EX-99.1 2 a20151104earningsrelease.htm EXHIBIT 99.1 Exhibit

Exhibit 99.1


                                
Contact: Joanne Freiberger
Vice President and Treasurer
813-739-1808
investorrelations@masonite.com

MASONITE INTERNATIONAL CORPORATION REPORTS 2015 THIRD QUARTER
AND YEAR TO DATE RESULTS AND INCREASES GUIDANCE

(Tampa, FL, November 4, 2015) - Masonite International Corporation ("Masonite" or "the Company") (NYSE: DOOR) today announced results for the three and nine months ended September 27, 2015.

Executive Summary
•
Net sales were essentially flat at $475.7 million for the third quarter of 2015 compared with the third quarter of 2014. Excluding the $26.0 million negative impact of foreign exchange, net sales would have increased by 5.4% to $501.7 million.
•
Net loss attributable to Masonite was $16.3 million, or $0.54 per diluted share, which includes non-cash charges of $35.9 million related to the disposition of the Company's door business in France in the third quarter of 2015.
•
Adjusted EBITDA1 increased $14.9 million, or 41.9%, to $50.5 million in the third quarter of 2015 versus the comparable 2014 period.
•
Adjusted EBITDA margin increased 310 basis points to 10.6% in the third quarter of 2015 versus 7.5% in the comparable 2014 period.
•
Increased estimated 2015 Adjusted EBITDA range to $193 million to $196 million.

“We achieved our sixth consecutive quarter of double digit adjusted EBITDA growth in the third quarter with adjusted EBITDA growth of 42% compared to the same period last year.  Gross profit margin expanded 450 basis points in the quarter, which we believe reflects our continued focus on improving the customer experience and achieving fair value for our products and services,” said Fred Lynch, President and CEO. “Over the last four months we also took significant steps to optimize our portfolio with the divestiture of the door business in France, and the acquisitions of PDS, National Hickman and, most recently, USA Wood Door.  We believe the combination of these actions will improve our overall customer value proposition and will increase long term shareholder value.”



1 See "Non-GAAP Financial Measure and Related Information" for definition and reconciliation of Adjusted EBITDA to net income (loss) attributable to Masonite.


Third Quarter 2015
Net sales were essentially flat at $475.7 million in the three months ended September 27, 2015, from $476.1 million in the comparable period of 2014. Excluding the $26.0 million unfavorable impact of foreign exchange, net sales would have increased by 5.4% to $501.7 million. The foreign exchange-adjusted increase was primarily due to a $31.5 million improvement in average unit price and a $0.8 million increase in net sales of other products, partially offset by $6.7 million of lower unit volumes.

Total company gross profit increased to $87.5 million in the three months ended September 27, 2015, from $66.2 million in the three months ended September 28, 2014. Gross profit margin increased 450 basis points to 18.4% of net sales in the third quarter of 2015, from 13.9% of net sales in the third quarter of 2014, primarily due to increases in average unit price.

Selling, general and administrative expenses (SG&A) as a percentage of net sales increased 120 basis points in the third quarter of 2015 to 12.5%, from 11.3% in the third quarter of 2014. In the third quarter of 2015, SG&A increased $5.7 million to $59.6 million from $53.9 million in the comparable 2014 period. The increase in SG&A was primarily driven by an increase in personnel costs partially offset by the incremental comparative benefit from the 2015 disposition of the Company's door business in France, the 2014 exit from Israel and a beneficial foreign exchange impact.

Net loss attributable to Masonite increased $6.3 million to $16.3 million, or $0.54 per diluted share in the third quarter of 2015 which includes non-cash charges of $35.9 million related to the disposition of the Company's door business in France versus the comparable 2014 period.

Adjusted EBITDA increased 41.9% to $50.5 million for the three months ended September 27, 2015, from $35.6 million in the comparable period of 2014.

Year to date 2015
Net sales for the nine months ended September 27, 2015 were essentially flat at $1.4 billion versus the comparable period of 2014. Excluding the $72.5 million unfavorable impact of foreign exchange, net sales would have increased 5.1%. The foreign exchange-adjusted increase was primarily due to an $80.0 million improvement in average unit price, partially offset by $7.9 million of lower unit volumes and a $1.9 million decrease in net sales of other products.

Total company gross profit increased to $255.9 million in the nine months ended September 27, 2015, from $197.8 million in the nine months ended September 28, 2014. Gross profit margin increased 430 basis points to 18.5% of net sales in the first nine months of 2015, from 14.2% of net sales in the first nine months of 2014, primarily due to increases in average unit price.

