Masonite 2015 investor day final

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<ol><li> 1. 2015 Investor Day NYSE: DOOR June 19, 2015 </li><li> 2. 2 Safe Harbor / Non-GAAP Financial Measure 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, including our discussion of improvements in the housing market and related markets and the effects of our pricing and other strategies. When used in this Investor Presentation, such forward-looking statements may be identified by the use of 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 statements involve significant known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Masonite, 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. As a result, such forward-looking statements 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. Certain historical and forecast market and industry data used this investor presentation are based upon publications, studies and surveys conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these publications, studies and surveys is reliable, we have not independently verified market and industry data from third party sources. NON-GAAP FINANCIAL MEASURE Adjusted EBITDA is a measure used by management to measure operating performance. Beginning in the first quarter of 2015, we revised our calculation of Adjusted EBITDA to separately exclude loss on extinguishment of debt, which would be a component of other expense (income), net, but is separately stated due to its magnitude. The revision to this definition had no impact on our reported Adjusted EBITDA for the three months ended March 30, 2014. As revised, Adjusted EBITDA is defined as net income (loss) attributable to Masonite plus depreciation, amortization, restructuring costs, loss (gain) on sale of property, plant and equipment, asset impairment, registration and listing fees, interest expense, net, loss from extinguishment of debt, 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 appendix sets forth a reconciliation of Adjusted EBITDA to net income (loss) attributable to Masonite for the periods indicated. </li><li> 3. 3 Investor Day Agenda Investor Day Agenda CEO Overview Fred Lynch President &amp; Chief Executive Officer Portfolio Optimization Chris Virostek SVP - Strategy Implementation &amp; Corporate Development Residential Business Tony Hair VP &amp; Business Leader - Residential Business Architectural Business Mike Nelson VP &amp; Business Leader - Architectural Business Automation Mike Fout VP - Operations Sales &amp; Marketing Excellence Larry Repar EVP Global Sales &amp; Marketing &amp; Chief Operating Officer Financial Update Joanne Freiberger VP - Treasurer Summary Fred Lynch President &amp; Chief Executive Officer Q&amp;A Session Coffee Break (15 min) </li><li> 4. Introductions CEO Overview Portfolio Optimization Residential Business Architectural Business Automation Sales &amp; Marketing Excellence Financial Update Summary &amp; Q&amp;A </li><li> 5. 5 CEO Overview Talented Management Team With Diverse Industry Backgrounds Fred Lynch President &amp; Chief Executive Officer OPEN EVP &amp; Chief Financial Officer Larry Repar EVP Global Sales &amp; Marketing &amp; Chief Operating Officer John Przedpelski SVP &amp; Chief Information Officer Chris Virostek SVP Strategy Implementation &amp; Corporate Development Gail Auerbach SVP Human Resources Bob Lewis SVP General Counsel &amp; Corporate Secretary Elias Barrios SVP Global Operations &amp; Supply Chain Steve Swartzmiller SVP &amp; Chief Technology Officer Tony Hair VP &amp; Business Leader - Residential Mike Nelson VP &amp; Business Leader - Architectural Graham Thayer VP &amp; Business Leader - Components Year started at Masonite 06 89 95 13 11 13 12 02 07 15 15 </li><li> 6. Executive Profile Fred Lynch Masonite Since: 2006 President &amp; CEO Prior Experience: Alpharma/Actavis, Honeywell / AlliedSignal Chris Virostek Masonite Since: 2002 Senior VP Strategy Implementation &amp; Corporate Development Prior Experience: Arthur Andersen Tony Hair Masonite Since: 2013 VP &amp; Business Leader, Residential Business Prior Experience: Newell Rubbermaid, Maytag Mike Nelson Masonite Since: 2013 VP &amp; Business Leader, Architectural Business Prior Experience: 3M, Mead Westvaco, Wausau Paper Mike Fout Masonite Since: 2008 VP, Operations Prior Experience: General Electric, Crystaloid Technologies Larry Repar Masonite Since: 1995 EVP Global Sales &amp; Marketing &amp; COO Prior Experience: Sanwa McCarthy Securities Limited and Twin Windows Joanne Freiberger Masonite Since: 2008 VP &amp; Treasurer Prior Experience: Catalina Marketing, PriceWaterhouseCoopers, PepsiCo / Tropicana / Seagram and Arthur Andersen 6 CEO Overview Presenter Profiles Todays Presenters Highlight Masonites Deep Management Bench </li><li> 7. 7 CEO Overview A Global Building Products Company Masonite Has Transformed Itself in Recent Years Company Overview 2014 Net Sales Net Sales of $1.8 billion and approximately 33 million doors sold in 2014. Extensive global footprint with 62 manufacturing facilities spread across 10 countries. More than 7,000 customers in 80 countries. One of only two vertically integrated residential molded door manufacturers and the only vertically integrated commercial door manufacturer in North America. Established leadership positions in all targeted product categories in North America. Industry consolidation and Lean Sigma efforts have transformed Masonite into a better positioned, more efficient company 2014 North American End Markets North America, 76% Europe / ROW, 21% S. Africa, 3% Residential repair &amp; remodel, 44% Residential new construction, 37% Architectural construction, 19% </li><li> 8. 