1 q15 earnings presentation final
-
Upload
masoniteinvestors -
Category
Investor Relations
-
view
292 -
download
2
Transcript of 1 q15 earnings presentation final
2015 First Quarter Earnings PresentationNYSE: DOOR
May 5, 2015
2
Safe Harbor / Non-GAAP Financial Measure
SAFE HARBOR / FORWARD LOOKING STATEMENT
This investor 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,” “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, 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 successfully implement our business strategy; 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 MEASURE
Adjusted EBITDA is a measure used by management to measure operating performance. Beginning in the first quarter of 2015, we revised our calculation of Adjusted EBITDA to
separately exclude loss on extinguishment of debt, which would be a component of other expense (income), net, but is separately stated due to its magnitude. The revision to this
definition had no impact on our reported Adjusted EBITDA for the three months ended March 30, 2014. As revised, 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, asset impairment, registration and listing fees, interest expense, net,
loss from 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 press release 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. The table below sets forth a reconciliation of Adjusted
EBITDA to net income (loss) attributable to Masonite for the periods indicated.
① Company / Industry Update
② Q1’15 Financial Review
③ Summary / Q&A
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Single Family Multi Family
4
Company / Industry UpdateGrowth in U.S. Single Family Housing Starts and Completions
Growth In Single Family Housing Starts and Completions Was Modest During Q1’15
Single Family Starts (Jan 14 – March 15)
Single Family Completions (Jan 14 – March 15)
The U.S. housing market in Q1’15 registered only modest
improvement despite a favorable base period comparison.
Q1’2015 Single family starts and completions increased
5.6% and 1.8%, respectively, compared to Q1’2014.
Single family starts continue to trend slightly below their
historic average of 72% compared to multi family starts.
Q1’2015: 66.7% SF / 33.3% MF
Single Family vs. Multi Family Starts Splits
Source: U.S. Census Bureau
583 589635 649 634
593
652 641 663716
674725
698
592618
0
100
200
300
400
500
600
700
800
609 617 614 606 628591
631 611 627 614 613667 674
597 602
0
100
200
300
400
500
600
700
800
Avg. = 602 Avg. = 636
Avg. = 613 Avg. = 624
5
Company / Industry UpdateMasonite’s NA Segment Volume Growth Driven by Wholesale Business
NA Wholesale Volume Growth (+7%) Exceeded U.S. Housing Completions (+1.8%)
Wholesale Doors Retail Doors Architectural
4.44.7
0.0
1.0
2.0
3.0
4.0
5.0
Q1'14 Q1'15
1.7 1.7
0.0
1.0
2.0
3.0
4.0
5.0
Q1'14 Q1'15
0.3 0.3
0.0
1.0
2.0
3.0
4.0
5.0
Q1'14 Q1'15Q1’14 Q1’15 Q1’14 Q1’15 Q1’14 Q1’15
+7% 0% 0%
(in millions) (in millions) (in millions)
Growth in the Wholesale Channel Closely Tracks Residential New Housing
6
Company / Industry UpdateNA Average Unit Price, Foreign Exchange & Europe / Rest of World Segment
Adjusted EBITDA Increased 92% in Q1 2015 vs. YA With Our Balanced Approach
NA Average Unit Price Growth Foreign Exchange
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Q1'1
1
Q2'1
1
Q3'1
1
Q4'1
1
Q1'1
2
Q2'1
2
Q3'1
2
Q4'1
2
Q1'1
3
Q2'1
3
Q3'1
3
Q4'1
3
Q1'1
4
Q2'1
4
Q3'1
4
Q4'1
4
Q1'1
5
FX reduced Q1 2015 Net Sales by 5%.
($8.9 million) impact on NA Net Sales
($11.0 million) impact on EUR/ROW Net Sales
($1.0 million) impact on South Africa Net Sales
FX reduced Q1 2015 Adjusted EBITDA by 6%.
Average unit price growth in our NA business
continues to improve as we focus on increasing the
value proposition for our customers by driving:
Product Line Leadership
Electronic Enablement
Sales and Marketing Excellence
Europe / Rest of World Segment
Total door volume down ~5% on the quarter:
United Kingdom increased 7%
France down 17%
Total Adjusted EBITDA nearly tripled in the quarter:
Door Stop & housing strength in the UK
Exit of Israel business
7
Company / Industry UpdateFive Focus Areas Designed to Accelerate Growth
Product Line Leadership
Electronic Enablement
Sales and Marketing Excellence
Automation
Portfolio Optimization
Goal: Grow Share & Expand Margins Beyond the Macroeconomic Recovery.
① Company / Industry Update
② Q1’15 Financial Review
③ Summary / Q&A
$19.7
$37.8
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
Q1'14 Q1'15
$422.5 $434.5
$200.0
$300.0
$400.0
$500.0
$600.0
Q1'14 Q1'15
7.8 8.1
5.0
10.0
15.0
Q1'14 Q1'15
Net Sales Adjusted EBITDA*Door Volume^
(in millions) (millions of USD) (millions of USD)
Q1’14 Q1’15 Q1’14 Q1’15 Q1’14 Q1’15
(^) – Does not include Africa segment.