Selling, general and administrative expenses (SG&A) as a percentage of net sales increased 40 basis points in the nine months ended September 27, 2015, to 12.7%, from 12.3% in the nine months ended September 28, 2014. In the first nine months of 2015, SG&A increased to $176.6 million compared to $170.1 million in the same 2014 period. The increase in SG&A was primarily driven by increases in personnel costs partially offset by the incremental comparative benefit from the 2015 disposition of the Company's door business in France, the 2014 exit from Israel and a beneficial foreign exchange impact.

Net loss attributable to Masonite increased $12.9 million to $33.9 million, or $1.12 per diluted share in the first nine months of 2015 which includes non-cash charges of $35.9 million related to the disposition of the

2


Company's door business in France and the $28.0 million loss on extinguishment of debt versus the comparable 2014 period.

Adjusted EBITDA increased $48.0 million to $147.4 million for the nine months ended September 27, 2015, from $99.4 million in the comparable period of 2014.

Masonite Earnings Conference Call
The Company will hold a live conference call and webcast on November 5, 2015. The live audio webcast will begin at 10:00 a.m. ET and can be accessed, together with the presentation, on the Masonite website under Investors > Events & Presentations. The webcast can be directly accessed at: Q3'15 Earnings Webcast.

Telephone access to the live call will be available at 877-407-3980 (in the U.S.) or by dialing 201-689-8475 (outside U.S.).

A telephone replay will be available approximately one hour following completion of the call through November 19, 2015. To access the replay, please dial 877-660-6853 (in the U.S.) or 201-612-7415 (outside U.S.). Enter Conference ID #13622046.

About Masonite
Masonite International Corporation is a leading global designer and manufacturer of interior and exterior doors for the residential new construction; the residential repair, renovation and remodeling; and the non-residential building construction markets. Since 1925, Masonite has provided its customers with innovative products and superior service at compelling values. Masonite currently serves more than 7,000 customers in 80 countries. Additional information about Masonite can be found at www.masonite.com.


3


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 our discussion of improvements in the housing market and related markets and the effects of our pricing and other strategies. 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, general economic, market and business conditions; levels of residential new construction, residential repair, renovation and remodeling and non-residential building construction activity; competition; our ability to successfully implement our business strategy; our ability to manage our operations including integrating our recent acquisitions and companies or assets we acquire in the future; 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 and our senior secured asset-backed credit facility; labor relations (i.e., disruptions, strikes or work stoppages), labor costs, and availability of labor; increases in the costs of raw materials or any shortage in supplies; our ability to keep pace with technological developments; the actions by, and the continued success of, certain key customers; our ability to maintain relationships with certain customers; new contractual commitments; our ability to generate the benefits of our restructuring activities; retention of key management personnel; environmental and other government regulations; limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes and senior secured asset-based credit facility; and other factors publicly disclosed by the company from time to time.



4


Non-GAAP Financial Measure and Related Information
Adjusted EBITDA is a measure used by management to measure operating performance. Beginning in the first quarter of 2015, we revised our calculation of Adjusted EBITDA to separately exclude loss on extinguishment of debt, which would be a component of other expense (income), net, but is separately stated due to its magnitude. Furthermore, in the third quarter of 2015, we revised our calculation of Adjusted EBITDA to separately exclude loss (gain) on disposal of subsidiaries. The revisions to this definition had no impact on our reported Adjusted EBITDA for the three or nine months ended September 28, 2014. As revised, Adjusted EBITDA is defined as net income (loss) attributable to Masonite plus depreciation, amortization, restructuring costs, loss (gain) on sale of property, plant and equipment, asset impairment, loss (gain) on disposal of subsidiaries, registration and listing fees, interest expense, net, loss on extinguishment of debt, other expense (income), net, income tax expense (benefit), loss (income) from discontinued operations, net of tax, net income attributable to non-controlling interest and share based compensation expense. Adjusted EBITDA is not a measure of financial condition or profitability under GAAP, and should not be considered as an alternative to (i) net income (loss) or net income (loss) attributable to Masonite determined in accordance with GAAP or (ii) operating cash flow 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. We believe that the inclusion of Adjusted EBITDA in this press release is appropriate to provide additional information to investors about our operating performance. Not all companies use identical calculations, and as a result, this presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Moreover, Adjusted EBITDA as presented for financial reporting purposes herein, although similar, is not the same as similar terms in the applicable covenants in our ABL Facility or our senior notes. 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. The table below sets forth a reconciliation of Adjusted EBITDA to net income (loss) attributable to Masonite for the periods indicated.


