Masonite Announces First-Quarter Sales of $464.4 Million

Masonite International Inc. this week announced first-quarter 2008 sales of $464.4 million, a decline of 18.4 percent, compared to sales of $569.4 million in the first quarter of 2007. Operating EBITDA decreased 36.5 percent to $46.7 million from $73.5 million in the first quarter of 2007. Adjusted EBITDA declined 34.7 percent to $53.5 million in the first quarter of 2008, compared to $81.9 million in the prior year period. According to the company, its first-quarter 2008 adjusted EBITDA includes $6.8 million of net adjustments, while adjusted EBITDA in the first quarter of 2007 includes $8.4 million of such adjustments.

"Continued volume weakness resulting from the ongoing downturn in the US housing market negatively impacted our first quarter results," says Fred Lynch, President and chief executive officer of Masonite. "We continue to take aggressive actions to right size our business, both in terms of capacity and staffing levels, while simultaneously driving operational efficiencies, reducing controllable costs, and effectively managing our cash. These actions combined with our increased focus on innovation, are designed to position the company for great success when the market rebounds."

In the first quarter, the company completed the closure of its Bridgwater, United Kingdom, operations and announced the closure of three additional sites in North America. The company recorded a restructuring charge of $5.5 million in the first quarter of 2008 in connection with these closures as well as further reductions in salaried workforce.

In the first quarter of 2008, net debt (consolidated debt net of cash and cash equivalents) increased by $22.5 million to $1,932.8 million on March 31, 2008, from $1,910.3 million on December 31, 2007. Excluded from the net debt balances is $66.4 million outstanding under the company's accounts receivable sales facility.

Sales to external customers from facilities in North America decreased 28.4 percent to $294.8 million in the first quarter of 2008 from $411.8 million in the first quarter of 2007. Approximately $66.4 of the decline in sales is attributable to sales in geographic regions that The Home Depot moved to a competitor in the second half of 2007, according to a company press release. Sales decreased 12.4 percent in North America excluding the loss of The Home Depot regions. Sales to customers from facilities outside of North America, primarily in Western Europe, increased approximately 7.6 percent to $169.6 million in the first quarter of 2008 from $157.5 million in the prior year period.

Other expense of $6.4 million in the first quarter of 2008 includes restructuring charges of $5.5 million related to the reductions in salaried workforce as well as costs incurred in connection with the closure and consolidation of manufacturing sites. Asset impairment and disposal charges of $0.9 million were also recorded in the first quarter of 2008. This compares to $1.8 million of other expense in the first quarter of 2007, which reflected severance of $0.9 million, loss on disposal of property plant and equipment of $0.7 million and foreign exchange losses of $0.2 million.

Subsequent to the end of the first quarter of 2008 Masonite borrowed the remaining $236 million available from its eight-year $350 million bank senior secured revolving credit facility.

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