, respectively 525,232 520,003 Additional paid-in capital 231,332 226,514 Retained earnings 211,881 127,826 Accumulated other comprehensive loss (120,192 ) (142,224 ) Total equity attributable to Masonite 848,253 732,119 Equity attributable to non-controlling interests 11,075 10,663 Total equity 859,328 742,782 Total liabilities and equity $ 2,685,379 $ 2,248,178 MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars, except share amounts) (Unaudited) Year Ended Cash flows from operating activities: December 31, 2023 January 1, 2023 Net income $ 121,269 $ 218,444 Adjustments to reconcile net income to net cash flow provided by operating activities: Loss on disposal of subsidiaries — 850 Depreciation 91,145 71,168 Amortization 32,976 17,127 Share based compensation expense 23,638 21,771 Deferred income taxes (11,978 ) 6,024 Unrealized foreign exchange (gain) loss (334 ) 820 Share of income from equity investees, net of tax (3,888 ) (4,768 ) Dividend from equity investee 3,150 4,500 Pension and post-retirement funding, net of expense (1,943 ) (2,342 ) Non-cash accruals and interest 4,483 (511 ) Loss (gain) on sale of property, plant and equipment 4,434 (378 ) Asset impairment 33,063 — Changes in assets and liabilities, net of acquisitions: Accounts receivable 67,310 (39,056 ) Inventories 102,625 (66,372 ) Prepaid expenses and other assets (14,329 ) 7,266 Accounts payable and accrued expenses (23,459 ) (33,302 ) Other assets and liabilities (20,432 ) (12,044 ) Net cash flow provided by operating activities 407,730 189,197 Cash flows from investing activities: Additions to property, plant and equipment (112,660 ) (114,307 ) Acquisition of businesses, net of cash acquired (626,802 ) — Proceeds from sale of subsidiaries, net of cash disposed — (74 ) Proceeds from sale of property, plant and equipment 67 6,413 Proceeds from repayment of note receivable 12,000 — Other investing activities (6,437 ) (3,130 ) Net cash flow used in investing activities (733,832 ) (111,098 ) Cash flows from financing activities: Proceeds from issuance of long-term debt 250,000 — Repayments of long-term debt (28,125 ) — Payment of debt issuance costs (3,628 ) — Proceeds from borrowings on revolving credit facilities 185,019 — Repayments of borrowings on revolving credit facilities (185,019 ) — Tax withholding on share based awards (2,544 ) (3,359 ) Distributions to non-controlling interests (2,809 ) (4,550 ) Repurchases of common shares (46,559 ) (149,489 ) Net cash flow provided by (used in) financing activities 166,335 (157,398 ) Net foreign currency translation adjustment on cash 186 (3,285 ) Decrease in cash, cash equivalents and restricted cash (159,581 ) (82,584 ) Cash, cash equivalents and restricted cash, beginning of period 308,921 391,505 Cash, cash equivalents and restricted cash, at end of period $ 149,340 $ 308,921 MASONITE INTERNATIONAL CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands of U.S. dollars, except share and per share amounts) (Unaudited) Three Months Ended Twelve Months Ended (In thousands) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net income (loss) attributable to Masonite $ (9,995 ) $ 31,099 $ 118,227 $ 214,233 Add: Adjustments to net income (loss) attributable to Masonite: Restructuring costs 1,487 2,125 10,130 1,904 Asset impairment 33,063 — 33,063 — Loss on disposal of subsidiaries — 850 — 850 Other items (1) 5,962 6,829 12,311 6,829 Income tax impact of adjustments (1,905 ) (2,317 ) (5,484 ) (2,261 ) Adjusted net income attributable to Masonite $ 28,612 $ 38,586 $ 168,247 $ 221,555 Diluted earnings (loss) per common share attributable to Masonite ("EPS") $ (0.46 ) $ 1.38 $ 5.29 $ 9.41 Diluted adjusted earnings per common share attributable to Masonite ("Adjusted EPS") $ 1.29 $ 1.72 $ 7.53 $ 9.73 Shares used in computing EPS 21,877,423 22,484,901 22,345,480 22,772,465 Shares used in computing Adjusted EPS 22,212,089 22,484,901 22,345,480 22,772,465 ____________ (1) Other items include $5,962 and $12,311 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the three and twelve months ended December 31, 2023, and $6,829 in acquisition and due diligence related costs in the three and twelve months ended January 1, 2023. These costs were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. The weighted average number of shares outstanding utilized for the diluted EPS and diluted Adjusted EPS calculation contemplates the exercise of all currently outstanding SARs and the conversion of all RSUs. The dilutive effect of such equity awards is calculated based on the weighted average share price for each fiscal period using the treasury stock method. For all periods presented, common shares issuable for stock instruments which would have had an anti-dilutive impact under the treasury stock method have been excluded from the computation of diluted earnings per share. Three Months Ended December 31, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 81,784 $ (39,486 ) $ (5,590 ) $ (46,703 ) $ (9,995 ) Plus: Depreciation 14,455 2,328 3,057 3,950 23,790 Amortization 7,439 2,863 68 691 11,061 Share based compensation expense — — — 6,199 6,199 Loss on disposal of property, plant and equipment 950 7 158 — 1,115 Restructuring costs 1,328 158 1 — 1,487 Asset impairment — 33,063 — — 33,063 Interest expense, net — — — 11,169 11,169 Other expense (income), net 41 236 — (783 ) (506 ) Income tax expense — — — 2,867 2,867 Other items (1) — — — 5,962 5,962 Net income attributable to non-controlling interest 439 — — 133 572 Adjusted EBITDA $ 106,436 $ (831 ) $ (2,306 ) $ (16,515 ) $ 86,784 Net sales $ 537,895 $ 52,705 $ 67,071 $ 2,909 $ 660,580 Adjusted EBITDA Margin 19.8 % (1.6 )% (3.4 )% nm 13.1 % ____________ (1) Other items include $5,962 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the three months ended December 31, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Three Months Ended January 1, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 79,684 $ (1,211 ) $ (3,991 ) $ (43,383 ) $ 31,099 Plus: Depreciation 10,683 2,234 2,928 3,346 19,191 Amortization 353 2,873 165 572 3,963 Share based compensation expense — — — 5,520 5,520 Loss on disposal of property, plant and equipment 584 12 181 90 867 Restructuring costs 2,095 — 8 22 2,125 Loss on disposal of subsidiaries — — — 850 850 Interest expense, net — — — 10,233 10,233 Other (income) expense, net 1 559 — (3,957 ) (3,397 ) Income tax expense — — — 12,251 12,251 Other items (1) — — — 6,829 6,829 Net income attributable to non-controlling interest 617 — — 851 1,468 Adjusted EBITDA $ 94,017 $ 4,467 $ (709 ) $ (6,776 ) $ 90,999 Net sales $ 527,862 $ 60,730 $ 82,726 $ 4,652 $ 675,970 Adjusted EBITDA Margin 17.8 % 7.4 % (0.9 )% nm 13.5 % ____________ (1) Other items include $6,829 in acquisition and due diligence related costs in the three months ended January 1, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Twelve Months Ended December 31, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 352,604 $ (44,818 ) $ 1,189 $ (190,748 ) $ 118,227 Plus: Depreciation 55,927 9,635 12,016 13,567 91,145 Amortization 17,846 11,644 908 2,578 32,976 Share based compensation expense — — — 23,638 23,638 Loss on disposal of property, plant and equipment 3,732 68 485 149 4,434 Restructuring costs 8,481 158 864 627 10,130 Asset impairment — 33,063 — — 33,063 Interest expense, net — — — 50,822 50,822 Other expense (income), net 54 959 — (3,100 ) (2,087 ) Income tax expense — — — 40,941 40,941 Other items (1) — — — 12,311 12,311 Net income attributable to non-controlling interest 2,243 — — 799 3,042 Adjusted EBITDA $ 440,887 $ 10,709 $ 15,462 $ (48,416 ) $ 418,642 Net sales $ 2,244,882 $ 246,968 $ 323,449 $ 15,396 $ 2,830,695 Adjusted EBITDA Margin 19.6 % 4.3 % 4.8 % nm 14.8 % ____________ (1) Other items include $12,311 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the twelve months ended December 31, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Twelve Months Ended January 1, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 412,917 $ 6,851 $ (13,345 ) $ (192,190 ) $ 214,233 Plus: Depreciation 41,077 8,874 11,530 9,687 71,168 Amortization 1,881 12,187 844 2,215 17,127 Share based compensation expense — — — 21,771 21,771 Loss (gain) on disposal of property, plant and equipment 2,457 (1 ) (2,856 ) 22 (378 ) Restructuring costs 1,736 — 79 89 1,904 Loss on disposal of subsidiaries — — — 850 850 Interest expense, net — — — 41,331 41,331 Other (income) expense, net (791 ) 863 — (5,073 ) (5,001 ) Income tax expense — — — 71,753 71,753 Other items (1) — — — 6,829 6,829 Net income attributable to non-controlling interest 2,473 — — 1,738 4,211 Adjusted EBITDA $ 461,750 $ 28,774 $ (3,748 ) $ (40,978 ) $ 445,798 Net sales to external customers $ 2,283,642 $ 280,769 $ 306,983 $ 20,293 $ 2,891,687 Adjusted EBITDA Margin 20.2 % 10.2 % (1.2 )% nm 15.4 % ____________ (1) Other items include $6,829 in acquisition and due diligence related costs in the twelve months ended January 1, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. View source version on businesswire.com: https://www.businesswire.com/news/home/20240219257655/en/Contacts Richard Leland VP, FINANCE AND TREASURER rleland@masonite.com 