Masonite International Reports 2014 First Quarter Results

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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