Masonite International Corporation Reports 2020 Second Quarter Financial Results

Masonite International Corporation (“Masonite” or “the Company”) announced results for the three and six months ended June 28, 2020.

Executive Summary – 2Q20 versus 2Q19

Net sales decreased 11% to $500 million versus $563 million, due to the negative impact of COVID-19.
Net income attributable to Masonite increased to $34 million from $24 million. The increase was primarily due to higher average unit price and lower selling, general and administration expenses.
Diluted earnings per share increased to $1.38 from $0.96 and adjusted diluted earnings per share* increased to $1.50 from $1.09.
Adjusted EBITDA* increased to $92 million from $80 million.

“We are extremely pleased with our second quarter performance and the resilience of our business, as we delivered significant margin expansion despite base volume declines,” said Howard Heckes, President and CEO. “We benefited from our previously implemented pricing strategy and saw demand strengthen following an initial decline early in the quarter during the onset of the COVID-19 pandemic. Operationally we faced many headwinds, yet the organization did an exceptional job addressing these challenges in order to protect our employees and serve our customers. With continued uncertainty around the impact of the ongoing pandemic, we remain keenly focused on near-term execution while also monitoring emerging trends that may contribute to our business momentum following the crisis.”

Second Quarter 2020 Discussion

Net sales decreased 11% to $500 million in the second quarter of 2020, from $563 million in the comparable period of 2019. The decrease in net sales was the result of a 15% decrease in base volume due to the impact of COVID-19, a 1% decrease from the net impact of a divestiture and an acquisition, a 1% decrease in the sale of components and other products and a 1% decrease due to foreign exchange, partially offset by a 7% increase in average unit price (“AUP”).

North American Residential net sales were $381 million, flat compared to the second quarter of 2019, driven by a 9% increase in AUP offset by an 8% decrease in base volume and a 1% decrease in foreign exchange.

Europe net sales were $30 million, a 63% decrease compared to the second quarter of 2019, driven by a 54% decrease in base volume, a 5% decrease in sales volume from the net impact of a divestiture and an acquisition, a 2% decrease in AUP, a 1% decrease in the sale of components and other products and a 1% decrease due to foreign exchange.

Architectural net sales were $86 million, a 12% decrease compared to the second quarter of 2019, driven by a 14% decrease in base volume and a 3% decrease in the sale of components and other products, partially offset by a 5% increase in AUP.

Total company gross profit increased 6% to $136 million in the second quarter of 2020 compared to $129 million in the second quarter of 2019. Gross profit margin increased 440 basis points to 27.3%, driven by higher AUP and prior year restructuring actions, partially offset by the impact of lower volume, higher manufacturing wages and benefits and a portion of our planned 5-year $100 million reinvestment in the business related to our pricing strategy. Increased savings from material sourcing projects offset the combined impact of inflation and tariffs in the quarter.

Selling, general and administration (SG&A) expenses of $73 million decreased $5 million, or 6%, compared to the second quarter of 2019. The decrease in SG&A was primarily due to COVID-19 related cost reductions, partially offset by higher legal costs related to a previously disclosed lawsuit. SG&A as a percentage of net sales was 14.7%, an 80 basis point increase compared to the second quarter of 2019.

Net income attributable to Masonite increased $10 million to $34 million in the second quarter of 2020. Adjusted EBITDA* increased to $92 million in the second quarter of 2020 from $80 million in the second quarter of 2019.

Diluted earnings per share were $1.38 in the second quarter of 2020 compared to $0.96 in the comparable 2019 period. Diluted adjusted earnings per share* were $1.50 in the second quarter of 2020 compared to $1.09 in the comparable 2019 period. Diluted adjusted earnings per share* excludes $3 million in charges related to the loss on disposal of our India subsidiary and our previously announced restructuring plans incurred in the second quarter of 2020, and the impact of $3 million in charges related to restructuring and the divestiture of non-core businesses in the second quarter of 2019.

Year to Date 2020 Discussion

Net sales decreased 4% to $1,051 million in the first six months of 2020, from $1,093 million in the comparable period of 2019. The decrease in net sales was a result of a 7% decrease in base volume due to the impact of COVID-19, a 1% decrease from the net impact of divestitures and an acquisition, a 1% decrease in the sale of components and other products and a 1% decrease due to foreign exchange, partially offset by a 6% increase in AUP.

North American Residential net sales were $765 million, a 4% increase compared to the first six months of 2019, driven by a 7% increase in AUP partially offset by a 2% decrease in base volume and a 1% decrease from foreign exchange.

Europe net sales were $101 million, a 39% decrease compared to the first six months of 2019, driven by a 31% decrease in base volume, a 7% decrease in sales volume from the net impact of divestitures and an acquisition and a 1% decrease due to foreign exchange.

Architectural net sales were $177 million, a 3% decrease compared to the first six months of 2019, driven by an 8% decrease in base volumes and a 1% decrease in the sale of components and other products, partially offset by a 6% increase in AUP.

Total company gross profit increased 12% to $271 million in the first six months of 2020, compared to $241 million in the comparable period of 2019. Gross profit margin increased 380 basis points to 25.8%, due to higher AUP, increased 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 and higher manufacturing wages and benefits.

Selling, general and administrative (“SG&A”) expenses of $154 million decreased $3 million compared to the first six months of 2019. The decrease was primarily due to COVID-19 related cost reductions and non-cash items, partially offset by higher legal costs related to a previously disclosed lawsuit and higher personnel costs. SG&A as a percentage of net sales was 14.6%, a 30 basis point increase from the first six months of 2019.

Net income attributable to Masonite increased $36 million to $64 million in the first six months of 2020 primarily due to higher AUP, as discussed above, and the absence of prior year costs related to restructuring and divestiture of non-core businesses, partially offset by impact of lower volume. Adjusted EBITDA* increased $28 million to $173 million in the first six months of 2020.

Diluted earnings per share were $2.56 in the first six months of 2020 compared to $1.09 in the comparable 2019 period. Diluted adjusted earnings per share* were $2.74 in the first six months of 2020 compared to $1.90 in the comparable 2019 period. Diluted adjusted earnings per share* excludes $4 million in charges related to the loss on disposal of our India subsidiary and our previously announced restructuring plans incurred in the first half of 2020, and the impact of $21 million in charges related to restructuring and the divestiture of non-core businesses in the first half of 2019.

Masonite repurchased 567,271 shares of stock in the first six months of 2020 for $35 million, at an average price of $61.29, prior to temporarily suspending repurchases in March 2020.

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

For the full second 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 8,500 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