Segment reporting change (slides) final
- 1. the beautifuldoor April 2016 Segment Reporting Change
- 2. 2 SAFE HARBOR / FORWARD LOOKING STATEMENT This presentation 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 improvements in the housing market and related markets and the effects of our pricing and other strategies. When used in this Investor Presentation, 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,” “framework,” “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, but are not limited to, our ability to successfully implement our business strategy; general economic, market and business conditions; levels of residential new construction, residential repair, renovation and remodeling and non-residential building construction activity; competition; our ability to manage our operations including integrating our recent acquisitions and companies or assets we acquire in the future; our ability to generate sufficient cash flows to fund our capital expenditure requirements and to meet our debt service obligations, including our obligations under our senior notes and our senior secured asset-backed credit facility; labor relations (i.e., disruptions, strikes or work stoppages), labor costs, and availability of labor; increases in the costs of raw materials or any shortage in supplies; our ability to keep pace with technological developments; the actions by, and the continued success of, certain key customers; our ability to maintain relationships with certain customers; new contractual commitments; our ability to generate the benefits of our restructuring activities; retention of key management personnel; environmental and other government regulations; limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes and senior secured asset-based credit facility; and other factors publicly disclosed by the company from time to time. NON-GAAP FINANCIAL MEASURES Adjusted EBITDA is a measure used by management to measure operating performance. Adjusted EBITDA is defined as net income (loss) attributable to Masonite plus depreciation, amortization, restructuring costs, loss (gain) on sale of property, plant and equipment, loss (gain) on disposal of subsidiaries, registration and listing fees, interest expense, net, loss on extinguishment of debt, other expense (income), net, income tax expense (benefit), loss (income) from discontinued operations, net of tax, net income attributable to non-controlling interest and share based compensation expense. Adjusted EBITDA is not a measure of financial condition or profitability under GAAP, and should not be considered as an alternative to (i) net income (loss) or net income (loss) attributable to Masonite determined in accordance with GAAP or (ii) operating cash flow 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. We believe that the inclusion of Adjusted EBITDA in this presentation is appropriate to provide additional information to investors about our operating performance. Not all companies use identical calculations, and as a result, this presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Moreover, Adjusted EBITDA as presented for financial reporting purposes herein, although similar, is not the same as similar terms in the applicable covenants in our ABL Facility or our senior notes. 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 connection with acquisitions. A reconciliation of Adjusted EBITDA to net income (loss) attributable to Masonite for the periods indicated is set forth in the appendix to this presentation. Safe Harbor / Non-GAAP Financial Measures
- 3. 3 Summary of Changes the beautifuldoor
- 4. 4 Overview Summary of Changes Following de-consolidation of our South Africa business in 2015 and sale of our door business in France, Masonite has re-aligned its segment reporting structure to the following: ― North American Residential ― Europe ― Architectural Corporate & Other will be a reconciling entity that includes: ― Unallocated corporate costs ― Immaterial operating segments ― South Africa reportable segment (previous quarters) New reporting changes will commence with the Q1’16 reporting period. Summary of New Segments North American Residential ― North American Wholesale business ― North American Retail business ― Chile (primarily serving the North American residential market) Europe ― United Kingdom ― Czech Republic ― Ireland ― France (previous quarters) Architectural ― North American Architectural business
