Masonite International Corporation ("Masonite" or the "Company")
(NYSE: DOOR) today announced results for the three months ended
March 31, 2024.
($ in millions, except per share
amounts)
1Q24
1Q23
% Change
Net sales
$668
$726
(8%)
Net income attributable to
Masonite
$61
$38
+59%
% of net sales
9.1%
5.3%
+380 bps
Diluted earnings per share
$2.74
$1.71
+60%
Adjusted EPS*
$1.29
$1.88
(31%)
Adjusted EBITDA*
$97
$106
(9%)
% of net sales
14.5%
14.6%
(10 bps)
“Although end-market conditions remain choppy, we saw a
sequential improvement in performance as we moved through the
quarter,” said Howard Heckes, President and CEO. “Disciplined
price-cost management continues to benefit margins in our North
American Residential segment and the integration of the Fleetwood
acquisition is progressing according to plan. Subsequent to the
quarter end we announced the pending sale of the Architectural
business segment, which further sharpens our focus on capturing
opportunities in our residential end markets. Now that our
shareholders have approved the pending acquisition by Owens
Corning, we look forward to closing the transaction and becoming
part of the larger, combined entity.”
First Quarter 2024
Discussion (All references to percent increase or
decrease in the discussion below compare first quarter 2024 results
to results from the first quarter of 2023 unless otherwise
noted.)
Consolidated net sales were $668 million in the first quarter of
2024, an 8% decrease resulting from a 10% decline in volume, a 1%
decrease in average unit price (AUP) and a 1% decrease in sales of
door components, partially offset by a 4% increase from the
Fleetwood acquisition.
Total Company gross profit was $165 million in the first quarter
of 2024, down 3% as positive contributions from price-cost
management initiatives and the Fleetwood acquisition were more than
offset by impacts of lower volumes. Gross profit as a percentage of
net sales, however, increased 130 basis points to 24.8%.
Selling, general and administration (SG&A) expenses were
$153 million in the first quarter of 2024, an increase of 50% due
primarily to an increase in acquisition and due diligence-related
costs, including those related to our previously contemplated
acquisition of PGTI, as well as incremental acquired SG&A from
Fleetwood. SG&A as a percentage of net sales increased 880
basis points to 23% compared to the first quarter of 2023.
Net income attributable to Masonite was $61 million in the first
quarter of 2024, an increase of 59% primarily driven by an increase
in other income related to receipt of the PGTI termination fee,
partially offset by acquisition and due diligence costs, as well as
higher income tax expense.
Adjusted EBITDA* was $97 million in the first quarter of 2024, a
decrease of 9% driven primarily by the impact of volume declines.
Diluted earnings per share were $2.74, an increase of 60% compared
to $1.71 in the comparable 2023 period. Diluted adjusted earnings
per share* were $1.29 compared to $1.88 in the comparable 2023
period.
Balance Sheet, Cash Flow and Capital
Allocation At the end of the first quarter, total
available liquidity was $507 million, inclusive of $230 million in
unrestricted cash and $277 million of availability under our ABL
Facility and AR Sales Program.
Cash provided by operations was $133 million for the three
months ended March 31, 2024, as compared to $56 million in the
prior year period. Capital expenditures were $26 million for the
three months ended March 31, 2024, a decrease from $28 million in
the comparable period of 2023.
During the first quarter, Masonite did not repurchase any shares
of stock.
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.
On April 25, 2024 Masonite shareholders voted to approve the
combination and the transaction is anticipated to close in May
2024, subject to satisfaction of the remaining customary closing
conditions.
In light of this pending transaction, Masonite does not plan to
hold a live conference call to discuss first quarter results.
Additional information on the Company's results can be found on our
Form 10-Q to be filed with the Securities and Exchange Commission
on May 7, 2024.
* See "Non-GAAP Financial Measures and
Related Information" for definition and reconciliation of non-GAAP
measures.
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 the integration of
the Fleetwood acquisition, statements regarding the proposed
disposition of our architectural business segment, 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," "progressing," "potential," "continue," "plan,"
"project," "showing," "yielding," "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
mergers, acquisitions and dispositions, including the pending
disposition of our Architectural reporting segment; 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, as applicable:
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 expense (income), 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 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.