813.739.1808 Marcus Devlin DIRECTOR, INVESTOR RELATIONS mdevlin@masonite.com 813.371.5839 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Masonite International Corporation Reports 2023 Fourth Quarter and Full Year Financial Results By: Masonite International Corporation via Business Wire February 19, 2024 at 16:44 PM EST Reported full year 2023 net sales of $2.8 billion and net income attributable to Masonite of $118 million Delivered full year adjusted EBITDA* of $419 million and a record high $408 million of operating cash flow Enhanced portfolio of product solutions with acquisitions of Endura Products and Fleetwood during 2023 Subsequent to year end, announced definitive agreement under which Owens Corning (NYSE: OC) will acquire all outstanding shares of Masonite for $133.00 per share in cash Masonite International Corporation ("Masonite" or "the Company") (NYSE: DOOR) today announced results for the three months and full year ended December 31, 2023. ($ in millions, except per share amounts) 4Q23 4Q22 % Change FY23 FY22 % Change Net sales $661 $676 (2)% $2,831 $2,892 (2)% Net income (loss) attributable to Masonite ($10) $31 nm $118 $214 (45)% Diluted earnings (loss) per share ($0.46) $1.38 nm $5.29 $9.41 (44)% Adjusted EPS* $1.29 $1.72 (25%) $7.53 $9.73 (23)% Adjusted EBITDA* $87 $91 (5%) $419 $446 (6)% Adjusted EBITDA margin* 13.1% 13.5% (40 bps) 14.8% 15.4% (60 bps) "Thanks to strong execution of our 2023 playbook, Masonite was able to deliver net sales and adjusted EBITDA* within the guidance we announced at the beginning of the year and cash flow that significantly exceeded our initial guidance," said Howard Heckes, President and CEO. "Subsequent to year end, we announced a deal that will make Masonite a part of the Owens Corning family in 2024. We see this combination as a tremendous opportunity to accelerate our Doors That Do More™ strategy with an industry leader, while delivering substantial value to our shareholders.” * See "Non-GAAP Financial Measures and Related Information" for definition and reconciliation of non-GAAP measures. Fourth Quarter 2023 Discussion (All references to percent increase or decrease in the discussion below compare current fourth quarter 2023 results to those realized in the fourth quarter of 2022 unless otherwise noted.) Consolidated net sales were $661 million in the fourth quarter of 2023, a 2% decrease resulting from an 11% decrease in organic volume and a 2% decrease in average unit price (AUP), partially offset by a 10% increase from acquisitions and a 1% increase from favorable foreign exchange. North American Residential net sales were $538 million, a 2% increase, driven by a 13% increase from acquisitions, partially offset by a 9% decrease in organic volume and 2% lower AUP. Europe net sales were $53 million, a 13% decrease, driven by a 14% decrease in volume and a 4% decrease in AUP, partially offset by a 5% increase due to favorable foreign exchange. Architectural net sales were $67 million, a 19% decrease, driven by a 24% decrease in volume and component sales, partially offset by a 5% increase in AUP. Total Company gross profit was $151 million in the fourth quarter of 2023, an increase of 6%. Gross profit margin increased 170 basis points year over year to 22.9%, due to effective price-cost management, which was enough to offset the impact of lower volumes and inflation on wages, benefits and overhead. Selling, general and administration (SG&A) expenses were $113 million in the fourth quarter of 2023, an increase of 27%. The increase in SG&A was primarily driven by the addition of SG&A from acquisitions as well as year-over-year differences in the timing of adjustments to variable compensation expense. SG&A as a percentage of net sales was 17.0%. Net loss attributable to Masonite was $10 million in the fourth quarter of 2023 compared to net income of $31 million in the fourth quarter of 2022. The decrease was primarily driven by $33 million in charges related to goodwill impairment in the Europe reporting unit. Adjusted EBITDA* of $87 million in the fourth quarter of 2023 decreased 5% from $91 million. Diluted loss per share was $0.46 in the fourth quarter of 2023 compared to earnings of $1.38 in the comparable 2022 period. Adjusted EPS* was $1.29 in the fourth quarter of 2023 compared to $1.72 in the comparable 2022 period. Full Year 2023 Discussion (All references to percent increase or decrease in the discussion below compare current full year 2023 results to those realized in full year 2022 unless otherwise noted.) Consolidated net sales were $2,831 million in the year ended December 31, 2023, a 2% decrease resulting from a 14% decrease in organic volume and a 1% decrease in component sales, partially offset by a 9% increase from acquisitions and a 4% increase in AUP. North American Residential net sales were $2,245 million, a 2% decrease, driven by a 15% decrease in organic volume and a 1% decrease due to unfavorable foreign exchange, partially offset by an 11% increase from acquisitions and a 3% increase in AUP. Europe net sales were $247 million, a 12% decrease, driven by an 11% decrease in volume and a 1% decrease in component sales. AUP was flat year over year. Architectural net sales were $323 million, a 5% increase, driven by an 18% increase in AUP, partially offset by a 9% decrease in volume, a 3% decrease in the sale of components and a 1% decrease due to unfavorable foreign exchange. Total company gross profit was $666 million in the year ended December 31, 2023, a decrease of 1%. Gross profit margin increased 20 basis points to 23.5%, as higher AUP and cost savings initiatives were enough to offset the impact of lower volumes and inflation on wages, benefits and overhead. SG&A expenses were $412 million in the year ended December 31, 2023, an increase of 19% due largely to the year-over-year addition of SG&A from acquisitions, as well as wage and benefits inflation, higher professional fees, information technology costs and additional investments in strategic initiatives. SG&A as a percentage of net sales was 14.5%. Net income attributable to Masonite was $118 million in 2023 compared to $214 million in 2022. The decrease was primarily driven by higher SG&A expenses and $33 million in charges related to goodwill impairment in the Europe reporting unit. Adjusted EBITDA* of $419 million in 2023 decreased 6% from $446 million in 2022. Diluted earnings per share were $5.29 in the 2023 fiscal year compared to $9.41 in the comparable 2022 period. Adjusted EPS* was $7.53 in the 2023 fiscal year compared to $9.73 in the comparable 2022 period. Balance Sheet, Cash Flow and Capital Allocation At the end of the fourth quarter, total available liquidity was $437 million, inclusive of $300 million of availability under our ABL Facility and AR Sales Program and $137 million in unrestricted cash. Cash flow from operations was $408 million in 2023, up from $189 million in the comparable period of 2022. Capital expenditures were $113 million in the year ended December 31, 2023, down from $114 million in the comparable period of 2022. During the fourth quarter, Masonite repurchased approximately 84 thousand shares of stock for $7 million, at an average price of $88.88. In fiscal 2023, the Company repurchased approximately 518 thousand shares of stock for $47 million, at an average price of $89.96 per share. Acquisition by Owens Corning On February 8, 2024, Masonite and Owens Corning entered into a definitive agreement under which Owens Corning will acquire all of the outstanding shares of Masonite for $133.00 per share in cash. The transaction has been unanimously approved by both companies' Board of Directors and is subject to Masonite shareholders' approval, as well as various regulatory approvals and other customary closing conditions. The transaction is anticipated to close by the middle of 2024. In light of this pending transaction, Masonite has cancelled plans to hold a live conference call to discuss fourth quarter results. Additional information on the Company's results can be found in our Annual Report on Form 10-K to be filed with the SEC by February 29, 2024. About Masonite Masonite International Corporation is a leading global designer, manufacturer, marketer and distributor of interior and exterior doors, door system components and door systems for the new construction and repair, renovation and remodeling sectors of the residential and non-residential building construction markets. Since 1925, Masonite has provided its customers with innovative products and superior service at compelling values. Masonite currently serves approximately 6,600 customers globally. Additional information about Masonite can be found at www.masonite.com. Forward-looking Statements This press release contains forward-looking information and other forward-looking statements within the meaning of applicable Canadian and/or U.S. securities laws, including statements regarding the proposed transaction between us and Owens Corning (the “Acquisition”), including statements regarding the expected timetable for completing the Acquisition, the ability to complete the Acquisition and the expected