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MarketScreener Homepage  >  Equities  >  Nyse  >  Masonite International Corporation    DOOR   CA5753851099

MASONITE INTERNATIONAL CORPORATION

(DOOR)
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MASONITE INTERNATIONAL : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/03/2020 | 11:20am EST
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is based upon accounting principles generally
accepted in the United States of America and discusses the financial condition
and results of operations for Masonite International Corporation for the three
and nine months ended September 27, 2020, and September 29, 2019. In this MD&A,
"Masonite," "we," "us," "our" and the "Company" refer to Masonite International
Corporation and its subsidiaries.
This discussion should be read in conjunction with (i) the unaudited condensed
consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q and (ii) the annual audited consolidated financial
statements, including the accompanying notes and MD&A, which are included in our
Annual Report on Form 10-K for the year ended December 29, 2019. The following
discussion should also be read in conjunction with the disclosure under "Special
Note Regarding Forward Looking Statements," "Item 1A. Risk Factors" elsewhere in
this Quarterly Report on Form 10-Q and the Company's Quarterly Report on Form
10-Q for the first quarter of 2020. Our actual results could differ materially
from the forward-looking statements as a result of these risks and
uncertainties.
Overview
We are a leading global designer, manufacturer and distributor of interior and
exterior doors for the new construction and repair, renovation and remodeling
sectors of the residential and the non-residential building construction
markets. Since 1925, we have provided our customers with innovative products and
superior service at compelling values. In order to better serve our customers
and create sustainable competitive advantages, we focus on developing innovative
products, advanced manufacturing capabilities and technology-driven sales and
service solutions.
We market and sell our products to remodeling contractors, builders, homeowners,
retailers, dealers, lumberyards, commercial and general contractors and
architects through well-established wholesale, retail and direct distribution
channels as part of our cross-merchandising strategy. Customers are provided a
broad product offering of interior and exterior doors and entry systems at
various price points. We manufacture a broad line of interior doors, including
residential molded, flush, stile and rail, louver and specially-ordered
commercial and architectural doors; door components for internal use and sale to
other door manufacturers; and exterior residential steel, fiberglass and wood
doors and entry systems.
We operate 62 manufacturing and distribution facilities in eight countries in
North America, South America, Europe and Asia, which are strategically located
to serve our customers through multiple distribution channels. These
distribution channels include: (i) direct distribution to retail home center
customers and homebuilders; (ii) one-step distribution that sells directly to
homebuilders and contractors; and (iii) two-step distribution through wholesale
distributors. For retail home center customers, numerous door fabrication
facilities provide value-added fabrication and logistical services, including
pre-finishing and store delivery of pre-hung interior and exterior doors. We
believe our ability to provide: (i) a broad product range; (ii) frequent, rapid,
on-time and complete delivery; (iii) consistency in products and merchandising;
(iv) national service; and (v) special order programs enables retail customers
to increase comparable store sales and helps to differentiate us from our
competitors. We believe investments in innovative new product manufacturing and
distribution capabilities, coupled with an ongoing commitment to operational
excellence, provide a strong platform for future growth.
Our reportable segments are organized and managed principally by end market:
North American Residential, Europe and Architectural. In the nine months ended
September 27, 2020, we generated net sales of $1,185.6 million or 72.4%, $174.9
million or 10.7% and $263.6 million or 16.1% in our North American Residential,
Europe and Architectural segments, respectively.

