2. 2
Safe Harbor / Forward Looking Statements
This Investor Presentation contains forward-looking information and other forward-looking statements within the meaning of applicable Canadian and/or U.S. securities laws that
involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Masonite International Company (the
“Company”), or industry results, to be materially different from any future plans, goals, targets, objectives, results, performance or achievements expressed or implied by such
forward-looking statements. When used in this Investor Presentation, such statements may contain such words as “may,” might, “could,” “will,” would,” “should,” “expect,”
“believes,” “outlook,” “predict,” “forecast,” “objective,” “remain,” “anticipate,” “estimate,” “potential,” “continue,” “plan,” “project,” “targeting,” or the negative of these terms or
other similar terminology.
Forward-looking information in this Investor Presentation may include, without limitation, statements regarding intentions, goals, targets, preliminary results, performance, goals,
achievements, operations, acquisitions and integration of acquired businesses, plans and objectives, strategies, business and economic conditions, and projected costs. These
statements reflect the Company’s current expectations regarding future events and operating performance are based on information currently available to the Company and speak
only as of the date of this Investor Presentation. All forward-looking statements in this Investor Presentation are qualified by these cautionary statements.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, should not be unduly relied upon, and will
not necessarily be accurate indications of whether or not such results will be achieved. Factors that could cause actual results to differ materially from the results discussed in the
forward-looking statements include, but are not limited to, general economic, market and business conditions; levels of residential new construction, residential repair, renovation
and remodeling and non-residential building construction activity; competition; our ability to successfully implement our business strategy; our ability to manage our operations
including integrating our recent acquisitions and companies or assets we acquire in the future; our ability to generate sufficient cash flows to fund our capital expenditure
requirements and to meet our debt service obligations, including our obligations under our senior notes and our senior secured asset-backed credit facility; labor relations (i.e.,
disruptions, strikes or work stoppages), labor costs, and availability of labor; increases in the costs of raw materials or any shortage in supplies; our ability to keep pace with
technological developments; the actions by, and the continued success of, certain key customers; our ability to maintain relationships with certain customers; new contractual
commitments; our ability to generate the benefits of our restructuring activities; retention of key management personnel; environmental and other government regulations;
limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes and senior secured asset-based credit
facility; and other factors publicly disclosed by the company from time to time.
Forward-looking information is based on various material factors or assumptions, which are based on information currently available to the Company. Material factors or
assumptions that were applied in drawing a conclusion or making a target, objectives or goal set out in the following forward-looking information are as set out within this Investor
Presentation. Readers are cautioned that the preceding and enclosed list of material factors or assumptions is not exhaustive. Although the forward-looking statements contained
in this Investor Presentation are based upon what the Company believes are reasonable assumptions, the Company cannot assure readers that actual results will be consistent with
these forward-looking statements. These forward-looking statements are made as of the date of this Presentation, and should not be relied upon as presenting the Company’s views
on any date subsequent to such date. The Company assumes no obligation to update or revise these forward-looking statements to reflect new information, events, and
circumstances or otherwise, except in such circumstances as may be required by applicable law.
3. 3
Non-GAAP Financial Measure
Adjusted EBITDA is a measure used by management to measure operating performance. Beginning in the fourth quarter of 2013, we revised
our calculation of Adjusted EBITDA to exclude costs related to the registration and listing of Masonite’s common shares. Management
believes that the revised definition of Adjusted EBITDA better reflects the underlying performance of our reportable segments. The revision
to this definition had no impact on our reported Adjusted EBITDA for the three months or year ended December 30, 2012, or January 1,
2012. As revised, Adjusted EBITDA is defined as net income (loss) attributable to Masonite plus depreciation, amortization of intangible
assets, restructuring costs, loss (gain) on sale of property, plant and equipment, impairment of property, plant and equipment, registration
and listing fees, interest expense, net, other expense (income), net, income tax expense (benefit), loss (income) from discontinued
operations, net of tax, net income attributable to non-controlling interest and share based compensation expense. Adjusted EBITDA is not a
measure of financial condition or profitability under GAAP, and should not be considered as an alternative to (i) net income (loss) or net
income (loss) attributable to Masonite determined in accordance with GAAP or (ii) operating cash flow determined in accordance with GAAP.
Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not include
certain cash requirements such as interest payments, tax payments and debt service requirements. We believe that the inclusion of Adjusted
EBITDA in this press release is appropriate to provide additional information to investors about our operating performance. Not all companies
use identical calculations, and as a result, this presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of
other companies. Moreover, Adjusted EBITDA as presented for financial reporting purposes herein, although similar, is not the same as
similar terms in the applicable covenants in our ABL Facility or our senior notes. Adjusted EBITDA, as calculated under our ABL Facility or
senior notes would also include, among other things, additional add-backs for amounts related to: cost savings projected by us in good faith
to be realized as a result of actions taken or expected to be taken prior to or during the relevant period; fees and expenses in connection with
certain plant closures and layoffs; and the amount of any restructuring charges, integration costs or other business optimization expenses or
reserve deducted in the relevant period in computing consolidated net income, including any one-time costs incurred in connection with
acquisitions. The table below sets forth a reconciliation of Adjusted EBITDA to net income (loss) attributable to Masonite for the periods
indicated.
4. 1. Company & Industry Overview
2. Financial Results
3. Summary
5. 5
Company & Industry Overview
Masonite is a Global Building Products Company
Established leadership positions in all targeted product categories in
our largest market (United States).
Net Sales of $1.7 billion; approximately 32 million doors sold annually.
An extensive global footprint with 65 manufacturing facilities spread
across 11 countries.
Serves more than 7,000 customers worldwide in 80 countries.
One of only two vertically integrated residential door manufacturers
and the only vertically integrated commercial door manufacturer in
NA.
Manufacturing Headquarters
North America
CANADA
UNITED STATES
MEXICO
S. America
CHILE
Europe
FRANCE
UK
ISRAEL
CZECH REPUBLIC
IRELAND
Southeast Asia
MALAYSIA
South Africa
SOUTH AFRICA
NA End-Markets
Sales by Reportable Segment
North
America, 76%
Europe, Asia
& Latin
America, 20%
S. Africa, 4%
Residential
RRR, 43%
Residential
new
construction,
35%
Non-
residential
building
constrcution,
21%
6. 6
Company & Industry Overview
Masonite Has Transformed Itself Over the Past Several Years
Actions Taken
-
5,000
10,000
15,000
20,000
2006 2013
Pre-Acquisitions Acquisitions
Total Headcount
Cumulative Global Plant Closures
-
10
20
30
40
50
60
2006 2007 2008 2009 2010 2011 2012 2013
ROW North America
Strengthened the Core Business:
• Lean sigma deployed and $100+
million of benefits since 2006
• 57 manufacturing/distribution
facilities closed since 2006
• Reduced total headcount by
approximately 40% since 2006
• Automation: Residential interior
door plant in Denmark, South
Carolina
Drive Organic Growth:
• Product Line Leadership
• Electronic Enablement
Strategic Tuck-in Acquisitions:
• Acquisitions: Twelve strategic tuck-
ins since March 2010 designed to
build leadership positions and
strengthen vertical integration across
all targeted North American product
categories
7. 7
Company & Industry Overview
Residential Interior Molded Facings and Interior Door Consolidation
NA Residential Interior Molded Facings*
3 Players 2 Players
#
#
(^) – There are only two residential molded interior wood door
manufacturers with a full North American footprint / distribution capability.
Both have been actively consolidating smaller, regional players.
(#) – ONEX acquired JW in October 2011 & JW acquired CMI in October
2012. CMI previously acquired Illinois Flush Door in February 2010.
(*) – Full vertically integrated operations.
NA Residential Interior Doors
6 Players 2 Players^
#
2010
2010
2012
2012
2010
8. 8
NA Non-Residential Interior Wood
7 Players^ 4 Players
NA Residential Specialty (Stile & Rail)
4 Players* 2 Players
(^) – Management estimate of seven largest North American Commercial
& Architectural interior wood door manufacturers.