benefits of the Acquisition. When used in this press release, such forward-looking statements may be identified by the use of such words as “may,” “might,” “could,” “will,” “would,” “should,” “expect,” “believes,” “outlook,” “predict,” “forecast,” “objective,” “remain,” “anticipate,” “estimate,” “potential,” “continue,” “plan,” “project,” “targeting,” or the negative of these terms or other similar terminology. Forward-looking statements involve significant known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Masonite, or industry results, to be materially different from any future plans, goals, targets, objectives, results, performance or achievements expressed or implied by such forward-looking statements. As a result, such forward-looking statements should not be read as guarantees of future performance or results, should not be unduly relied upon, and will not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the forward-looking statements include, but are not limited to, restrictions during the pendency of the Acquisition that may impact our ability to pursue certain business opportunities or strategic transactions; risks related to diverting management’s attention from ongoing business operations and disrupting our relationships with third-parties and employees during the pendency of the Acquisition; the risk that the Acquisition may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the outcome of any legal proceedings that may be instituted against us related to the Acquisition or the agreement pursuant to which the Acquisition would be effected, downward trends in our end markets and in economic conditions; volatility and uncertainty in general business, economic conditions or financial markets, including the impact on the building product industries and housing markets; challenges pertaining to financing and the impact on reduced levels of residential new construction, residential repair, renovation and remodeling, and non-residential building construction activity due to increases in mortgage rates, changes in mortgage interest deductions and related tax changes and reduced availability of financing; the impact of energy and transportation price fluctuations; competition; the continued success of, and our ability to maintain relationships with, certain key customers in light of customer concentration and consolidation; our ability to innovate and accurately anticipate demand for our products; availability of raw materials, price fluctuations and supply chain disruptions; impacts on our business from weather and climate change; our ability to successfully consummate and integrate acquisitions; increases in labor costs, the availability of labor, or labor relations (i.e., disruptions, strikes or work stoppages); our ability to manage our operations including potential disruptions and manufacturing realignments (including related restructuring charges); product liability claims and product recalls; retention of key management personnel; the continuous operation of our information technology and enterprise resource planning systems and management of potential cyber security threats and attacks and data privacy requirements; our ability to generate sufficient cash flows to fund our capital expenditure requirements and to meet our debt service obligations, including our obligations under our senior notes, our term loan credit agreement (the "Term Loan Facility") and our asset-based revolving credit facility (the "ABL Facility"); limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes, the Term Loan Facility and the ABL Facility; fluctuating foreign exchange and interest rates; environmental and other government regulations, including the United States Foreign Corrupt Practices Act ("FCPA"), and any changes in such regulations; tariffs and evolving trade policy and friction between the United States and other countries, including China, and the impact of anti-dumping and countervailing duties; our ability to replace our expiring patents and to innovate and keep pace with technological developments. For additional information on identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see Masonite’s reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Masonite undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Non-GAAP Financial Measures and Related Information Our management reviews net sales and adjusted EBITDA (as defined below) to evaluate segment performance and allocate resources. Net assets are not allocated to the reportable segments. Adjusted EBITDA is a non-GAAP financial measure which does not have a standardized meaning under GAAP and is unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA should not be considered as an alternative to either net income or operating cash flows determined in accordance with GAAP. Additionally, adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not include certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA is defined as net income attributable to Masonite adjusted to exclude the following items: depreciation; amortization; share based compensation expense; loss (gain) on disposal of property, plant and equipment; registration and listing fees; restructuring costs; asset impairment; loss (gain) on disposal of subsidiaries; interest expense (income), net; loss on extinguishment of debt; other (income) expense, net; income tax expense (benefit); other items; loss (income) from discontinued operations, net of tax; and net income (loss) attributable to non-controlling interest. This definition of adjusted EBITDA differs from the definitions of EBITDA contained in the indentures governing the 2028 and 2030 Notes and the credit agreements governing the ABL Facility and Term Loan Facility. Adjusted EBITDA, as calculated under our ABL Facility or senior notes would also include, among other things, additional add-backs for amounts related to: cost savings projected by us in good faith to be realized as a result of actions taken or expected to be taken prior to or during the relevant period; fees and expenses in connection with certain plant closures and layoffs; and the amount of any restructuring charges, integration costs or other business optimization expenses or reserve deducted in the relevant period in computing consolidated net income, including any one-time costs incurred in connection with acquisitions. Adjusted EBITDA is used to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. Intersegment sales are recorded using market prices. We believe that adjusted EBITDA, from an operations standpoint, provides an appropriate way to measure and assess segment performance. Our management team has established the practice of reviewing the performance of each segment based on the measures of net sales and adjusted EBITDA. We believe that adjusted EBITDA is useful to users of the consolidated financial statements because it provides the same information that we use internally to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. The tables below set forth a reconciliation of net income (loss) attributable to Masonite to adjusted EBITDA for the periods indicated. Adjusted EBITDA margin is defined as adjusted EBITDA divided by Net Sales. Management believes this measure provides supplemental information on how successfully we operate our business. Adjusted EPS is diluted earnings (loss) per common share attributable to Masonite (EPS) less restructuring costs, asset impairment charges, loss (gain) on disposal of subsidiaries, loss on extinguishment of debt and other items, if any, that do not relate to Masonite’s underlying business performance (each net of related tax expense (benefit)). Management uses this measure to evaluate the overall performance of the Company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the Company from period to period. This measure may be inconsistent with similar measures presented by other companies. Free cash flow is a non-GAAP liquidity measure used by investors, financial analysts and management to help evaluate the Company's ability to generate cash to pursue opportunities that enhance shareholder value. Free cash flow is not a measure of residual cash flow available for discretionary expenditures due to our mandatory debt service requirements. As a conversion ratio, free cash flow is compared to adjusted net income (loss) attributable to Masonite. Free cash flow and free cash flow conversion are used internally by the Company for various purposes, including reporting results of operations to the Board of Directors of the Company and analysis of performance. Management believes that these measures provide a useful representation of our operational performance and liquidity; however, the measures should not be considered in isolation or as a substitute for net cash flow provided by operating activities or net income attributable to Masonite as prepared in accordance with GAAP. Certain amounts in the Condensed Consolidated Financial Statements and associated tables may not foot due to rounding. All percentages have been calculated using unrounded amounts. MASONITE INTERNATIONAL CORPORATION SALES RECONCILIATION AND ADJUSTED EBITDA BY