TAMPA, Fla. - Masonite International Corporation ("Masonite" or the “Company”) (NYSE:DOOR) today announced results for the three months and fiscal year ended December 29, 2013 that were in line with previously announced preliminary results.
Executive Summary
• Net sales increased $2.3 million, or 0.5%, to $420.5 million and $55.1 million, or 3.3%, to $1,731.1 million for the fourth quarter and fiscal year, respectively, over the comparable 2012 periods.
• Net loss attributable to Masonite increased $0.1 million to $7.6 million, or $0.25 per diluted share, and decreased $12.2 million to $11.0 million, or $0.39 per diluted share in the fourth quarter and fiscal year, respectively, versus the comparable 2012 periods.
• Adjusted EBITDA 1 decreased $7.8 million, or 30.5%, to $17.8 million and increased $8.6 million, or 8.8%, to $105.9 million in the fourth quarter and fiscal year, respectively, versus the comparable 2012 periods.
"2013 was an important year for Masonite as two successful U.S. residential wholesale price increases allowed North American average unit price to turn positive for the first time in several years,” said Fred Lynch, President and CEO. “Even more importantly, we recently implemented additional price increases across all North American residential distribution points as we strive to achieve appropriate value for the high quality products and services we provide.”
Fourth Quarter 2013 Discussion
Net sales increased 0.5% to $420.5 million in the three months ended December 29, 2013, from $418.2 million in the comparable period of 2012. Excluding the unfavorable impact of foreign exchange, net sales would have increased by 1.7% to $425.3 million. This increase was primarily due to a $14.4 million improvement in average unit prices, partially offset by a $2.4 million decline due to lower unit volumes.
Net sales in the North America segment increased 5.2% to $322.5 million in the three months ended December 29, 2013, from $306.5 million in the three months ended December 30, 2012. The increase was primarily driven by improvements in average unit prices and increased unit volumes.
Net sales in the Europe, Asia and Latin America segment decreased 11.3% to $81.6 million in the three months ended December 29, 2013, from $92.0 million in the three months ended December 30, 2012. The decrease in net sales was primarily the result of lower unit volumes due to a strategic shift in our product lines and customer base in France as well as the decision to exit the Polish market.
Net sales in the Africa segment decreased 17.3% to $16.3 million in the three months ended December 29, 2013, from $19.7 million in the three months ended December 30, 2012. The decrease in net sales was primarily the result of a negative foreign exchange impact of $2.6 million and a decrease in unit volumes of $3.5 million, partially offset by an increase in average unit price of $2.7 million.
Total company gross profit decreased to $51.5 million in the three months ended December 29, 2013, from $52.9 million in the three months ended December 30, 2012. Gross profit margin decreased 40 basis points to 12.2% of net sales in the fourth quarter of 2013, from 12.6% of net sales in the fourth quarter of 2012.
In the three months ended December 29, 2013, selling, general and administrative expenses increased $2.3 million to $54.7 million, from $52.4 million in the three months ended December 30, 2012. This increase was primarily due to a $3.3 million benefit in the fourth quarter of 2012 related to a business interruption insurance claim associated with our Marshfield acquisition. Also contributing to the increase were $1.4 million of increased salaries and commissions as well as $0.4 million costs related to the registration and listing of Masonite’s common shares. These increases were partially offset by a reduction in impairment and losses on sales of property, plant and equipment of $3.3 million. Overall selling, general and administrative expenses as a percentage of net sales increased 50 basis points in the fourth quarter of 2013 to 13.0%, from 12.5% in 2012.
Net loss attributable to Masonite increased $0.1 million to $7.6 million or $0.25 per diluted share, in the three months ended December 29, 2013, from $7.5 million or $0.27 per diluted share in the three months ended December 30, 2012.
Adjusted EBITDA decreased 30.5% to $17.8 million in the three months ended December 29, 2013, from $25.6 million in the comparable period of 2012.
Full Year 2013 Discussion
Net sales increased 3.3% to $1,731.1 million in the year ended December 29, 2013, from $1,676.0 million in 2012. Excluding the unfavorable impact of foreign exchange, net sales would have increased 4.2% to $1,746.8 million. This increase was due to $30.3 million related to increased unit volumes and $50.1 million related to higher average unit prices, partially offset by lower external sales of other products.
Net sales in the North America segment increased 8.0% to $1,321.6 million in the year ended December 29, 2013, from $1,224.1 million in the year ended December 30, 2012. This increase was primarily driven by an increase in unit volumes, which contributed $67.4 million and higher average unit prices of $36.9 million.
Net sales in the Europe, Asia and Latin America segment decreased 8.2% to $339.9 million in the year ended December 29, 2013, from $370.3 million in the year ended December 30, 2012. The decrease in net sales was primarily the result of lower unit volumes due to the broader adverse economic conditions in Europe, a strategic shift in our customer and product lines in France and the decision to exit the Polish market.
Net sales in the Africa segment decreased 14.7% to $69.6 million in the year ended December 29, 2013, from $81.6 million in the year ended December 30, 2012. The decrease in net sales was primarily the result of a $12.3 million unfavorable impact from foreign exchange and $3.8 million related to a decrease in unit volumes, partially offset by an increase in average unit price of $4.1 million.