- 5. 5 Segment Drivers North American Residential, 64% Europe, 17% Architectural, 16% Corp & Other, 4% North American Residential Segment is tied substantially to North American new residential construction and the North American repair, renovation and remodel (RRR) market. Principally sells products through building products distribution customers (~65%) and big box retail customers (~35%). Europe Segment is tied substantially to the United Kingdom’s new residential construction and RRR market. We also have a relatively small business in the Czech Republic. Architectural Segment is tied substantially to the North American commercial construction market. Principally sells through commercial and architectural distribution customers for larger scale commercial projects. Corporate & Other Corporate & Other consists of unallocated corporate costs and the results of immaterial businesses including our joint venture facings facility in Malaysia. 2015 Net Sales
- 7. 7 Historical Financials Financial Summary by Segment (*) – See page 2 for the definition of adjusted EBITDA and appendix for a reconciliation of Adjusted EBITDA to Net Income (loss) attributable to Masonite. (in millions) Q1'14 Q2'14 Q3'14 Q4'14 2014 Q1'15 Q2'15 Q3'15 Q4'15 2015 1 NA Residential $253.9 $305.7 $302.3 $281.1 $1,143.0 $273.3 $304.9 $304.2 $310.9 $1,193.2 2 Europe 77.2 86.9 80.6 81.5 326.2 75.0 77.1 78.4 81.3 311.8 3 Architectural 64.6 71.6 72.2 61.8 270.2 66.9 76.0 74.1 74.8 291.8 Corporate & Other 26.7 26.0 21.1 24.6 98.4 19.2 18.5 19.0 18.4 75.1 Total $422.5 $490.2 $476.1 $448.9 $1,837.7 $434.5 $476.4 $475.7 $485.4 $1,872.0 (in millions) Q1'14 Q2'14 Q3'14 Q4'14 2014 Q1'15 Q2'15 Q3'15 Q4'15 2015 1 NA Residential $17.5 $39.2 $34.9 $29.4 $120.9 $29.3 $46.7 $43.9 $45.6 $165.6 2 Europe 4.0 5.7 0.8 4.0 14.6 6.6 8.1 5.9 9.9 30.5 3 Architectural 4.4 6.7 6.7 2.0 19.8 4.0 8.2 6.1 4.9 23.3 Corporate & Other (6.2) (7.6) (6.8) 2.3 (18.2) (2.2) (3.9) (5.5) (3.6) (15.1) Total $19.7 $44.1 $35.6 $37.7 $137.1 $37.8 $59.1 $50.5 $56.8 $204.2 NET SALES ADJUSTED EBITDA
- 8. 8 Historical Financials (In millions) North American Residential Europe Architectural Corporate & Other Consolidated Third quarter 2014 net sales $ 302.3 $ 80.6 $ 72.2 $ 21.1 $ 476.1 Foreign exchange (15.2) (6.7) (1.2) (2.9) (26.0) Volume* (9.8) (0.5) 3.0 0.6 (6.7) Average unit price 25.9 4.6 0.3 0.7 31.5 Other 1.0 0.4 (0.2) (0.5) 0.8 Third quarter 2015 net sales $ 304.2 $ 78.4 $ 74.1 $ 19.0 $ 475.7 Third quarter 2014 Adj. EBITDA^ $ 34.9 $ 0.8 $ 6.7 $ (6.8) $ 35.6 Third quarter 2015 Adj. EBITDA 43.9 5.9 6.1 (5.5) 50.5 Year over year growth, net sales 0.6% (2.7)% 2.6 % (0.1)% Year over year growth, Adj. EBITDA 25.8% 637.5 % (9.0)% 41.9 % Third quarter 2014 Adj. EBITDA margin 11.5% 1.0 % 9.3 % 7.5 % Third quarter 2015 Adj. EBITDA margin 14.4% 7.5 % 8.2 % 10.6 % (In millions) North American Residential Europe Architectural Corporate & Other Consolidated Fourth quarter 2014 net sales $ 281.1 $ 81.5 $ 61.8 $ 24.6 $ 448.9 Foreign exchange (13.1) (2.9) (1.1) (3.3) (20.4) Volume* 27.6 (3.0) 12.5 1.2 38.3 Average unit price 13.9 5.0 (0.9) (3.7) 14.3 Other 1.4 0.7 2.5 (0.4) 4.3 Fourth quarter 2015 net sales $ 310.9 $ 81.3 $ 74.8 $ 18.4 $ 485.4 Fourth quarter 2014 Adj. EBITDA^ $ 29.4 $ 4.0 $ 2.0 $ 2.3 $ 37.7 Fourth quarter 2015 Adj. EBITDA 45.6 9.9 4.9 (3.6) 56.8 Year over year growth, net sales 10.6% (0.2)% 21.0% 8.1% Year over year growth, Adj. EBITDA 55.1% 147.5 % 145.0% 50.7% Fourth quarter 2014 Adj. EBITDA margin 10.5% 4.9 % 3.2% 8.4% Fourth quarter 2015 Adj. EBITDA margin 14.7% 12.2 % 6.6% 11.7% (*) Includes the incremental impact of acquisitions and dispositions. (^) See page 2 for the definition of adjusted EBITDA and appendix for a reconciliation of Adjusted EBITDA to Net Income (loss) attributable to Masonite.
