door-20200505
FALSEA1000089369100008936912020-05-052020-05-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 
_______________________________________ 
FORM 8-K 
 ________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 5, 2020
  ________________________________________
Masonite International Corporation
(Exact name of registrant as specified in its charter) 
  ________________________________________
British Columbia, Canada 001-11796 98-0377314
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
 

2771 Rutherford Road
Concord, Ontario L4K 2N6 Canada
(Address of principal executive offices)

(800) 895-2723
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name or former address, if changed since last report) 
 ________________________________________
 
Securities registered pursuant to Section 12(b) of the Act:
Common Stock (no par value)  DOORNew York Stock Exchange
(Title of class)(Trading symbol)(Name of exchange on which registered)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.





Item 2.02Results of Operations and Financial Condition.

On May 5, 2020, Masonite International Corporation (the “Company”) issued a press release announcing its financial results for the three months ended March 29, 2020. A copy of the press release is being furnished as Exhibit 99.1 and is hereby incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to liabilities under that section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01Financial Statements and Exhibits.
Exhibit No.Description
Press release issued by Masonite International Corporation on May 5, 2020  
101.SCHInline XBRL Taxonomy Extension Schema Document  
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document  
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document  
101.LABInline XBRL Taxonomy Extension Label Linkbase Document  
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document  
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
MASONITE INTERNATIONAL CORPORATION
Date:May 5, 2020By: /s/ Robert E. Lewis
 Name: Robert E. Lewis
 Title: Senior Vice President, General Counsel and Secretary

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Document

Exhibit 99.1

PRESS RELEASE  
_________________________________________________________________________________

joanne freiberger, CPA, CTP, IRC
VP, TREASURER
jfreiberger@masonite.com
813.739.1808

farand pawlak, CPA
DIRECTOR, INVESTOR RELATIONS
fpawlak@masonite.com
813.371.5839


Masonite International Corporation Reports 2020 First Quarter Financial Results and Temporarily Withdraws Annual Outlook

(Tampa, FL, May 5, 2020) - Masonite International Corporation ("Masonite" or "the Company") (NYSE: DOOR) today announced results for the three months ended March 29, 2020.

Executive Summary - 1Q20 versus 1Q19
Net sales increased 4% to $551 million versus $530 million.
Net income attributable to Masonite increased to $30 million from $4 million. The increase was primarily due to higher net sales and the absence of prior year charges related to divestitures.
Diluted earnings per share increased to $1.19 from $0.15 and adjusted diluted earnings per share* increased to $1.24 from $0.81.
Adjusted EBITDA* increased to $82 million from $65 million.
Repurchased 567,271 shares of Masonite stock in the first quarter for approximately $35 million; temporarily suspended share repurchase program due to the impact of COVID-19.

“Masonite kicked off 2020 building strong momentum. Our North American Residential pricing strategy was successfully implemented, and our global operations were performing well, resulting in strong first quarter results despite modest headwinds from COVID-19 beginning in March," said Howard Heckes, President and Chief Executive Officer. “As this situation evolved into a global pandemic, we took swift and decisive action to protect the health and welfare of our employees while maintaining business continuity to support essential services. We are focused on maintaining financial stability, afforded by the strength of our balance sheet and liquidity. These are truly unprecedented times and we believe these actions will help us navigate near-term uncertainty and position us for further success once our end markets stabilize and recover.”



* See "Non-GAAP Financial Measures and Related Information" for definition and reconciliation of non-GAAP measures.
masonite.com



First Quarter 2020 Discussion
Net sales increased 4% to $551 million in the first quarter of 2020, from $530 million in the comparable period of 2019. The increase in net sales was the result of a 4% increase in average unit price (AUP) and a 2% increase in base volume, partially offset by a 2% decrease from the combined impact of divestitures and unfavorable foreign exchange.
North American Residential net sales were $384 million, a 9% increase compared to the first quarter of 2019, driven by a 5% increase in base volumes and a greater than 3% increase in AUP.
Europe net sales were $71 million, a 16% decrease compared to the first quarter of 2019, due to a 9% decrease in sales volume from the net impact of divestitures and an acquisition, an 8% decrease in base volume and a 2% decrease due to foreign exchange. The declines were partially offset by a 3% increase in AUP.
Architectural net sales were $91 million, a 7% increase compared to the first quarter of 2019, driven by a 7% increase in AUP and a 1% increase in the sale of components and other products, partially offset by a decline in base volume of less than 2%.