REPORTABLE SEGMENT (In millions of U.S. dollars) (Unaudited) North America Residential Europe Architectural Corporate and Other Consolidated % Change Fourth quarter 2022 net sales $ 527.9 $ 60.7 $ 82.7 $ 4.7 $ 676.0 Acquisitions, net of divestitures 69.2 — — — 69.2 10.2 % Base volume (46.6 ) (8.3 ) (17.0 ) — (71.9 ) (10.6 )% Average unit price (12.9 ) (2.3 ) 4.4 (0.3 ) (11.1 ) (1.6 )% Components 0.4 (0.3 ) (3.0 ) (1.5 ) (4.4 ) (0.7 )% Foreign exchange (0.1 ) 2.9 — — 2.8 0.4 % Fourth quarter 2023 net sales $ 537.9 $ 52.7 $ 67.1 $ 2.9 $ 660.6 Year over year change, net sales 1.9 % (13.2 )% (18.9 )% (38.3 ) % (2.3 )% Fourth quarter 2022 Adjusted EBITDA $ 94.0 $ 4.5 $ (0.7 ) $ (6.8 ) $ 91.0 Fourth quarter 2023 Adjusted EBITDA 106.4 (0.8 ) (2.3 ) (16.5 ) 86.8 Year over year change, Adjusted EBITDA 13.2 % (118.6 )% (225.2 )% nm (4.6 )% North America Residential Europe Architectural Corporate and Other Consolidated % Change Year to date 2022 net sales $ 2,283.6 $ 280.8 $ 307.0 $ 20.3 $ 2,891.7 Acquisitions, net of divestitures 248.1 — — — 248.1 8.6 % Base volume (340.0 ) (32.0 ) (28.0 ) — (400.0 ) (13.8 )% Average unit price 61.1 (0.2 ) 56.4 0.9 118.2 4.1 % Components 1.4 (2.9 ) (10.4 ) (5.7 ) (17.6 ) (0.6 )% Foreign exchange (9.3 ) 1.3 (1.6 ) (0.1 ) (9.7 ) (0.3 )% Year to date 2023 net sales $ 2,244.9 $ 247.0 $ 323.4 $ 15.4 $ 2,830.7 Year over year change, net sales (1.7 )% (12.0 )% 5.3 % (24.1 ) % (2.1 ) % Year to date 2022 Adjusted EBITDA $ 461.8 $ 28.8 $ (3.7 ) $ (41.0 ) $ 445.8 Year to date 2023 Adjusted EBITDA 440.9 10.7 15.5 (48.4 ) 418.6 Year over year change, Adjusted EBITDA (4.5 )% (62.8 )% 512.5 % nm (6.1 )% MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of U.S. dollars, except share and per share amounts) (Unaudited) Three Months Ended Twelve months ended December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net sales $ 660,580 $ 675,970 $ 2,830,695 $ 2,891,687 Cost of goods sold 509,420 532,993 2,164,978 2,217,792 Gross profit 151,160 142,977 665,717 673,895 Gross profit as a % of net sales 22.9 % 21.2 % 23.5 % 23.3 % Selling, general and administration expenses 112,503 88,348 411,579 344,614 Selling, general and administration expenses as a % of net sales 17.0 % 13.1 % 14.5 % 11.9 % Restructuring costs 1,487 2,125 10,130 1,904 Asset impairment 33,063 — 33,063 — Loss on disposal of subsidiaries — 850 — 850 Operating income 4,107 51,654 210,945 326,527 Interest expense, net 11,169 10,233 50,822 41,331 Other (income) expense, net (506 ) (3,397 ) (2,087 ) (5,001 ) Income (loss) before income tax expense (6,556 ) 44,818 162,210 290,197 Income tax expense 2,867 12,251 40,941 71,753 Net income (loss) (9,423 ) 32,567 121,269 218,444 Less: net income attributable to non-controlling interests 572 1,468 3,042 4,211 Net income (loss) attributable to Masonite $ (9,995 ) $ 31,099 $ 118,227 $ 214,233 Basic earnings (loss) per common share attributable to Masonite $ (0.46 ) $ 1.40 $ 5.37 $ 9.51 Diluted earnings (loss) per common share attributable to Masonite $ (0.46 ) $ 1.38 $ 5.29 $ 9.41 Shares used in computing basic earnings per share 21,877,423 22,256,398 22,031,168 22,532,722 Shares used in computing diluted earnings per share 21,877,423 22,484,901 22,345,480 22,772,465 MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share amounts) (Unaudited) ASSETS December 31, 2023 January 1, 2023 Current assets: Cash and cash equivalents $ 137,414 $ 296,922 Restricted cash 11,926 11,999 Accounts receivable, net 326,224 375,918 Inventories, net 391,199 406,828 Prepaid expenses and other assets 60,092 55,051 Income taxes receivable 26,544 16,922 Total current assets 953,399 1,163,640 Property, plant and equipment, net 747,970 652,329 Operating lease right-of-use assets 202,806 160,695 Investment in equity investees 20,378 16,111 Goodwill 294,710 69,868 Intangible assets, net 402,941 136,056 Deferred income taxes 26,658 16,133 Other assets 36,517 33,346 Total assets $ 2,685,379 $ 2,248,178 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 113,208 $ 111,526 Accrued expenses 240,476 223,046 Income taxes payable 3,400 14,361 Current portion of long-term debt 37,500 — Total current liabilities 394,584 348,933 Long-term debt 1,049,384 866,116 Long-term operating lease liabilities 186,647 151,242 Deferred income taxes 120,278 79,590 Other liabilities 75,158 59,515 Total liabilities 1,826,051 1,505,396 Commitments and Contingencies Equity: Share capital: unlimited shares authorized, no par value, 21,835,474 and 22,155,035 shares issued and outstanding as of December 31, 2023, and January 1, 2023, respectively 525,232 520,003 Additional paid-in capital 231,332 226,514 Retained earnings 211,881 127,826 Accumulated other comprehensive loss (120,192 ) (142,224 ) Total equity attributable to Masonite 848,253 732,119 Equity attributable to non-controlling interests 11,075 10,663 Total equity 859,328 742,782 Total liabilities and equity $ 2,685,379 $ 2,248,178 MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars, except share amounts) (Unaudited) Year Ended Cash flows from operating activities: December 31, 2023 January 1, 2023 Net income $ 121,269 $ 218,444 Adjustments to reconcile net income to net cash flow provided by operating activities: Loss on disposal of subsidiaries — 850 Depreciation 91,145 71,168 Amortization 32,976 17,127 Share based compensation expense 23,638 21,771 Deferred income taxes (11,978 ) 6,024 Unrealized foreign exchange (gain) loss (334 ) 820 Share of income from equity investees, net of tax (3,888 ) (4,768 ) Dividend from equity investee 3,150 4,500 Pension and post-retirement funding, net of expense (1,943 ) (2,342 ) Non-cash accruals and interest 4,483 (511 ) Loss (gain) on sale of property, plant and equipment 4,434 (378 ) Asset impairment 33,063 — Changes in assets and liabilities, net of acquisitions: Accounts receivable 67,310 (39,056 ) Inventories 102,625 (66,372 ) Prepaid expenses and other assets (14,329 ) 7,266 Accounts payable and accrued expenses (23,459 ) (33,302 ) Other assets and liabilities (20,432 ) (12,044 ) Net cash flow provided by operating activities 407,730 189,197 Cash flows from investing activities: Additions to property, plant and equipment (112,660 ) (114,307 ) Acquisition of businesses, net of cash acquired (626,802 ) — Proceeds from sale of subsidiaries, net of cash disposed — (74 ) Proceeds from sale of property, plant and equipment 67 6,413 Proceeds from repayment of note receivable 12,000 — Other investing activities (6,437 ) (3,130 ) Net cash flow used in investing activities (733,832 ) (111,098 ) Cash flows from financing activities: Proceeds from issuance of long-term debt 250,000 — Repayments of long-term debt (28,125 ) — Payment of debt issuance costs (3,628 ) — Proceeds from borrowings on revolving credit facilities 185,019 — Repayments of borrowings on revolving credit facilities (185,019 ) — Tax withholding on share based awards (2,544 ) (3,359 ) Distributions to non-controlling interests (2,809 ) (4,550 ) Repurchases of common shares (46,559 ) (149,489 ) Net cash flow provided by (used in) financing activities 166,335 (157,398 ) Net foreign currency translation adjustment on cash 186 (3,285 ) Decrease in cash, cash equivalents and restricted cash (159,581 ) (82,584 ) Cash, cash equivalents and restricted cash, beginning of period 308,921 391,505 Cash, cash equivalents and restricted cash, at end of period $ 149,340 $ 308,921 MASONITE INTERNATIONAL CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands of U.S. dollars, except share and per share amounts) (Unaudited) Three Months Ended Twelve Months Ended (In thousands) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net income (loss) attributable to Masonite $ (9,995 ) $ 31,099 $ 118,227 $ 214,233 Add: Adjustments to net income (loss) attributable to Masonite: Restructuring costs 1,487 2,125 10,130 1,904 Asset impairment 33,063 — 33,063 — Loss on disposal of subsidiaries — 850 — 850 Other items (1) 5,962 6,829 12,311 6,829 Income tax impact of adjustments (1,905 ) (2,317 ) (5,484 ) (2,261 ) Adjusted net income attributable to Masonite $ 28,612 $ 38,586 $ 168,247 $ 221,555 Diluted earnings (loss) per common share attributable to Masonite ("EPS") $ (0.46 ) $ 1.38 $ 5.29 $ 9.41 Diluted adjusted earnings per common share attributable to Masonite ("Adjusted EPS") $ 1.29 $ 1.72 $ 7.53 $ 9.73 Shares used in computing EPS 21,877,423 22,484,901 22,345,480 22,772,465 Shares used in computing Adjusted EPS 22,212,089 22,484,901 22,345,480 22,772,465 ____________ (1) Other items include $5,962 and $12,311 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the three and twelve months ended December 31, 2023, and $6,829 in acquisition and due diligence related costs in the three and twelve months ended January 1, 2023. These costs were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. The weighted average number of shares outstanding utilized for the diluted EPS and diluted Adjusted EPS calculation contemplates the exercise of all currently outstanding SARs and the conversion of all RSUs. The dilutive effect of such equity awards is calculated based on the weighted average share price for each fiscal period using the treasury