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Masonite International Corporation Reports 2023 Fourth Quarter and Full Year Financial Results

  • 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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