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Key Factors Affecting Our Results of Operations
COVID-19
A novel strain of coronavirus (COVID-19) was first identified in Wuhan, China in
December 2019, and in March 2020 was declared a pandemic by the World Health
Organization. To date, COVID-19 has surfaced in nearly all regions around the
world and resulted in business slowdowns or shutdowns in affected areas. As a
result, COVID-19 has impacted our business globally. Our first priority with
regard to the COVID-19 pandemic is to do everything we can to ensure the safety,
health and welfare of our employees, customers, suppliers and others with whom
we partner in our business activities. Through the use of appropriate risk
mitigation and safety practices at our facilities, we are endeavoring to
maintain operations to continue supplying the industry during this uncertain
time, recognizing the important role our customers and our products play in
construction related to providing residential shelter and health care services.
During 2020, a number of countries, provinces, states and municipalities issued
orders temporarily requiring persons who were not engaged in essential
activities and businesses to remain at home. Additionally, some jurisdictions
without stay-at-home orders required non-essential businesses to close. As a
result, some of our facilities were temporarily shut down due to the impact of
these government orders. For example, our United Kingdom facilities closed on
March 27, 2020, and did not reopen until May 2020. Additionally, local or
regional hotspots of the pandemic resulted in other locations being temporarily
idled due to the impacts of COVID-19. We estimate that nearly one-half of our
base volume decline in the second quarter of 2020 was due to the closure of our
manufacturing facilities as a result of COVID-19 in the United Kingdom and
Ireland.
During the third quarter, production levels began to stabilize at many of our
manufacturing facilities, but local or regional hotspots of the pandemic
continued to result in pockets of absenteeism resulting in reduced production
and one location being temporarily idled. While the direct financial impact of
COVID-19 was much lower than what we experienced in the second quarter, the
pandemic had and continues to have varying impacts on our reportable segments.
For example, the impact of COVID-19 on demand in the Architectural door market
in the current year and expected impacts to future periods contributed to an
impairment of that reporting unit's goodwill. Refer to Note 10. Asset
Impairment, in Item 1 of this Quarterly Report for additional information. The
extent to which the COVID-19 pandemic impacts our business, results of
operations and financial condition will depend on future developments, which are
highly uncertain and cannot be predicted. These impacts include, but are not
limited to, the duration, spread, severity and impact of the COVID-19 pandemic,
the effects of the COVID-19 pandemic on our employees, operations, customers,
suppliers and supply chain, the remedial actions and stimulus measures adopted
by federal, state and local governments and the extent to which normal economic
and operating conditions can resume.
Product Demand
There are numerous factors that influence overall market demand for our
products. Demand for new homes, home improvement products and other building
construction products have a direct impact on our financial condition and
results of operations. Demand for our products may be impacted by changes in
United States, Canadian, European, Asian or other global economic conditions,
including inflation, deflation, interest rates, availability of capital,
consumer spending rates, energy availability and costs, and the effects of
governmental initiatives to manage economic conditions. Additionally, trends in
residential new construction, repair, renovation and remodeling and
architectural building construction may directly impact our financial
performance. Accordingly, the following factors may have a direct impact on our
business in the countries and regions in which our products are sold:
•the strength of the economy;
•employment rates and consumer confidence;
•the amount and type of residential and commercial construction;
•housing sales and home values;
•the age of existing home stock, home vacancy rates and foreclosures;
•non-residential building occupancy rates;
•increases in the cost of raw materials or wages or any shortage in supplies or
labor;
•the availability and cost of credit; and
•demographic factors such as immigration and migration of the population and
trends in household formation.
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Product Pricing and Mix
The building products industry is highly competitive and we therefore face
pressure on sales prices of our products. In addition, our competitors may adopt
more aggressive sales policies and devote greater resources to the development,
promotion and sale of their products than we do, which could result in a loss of
customers. Our business in general is subject to changing consumer and industry
trends, demands and preferences. Trends within the industry change often and our
failure to anticipate, identify or quickly react to changes in these trends
could lead to, among other things, rejection of a new product line and reduced
demand and price reductions for our products, which could materially adversely
affect us. Changes in consumer preferences may also lead to increased demand for
our lower margin products relative to our higher margin products, which could
reduce our future profitability.
Business Wins and Losses
Our customers consist mainly of wholesalers and retail home centers. In fiscal
year 2019, our top ten customers together accounted for approximately 43% of our
net sales and our top customer, The Home Depot, Inc. accounted for approximately
17% of our net sales. Net sales from customers that have accounted for a
significant portion of our net sales in past periods, individually or as a
group, may not continue in future periods, or if continued, may not reach or
exceed historical levels in any period. Certain customers perform periodic
product line reviews to assess their product offerings, which have, on past
occasions, led to business wins and losses. In addition, as a result of
competitive bidding processes, we may not be able to increase or maintain the
margins at which we sell our products to our customers.
Organizational Restructuring
Over the past several years, we have engaged in a series of restructuring
programs related to exiting certain geographies and non-core businesses,
consolidating certain internal support functions and engaging in other actions
designed to reduce our cost structure and improve productivity. These
initiatives primarily consist of severance actions and lease termination costs.
Management continues to evaluate our business; therefore, in future years, there
may be additional provisions for new plan initiatives, as well as changes in
previously recorded estimates, as payments are made or actions are completed.
Asset impairment charges were also incurred in connection with these
restructuring actions for those assets sold, abandoned or made obsolete as a
result of these programs.
In February 2019, we began implementing a plan to improve overall business
performance that includes the reorganization of our manufacturing capacity and a
reduction of our overhead and selling, general and administration workforce
across all of our reportable segments and in our head offices. The
reorganization of our manufacturing capacity involves specific plants in the
North American Residential and Architectural segments and costs associated with
the closure of these plants and related headcount reductions began taking place
in the first quarter of 2019 (collectively, the "2019 Plan"). Costs associated
with the 2019 Plan include severance, retention and closure charges and will
continue through 2020. Additionally, the plan was determined to be a triggering
event requiring a test of the carrying value of the definite-lived assets
relating to the divestitures, as further described in Note 9. As of
September 27, 2020, we expect to incur approximately $3 million to $4 million of
additional charges related to the 2019 Plan. Once fully implemented, the actions
taken as part of the 2019 Plan are expected to increase our annual earnings and
cash flows by approximately $17 million to $21 million.
During the fourth quarter of 2018, we began implementing a plan to reorganize
and consolidate certain aspects of our United Kingdom head office function and
optimize our portfolio by divesting non-core assets to enable more effective and
consistent business processes in the Europe segment. In addition, in the North
American Residential segment we announced a new facility that will optimize and
expand capacity through increased automation, which resulted in the closure of
one existing facility and related headcount reductions beginning in the second
quarter of 2019 (collectively, the "2018 Plan"). Costs associated with the 2018
Plan include severance, retention and closure charges and continued throughout
2019. Additionally, the plan to divest non-core assets was determined to be a
triggering event requiring a test of the carrying value of the definite-lived
assets relating to the divestitures, as further described in Note 9. The actions
taken as part of the 2018 Plan are expected to increase our annual earnings and
cash flows by approximately $6 million.

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Inflation
An increase in inflation could have a significant impact on the cost of our raw
material inputs. Wage inflation, increased prices for raw materials or finished
goods used in our products, tariffs and/or interruptions in deliveries of raw
materials or finished goods could adversely affect our profitability, margins
and net sales, particularly if we are not able to pass these incurred costs on
to our customers. Additionally, anti-dumping and countervailing duty trade
cases, such as the January 8, 2020, Coalition of American Millwork Producers
anti-dumping and countervailing duty petitions against Wood Mouldings and
Millwork Products from Brazil and China, is expected to impact our business and
results of operations.
Seasonality
Our business is moderately seasonal and our net sales vary from quarter to
quarter based upon the timing of the building season in our markets. Severe
weather conditions in any quarter, such as unusually prolonged warm or cold
conditions, rain, blizzards or hurricanes, could accelerate, delay or halt
construction and renovation activity.
Acquisitions and Divestitures
We are pursuing a strategic initiative of optimizing our global business
portfolio. As part of this strategy, in the last several years we have pursued
strategic acquisitions targeting companies who produce components for our
existing operations, manufacture niche products and provide value-added
services. Additionally, we target companies with strong brands, complementary
technologies, attractive geographic footprints and opportunities for cost and
distribution synergies. We also continuously analyze our operations to determine
which businesses, market channels and products create the most value for our
customers and acceptable returns for our shareholders.
Acquisitions
•On August 31, 2020, we acquired intellectual property and other assets related
to an interior door technology for cash consideration of $1.9 million.
•On August 29, 2019, we completed the acquisition of TOPDOORS, s.r.o. ("Top
Doors") based in the Czech Republic for cash consideration of $1.8 million, net
of cash acquired, following a post-closing adjustment. Top Doors is a specialist
manufacturer of door frames.
Divestitures
•During the second quarter of 2020, we completed the liquidation of our legal
entity in India. As a result, we recognized $2.1 million in loss on disposal of
subsidiaries.
•On December 13, 2019, we completed the sale of all the capital stock of Window
Widgets Limited ("WW"), a leading United Kingdom provider of high quality window
systems, for consideration of $1.2 million, net of cash disposed.
•On March 21, 2019, we completed the sale of all of the capital stock of
Performance Doorset Solutions Limited ("PDS"), a leading supplier of custom
doors and millwork in the United Kingdom, for nominal consideration. The
divestiture of this business resulted in a loss on deconsolidation of $4.6
million, which was recognized during the first quarter of 2019 in the Europe
segment.
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Results of Operations

