Masonite International Corporation

Welcome to May 3rd quarter 2021 earnings conference call. During the presentation, all participants will be in a listen-only mode. After management's prepared remarks, investors are invited to participate in a question and answer session. Please note that this conference is being recorded. I would now like to turn the call over to Rich Leland, Vice President, Finance and Treasurer. Please proceed.

Thank you. Good morning, everyone. We appreciate you joining us for today's call. With me here this morning are Howard Hackett, President and Chief Executive Officer, and Russ Kijima, Executive Vice President and Chief Financial Officer. Chris Ball, our President of Global Residential, will also be joining us for the Q&A session. issued a press release and earnings presentation yesterday after the market closed, reporting our third quarter 2021 financial results. These documents are available on our website at maintenancenight.com. Before we begin, let me remind you that this call will include forward-looking statements. Each forward-looking statement contained in this call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears in the section entitled Forward-Looking Statements in the press release we issued yesterday. More information about risks can be found under the heading Risk Factors in Masonite's most recently filed Form 10-K and our subsequent Form 10-Qs, which are available at sec.gov and at masonite.com. The forward-looking statements in this call speak only as of today, and we undertake no obligation to update or revise any of these statements. Our earnings release in today's discussion includes certain non-GAAP financial measures. Please refer to the reconciliations, which are in the press release and the appendix of the earnings presentation. Our agenda for today's call includes a business overview from Howard, followed by a review of the third quarter from Russ, along with our updated 2021 financial outlook. Lastly, Howard will provide some closing remarks and will host a question and answer session. And with that, let me turn the call over to Howard.

Thanks, Rich. Good morning and welcome everyone. It's good to be speaking with you all again. I am pleased to report that we delivered another quarter of year-on-year growth in both net sales and volume. The strong 11% increase in net sales was driven by higher average unit price, or AUP, and volume growth in our residential businesses, both in North America and Europe. AUP was up year-on-year across all three segments as we continued to benefit from previously implemented pricing actions. As expected, adjusted EBITDA margin contracted year-on-year due to higher input costs ahead of the realization of pricing actions taken in June and August. We have implemented multiple price increases across the business this year to stay ahead of the rising costs in 2021 and maintain a favorable price-cost relationship. While we did not realize enough price to preserve margins in the third quarter, pricing actions did offset the dollar impact of inflation in absolute terms. With these actions in full effect, we feel confident we will return to year-on-year margin expansion in the fourth quarter. Russ will discuss this in more detail as it relates to our updated 2021 outlook. During the quarter, we repurchased $41 million of our common stock. This marks the highest amount of quarterly share repurchase activity since 2018. With respect to business and operational highlights for the quarter, demand remained robust across our residential and markets in both North America and Europe. We were pleased to deliver volume growth despite labor availability and logistics challenges that are impacting the markets we serve. In an effort to service our customers, we experienced operating inefficiencies and elevated overtime during the quarter. The use of initiatives such as referral, sign-on, retention, and perfect attendance bonus programs in the quarter, in addition to wage adjustments, help drive an increase in applicants, but labor remains a challenge broadly. I am pleased to say that our new facilities in both our North American residential and Europe segments are moving forward as planned. We expect to see our new Stoke-on-Trent, UK facility operational in the first quarter of 2022 and our Fort Mill, South Carolina facility online the following quarter. Both of these facilities are extremely attractive investments addressing high growth products and regions respectively. We believe this additional capacity will enable us to fully meet demand while increasing efficiency and providing better service to our customers overall. Lastly, I'd like to highlight several organizational changes in the leadership of Masonite, including the addition of a chief sustainability officer to our executive management team. Let's turn to slide five for more details. Environment, social, and governance has become increasingly important to our shareholders and stakeholders at large in recent years. As a company founded on sustainability, I think it's important to build upon this legacy and ensure we embed a focus on environmental stewardship, social responsibility, and good governance more deeply into our business. Accordingly, we made the decision to create a new executive role of Chief Sustainability Officer To effectively drive ESG into our operations, supply chain, and product development process, the role requires someone with a strong operational and technical background. It was for these reasons that we chose Claire Doyle, who most recently served as our senior vice president general manager for the Europe business segment. Claire has a valuable combination of general management experience with a technical background. And her five years with Masonite makes her an ideal candidate to lead our continued ESG journey. This organizational move created an opportunity for us to continue building our leadership talent abroad. I am pleased that Vicki Filliman joined Masonite in August of this year as the new Senior Vice President, General Manager of Europe. Her commercial and marketing expertise, as well as her inclusive leadership style and strategic mindset, are ideal for this role as we look to build on strong momentum in our Europe business. Vicki was most recently a managing director for Morphy Richards, a supplier of small appliances in the UK. She also previously served in senior sales and marketing roles at Stanley Black & Decker. And most recently, we announced the appointment of Chris Ball as president of Global Residential. We believe his leadership style, relevant experience, and drive for results will be strong assets in helping us achieve our growth initiatives, including delivering on our Doors That Do More strategy. Prior to joining Masonite, Chris served as the president of Americas for Cooper Tire and Rubber Company. Earlier in his career, he held a variety of leadership roles across sales and operations at Whirlpool Corporation and has an extensive background leading global teams to drive growth. I'm delighted to have Chris join the team and have him here with us today. As we discussed in our Investor Day, we want to have the best team in the industry. The ability to attract and retain talent is a critical differentiator for companies. For these reasons, I couldn't be more pleased with the new hires we made into the organization and the addition of a dedicated CSO to lead our ESG initiative. With that, I'll turn the call over to Russ to provide more details on our financials. Russ?