TAMPA, Fla. - Masonite International Corporation ("Masonite") (NYSE: DOOR) today announced results for the three months ended March 30, 2014.

Executive Summary

• Net sales decreased $2.0 million or 0.5% to $422.5 million in the first quarter of 2014 compared with the first quarter of 2013 as a 4.5% drop in unit volumes due to unusually harsh winter conditions and a 1.5% foreign exchange headwind were only partially offset by a 5.7% increase in average unit price in the quarter.

• Net loss attributable to Masonite increased $10.8 million to $16.6 million, or $0.56 per diluted share, in the first quarter of 2014 from a loss of $5.8 million, or $0.21 per diluted share, in the first quarter of 2013.

• Adjusted EBITDA1 decreased $6.5 million or 24.8% to $19.7 million in the first quarter of 2014 from the first quarter of 2013. Excluding the $4.5 million net recovery recognized in the first quarter of 2013 related to the final resolution of the Marshfield 2011 business interruption insurance claim, Adjusted EBITDA decreased $2.0 million, or 9.2%.

“Unusually harsh winter conditions negatively affected unit volume demand and led to increased costs across the North American business,” said Fred Lynch , President and CEO. “While first quarter results in the absolute were disappointing, we remain optimistic the U.S. housing market will accelerate throughout the balance of the year and believe the 5.7% increase in average unit price is a good ‘first step’ towards realizing appropriate value for the high quality products and services we provide.”

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

First Quarter 2014 Discussion

Net sales decreased 0.5% to $422.5 million in the three months ended March 30, 2014, from $424.5 million in the comparable period of 2013. Excluding the unfavorable impact of foreign exchange, net sales would have increased by 1.0% to $428.9 million. The decrease was primarily due to a $19.1 million decline in unit volumes and $6.4 million of negative foreign exchange impact, partially offset by a $24.1 million improvement in average unit prices.

Total company gross profit increased to $53.0 million in the three months ended March 30, 2014, from $50.4 million in the three months ended March 31, 2013. Gross profit margin increased 60 basis points to 12.5% of net sales in the first quarter of 2014, from 11.9% of net sales in the first quarter of 2013, primarily due to price increases at North American residential customers.

In the three months ended March 30, 2014, selling, general and administrative expenses increased $10.8 million to $57.8 million, from $47.0 million in the three months ended March 31, 2013. The increase was partially driven by a $4.5 million benefit in the first quarter of 2013 related to a business interruption insurance claim associated with our Marshfield acquisition. Also contributing to the higher SG&A expenses were increases of $1.5 million from salaries and benefits, $1.1 million from professional fees related to business development costs and public company compliance costs, $1.0 million from loss on disposal of property, plant & equipment, costs of $0.8 million from the newly-acquired Door-Stop operations, and $0.6 million of bad debt expense. Overall selling, general and administrative expenses as a percentage of net sales increased 260 basis points in the first quarter of 2014 to 13.7%, from 11.1% in 2013. Excluding the business interruption insurance benefit, selling, general and administrative expenses would have increased by 160 basis points.

Net loss attributable to Masonite increased $10.8 million to $16.6 million, or $0.56 per diluted share, in the three months ended March 30, 2014 from a loss of $5.8 million, or $0.21 per diluted share, in the three months ended March 31, 2013.

Adjusted EBITDA decreased 24.8% to $19.7 million for the three months ended March 30, 2014, from $26.2 million in the comparable period of 2013.

MASONITE INTERNATIONAL CORPORATION

NET SALES RECONCILIATION BY REPORTABLE SEGMENT

(In millions of U.S. dollars)

(Unaudited)

 
North America

Europe, Asia
and Latin
America

Africa Total % Change
Q1 2013 net sales $ 319.3 $ 88.7 $ 16.5 $ 424.5
Volume* (14.2 ) (0.9 ) (4.0 ) (19.1 ) (4.5 )%
Average unit price 17.9 2.4 3.8 24.1 5.7 %
Other (2.2 ) 1.6 (0.6 ) (0.1 )%
Foreign exchange (6.4 ) 2.8   (2.9 ) (6.4 ) (1.5 )%
Q1 2014 net sales $ 314.4   $ 94.6   $ 13.4   $ 422.5   (0.5 )%
 

(*) Includes the incremental impact of 2013 and 2014 acquisitions and the loss of Lowe's business.