                                                 Three Months Ended                               Nine Months Ended
                                         September 27,        September 29,
(In thousands)                                2020                 2019             September 27, 2020         September 29, 2019
Net sales                                $   587,652$   552,192$       1,638,538$       1,645,446
Cost of goods sold                           427,331              426,588                  1,207,582                  1,278,808
Gross profit                                 160,321              125,604                    430,956                    366,638
Gross profit as a % of net sales                27.3  %              22.7  %                    26.3  %                    22.3  %
Selling, general and administration
expenses                                     118,354               77,573                    272,077                    233,815
Selling, general and administration
expenses as a % of net sales                    20.1  %              14.0  %                    16.6  %                    14.2  %
Restructuring costs                            1,895                1,994                      4,984                      7,095
Asset impairment                              51,515                    -                     51,515                     13,767
Loss on disposal of subsidiaries                   -                    -                      2,091                      4,605
Operating income (loss)                      (11,443)              46,037                    100,289                    107,356
Interest expense, net                         11,805               11,909                     34,911                     34,393
Loss on extinguishment of debt                     -               14,523                          -                     14,523
Other expense (income), net                   (1,953)                (824)                    (3,350)                    (2,410)
Income (loss) before income tax expense      (21,295)              20,429                     68,728                     60,850
Income tax expense (benefit)                    (804)               4,334                     23,522                     14,685
Net income (loss)                            (20,491)              16,095                     45,206                     46,165
Less: net income attributable to
non-controlling interests                      1,275                1,126                      3,090                      3,165
Net income (loss) attributable to
Masonite                                 $   (21,766)$    14,969          $          42,116          $          43,000



Three Months Ended September 27, 2020, Compared with Three Months Ended
September 29, 2019
Net Sales
Net sales in the three months ended September 27, 2020, were $587.7 million, an
increase of $35.5 million or 6.4% from $552.2 million in the three months ended
September 29, 2019. Net sales in the third quarter of 2020 were positively
impacted by $1.0 million as a result of foreign exchange rate fluctuations.
Excluding this exchange rate impact, net sales would have increased by $34.5
million or 6.2% due to changes in volume, average unit price, acquisitions and
divestitures and sales of components and other products. Average unit price
increased net sales in the third quarter of 2020 by $51.2 million or 9.3%
compared to the 2019 period. Net sales of components and other products to
external customers increased $2.3 million or 0.4% in the third quarter of 2020
compared to the 2019 period. Lower volumes excluding the incremental impact of
acquisitions and divestitures ("base volume") decreased net sales by $14.6
million or 2.6% in the third quarter of 2020 compared to the 2019 period. Our
2019 divestiture, net of acquisition, decreased net sales by $4.4 million or
0.8% in the third quarter of 2020.
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Net Sales and Percentage of Net Sales by Reportable Segment

                                                              Three Months 

Ended September 27, 2020

                                 North American                                                   Corporate &
(In thousands)                    Residential             Europe           Architectural             Other               Total
Sales                           $   421,186$  75,192$      92,021$     6,100$ 594,499
Intersegment sales                     (654)                (910)                (5,283)                   -             (6,847)
Net sales to external customers $   420,532$  74,282$      86,738$     6,100$ 587,652
Percentage of consolidated
external net sales                     71.6    %            12.6  %                14.8  %



                                                              Three Months Ended September 29, 2019
                                 North American                                                   Corporate &
(In thousands)                    Residential             Europe           Architectural             Other               Total
Sales                           $   374,612$  76,308$     100,707$     5,814$ 557,441
Intersegment sales                     (701)                (343)                (4,205)                   -             (5,249)
Net sales to external customers $   373,911$  75,965$      96,502$     5,814$ 552,192
Percentage of consolidated
external net sales                     67.7    %            13.8  %                17.5  %


