Masonite International Corporation Reports 2021 Third Quarter Financial Results and Updates Annual Outlook

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

Executive Summary – 3Q21 versus 3Q20

-Net sales increased 11% to $652 million versus $588 million.
-Net income attributable to Masonite increased to $38 million from a $22 million loss.
-Diluted earnings per share increased to $1.54 from a loss of $0.89 per share and adjusted earnings per share* decreased to $1.99 from $2.16 on a fully diluted basis.
-Adjusted EBITDA* decreased to $105 million from $109 million.
-Repurchased 369,148 shares of Masonite stock in the third quarter for approximately $41 million.

“We delivered another quarter of year-on-year Net Sales growth as a result of favorable pricing actions across all three of our reporting segments and base volume growth in our residential businesses,” said Howard Heckes, President and CEO. “Inflationary pressures continued to weigh on our results as expected, as did labor availability and absenteeism in the quarter. I am extremely pleased with the organization’s ability to navigate these challenges while making continued progress on our long-term growth initiatives.”

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

Third Quarter 2021 Discussion

Net sales were $652 million in the third quarter of 2021, an 11% increase from $588 million in the comparable period of 2020. The increase in net sales was the result of an 8% increase in average unit price (AUP), a 2% increase in base volume and a 2% increase due to favorable foreign exchange, partially offset by a 1% decrease from the impact of a divestiture.

North American Residential net sales were $489 million, a 16% increase compared to the third quarter of 2020, driven by a 9% increase in AUP, a 4% increase in base volume, a 2% increase due to favorable foreign exchange and a 1% increase in the sale of components and other products.
Europe net sales were $84 million, a 14% increase compared to the third quarter of 2020, driven by an 11% increase in AUP, a 7% increase due to favorable foreign exchange, a 3% increase in base volume and a 1% increase in the sale of components and other products, partially offset by an 8% decrease from the impact of a divestiture.
Architectural net sales were $75 million, a 13% decrease compared to the third quarter of 2020, driven by a 15% decrease in base volume and a 3% decrease in the sale of components and other products, partially offset by a 4% increase in AUP and a 1% increase due to favorable foreign exchange.
Total company gross profit was $154 million in the third quarter of 2021, a decrease of 4% compared to $160 million in the third quarter of 2020. Gross profit margin decreased 370 basis points to 23.6%, due to the impact of higher inflation and tariffs on raw materials, rising logistics costs, and higher manufacturing wages and benefits, partially offset by higher AUP.

Selling, general and administration (SG&A) expenses were $77 million in the third quarter of 2021, a decrease of 35% compared to $118 million in the third quarter of 2020. The decrease in SG&A 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 resources to support growth. SG&A as a percentage of net sales was 11.7%, a 200 basis point decrease compared to the third quarter of 2020, excluding the charges related to the settlement in that period.

Net income attributable to Masonite was $38 million in the third quarter of 2021 compared to a loss of $22 million in the third quarter of 2020. Adjusted EBITDA* of $105 million in the third quarter of 2021 decreased 4% from $109 million, which excludes the settlement litigation charge, in the third quarter of 2020.

Diluted earnings per share were $1.54 in the third quarter of 2021 compared to $0.89 of loss in the comparable 2020 period. Diluted adjusted earnings per share* were $1.99 in the third quarter of 2021 compared to $2.16 in the comparable 2020 period. Diluted adjusted earnings per share* excludes $11 million in charges related to the loss on extinguishment of debt and actions taken as part of our previously announced restructuring plans incurred in the third quarter of 2021 and $76 million in charges related to goodwill impairment in the Architectural segment, the settlement of U.S. class action litigation and restructuring incurred in the third quarter of 2020.

Masonite repurchased 369,148 shares of stock in the third quarter of 2021 for $41 million, at an average price of $111.37.

Year to Date 2021 Discussion

Net sales were $1,961 million in the first nine months of 2021, a 20% increase from $1,639 million in the comparable period of 2020. The increase in net sales was a result of a 10% increase in AUP, a 7% increase in base volume, a 3% increase due to favorable foreign exchange and a 1% increase in the sale of components and other products, partially offset by a less than 1% decrease from the impact of a divestiture.

North American Residential net sales were $1,458 million, a 23% increase compared to the first nine months of 2020, driven by an 11% increase in AUP, a 9% increase in base volume, a 2% increase due to favorable foreign exchange and a 1% increase in the sale of components and other products.
Europe net sales were $261 million, a 49% increase compared to the first nine months of 2020, driven by a 27% increase in base volume, a 12% increase due to favorable foreign exchange, an 11% increase in AUP and a 3% increase in the sale of components and other products, partially offset by a 4% decrease from the impact of a divestiture.
Architectural net sales were $226 million, a 14% decrease compared to the first nine months of 2020, driven by a 17% decrease in base volume and a 2% decrease in the sale of components and other products, partially offset by a 4% increase in AUP and a 1% increase due to favorable foreign exchange.
Total company gross profit was $477 million in the first nine months of 2021, an increase of 11% compared to $431 million in the first nine months of 2020. Gross profit margin decreased 200 basis points to 24.3%, 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 $243 million in the first nine months of 2021, a decrease of 11% compared to $272 million in the first nine months of 2020. The decrease in SG&A was primarily due to the absence of charges related to the settlement of U.S. class action litigation in the period year period and lower incentive compensation, partially offset by higher personnel costs, which includes resources to support growth. SG&A as a percentage of net sales was 12.4%, a 190 basis point decrease compared to the first nine months of 2020, excluding the charges related to the settlement in that period.

Net income attributable to Masonite was $120 million in the first nine months of 2021, an increase of 184% compared to $42 million in the first nine months of 2020. Adjusted EBITDA* of $317 million in the first nine months of 2021 increased 12% from $282 million, which excludes the settlement litigation charge in the first nine months of 2020.

Diluted earnings per share were $4.84 in the first nine months of 2021 compared to $1.69 in the comparable 2020 period. Diluted adjusted earnings per share* were $6.16 in the first nine months of 2021 compared to $4.89 in the comparable 2020 period. Diluted adjusted earnings per share* excludes $32 million in charges related to actions taken as part of our previously announced restructuring plans, the loss on extinguishment of debt, the loss on the disposal of our Czech business and the UK tax rate change incurred in the first nine months of 2021 and $80 million in charges related to goodwill impairment in the Architectural segment, the settlement of U.S. class action litigation, the loss on disposal of our India subsidiary and restructuring incurred in the first nine months of 2020.

Masonite repurchased 737,843 shares of stock in the first nine months of 2021 for $83 million, at an average price of $112.67.

Updated 2021 Outlook

The Company now expects full-year 2021 Net Sales growth in the range of 15 to 17 percent, reflecting the negative impact that labor and logistics constraints are having on both our operations and end markets. Current foreign exchange tailwinds are expected to continue through the fourth quarter.

The Company now expects 2021 Adjusted EBITDA* in the range of $415 million to $425 million and diluted adjusted earnings per share* of $7.95 to $8.25.

“While our team has worked extremely hard to deliver continued growth in the face of a difficult operating environment, we expect the fourth quarter will continue to be affected by a tight labor market and logistics challenges and have updated our outlook to reflect their impact,” Mr. Heckes concluded.

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 complete press release, 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 7,600 customers in 60 countries. Additional information about Masonite can be found at www.masonite.com.

Contact:

Farand Pawlak – Director of Investor Relations – fpawlak@masonite.com – (813) 371-5839

Source: Masonite International Corporation