stock method. For all periods presented, common shares issuable for stock instruments which would have had an anti-dilutive impact under the treasury stock method have been excluded from the computation of diluted earnings per share. Three Months Ended December 31, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 81,784 $ (39,486 ) $ (5,590 ) $ (46,703 ) $ (9,995 ) Plus: Depreciation 14,455 2,328 3,057 3,950 23,790 Amortization 7,439 2,863 68 691 11,061 Share based compensation expense — — — 6,199 6,199 Loss on disposal of property, plant and equipment 950 7 158 — 1,115 Restructuring costs 1,328 158 1 — 1,487 Asset impairment — 33,063 — — 33,063 Interest expense, net — — — 11,169 11,169 Other expense (income), net 41 236 — (783 ) (506 ) Income tax expense — — — 2,867 2,867 Other items (1) — — — 5,962 5,962 Net income attributable to non-controlling interest 439 — — 133 572 Adjusted EBITDA $ 106,436 $ (831 ) $ (2,306 ) $ (16,515 ) $ 86,784 Net sales $ 537,895 $ 52,705 $ 67,071 $ 2,909 $ 660,580 Adjusted EBITDA Margin 19.8 % (1.6 )% (3.4 )% nm 13.1 % ____________ (1) Other items include $5,962 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the three months ended December 31, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Three Months Ended January 1, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 79,684 $ (1,211 ) $ (3,991 ) $ (43,383 ) $ 31,099 Plus: Depreciation 10,683 2,234 2,928 3,346 19,191 Amortization 353 2,873 165 572 3,963 Share based compensation expense — — — 5,520 5,520 Loss on disposal of property, plant and equipment 584 12 181 90 867 Restructuring costs 2,095 — 8 22 2,125 Loss on disposal of subsidiaries — — — 850 850 Interest expense, net — — — 10,233 10,233 Other (income) expense, net 1 559 — (3,957 ) (3,397 ) Income tax expense — — — 12,251 12,251 Other items (1) — — — 6,829 6,829 Net income attributable to non-controlling interest 617 — — 851 1,468 Adjusted EBITDA $ 94,017 $ 4,467 $ (709 ) $ (6,776 ) $ 90,999 Net sales $ 527,862 $ 60,730 $ 82,726 $ 4,652 $ 675,970 Adjusted EBITDA Margin 17.8 % 7.4 % (0.9 )% nm 13.5 % ____________ (1) Other items include $6,829 in acquisition and due diligence related costs in the three months ended January 1, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Twelve Months Ended December 31, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 352,604 $ (44,818 ) $ 1,189 $ (190,748 ) $ 118,227 Plus: Depreciation 55,927 9,635 12,016 13,567 91,145 Amortization 17,846 11,644 908 2,578 32,976 Share based compensation expense — — — 23,638 23,638 Loss on disposal of property, plant and equipment 3,732 68 485 149 4,434 Restructuring costs 8,481 158 864 627 10,130 Asset impairment — 33,063 — — 33,063 Interest expense, net — — — 50,822 50,822 Other expense (income), net 54 959 — (3,100 ) (2,087 ) Income tax expense — — — 40,941 40,941 Other items (1) — — — 12,311 12,311 Net income attributable to non-controlling interest 2,243 — — 799 3,042 Adjusted EBITDA $ 440,887 $ 10,709 $ 15,462 $ (48,416 ) $ 418,642 Net sales $ 2,244,882 $ 246,968 $ 323,449 $ 15,396 $ 2,830,695 Adjusted EBITDA Margin 19.6 % 4.3 % 4.8 % nm 14.8 % ____________ (1) Other items include $12,311 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the twelve months ended December 31, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Twelve Months Ended January 1, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 412,917 $ 6,851 $ (13,345 ) $ (192,190 ) $ 214,233 Plus: Depreciation 41,077 8,874 11,530 9,687 71,168 Amortization 1,881 12,187 844 2,215 17,127 Share based compensation expense — — — 21,771 21,771 Loss (gain) on disposal of property, plant and equipment 2,457 (1 ) (2,856 ) 22 (378 ) Restructuring costs 1,736 — 79 89 1,904 Loss on disposal of subsidiaries — — — 850 850 Interest expense, net — — — 41,331 41,331 Other (income) expense, net (791 ) 863 — (5,073 ) (5,001 ) Income tax expense — — — 71,753 71,753 Other items (1) — — — 6,829 6,829 Net income attributable to non-controlling interest 2,473 — — 1,738 4,211 Adjusted EBITDA $ 461,750 $ 28,774 $ (3,748 ) $ (40,978 ) $ 445,798 Net sales to external customers $ 2,283,642 $ 280,769 $ 306,983 $ 20,293 $ 2,891,687 Adjusted EBITDA Margin 20.2 % 10.2 % (1.2 )% nm 15.4 % ____________ (1) Other items include $6,829 in acquisition and due diligence related costs in the twelve months ended January 1, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. View source version on businesswire.com: https://www.businesswire.com/news/home/20240219257655/en/Contacts Richard Leland VP, FINANCE AND TREASURER rleland@masonite.com 813.739.1808 Marcus Devlin DIRECTOR, INVESTOR RELATIONS mdevlin@masonite.com 813.371.5839
Reported full year 2023 net sales of $2.8 billion and net income attributable to Masonite of $118 million Delivered full year adjusted EBITDA* of $419 million and a record high $408 million of operating cash flow Enhanced portfolio of product solutions with acquisitions of Endura Products and Fleetwood during 2023 Subsequent to year end, announced definitive agreement under which Owens Corning (NYSE: OC) will acquire all outstanding shares of Masonite for $133.00 per share in cash
Masonite International Corporation ("Masonite" or "the Company") (NYSE: DOOR) today announced results for the three months and full year ended December 31, 2023. ($ in millions, except per share amounts) 4Q23 4Q22 % Change FY23 FY22 % Change Net sales $661 $676 (2)% $2,831 $2,892 (2)% Net income (loss) attributable to Masonite ($10) $31 nm $118 $214 (45)% Diluted earnings (loss) per share ($0.46) $1.38 nm $5.29 $9.41 (44)% Adjusted EPS* $1.29 $1.72 (25%) $7.53 $9.73 (23)% Adjusted EBITDA* $87 $91 (5%) $419 $446 (6)% Adjusted EBITDA margin* 13.1% 13.5% (40 bps) 14.8% 15.4% (60 bps) "Thanks to strong execution of our 2023 playbook, Masonite was able to deliver net sales and adjusted EBITDA* within the guidance we announced at the beginning of the year and cash flow that significantly exceeded our initial guidance," said Howard Heckes, President and CEO. "Subsequent to year end, we announced a deal that will make Masonite a part of the Owens Corning family in 2024. We see this combination as a tremendous opportunity to accelerate our Doors That Do More™ strategy with an industry leader, while delivering substantial value to our shareholders.” * See "Non-GAAP Financial Measures and Related Information" for definition and reconciliation of non-GAAP measures. Fourth Quarter 2023 Discussion (All references to percent increase or decrease in the discussion below compare current fourth quarter 2023 results to those realized in the fourth quarter of 2022 unless otherwise noted.) Consolidated net sales were $661 million in the fourth quarter of 2023, a 2% decrease resulting from an 11% decrease in organic volume and a 2% decrease in average unit price (AUP), partially offset by a 10% increase from acquisitions and a 1% increase from favorable foreign exchange. North American Residential net sales were $538 million, a 2% increase, driven by a 13% increase from acquisitions, partially offset by a 9% decrease in organic volume and 2% lower AUP. Europe net sales were $53 million, a 13% decrease, driven by a 14% decrease in volume and a 4% decrease in AUP, partially offset by a 5% increase due to favorable foreign exchange. Architectural net sales were $67 million, a 19% decrease, driven by a 24% decrease in volume and component sales, partially offset by a 5% increase in AUP. Total Company gross profit was $151 million in the fourth quarter of 2023, an increase of 6%. Gross profit margin increased 170 basis points year over year to 22.9%, due to effective price-cost management, which was enough to offset the impact of lower volumes and inflation on wages, benefits and overhead. Selling, general and administration (SG&A) expenses were $113 million in the fourth quarter of 2023, an increase of 27%. The increase in SG&A was primarily driven by the addition of SG&A from acquisitions as well as year-over-year differences in the timing of adjustments to variable compensation expense. SG&A as a percentage of net sales was 17.0%. Net loss attributable to Masonite was $10 million in the fourth quarter of 2023 compared to net income of $31 million in the fourth quarter of 2022. The decrease was primarily driven by $33 million in charges related to goodwill impairment in the Europe reporting unit. Adjusted EBITDA* of $87 million in the fourth quarter of 2023 decreased 5% from $91 million. Diluted loss per share was $0.46 in the fourth quarter of 2023 compared to earnings of $1.38 in the comparable 2022 period. Adjusted EPS* was $1.29 in the fourth quarter of 2023 compared to $1.72 in the comparable 2022 period. Full Year 2023 Discussion (All references to percent increase or decrease in the discussion below compare current full year 2023 results to those realized in full year 2022 unless otherwise noted.) Consolidated net sales were $2,831 million in the year ended December 31, 2023, a 2% decrease resulting from a 14% decrease in organic volume and a 1% decrease in component sales, partially offset by a 9% increase from acquisitions and a 4% increase in AUP. North American Residential net sales were $2,245 