North American Residential
Net sales to external customers from facilities in the North American
Residential segment in the three months ended September 27, 2020, were $420.5
million, an increase of $46.6 million or 12.5% from $373.9 million in the three
months ended September 29, 2019. Net sales in the third quarter of 2020 were
negatively impacted by $2.2 million as a result of foreign exchange rate
fluctuations. Excluding this exchange rate impact, net sales would have
increased by $48.8 million or 13.1% due to changes in volume, average unit price
and sales of components and other products. Average unit price increased net
sales in the third quarter of 2020 by $46.7 million or 12.5% compared to the
2019 period primarily as a result of our previously communicated price increases
that became effective on February 3, 2020. Higher base volume increased net
sales in the third quarter of 2020 by $0.8 million or 0.2% compared to the 2019
period. Net sales of components and other products to external customers were
$1.3 million higher in the third quarter of 2020 compared to the 2019 period.
Europe
Net sales to external customers from facilities in the Europe segment in the
three months ended September 27, 2020, were $74.3 million, a decrease of $1.7
million or 2.2% from $76.0 million in the three months ended September 29, 2019.
Net sales in the third quarter of 2020 were positively impacted by $3.3 million
as a result of foreign exchange fluctuations. Excluding this exchange rate
impact, net sales would have decreased by $5.0 million or 6.6% due to changes in
volume, average unit price, acquisitions and divestitures and sales of
components and other products. Net sales in the third quarter of 2020 were
reduced by $4.4 million or 5.8% due to the net impact of the divestiture of a
non-core business in 2019, partially offset by incremental sales from the Top
Doors acquisition. Lower base volume decreased net sales by $1.9 million or 2.5%
in the third quarter of 2020 compared to the 2019 period. Net sales of
components and other products to external customers were $0.9 million higher in
the third quarter of 2020 compared to the 2019 period. Average unit price
increased net sales in the third quarter of 2020 by $0.4 million or 0.5%
compared to the 2019 period.
Architectural
Net sales to external customers from facilities in the Architectural segment in
the three months ended September 27, 2020, were $86.7 million, a decrease of
$9.8 million or 10.2% from $96.5 million in the three months ended September 29,
2019. Net sales in the third quarter of 2020 were negatively impacted by $0.1
million as a result of foreign exchange fluctuations. Excluding this exchange
rate impact, net sales would have decreased by $9.7 million or 10.1% due to
changes in volume, average unit price and sales of components and other
products. Lower base volume
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decreased net sales in the third quarter of 2020 by $13.7 million or 14.2%
compared to the 2019 period primarily as a result of COVID-19. Net sales of
components and other products to external customers were $0.1 million lower in
the third quarter of 2020 compared to the 2019 period. Average unit price
increased net sales in the third quarter of 2020 by $4.1 million or 4.2%
compared to the 2019 period.
Cost of Goods Sold
Cost of goods sold as a percentage of net sales was 72.7% and 77.3% for the
three months ended September 27, 2020, and September 29, 2019, respectively.
Material cost of sales, direct labor costs, overhead and distribution costs as a
percentage of net sales decreased by 3.2%, 1.1%, 0.2% and 0.1% respectively,
compared to the 2019 period. Depreciation as a percentage of sales in the third
quarter of 2020 was flat as a percentage of sales compared to the third quarter
of 2019. The decrease in material cost of sales as a percentage of net sales was
driven by higher average unit prices and material cost savings projects that
more than offset investments in quality and commodity inflation. Direct labor as
a percentage of net sales decreased due to prior year restructuring actions,
partially offset by manufacturing wage inflation. The decrease in overhead as a
percentage of net sales was driven by higher average unit prices, partially
offset by wage inflation and increased plant maintenance.
Selling, General and Administration Expenses
In the three months ended September 27, 2020, selling, general and
administration ("SG&A") expenses, as a percentage of net sales, were 20.1%, as
compared to 14.0% in the three months ended September 29, 2019, an increase of
610 basis points.
SG&A expenses in the three months ended September 27, 2020, were $118.4 million,
an increase of $40.8 million from $77.6 million in the three months ended
September 29, 2019. The overall increase was driven by a $37.8 million legal
reserve related to the previously disclosed settlement of U.S. class action
litigation, a $6.4 million increase in personnel costs primarily due to
incentive compensation and resource investments to support growth, unfavorable
foreign exchange impacts of $0.5 million and a net $0.7 million increase in
non-cash items in SG&A expenses, including share based compensation, loss (gain)
on disposal of property, plant and equipment, deferred compensation and
depreciation and amortization. These increases were partially offset by a $2.4
million decrease in travel expense and a $0.5 million decrease in advertising
expense as a result of COVID-19, as well as a $1.3 million decrease in
professional and other fees and incremental SG&A savings from our 2019
divestitures (net of acquisition) of $0.4 million.
Restructuring Costs
Restructuring costs in the three months ended September 27, 2020, and
September 29, 2019, were $1.9 million and $2.0 million, respectively.
Restructuring costs in the current year related primarily to the 2019 Plan.
Restructuring costs in the prior year period related to the 2019 and 2018 Plans.
Asset Impairment
Asset impairment charges in the three months ended September 27, 2020, were
$51.5 million, and represent a goodwill impairment charge recorded in our
Architectural reporting unit. Refer to Note 10. Asset Impairment, in Item 1 of
this Quarterly Report for additional information. There were no asset impairment
charges in the three months ended September 29, 2019.
Loss on Disposal of Subsidiaries
There was no loss on disposal of subsidiaries in the three months ended
September 27, 2020, and September 29, 2019.
Interest Expense, Net
Interest expense, net, in the three months ended September 27, 2020, was $11.8
million, compared to $11.9 million in the three months ended September 29, 2019,
remaining relatively flat as compared to the 2019 period.
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Loss on Extinguishment of Debt
There was no loss on extinguishment of debt in the three months ended
September 27, 2020. Loss on extinguishment of debt was $14.5 million in the
three months ended September 29, 2019. Loss on extinguishment of debt in the
prior year was related to the redemption of our senior unsecured notes due 2023.
Other Expense (Income), Net
Other expense (income), net, in the three months ended September 27, 2020, was
$2.0 million of income, compared to $0.8 million of income in the three months
ended September 29, 2019. The change in other expense (income), net is primarily
due to a change in the fair value of plan assets in the deferred compensation
rabbi trust and a decrease in pension expense.
Income Tax Expense
Income tax benefit in the three months ended September 27, 2020, was $0.8
million, compared to $4.3 million of income tax expense in the three months
ended September 29, 2019. The decrease in income tax expense is primarily due to
the mix of income or losses within the tax jurisdictions with various tax rates
in which we operate. We recognized discrete items resulting in$1.2 million of
income tax expense in the three months ended September 27, 2020, compared to
$0.8 million of income tax benefit recorded in the three months ended
September 29, 2019. The discrete income tax expense for the period is primarily
attributable to a change in tax rate applied to certain deferred tax assets and
liabilities.
Segment Information
                                                              Three Months Ended September 27, 2020
                                 North American                                                    Corporate &
(In thousands)                     Residential             Europe           Architectural             Other              Total
Adjusted EBITDA                 $     97,492$  15,021$      11,126$  (14,639)$ 109,000
Adjusted EBITDA as a percentage
of segment net sales                    23.2    %            20.2  %                12.8  %                                18.5  %



                                                              Three Months Ended September 29, 2019
                                 North American                                                    Corporate &
(In thousands)                     Residential             Europe           Architectural             Other              Total
Adjusted EBITDA                 $     61,549$  10,645$      13,920$  (10,270)$  75,844
Adjusted EBITDA as a percentage
of segment net sales                    16.5    %            14.0  %                14.4  %                                13.7  %


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The following reconciles net income (loss) attributable to Masonite to Adjusted EBITDA:

                                                                 Three 

Months Ended September 27, 2020

                                   North American                                                     Corporate &
(In thousands)                       Residential             Europe            Architectural             Other              Total
Net income (loss) attributable to
Masonite                          $       85,889$   9,655$      (45,074)$  (72,236)$ (21,766)
Plus:
Depreciation                               8,868              2,437                   3,088               3,488             17,881
Amortization                                 508              3,354                   1,268                 389              5,519
Share based compensation expense               -                  -                       -               6,299              6,299
Loss (gain) on disposal of
property, plant and equipment               (391)              (317)                    247                  45               (416)
Restructuring costs                        1,746                  -                      82                  67              1,895
Asset impairment                               -                  -                  51,515                   -             51,515

Interest expense, net                          -                  -                       -              11,805             11,805

Other expense (income), net                    -               (108)                      -              (1,845)            (1,953)
Income tax expense                             -                  -                       -                (804)              (804)
Other items (1)                                -                  -                       -              37,750             37,750
Net income attributable to
non-controlling interest                     872                  -                       -                 403              1,275
Adjusted EBITDA                   $       97,492$  15,021$       11,126$  (14,639)$ 109,000


____________
(1) Other items not part of our underlying business performance include $37,750
in legal reserves related to the previously disclosed settlement of U.S. class
action litigation in the three months ended September 27, 2020, and were
recorded in selling, general and administration expenses within the condensed
consolidated statements of comprehensive income (loss). Refer to Note 7.
Commitments and Contingencies, in Item 1 of this Quarterly Report for additional
information.
                                                                  Three 

