Masonite International Corporation Reports 2020 Fourth Quarter and Full Year Financial Results; Provides 2021 Outlook

Masonite International Corporation (“Masonite” or “the Company”) announced results for the three months and full year ended January 3, 2021.

Executive Summary – 4Q20 versus 4Q19

– Net sales increased 16% to $619 million versus $531 million.

– Net income attributable to Masonite increased to $27 million from $2 million. Net income in the prior year includes the impact of $12 million in restructuring charges.

– Diluted earnings per share increased to $1.08 from $0.06 and diluted adjusted earnings per share* increased to $1.26 from $0.69.
– Adjusted EBITDA* increased to $81 million from $62 million.

Executive Summary – Full Year 2020 versus 2019

– Net sales increased 4% to $2.26 billion versus $2.18 billion.

– Net income attributable to Masonite increased to $69 million from $45 million. Net income for full year 2020 includes pre-tax charges of $52 million related to goodwill impairment and $41 million for the settlement of U.S. class action litigation.

– Diluted earnings per share increased to $2.77 from $1.75 and diluted adjusted earnings per share* increased to $6.15 from $3.66.

– Adjusted EBITDA* increased to $364 million from $283 million.
– Repurchased $44 million of common shares

“We are extremely pleased with our performance in the fourth quarter and our strong finish to what has been an exceptional year,” said Howard Heckes, President and CEO. “Strengthening demand in our residential businesses and strong average unit price allowed us to expand Adjusted EBITDA* margin in the quarter and to continue investing for future growth. We believe our focus on employee safety, servicing customers and operational performance helped us achieve these results and will enable even stronger performance in 2021.”

* See “Non-GAAP Financial Measures and Related Information” for definition and reconciliation of non-GAAP measures.

Fourth Quarter 2020 Discussion

Net sales increased 16% to $619 million in the fourth quarter of 2020, from $531 million in the comparable period of 2019. The increase in net sales was the result of a 9% increase in average unit price (AUP), a 6% increase in base volume, a 1% increase from the sale of components and other products and a 1% increase due to foreign exchange, partially offset by a 1% decrease from the net impact of a divestiture.

– North American Residential net sales were $453 million, a 26% increase compared to the fourth quarter of 2019, driven by a 13% increase in base volumes, a 12% increase in AUP and a 1% increase from the sale of components and other products.

– Europe net sales were $83 million, a 4% increase compared to the fourth quarter of 2019, driven by a 4% increase in base volume, a 3% increase due to foreign exchange and a 2% increase in AUP, partially offset by a 5% decrease in sales volume from the impact of a divestiture.

– Architectural net sales were $77 million, a 10% decrease compared to the fourth quarter of 2019, driven by a 16% decrease in base volume, partially offset by a 4% increase in AUP and a 2% increase in the sale of components and other products.

Total company gross profit increased 28% to $142 million in the fourth quarter of 2020 compared to $111 million in the fourth quarter of 2019. Gross profit margin increased 200 basis points to 22.9%, due to higher AUP, savings from material sourcing projects and prior year restructuring actions, partially offset by higher inflation and tariffs on raw materials, increased investment in the business, including those related to our North American Investment Plan, and the impact of lower volume in our Architectural business segment.

Selling, general and administration (SG&A) expenses of $95 million increased $18 million, or 23%, compared to the fourth quarter of 2019. The increase in SG&A was primarily driven by higher personnel costs, including incentive compensation, and charges related to the settlement of U.S. class action litigation. SG&A as a percentage of net sales was 15.3%, a 90 basis point increase compared to the fourth quarter of 2019.

Net income attributable to Masonite increased $25 million to $27 million in the fourth quarter of 2020, driven by higher gross profit, partially offset by higher SG&A expenses, as discussed above, and the impact of $12 million in restructuring charges in the prior year. Adjusted EBITDA*, which excludes the litigation settlement charges, increased to $81 million in the fourth quarter of 2020 from $62 million in the fourth quarter of 2019.

Diluted earnings per share were $1.08 in the fourth quarter of 2020 compared to $0.06 in the comparable 2019 period. Diluted adjusted earnings per share* were $1.26 in the fourth quarter of 2020 compared to $0.69 in the comparable 2019 period. Diluted adjusted earnings per share* excludes $4 million in charges related to our previously announced restructuring plans and the settlement of U.S. class action litigation incurred in the fourth quarter of 2020, and the impact of $16 million in charges related to restructuring actions and a pension settlement in the fourth quarter of 2019.