million, a 2% decrease, driven by a 15% decrease in organic volume and a 1% decrease due to unfavorable foreign exchange, partially offset by an 11% increase from acquisitions and a 3% increase in AUP. Europe net sales were $247 million, a 12% decrease, driven by an 11% decrease in volume and a 1% decrease in component sales. AUP was flat year over year. Architectural net sales were $323 million, a 5% increase, driven by an 18% increase in AUP, partially offset by a 9% decrease in volume, a 3% decrease in the sale of components and a 1% decrease due to unfavorable foreign exchange. Total company gross profit was $666 million in the year ended December 31, 2023, a decrease of 1%. Gross profit margin increased 20 basis points to 23.5%, as higher AUP and cost savings initiatives were enough to offset the impact of lower volumes and inflation on wages, benefits and overhead. SG&A expenses were $412 million in the year ended December 31, 2023, an increase of 19% due largely to the year-over-year addition of SG&A from acquisitions, as well as wage and benefits inflation, higher professional fees, information technology costs and additional investments in strategic initiatives. SG&A as a percentage of net sales was 14.5%. Net income attributable to Masonite was $118 million in 2023 compared to $214 million in 2022. The decrease was primarily driven by higher SG&A expenses and $33 million in charges related to goodwill impairment in the Europe reporting unit. Adjusted EBITDA* of $419 million in 2023 decreased 6% from $446 million in 2022. Diluted earnings per share were $5.29 in the 2023 fiscal year compared to $9.41 in the comparable 2022 period. Adjusted EPS* was $7.53 in the 2023 fiscal year compared to $9.73 in the comparable 2022 period. Balance Sheet, Cash Flow and Capital Allocation At the end of the fourth quarter, total available liquidity was $437 million, inclusive of $300 million of availability under our ABL Facility and AR Sales Program and $137 million in unrestricted cash. Cash flow from operations was $408 million in 2023, up from $189 million in the comparable period of 2022. Capital expenditures were $113 million in the year ended December 31, 2023, down from $114 million in the comparable period of 2022. During the fourth quarter, Masonite repurchased approximately 84 thousand shares of stock for $7 million, at an average price of $88.88. In fiscal 2023, the Company repurchased approximately 518 thousand shares of stock for $47 million, at an average price of $89.96 per share. Acquisition by Owens Corning On February 8, 2024, Masonite and Owens Corning entered into a definitive agreement under which Owens Corning will acquire all of the outstanding shares of Masonite for $133.00 per share in cash. The transaction has been unanimously approved by both companies' Board of Directors and is subject to Masonite shareholders' approval, as well as various regulatory approvals and other customary closing conditions. The transaction is anticipated to close by the middle of 2024. In light of this pending transaction, Masonite has cancelled plans to hold a live conference call to discuss fourth quarter results. Additional information on the Company's results can be found in our Annual Report on Form 10-K to be filed with the SEC by February 29, 2024. About Masonite Masonite International Corporation is a leading global designer, manufacturer, marketer and distributor of interior and exterior doors, door system components and door systems for the new construction and repair, renovation and remodeling sectors of the residential and non-residential building construction markets. Since 1925, Masonite has provided its customers with innovative products and superior service at compelling values. Masonite currently serves approximately 6,600 customers globally. Additional information about Masonite can be found at www.masonite.com. Forward-looking Statements This press release contains forward-looking information and other forward-looking statements within the meaning of applicable Canadian and/or U.S. securities laws, including statements regarding the proposed transaction between us and Owens Corning (the “Acquisition”), including statements regarding the expected timetable for completing the Acquisition, the ability to complete the Acquisition and the expected benefits of the Acquisition. When used in this press release, such forward-looking statements may be identified by the use of such words as “may,” “might,” “could,” “will,” “would,” “should,” “expect,” “believes,” “outlook,” “predict,” “forecast,” “objective,” “remain,” “anticipate,” “estimate,” “potential,” “continue,” “plan,” “project,” “targeting,” or the negative of these terms or other similar terminology. Forward-looking statements involve significant known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Masonite, or industry results, to be materially different from any future plans, goals, targets, objectives, results, performance or achievements expressed or implied by such forward-looking statements. As a result, such forward-looking statements should not be read as guarantees of future performance or results, should not be unduly relied upon, and will not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the forward-looking statements include, but are not limited to, restrictions during the pendency of the Acquisition that may impact our ability to pursue certain business opportunities or strategic transactions; risks related to diverting management’s attention from ongoing business operations and disrupting our relationships with third-parties and employees during the pendency of the Acquisition; the risk that the Acquisition may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the outcome of any legal proceedings that may be instituted against us related to the Acquisition or the agreement pursuant to which the Acquisition would be effected, downward trends in our end markets and in economic conditions; volatility and uncertainty in general business, economic conditions or financial markets, including the impact on the building product industries and housing markets; challenges pertaining to financing and the impact on reduced levels of residential new construction, residential repair, renovation and remodeling, and non-residential building construction activity due to increases in mortgage rates, changes in mortgage interest deductions and related tax changes and reduced availability of financing; the impact of energy and transportation price fluctuations; competition; the continued success of, and our ability to maintain relationships with, certain key customers in light of customer concentration and consolidation; our ability to innovate and accurately anticipate demand for our products; availability of raw materials, price fluctuations and supply chain disruptions; impacts on our business from weather and climate change; our ability to successfully consummate and integrate acquisitions; increases in labor costs, the availability of labor, or labor relations (i.e., disruptions, strikes or work stoppages); our ability to manage our operations including potential disruptions and manufacturing realignments (including related restructuring charges); product liability claims and product recalls; retention of key management personnel; the continuous operation of our information technology and enterprise resource planning systems and management of potential cyber security threats and attacks and data privacy requirements; our ability to generate sufficient cash flows to fund our capital expenditure requirements and to meet our debt service obligations, including our obligations under our senior notes, our term loan credit agreement (the "Term Loan Facility") and our asset-based revolving credit facility (the "ABL Facility"); limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes, the Term Loan Facility and the ABL Facility; fluctuating foreign exchange and interest rates; environmental and other government regulations, including the United States Foreign Corrupt Practices Act ("FCPA"), and any changes in such regulations; tariffs and evolving trade policy and friction between the United States and other countries, including China, and the impact of anti-dumping and countervailing duties; our ability to replace our expiring patents and to innovate and keep pace with technological developments. For additional information on identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, see Masonite’s reports on Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC from time to time. Masonite undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Non-GAAP Financial Measures and Related Information Our management reviews net sales and adjusted EBITDA (as defined below) to evaluate segment performance and allocate resources. Net assets are not allocated to the reportable segments. Adjusted EBITDA is a non-GAAP financial measure which does not have a standardized meaning under GAAP and is unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA should not be considered as an alternative to either net income or operating cash flows determined in accordance with