Months Ended September 29, 2019

                                    North American                                                     Corporate &
(In thousands)                        Residential             Europe            Architectural             Other              Total
Net income (loss) attributable to
Masonite                           $       49,525$   3,794$        9,263$  (47,613)$  14,969
Plus:
Depreciation                                8,582              2,916                   2,566               2,295             16,359
Amortization                                  377              3,494                   2,059               1,124              7,054
Share based compensation expense                -                  -                       -               3,695              3,695
Loss on disposal of property,
plant and equipment                           646                 57                       -                   2                705
Restructuring costs                         1,761                257                      32                 (56)             1,994

Interest expense, net                           -                  -                       -              11,909             11,909
Loss on extinguishment of debt                  -                  -                       -              14,523             14,523
Other expense (income), net                   (86)               127                       -                (865)              (824)
Income tax expense                              -                  -                       -               4,334              4,334
Net income attributable to
non-controlling interest                      744                  -                       -                 382              1,126
Adjusted EBITDA                    $       61,549$  10,645$       13,920$  (10,270)$  75,844


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Adjusted EBITDA in our North American Residential segment increased $35.9
million, or 58.4%, to $97.5 million in the three months ended September 27,
2020, from $61.5 million in the three months ended September 29, 2019. Adjusted
EBITDA in the North American Residential segment included corporate allocations
of shared costs of $16.3 million and $14.0 million, in the third quarter of 2020
and 2019, respectively. The allocations generally consist of certain costs of
human resources, legal, finance, information technology, research and
development and share based compensation.
Adjusted EBITDA in our Europe segment increased $4.4 million, or 41.1%, to $15.0
million in the three months ended September 27, 2020, from $10.6 million in the
three months ended September 29, 2019. Adjusted EBITDA in the Europe segment
included corporate allocations of shared costs of $0.3 million in both the third
quarter of 2020 and 2019. The allocations generally consist of certain costs of
human resources, legal, finance and information technology.
Adjusted EBITDA in our Architectural segment decreased $2.8 million, or 20.1%,
to $11.1 million in the three months ended September 27, 2020, from $13.9
million in the three months ended September 29, 2019. Adjusted EBITDA in the
Architectural segment also included corporate allocations of shared costs of
$2.7 million in both the third quarter of 2020 and 2019. The allocations
generally consist of certain costs of human resources, legal, finance,
information technology and research and development.
Nine Months Ended September 27, 2020, Compared with Nine Months Ended September
29, 2019Net Sales
Net sales in the nine months ended September 27, 2020, were $1,638.5 million, a
decrease of $6.9 million or 0.4% from $1,645.4 million in the nine months ended
September 29, 2019. Net sales in the first nine months of 2020 were negatively
impacted by $6.1 million as a result of foreign exchange rate fluctuations.
Excluding this exchange rate impact, net sales would have decreased by $0.8
million and were flat due to changes in volume, average unit price, acquisitions
and divestitures and sales of components and other products. Lower base volumes
decreased net sales by $91.9 million or 5.6% in the first nine months of 2020
compared to the same period in 2019. Our 2019 divestitures, net of acquisition,
decreased net sales by $16.0 million or 1.0% in the first nine months of 2020.
Net sales of components and other products to external customers were $4.5
million lower in the first nine months of 2020 compared to the same period in
2019. Average unit price increased net sales in the first nine months of 2020 by
$111.6 million or 6.8% compared to the same period in 2019.
Net Sales and Percentage of Net Sales by Reportable Segment
                                                                Nine Months 

Ended September 27, 2020

                                 North American                                                   Corporate &
(In thousands)                    Residential             Europe           Architectural             Other                Total
Sales                           $   1,187,239$ 176,778$     275,972$    14,493$ 1,654,482
Intersegment sales                     (1,685)            (1,882)               (12,377)                   -              (15,944)

Net sales to external customers $ 1,185,554$ 174,896 $

     263,595          $    14,493$ 1,638,538
Percentage of consolidated
external net sales                       72.4  %            10.7  %                16.1  %



                                                                Nine Months Ended September 29, 2019
                                 North American                                                   Corporate &
(In thousands)                    Residential             Europe           Architectural             Other                Total
Sales                           $   1,109,919$ 242,408$     290,206$    17,741$ 1,660,274
Intersegment sales                     (2,673)            (1,223)               (10,932)                   -              (14,828)

Net sales to external customers $ 1,107,246$ 241,185 $

     279,274          $    17,741$ 1,645,446
Percentage of consolidated
external net sales                       67.3  %            14.7  %                17.0  %