(*) – See appendix for non-GAAP reconciliations.
9
2015 First Quarter Financial ResultsDoor Volume, Net Sales and Adjusted EBITDA
Masonite’s Results Continue to Improve Despite an Uneven Recovery in U.S. Housing
+92%+3%+4%
+8%Excluding impact of F(x):
(*) – See appendix for non-GAAP reconciliations
Net Sales
Gross Profit
Gross Profit %
SG&A
SG&A %
Adj. EBITDA*
Adj. EBITDA %
Q1’15
$434.5
$73.3
16.9%
$58.2
13.4%
$37.8
8.7%
Q1’14
$422.5
$53.0
12.5%
$57.8
13.7%
$19.7
4.7%
Change
+2.8%
+38.3%
+440 bps.
+0.7%
-30 bps.
+91.9%
+400 bps.
10
2015 First Quarter Financial ResultsConsolidated P&L Information
Gross Profit and Adjusted EBITDA Margins Both Expanded by 400+ Basis Points
(Millions of USD)
11
2015 First Quarter Financial ResultsNet Sales and Adjusted EBITDA by Reportable Business Segment
NA and Europe / Rest of World Both Posted Strong Adjusted EBITDA Growth vs. YA
North America
+$21.6M Net Sales
+$30.5M excl. FX^
+$13.6M Adj. EBITDA*(shown below)
Europe / ROW
($7.4M) Net Sales
+$3.6M excl. FX^
+$5.8M Adj. EBITDA*(shown below)
South Africa
($2.2M) Net Sales
($1.2M) excl. FX^
($1.3M) Adj. EBITDA*
(shown below)
(* & ^) – See appendix for non-GAAP reconciliations
-$1.0
$9.0
$19.0
$29.0
Q1'14 Q1'15
-$1.0
$9.0
$19.0
$29.0
Q1'14 Q1'15
-$1.0
$9.0
$19.0
$29.0
Q1'14 Q1'15
12
Since 2012, We Have Absorbed ~$100 Million of Foreign Exchange Headwinds
Foreign Exchange Headwinds to Net Sales Have Been Significant*
2015 First Quarter Financial ResultsForeign Exchange
0
5,000
10,000
15,000
20,000
25,000
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
($38.4M) ($15.7M) ($23.6M) ($20.9M)
US
Dolla
rs –
In T
housands
(*) – Represents the impact on Net Sales
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
Q2'13 Q2'14 Q3'13 Q3'14 Q4'13 Q4'14 Q1'14 Q1'15
13
2015 First Quarter Financial ResultsAdjusted EBITDA by Quarter
(*) – See appendix for non-GAAP reconciliations.
(in millions)
+31.6%
+25.4%
+111.8%
Adjusted EBITDA Growth by Quarter Shows Strong TTM Adj. EBITDA Improvement
Q1’15 Trailing Twelve Month Adjusted EBITDA Increased 56% to $155 Million Over Q1’14
+91.9%
Leverage Ratios
Unrestricted Cash $90.1
Total Available Liquidity $225.7
Liquidity at March 29, 2015 (millions of USD)
TTM Adj. EBITDA^ $155.2
TTM Interest Expense $43.3
Total Debt $475.0
Net Debt $384.9
14
2015 First Quarter Financial ResultsLiquidity, Credit and Debt Profile
8.25% Senior Unsecured Notes due 2021
(*) – Net debt increase due primarily to cash used for make whole provision & early interest payment on bond redemption of approximately $52 million.
(^) – See appendix for non-GAAP reconciliations.
Masonite’s Balance Sheet and Liquidity Position Remains Strong
Coverage Ratios
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Total Debt Net Debt
0.0
1.0
2.0
3.0
4.0
Q1'14 Q2'14 Q3'14 Q4'14 Q1'15
Adj. EBITDA / Interest (Adj. EBITDA - Capex) / Interest
Financing Activities
Replaced $500 million senior unsecured 8.25%
2021 notes with $475 million of senior unsecured
5.625% 2023 notes creating $14.5 million of
expected annual cash interest savings.
Subsequent to quarter end, increased the size of
the ABL to $150 million from $125 million,
lowered interest rate 75bps and extended the
maturity date to 2020 from 2016.
*
① Company / Industry Update
② Q1’15 Financial Review
③ Summary / Q&A
Masonite’s Results Continue to Improve Despite an Uneven Recovery U.S. new housing market’s recovery continues to be choppy
Single family housing starts and completions growth remained modest in Q1’15
Multi family housing starts as a percent of total continue to trend above the historic average
Non-residential channel showing some early signs of improvement
Strong Q1’15 financial results
Net Sales, excluding foreign exchange, increased 8%.