(*) – Management estimate of the four largest Residential Stile & Rail door
manufacturers serving the North American market.
Company & Industry Overview
Non-Residential and Specialty Door Consolidation
2012
2012
2011
2012
2013
9. 9
• Based in Nottingham, United Kingdom
• Specializes in fiberglass exterior doors
• Leading e-commerce platform with 3-day delivery
• High average unit prices, double-digit margins and strong
EBITDA to cash conversion
• United Kingdom housing starts accelerating
Pre Acquisition
$7.6M TTM
Adjusted EBITDA
~6.5x Pre Synergy
Adjusted EBITDA
Acquisition Details
~$50 mm net purchase price*
UK Housing Market is Accelerating
(in 000s)
Source: UK Office of National Statistics (Autumn 2013)
100
110
120
130
140
2011 2012 2013 2014
(*) – Net of cash acquired
Company & Industry Overview
Tuck-In Acquisitions: Door-Stop International
11. 11
Q4’13Q1’13
Masonite Is Committed To Capturing an Appropriate Value For the Products & Services We Provide
North America Retail & U.S. Wholesale
Mid-High Single Digit* Increase Across
Interior & Exterior Doors
Q1’14
25%
15%
2013 NA Price Increases Affected a Limited
Percentage of Masonite’s Total Global Business^
55%
2014 NA Price Increases Have
Been Broader Based^
U.S. Wholesale Mid Single Digit Increase
on Molded & Flush Interior Doors
U.S. Wholesale Mid Single Digit Increase
on Certain Interior & Exterior Doors, Door
Lites & Components
(^) – Percentages of net sales are approximate and based on management estimates of net sales.
(*) – The 2014 impact of North American retail pricing is expected to be up low-mid single digits once prior year price concessions are taken into account.
Company & Industry Overview
Residential Pricing Environment Improving
12. 12
Retailers have put in place what appears to be a more logical
pricing progression across the product category
Retailer BRetailer A
Recent U.S. Retail Price Shops Suggest Consumer Prices Have Increased
(*) - Prices are for 6-panel, hollow core slab and bi-fold doors. Prices shown are based upon retail price shops conducted by Masonite in Oct. 2013 and Jan. 2014 across various markets with in the U.S.
$22-$30
1/14
$19-$26
10/13
$44-$49
1/14
$41
10/13
$29
1/14
$19-$26
10/13
$49
1/14
$41
10/13
Company & Industry Overview
Recent Retail Price Shops
13. 13
$2 / Door
+~$60 MM
$3 / Door
+~$90 MM
$1 / Door
+~$30 MM
Hypothetical increase in Adjusted EBITDA
per $1/door increase^
Masonite sold approx. 32 million doors
globally in 2013 with an AUP of ~$55/door
(^) – Assuming no change in mix, input costs etc.
Company & Industry Overview
Improved Pricing Environment & Core Focus Areas
Automation
Product Line Leadership
Electronic Enablement
Sales and Marketing Excellence
Industry Structure
The Combination of These Items is Expected to Grow Share and Expand Margins
Beyond Macro Economic Recovery
14. 14
0
200
400
600
800
1000
2009 2010 2011 2012 2013
0
100
200
300
400
500
600
700
800
900
1000
2009 2010 2011 2012 2013
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013
2014 Outlook Is Positive for U.S. Building Activity
2014 Building Expectations Are PositiveU.S. New Housing Starts & Completions
• National Association of Homebuilders forecasts New
Housing Starts of 1,055,000 in 2014
14% year over year growth
• Home Improvement Research Institute (HIRI) forecasts
Home Improvement spend of $313 billion in 2014
6.8% year over year growth
• McGraw Hill Construction estimates 900K square feet
of non-residential construction in 2014
11.4% year over year growth