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North American Residential
Net sales to external customers from facilities in the North American
Residential segment in the nine months ended September 27, 2020, were $1,185.6
million, an increase of $78.4 million or 7.1% from $1,107.2 million in the nine
months ended September 29, 2019. Net sales in the first nine months of 2020 were
negatively impacted by $6.6 million as a result of foreign exchange rate
fluctuations. Excluding this exchange rate impact, net sales would have
increased by $85.0 million or 7.7% due to changes in volume, average unit price
and sales of components and other products. Average unit price increased net
sales in the first nine months of 2020 by $94.9 million or 8.6% compared to the
2019 period primarily as a result of our previously communicated price increases
that became effective on February 3, 2020. Net sales of components and other
products to external customers were $0.8 million higher in the first nine months
of 2020 compared to the same period in 2019. Lower base volume decreased net
sales by $10.7 million or 1.0% in the first nine months of 2020 compared to the
same period in 2019.
Europe
Net sales to external customers from facilities in the Europe segment in the
nine months ended September 27, 2020, were $174.9 million, a decrease of $66.3
million or 27.5% from $241.2 million in the nine months ended September 29,
2019. Net sales in 2020 were positively impacted by $1.1 million as a result of
foreign exchange fluctuations. Excluding this exchange rate impact, net sales
would have decreased by $67.4 million or 27.9% due to changes in volume, average
unit price, acquisitions and divestitures and sales of components and other
products. Lower base volume, primarily due to our manufacturing facilities being
closed approximately half of the second quarter and other impacts as a result of
COVID-19, decreased net sales in the first nine months of 2020 by $52.6 million
or 21.8% compared to the same period in 2019. Net sales in the first nine months
of 2020 were reduced by $16.0 million or 6.6% due to the net impact of
divestitures and an acquisition, including the divestitures of three non-core
businesses in 2019, partially offset by incremental sales from the Top Doors
acquisition. Average unit price increased net sales in the first nine months of
2020 by $1.0 million or 0.4% compared to the same period in 2019. Net sales of
components and other products to external customers were $0.2 million higher in
the first nine months of 2020 compared to the same period in 2019.
Architectural
Net sales to external customers from facilities in the Architectural segment in
the nine months ended September 27, 2020, were $263.6 million, a decrease of
$15.7 million or 5.6% from $279.3 million in the nine months ended September 29,
2019. Net sales in 2020 were negatively impacted by $0.5 million as a result of
foreign exchange fluctuations. Excluding this exchange rate impact, net sales
would have decreased by $15.2 million or 5.4% due to changes in volume, average
unit price and sales of components and other products. Lower base volume
decreased net sales in the first nine months of 2020 by $29.0 million or 10.4%
compared to the 2019 period primarily as a result of COVID-19. Net sales of
components and other products to external customers decreased net sales by $1.9
million or 0.7% in the first nine months of 2020 compared to the same period in
2019. Average unit price increased net sales in the first nine months of 2020 by
$15.7 million or 5.6% compared to the 2019 period.
Cost of Goods Sold
Cost of goods sold as a percentage of net sales was 73.7% and 77.7% for the nine
months ended September 27, 2020, and September 29, 2019, respectively. Material
cost of sales, direct labor and distribution costs as a percentage of net sales
in the first nine months of 2020 decreased by 3.4%, 0.7% and 0.1%, respectively.
Partially offsetting these decreases, overhead as a percentage of net sales
increased by 0.2% compared to the 2019 period. Depreciation in the first nine
months of 2020 was flat as a percentage of sales compared to the first nine
months of 2019. The decrease in material cost of sales as a percentage of net
sales was driven by higher average unit prices and material cost savings
projects that more than offset commodity inflation, an increase in tariffs and
investments in quality. Direct labor as a percentage of net sales decreased due
to prior year restructuring actions, partially offset by manufacturing wage
inflation. Overhead as a percentage of net sales was negatively impacted by
decreased volumes, wage inflation and increased plant maintenance, partially
offset by higher average unit prices as compared to the 2019 period.
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Selling, General and Administration Expenses
In the nine months ended September 27, 2020, selling, general and administration
("SG&A") expenses, as a percentage of net sales, were 16.6% compared to 14.2%
the nine months ended September 29, 2019, an increase of 240 basis points.
SG&A expenses in the nine months ended September 27, 2020, were $272.1 million,
an increase of $38.3 million from $233.8 million in the nine months ended
September 29, 2019. The overall increase was driven by $37.8 million legal
reserve related to the previously disclosed settlement of U.S. class action
litigation, a $9.0 million increase in personnel costs primarily due to
incentive compensation and resource investments to support growth, a $3.3
million increase in professional and other fees including legal costs associated
with the previously disclosed litigation and unfavorable foreign exchange
impacts of $0.1 million. These increases were partially offset by a $6.2 million
reduction in travel expense and a $2.8 million decrease in advertising expense
as a result of COVID-19, as well as a $1.6 million decrease in non-cash items
including depreciation and amortization, deferred compensation, loss on disposal
of property, plant and equipment and share based compensation and $1.3 million
of incremental SG&A savings from our 2019 divestitures (net of acquisition).
Restructuring Costs
Restructuring costs in the nine months ended September 27, 2020, were $5.0
million, compared to $7.1 million in the nine months ended September 29, 2019.
Asset Impairment
Asset impairment charges in the nine months ended September 27, 2020, were $51.5
million, and represent a goodwill impairment charge recorded in our
Architectural reporting unit. Refer to Note 10. Asset Impairment, in Item 1 of
this Quarterly Report for additional information. Asset impairment charges in
the nine months ended September 29, 2019, were $13.8 million. Asset impairment
charges in 2019 resulted from actions associated with the 2019 Plan.
Loss on Disposal of Subsidiaries
Loss on disposal of subsidiaries in the nine months ended September 27, 2020,
was $2.1 million, compared to $4.6 million in the nine months ended
September 29, 2019. The current year loss arose as a result of the liquidation
of our legal entity in India and is comprised of the recognition of the
cumulative translation adjustment out of accumulated other comprehensive loss of
$2.3 million and $0.2 million relating to the write-off of net assets and other
professional fees. The loss in the prior year was related to the sale of PDS for
nominal consideration during the first nine months of 2019. The total charge
consisted of $3.6 million relating to the write-off of the net assets sold and
other professional fees and $1.0 million relating to the recognition of the
cumulative translation adjustment out of accumulated other comprehensive loss.
Interest Expense, Net
Interest expense, net, in the nine months ended September 27, 2020, was $34.9
million, compared to $34.4 million in the nine months ended September 29, 2019,
remaining relatively flat as compared to the 2019 period.
Loss on Extinguishment of Debt
There was no loss on extinguishment of debt in the nine months ended
September 27, 2020. Loss on extinguishment of debt was $14.5 million in the nine
months ended September 29, 2019. Loss on extinguishment of debt in the prior
year was related to the redemption of our senior unsecured notes due 2023.
Other Expense (Income), Net
Other expense (income), net, in the nine months ended September 27, 2020, was
$3.4 million of income, compared to $2.4 million of income in the nine months
ended September 29, 2019. The change in other expense (income), net is primarily
due to a decrease in pension expense and an increase in other miscellaneous
non-operating income net of expenses, partially offset by a change in our
portion of the net gains and losses related to our non-majority owned
unconsolidated subsidiaries that are recognized under the equity method of
accounting and a change in the fair value of plan assets in the deferred
compensation rabbi trust.
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Income Tax Expense
Our income tax expense in the nine months ended September 27, 2020, was $23.5
million, compared to $14.7 million of income tax expense in the nine months
ended September 29, 2019. The increase in income tax expense is primarily due to
the mix of income or losses within the tax jurisdictions with various tax rates
in which we operate, as well as a decrease in discrete income tax benefits. We
recognized discrete items resulting in income tax expense of $1.1 million the
nine months ended September 27, 2020, compared to $1.3 million of income tax
benefit recorded in the nine months ended September 29, 2019. The discrete
income tax expense for the period is primarily attributable to a change in tax
rate applied to certain deferred tax assets and liabilities.
Segment Information
                                                              Nine Months 

Ended September 27, 2020

                                 North American                                                   Corporate &
(In thousands)                    Residential             Europe           Architectural             Other              Total
Adjusted EBITDA                 $   260,319$  23,782$      33,208$  (34,900)$ 282,409
Adjusted EBITDA as a percentage
of segment net sales                   22.0    %            13.6  %                12.6  %                                17.2  %



                                                              Nine Months Ended September 29, 2019
                                North American                                                   Corporate &
(In thousands)                    Residential            Europe           Architectural             Other               Total
Adjusted EBITDA                $    178,571$ 34,050$      34,312$   (25,877)$ 221,056
Adjusted EBITDA as a
percentage of segment net
sales                                  16.1    %           14.1  %                12.3  %                                 13.4  %


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The following reconciles net income (loss) attributable to Masonite to Adjusted EBITDA:

