Masonite International Inc. Announces Fourth Quarter and 2006 Year End Results



    TAMPA, FLA., March 12 /CNW/ - Masonite International Inc.:

    Fourth Quarter Highlights

    --  Sales declined 1.7% to $585.0 million from $595.2 million

    --  Operating EBITDA increased 39.1% to $69.0 million from $49.6 million

    --  Adjusted EBITDA increased 9.1% to $75.8 million from $69.5 million

    --  Adjusted EBITDA margin increased to 13.0% from 11.7%

    --  Net debt of $1,968.8 million as of December 31, 2006 declined $0.1
million from $1,968.9 million as of September 30, 2006

    Full Year Highlights

    --  Sales increased 1.5% to $2,464.5 million from $2,428.5 million

    --  Operating EBITDA increased 32.6% to $302.4 million from $228.1
million

    --  Adjusted EBITDA increased 11.5% to $332.6 million from $298.4 million

    --  Adjusted EBITDA margin increased to 13.5% from 12.3%

    --  Net debt decreased $89.0 million to $1,968.8 million as of December
31, 2006 from $2,057.8 million as of December 31, 2005

    Masonite International Inc. today announced fourth quarter 2006 net sales
of $585.0 million, a decline of 1.7% compared to net sales of $595.2 million
in the fourth quarter of 2005. Operating EBITDA increased 39.1% to $69.0
million from $49.6 million in the fourth quarter of 2005. Consolidated
Adjusted EBITDA, calculated pursuant to the Company's Credit Agreement,
increased 9.1% to $75.8 million in the fourth quarter of 2006, compared to
$69.5 million in the prior year period. Fourth quarter 2006 Adjusted EBITDA
includes $6.8 million of net adjustments, while Adjusted EBITDA in the fourth
quarter of 2005 includes $19.9 million of such adjustments, as described in
the attached reconciliation.

    "Masonite felt the full impact of weakness in both the new residential
construction and the repair and remodeling markets during the fourth quarter,"
said Kenneth W. Freeman, Chairman and Chief Executive Officer of Masonite.
"Despite difficult market conditions, our profitability improved significantly
compared to the fourth quarter of 2005."

    Net debt at year end of $1,968.8 million remained substantially unchanged
from the level on September 30, 2006. During the fourth quarter, Masonite paid
the previously announced $17.3 million fee pursuant to the conversion of the
Company's Senior Subordinated Loan to Exchange Notes.

    Other expense for the three month period ended December 31, 2006 was
$22.4 million, including fixed asset impairment costs of $17.7 million related
to product lines curtailed or exited during the fourth quarter, and to the
ongoing consolidation of facilities and equipment associated with entry door
manufacturing operations. In addition, losses of $2.2 million in association
with the disposal of surplus equipment, and $2.3 million of severance and
restructuring costs associated with the completion of reductions in staffing
levels announced during the third quarter of 2006, were recorded during the
quarter.

    For the twelve month period ended December 31, 2006 net sales increased
1.5% to $2,464.5 million, from $2,428.5 million in the prior year. Operating
EBITDA increased 32.6% to $302.4 million from $228.1 million in 2005. Adjusted
EBITDA increased 11.5% to $332.6 million in 2006, compared to $298.4 million
in the prior year. Adjusted EBITDA for 2006 includes $30.2 million of net
adjustments, while Adjusted EBITDA for 2005 includes $70.3 million of such
adjustments, as described in the attached reconciliation.

    During the year, net debt decreased approximately $89.0 million,
resulting in the reduction of consolidated debt, net of cash and cash
equivalents, to $1,968.8 million on December 31, 2006, from $2,057.8 million
on December 31, 2005. Cash interest paid during the year 2006 was $171.9
million.

    Other expense for the year was $39.0 million, including asset impairment
charges of $17.7 million noted above, restructuring and severance of $13.9
million relating to the closure of four plants, the reduction in employment
levels announced during the third quarter, the departure of former senior
executives of the Company and $6.7 million of losses on disposal of assets.
Two corporate aircraft were disposed of in 2006 in addition to surplus real
estate and other fixed assets.