U.S. Non-Residential ConstructionU.S. Repair, Renovation & Remodel
Source: U.S. Census Bureau (Feb 2014)
Source: HIRI (Sep 2013) Source: McGraw-Hill (4Q13)
Company & Industry Overview
Positive Construction Indicators Heading into 2014
20. 20
Financial Policy & Coverage Ratios
Selected Cash Flow Data 2013 2012
Cash flow from continuing operations $46.1 $55.7
Additions to property, plant & equipment ($46.0) ($48.4)
Cash used in acquisitions ($15.4) ($88.4)
Gross Proceeds from issuance of long-term debt $0 $103.5
Payment of financing costs $0 ($2.0)
Increase (decrease) in cash & cash equivalents ($21.4) $13.1
Fiscal 2013 Financial Results
Liquidity, Credit and Debt Profile
Target
financial
leverage
range
Unrestricted Cash $100.9
ABL Borrowing Base $108.2
AR Purchase Agreement $13.0
Total Available Liquidity $222.1
Liquidity at Dec 29, 2013 (millions of USD)
LTM Adj. EBITDA $105.9
LTM Adj. EBITDA Margin 6.1%
Total Debt $378.2
Net Debt $277.3
3.9
3.7
3.4
3.3
3.6
2.6 2.6 2.6
2.3
2.6
3.1 3.1
3.3
3.6
3.2
1.6
1.9
2.0 2.1
1.8
1.0
2.0
3.0
4.0
5.0
12/30/12 3/31/13 6/30/13 9/29/13 12/29/2013
Total Debt / Adjusted EBITDA Net Debt / Adjusted EBITDA
Adj. EBITDA/Interest (Adj. EBITDA - Capex) / Interest
Debt Maturity Schedule
$125
$500
0
100
200
300
400
500
600
2013 2014 2015 2016 2017 2018 2019 2020 2021
8.25% Senior Unsecured Notes
$125mm add-on
Jan. 2014
$125 mm Asset Backed Loan
21. 1. Company & Industry Overview
3. Summary
2. Financial Results
22. 22
North American Pricing Trends Improving
Mid-single digit U.S. Wholesale price increases took effect on
March 18, 2013 and September 30, 2013
Average unit price increased Q2-Q4 (3 consecutive quarters)
U.S. Wholesale & NA Retail prices increases in Q1 2014
Strategic Tuck-In Acquisition Program
~$125 million^ add-on bond offering successfully completed
Completed acquisition of UK based Door-Stop
Expanded our leadership position
#1 or #2 in all seven targeted product categories
Market Indicators Remain Favorable
New housing expected to experience robust growth in 2014
U.S. Home Improvement market expected to display steady
growth in 2014
Long-term, demographically driven demand characteristics
remain strong
Key Focus Areas to Accelerate Growth
Automation
Product line leadership
Electronic Enablement
Sales and Marketing Excellence
Strategic Tuck-In Acquisitions
(^) – Net of expenses ~$137 million dollars was raised (bonds priced at 108.75).
Summary
Positioning the Company for a Sustained Recovery
24. 24
Reconciliation of Adjusted EBITDA to Net Income (Loss)
Attributable to Masonite:
(In thousands) December 29, 2013 December 30, 2012 January 1, 2012 January 2, 2011
Adjusted EBITDA 105,877$ 97,261$ 81,994$ 80,678$
Less (plus):
Depreciation 62,080 63,348 60,784 58,633
Amortization of intangible assets 17,058 15,076 10,569 8,092
Share based compensation expense 7,752 6,517 5,888 9,626
Loss (gain) on disposal of property, plant and equipment (1,774) 2,724 3,654 1,301
Impairment of property, plant and equipment 1,903 1,350 2,516 -
Registration and listing fees 2,421 - - -
Restructuring costs 10,630 11,431 5,116 7,000
Interest expense (income), net 33,230 31,454 18,068 245
Other expense (income), net (1,288) 528 1,111 1,030
Income taxexpense (benefit) (23,363) (13,365) (21,560) (11,396)
Loss (income) fromdiscontinued operations, net of tax 597 (1,480) 303 1,718
Net income (loss) attributable to noncontrolling interest 2,105 2,923 2,079 1,390
Net income (loss) attributable to Masonite (5,474)$ (23,245)$ (6,534)$ 3,039$
Year Ended