Masonite repurchased 105,628 shares of stock in the fourth quarter for $9 million, at an average price of $84.77.

Full Year 2020 Discussion

Net sales increased 4% to $2,257 million in the year ended January 3, 2021, from $2,177 million in the comparable period of 2019. The increase in net sales was a result of an 8% increase from the combined impact of AUP and the sale of components and other products, partially offset by a 3% decrease in base volume and a 1% decrease from the net impact of divestitures and an acquisition.

– North American Residential net sales were $1,638 million, a 12% increase from 2019, driven by a 10% increase in AUP and a 2% increase in base volume.

– Europe net sales were $258 million, a 20% decrease from 2019, driven by a 16% decrease in base volume and a 6% decrease from the net impact of divestitures and an acquisition, partially offset by a 1% increase due to favorable foreign exchange and a 1% increase from higher AUP.

– Architectural net sales were $341 million, a 7% decrease from 2019, driven by a 12% decrease in base volumes, partially offset by a 5% increase in AUP.

Total company gross profit increased 20% to $573 million in the year ended January 3, 2021, compared to $478 million in the comparable period of 2019. Gross profit margin increased 350 basis points to 25.4%, due to higher AUP, savings from material sourcing projects and prior year restructuring actions, partially offset by the impact of lower volume, higher inflation and tariffs on raw materials, increased investment in the business and higher manufacturing wages and benefits.

Selling, general and administration (SG&A) expenses of $367 million increased $56 million compared to 2019. The increase was due to higher legal expenses and charges related to the settlement of U.S. class action litigation, higher personnel costs, including incentive compensation, partially offset by COVID-19 related cost reductions. Excluding the charges related to the settlements, SG&A as a percentage of net sales was 14.5%, a 20 basis point increase compared to 2019.

Net income attributable to Masonite increased $24 million to $69 million in 2020 primarily due to higher AUP and the absence of charges related to debt extinguishment costs, restructuring and divestiture of non-core businesses, partially offset by higher SG&A expenses, as discussed above, charges related to goodwill impairment in the Architectural segment, and the impact of lower volume. Adjusted EBITDA*, which excludes the litigation settlement charges, increased $80 million to $364 million in 2020.

Diluted earnings per share were $2.77 in the 2020 fiscal year compared to $1.75 in the comparable 2019 period. Diluted adjusted earnings per share* were $6.15 in the 2020 fiscal year compared to $3.66 in the comparable 2019 period. Diluted adjusted earnings per share* excludes $84 million in charges related to goodwill impairment in the Architectural segment, the settlement of U.S. class action litigation and our previously announced restructuring plans incurred in fiscal year 2020, and the impact of $49 million in charges related to restructuring actions, debt extinguishment costs and a pension settlement in fiscal year 2019.

Masonite repurchased 672,899 shares of stock in fiscal year 2020 for $44 million, at an average price of $64.98.

Full Year 2021 Outlook

The Company expects full-year 2021 net sales growth in the range of 7 to 10 percent, primarily driven by increases in AUP, continued recovery in residential end markets and new business wins, offset by continued softness in non-residential end markets. The Company anticipates a negligible impact from foreign exchange on net sales in 2021.

The Company expects 2021 Adjusted EBITDA* to be in the range of $415 million to $445 million and diluted adjusted earnings per share* of $7.40 to $8.30.

“We entered 2021 with significant momentum,” Mr. Heckes continued. “With favorable end market conditions and shifting consumer preferences, we believe 2021 will be a pivotal year for Masonite’s growth and our commitment of delivering doors that do more.”

A quantitative reconciliation of Adjusted EBITDA* and diluted adjusted earnings per share* to the corresponding GAAP information is not provided for the 2021 outlook because it is difficult to predict the GAAP measures that are excluded from Adjusted EBITDA* such as restructuring costs, asset impairments, share based compensation expense and gains/losses on sales of subsidiaries and PP&E.

For the full fourth quarter results, click here.

About Masonite

Masonite International Corporation is a leading global designer, manufacturer and distributor of interior and exterior doors for the new construction and repair, renovation and remodeling sectors of the residential and 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 7,600 customers in 60 countries. Additional information about Masonite can be found at www.masonite.com.

Contact:

Joanne Freiberger – Vice President Treasurer – jfreiberger@masonite.com – (813) 739-1808

Source: Masonite International Corporation