Masonite International Corporation Reports 2023 Fourth Quarter and Full Year Financial Results

Reported full year 2023 net sales of $2.8 billion and net income attributable to Masonite of $118 million

Delivered full year adjusted EBITDA* of $419 million and a record high $408 million of operating cash flow

Enhanced portfolio of product solutions with acquisitions of Endura Products and Fleetwood during 2023

Subsequent to year end, announced definitive agreement under which Owens Corning will acquire all outstanding shares of Masonite for $133.00 per share in cash

Masonite International Corporation (“Masonite” or “the Company”) announced results for the three months and full year ended December 31, 2023.

“Thanks to strong execution of our 2023 playbook, Masonite was able to deliver net sales and adjusted EBITDA* within the guidance we announced at the beginning of the year and cash flow that significantly exceeded our initial guidance,” said Howard Heckes, President and CEO. “Subsequent to year end, we announced a deal that will make Masonite a part of the Owens Corning family in 2024. We see this combination as a tremendous opportunity to accelerate our Doors That Do More™ strategy with an industry leader, while delivering substantial value to our shareholders.”

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

Fourth Quarter 2023 Discussion

(All references to percent increase or decrease in the discussion below compare current fourth quarter 2023 results to those realized in the fourth quarter of 2022 unless otherwise noted.)

Consolidated net sales were $661 million in the fourth quarter of 2023, a 2% decrease resulting from an 11% decrease in organic volume and a 2% decrease in average unit price (AUP), partially offset by a 10% increase from acquisitions and a 1% increase from favorable foreign exchange.

• North American Residential net sales were $538 million, a 2% increase, driven by a 13% increase from acquisitions, partially offset by a 9% decrease in organic volume and 2% lower AUP.
• Europe net sales were $53 million, a 13% decrease, driven by a 14% decrease in volume and a 4% decrease in AUP, partially offset by a 5% increase due to favorable foreign exchange.
• Architectural net sales were $67 million, a 19% decrease, driven by a 24% decrease in volume and component sales, partially offset by a 5% increase in AUP.

Total Company gross profit was $151 million in the fourth quarter of 2023, an increase of 6%. Gross profit margin increased 170 basis points year over year to 22.9%, due to effective price-cost management, which was enough to offset the impact of lower volumes and inflation on wages, benefits and overhead.

Selling, general and administration (SG&A) expenses were $113 million in the fourth quarter of 2023, an increase of 27%. The increase in SG&A was primarily driven by the addition of SG&A from acquisitions as well as year-over-year differences in the timing of adjustments to variable compensation expense. SG&A as a percentage of net sales was 17.0%.

Net loss attributable to Masonite was $10 million in the fourth quarter of 2023 compared to net income of $31 million in the fourth quarter of 2022. The decrease was primarily driven by $33 million in charges related to goodwill impairment in the Europe reporting unit.

Adjusted EBITDA* of $87 million in the fourth quarter of 2023 decreased 5% from $91 million. Diluted loss per share was $0.46 in the fourth quarter of 2023 compared to earnings of $1.38 in the comparable 2022 period. Adjusted EPS* was $1.29 in the fourth quarter of 2023 compared to $1.72 in the comparable 2022 period.

Full Year 2023 Discussion

(All references to percent increase or decrease in the discussion below compare current full year 2023 results to those realized in full year 2022 unless otherwise noted.)

Consolidated net sales were $2,831 million in the year ended December 31, 2023, a 2% decrease resulting from a 14% decrease in organic volume and a 1% decrease in component sales, partially offset by a 9% increase from acquisitions and a 4% increase in AUP.

• North American Residential net sales were $2,245 million, a 2% decrease, driven by a 15% decrease in organic volume and a 1% decrease due to unfavorable foreign exchange, partially offset by an 11% increase from acquisitions and a 3% increase in AUP.
• Europe net sales were $247 million, a 12% decrease, driven by an 11% decrease in volume and a 1% decrease in component sales. AUP was flat year over year.
• Architectural net sales were $323 million, a 5% increase, driven by an 18% increase in AUP, partially offset by a 9% decrease in volume, a 3% decrease in the sale of components and a 1% decrease due to unfavorable foreign exchange.

Total company gross profit was $666 million in the year ended December 31, 2023, a decrease of 1%. Gross profit margin increased 20 basis points to 23.5%, as higher AUP and cost savings initiatives were enough to offset the impact of lower volumes and inflation on wages, benefits and overhead.

SG&A expenses were $412 million in the year ended December 31, 2023, an increase of 19% due largely to the year-over-year addition of SG&A from acquisitions, as well as wage and benefits inflation, higher professional fees, information technology costs and additional investments in strategic initiatives. SG&A as a percentage of net sales was 14.5%.

Net income attributable to Masonite was $118 million in 2023 compared to $214 million in 2022. The decrease was primarily driven by higher SG&A expenses and $33 million in charges related to goodwill impairment in the Europe reporting unit.

Adjusted EBITDA* of $419 million in 2023 decreased 6% from $446 million in 2022. Diluted earnings per share were $5.29 in the 2023 fiscal year compared to $9.41 in the comparable 2022 period. Adjusted EPS* was $7.53 in the 2023 fiscal year compared to $9.73 in the comparable 2022 period.

Balance Sheet, Cash Flow and Capital Allocation

At the end of the fourth quarter, total available liquidity was $437 million, inclusive of $300 million of availability under our ABL Facility and AR Sales Program and $137 million in unrestricted cash.

Cash flow from operations was $408 million in 2023, up from $189 million in the comparable period of 2022. Capital expenditures were $113 million in the year ended December 31, 2023, down from $114 million in the comparable period of 2022.

During the fourth quarter, Masonite repurchased approximately 84 thousand shares of stock for $7 million, at an average price of $88.88. In fiscal 2023, the Company repurchased approximately 518 thousand shares of stock for $47 million, at an average price of $89.96 per share.

Acquisition by Owens Corning

On February 8, 2024, Masonite and Owens Corning entered into a definitive agreement under which Owens Corning will acquire all of the outstanding shares of Masonite for $133.00 per share in cash. The transaction has been unanimously approved by both companies’ Board of Directors and is subject to Masonite shareholders’ approval, as well as various regulatory approvals and other customary closing conditions. The transaction is anticipated to close by the middle of 2024.

In light of this pending transaction, Masonite has cancelled plans to hold a live conference call to discuss fourth quarter results. Additional information on the Company’s results can be found in our Annual Report on Form 10-K to be filed with the SEC by February 29, 2024.

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About Masonite

Masonite International Corporation is a leading global designer, manufacturer, marketer and distributor of interior and exterior doors, door system components and door systems 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 approximately 7,000 customers globally. Additional information about Masonite can be found at www.masonite.com.

Contact:

Marcus Devlin – Investor Relations – mdevlin@masonite.com – (813) 371-5839

Source: Masonite International Corporation