5


MASONITE INTERNATIONAL CORPORATION
SALES RECONCILIATION AND ADJUSTED EBITDA BY REPORTABLE SEGMENT
(In millions of U.S. dollars)
(Unaudited)
 
North America
 
Europe, Asia and Latin America
 
Africa
 
Total
 
% Change
Third quarter 2014 net sales
$
370.1

 
$
93.9

 
$
12.1

 
$
476.1

 
 
Volume*
(6.2
)
 
(3.8
)
 
3.3

 
(6.7
)
 
(1.4
)%
Average unit price
26.5

 
4.5

 
0.5

 
31.5

 
6.6
 %
Other
0.7

 
0.1

 
—

 
0.8

 
0.2
 %
Foreign exchange
(16.5
)
 
(6.9
)
 
(2.6
)
 
(26.0
)
 
(5.5
)%
Third quarter 2015 net sales
$
374.6

 
$
87.8

 
$
13.3

 
$
475.7

 
(0.1
)%
Year over year growth, net sales
1.2
%
 
(6.5
)%
 
9.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third quarter 2014 Adjusted EBITDA
$
36.3

 
$
1.9

 
$
(2.6
)
 
$
35.6

 
 
Third quarter 2015 Adjusted EBITDA
$
42.0

 
$
8.4

 
$
—

 
$
50.5

 
41.9
 %
Year over year growth, Adjusted EBITDA
15.7
%
 
342.1
 %
 
(100.0
)%
 
 
 
 

 
North America
 
Europe, Asia and Latin America
 
Africa
 
Total
 
% Change
Year to date 2014 net sales
$
1,057.2

 
$
292.1

 
$
39.5

 
$
1,388.8

 
 
Volume*
0.6

 
(11.0
)
 
2.5

 
(7.9
)
 
(0.6
)%
Average unit price
64.5

 
14.9

 
0.6

 
80.0

 
5.8
 %
Other
1.0

 
(2.9
)
 
—

 
(1.9
)
 
(0.1
)%
Foreign exchange
(36.5
)
 
(30.6
)
 
(5.4
)
 
(72.5
)
 
(5.2
)%
Year to date 2015 net sales
$
1,086.8

 
$
262.5

 
$
37.2

 
$
1,386.5

 
(0.2
)%
Year over year growth, net sales
2.8
%
 
(10.1
)%
 
(5.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year to date 2014 Adjusted EBITDA
$
92.0

 
$
10.0

 
$
(2.6
)
 
$
99.4

 
 
Year to date 2015 Adjusted EBITDA
$
119.8

 
$
28.6

 
$
(1.0
)
 
$
147.4

 
48.3
 %
Year over year growth, Adjusted EBITDA
30.2
%
 
186.0
 %
 
(61.5
)%
 
 
 
 

(*) Includes the incremental impact of acquisitions and dispositions.


6


MASONITE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 27,
2015
 
September 28,
2014
 
September 27,
2015
 
September 28,
2014
Net sales
$
475,650

 
$
476,124

 
$
1,386,543

 
$
1,388,760

Cost of goods sold
388,141

 
409,894

 
1,130,691

 
1,190,937

Gross profit
87,509

 
66,230

 
255,852

 
197,823

Gross profit as a % of net sales
18.4
%
 
13.9
%
 
18.5
%
 
14.2
%
 
 
 
 
 
 
 
 
Selling, general and administration expenses
59,590

 
53,855

 
176,569

 
170,149

Selling, general and administration expenses as a % of net sales
12.5
%
 
11.3
%
 
12.7
%
 
12.3
%
 
 
 
 
 
 
 
 
Restructuring costs
1,139

 
9,913

 
4,483

 
11,194

Asset impairment
9,439

 
—

 
9,439

 
—

Loss (gain) on disposal of subsidiaries
29,721

 
—

 
29,721

 
—

Operating income (loss)
(12,380
)
 
2,462

 
35,640

 
16,480

Interest expense (income), net
7,179

 
10,447

 
25,719

 
31,034

Loss on extinguishment of debt
—

 
—

 
28,046

 
—

Other expense (income), net
(1,720
)
 
(404
)
 
(3,539
)
 
1,083

Income (loss) from continuing operations before income tax expense (benefit)
(17,839
)
 
(7,581
)
 
(14,586
)
 
(15,637
)
Income tax expense (benefit)
(2,510
)
 