8 Maintain focus on core capabilities &amp; operational excellence through all strategic phases CEO Overview Masonites Strategic Phases 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Surviving the Downturn Consolidation Strengthen/Optimize Portfolio Accelerate Performance </li><li> 9. 9 CEO Overview Masonite Has Created Leadership Positions in Targeted Product Categories Door Components Residential Doors SteelStile &amp; RailMolded Architectural Fiberglass ExteriorInterior Door Core Veneers / Facings Interior Wood Steel &amp; Glass Chile Baillargeon BirchwoodMarshfield Algoma Ledco Lifetime Door-StopLemieux Algoma Marshfield Harring Leadership Position Leadership Position Leadership Position Leadership Position Leadership Position Leadership Position Leadership Position 2010-2014 acquisitions. Limited Masonite presence. Defined as #1 or #2 (based on internal estimates). </li><li> 10. 10 Demonstrated improvement through strategic focus CEO Overview Our Strategy Is Working Masonites Trailing Twelve Month Adjusted EBITDA (2010 Present) (in 000s) $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2010 2011 2012 2013 2014 Q1'14 Q1'15 +2% +19% +9% +30% +56% </li><li> 11. 11 U.S. housing starts remain far below historic averages CEO Overview Even With Our Primary Market Still Far Below Historic Averages U.S. Housing Starts 1960 - Present Source: U.S. Census Bureau (in 000s) 0 500 1,000 1,500 2,000 2,500 Average annual housing starts = 1.448 mm </li><li> 12. 12 CEO Overview Five Focus Areas Designed to Accelerate Growth Product Line Leadership Electronic Enablement Sales &amp; Marketing Excellence Automation Portfolio Optimization Goal: Grow share &amp; expand margins beyond macroeconomic recovery </li><li> 13. Introductions CEO Overview Portfolio Optimization Residential Business Architectural Business Automation Sales &amp; Marketing Excellence Financial Update Summary &amp; Q&amp;A </li><li> 14. 14 Portfolio Optimization Industry Consolidation of Residential Interior Molded Door Business NA Residential Interior Molded FacingsNA Residential Interior Doors 2010 2010 2012 2012 2010 Residential Interior Molded Facings &amp; Assembly Consolidation There are only two vertically integrated interior molded door manufacturers in NA </li><li> 15. NA Architectural Interior Wood DoorFacings NA Architectural Components MineralCore 15 Portfolio Optimization Industry Consolidation of Architectural Door Business Masonite is the ONLY vertically integrated architectural wood door manufacturer in NA 2011 2012 2012 2014 2011 2012 2011 </li><li> 16. 16 Portfolio Optimization A Strong Track Record of Successful Acquisitions Average* multiple paid was 7.4x trailing twelve months EBITDA, pre-synergy, pre-recovery Select assets of: Residential Interior Architectural Specialty Stile &amp; Rail International Date Paid Mult.Company Chile LEDCO Mar 2010 $12.8 NA Lifetime Doors Oct 2010 $28.0 NA Marshfield Aug 2011 $102.4 7.9x Birchwood Nov 2011 $41.0 7.3x Baillargeon Mar 2012 $9.9 8.0x Algoma Apr 2012 $55.6 8.0x Lemieux Aug 2012 $22.1 6.3x Chile Jul 2013 $12.2 6.1x Door-Stop Feb 2014 $50.4 6.6x Harring Doors Dec 2014 $3.9 7.0x *Calculated on a weighted average method. </li><li> 17. 17 Portfolio Optimization And Exiting Markets Where Warranted Optimizing the portfolio includes exiting businesses that arent strategic focus areas Market Exits 2010 - Present Non-Strategic Poor macroeconomic outlook Outdated facilities or equipment Poor cash conversion metrics Exited 6 markets since 2010: Ukraine 2010 Turkey 2010 Romania 2012 Hungary 2012 Poland 2014 Israel 2014 Potential Sale of France 2015 </li><li> 18. Value Added Services Niche Products Components 18 Portfolio Optimization Acquisition Opportunities Remain Available Acquisitions enhance the Masonite value proposition </li><li> 19. 19 Portfolio Optimization Masonites Acquisition Criteria Acquisitions should have attractive valuation and meet all five criteria Similar Technology Distribution Synergy Brand Positioning Geographically Appropriate Actionable </li><li> 20. Introductions CEO Overview Portfolio Optimization Residential Business Architectural Business Automation Sales &amp; Marketing Excellence Financial Update Summary &amp; Q&amp;A </li><li> 21. 21 Residential Business Residential Door Opportunity United States The highest growth is expected from new construction and interior doors U.S. residential door sales are forecast to grow significantly through 2018 Source: Freedonia Group 72% 21% 7% Interior Entry Patio 2013 Residential Door Sales New construction doors (13-18) Annual growth in interior doors (13-18) (in millions of doors sold) Forecast 11% CAGR from 2013-2018 83.6 60.1 45.2 76.5 0 10 20 30 40 50 60 70 80 90 2003 2008 2013 2018F Annual growth replacement doors (13-18) + 13% + 12% + 5% </li><li> 22. 22 Residential Business Residential Door Opportunity United Kingdom Many construction indices have positive 2015 forecasts UK Housing Dynamics Steadily Improving Source: NHBC Housing Tracker; UK Office of National Statistics Private housing 2015 forecast: starts +4%, completions +9% Remodel index 2015 forecast: +2% 0 5,000 10,000 15,000 20,000 25,000 Starts Completions Starts Forecast Completions Forecast Door Stop...</li></ol>