Total company gross profit increased to $225.5 million in the year ended December 29, 2013, from $216.3 million in the year ended December 30, 2012. Gross profit margin increased 10 basis points to 13.0% of net sales in the year ended December 29, 2013 from 12.9% of net sales in the year ended December 30, 2012.
Selling, general and administrative expenses increased $1.0 million to $209.1 million in the year ended December 29, 2013, from $208.1 million in the year ended December 30, 2012. A majority of the increase in 2013 was due to increases in depreciation, amortization and impairment of $2.7 million, costs related to the registration and listing of Masonite’s shares of $2.4 million, and employee stock compensation expense of $1.2 million. In 2013, Masonite also recorded an incremental $1.2 million non-recurring benefit related to the final resolution of the Marshfield business interruption insurance claim noted above and recorded a $3.9 million reduction in impairment and losses on sales of property, plant and equipment. Overall, selling, general and administrative expenses as a percentage of net sales decreased 30 basis points in the year ended December 29, 2013 to 12.1%, from 12.4% in the year ended December 30, 2012.
Net loss attributable to Masonite decreased $12.2 million to $11.0 million or $0.39 per diluted share in the year ended December 29, 2013 from $23.2 million or $0.84 per diluted share in the year ended December 30, 2012.
Adjusted EBITDA increased 8.8% or $8.6 million to $105.9 million in the year ended December 29, 2013, from $97.3 million in the year ended December 30, 2012. Adjusted EBITDA in 2013 included a $1.2 million net recovery related to the final resolution of the Marshfield business interruption insurance claim.
Subsequent Events
On January 21, 2014 Masonite issued and sold $125 million of 8¼% Senior Notes due 2021 in a private offering exempt from the registration requirements of the Securities Act of 1933. The add-on notes priced at 108.75% plus accrued interest from October 15, 2013, to yield to worst 5.704%. The Company used a portion of the proceeds for today’s announced acquisition of Door-Stop International and intends to use the remaining net proceeds from the sale of the notes for general corporate purposes, which may include funding future acquisitions.
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MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of U.S. dollars, except per share amounts) (Unaudited) |
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| Three Months Ended | Year Ended | ||||||||||||||||||||||||
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December 29, 2013 |
December 30, 2012 |
December 29, 2013 |
December 30, 2012 |
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| Net sales | $ | 420,475 | $ | 418,159 | $ | 1,731,143 | $ | 1,676,005 | |||||||||||||||||
| Cost of goods sold | 369,007 | 365,301 | 1,505,636 | 1,459,701 | |||||||||||||||||||||
| Gross profit | 51,468 | 52,858 | 225,507 | 216,304 | |||||||||||||||||||||
| Selling, general and administration expenses | 54,692 | 52,412 | 209,070 | 208,058 | |||||||||||||||||||||
| Restructuring costs | 6,163 | 6,380 | 10,630 | 11,431 | |||||||||||||||||||||
| Operating income (loss) | (9,387 | ) | (5,934 | ) | 5,807 | (3,185 | ) | ||||||||||||||||||
| Interest expense (income), net | 8,442 | 8,381 | 33,230 | 31,454 | |||||||||||||||||||||
| Other expense (income), net | 3,092 | (669 | ) | 2,316 | 528 | ||||||||||||||||||||
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Income (loss) from continuing operations before income tax expense (benefit) |
(20,921 | ) | (13,646 | ) | (29,739 | ) | (35,167 | ) | |||||||||||||||||
| Income tax expense (benefit) | (13,661 | ) | (7,027 | ) | (21,377 | ) | (13,365 | ) | |||||||||||||||||
| Income (loss) from continuing operations | (7,260 | ) | (6,619 | ) | (8,362 | ) | (21,802 | ) | |||||||||||||||||
| Income (loss) from discontinued operations, net of tax | (402 | ) | (40 | ) | (598 | ) | 1,480 | ||||||||||||||||||
| Net income (loss) | (7,662 | ) | (6,659 | ) | (8,960 | ) | (20,322 | ) | |||||||||||||||||
| Less: net income (loss) attributable to non-controlling interest | (73 | ) | 792 | 2,050 | 2,923 | ||||||||||||||||||||
| Net income (loss) attributable to Masonite | $ | (7,589 | ) | $ | (7,451 | ) | $ | (11,010 | ) | $ | (23,245 | ) | |||||||||||||
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Earnings (loss) per common share attributable to Masonite: |
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| Basic | $ | (0.25 | ) | $ | (0.27 | ) | $ | (0.39 | ) | $ | (0.84 | ) | |||||||||||||
| Diluted | $ | (0.25 | ) | $ | (0.27 | ) | $ | (0.39 | ) | $ | (0.84 | ) | |||||||||||||
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Earnings (loss) per common share from continuing operations attributable to Masonite: |
