7/29/2019 Masonite mgmt pres
1/25
1
Masonite
Presentation to
Lehman Brothers
Dec 5, 2007
New York, NY
7/29/2019 Masonite mgmt pres
2/25
2
The following information contains, or may be deemed to contain, forward-lookingstatements (as defined in the U.S. Private Securities Litigation Reform act of 1995).The forward-looking statements contained in this presentation include, but are notlimited to, statements about our strategies, plans, objectives, expectations,intentions, expenditures and assumptions and other statements that are nothistorical facts. These statements reflect our current views with respect to future
events and involve risks, assumptions and uncertainties because they relate toevents and depend on circumstances that may or may not occur in the future.
Our future results may vary from the results expressed in, or implied by, thefollowing forward looking statements, possibly to a material degree. For adiscussion of some of the important factors that could cause our results to differfrom those expressed in, or implied by, the following forward-looking statements,
please refer to Amendment No. 2 to our Registration Statement on Form F-4, filedon May 17, 2007 and available on the website of the U.S. Securities and ExchangeCommission at www.sec.gov, and in particular the Risk Factors section thereof.
This presentation includes certain non-GAAP financial measures, including AdjustedEBITDA, which are not calculated in accordance with generally accepted accountingprinciples (GAAP). Please refer to our 2007 filings with the U.S. Securities andExchange Commission for a discussion of the calculation and limitations of these
non-GAAP financial measures as well as a reconciliation of these measures to themost directly comparable GAAP measure.
We neither intend nor assume any obligation to update these forward lookingstatements, which speak only as of their dates.
Forward Looking Statements
7/29/2019 Masonite mgmt pres
3/25
3
A leading global door manufacturer
Products sold in > 70 countries
Broad Product Offering
Interior Doors Flush, Molded, Stile & Rail, French
Entry Steel, Fiberglass, Wood Architectural Fire Rated, Veneer, Custom Door Glass Decorative, Clear
2006 Revenues of $2.5 billion Adjusted EBITDA $332.6 million Net Debt reduction of $89.1 million
Masonite Overview
7/29/2019 Masonite mgmt pres
4/25
4Builder Magazine 2006 Interior Ranked #1:
Brand Familiarity, Brand Used in the Last 2 Years, Brand Used the Most, and Quality Rating
7/29/2019 Masonite mgmt pres
5/25
5
Global Sales / Adjusted EBITDA
71.3%
28.7%
71.2%
28.8%
Significant Sales and Adjusted EBITDA from Growing Markets Outside North America
72.1%
27.9%
Sales by Geographic SegmentLTM ending 9/30/07
Adj. EBITDA by Geographic SegmentLTM ending 9/30/07
Sales by Product TypeLTM ending 9/30/07
North America
Europe andOther
Interior
Exterior
7/29/2019 Masonite mgmt pres
6/25
6
Global Manufacturing and Distribution Footprint
Over 65 Manufacturing Sites in 18 Countries - Well Positioned for International Growth
7/29/2019 Masonite mgmt pres
7/25
7
Innovative Product Offerings
Transforming homes with exceptional definition and elegance
7/29/2019 Masonite mgmt pres
8/25
8
Safe N Sound
Doors with DorCor
A Masonite Innovation
DorCor = Wheat Straw Board
Rapidly renewable resource Lightweight
Formaldehyde free
Lower cost
7/29/2019 Masonite mgmt pres
9/25
9
Customers / Channels
>3,500 Customers Globally
Repair, Renovation and Remodeling Direct to Retail Home Centers
New Home Construction
One Step Distributors Two-step Distributors
European distributors and home centers
7/29/2019 Masonite mgmt pres
10/25
10
Vertically-Integrated Manufacturer
Interior and Exterior Door Plants
Manufacturing / Light Assembly
to support Wholesale and Retail Customers
Medium Capital Investment
Dorfab Facilities
Assembly and orderfulfillment for RetailCustomers
Low Capital Investment
Components Plants
Core components include: Door Facings Door Lites (glass) Cutstock, Door core and Hardboard
High Capital Investment
Masonite
Ireland
Steel Edge Line
Pittsburg, KS
DorFab Operations
7/29/2019 Masonite mgmt pres
11/25
11
Highly Variable Cost Structure
Materials ( > 50% of COGS $) Fully variable- Wood components, hardboard, MDF- Steel, glue, resin, paint
Distribution Primarily variable
Direct Labor Primarily variable
Overhead Partially variable
Cost of Goods Sold 79% of 2006 Revenue
SG&A Partially variable
7/29/2019 Masonite mgmt pres
12/25
12
7/29/2019 Masonite mgmt pres
13/25
13
New Senior Management Team CEO / Finance / HR /Manufacturing and Supply Chain / General Counsel
Major Talent Upgrades Throughout the Company:
Product Management