2,004

 
15,767

 
3,402

Income (loss) from continuing operations
(15,329
)
 
(9,585
)
 
(30,353
)
 
(19,039
)
Income (loss) from discontinued operations, net of tax
(192
)
 
(124
)
 
(661
)
 
(436
)
Net income (loss)
(15,521
)
 
(9,709
)
 
(31,014
)
 
(19,475
)
Less: net income (loss) attributable to non-controlling interest
762

 
258

 
2,879

 
1,498

Net income (loss) attributable to Masonite
$
(16,283
)
 
$
(9,967
)
 
$
(33,893
)
 
$
(20,973
)
 
 
 
 
 
 
 
 
Earnings (loss) per common share attributable to Masonite:
 
 
 
 
 
 
 
Basic
$
(0.54
)
 
$
(0.34
)
 
$
(1.12
)
 
$
(0.70
)
Diluted
$
(0.54
)
 
$
(0.34
)
 
$
(1.12
)
 
$
(0.70
)
 
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations attributable to Masonite:
 
 
 
 
 
 
 
Basic
$
(0.53
)
 
$
(0.34
)
 
$
(1.10
)
 
$
(0.69
)
Diluted
$
(0.53
)
 
$
(0.34
)
 
$
(1.10
)
 
$
(0.69
)
 
 
 
 
 
 
 
 
Shares used in computing basic earnings per share
30,351,707

 
29,731,769

 
30,218,023

 
29,477,880

Shares used in computing diluted earnings per share
30,351,707

 
29,731,769

 
30,218,023

 
29,477,880




7


MASONITE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share amounts)
(Unaudited)
ASSETS
September 27,
2015
 
December 28, 2014
Current assets:
 
 
 
Cash and cash equivalents
$
69,047

 
$
192,037

Restricted cash
12,768

 
13,187

Accounts receivable, net
265,844

 
241,721

Inventories, net
239,583

 
222,732

Prepaid expenses
21,162

 
21,103

Income taxes receivable
1,938

 
1,796

Current deferred income taxes
18,573

 
20,767

Total current assets
628,915

 
713,343

Property, plant and equipment, net
548,803

 
576,234

Investment in equity investees
8,383

 
8,827

Goodwill
118,065

 
99,199

Intangible assets, net
235,273

 
203,372

Long-term deferred income taxes
15,621

 
20,697

Other assets, net
16,839

 
16,744

Total assets
$
1,571,899

 
$
1,638,416

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
129,002

 
$
98,199

Accrued expenses
141,177

 
137,681

Income taxes payable
2,720

 
1,361

Total current liabilities
272,899

 
237,241

Long-term debt
468,576

 
503,785

Long-term deferred income taxes
120,990

 
107,777

Other liabilities
47,814

 
54,114

Total liabilities
910,279

 
902,917

Commitments and Contingencies
 
 
 
Equity:
 
 
 
Share capital: unlimited shares authorized, no par value, 30,380,300 and 30,015,321 shares issued and outstanding as of September 27, 2015, and December 28, 2014, respectively.
662,774

 
657,292

Additional paid-in capital
227,055

 
225,918

Accumulated deficit
(131,410
)
 
(97,517
)
Accumulated other comprehensive income (loss)
(122,205
)
 
(76,259
)
Total equity attributable to Masonite
636,214

 
709,434

Equity attributable to non-controlling interests
25,406

 
26,065

Total equity
661,620

 
735,499

Total liabilities and equity
$
1,571,899

 
$
1,638,416




8


MASONITE INTERNATIONAL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
TO GAAP FINANCIAL MEASURE
(In thousands of U.S. dollars)
(Unaudited)
 
Three Months Ended September 27, 2015
(In thousands)
North America
 
Europe, Asia and Latin America
 
Africa
 
Total
Adjusted EBITDA
$
42,048

 
$
8,431

 
$
33

 
$
50,512

Less (plus):
 
 
 
 
 
 
 
Depreciation
10,227

 
3,649

 
678

 
14,554

Amortization
3,963

 
2,290

 
5

 
6,258

Share based compensation expense
1,490

 
—

 
—

 
1,490

Loss (gain) on disposal of property, plant and equipment
289

 
13

 
(11
)
 
291

Restructuring costs
492

 
219

 
428

 
1,139

Asset impairment
—

 
9,439

 
—

 
9,439

Loss (gain) on disposal of subsidiaries
—

 
29,721

 
—

 
29,721

Interest expense (income), net
12,788

 
(5,637
)
 