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 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
Three Months Ended
March 31,
2024
April 2,
2023
Net sales
$
668,339
$
725,984
Cost of goods sold
502,869
555,493
Gross profit
165,470
170,491
Gross profit as a % of net sales
24.8
%
23.5
%
Selling, general and administration
expenses
152,644
101,705
Selling, general and administration
expenses as a % of net sales
22.8
%
14.0
%
Restructuring costs
1,394
3,678
Operating income
11,432
65,108
Interest expense, net
12,022
14,252
Other (income) expense, net
(85,250
)
52
Income before income tax
expense
84,660
50,804
Income tax expense
23,278
11,360
Net income
61,382
39,444
Less: net income attributable to
non-controlling interests
327
953
Net income attributable to
Masonite
$
61,055
$
38,491
Basic earnings per common share
attributable to Masonite
$
2.79
$
1.74
Diluted earnings per common share
attributable to Masonite
$
2.74
$
1.71
Shares used in computing basic earnings
per share
21,891,366
22,183,068
Shares used in computing diluted earnings
per share
22,322,748
22,480,233
MASONITE INTERNATIONAL
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of
U.S. dollars, except share amounts) (Unaudited)
ASSETS
March 31,
2024
December 31,
2023
Current assets:
Cash and cash equivalents
$
230,441
$
137,414
Restricted cash
12,426
11,926
Accounts receivable, net
336,472
326,224
Inventories, net
383,866
391,199
Prepaid expenses and other assets
60,168
60,092
Income taxes receivable
27,928
26,544
Total current assets
1,051,301
953,399
Property, plant and equipment, net
743,900
747,970
Operating lease right-of-use assets
235,408
202,806
Investment in equity investees
21,360
20,378
Goodwill
294,846
294,710
Intangible assets, net
391,913
402,941
Deferred income taxes
10,420
26,658
Other assets
37,570
36,517
Total assets
$
2,786,718
$
2,685,379
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
151,392
$
113,208
Accrued expenses
225,500
240,476
Income taxes payable
11,281
3,400
Current portion of long-term debt
37,500
37,500
Total current liabilities
425,673
394,584
Long-term debt
1,040,536
1,049,384
Long-term operating lease liabilities
226,058
186,647
Deferred income taxes
116,348
120,278
Other liabilities
58,049
75,158
Total liabilities
1,866,664
1,826,051
Commitments and Contingencies
Equity:
Share capital: unlimited shares
authorized, no par value, 21,976,156 and 21,835,474 shares issued
and outstanding as of March 31, 2024, and December 31, 2023,
respectively
538,746
525,232
Additional paid-in capital
223,442
231,332
Retained earnings
272,936
211,881
Accumulated other comprehensive loss
(124,735
)
(120,192
)
Total equity attributable to
Masonite
910,389
848,253
Equity attributable to non-controlling
interests
9,665
11,075
Total equity
920,054
859,328
Total liabilities and equity
$
2,786,718
$
2,685,379
MASONITE INTERNATIONAL
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands of U.S. dollars, except share amounts)
(Unaudited)
Three Months Ended
Cash flows from operating
activities:
March 31,
2024
April 2,
2023
Net income
$
61,382
$
39,444
Adjustments to reconcile net income to net
cash flow provided by operating activities:
Depreciation
27,568
21,485
Amortization
10,876
7,421
Share based compensation expense
6,930
6,054
Deferred income taxes
12,196
885
Unrealized foreign exchange gain
(234
)
(97
)
Share of income from equity investees, net
of tax
(838
)
(748
)
Pension and post-retirement funding, net
of expense
(683
)
(509
)
Non-cash accruals and interest
1,420
1,445
Loss on sale of property, plant and
equipment
1,068
1,038
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable
(6,692
)
(5,457
)
Inventories
6,494
34,024
Prepaid expenses and other assets
(197
)
(7,730
)
Accounts payable and accrued expenses
8,362
(33,223
)
Other assets and liabilities
5,670
(7,685
)
Net cash flow provided by operating
activities
133,322
56,347
Cash flows from investing
activities:
Additions to property, plant and
equipment
(25,764
)
(27,827
)
Acquisition of businesses, net of cash
acquired
(392
)
(353,618
)
Proceeds from sale of property, plant and
equipment
—
4
Proceeds from repayment of note
receivable
—
12,000
Other investing activities
(455
)
(3,511
)
Net cash flow used in investing
activities
(26,611
)
(372,952
)
Cash flows from financing
activities:
Proceeds from issuance of long-term
debt
—
250,000
Repayments of long-term debt
(9,375
)
—
Payment of debt issuance costs
—
(3,628
)
Proceeds from borrowings on revolving
credit facilities
—
100,000
Repayments of borrowings on revolving
credit facilities
—
(100,000
)
Tax withholding on share based awards
(2,094
)
(1,960
)
Distributions to non-controlling
interests
(1,582
)
(554
)
Repurchases of common shares
—
(14,717
)
Net cash flow (used in) provided by
financing activities
(13,051
)
229,141
Net foreign currency translation
adjustment on cash
(133
)
855
Increase (decrease) in cash, cash
equivalents and restricted cash
93,527
(86,609
)
Cash, cash equivalents and restricted
cash, beginning of period
149,340
308,921
Cash, cash equivalents and restricted
cash, at end of period
$
242,867
$
222,312
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
(In thousands)
March 31,
2024
April 2,
2023
Net income attributable to Masonite
$
61,055
$
38,491
Add: Adjustments to net income
attributable to Masonite:
Restructuring costs (benefit)
1,394
3,678
Other (income) expense, net (1)
(85,250
)
—
Other items (2)
37,832
1,381
Income tax impact of adjustments
13,838
(1,316
)
Adjusted net income attributable to
Masonite
$
28,869
$
42,234
Diluted earnings per common share
attributable to Masonite ("EPS")
$
2.74
$
1.71
Diluted adjusted earnings per common share
attributable to Masonite ("Adjusted EPS")
$
1.29
$
1.88
Shares used in computing EPS and Adjusted
EPS
22,322,748
22,480,233
____________
(1)
Other expense (income), net includes
$85,250 in income primarily related to the PGTI termination fee in
the three months ended March 31, 2024.