Total company gross profit increased 20% to $134 million in the first quarter of 2020 compared to $112 million in the first quarter of 2019. Gross profit margin increased 330 basis points to 24.4%, driven by higher AUP and increased savings from material sourcing projects and prior year restructuring actions, partially offset by higher manufacturing wages and benefits and costs related to factory start-ups and relocations.

Selling, general and administration expenses (SG&A) of $80 million increased $2 million, or 3%, compared to the first quarter of 2019. The increase in SG&A was due to professional fees driven by over $3 million of legal costs related to a previously disclosed lawsuit. SG&A as a percentage of net sales was 14.6%, a 10 basis point decrease compared to the first quarter of 2019.

Masonite had $30 million of net income in the first quarter of 2020, an increase of $26 million from the prior year, primarily due to higher AUP and base volumes, as discussed above, and the absence of prior year charges related to divestitures. Previously announced restructuring costs totaled $2 million pre-tax in the first quarter. Adjusted EBITDA* increased to $82 million in the first quarter of 2020 from $65 million in the first quarter of 2019.

Diluted earnings per share were $1.19 in the first quarter of 2020 compared to $0.15 in the comparable 2019 period. Diluted adjusted earnings per share* were $1.24 in the first quarter of 2020 compared to $0.81 in the comparable 2019 period. Diluted adjusted earnings per share* excludes the impact of $1 million in charges related to previously announced restructuring plans incurred in the first quarter of 2020, and the impact of $17 million in charges related to restructuring and the divestiture of non-core businesses in the first quarter of 2019.

Masonite repurchased 567,271 shares of stock in the first quarter for $35 million, at an average price of $61.29, prior to temporarily suspending its repurchase program on March 18, 2020.





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

Masonite Withdraws 2020 Outlook
The Company is withdrawing its 2020 Outlook provided on February 18, 2020 due to continued uncertainty around the impact of COVID-19 on global economies and the end markets it serves.

Heckes concluded, “Given the dynamic environment, we are not in a position to update our financial outlook at this time. We believe our cost structure, liquidity and strong balance sheet position us well for uncertain times. I am proud of the resilience and grit exhibited by the Masonite team as we navigate this global health crisis. Together we will strive to develop solutions that can build upon the momentum we demonstrated in these last two quarters and help us emerge from the COVID-19 pandemic as an even stronger partner for our customers and communities.”

Masonite Earnings Conference Call
The Company will hold a live conference call and webcast on May 6, 2020. The live audio webcast will begin at 9:00 a.m. EDT and can be accessed, together with the presentation, on the Masonite website www.masonite.com. The webcast can be directly accessed at: Q1'20 Earnings Webcast.

Telephone access to the live call will be available at 877-407-8289 (in the U.S.) or by dialing 201-689-8341 (outside the U.S.).

A telephone replay will be available approximately one hour following completion of the call through May 20, 2020. To access the replay, please dial 877-660-6853 (in the U.S.) or 201-612-7415 (outside U.S.). Enter Conference ID #13702305.

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.

Forward-looking Statements
This press release contains forward-looking information and other forward-looking statements within the meaning of applicable Canadian and/or U.S. securities laws, including our discussion of the impact of the COVID-19 pandemic, housing and other markets, and the effects of our restructuring and strategic initiatives. When used in this press release, such forward-looking statements may be identified by the use of such words as “may,” “might,” “could,” “will,” “would,” “should,” “expect,” “believes,” “outlook,” “predict,” “forecast,” “objective,” “remain,” “anticipate,” “estimate,” “potential,” “continue,” “plan,” “project,” “targeting,” or the negative of these terms or other similar terminology.

