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) |
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North America |
Europe, Asia |
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. |
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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 | ||||||||
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: |
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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) |
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ASSETS | March 30, 2014 |
December 29, 2013 |
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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) |
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Three Months Ended | ||||||||
March 30, |
March 31, |
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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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