                                                                 Nine 

Months Ended September 27, 2020

                                   North American                                                    Corporate &
(In thousands)                      Residential             Europe            Architectural             Other               Total
Net income (loss) attributable to
Masonite                          $     224,541$   6,762$      (35,511)$  (153,676)$  42,116
Plus:
Depreciation                             26,961              7,261                   8,687                7,833             50,742
Amortization                              1,615             10,186                   4,940                1,159             17,900
Share based compensation expense              -                  -                       -               13,509             13,509
Loss (gain) on disposal of
property, plant and equipment             1,319               (307)                  2,547                   70              3,629
Restructuring costs                       3,509                (37)                  1,030                  482              4,984
Asset impairment                              -                  -                  51,515                    -             51,515
Loss on disposal of subsidiaries              -                  -                       -                2,091              2,091
Interest expense, net                         -                  -                       -               34,911             34,911

Other expense (income), net                   -                (83)                      -               (3,267)            (3,350)
Income tax expense                            -                  -                       -               23,522             23,522
Other items (1)                               -                  -                       -               37,750             37,750
Net income attributable to
non-controlling interest                  2,374                  -                       -                  716              3,090
Adjusted EBITDA                   $     260,319$  23,782$       33,208$   (34,900)$ 282,409


____________
(1) Other items not part of our underlying business performance include $37,750
in legal reserves related to the previously disclosed settlement of U.S. class
action litigation in the nine months ended September 27, 2020, and were recorded
in selling, general and administration expenses within the condensed
consolidated statements of comprehensive income (loss). Refer to Note 7.
Commitments and Contingencies, in Item 1 of this Quarterly Report for additional
information.

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                                                                  Nine

Months Ended September 29, 2019

                                    North American                                                    Corporate &
(In thousands)                       Residential             Europe            Architectural             Other               Total
Net income (loss) attributable to
Masonite                           $     126,615$   6,831$       18,528$  (108,974)$  43,000
Plus:
Depreciation                              27,461              7,652                   8,812                8,920             52,845
Amortization                               1,263             11,115                   6,306                3,296             21,980
Share based compensation expense               -                  -                       -                8,468              8,468
Loss on disposal of property,
plant and equipment                        2,097              2,674                     146                   23              4,940
Restructuring costs                        4,954              1,220                     518                  403              7,095
Asset impairment                          13,767                  -                       -                    -             13,767
Loss on disposal of subsidiaries               -              4,605                       -                    -              4,605
Interest expense, net                          -                  -                       -               34,393             34,393
Loss on extinguishment of debt                 -                  -                       -               14,523             14,523
Other expense (income), net                    -                (47)                      2               (2,365)            (2,410)
Income tax expense                             -                  -                       -               14,685             14,685
Net income attributable to
non-controlling interest                   2,414                  -                       -                  751              3,165
Adjusted EBITDA                    $     178,571$  34,050$       34,312$   (25,877)$ 221,056