Forward-looking statements involve significant known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Masonite, or industry results, to be materially different from any future plans, goals, targets, objectives, results, performance or achievements expressed or implied by such forward-looking statements. As a result, such forward-looking statements should not be read as guarantees of future performance or results, should not be unduly relied upon, and will not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the forward-looking statements include,
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but are not limited to, downward trends in our end markets and in economic conditions; scale and scope of the current coronavirus ("COVID-19") pandemic on our operations, customer demand and supply chain; reduced levels of residential new construction; residential repair, renovation and remodeling; and non-residential building construction activity due to increases in mortgage rates, changes in mortgage interest deductions and related tax changes and reduced availability of financing; competition; the continued success of, and our ability to maintain relationships with, certain key customers in light of price increases and customer concentration and consolidation; tariffs and evolving trade policy and friction between the United States and other countries, including China; the impact of anti-dumping and countervailing trade cases; increases in prices of raw materials and fuel; increases in labor costs, the availability of labor, or labor relations (i.e., disruptions, strikes or work stoppages); our ability to manage our operations including anticipating demand for our products, managing disruptions in our operations, managing manufacturing realignments (including related restructuring charges), managing customer credit risk and successful integration of acquisitions; the continuous operation of our information technology and enterprise resource planning systems and management of potential cyber security threats and attacks; our ability to generate sufficient cash flows to fund our capital expenditure requirements, to meet our pension obligations, and to meet our debt service obligations, including our obligations under our senior notes and our ABL Facility; political, economic and other risks that arise from operating a multinational business; uncertainty relating to the United Kingdom's exit from the European Union; fluctuating exchange and interest rates; our ability to innovate and keep pace with technological developments; product liability claims and product recalls; retention of key management personnel; limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes and our ABL Facility; and environmental and other government regulations, including the FCPA, and any changes in such regulations.


Non-GAAP Financial Measures and Related Information
Our management reviews net sales and Adjusted EBITDA (as defined below) to evaluate segment performance and allocate resources. Net assets are not allocated to the reportable segments. Adjusted EBITDA is a non-GAAP financial measure which does not have a standardized meaning under GAAP and is unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA should not be considered as an alternative to either net income or operating cash flows determined in accordance with GAAP. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not include certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA is defined as net income attributable to Masonite adjusted to exclude the following items: depreciation; amortization; share based compensation expense; loss (gain) on disposal of property, plant and equipment; registration and listing fees; restructuring costs; asset impairment; loss (gain) on disposal of subsidiaries; interest expense (income), net; loss on extinguishment of debt; other expense (income), net; income tax expense (benefit); loss (income) from discontinued operations, net of tax; and net income (loss) attributable to non-controlling interest. This definition of Adjusted EBITDA differs from the definitions of EBITDA contained in the indentures governing the 2026 and 2028 Notes and the credit agreement governing the ABL Facility. Adjusted EBITDA, as calculated under our ABL Facility or senior notes would also include, among other things, additional add-backs for amounts related to: cost savings projected by us in good faith to be realized as a result of actions taken or expected to be taken prior to or during the relevant period; fees and expenses in connection with certain plant closures and layoffs; and the amount of any restructuring charges, integration costs or other business optimization expenses or reserve deducted in the relevant period in computing consolidated net income, including any one-time costs incurred in
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connection with acquisitions. Adjusted EBITDA is used to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation. Intersegment sales are recorded using market prices. We believe that Adjusted EBITDA, from an operations standpoint, provides an appropriate way to measure and assess segment performance. Our management team has established the practice of reviewing the performance of each segment based on the measures of net sales and Adjusted EBITDA. We believe that Adjusted EBITDA is useful to users of the consolidated financial statements because it provides the same information that we use internally to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation.

The tables below set forth a reconciliation of net income (loss) attributable to Masonite to Adjusted EBITDA for the periods indicated.

Adjusted EBITDA margin is defined as Adjusted EBITDA divided by Net Sales. Management believes this measure provides supplemental information on how successfully we operate our business.

Adjusted EPS is diluted earnings per common share attributable to Masonite (EPS) less restructuring costs, asset impairment charges, loss (gain) on disposal of subsidiaries, loss on extinguishment of debt and other items, if any, that do not relate to Masonite’s underlying business performance (each net of related tax expense (benefit)). Management uses this measure to evaluate the overall performance of the Company and believes this measure provides investors with helpful supplemental information regarding the underlying performance of the Company from period to period. This measure may be inconsistent with similar measures presented by other companies.


