MISSISSAUGA, Ontario--(Business Wire)--
Masonite International Inc.:
Fourth Quarter Highlights
-- Sales declined 16.8% to $486.8 million from $585.0 million in
the fourth quarter of 2006
-- Operating EBITDA decreased 42.9% to $39.4 million from $69.0
million
-- Adjusted EBITDA decreased 24.0% to $57.6 million from $75.8
million
-- Adjusted EBITDA margin decreased to 11.8% from 13.0%
-- Net debt increased $14.9 million to $1,910.3 million on
December 31, 2007 from $1,895.4 million on September 30, 2007
Full Year Highlights
-- Sales declined 11.8% to $2,174.4 million from $2,464.5 million
in 2006
-- Operating EBITDA decreased 9.9% to $272.4 million from $302.4
million
-- Adjusted EBITDA decreased 4.0% to $319.4 million from $332.6
million
-- Adjusted EBITDA margin increased to 14.7% from 13.5%
-- Net debt decreased $58.5 million to $1,910.3 million on
December 31, 2007 from $1,968.8 million on December 31, 2006
Masonite International Inc. today announced fourth quarter 2007
sales of $486.8 million, a decline of 16.8% compared to sales of
$585.0 million in the fourth quarter of 2006. Operating EBITDA
decreased 42.9% to $39.4 million from $69.0 million in the fourth
quarter of 2006. Adjusted EBITDA, calculated pursuant to the Company's
credit agreement, declined 24.0% to $57.6 million in the fourth
quarter of 2007, compared to $75.8 million in the prior year period.
As described in the attached reconciliation, fourth quarter 2007
Adjusted EBITDA includes $18.2 million of net adjustments, while
Adjusted EBITDA in the fourth quarter of 2006 includes $6.8 million of
such adjustments.
"It is clear that we are in, have been in, and will continue to be
in an extremely challenging market environment in the United States,
which is our largest market," said Frederick Lynch, President and
Chief Executive Officer of Masonite. "At Masonite, we continue to
actively address the reality of the difficult markets head on through
aggressive cost actions, plant consolidations and closures, and
tighter working capital and cash controls, while at the same time
pursuing growth opportunities through new products and innovation."
In the fourth quarter, the Company completed the consolidation of
its interior door manufacturing operations in Florida, resulting in
the closure of its Tampa, Florida facility. Subsequent to year end,
the Company announced the closure of four additional sites; one
located in the UK and three additional sites in North America. The
Company recorded a restructuring charge of $8.6 million in the fourth
quarter of 2007 in connection with these closures as well as a further
reduction in salaried workforce, and non-cash asset impairment and
disposal losses of $6.6 million associated with redundant assets
scheduled for disposal upon closure of the facilities mentioned
previously.
As a result of the Home Depot business loss in mid-2007, and the
continuing weakness in the North American segment, the Company
recorded a fourth quarter impairment charge of $303.8 million, and a
related tax benefit of $34.0 million. Accounting standards require the
comparison of estimated fair values of intangibles to carrying values
on an annual basis or when events or conditions indicate that the
intangible may be impaired. The total impairment was comprised of
goodwill impairment of $208.4 million, impairment in tradename
intangibles of $30.0 million and impairment in customer relationship
intangibles of $65.4 million.
In the fourth quarter of 2007, net debt (consolidated debt net of
cash and cash equivalents) increased by $14.9 million to $1,910.3
million on December 31, 2007 from $1,895.4 million on September 30,
2007. Excluded from the net debt balances is $52.1 million outstanding
on the Company's accounts receivable sales facility.
Sales in the North American segment decreased 25.8% to $322.8
million in the fourth quarter of 2007 from $435.6 million in the
fourth quarter of 2006. Sales to customers from facilities outside of
North America, primarily in Western Europe, increased approximately
9.9% to $164.1 million in the fourth quarter of 2007 from $149.3
million in the prior year period. Favorable foreign currency movements
provided a $24.4 million positive impact on comparative consolidated
sales ($9.3 million in North America and $15.1 million in rest of
world) and also had a favorable impact on margins in the period.
Other expense of $8.3 million in the fourth quarter of 2007
included the restructuring charges noted above, offset by favorable
non-cash foreign currency adjustments of $0.7 million, $2.7 million
received on the settlement of an insurance claim from prior years and
a $3.4 million gain on the favorable resolution of an environmental
liability. This compares to $22.4 million of Other expense in the
fourth quarter of 2006, which reflected principally a $3.1 million
charge for a reduction in salaried workforce and $19.0 million of
asset impairment and disposal charges.