    Subsequent to the end of the year, Masonite was informed by its largest
customer that they will reduce their volume of business with the Company by
approximately 50% starting later this year, as a result of price increases
implemented by Masonite during 2006. "Although we are disappointed with this
decision, it is essential that we ground Masonite on a solid foundation of
selling our door products at prices that provide us with appropriate returns
for the value we provide," said Mr. Freeman. "We are actively pursuing
opportunities to accelerate growth with existing and new customers, and we are
evaluating selective adjustments in capacity as we strive to balance supply
and anticipated demand." Masonite expects to record a charge in the first
quarter of 2007 in connection with the transition of business.

    A full version of this press release, with financial attachments, is also
available within the "Corporate Information" section of the Company's website
at www.masonite.com.

    A Conference Call with Masonite management will take place at 10am
Eastern Daylight Time on Monday, March 12, 2007. Dial in information is as
follows:

    USA Toll Free Number: (888) 552-2690

    USA Toll Number: +1 (517) 268-4679

    Passcode: MASONITE

    Masonite International Inc. is a leading global manufacturer of
residential and commercial doors. Our employees are a dedicated team 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", "will",
"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. 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, a measure used historically by management to measure
operating performance, is defined as earnings before depreciation and
amortization; other expense; interest; income taxes; and non-controlling
interest. Operating EBITDA margin is defined as EBITDA divided by sales.
Organic growth is defined as sales growth adjusted for acquisitions which are
not fully reflected in the prior period comparative. 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. Adjusted EBITDA is as defined in
the Company's credit agreements. These terms do not have standardized meanings
under GAAP 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.

    
    UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
    Three Month Period Ended December 31, 2006
    (In millions of U.S. dollars)

                                                          2006     2005
    ----------------------------------------------------------------------


    Sales                                                 $585.0   $595.2

    Cost of sales                                          463.3    490.1
    ----------------------------------------------------------------------

                                                           121.6    105.1

    Selling, general and administration expenses (1)        52.6     55.5
    ----------------------------------------------------------------------

                                                            69.0     49.6

    Depreciation and amortization                           32.6     30.7
    ----------------------------------------------------------------------

    Income before other expense, interest and income
     taxes                                                  36.4     18.9

    Other expense, net                                      22.4      2.1

    Interest (1)                                            45.4     46.6
    ----------------------------------------------------------------------

                                                           (31.3)   (29.9)

    Income taxes (recovery)                                (10.9)     3.0
    ----------------------------------------------------------------------

                                                           (20.5)   (32.9)

    Non-controlling interest                                 0.6      1.3
    ----------------------------------------------------------------------

    Net loss                                              $(21.1)  $(34.2)
    ----------------------------------------------------------------------


    Adjusted EBITDA Reconciliation:                       2006     2005
    ----------------------------------------------------------------------

    Net loss                                              $(21.1)  $(34.2)
    Interest                                                45.4     46.6
    Income taxes (recovery)                                (10.9)     3.0
    Depreciation and amortization                           32.6     30.7
    Other expense, net                                      22.4      2.1
    Non-controlling interest                                 0.6      1.3
    ----------------------------------------------------------------------
      Operating EBITDA                                      69.0     49.6

    Inventory write-down                                     2.5      8.4
    Inventory purchase accounting adjustment                   -      1.2
    ----------------------------------------------------------------------
                                                            71.6     59.2

    Receivables transaction charges                          2.0      2.3
    Laurel fire                                                -        -
    Facility closures / realignments                           -        -
    Acquisitions impact (including synergies)                  -      1.7
    Stock based compensation                                 0.8      1.1
    Franchise and capital tax                                0.3      1.7

    Foreign exchange (gains)                                (0.5)    (1.0)

    Craftmaster contract termination                           -        -
    Employee future benefits                                 0.1      0.4
    Hurricane expenses (recovery)                              -        -
    Other                                                    1.5      4.1
    ----------------------------------------------------------------------
      Adjusted EBITDA                                      $75.8    $69.5
    ----------------------------------------------------------------------

    (1) Receivables transactions charges were reclassified from
    Interest expense to Selling, general and administration expenses.




    UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
    Year Ended December 31, 2006
    (In millions of U.S. dollars)

                                                          2006     2005
    ----------------------------------------------------------------------


    Sales                                               $2,464.5 $2,428.5

    Cost of sales                                        1,950.2  1,984.7
    ----------------------------------------------------------------------

                                                           514.2    443.8

    Selling, general and administration expenses (1)       211.8    215.7
    ----------------------------------------------------------------------

                                                           302.4    228.1

    Depreciation and amortization                          124.6    109.3
    ----------------------------------------------------------------------

    Income before other expense, interest and income
     taxes                                                 177.8    118.8

    Other expense, net                                      39.0     89.0

    Interest (1)                                           182.6    148.3
    ----------------------------------------------------------------------

                                                           (43.8)  (118.5)

    Income tax recovery                                    (15.7)   (24.6)
    ----------------------------------------------------------------------

                                                           (28.2)   (93.8)

    Non-controlling interest                                 6.2      6.6
    ----------------------------------------------------------------------

    Net loss                                              $(34.3) $(100.5)
    ----------------------------------------------------------------------


    Adjusted EBITDA Reconciliation:                       2006     2005
    ----------------------------------------------------------------------

    Net loss                                              $(34.3) $(100.5)
    Interest                                               182.6    148.3
    Income tax recovery                                    (15.7)   (24.6)
    Depreciation and amortization                          124.6    109.3
    Other expense, net                                      39.0     89.0
    Non-controlling interest                                 6.2      6.6
    ----------------------------------------------------------------------
      Operating EBITDA                                     302.4    228.1

    Inventory write-down                                    11.5      8.4
    Inventory purchase accounting adjustment                   -     21.8
    ----------------------------------------------------------------------
                                                           314.0    258.2


    Receivables transaction charges                          7.9      6.5
    Laurel fire                                                -      5.0
    Facility closures / realignments                         1.9      1.8
    Acquisitions impact (including synergies)                  -      9.5
    Stock based compensation                                 2.0      3.0
    Franchise and capital tax                                2.2      3.0
    Foreign exchange (gains)                                (1.1)    (4.2)
    Craftmaster contract termination                           -      1.3
    Employee future benefits                                 0.6      1.1
    Hurricane expenses (recovery)                           (0.7)     7.9
    Other                                                    5.7      5.3
    ----------------------------------------------------------------------
      Adjusted EBITDA                                     $332.6   $298.4
    ----------------------------------------------------------------------

    (1) Receivables transactions charges were reclassified from
     Interest expense to Selling, general and administration
     expenses.

    (Year ended December 31, 2005 represents the combined results of
     Masonite International Corporation for the period from January 1,
     2005 to April 6, 2005 and Masonite International Inc. for the period
     from February 2, 2005 to December 31, 2005)



    UNAUDITED CONSOLIDATED BALANCE SHEETS
    (In millions of U.S. dollars)


                                                        Dec. 31, Dec. 31,
                                                          2006     2005
    ----------------------------------------------------------------------

    ASSETS
    Cash and cash equivalents                              $47.4    $47.5
    Accounts receivable                                    247.7    246.3
    Inventories                                            351.5    400.1
    Prepaid expenses                                        19.1     21.1
    Current future income taxes                             38.9     36.4
    ----------------------------------------------------------------------
                                                           704.6    751.3
    ----------------------------------------------------------------------

    Property, plant and equipment                          873.6    940.8
    Goodwill and other intangible assets                 1,478.4  1,513.4
    Other assets                                            89.3     73.3
    Long-term future income taxes                           18.5     18.5
    ----------------------------------------------------------------------
                                                         2,459.9  2,546.0
    ----------------------------------------------------------------------

                                                        $3,164.5 $3,297.3
    ----------------------------------------------------------------------



    LIABILITIES AND SHAREHOLDER'S EQUITY
    Bank indebtedness                                      $60.4   $128.8
    Accounts payable and accrued liabilities               343.7    355.4
    Income taxes payable                                    26.9     19.2
    Current future income taxes                              1.6      2.4
    Current portion of long-term debt                       32.2     34.3
    ----------------------------------------------------------------------
                                                           464.8    540.1

    Long-term debt                                       1,923.6  1,942.1
    Long-term future income taxes                          214.2    243.6
    Other long-term liabilities                             41.1     48.5
    Non-controlling interest                                36.8     30.7
    ----------------------------------------------------------------------
                                                         2,680.5  2,805.0
    ----------------------------------------------------------------------