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MASONITE INTERNATIONAL CORPORATION
SALES RECONCILIATION AND ADJUSTED EBITDA BY REPORTABLE SEGMENT
(In millions of U.S. dollars)
(Unaudited)

North American ResidentialEuropeArchitecturalCorporate & OtherTotal% Change
First quarter 2019 net sales$353.7  $84.3  $85.6  $6.7  $530.3  
Acquisitions, net of divestitures—  (7.3) —  —  (7.3) (1.4)%
Base volume18.2  (7.0) (1.3) (0.5) 9.4  1.8 %
Average unit price12.3  2.3  6.3  —  20.9  3.9 %
Other0.4  (0.3) 0.7  (0.8) —  — %
Foreign exchange(0.7) (1.3) (0.1) —  (2.1) (0.4)%
First quarter 2020 net sales$383.9  $70.7  $91.2  $5.4  $551.2  
Year over year growth, net sales8.5 %(16.1)%6.5 %(19.4)%3.9 %
First quarter 2019 Adjusted EBITDA$53.6  $10.0  $7.6  $(5.8) $65.5  
First quarter 2020 Adjusted EBITDA71.7  9.7  10.6  (10.4) 81.5  
Year over year growth, Adjusted EBITDA33.8 %(3.0)%39.5 %nm  24.4 %

Note: Amounts may not foot due to rounding
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MASONITE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
Three Months Ended
March 29, 2020March 31, 2019
Net sales$551,228  $530,311  
Cost of goods sold416,947  418,207  
Gross profit134,281  112,104  
Gross profit as a % of net sales24.4 %21.1 %
Selling, general and administration expenses80,333  78,100  
Selling, general and administration expenses as a % of net sales14.6 %14.7 %
Restructuring costs1,941  3,740  
Asset impairment—  10,625  
Loss on disposal of subsidiaries—  4,605  
Operating income52,007  15,034  
Interest expense, net11,282  11,127  
Other expense (income), net49  (1,130) 
Income before income tax expense40,676  5,037  
Income tax expense9,639  58  
Net income31,037  4,979  
Less: net income attributable to non-controlling interests1,152  1,190  
Net income attributable to Masonite$29,885  $3,789  
Basic earnings per common share attributable to Masonite$1.20  $0.15  
Diluted earnings per common share attributable to Masonite$1.19  $0.15  
Shares used in computing basic earnings per share24,861,442  25,574,910  
Shares used in computing diluted earnings per share25,214,764  25,951,484  

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MASONITE INTERNATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share amounts)
(Unaudited)
ASSETSMarch 29, 2020December 29, 2019
Current assets:
Cash and cash equivalents$114,375  $166,964  
Restricted cash10,644  10,644  
Accounts receivable, net303,111  276,208  
Inventories, net240,975  242,230  
Prepaid expenses33,137  33,190  
Income taxes receivable3,492  4,819  
Total current assets705,734  734,055  
Property, plant and equipment, net612,304  625,585  
Operating lease right-of-use assets123,925  121,367  
Investment in equity investees17,011  16,100  
Goodwill179,386  184,192  
Intangible assets, net171,684  184,532  
Deferred income taxes24,355  25,945  
Other assets43,650  44,808  
Total assets$1,878,049  $1,936,584  
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$97,501  $84,912  
Accrued expenses145,342  180,405  
Income taxes payable1,537  2,350  
Total current liabilities244,380  267,667  
Long-term debt791,190  790,984  
Long-term operating lease liabilities112,691  110,497  
Deferred income taxes88,504  83,465  
Other liabilities45,028  47,109  
Total liabilities1,281,793  1,299,722  
Commitments and Contingencies
Equity:
Share capital: unlimited shares authorized, no par value, 24,446,987 and 24,869,921 shares issued and outstanding as of March 29, 2020, and December 29, 2019, respectively551,983  558,514  
Additional paid-in capital212,826  216,584  
Accumulated deficit(12,203) (20,047) 
Accumulated other comprehensive loss(168,193) (130,169) 
Total equity attributable to Masonite584,413  624,882  
Equity attributable to non-controlling interests11,843  11,980  
Total equity596,256  636,862  
Total liabilities and equity$1,878,049  $1,936,584  

