Masonite International Corporation Reports 2021 Fourth Quarter and Full Year Financial Results

Masonite International Corporation (“Masonite” or “the Company”) announced results for the three months and full year ended January 2, 2022.

• Achieved full year net sales of $2.6 billion, an increase of 15% year over year
• Delivered full year net income attributable to Masonite of $95 million, up 37% year over year, and Adjusted EBITDA* of $413 million, up 13% year over year
• Launched award winning M-Pwr™ Smart Doors as part of the Doors That Do More™ Strategy
• Announced $200 Million Additional Share Repurchase Program including planned $100 Million Accelerated Share Repurchase
• Provides 2022 financial outlook with continued strong sales and earnings growth

“Our team’s ability to execute allowed us to deliver double-digit growth in both net sales and Adjusted EBITDA* in 2021 despite the inflation, supply chain and labor challenges faced throughout the year,” said Howard Heckes, President and CEO. “Although the Omicron spike in the back half of the quarter constrained volumes, end-market demand remained steady. We believe our full year results demonstrate the momentum we have gained with our Doors That Do More™ Strategy. I am very grateful to the Masonite employees around the world that showed tremendous creativity, flexibility and resilience throughout the year to deliver these results.”

Fourth Quarter 2021 Discussion

Net sales were $636 million in the fourth quarter of 2021, a 3% increase from $619 million in the comparable period of 2020. The increase in net sales was the result of a 14% increase in average unit price (“AUP”) and a 1% increase due to foreign exchange, partially offset by a 10% decrease in base volume, a 1% decrease from the sale of components and a 1% decrease from the impact of a divestiture. The year-over-year decline in volumes resulted largely from the absence of a 53rd week in 2021, as well as Omicron related labor shortages, destocking among certain UK customers and production challenges in the Architectural segment.

• North American Residential net sales were $495 million, a 9% increase compared to the fourth quarter of 2020, driven by a 15% increase from the combined impact of AUP and favorable foreign exchange, partially offset by a 6% decrease in base volume.

• Europe net sales were $74 million, an 11% decrease compared to the fourth quarter of 2020, driven by a 20% decrease in base volume and a 7% decrease from the impact of a divestiture, partially offset by a 14% increase in AUP and a 2% increase due to foreign exchange.

• Architectural net sales were $63 million, an 18% decrease compared to the fourth quarter of 2020, driven by an 18% decrease in base volume and a 6% decrease in the sale of components, partially offset by a 6% increase in AUP.

Total company gross profit was $135 million in the fourth quarter of 2021, a decrease of 5% compared to $142 million in the fourth quarter of 2020. Gross profit margin decreased 170 basis points to 21.2%, due to the impact of inflation on raw materials, rising logistics costs, higher manufacturing wages and benefits, and the impact of lower volume, partially offset by higher AUP.

Selling, general and administration (SG&A) expenses were $66 million in the fourth quarter of 2021, a decrease of 31% compared to $95 million in the fourth quarter of 2020. The decrease in SG&A was primarily driven by lower incentive compensation, as well as the absence of charges related to the settlement of U.S. class action litigation in the prior year period. SG&A as a percentage of net sales was 10.3%, a 500 basis point decrease compared to the fourth quarter of 2020.

Net income (loss) attributable to Masonite was a loss of $25 million in the fourth quarter of 2021 compared to $27 million of income in the fourth quarter of 2020. The decrease was primarily due to the pre-tax impacts of a $60 million charge related to goodwill impairment in the Architectural segment and a $23 million pension settlement charge, partially offset by a $29 million decrease in SG&A expenses as discussed above.

Adjusted EBITDA* of $95 million in the fourth quarter of 2021 increased 17% from $81 million. Diluted earnings (loss) per share were $1.06 of loss in the fourth quarter of 2021 compared to $1.08 of earnings in the comparable 2020 period. Diluted adjusted earnings per share* were $2.01 in the fourth quarter of 2021 compared to $1.26 in the comparable 2020 period.

Full Year 2021 Discussion

Net sales were $2,597 million in the year ended January 2, 2022, a 15% increase from $2,257 million in the comparable period of 2020. The increase in net sales was a result of an 11% increase in AUP, a 2% increase in base volume, a 2% increase due to favorable foreign exchange and a 1% increase in the sale of components, partially offset by a 1% decrease from the impact of a divestiture.