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| Basic | $ | (0.28 | ) | $ | (0.26 | ) | $ | (0.37 | ) | $ | (0.89 | ) | |||||||||||||
| Diluted | $ | (0.28 | ) | $ | (0.26 | ) | $ | (0.37 | ) | $ | (0.89 | ) | |||||||||||||
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MASONITE INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share amounts) (Unaudited) |
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| ASSETS |
December 29, 2013 |
December 30, 2012 |
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| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 100,873 | $ | 122,314 | |||||||||
| Restricted cash | 13,831 | 12,769 | |||||||||||
| Accounts receivable, net | 243,823 | 256,666 | |||||||||||
| Inventories, net | 218,348 | 208,783 | |||||||||||
| Prepaid expenses | 22,371 | 19,546 | |||||||||||
| Assets held for sale | 3,408 | 7,211 | |||||||||||
| Income taxes receivable | 3,250 | 6,502 | |||||||||||
| Current deferred income taxes | 17,840 | 18,681 | |||||||||||
| Total current assets | 623,744 | 652,472 | |||||||||||
| Property, plant and equipment, net | 630,279 | 648,360 | |||||||||||
| Investment in equity investees | 7,483 | 7,633 | |||||||||||
| Goodwill | 78,404 | 78,122 | |||||||||||
| Intangible assets, net | 203,714 | 219,624 | |||||||||||
| Long-term deferred income taxes | 23,363 | 14,502 | |||||||||||
| Other assets, net | 24,158 | 25,235 | |||||||||||
| Total assets | $ | 1,591,145 | $ | 1,645,948 | |||||||||
| LIABILITIES AND EQUITY | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 98,936 | $ | 93,311 | |||||||||
| Accrued expenses | 128,924 | 139,383 | |||||||||||
| Income taxes payable | 732 | 2,194 | |||||||||||
| Total current liabilities | 228,592 | 234,888 | |||||||||||
| Long-term debt | 377,861 | 378,848 | |||||||||||
| Long-term deferred income taxes | 108,924 | 119,139 | |||||||||||
| Other liabilities | 50,206 | 75,258 | |||||||||||
| Total liabilities | 765,583 | 808,133 | |||||||||||
| Commitments and Contingencies | |||||||||||||
| Equity: | |||||||||||||
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Share capital: unlimited shares authorized, no par value, 29,085,021 and 27,943,774 shares issued and outstanding as of December 29, 2013, and December 30, 2012, respectively. |
646,196 | 633,910 | |||||||||||
| Additional paid-in capital | 230,306 | 240,784 | |||||||||||
| Accumulated deficit | (60,177 | ) | (49,167 | ) | |||||||||
| Accumulated other comprehensive income (loss) | (19,601 | ) | (18,984 | ) | |||||||||
| Total equity attributable to Masonite | 796,724 | 806,543 | |||||||||||
| Equity attributable to non-controlling interests | 28,838 | 31,272 | |||||||||||
| Total equity | 825,562 | 837,815 | |||||||||||
| Total liabilities and equity | $ | 1,591,145 | $ | 1,645,948 | |||||||||
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MASONITE INTERNATIONAL CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO GAAP FINANCIAL MEASURE (In thousands of U.S. dollars) (Unaudited) |
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| Three Months Ended | Year Ended | ||||||||||||||||||||||||
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December 29, 2013 |
December 30, 2012 |
December 29, 2013 |
December 30, 2012 |
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| Adjusted EBITDA | $ | 17,807 | $ | 25,617 | $ | 105,877 | $ | 97,261 | |||||||||||||||||
| Less (plus): | |||||||||||||||||||||||||
| Depreciation | 14,398 | 15,862 | 62,080 | 63,348 | |||||||||||||||||||||
| Amortization of intangible assets | 4,175 | 4,006 | 17,058 | 15,076 | |||||||||||||||||||||
| Share based compensation expense | 2,000 | 1,912 | 7,752 | 6,517 | |||||||||||||||||||||
| Loss (gain) on disposal of property, plant and equipment | 35 | 2,041 | (1,775 | ) | 2,724 | ||||||||||||||||||||
| Impairment of property, plant and equipment | — | 1,350 | 1,904 | 1,350 | |||||||||||||||||||||
| Registration and listing fees | 423 | — | 2,421 | — | |||||||||||||||||||||
| Restructuring costs | 6,163 | 6,380 | 10,630 | 11,431 | |||||||||||||||||||||
| Interest expense (income), net | 8,442 | 8,381 | 33,230 | 31,454 | |||||||||||||||||||||
| Other expense (income), net | 3,092 | (669 | ) | 2,316 | 528 | ||||||||||||||||||||
| Income tax expense (benefit) | (13,661 | ) | (7,027 | ) | (21,377 | ) | (13,365 | ) | |||||||||||||||||
| Loss (income) from discontinued operations, net of tax | 402 | 40 | 598 | (1,480 | ) | ||||||||||||||||||||
| Net income (loss) attributable to non-controlling interest | (73 | ) | 792 | 2,050 | 2,923 | ||||||||||||||||||||
| Net income (loss) attributable to Masonite | $ | (7,589 | ) | $ | (7,451 | ) | $ | (11,010 | ) | $ | (23,245 | ) | |||||||||||||
Source: Masonite International Corporation
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