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MASONITE INTERNATIONAL CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
(In thousands of U.S. dollars, except share and per share amounts)
(Unaudited)
Three Months Ended
(In thousands)March 29, 2020March 31, 2019
Net income attributable to Masonite$29,885  $3,789  
Add: Adjustments to net income attributable to Masonite:
Restructuring costs1,941  3,740  
Asset impairment—  10,625  
Loss on disposal of subsidiaries—  4,605  
Loss on disposal of property, plant and equipment related to divestitures—  2,450  
Income tax impact of adjustments(508) (4,117) 
Adjusted net income attributable to Masonite$31,318  $21,092  
Diluted earnings per common share attributable to Masonite ("EPS")$1.19  $0.15  
Diluted adjusted earnings per common share attributable to Masonite ("Adjusted EPS")$1.24  $0.81  
Shares used in computing EPS and Adjusted EPS25,214,764  25,951,484  

The weighted average number of shares outstanding utilized for the diluted EPS and diluted Adjusted EPS calculation contemplates the exercise of all currently outstanding SARs and the conversion of all RSUs. The dilutive effect of such equity awards is calculated based on the weighted average share price for each fiscal period using the treasury stock method. For all periods presented, common shares issuable for stock instruments which would have had an anti-dilutive impact under the treasury stock method have been excluded from the computation of diluted earnings per share.
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Three Months Ended March 29, 2020
(In thousands)North American ResidentialEuropeArchitecturalCorporate & OtherTotal
Net income (loss) attributable to Masonite$58,811  $3,483  $4,580  $(36,989) $29,885  
Plus:
Depreciation9,364  2,457  2,822  1,375  16,018  
Amortization595  3,562  1,922  380  6,459  
Share based compensation expense—  —  —  3,470  3,470  
Loss on disposal of property, plant and equipment1,204   396  19  1,622  
Restructuring costs849  (37) 862  267  1,941  
Interest expense, net—  —  —  11,282  11,282  
Other expense (income), net—  211  —  (162) 49  
Income tax expense—  —  —  9,639  9,639  
Net income attributable to non-controlling interest873  —  —  279  1,152  
Adjusted EBITDA$71,696  $9,679  $10,582  $(10,440) $81,517  

Three Months Ended March 31, 2019
(In thousands)North American ResidentialEuropeArchitecturalCorporate & OtherTotal
Net income (loss) attributable to Masonite$30,261  $(4,147) $2,079  $(24,404) $3,789  
Plus:
Depreciation9,079  2,382  2,741  4,083  18,285  
Amortization449  3,965  2,093  1,090  7,597  
Share based compensation expense—  —  —  2,680  2,680  
Loss on disposal of property, plant and equipment341  2,469  97   2,913  
Restructuring costs1,880  862  604  394  3,740  
Asset impairment10,625  —  —  —  10,625  
Loss on disposal of subsidiaries—  4,605  —  —  4,605  
Interest expense, net—  —  —  11,127  11,127  
Other expense (income), net—  (139) —  (991) (1,130) 
Income tax expense—  —  —  58  58  
Net income attributable to non-controlling interest986  —  —  204  1,190  
Adjusted EBITDA$53,621  $9,997  $7,614  $(5,753) $65,479  

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v3.20.1
Cover Page
May 05, 2020
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date May 05, 2020
Entity Registrant Name Masonite International Corporation
Entity Incorporation, State or Country Code A1
Entity File Number 001-11796
Entity Tax Identification Number 98-0377314
Entity Address, Address Line One 2771 Rutherford Road
Entity Address, City or Town Concord
Entity Address, State or Province ON
Entity Address, Postal Zip Code L4K 2N6
Entity Address, Country CA
City Area Code 800
Local Phone Number 895-2723
Title of 12(b) Security Common Stock (no par value)
Trading Symbol DOOR
Security Exchange Name NYSE
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0000893691