 
 

MASONITE INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except per share amounts)

(Unaudited)

 
Three Months Ended
March 30, 2014   March 31, 2013
Net sales $ 422,460 $ 424,524
Cost of goods sold 369,474   374,123  
Gross profit 52,986 50,401
Selling, general and administration expenses 57,775 46,960
Restructuring costs 721   1,440  
Operating income (loss) (5,510 ) 2,001
Interest expense (income), net 9,993 8,250
Other expense (income), net 181   (158 )
Income (loss) from continuing operations before income tax expense (benefit) (15,684 ) (6,091 )
Income tax expense (benefit) 19   (1,036 )
Income (loss) from continuing operations (15,703 ) (5,055 )
Income (loss) from discontinued operations, net of tax (142 ) (90 )
Net income (loss) (15,845 ) (5,145 )
Less: net income (loss) attributable to non-controlling interest 741   680  
Net income (loss) attributable to Masonite $ (16,586 ) $ (5,825 )
 
Earnings (loss) per common share attributable to Masonite:
Basic $ (0.56 ) $ (0.21 )
Diluted $ (0.56 ) $ (0.21 )
 

Earnings (loss) per common share from continuing operations attributable to Masonite:

Basic $ (0.56 ) $ (0.21 )
Diluted $ (0.56 ) $ (0.21 )
 
   

MASONITE INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share amounts)

(Unaudited)

 
ASSETS March 30,
2014
December 29,
2013
Current assets:
Cash and cash equivalents $ 166,264 $ 100,873
Restricted cash 13,307 13,831
Accounts receivable, net 264,634 243,823
Inventories, net 235,521 218,348
Prepaid expenses 24,497 22,371
Assets held for sale 3,451 3,408
Income taxes receivable 2,719 3,250
Current deferred income taxes 16,869   17,840  
Total current assets 727,262 623,744
Property, plant and equipment, net 620,135 630,279
Investment in equity investees 7,730 7,483
Goodwill 99,485 78,404
Intangible assets, net 227,885 203,714
Long-term deferred income taxes 22,736 23,363
Other assets, net 24,475   24,158  
Total assets $ 1,729,708   $ 1,591,145  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 113,315 $ 98,936
Accrued expenses 137,565 128,924
Income taxes payable 836   732  
Total current liabilities 251,716 228,592
Long-term debt 513,339 377,861
Long-term deferred income taxes 112,045 108,924
Other liabilities 48,771   50,206  
Total liabilities 925,871 765,583
Commitments and Contingencies
Equity:
Share capital: unlimited shares authorized, no par value, 29,294,453
and 29,085,021 shares issued and outstanding as of March 30, 2014,
and December 29, 2013, respectively. 646,871 646,196
Additional paid-in capital 231,799 230,306
Accumulated deficit (76,763 ) (60,177 )
Accumulated other comprehensive income (loss) (26,615 ) (19,601 )
Total equity attributable to Masonite 775,292 796,724
Equity attributable to non-controlling interests 28,545   28,838  
Total equity 803,837   825,562  
Total liabilities and equity $ 1,729,708   $ 1,591,145  
 
 

MASONITE INTERNATIONAL CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURE

TO GAAP FINANCIAL MEASURE

(In thousands of U.S. dollars)

(Unaudited)

 
Three Months Ended

March 30,
2014

 

March 31,
2013

Adjusted EBITDA $ 19,718 $ 26,177
Less (plus):
Depreciation 15,446 16,526
Amortization 5,691 4,270
Share based compensation expense 2,283 1,830
Loss (gain) on disposal of property, plant and equipment 1,087 110
Restructuring costs 721 1,440
Interest expense (income), net 9,993 8,250
Other expense (income), net 181 (158 )
Income tax expense (benefit) 19 (1,036 )
Loss (income) from discontinued operations, net of tax 142 90
Net income (loss) attributable to non-controlling interest 741   680  
Net income (loss) attributable to Masonite $ (16,586 ) $ (5,825 )
 

 

Source: Masonite International Corporation

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