Adjusted EBITDA in our North American Residential segment increased $81.7
million, or 45.8%, to $260.3 million in the nine months ended September 27,
2020, from $178.6 million in the nine months ended September 29, 2019. Adjusted
EBITDA in the North American Residential segment included corporate allocations
of shared costs of $48.8 million and $41.9 million in the first nine months of
2020 and 2019, respectively. The allocations generally consist of certain costs
of human resources, legal, finance, information technology, research and
development and share based compensation.
Adjusted EBITDA in our Europe segment decreased $10.3 million, or 30.2%, to
$23.8 million in the nine months ended September 27, 2020, from $34.1 million in
the nine months ended September 29, 2019. Adjusted EBITDA in the Europe segment
included corporate allocations of shared costs of $0.8 million in the first nine
months of 2020 and 2019. The allocations generally consist of certain costs of
human resources, legal, finance and information technology.
Adjusted EBITDA in our Architectural segment decreased $1.1 million, or 3.2%, to
$33.2 million in the nine months ended September 27, 2020, from $34.3 million in
the nine months ended September 29, 2019. Adjusted EBITDA in the Architectural
segment also included corporate allocations of shared costs of $8.1 million and
$8.0 million in the first nine months of 2020 and 2019, respectively. The
allocations generally consist of certain costs of human resources, legal,
finance, information technology and research and development.
Liquidity and Capital Resources
Our liquidity needs for operations vary throughout the year. Our principal
sources of liquidity are cash flows from operating activities, the borrowings
under our ABL Facility and an accounts receivable sales program with a third
party ("AR Sales Program") and our existing cash balance. Our anticipated uses
of cash in the near term include working capital needs, capital expenditures for
critical maintenance, safety and regulatory projects, and share repurchases. On
a continual basis, we evaluate and consider strategic acquisitions,
divestitures, and joint ventures to create shareholder value and enhance
financial performance.
Due to the highly uncertain nature and duration of the COVID-19 pandemic and its
impact on our customers, suppliers and employees, we are unable to fully
estimate the extent of the impact it may have on our future financial condition
and liquidity. We anticipate capital expenditures in fiscal year 2020 will be
approximately $60 million to $70 million as compared to our original estimate of
$70 million to $75 million as previously disclosed under "Key Factors
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Affecting Our Results of Operations" in our Annual Report on Form 10-K for the
year ended December 29, 2019. We believe that our cash balance on hand, future
cash generated from operations, the use of our AR Sales Program, our ABL
Facility, and ability to access the capital markets will provide adequate
liquidity for the foreseeable future. As of September 27, 2020, we had $300.8
million of cash and cash equivalents, availability under our ABL Facility of
$205.6 million and availability under our AR Sales Program of $15.4 million.
Cash Flows
Cash provided by operating activities was $219.3 million during the nine months
ended September 27, 2020, compared to $138.4 million in the nine months ended
September 29, 2019. This $80.9 million increase in cash provided by operating
activities was due to changes in net working capital, a $23.4 million increase
in other assets and liabilities and a $17.7 million increase in net income
attributable to Masonite, adjusted for non-cash and non-operating items in the
first nine months of 2020 compared to the same period in 2019.
Cash used in investing activities was $44.5 million during the nine months ended
September 27, 2020, compared to $59.1 million in the nine months ended
September 29, 2019. This $14.6 million decrease in cash used in investing
activities was driven by a $9.7 million decrease in cash additions to property,
plant and equipment and a net decrease in other investing outflows of $4.9
million driven by proceeds from sale of property, plant and equipment in the
first nine months of 2020 compared to the same period in 2019.
Cash used in financing activities was $41.5 million during the nine months ended
September 27, 2020, compared to $84.1 million during the nine months ended
September 29, 2019. This $42.5 million decrease in cash used in financing
activities was driven by a $23.6 million decrease in cash used for repurchases
of common shares and a $20.8 million decrease in cash used for debt-related
transactions, partially offset by a $1.3 million increase in cash used for tax
withholding on share based awards and a $0.6 million increase in distributions
to non-controlling interests in the first nine months of 2020 compared to the
same period in 2019.
Share Repurchases
We currently have in place a $600.0 million share repurchase authorization,
stemming from three separate authorizations by our Board of Directors. During
the nine months ended September 27, 2020, we repurchased and retired 567,271 of
our common shares in the open market at an aggregate cost of $34.8 million as
part of the share repurchase programs, prior to temporarily suspending our
repurchase program on March 18, 2020. During the third quarter, the temporary
suspension was removed. We did not repurchase any of our common shares in the
open market during the three months ended September 27, 2020. During the nine
months ended September 29, 2019, we repurchased 1,148,815 of our common shares
in the open market at an aggregate cost of $58.4 million. As of September 27,
2020, there was $109.3 million available for repurchase in accordance with the
share repurchase programs.
Other Liquidity Matters
Our cash and cash equivalents balance includes cash held in foreign countries in
which we operate. Cash held outside Canada, in which we are incorporated, is
free from significant restrictions that would prevent the cash from being
accessed to meet our liquidity needs including, if necessary, to fund operations
and service debt obligations in Canada. However, earnings from certain
jurisdictions are indefinitely reinvested in those jurisdictions. Upon the
repatriation of any earnings to Canada, in the form of dividends or otherwise,
we may be subject to Canadian income taxes and withholding taxes payable to the
various foreign countries. As of September 27, 2020, we do not believe adverse
tax consequences exist that restrict our use of cash or cash equivalents in a
material manner.
We also routinely monitor the changes in the financial condition of our
customers and the potential impact on our results of operations. There has not
been a change in the financial condition of any customer that has had a material
adverse effect on our results of operations in the first nine months of 2020.
However, in light of COVID-19, it is possible there could be an impact on our
results of operations in a future period and this impact could be material.
Accounts Receivable Sales Program
Under the AR Sales Program, we can transfer ownership of eligible trade accounts
receivable of certain customers. Receivables are sold outright to a third party
who assumes the full risk of collection, without recourse to us in the event of
a loss. Transfers of receivables under this program are accounted for as sales.
Proceeds from the transfers
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reflect the face value of the accounts receivable less a discount. Receivables
sold under the AR Sales Program are excluded from trade accounts receivable in
the condensed consolidated balance sheets and are included in cash flows from
operating activities in the condensed consolidated statements of cash flows. The
discounts on the sales of trade accounts receivable sold, if any, under the AR
Sales Program were not material for any of the periods presented and were
recorded in selling, general and administration expense within the condensed
consolidated statements of comprehensive income (loss).
5.375% Senior Notes due 2028
On July 25, 2019, we issued $500.0 million aggregate principal senior unsecured
notes (the "2028 Notes"), all of which was outstanding as of September 27, 2020.
The 2028 Notes bear interest at 5.375% per annum. The net proceeds from issuance
of the 2028 Notes, together with available cash balances, were used to redeem
the remaining $500.0 million aggregate principal amount of similar senior
unsecured notes, including the payment of related premiums, fees and expenses.
The 2028 Notes were issued under an indenture which contains restrictive
covenants that are described in detail in our Annual Report on Form 10-K for the
year ended December 29, 2019. As of September 27, 2020, we were in compliance
with all covenants under the indenture governing the 2028 Notes.
5.750% Senior Notes due 2026
On August 27, 2018, we issued $300.0 million aggregate principal senior
unsecured notes (the "2026 Notes"), all of which were outstanding as of March
29, 2020. The 2026 Notes bear interest at 5.750% per annum. The 2026 Notes were
issued under an indenture which contains restrictive covenants that are
described in detail in our Annual Report on Form 10-K for the year ended
December 29, 2019. As of September 27, 2020, we were in compliance with all
covenants under the indenture governing the 2026 Notes.
ABL Facility
On January 31, 2019, we and certain of our subsidiaries entered into a $250.0
million asset-based revolving credit facility (the "ABL Facility") maturing on
January 31, 2024, which replaced the previous facility. Borrowings under the ABL
Facility bear interest at a rate which is described in more detail in Note 6.
The ABL Facility contains various customary representations, warranties by us
and covenants that are described in detail in our Annual Report on Form 10-K for
the year ended December 29, 2019. As of September 27, 2020, we were in
compliance with all covenants under the credit agreement governing the ABL
Facility. We had availability of $205.6 million under our ABL Facility and there
were no amounts outstanding as of September 27, 2020.
Supplemental Guarantor Financial Information
Our obligations under the 2028 Notes and 2026 Notes and the ABL Facility are
fully and unconditionally guaranteed, jointly and severally, by certain of our
directly or indirectly wholly-owned subsidiaries. The following unaudited
supplemental financial information for our non-guarantor subsidiaries is
presented:
Our non-guarantor subsidiaries generated external net sales of $522.4 million
and $491.9 million for the three months ended September 27, 2020, and
September 29, 2019, respectively, and $1.5 billion for both the nine months
ended September 27, 2020, and September 29, 2019. Our non-guarantor subsidiaries
generated Adjusted EBITDA of $94.0 million and $65.0 million for the three
months ended September 27, 2020, and September 29, 2019, respectively, and
$238.7 million and $189.8 million for the nine months ended September 27, 2020,
and September 29, 2019, respectively. Our non-guarantor subsidiaries had total
assets of $2.1 billion and $2.0 billion as of September 27, 2020, and
December 29, 2019, respectively, and total liabilities of $925.8 million and
$834.5 million as of September 27, 2020, and December 29, 2019, respectively.
Changes in Accounting Standards and Policies
Changes in accounting standards and policies are discussed in Note 1. Business
Overview and Significant Accounting Policies in the Notes to the Condensed
Consolidated Financial Statements in this Quarterly Report.
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2020MASONITE INTERNATIONAL CORPORATION : to Present at the BofA Securities 2020 Leve..
BU
2020Wedbush Upgrades Masonite International to Outperform From Neutral, Citing Pr..
MT
2020MASONITE INTERNATIONAL CORP : Change in Directors or Principal Officers, Financi..
AQ
2020MASONITE INTERNATIONAL CORPORATION : Adds Jay Steinfeld to Board of Directors
BU
2020RBC Capital Adjusts Masonite International's Price Target to $119 From $116, ..
MT
2020MASONITE INTERNATIONAL : Management's Discussion and Analysis of Financial Condi..
AQ
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