Masonite International Corp. reports that net sales declined by 3% year-over-year in the second quarter of 2023 (2Q23). Masonite CFO and executive vice president Russell Tiejema says the decline was expected, as resiliency in the market for new housing was offset by a weaker demand for repairs and remodels.

Financial data indicates that the Tampa-based manufacturer of interior and exterior doors recorded net sales of $742 million in 2Q23, down from $762 million in the second quarter of 2022 (2Q22). The company’s adjusted EBITDA remained unchanged from 2Q22 at $118. Total company gross profit was $178 million in 2Q23, down 1% from 2Q22.

“Lower overall market demand was the primary driver of lower revenue in the second quarter, offset partly by revenue from Endura, which we acquired in January, and higher average unit prices,” explains Tiejema. “Long term, both the U.S. and the U.K. have great potential for housing demand given the growing need for new housing units and an existing housing market in need of renovation, in both markets.”

2Q23 Breakdown

Masonite officials report that the 3% decline in 2Q23 resulted from a 15% decrease in volume and a 2% decrease from unfavorable foreign exchange and low component sales. This was somewhat offset by an 8% increase from the Endura acquisition and a 6% increase in the average unit price.

Regionally, North American residential net sales were $585 million in 2Q23. This was a 4% decrease from the same time last year. The decline resulted from lower volume from unfavorable foreign exchange and lower component sales. Tiejema says the rise in multi-family housing construction has reduced volume “given that multi-family homes typically have fewer doors.”

However, Tiejema adds that growth for single-family permits and starts in the U.S. could propel Masonite forward as the calendar turns to 2024.

Across the pond, European net sales were $66 million, an 11% decrease from 2Q22. The decline was driven by a 9% decrease in volume and a 2% decrease from lower component sales and unfavorable foreign exchange.

“We entered 2023 anticipating that demand in our primary end markets of North America and the U.K. would be weaker, and we implemented a playbook to continue achieving strong results despite that,” says Tiejema. “This includes maintaining our disciplined approach to price-cost management, successfully implementing the restructuring plan we announced at the end of 2022 and delivering synergies from our acquisition of Endura. So far, conditions in both markets are largely playing out as we expected, and the team is doing an outstanding job executing this plan while continuing to keep an eye on the future.”

Looking Ahead

Though softness in end-market demand persisted throughout 2Q23, Masonite officials remain upbeat about future prospects. Tiejema says that early signs point to a recovery in the U.S. housing market, which would be a boon for the company.

“We view 2023 as a year to prepare the business for accelerated growth when markets recover–what we refer to internally as ‘coiling the spring,’” says Tiejema. “This goes beyond carefully controlling costs, it also means thoughtfully investing in our ‘Doors That Do More’ strategy now to deliver even more value for homeowners and our channel partners in 2024 and beyond.”

In the meantime, Tiejema states that Masonite will continue to focus on price-cost management to maintain margins and fund new initiatives, such as the company’s investment in a new hybrid production facility in Dallas. The facility will provide pre-hanging and pre-finishing capabilities for retail customers and also serve as a hub for a new make-to-stock inventory program.

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