- 9. 9 Historical Financials (In millions) North American Residential Europe Architectural Corporate & Other Consolidated Second quarter 2014 net sales $ 305.7 $ 86.9 $ 71.6 $ 26.0 $ 490.2 Foreign exchange (10.4) (12.6) (0.8) (1.9) (25.7) Volume* (8.8) (1.6) 4.6 (4.5) (10.3) Average unit price 17.5 4.4 1.9 0.7 24.5 Other 0.9 — (1.3) (1.8) (2.3) Second quarter 2015 net sales $ 304.9 $ 77.1 $ 76.0 $ 18.5 $ 476.4 Second quarter 2014 Adj. EBITDA^ $ 39.2 $ 5.7 $ 6.7 $ (7.6) $ 44.1 Second quarter 2015 Adj. EBITDA 46.7 8.1 8.2 (3.9) 59.1 Year over year growth, net sales (0.3)% (11.3)% 6.1% (2.8)% Year over year growth, Adj. EBITDA 19.1 % 42.1 % 22.4% 34.0 % Second quarter 2014 Adj. EBITDA margin 12.8 % 6.6 % 9.4% 9.0 % Second quarter 2015 Adj. EBITDA margin 15.3 % 10.5 % 10.8% 12.4 % (In millions) North American Residential Europe Architectural Corporate & Other Consolidated First quarter 2014 net sales $ 253.9 $ 77.2 $ 64.6 $ 26.7 $ 422.5 Foreign exchange (8.2) (10.8) (0.7) (1.2) (20.9) Volume* 9.2 3.0 1.4 (4.5) 9.1 Average unit price 17.1 6.0 2.2 (1.3) 24.0 Other 1.3 (0.4) (0.6) (0.5) (0.2) First quarter 2015 net sales $ 273.3 $ 75.0 $ 66.9 $ 19.2 $ 434.5 First quarter 2014 Adj. EBITDA^ $ 17.5 $ 4.0 $ 4.4 $ (6.2) $ 19.7 First quarter 2015 Adj. EBITDA 29.3 6.6 4.0 (2.2) 37.8 Year over year growth, net sales 7.6% (2.8)% 3.6 % 2.8% Year over year growth, Adj. EBITDA 67.4% 65.0 % (9.1)% 91.9% First quarter 2014 Adj. EBITDA margin 6.9% 5.2 % 6.8 % 4.7% First quarter 2015 Adj. EBITDA margin 10.7% 8.8 % 6.0 % 8.7% (*) Includes the incremental impact of acquisitions and dispositions. (^) See page 2 for the definition of adjusted EBITDA and appendix for a reconciliation of Adjusted EBITDA to Net Income (loss) attributable to Masonite.
- 12. 12 Reconciliation of Adjusted EBITDA to Net Income (loss) Attributable to Masonite Three Months Ended January 3, 2016 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 45,615 $ 9,905 $ 4,925 $ (3,605) $ 56,840 Less (plus): Depreciation 7,896 2,157 2,145 2,692 14,890 Amortization 1,295 2,806 2,311 1,069 7,481 Share based compensation expense — — — 6,261 6,261 Loss (gain) on disposal of property, plant and equipment 53 292 436 5 786 Restructuring costs 2 87 — 1,106 1,195 Loss (gain) on disposal of subsidiaries — — — 30,263 30,263 Interest expense (income), net — — — 7,165 7,165 Other expense (income), net (50) 882 — 950 1,782 Income tax expense (benefit) — — — (1,595) (1,595) Loss (income) from discontinued operations, net of tax — — — 247 247 Net income (loss) attributable to non- controlling interest 866 — — 717 1,583 Net income (loss) attributable to Masonite $ 35,553 $ 3,681 $ 33 $ (52,485) $ (13,218) Three Months Ended December 28, 2014 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 29,374 $ 4,042 $ 2,000 $ 2,306 $ 37,722 Less (plus): Depreciation 8,384 2,240 2,013 2,161 14,798 Amortization 1,377 1,102 1,995 1,075 5,549 Share based compensation expense — — — 2,270 2,270 Loss (gain) on disposal of property, plant and equipment 869 12 325 251 1,457 Restructuring costs 44 (46) — (55) (57) Asset impairment — 14,020 — 4,182 18,202 Interest expense (income), net — — — 10,491 10,491 Other expense (income), net — 161 — (1,831) (1,670) Income tax expense (benefit) — — — 1,131 1,131 Loss (income) from discontinued operations, net of tax — — — 194 194 Net income (loss) attributable to non- controlling interest 764 — — 960 1,724 Net income (loss) attributable to Masonite $ 17,936 $ (13,447) $ (2,333) $ (18,523) $ (16,367)
- 13. 13 Reconciliation of Adjusted EBITDA to Net Income (loss) Attributable to Masonite Three Months Ended September 27, 2015 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 43,885 $ 5,941 $ 6,141 $ (5,455) $ 50,512 Less (plus): Depreciation 7,683 2,107 2,081 2,683 14,554 Amortization 1,261 2,208 2,015 774 6,258 Share based compensation expense — — — 1,490 1,490 Loss (gain) on disposal of property, plant and equipment 213 14 59 5 291 Restructuring costs 2 219 — 918 1,139 Asset impairment — 9,439 — — 9,439 Loss (gain) on disposal of subsidiaries — 29,721 — — 29,721 Interest expense (income), net — — — 7,179 7,179 Other expense (income), net — 77 — (1,797) (1,720) Income tax expense (benefit) — — — (2,510) (2,510) Loss (income) from discontinued operations, net of tax — — — 192 192 Net income (loss) attributable to non- controlling interest 696 — — 66 762 Net income (loss) attributable to Masonite $ 34,030 $ (37,844) $ 1,986 $ (14,455) $ (16,283) Three Months Ended September 28, 2014 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 34,900 $ 772 $ 6,701 $ (6,776) $ 35,597 Less (plus): Depreciation 7,132 4,021 2,014 2,675 15,842 Amortization 1,295 863 1,872 859 4,889 Share based compensation expense — — — 2,255 2,255 Loss (gain) on disposal of property, plant and equipment 1,276 (948) 90 (182) 236 Restructuring costs 107 192 — 9,614 9,913 Interest expense (income), net — — — 10,447 10,447 Loss on extinguishment of debt — — — — — Other expense (income), net — 22 — (426) (404) Income tax expense (benefit) — — — 2,004 2,004 Loss (income) from discontinued operations, net of tax — — — 124 124 Net income (loss) attributable to non- controlling interest 643 — — (385) 258 Net income (loss) attributable to Masonite $ 24,447 $ (3,378) $ 2,725 $ (33,761) $ (9,967)
- 14. 14 Reconciliation of Adjusted EBITDA to Net Income (loss) Attributable to Masonite Three Months Ended June 28, 2015 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 46,713 $ 8,053 $ 8,185 $ (3,894) $ 59,057 Less (plus): Depreciation 7,925 1,882 2,020 2,583 14,410 Amortization 1,091 924 2,074 886 4,975 Share based compensation expense — — 3,106 3,106 Loss (gain) on disposal of property, plant and equipment 317 5 9 19 350 Restructuring costs 3 467 — 518 988 Interest expense (income), net — — — 6,787 6,787 Other expense (income), net — 45 — (680) (635) Income tax expense (benefit) — — — 15,013 15,013 Loss (income) from discontinued operations, net of tax — — — 240 240 Net income (loss) attributable to non- controlling interest 823 — — (442) 381 Net income (loss) attributable to Masonite $ 36,554 $ 4,730 $ 4,082 $ (31,924) $ 13,442 Three Months Ended June 29, 2014 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 39,180 $ 5,731 $ 6,739 $ (7,600) $ 44,050 Less (plus): Depreciation 7,353 2,724 2,029 2,430 14,536 Amortization 1,083 1,430 1,665 1,415 5,593 Share based compensation expense — — — 2,797 2,797 Loss (gain) on disposal of property, plant and equipment 929 20 64 23 1,036 Restructuring costs 370 201 — (11) 560 Interest expense (income), net — — — 10,594 10,594 Other expense (income), net — (47) — 1,353 1,306 Income tax expense (benefit) — — — 1,379 1,379 Loss (income) from discontinued operations, net of tax — — — 170 170 Net income (loss) attributable to non- controlling interest 772 — — (273) 499 Net income (loss) attributable to Masonite $ 28,673 $ 1,403 $ 2,981 $ (27,477) $ 5,580
- 15. 15 Reconciliation of Adjusted EBITDA to Net Income (loss) Attributable to Masonite Three Months Ended March 29, 2015 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 29,347 $ 6,569 $ 4,030 $ (2,158) $ 37,788 Less (plus): Depreciation 7,952 1,959 1,977 3,418 15,306 Amortization 1,307 922 2,028 754 5,011 Share based compensation expense — — — 2,379 2,379 Loss (gain) on disposal of property, plant and equipment 213 14 44 (327) (56) Restructuring costs 3 1,728 — 625 2,356 Interest expense (income), net — — — 11,753 11,753 Loss on extinguishment of debt — — — 28,046 28,046 Other expense (income), net — 83 — (1,267) (1,184) Income tax expense (benefit) — — — 3,264 3,264 Loss (income) from discontinued operations, net of tax — — — 229 229 Net income (loss) attributable to non- controlling interest 938 — — 798 1,736 Net income (loss) attributable to Masonite $ 18,934 $ 1,863 $ (19) $ (51,830) $ (31,052) Three Months Ended March 30, 2014 (In thousands) North American Residential Europe Architectural Corporate & Other Total Adjusted EBITDA $ 17,490 $ 4,025 $ 4,359 $ (6,156) $ 19,718 Less (plus): Depreciation 8,588 3,132 2,027 1,699 15,446 Amortization 2,077 142 3,215 257 5,691 Share based compensation expense — — — 2,283 2,283 Loss (gain) on disposal of property, plant and equipment 769 313 8 (3) 1,087 Restructuring costs 126 570 — 25 721 Interest expense (income), net — — — 9,993 9,993 Other expense (income), net — 55 — 126 181 Income tax expense (benefit) — — — 19 19 Loss (income) from discontinued operations, net of tax — — — 142 142 Net income (loss) attributable to non- controlling interest 649 — — 92 741 Net income (loss) attributable to Masonite $ 5,281 $ (187) $ (891) $ (20,789) $ (16,586)