• North American Residential net sales were $1,953 million, a 19% increase from 2020, driven by a 12% increase in AUP, a 5% increase in base volume and a 2% increase from the combined impact of favorable foreign exchange and the sale of components.

• Europe net sales were $335 million, a 30% increase from 2020, driven by a 12% increase in AUP, a 12% increase in base volume, a 9% increase due to favorable foreign exchange and a 2% increase in the sale of components, partially offset by a 5% decrease from the impact of a divestiture.

• Architectural net sales were $290 million, a 15% decrease from 2020, driven by an 18% decrease in base volumes and a 3% decrease in the sale of components, partially offset by a 6% increase from the combined impact of AUP and favorable foreign exchange.

Total company gross profit was $612 million in the year ended January 2, 2022, an increase of 7% compared to $573 million in the comparable period of 2020. Gross profit margin decreased 180 basis points to 23.6%, due to the impact of higher inflation and tariffs on raw materials, rising logistics costs, higher manufacturing wages and benefits, and increased investment in the business, partially offset by higher AUP.

Selling, general and administration (SG&A) expenses were $308 million in the year ended January 2, 2022, a decrease of 16% compared to $367 million in the comparable 2020 period. The decrease was primarily due to the absence of charges related to the settlement of U.S. class action litigation in the prior year period and lower incentive compensation, partially offset by higher personnel costs, which includes additional resources to support growth. SG&A as a percentage of net sales was 11.9%, a 430 basis point decrease compared to 2020.

Net income attributable to Masonite was $95 million in 2021, an increase of 37% compared to $69 million in 2020. The increase was primarily driven by the pre-tax impacts of a $58 million reduction in SG&A expenses as discussed above, partially offset by an $18 million increase in asset impairment charges in the Architectural segment and a $23 million pension settlement charge.

Adjusted EBITDA* of $413 million in 2021 increased 13% from $364 million in 2020. Diluted earnings per share were $3.85 in the 2021 fiscal year compared to $2.77 in the comparable 2020 period. Diluted adjusted earnings per share* were $8.16 in the 2021 fiscal year compared to $6.15 in the comparable 2020 period.

Balance Sheet, Cash Flow and Capital Allocation

At the end of the quarter, total available liquidity was $601 million, inclusive of $381 million in unrestricted cash and $220 million of availability under our ABL Facility and our AR Sales Program.

Cash flow from operations was $156 million in fiscal year 2021, down from $321 million in the comparable period of 2020. The decrease was driven by a change in net working capital which included payment of the $40 million litigation settlement that was accrued for in 2020. Capital expenditures were approximately $87 million in the year ended January 2, 2022, an increase from $73 million in the comparable period of 2020.

During the fourth quarter, Masonite repurchased approximately 276 thousand shares of stock for $31 million, at an average price of $111.51. The Company repurchased approximately 1 million shares of stock in fiscal year 2021 for $114 million, at an average price of $112.36.

In the first quarter of 2022 the Company has repurchased approximately 388 thousand shares of stock for $40 million as of February 21, 2022.

Separately, on February 21, 2022, the Company announced that its Board of Directors has approved a new share repurchase program allowing the Company to repurchase up to an additional $200 million of its outstanding common shares. The Company also announced that it intends to enter into an accelerated share repurchase transaction during the first quarter of 2022 for the repurchase of $100 million of its outstanding common shares.

Full Year 2022 Outlook

The Company expects full-year 2022 net sales growth in the range of 6 to 10 percent, primarily driven by increases in AUP and residential end market growth. Excluding anticipated impacts of foreign exchange, the Company expects net sales growth in the range of 7 to 11 percent.

Note that the Adjusted EPS* outlook assumes a tax rate of 22.5% and a share count of 24.5 million which includes the impact of shares repurchased through February 21, 2022, but excludes the impact of potential future repurchase activity.

“Despite the labor challenges that carried over into January, we entered 2022 with healthy end-market demand.” Mr. Heckes continued. ” We believe we are well positioned to deliver another strong year of sales and earnings growth in 2022 as we continue to make progress towards the goals we outlined in our 2025 Centennial Plan^.”

A quantitative reconciliation of Adjusted EBITDA* and Adjusted EPS* to the corresponding GAAP information is not provided for the 2022 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, marketer 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 7,000 customers globally. Additional information about Masonite can be found at www.masonite.com.

Contact:

Richard Leland – Vice President Finance & Treasurer – rleland@masonite.com – (813) 739-1808

Source: Masonite International Corporation