28

 
7,179

Other expense (income), net
(254
)
 
(1,466
)
 
—

 
(1,720
)
Income tax expense (benefit)
95

 
(2,241
)
 
(364
)
 
(2,510
)
Loss (income) from discontinued operations, net of tax
192

 
—

 
—

 
192

Net income (loss) attributable to non-controlling interest
762

 
—

 
—

 
762

Net income (loss) attributable to Masonite
$
12,004

 
$
(27,556
)
 
$
(731
)
 
$
(16,283
)

 
Three Months Ended September 28, 2014
(In thousands)
North America
 
Europe, Asia and Latin America
 
Africa
 
Total
Adjusted EBITDA
$
36,329

 
$
1,902

 
$
(2,634
)
 
$
35,597

Less (plus):
 
 
 
 
 
 
 
Depreciation
9,344

 
5,328

 
1,170

 
15,842

Amortization
3,782

 
1,107

 
—

 
4,889

Share based compensation expense
2,255

 
—

 
—

 
2,255

Loss (gain) on disposal of property, plant and equipment
1,165

 
(929
)
 
—

 
236

Restructuring costs
80

 
9,832

 
1

 
9,913

Interest expense (income), net
17,377

 
(6,967
)
 
37

 
10,447

Other expense (income), net
(287
)
 
(117
)
 
—

 
(404
)
Income tax expense (benefit)
3,422

 
(12
)
 
(1,406
)
 
2,004

Loss (income) from discontinued operations, net of tax
124

 
—

 
—

 
124

Net income (loss) attributable to non-controlling interest
258

 
—

 
—

 
258

Net income (loss) attributable to Masonite
$
(1,191
)
 
$
(6,340
)
 
$
(2,436
)
 
$
(9,967
)



9


 
Nine Months Ended September 27, 2015
(In thousands)
North America
 
Europe, Asia and Latin America
 
Africa
 
Total
Adjusted EBITDA
$
119,832

 
$
28,561

 
$
(1,036
)
 
$
147,357

Less (plus):
 
 
 
 
 
 
 
Depreciation
32,042

 
10,068

 
2,160

 
44,270

Amortization
12,121

 
4,118

 
5

 
16,244

Share based compensation expense
6,975

 
—

 
—

 
6,975

Loss (gain) on disposal of property, plant and equipment
844

 
32

 
(291
)
 
585

Restructuring costs
1,641

 
2,414

 
428

 
4,483

Asset impairment
—

 
9,439

 
—

 
9,439

Loss (gain) on disposal of subsidiaries
—

 
29,721

 
—

 
29,721

Interest expense (income), net
45,017

 
(19,426
)
 
128

 
25,719

Loss on extinguishment of debt
28,046

 
—

 
—

 
28,046

Other expense (income), net
(899
)
 
(2,640
)
 
—

 
(3,539
)
Income tax expense (benefit)
16,437

 
391

 
(1,061
)
 
15,767

Loss (income) from discontinued operations, net of tax
509

 
152

 
—

 
661

Net income (loss) attributable to non-controlling interest
2,879

 
—

 
—

 
2,879

Net income (loss) attributable to Masonite
$
(25,780
)
 
$
(5,708
)
 
$
(2,405
)
 
$
(33,893
)

 
Nine Months Ended September 28, 2014
(In thousands)
North America
 
Europe, Asia and Latin America
 
Africa
 
Total
Adjusted EBITDA
$
92,017

 
$
9,964

 
$
(2,616
)
 
$
99,365

Less (plus):
 
 
 
 
 
 
 
Depreciation
28,825

 
14,033

 
2,966

 
45,824

Amortization
12,947

 
3,226

 
—

 
16,173

Share based compensation expense
7,335

 
—

 
—

 
7,335

Loss (gain) on disposal of property, plant and equipment
2,689

 
(330
)
 
—

 
2,359

Restructuring costs
482

 
10,705

 
7

 
11,194

Interest expense (income), net
52,275

 
(21,358
)
 
117

 
31,034

Other expense (income), net
(445
)
 
1,528

 
—

 
1,083

Income tax expense (benefit)
4,862

 
199

 
(1,659
)
 
3,402

Loss (income) from discontinued operations, net of tax
436

 
—

 
—

 
436

Net income (loss) attributable to non-controlling interest
1,498

 
—

 
—

 
1,498

Net income (loss) attributable to Masonite
$
(18,887
)
 
$
1,961

 
$
(4,047
)
 
$
(20,973
)


10