(2)
Other items include $37,832 and $1,381 in
acquisition and due diligence related costs in the three months
ended March 31, 2024 and April 2, 2023, respectively, and were
recorded in selling, general and administration expenses within the
condensed consolidated statements of income and 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 March 31,
2024
(In thousands)
North
American
Residential
Europe
Architectural
Corporate &
Other
Total
Net income (loss) attributable to
Masonite
$
83,282
$
(4,286
)
$
1,595
$
(19,536
)
$
61,055
Plus:
Depreciation
15,392
2,285
3,070
6,821
27,568
Amortization
7,137
2,836
185
718
10,876
Share based compensation expense
—
—
—
6,930
6,930
Loss (gain) on disposal of property, plant
and equipment
95
7
(34
)
1,000
1,068
Restructuring costs (benefits)
450
961
—
(17
)
1,394
Interest expense, net
—
—
—
12,022
12,022
Other expense (income), net (1)
11
138
—
(85,399
)
(85,250
)
Income tax expense
—
—
—
23,278
23,278
Other items (2)
145
—
—
37,687
37,832
Net income attributable to non-controlling
interest
289
—
—
38
327
Adjusted EBITDA
$
106,801
$
1,941
$
4,816
$
(16,458
)
$
97,100
Net sales
$
530,643
$
58,392
$
75,539
$
3,765
$
668,339
Adjusted EBITDA margin
20.1
%
3.3
%
6.4
%
nm
14.5
%
____________
(1)
Other expense (income), net include
$85,250 in income primarily related to the PGTI termination fee in
the three months ended March 31, 2024.
(2)
Other items include $37,832 in acquisition
and due diligence related costs in the three months ended March 31,
2024, and were recorded in selling, general and administration
expenses within the condensed consolidated statements of income and
comprehensive income.
Three Months Ended April 2,
2023
(In thousands)
North
American
Residential
Europe
Architectural
Corporate &
Other
Total
Net income (loss) attributable to
Masonite
$
86,755
$
203
$
1,465
$
(49,932
)
$
38,491
Plus:
Depreciation
13,232
2,204
2,957
3,092
21,485
Amortization
3,790
2,808
252
571
7,421
Share based compensation expense
—
—
—
6,054
6,054
Loss (gain) on disposal of property, plant
and equipment
1,040
(3
)
(13
)
14
1,038
Restructuring costs
2,380
—
684
614
3,678
Interest expense, net
—
—
—
14,252
14,252
Other (income) expense, net
(28
)
(61
)
—
141
52
Income tax expense
—
—
—
11,360
11,360
Other items (1)
—
—
5
1,376
1,381
Net income attributable to non-controlling
interest
712
—
—
241
953
Adjusted EBITDA
$
107,881
$
5,151
$
5,350
$
(12,217
)
$
106,165
Net sales
$
569,039
$
63,694
$
87,902
$
5,349
$
725,984
Adjusted EBITDA margin
19.0
%
8.1
%
6.1
%
nm
14.6
%
____________
(1)
Other items include $1,381 in acquisition
and due diligence related costs in the three months ended April 2,
2023, and were recorded in selling, general and administration
expenses within the condensed consolidated statements of income and
comprehensive income..
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240506609817/en/
Richard Leland VP, FINANCE AND TREASURER
rleland@masonite.com 813.739.1808
Marcus Devlin DIRECTOR, INVESTOR RELATIONS
mdevlin@masonite.com 813.371.5839
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