For the full year ended December 31, 2007 sales were $2,174.4
million, a decline of 11.8% compared to sales of $2,464.5 million in
2006. Operating EBITDA decreased 9.9% to $272.4 million from $302.4
million (net of a $11.5 million non-cash inventory write down).
Adjusted EBITDA, calculated pursuant to the Company's credit
agreement, decreased 4.0% to $319.4 million in 2007, compared to
$332.6 million in the prior year period. 2007 Adjusted EBITDA includes
$47.0 million of net adjustments, while Adjusted EBITDA for 2006
includes $30.2 million of such adjustments, as described in the
attached reconciliation.
In 2007, Masonite reduced net debt (consolidated debt net of cash
and cash equivalents) by $58.5 million to $1,910.3 million on December
31, 2007 from $1,968.8 million on December 31, 2006. This compares to
a decrease of net debt of $89.0 million in 2006. The amount
outstanding under the Company's accounts receivable sales program
declined by $60.8 million to $52.1 million from $112.9 million in the
prior year.
Sales in the North American segment decreased 19.6% to $1,526.3
million in 2007 from $1,899.4 million in 2006. Sales to customers from
facilities outside of North America, primarily in Western Europe,
increased approximately 14.7% to $648.2 million in 2007 from $565.0
million in the prior year period. Favorable foreign currency movements
provided a $59.3 million positive impact on comparative consolidated
sales ($13.4 million in North America and $45.9 million in rest of
world) and also had a favorable impact on margins for the year.
Other expense in 2007 was $29.9 million, including restructuring
charges of approximately $27.9 million and non-cash asset impairment
and disposal losses of $14.4 million, offset by favorable non-cash
foreign currency adjustments of $6.3 million, the insurance settlement
of $2.7 million and the environmental gain of $3.4 million. This
compares to $39.0 million of Other expense in 2006, composed primarily
of charges for the closure of four manufacturing sites, changes in
senior management, and impairment and disposal losses on fixed assets
during the year.
For the latest twelve months ended December 31, 2007, Adjusted
EBITDA declined by 5.7% to $319.4 million from $337.6 million for the
twelve months ended September 30, 2007. The Company's net debt to
Adjusted EBITDA ratio was 6.03x for the twelve months ending December
31, 2007 compared to 5.66x for the twelve months ending September 30,
2007, versus a covenant maximum of 7.00x. (As of December 31, 2007,
$12.3 million of outstanding letters of credit and other notes payable
not reflected in net debt presented above, and a $3.2 million
liability on the Company's interest rate swap were included as net
debt for covenant calculation purposes only.) Trailing twelve month
cash interest for the twelve months ending December 31, 2007 was
$167.3 million, and the Company's cash interest coverage ratio
(Adjusted EBITDA divided by cash interest expense) was 1.91x at
December 31, 2007 compared to 1.97x at September 30, 2007 versus a
covenant minimum of 1.65x.
Adjusted EBITDA for all periods including the first nine months of
2007 reflect $12.4 million of additional adjustments eligible under
the Company's credit agreement that had not been previously reported.
In the first quarter of 2007, the Company adopted the new
accounting standards issued by the Canadian Institute of Chartered
Accountants with respect to Comprehensive Income, Hedges and Financial
Instruments. The impact of this was to record the fair value of the
Company's interest rate swaps on the balance sheet in Other assets,
and to reclassify the unamortized deferred financing costs from Other
assets to a reduction of debt incurred giving rise to such financing
costs. As a result, debt balances as of December 31, 2007 are
presented in the following unaudited financial statements net of
unamortized deferred financing costs of $61.0 million at December 31,
2007, whereas debt is presented at face value as at December 31, 2006.
Net debt for the covenant calculations described above also present
the debt at face value.
This press release is also available within the "News & Events"
section of the Company's website at www.masonite.com.
A Conference Call with Masonite management will take place at
10:00 a.m. Eastern Daylight Time today. Dial in information is as
follows:
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USA Toll Free Number: 888-810-5901
USA Toll Number: +1-210-839-8505
Passcode: MASONITE
A replay of the call will be available through April 11, 2008 by
calling:
USA Toll Free Number: 866-407-9260
USA Toll Number: +1-203-369-0614
Passcode: 9245
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Masonite International is a leading global manufacturer of
residential and commercial doors, committed to providing the highest
value door products to our customers in more than 70 countries around
the world.