GAAP. Additionally, adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not include certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA is defined as net income attributable to Masonite adjusted to exclude the following items: depreciation; amortization; share based compensation expense; loss (gain) on disposal of property, plant and equipment; registration and listing fees; restructuring costs; asset impairment; loss (gain) on disposal of subsidiaries; interest expense (income), net; loss on extinguishment of debt; other (income) expense, net; income tax expense (benefit); other items; loss (income) from discontinued operations, net of tax; and net income (loss) attributable to non-controlling interest. This definition of adjusted EBITDA differs from the definitions of EBITDA contained in the indentures governing the 2028 and 2030 Notes and the credit agreements governing the ABL Facility and Term Loan Facility. Adjusted EBITDA, as calculated under our ABL Facility or senior notes would also include, among other things, additional add-backs for amounts related to: cost savings projected by us in good faith to be realized as a result of actions taken or expected to be taken prior to or during the relevant period; fees and expenses in connection with certain plant closures and layoffs; and the amount of any restructuring charges, integration costs or other business optimization expenses or reserve deducted in the relevant period in computing consolidated net income, including any one-time costs incurred in connection with acquisitions. Adjusted EBITDA is used to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. Intersegment sales are recorded using market prices. We believe that adjusted EBITDA, from an operations standpoint, provides an appropriate way to measure and assess segment performance. Our management team has established the practice of reviewing the performance of each segment based on the measures of net sales and adjusted EBITDA. We believe that adjusted EBITDA is useful to users of the consolidated financial statements because it provides the same information that we use internally to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. The tables below set forth a reconciliation of net income (loss) attributable to Masonite to adjusted EBITDA for the periods indicated. Adjusted EBITDA margin is defined as adjusted EBITDA divided by Net Sales. Management believes this measure provides supplemental information on how successfully we operate our business. Adjusted EPS is diluted earnings (loss) per common share attributable to Masonite (EPS) less restructuring costs, asset impairment charges, loss (gain) on disposal of subsidiaries, loss on extinguishment of debt and other items, if any, that do not relate to Masonite’s underlying business performance (each net of related tax expense (benefit)). Management uses this measure to evaluate the overall performance of the Company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the Company from period to period. This measure may be inconsistent with similar measures presented by other companies. Free cash flow is a non-GAAP liquidity measure used by investors, financial analysts and management to help evaluate the Company's ability to generate cash to pursue opportunities that enhance shareholder value. Free cash flow is not a measure of residual cash flow available for discretionary expenditures due to our mandatory debt service requirements. As a conversion ratio, free cash flow is compared to adjusted net income (loss) attributable to Masonite. Free cash flow and free cash flow conversion are used internally by the Company for various purposes, including reporting results of operations to the Board of Directors of the Company and analysis of performance. Management believes that these measures provide a useful representation of our operational performance and liquidity; however, the measures should not be considered in isolation or as a substitute for net cash flow provided by operating activities or net income attributable to Masonite as prepared in accordance with GAAP. Certain amounts in the Condensed Consolidated Financial Statements and associated tables may not foot due to rounding. All percentages have been calculated using unrounded amounts. MASONITE INTERNATIONAL CORPORATION SALES RECONCILIATION AND ADJUSTED EBITDA BY REPORTABLE SEGMENT (In millions of U.S. dollars) (Unaudited) North America Residential Europe Architectural Corporate and Other Consolidated % Change Fourth quarter 2022 net sales $ 527.9 $ 60.7 $ 82.7 $ 4.7 $ 676.0 Acquisitions, net of divestitures 69.2 — — — 69.2 10.2 % Base volume (46.6 ) (8.3 ) (17.0 ) — (71.9 ) (10.6 )% Average unit price (12.9 ) (2.3 ) 4.4 (0.3 ) (11.1 ) (1.6 )% Components 0.4 (0.3 ) (3.0 ) (1.5 ) (4.4 ) (0.7 )% Foreign exchange (0.1 ) 2.9 — — 2.8 0.4 % Fourth quarter 2023 net sales $ 537.9 $ 52.7 $ 67.1 $ 2.9 $ 660.6 Year over year change, net sales 1.9 % (13.2 )% (18.9 )% (38.3 ) % (2.3 )% Fourth quarter 2022 Adjusted EBITDA $ 94.0 $ 4.5 $ (0.7 ) $ (6.8 ) $ 91.0 Fourth quarter 2023 Adjusted EBITDA 106.4 (0.8 ) (2.3 ) (16.5 ) 86.8 Year over year change, Adjusted EBITDA 13.2 % (118.6 )% (225.2 )% nm (4.6 )% North America Residential Europe Architectural Corporate and Other Consolidated % Change Year to date 2022 net sales $ 2,283.6 $ 280.8 $ 307.0 $ 20.3 $ 2,891.7 Acquisitions, net of divestitures 248.1 — — — 248.1 8.6 % Base volume (340.0 ) (32.0 ) (28.0 ) — (400.0 ) (13.8 )% Average unit price 61.1 (0.2 ) 56.4 0.9 118.2 4.1 % Components 1.4 (2.9 ) (10.4 ) (5.7 ) (17.6 ) (0.6 )% Foreign exchange (9.3 ) 1.3 (1.6 ) (0.1 ) (9.7 ) (0.3 )% Year to date 2023 net sales $ 2,244.9 $ 247.0 $ 323.4 $ 15.4 $ 2,830.7 Year over year change, net sales (1.7 )% (12.0 )% 5.3 % (24.1 ) % (2.1 ) % Year to date 2022 Adjusted EBITDA $ 461.8 $ 28.8 $ (3.7 ) $ (41.0 ) $ 445.8 Year to date 2023 Adjusted EBITDA 440.9 10.7 15.5 (48.4 ) 418.6 Year over year change, Adjusted EBITDA (4.5 )% (62.8 )% 512.5 % nm (6.1 )% MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of U.S. dollars, except share and per share amounts) (Unaudited) Three Months Ended Twelve months ended December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net sales $ 660,580 $ 675,970 $ 2,830,695 $ 2,891,687 Cost of goods sold 509,420 532,993 2,164,978 2,217,792 Gross profit 151,160 142,977 665,717 673,895 Gross profit as a % of net sales 22.9 % 21.2 % 23.5 % 23.3 % Selling, general and administration expenses 112,503 88,348 411,579 344,614 Selling, general and administration expenses as a % of net sales 17.0 % 13.1 % 14.5 % 11.9 % Restructuring costs 1,487 2,125 10,130 1,904 Asset impairment 33,063 — 33,063 — Loss on disposal of subsidiaries — 850 — 850 Operating income 4,107 51,654 210,945 326,527 Interest expense, net 11,169 10,233 50,822 41,331 Other (income) expense, net (506 ) (3,397 ) (2,087 ) (5,001 ) Income (loss) before income tax expense (6,556 ) 44,818 162,210 290,197 Income tax expense 2,867 12,251 40,941 71,753 Net income (loss) (9,423 ) 32,567 121,269 218,444 Less: net income attributable to non-controlling interests 572 1,468 3,042 4,211 Net income (loss) attributable to Masonite $ (9,995 ) $ 31,099 $ 118,227 $ 214,233 Basic earnings (loss) per common share attributable to Masonite $ (0.46 ) $ 1.40 $ 5.37 $ 9.51 Diluted earnings (loss) per common share attributable to Masonite $ (0.46 ) $ 1.38 $ 5.29 $ 9.41 Shares used in computing basic earnings per share 21,877,423 22,256,398 22,031,168 22,532,722 Shares used in computing diluted earnings per share 21,877,423 22,484,901 22,345,480 22,772,465 MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share amounts) (Unaudited) ASSETS December 31, 2023 January 1, 2023 Current assets: Cash and cash equivalents $ 137,414 $ 296,922 Restricted cash 11,926 11,999 Accounts receivable, net 326,224 375,918 Inventories, net 391,199 406,828 Prepaid expenses and other assets 60,092 55,051 Income taxes receivable 26,544 16,922 Total current assets 953,399 1,163,640 Property, plant and equipment, net 747,970 652,329 Operating lease right-of-use assets 202,806 160,695 Investment in equity investees 20,378 16,111 Goodwill 294,710 69,868 Intangible assets, net 402,941 136,056 Deferred income taxes 26,658 16,133 Other assets 36,517 33,346 Total assets $ 2,685,379 $ 2,248,178 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 113,208 $ 111,526 Accrued expenses 240,476 223,046 Income taxes payable 3,400 14,361 Current portion of long-term debt 37,500 — Total current liabilities 394,584 348,933 Long-term debt 1,049,384 866,116 Long-term operating lease liabilities 186,647 151,242 Deferred income taxes 120,278 79,590 Other liabilities 75,158 59,515 Total liabilities 1,826,051 1,505,396 Commitments and Contingencies Equity: Share capital: unlimited shares authorized, no par value, 21,835,474 and 22,155,035 shares issued and outstanding as of December 31, 2023, and January 1, 2023, respectively 525,232 520,003 Additional paid-in capital 231,332 226,514 Retained earnings 211,881 127,826 Accumulated other comprehensive loss (120,192 ) (142,224 ) Total equity attributable to Masonite 848,253 732,119 Equity attributable to non-controlling interests 