Segment Information

9 Months Ended

Oct. 02, 2022

Segment Reporting [Abstract]

Segment Information

Segment Information

Our reportable segments are organized and managed principally by end market: North American Residential, Europe and Architectural. The Corporate & Other category includes unallocated corporate costs and the results of immaterial operating segments which were not aggregated into any reportable segment. In addition to similar economic characteristics, we also consider the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to our chief operating decision maker for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors and investors.

Our management reviews net sales and Adjusted EBITDA (as defined below) to evaluate segment performance and allocate resources. Net assets are not allocated to the reportable segments. Adjusted EBITDA is a non-GAAP financial measure which does not have a standardized meaning under GAAP and is unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA should not be considered as an alternative to either net income or operating cash flows determined in accordance with GAAP. Adjusted EBITDA is defined as net income (loss) attributable to Masonite adjusted to exclude the following items:

•    depreciation;

•    amortization;

•    share based compensation expense;

•    loss (gain) on disposal of property, plant and equipment;

•    registration and listing fees;

•    restructuring costs (benefit);

•    asset impairment;

•    loss (gain) on disposal of subsidiaries;

•    interest expense (income), net;

•    loss on extinguishment of debt;

•    other expense (income), net;

•    income tax expense (benefit);

•    other items;

•    loss (income) from discontinued operations, net of tax; and

•    net income (loss) attributable to non-controlling interest.

This definition of Adjusted EBITDA differs from the definitions of EBITDA contained in the indentures governing the 2030 Notes and 2028 Notes and the credit agreement governing the ABL Facility. Although Adjusted EBITDA is not a measure of financial condition or performance determined in accordance with GAAP, it is used to evaluate and compare the operating performance of the segments and it is one of the primary measures used to determine employee incentive compensation. Intersegment sales are recorded using market prices.

Certain information with respect to reportable segments is as follows for the periods indicated:

	Three Months Ended October 2, 2022
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net sales	$	579,908	$	66,109	$	82,388	$	4,625	$	733,030
Intersegment sales	(468)		(391)		(4,545)		—		(5,404)
Net sales to external customers	$	579,440	$	65,718	$	77,843	$	4,625	$	727,626
Adjusted EBITDA	$	115,092	$	3,898	$	(219)	$	(6,849)	$	111,922

	Three Months Ended October 3, 2021
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net sales	$	489,156	$	86,280	$	79,526	$	4,030	$	658,992
Intersegment sales	(636)		(1,882)		(4,266)		—		(6,784)
Net sales to external customers	$	488,520	$	84,398	$	75,260	$	4,030	$	652,208
Adjusted EBITDA	$	91,482	$	16,680	$	1,040	$	(4,441)	$	104,761

	Nine Months Ended October 2, 2022
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net Sales	$	1,757,820	$	222,120	$	236,941	$	15,641	$	2,232,522
Intersegment sales	(2,040)		(2,081)		(12,684)		—		(16,805)
Net sales to external customers	$	1,755,780	$	220,039	$	224,257	$	15,641	$	2,215,717
Adjusted EBITDA	$	367,733	$	24,307	$	(3,039)	$	(34,202)	$	354,799

	Nine Months Ended October 3, 2021
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net Sales	$	1,460,358	$	266,665	$	235,834	$	15,761	$	1,978,618
Intersegment sales	(1,985)		(5,918)		(9,760)		—		(17,663)
Net sales to external customers	$	1,458,373	$	260,747	$	226,074	$	15,761	$	1,960,955
Adjusted EBITDA	$	286,009	$	50,019	$	3,514	$	(22,192)	$	317,350

A reconciliation of our net income attributable to Masonite to consolidated Adjusted EBITDA is set forth as follows for the periods indicated:

	Three Months Ended				Nine Months Ended
(In thousands)	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
Net income attributable to Masonite	$	57,037	$	37,691	$	183,134	$	119,718
Plus:
Depreciation	17,461		17,365		51,977		52,876
Amortization	4,256		5,423		13,164		16,749
Share based compensation expense	5,556		2,336		16,251		11,460
Loss (gain) on disposal of property, plant and equipment	155		2,164		(1,245)		1,954
Restructuring (benefit) costs	(141)		1,311		(221)		5,146
Asset impairment	—		—		—		10,374
Loss on disposal of subsidiaries	—		—		—		8,590
Interest expense, net	10,266		11,349		31,098		35,213
Loss on extinguishment of debt	—		13,583		—		13,583
Other (income) expense, net	211		(1,471)		(1,604)		(4,400)
Income tax expense	16,376		13,854		59,502		42,713
Net income attributable to non-controlling interest	745		1,156		2,743		3,374
Adjusted EBITDA	$	111,922	$	104,761	$	354,799	$	317,350