This press release and other written reports and oral statements
made by the Company may include forward-looking statements, all of
which are subject to risks and uncertainties. One can identify these
forward-looking statements by their use of words such as "may",
"might", "expects", "plans", "would", "estimates", "intends",
"forecasts", "projects" and other words of similar meaning, or by the
fact that they do not relate strictly to historical or current facts.
These statements are likely to address, but may not be limited to, the
Company's growth strategy and financial results, the Company's
operations and the conditions in its industry. Readers must carefully
consider any such statements and should understand that many factors
could cause actual results and developments to differ materially from
the Company's forward-looking statements. These factors may include
inaccurate assumptions and a broad variety of other known and unknown
risks and uncertainties, including: general economic, market and
business conditions; levels of construction and renovation activity;
competition; financing risks; ability to manage expanding operations;
commitments; new services; retention of key management personnel;
environmental and other government regulation; and other factors
disclosed by the Company in its filings from time to time with the
United States Securities and Exchange Commission. No forward-looking
statement can be guaranteed and actual future results may vary
materially. Therefore, we caution you not to place undue reliance on
our forward-looking statements. The Company disclaims any
responsibility to update these forward-looking statements, whether as
a result of new information, future events or otherwise.
This press release contains non-GAAP measures. In this press
release Operating EBITDA is defined as earnings before depreciation
and amortization; other expense; interest; income taxes; and
non-controlling interest. Adjusted EBITDA is defined as Operating
EBITDA further adjusted pursuant to the terms of the Company's credit
agreement. Adjusted EBITDA margin is defined as Adjusted EBITDA
divided by sales. Net debt is defined as the sum of long-term debt,
current portion of long-term debt and bank indebtedness, less cash and
cash equivalents. These terms are not presentations made under GAAP
and are not measures of financial condition or profitability, should
not be considered as an alternative to GAAP financial measures, and
are unlikely to be comparable to similar measures used by other
companies.
Certain figures have been reclassified to conform to the current
period basis of presentation.
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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Period Ended December 31
(In millions of U.S. dollars)
Three Month Period Twelve Month Period
------------------ -------------------
2007 2006 2007 2006
----------------------------------------------------------------------
Sales $ 486.8 $ 585.0 $2,174.4 $2,464.5
Cost of sales 397.8 463.4 1,695.4 1,950.2
----------------------------------------------------------------------
88.9 121.6 479.0 514.2
Selling, general and
administration expenses 49.6 52.6 206.6 211.8
----------------------------------------------------------------------
39.4 69.0 272.4 302.4
Depreciation and amortization 32.6 32.6 127.4 124.6
----------------------------------------------------------------------
Income before other expense,
interest and income taxes 6.7 36.4 144.9 177.8
Other expense, net 8.3 22.4 29.9 39.0
Impairment of goodwill and
intangibles 303.8 - 303.8 -
Interest 44.1 45.4 178.2 182.6
----------------------------------------------------------------------
(349.5) (31.3) (367.0) (43.8)
Income taxes (recovery) (59.8) (10.9) (72.2) (15.7)
----------------------------------------------------------------------
(289.7) (20.5) (294.7) (28.2)
Non-controlling interest 2.8 0.6 8.1 6.2
----------------------------------------------------------------------
Net income (loss) $ (292.5) $ (21.1) $ (302.9) $ (34.3)
----------------------------------------------------------------------
Adjusted EBITDA Reconciliation:
----------------------------------------------------------------------
Net income (loss) $ (292.5) $ (21.1) $ (302.9) $ (34.3)
Interest 44.1 45.4 178.2 182.6
Income taxes (recovery) (59.8) (10.9) (72.2) (15.7)
Depreciation and amortization 32.6 32.6 127.4 124.6
Other expense, net 8.3 22.4 29.9 39.0
Impairment of goodwill and
intangibles 303.8 - 303.8 -
Non-controlling interest 2.8 0.6 8.1 6.2
----------------------------------------------------------------------
Operating EBITDA 39.4 69.0 272.4 302.4
Inventory write-down 5.0 2.5 7.0 11.5
Receivables transaction charges 0.9 2.0 5.3 7.9
Facility closures / realignments 2.1 - 2.4 1.9
Stock based compensation - 0.8 1.8 2.0
Franchise and capital taxes 0.7 0.3 4.2 2.2
Foreign exchange (gains) (0.1) (0.5) (2.6) (1.1)