    Share capital                                          567.2    567.2
    Contributed surplus                                      5.0      3.0
    Deficit                                               (104.1)   (69.8)
    Cumulative translation adjustments                      16.0     (8.0)
    ----------------------------------------------------------------------
                                                           484.0    492.3
    ----------------------------------------------------------------------

                                                        $3,164.5 $3,297.3
    ----------------------------------------------------------------------



    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
    Three Month Period Ended December 31, 2006
    (In millions of U.S. dollars)



                                                          2006     2005
    ----------------------------------------------------------------------


    Cash provided by (used in) operating activities
      Net loss for the period                             $(21.1)  $(34.2)
      Non-cash items                                        38.1     33.5
      Accounts receivable                                   23.0     31.3
      Inventories                                           41.7     19.5
      Income taxes payable                                  12.7     18.2
      Prepaid expenses                                       2.4      3.6
      Accounts payable and accrued liabilities             (58.6)   (36.1)
    ----------------------------------------------------------------------
                                                            38.2     35.8
    ----------------------------------------------------------------------

    Cash provided by (used in) investing activities
      Proceeds from sale of assets                           0.3      0.1
      Acquisitions                                             -    (16.5)
      Additions to property, plant and equipment           (15.2)   (28.6)
      Other investing activities                            (1.2)    (9.3)
    ----------------------------------------------------------------------
                                                           (16.0)   (54.3)
    ----------------------------------------------------------------------

    Cash provided by (used in) financing activities
      Net issuance of common shares                            -        -
      Increase (decrease) in bank and other
       indebtedness                                        (21.8)    11.6
      Net issue (repayment) of long-term debt                7.0     (3.8)
      Other                                                (22.4)       -
    ----------------------------------------------------------------------
                                                           (37.2)     7.8
    ----------------------------------------------------------------------
    Net foreign currency translation adjustment              1.0      2.0
    ----------------------------------------------------------------------
    Increase (decrease) in cash                            (13.9)    (8.6)

    Cash, beginning of period                               61.3     56.1
    ----------------------------------------------------------------------

    Cash, end of period                                    $47.4     47.5
    ----------------------------------------------------------------------



    UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
    Year Ended December 31, 2006
    (In millions of U.S. dollars)


                                                          2006     2005
    ----------------------------------------------------------------------


    Cash provided by (used in) operating activities
      Net loss for the period                             $(34.3) $(100.5)
      Non-cash items                                       139.3     96.3
      Accounts receivable                                   (1.2)    21.3
      Inventories                                           48.6     50.5
      Income taxes payable                                   9.5     11.7
      Prepaid expenses                                       0.6     (9.5)
      Accounts payable and accrued liabilities             (15.4)    28.7
    ----------------------------------------------------------------------
                                                           147.1     98.6
    ----------------------------------------------------------------------

    Cash provided by (used in) investing activities
      Proceeds from sale of assets                          20.5      9.6
      Acquisitions                                             - (1,979.9)
      Additions to property, plant and equipment           (50.5)   (82.2)
      Other investing activities                           (10.5)   (29.0)
    ----------------------------------------------------------------------
                                                           (40.4)(2,081.5)
    ----------------------------------------------------------------------

    Cash provided by (used in) financing activities
      Net issuance of common shares                            -    567.6
      Increase (decrease) in bank and other
       indebtedness                                        (65.4)   102.1
      Net issue (repayment) of long-term debt              (24.9) 1,358.0
      Other                                                (22.2)   (78.0)
    ----------------------------------------------------------------------
                                                          (112.5) 1,949.7
    ----------------------------------------------------------------------
    Net foreign currency translation adjustment              5.7     (5.8)
    ----------------------------------------------------------------------
    Increase (decrease) in cash                             (0.1)   (39.0)

    Cash, beginning of period                               47.5     86.5
    ----------------------------------------------------------------------

    Cash, end of period                                    $47.4    $47.5
    ----------------------------------------------------------------------

    (Year ended December 31, 2005 represents the combined results of
     Masonite International Corporation for the period from January 1,
     2005 to April 6, 2005 and Masonite International Inc. for the period
     from February 2, 2005 to December 31, 2005)
    




For further information:

For further information: Masonite International Inc., Tampa Frederick
Arnold, 813-739-3000

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