Adjusted EBITDA increased 92%.
Adjusted EBITDA margin and gross margin increased 400 and 440 basis points, respectively.
Five Key Focus Areas Designed to Accelerate Growth Product Line Leadership
Electronic Enablement
Sales & Marketing Excellence
Automation
Portfolio Optimization
Upcoming Events Analyst & Investor Day @ NYSE on June 19, 2015 (details to follow)
16
SummaryMasonite’s Balanced Growth Strategy Is Working
Questions & Answers
Appendix
19
Reconciliation of Adjusted EBITDA to Net Income
(loss) Attributable to Masonite
(In thousands)
March 29,
2015
December 28,
2014
September 28,
2014
June 29,
2014
March 30,
2014
Adjusted EBITDA 155,157$ 137,087$ 117,172$ 110,007$ 99,418$
Less (plus):
Depreciation 60,482 60,622 60,222 59,885 61,000
Amortization 21,042 21,722 20,348 19,736 18,479
Share based compensation expense 9,701 9,605 9,335 8,921 8,205
Loss (gain) on disposal of property, plant and
equipment 2,673 3,816 2,394 (614) (797)
Registration and listing fees — — 423 2,421 2,421
Restructuring costs 12,772 11,137 17,357 8,709 9,911
Asset impairment 18,202 18,202 — — 1,903
Interest expense (income), net 43,285 41,525 39,476 37,359 34,973
Loss on extinguishment of debt 28,046 — — — —
Other expense (income), net (1,952) (587) 4,175 4,324 (949)
Income tax expense (benefit) 7,778 4,533 (10,259) (18,535) (22,308)
Loss (income) from discontinued operations, net
of tax 717 630 838 776 649
Net income (loss) attributable to non-controlling
interest 4,217 3,222 1,425 2,005 2,166
Net income (loss) attributable to Masonite (51,806)$ (37,340)$ (28,562)$ (14,980)$ (16,235)$
Twelve Months Ended
(In thousands)
March 29,
2015
December 28,
2014
September 28,
2014
June 29,
2014
March 30,
2014
December 29,
2013
September 29,
2013
June 30,
2013
Adjusted EBITDA 37,788$ 37,722$ 35,597$ 44,050$ 19,718$ 17,807$ 28,432$ 33,461$
Less (plus):
Depreciation 15,306 14,798 15,842 14,536 15,446 14,398 15,505 15,651
Amortization 5,011 5,549 4,889 5,593 5,691 4,175 4,277 4,336
Share based compensation expense 2,379 2,270 2,255 2,797 2,283 2,000 1,841 2,081
Loss (gain) on disposal of property, plant and
equipment (56) 1,457 236 1,036 1,087 35 (2,772) 852
Registration and listing fees — — — — — 423 1,998 —
Restructuring costs 2,356 (57) 9,913 560 721 6,163 1,265 1,762
Asset impairment — 18,202 — — — — — 1,904
Interest expense (income), net 11,753 10,491 10,447 10,594 9,993 8,442 8,330 8,208
Loss on extinguishment of debt 28,046 — — — — — — —
Other expense (income), net (1,184) (1,670) (404) 1,306 181 3,092 (255) (363)
Income tax expense (benefit) 3,264 1,131 2,004 1,379 19 (13,661) (6,272) (408)
Loss (income) from discontinued operations, net
of tax 229 194 124 170 142 402 62 44
Net income (loss) attributable to non-controlling
interest 1,736 1,724 258 499 741 (73) 838 605
Net income (loss) attributable to Masonite (31,052)$ (16,367)$ (9,967)$ 5,580$ (16,586)$ (7,589)$ 3,615$ (1,211)$
Three Months Ended
20
Reconciliation of Net Sales, Excluding Foreign
Exchange
North
America
Europe,
Asia and
Latin
America Africa Total % Change
First quarter 2014 net sales $ 314.4 $ 94.6 $ 13.5 $ 422.5
Volume* 11.5 (1.7 ) (0.7 ) 9.1 2.2 %
Average unit price 18.5 6.0 (0.5 ) 24.0 5.7 %
Other 0.5 (0.7 ) — (0.2 ) — %
Foreign exchange (8.9 ) (11.0 ) (1.0 ) (20.9 ) (4.9 )%
First quarter 2015 net sales $ 336.0 $ 87.2 $ 11.3 $ 434.5 2.8 %
Year over year growth, net sales 6.9 % (7.8 )% (16.3 )%
First quarter 2014 Adjusted EBITDA $ 16.0 $ 3.0 $ 0.7 $ 19.7
First quarter 2015 Adjusted EBITDA $ 29.6 $ 8.8 $ (0.6 ) $ 37.8 91.9 %
Year over year growth, Adjusted EBITDA 85.0 % 193.3 % (185.7 )%
(*) Includes the incremental impact of 2014 acquisitions.