Employee future benefits 0.3 0.1 1.1 0.6
Severance 1.4 - 3.0 -
Relocation / recruiting 1.3 - 5.6 -
Lean Sigma, Supply Chain & HR
Consulting 1.6 - 7.2 -
(Earnings) loss of unrestricted
subsidiaries 3.7 - 3.7 -
Other (1) 1.3 1.5 8.3 5.0
----------------------------------------------------------------------
Adjusted EBITDA $ 57.6 $ 75.8 $ 319.4 $ 332.6
----------------------------------------------------------------------
Adjusted EBITDA Margin (2) 11.8% 13.0% 14.7% 13.5%
LTM Adjusted EBITDA $ 319.4 $ 332.6
----------------------------------------------------------------------
(1) Includes KKR monitoring / consulting, legal settlements and other
(2) Calculated by dividing Adjusted EBITDA by Sales
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UNAUDITED CONSOLIDATED BALANCE SHEETS
(In millions of U.S. dollars)
December 31 December 31
2007 2006
----------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 41.8 $ 47.4
Accounts receivable 264.9 247.7
Inventories 295.8 351.5
Prepaid expenses 15.2 19.1
Asset held for sale 1.8 -
Income tax recoverable 1.8 -
Current future income taxes 39.4 38.9
----------------------------------------------------------------------
660.7 704.6
----------------------------------------------------------------------
Property, plant and equipment 812.5 873.6
Goodwill and other intangible assets 1,146.4 1,478.4
Other assets 20.5 89.3
Long-term future income taxes 20.0 18.5
----------------------------------------------------------------------
1,999.4 2,459.9
----------------------------------------------------------------------
$ 2,660.1 $ 3,164.5
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Bank indebtedness $ 17.6 $ 60.4
Accounts payable and accrued liabilities 325.1 343.7
Income taxes payable 15.1 26.9
Current future income taxes 2.1 1.6
Current portion of long-term debt 20.8 32.2
----------------------------------------------------------------------
380.7 464.8
Long-term debt (1) 1,852.6 1,923.6
Long-term future income taxes 147.5 214.2
Other long-term liabilities 38.9 41.1
----------------------------------------------------------------------
2,419.8 2,643.7
----------------------------------------------------------------------
Non-controlling interest 42.7 36.8
----------------------------------------------------------------------
Share capital 567.2 567.2
Contributed surplus 6.8 5.0
Deficit (407.0) (104.1)
Accumulated other comprehensive income 30.7 16.0
----------------------------------------------------------------------
197.6 484.0
----------------------------------------------------------------------
$ 2,660.1 $ 3,164.5
----------------------------------------------------------------------
(1) Long-term debt is net of unamortized deferred financing fees of
$61.0 million as at December 31, 2007
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
For the Period Ended December 31
(In millions of U.S. dollars)
Three Month Period Twelve Month Period
------------------ -------------------
2007 2006 2007 2006
----------------------------------------------------------------------
Cash provided by (used in)
operating activities
Net income (loss) for the
period $ (292.5) $ (21.1) $ (302.9) $ (34.3)
Non-cash items 313.3 37.1 407.2 138.4
Accounts receivable 28.1 23.0 (2.3) (1.2)
Inventories 35.3 41.7 61.3 48.6
Income taxes payable (12.9) 12.7 (16.6) 9.5
Prepaid expenses 4.6 2.4 4.3 0.6
Accounts payable and accrued
liabilities (59.4) (58.6) (32.6) (15.4)
----------------------------------------------------------------------
16.5 37.3 118.5 146.2
----------------------------------------------------------------------
Cash provided by (used in)
financing activities
Increase (decrease) in bank
and other indebtedness 0.1 (21.8) (43.7) (65.4)
Net repayment of long-term
debt (3.4) 7.0 (22.0) (24.9)
Other - (22.4) - (22.2)
----------------------------------------------------------------------
(3.2) (37.1) (65.6) (112.5)
----------------------------------------------------------------------
Cash provided by (used in)
investing activities
Proceeds from sale of assets 7.8 0.3 8.6 20.5
Additions to property, plant
and equipment (20.1) (14.3) (42.8) (49.6)
Other investing activities (4.5) (1.1) (15.2) (10.5)
----------------------------------------------------------------------
(16.8) (15.0) (49.4) (39.5)
----------------------------------------------------------------------
Net foreign currency translation
adjustment (13.6) 1.0 (9.1) 5.7
----------------------------------------------------------------------
Increase in cash (17.3) (13.8) (5.7) -
Cash, beginning of period 59.0 61.3 47.4 47.5
----------------------------------------------------------------------
Cash, end of period $ 41.8 $ 47.4 $ 41.8 $ 47.4
----------------------------------------------------------------------
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Masonite International Inc., Mississauga
Tony DiLucente, 813-739-3000
Copyright Business Wire 2008