11,075 10,663 Total equity 859,328 742,782 Total liabilities and equity $ 2,685,379 $ 2,248,178 MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of U.S. dollars, except share amounts) (Unaudited) Year Ended Cash flows from operating activities: December 31, 2023 January 1, 2023 Net income $ 121,269 $ 218,444 Adjustments to reconcile net income to net cash flow provided by operating activities: Loss on disposal of subsidiaries — 850 Depreciation 91,145 71,168 Amortization 32,976 17,127 Share based compensation expense 23,638 21,771 Deferred income taxes (11,978 ) 6,024 Unrealized foreign exchange (gain) loss (334 ) 820 Share of income from equity investees, net of tax (3,888 ) (4,768 ) Dividend from equity investee 3,150 4,500 Pension and post-retirement funding, net of expense (1,943 ) (2,342 ) Non-cash accruals and interest 4,483 (511 ) Loss (gain) on sale of property, plant and equipment 4,434 (378 ) Asset impairment 33,063 — Changes in assets and liabilities, net of acquisitions: Accounts receivable 67,310 (39,056 ) Inventories 102,625 (66,372 ) Prepaid expenses and other assets (14,329 ) 7,266 Accounts payable and accrued expenses (23,459 ) (33,302 ) Other assets and liabilities (20,432 ) (12,044 ) Net cash flow provided by operating activities 407,730 189,197 Cash flows from investing activities: Additions to property, plant and equipment (112,660 ) (114,307 ) Acquisition of businesses, net of cash acquired (626,802 ) — Proceeds from sale of subsidiaries, net of cash disposed — (74 ) Proceeds from sale of property, plant and equipment 67 6,413 Proceeds from repayment of note receivable 12,000 — Other investing activities (6,437 ) (3,130 ) Net cash flow used in investing activities (733,832 ) (111,098 ) Cash flows from financing activities: Proceeds from issuance of long-term debt 250,000 — Repayments of long-term debt (28,125 ) — Payment of debt issuance costs (3,628 ) — Proceeds from borrowings on revolving credit facilities 185,019 — Repayments of borrowings on revolving credit facilities (185,019 ) — Tax withholding on share based awards (2,544 ) (3,359 ) Distributions to non-controlling interests (2,809 ) (4,550 ) Repurchases of common shares (46,559 ) (149,489 ) Net cash flow provided by (used in) financing activities 166,335 (157,398 ) Net foreign currency translation adjustment on cash 186 (3,285 ) Decrease in cash, cash equivalents and restricted cash (159,581 ) (82,584 ) Cash, cash equivalents and restricted cash, beginning of period 308,921 391,505 Cash, cash equivalents and restricted cash, at end of period $ 149,340 $ 308,921 MASONITE INTERNATIONAL CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES (In thousands of U.S. dollars, except share and per share amounts) (Unaudited) Three Months Ended Twelve Months Ended (In thousands) December 31, 2023 January 1, 2023 December 31, 2023 January 1, 2023 Net income (loss) attributable to Masonite $ (9,995 ) $ 31,099 $ 118,227 $ 214,233 Add: Adjustments to net income (loss) attributable to Masonite: Restructuring costs 1,487 2,125 10,130 1,904 Asset impairment 33,063 — 33,063 — Loss on disposal of subsidiaries — 850 — 850 Other items (1) 5,962 6,829 12,311 6,829 Income tax impact of adjustments (1,905 ) (2,317 ) (5,484 ) (2,261 ) Adjusted net income attributable to Masonite $ 28,612 $ 38,586 $ 168,247 $ 221,555 Diluted earnings (loss) per common share attributable to Masonite ("EPS") $ (0.46 ) $ 1.38 $ 5.29 $ 9.41 Diluted adjusted earnings per common share attributable to Masonite ("Adjusted EPS") $ 1.29 $ 1.72 $ 7.53 $ 9.73 Shares used in computing EPS 21,877,423 22,484,901 22,345,480 22,772,465 Shares used in computing Adjusted EPS 22,212,089 22,484,901 22,345,480 22,772,465 ____________ (1) Other items include $5,962 and $12,311 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the three and twelve months ended December 31, 2023, and $6,829 in acquisition and due diligence related costs in the three and twelve months ended January 1, 2023. These costs were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. The weighted average number of shares outstanding utilized for the diluted EPS and diluted Adjusted EPS calculation contemplates the exercise of all currently outstanding SARs and the conversion of all RSUs. The dilutive effect of such equity awards is calculated based on the weighted average share price for each fiscal period using the treasury stock method. For all periods presented, common shares issuable for stock instruments which would have had an anti-dilutive impact under the treasury stock method have been excluded from the computation of diluted earnings per share. Three Months Ended December 31, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 81,784 $ (39,486 ) $ (5,590 ) $ (46,703 ) $ (9,995 ) Plus: Depreciation 14,455 2,328 3,057 3,950 23,790 Amortization 7,439 2,863 68 691 11,061 Share based compensation expense — — — 6,199 6,199 Loss on disposal of property, plant and equipment 950 7 158 — 1,115 Restructuring costs 1,328 158 1 — 1,487 Asset impairment — 33,063 — — 33,063 Interest expense, net — — — 11,169 11,169 Other expense (income), net 41 236 — (783 ) (506 ) Income tax expense — — — 2,867 2,867 Other items (1) — — — 5,962 5,962 Net income attributable to non-controlling interest 439 — — 133 572 Adjusted EBITDA $ 106,436 $ (831 ) $ (2,306 ) $ (16,515 ) $ 86,784 Net sales $ 537,895 $ 52,705 $ 67,071 $ 2,909 $ 660,580 Adjusted EBITDA Margin 19.8 % (1.6 )% (3.4 )% nm 13.1 % ____________ (1) Other items include $5,962 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the three months ended December 31, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Three Months Ended January 1, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 79,684 $ (1,211 ) $ (3,991 ) $ (43,383 ) $ 31,099 Plus: Depreciation 10,683 2,234 2,928 3,346 19,191 Amortization 353 2,873 165 572 3,963 Share based compensation expense — — — 5,520 5,520 Loss on disposal of property, plant and equipment 584 12 181 90 867 Restructuring costs 2,095 — 8 22 2,125 Loss on disposal of subsidiaries — — — 850 850 Interest expense, net — — — 10,233 10,233 Other (income) expense, net 1 559 — (3,957 ) (3,397 ) Income tax expense — — — 12,251 12,251 Other items (1) — — — 6,829 6,829 Net income attributable to non-controlling interest 617 — — 851 1,468 Adjusted EBITDA $ 94,017 $ 4,467 $ (709 ) $ (6,776 ) $ 90,999 Net sales $ 527,862 $ 60,730 $ 82,726 $ 4,652 $ 675,970 Adjusted EBITDA Margin 17.8 % 7.4 % (0.9 )% nm 13.5 % ____________ (1) Other items include $6,829 in acquisition and due diligence related costs in the three months ended January 1, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Twelve Months Ended December 31, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 352,604 $ (44,818 ) $ 1,189 $ (190,748 ) $ 118,227 Plus: Depreciation 55,927 9,635 12,016 13,567 91,145 Amortization 17,846 11,644 908 2,578 32,976 Share based compensation expense — — — 23,638 23,638 Loss on disposal of property, plant and equipment 3,732 68 485 149 4,434 Restructuring costs 8,481 158 864 627 10,130 Asset impairment — 33,063 — — 33,063 Interest expense, net — — — 50,822 50,822 Other expense (income), net 54 959 — (3,100 ) (2,087 ) Income tax expense — — — 40,941 40,941 Other items (1) — — — 12,311 12,311 Net income attributable to non-controlling interest 2,243 — — 799 3,042 Adjusted EBITDA $ 440,887 $ 10,709 $ 15,462 $ (48,416 ) $ 418,642 Net sales $ 2,244,882 $ 246,968 $ 323,449 $ 15,396 $ 2,830,695 Adjusted EBITDA Margin 19.6 % 4.3 % 4.8 % nm 14.8 % ____________ (1) Other items include $12,311 in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation in the twelve months ended December 31, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. Twelve Months Ended January 1, 2023 (In thousands) North American Residential Europe Architectural Corporate & Other Total Net income (loss) attributable to Masonite $ 412,917 $ 6,851 $ (13,345 ) $ (192,190 ) $ 214,233 Plus: Depreciation 41,077 8,874 11,530 9,687 71,168 Amortization 1,881 12,187 844 2,215 17,127 Share based compensation expense — — — 21,771 21,771 Loss (gain) on disposal of property, plant and equipment 2,457 (1 ) (2,856 ) 22 (378 ) Restructuring costs 1,736 — 79 89 1,904 Loss on disposal of subsidiaries — — — 850 850 Interest expense, net — — — 41,331 41,331 Other (income) expense, net (791 ) 863 — (5,073 ) (5,001 ) Income tax expense — — — 71,753 71,753 Other items (1) — — — 6,829 6,829 Net income attributable to non-controlling interest 2,473 — — 1,738 4,211 Adjusted EBITDA $ 461,750 $ 28,774 $ (3,748 ) $ (40,978 ) $ 445,798 Net sales to external customers $ 2,283,642 $ 280,769 $ 306,983 $ 20,293 $ 2,891,687 Adjusted EBITDA Margin 20.2 % 10.2 % (1.2 )% nm 15.4 % ____________ (1) Other items include $6,829 in acquisition and due diligence related costs in the twelve months ended January 1, 2023, and were recorded in selling, general and administration expenses within the condensed consolidated statements of comprehensive income. 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Richard Leland VP, FINANCE AND TREASURER rleland@masonite.com 813.739.1808 Marcus Devlin DIRECTOR, INVESTOR RELATIONS mdevlin@masonite.com 813.371.5839