Sales and Marketing
Manufacturing/Supply Chain
Finance Deployed Lean Sigma in 19 Total Sites
Instilling Performance Culture and Meritocracy
Broad Employee Engagement and Communication
Strategic Goals - Build Capabilities and Develop Talent
7/29/2019 Masonite mgmt pres
14/25
14
Create Customer Excitement
Lead Times and Fill Rates Improved
Understand Voice of Customer
Product/Brand focus groups
Customer shop-alongs
Website focus groups
Driving Innovation Accelerating ProductIntroductions
Launching New Consumer-Oriented Websitewww.masonite.com
Every interaction with customers is an opportunity to delight them
7/29/2019 Masonite mgmt pres
15/25
15
Drive Exceptional Improvements in Manufacturing
Safety = 40% reduction in Injuries YTD
YTD September Gross Margin Improvement = 225 bps
Lean Sigma, Supply Chain, Price
September 30 Inventory Reduced $63 M (15.9%) YOY
Headcount = Down 16% from September 2006
Consolidating Door Capacity Closed 12 Plants since 2005
Increasing Molded Skins Capacity through Lean Sigma
Positioning Masonite well for housing rebound
7/29/2019 Masonite mgmt pres
16/25
16
Done in a self-funding way
1,800
1,850
1,900
1,950
2,000
2,050
2,100
Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307
Net Debt (Millions of US Dollars)
Initiated Management Changes
7/29/2019 Masonite mgmt pres
17/25
17
Strong cash generative capability
US $ M FY 2006
YTD 2007
September
Adjusted EBITDA 332.6$ 249.4$Adjustments (30.2) (16.4)
Cash Interest (173.0) (112.0)
Cap Ex (49.6) (22.7)
Cash Taxes (net) (7.1) (5.6)
Change in NWC 20.4 1.1Deferred Financing Fees (18.3) -
Proceeds from Asset Dispositions 20.5 0.8
Acquisitions - (7.0)
All Other (6.2) (14.2)
Change in Net Debt 89.1$ 73.4$
Interest on Senior Subordinated Notes is due semi annually on April 15 and October 15
7/29/2019 Masonite mgmt pres
18/25
18
Significant Business in Europe and with NA Commercial Customers
68.2%
3.9%
27.9%
Europe and Other
NA CommercialNorth America
Sales by Geographic Segment
LTM ending 9/30/07
7/29/2019 Masonite mgmt pres
19/25
19
Accelerating Growth
Vital to Our Success
Gaining Profitable Business in NorthAmerica through Improved CommercialCapabilities and Channel Specific SalesInitiatives
Rapid and Targeted New ProductIntroductions
Accelerating Global Market Expansion
7/29/2019 Masonite mgmt pres
20/25
20
Expanded Margins
8.0%
9.0%
10.0%
11.0%
12.0%
13.0%
14.0%
15.0%
16.0%
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2005
20062007
Adjusted EBITDA Margin
Timely progress to help weather the difficulties ahead
7/29/2019 Masonite mgmt pres
21/25
21
Ongoing Challenges for Masonite
Further Decline in U.S. Housing Starts
Impact of Credit Crisis Globally
Continuing Softness in Repair / Renovation /Remodeling Market
Loss of approximately of Home Depot business fully
impacting Q3 2007
Benefit of favorable year-over-year price comparisonsended
Ongoing Pricing Pressures in Soft Market
Increasing pressure on Masonites margins and operating results
7/29/2019 Masonite mgmt pres
22/25
22
New Construction Unravels
Clear indication that current downward cycle will last through 2008Clear indication that current downward cycle will last through 2008
7/29/2019 Masonite mgmt pres
23/25
23
Covenant metrics
Historical Performance
Q4 2006 Q1 2007 Q2 2007 Q3 2007
Net Debt / LTM Adj. EBITDA 5.96x 5.74x 5.76x 5.87x
Covenant 7.40 7.40 7.40 7.30
LTM Adj. EBITDA / Cash Interest 1.91x 1.97x 1.97x 1.92x
Covenant 1.60 1.60 1.60 1.60
Future Covenants
2008 Covenants
Q4 2007 Jan - Jun Jul - Sept Oct - Dec
Net Debt / LTM Adj. EBITDA 7.00x 7.00x 6.80x 6.50x
LTM Adj. EBITDA / Cash Interest 1.65x 1.65x 1.65x 1.75x
Takeaway: Covenants will tighten further in 2008
7/29/2019 Masonite mgmt pres
24/25
24
Net Debt as of 9/30/07
9/30/2007US $ M Outstanding Capacity
Revolving credit facility -$ 350.0$
Other bank loans 16.6 16.6
Senior secured credit facility term loan 1,145.6Senior subordinated notes due 2015 769.9
Other subsidiary long-term debt 22.2Less: Cash on hand (59.0)Net Debt 1,895.4$ *
* Net debt as defined in the credit agreement also includes notes payable andletters of credit of $14.3 million
7/29/2019 Masonite mgmt pres
25/25
25
Final Thoughts
Masonite is a well positioned company strong brand and extensive product offering vertically integrated geographic spread
Relatively low fixed cost structure
Aggressively aligning capacity with demand
Driving Alignment and Accountability MasoniteBlueprint
New Management post LBO taking aggressiveactions to:
improve performance /margins in difficult industry
environment building base for strong, profitable growth when
markets stabilize
Priority on Cash generation / debt reduction
Top Related